Interactive Brokers Stocks Dip After-Hours despite Record Q1 Revenue

Interactive Brokers Group (Nasdaq: IBKR) ended the first quarter of 2023 with adjusted earnings of $1.35 per share, which missed the consensus market estimate by about $0.06. However, the figure jumped from the previous quarter’s $1.30 per share and $0.82 in the first quarter of the previous year.

The latest reported diluted earnings per share came in at $1.42 compared to $0.74 in the previous year and $1.31 per share in the fourth quarter of 2022.

Stock Market Reacts to Interactive Brokers’ Earnings

The 3.57 percent shortfall in Interactive Brokers’ earnings from the market expectations has put investors in backfoot. The company’s shares ended Tuesday’s trading by gaining 1.13 percent but tumbled about percent in after-market trading as the earnings came.

Considering the after-hours plunge, Interactive Brokers shares added more than 15 percent this year compared to an 8.1 percent gain of the S&P 500.

Record Revenue of Interactive Brokers

The US-based broker reported net revenue above $1.05 billion for the quarter, with the adjusted figure at $1.01 billion. Both these figures went up significantly compared to the previous quarterly performances of the company. The revenue came in line with the market expectations.

In the fourth quarter of 2022, the reported revenue was at $976 million and the adjusted number at $958 million, while in the first quarter of that year, these figures were at $645 million and $692 million, respectively.

The brokerage reported $761 million as pre-tax income, while the adjusted figure reached $720 million. The pre-tax profit margin improved to 72 percent on reported and 71 percent on adjusted figures.

While the commission-based income of Interactive Brokers only increased by 2 percent to $357 million, its net interest income jumped 126 percent to $637 million on ‘higher benchmark interest rates and customer credit balances.’ It also generated a gain of $19 million from ‘other income.’

Customer Metrics Improved

At the end of the latest quarter, Interactive Brokers had 2.20 million customer accounts, an increase of 5.2 percent and 21 percent on a quarterly and yearly basis, respectively. However, the total DARTs decreased by 19 percent year-over-year to 2.05 million. The cleared DARTs also reduced by 17 percent to 1.85 million.

While the customer credits increased by 4 percent to $96.6 billion, customer margin loans decreased by 18 percent to $39.4 billion.

Meanwhile, the brokerage continued to improve its services and recently added deposits and withdrawals through the fintech platform Wise. However, in March, its Australian entity faced a setback as the country’s regulator temporarily suspended its stock lending products.

This article was written by Arnab Shome at http://www.financemagnates.com.