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Interactive Brokers (IBKR) Q1 Earnings Miss as Expenses Rise

Interactive Brokers Group’s IBKR first-quarter 2023 adjusted earnings per share of $1.35 missed the Zacks Consensus Estimate of $1.40. However, the bottom line reflects a rise of 64.6% from the prior-year quarter. Our estimate for adjusted earnings was also $1.35.

Results were primarily hurt by an increase in expenses. A fall in daily average revenue trades (DARTs) was another headwind. Nevertheless, an improvement in revenues was a tailwind. Also, the company’s capital position was strong.

After considering non-recurring items, net income available to common shareholders (GAAP basis) was $148 million or $1.42 per share, up from $73 million or 74 cents per share in the prior-year quarter. Our estimate for net income was $135.2 million.

Interactive Brokers reported comprehensive income available to common shareholders of $153 million or $1.47 per share compared with $63 million or 64 cents in the prior-year quarter.

Revenues Improve, Expenses Rise

Total GAAP net revenues were $1.06 billion, up 63.7% year over year. The top line beat the Zacks Consensus Estimate of $1.04 billion. Our estimate for the metric was $1 billion. Adjusted net revenues were $1 billion, up 46.7% year over year. We projected adjusted net revenues of $1.1 billion.

Total non-interest expenses increased 17.5% year over year to $295 million. The rise was due to an increase in almost all cost components, except for general and administrative expenses. Our estimate for expenses was $416.1 million.

Income before income taxes was $761 million, increasing 93.1% from the prior-year quarter.

The adjusted pre-tax profit margin was 71%, up from 64% a year ago.

In the reported quarter, total customer DARTs declined 19% year over year to 2.05 million. Total cleared DARTs decreased from 2.23 million to 1.85 million.

Customer accounts grew 21% from the year-ago quarter to 2,195,000.

Capital Position Strong

As of Mar 31, 2023, cash and cash equivalents (including cash and securities set aside for regulatory purposes) totaled $64.6 billion compared with $60.4 billion as of Dec 31, 2022.

As of Mar 31, 2023, total assets were $119.5 billion compared with $115.1 billion as of Dec 31, 2022. Total equity was $12.2 billion, up from $11.6 billion as of Dec 31, 2022.

Our Viewpoint

Interactive Brokers' efforts to develop proprietary software and an increase in emerging market customers are expected to keep aiding financials. Also, its efficient capital deployment activities indicate strong liquidity and capital positions. 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 and EPS Surprise
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 #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings Release Dates of Other Firms

Robinhood Markets HOOD is slated to report first-quarter 2023 results on May 10.

The Zacks Consensus Estimate for HOOD’s first-quarter earnings is pegged at a loss of 59 cents. The loss estimate has been narrowed over the past 30 days.

Raymond James RJF is scheduled to announce second-quarter fiscal 2023 (ended Mar 31, 2023) numbers on Apr 26.

Over the past 30 days, the Zacks Consensus Estimate for Raymond James’ quarterly earnings has been revised 1.3% lower to $2.20, suggesting a 41.9% increase from the prior-year reported number.

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Interactive Brokers Group, Inc. (IBKR) : Free Stock Analysis Report

Raymond James Financial, Inc. (RJF) : Free Stock Analysis Report

Robinhood Markets, Inc. (HOOD) : Free Stock Analysis Report

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