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Interactive Brokers Group’s (IBKR - Free Report) fourth-quarter 2023 adjusted earnings per share of $1.52 missed the Zacks Consensus Estimate of $1.54. However, the bottom line reflects a rise of 16.9% from the prior-year quarter.
Results were primarily hurt by an increase in expenses. However, higher revenues supported results to an extent. Also, the company recorded an increase in customer accounts during the quarter, which, along with a rise in daily average revenue trades (DARTs), was a tailwind.
After considering non-recurring items, net income available to common shareholders (GAAP basis) was $160 million or $1.48 per share, up from $136 million or $1.31 per share in the prior-year quarter. Our estimate for net income was $159.7 million.
Interactive Brokers reported comprehensive income available to common shareholders of $197 million or $1.83 per share compared with $174 million or $1.68 per share in the prior-year quarter.
For 2023, adjusted earnings per share was $5.75, which missed the Zacks Consensus Estimate of $5.77. However, the bottom line reflects a rise of 42% from the previous year. Net income available to common shareholders (GAAP) was $600 million or $5.67 per share compared with $380 million or $3.75 per share in 2022. Our estimate for 2023 net income was $599.7 million.
Revenues Improve, Expenses Rise
Total quarterly GAAP net revenues were $1.14 billion, up 16.7% year over year. The top line surpassed the Zacks Consensus Estimate of $1.12 billion. Adjusted net revenues were $1.15 billion, up 19.9%.
For 2023, total GAAP net revenues were $4.34 billion, up 41.5% year over year. The top line surpassed the Zacks Consensus Estimate of $4.33 billion.
Total quarterly non-interest expenses increased 12.5% year over year to $323 million. The rise was due to an increase in almost all cost components, except for general and administrative expenses. Our estimate for non-interest expenses was pegged at $354.6 million.
Income before income taxes was $816 million, increasing 18.4% from the prior-year quarter.
The adjusted pre-tax profit margin was 72%, up from 70% a year ago.
In the reported quarter, total customer DARTs increased 2% year over year to 1.93 million. Total cleared DARTs also increased 2% to 1.73 million. Our estimates for total customer DARTs and cleared DARTs were 1.84 million and 1.70 million, respectively.
Customer accounts grew 23% from the year-ago quarter to 2,562,000. We had projected customer accounts of 2,378,000.
Capital Position Strong
As of Dec 31, 2023, cash and cash equivalents (including cash and securities set aside for regulatory purposes) totaled $68 billion compared with $60.4 billion as of Dec 31, 2022.
As of Dec 31, 2023, total assets were $128.4 billion compared with $115.1 billion as of Dec 31, 2022. Total equity was $14.1 billion, up from $11.6 billion as of Dec 31, 2022.
Our View
Interactive Brokers' efforts to develop proprietary software and an increase in emerging market customers are expected to keep aiding financials. However, increasing expenses will likely hamper the bottom line to an extent in the near term.
Interactive Brokers Group, Inc. Price, Consensus and EPS Surprise
Earnings Release Dates of Other Investment Brokers
LPL Financial (LPLA - Free Report) is slated to announce fourth-quarter and 2023 numbers on Feb 1.
Over the past 30 days, the Zacks Consensus Estimate for LPL Financial’s quarterly earnings has moved 1% lower to $3.33, implying a 20.9% decline from the prior-year reported number.
Tradeweb Markets (TW - Free Report) is slated to announce quarterly numbers on Feb 6.
Over the past 30 days, the Zacks Consensus Estimate for TW’s quarterly earnings has moved 10.5% higher to 63 cents, implying a 28.6% rise from the prior-year reported number.
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Interactive Brokers (IBKR) Q4 Earnings Miss, Revenues Rise Y/Y
Interactive Brokers Group’s (IBKR - Free Report) fourth-quarter 2023 adjusted earnings per share of $1.52 missed the Zacks Consensus Estimate of $1.54. However, the bottom line reflects a rise of 16.9% from the prior-year quarter.
Results were primarily hurt by an increase in expenses. However, higher revenues supported results to an extent. Also, the company recorded an increase in customer accounts during the quarter, which, along with a rise in daily average revenue trades (DARTs), was a tailwind.
After considering non-recurring items, net income available to common shareholders (GAAP basis) was $160 million or $1.48 per share, up from $136 million or $1.31 per share in the prior-year quarter. Our estimate for net income was $159.7 million.
Interactive Brokers reported comprehensive income available to common shareholders of $197 million or $1.83 per share compared with $174 million or $1.68 per share in the prior-year quarter.
For 2023, adjusted earnings per share was $5.75, which missed the Zacks Consensus Estimate of $5.77. However, the bottom line reflects a rise of 42% from the previous year. Net income available to common shareholders (GAAP) was $600 million or $5.67 per share compared with $380 million or $3.75 per share in 2022. Our estimate for 2023 net income was $599.7 million.
Revenues Improve, Expenses Rise
Total quarterly GAAP net revenues were $1.14 billion, up 16.7% year over year. The top line surpassed the Zacks Consensus Estimate of $1.12 billion. Adjusted net revenues were $1.15 billion, up 19.9%.
For 2023, total GAAP net revenues were $4.34 billion, up 41.5% year over year. The top line surpassed the Zacks Consensus Estimate of $4.33 billion.
Total quarterly non-interest expenses increased 12.5% year over year to $323 million. The rise was due to an increase in almost all cost components, except for general and administrative expenses. Our estimate for non-interest expenses was pegged at $354.6 million.
Income before income taxes was $816 million, increasing 18.4% from the prior-year quarter.
The adjusted pre-tax profit margin was 72%, up from 70% a year ago.
In the reported quarter, total customer DARTs increased 2% year over year to 1.93 million. Total cleared DARTs also increased 2% to 1.73 million. Our estimates for total customer DARTs and cleared DARTs were 1.84 million and 1.70 million, respectively.
Customer accounts grew 23% from the year-ago quarter to 2,562,000. We had projected customer accounts of 2,378,000.
Capital Position Strong
As of Dec 31, 2023, cash and cash equivalents (including cash and securities set aside for regulatory purposes) totaled $68 billion compared with $60.4 billion as of Dec 31, 2022.
As of Dec 31, 2023, total assets were $128.4 billion compared with $115.1 billion as of Dec 31, 2022. Total equity was $14.1 billion, up from $11.6 billion as of Dec 31, 2022.
Our View
Interactive Brokers' efforts to develop proprietary software and an increase in emerging market customers are expected to keep aiding financials. However, increasing expenses will likely hamper the bottom line to an extent in the near term.
Interactive Brokers Group, Inc. Price, Consensus and EPS Surprise
Interactive Brokers Group, Inc. price-consensus-eps-surprise-chart | Interactive Brokers Group, Inc. Quote
Currently, Interactive Brokers carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings Release Dates of Other Investment Brokers
LPL Financial (LPLA - Free Report) is slated to announce fourth-quarter and 2023 numbers on Feb 1.
Over the past 30 days, the Zacks Consensus Estimate for LPL Financial’s quarterly earnings has moved 1% lower to $3.33, implying a 20.9% decline from the prior-year reported number.
Tradeweb Markets (TW - Free Report) is slated to announce quarterly numbers on Feb 6.
Over the past 30 days, the Zacks Consensus Estimate for TW’s quarterly earnings has moved 10.5% higher to 63 cents, implying a 28.6% rise from the prior-year reported number.