Ameritrade's Revenues Drops by 6% in Q3, Despite Record Client Assets

TD Ameritrade, the NYSE listed online stocks broker, released today its operating results for the third quarter of fiscal 2014. The results show sound results compared with the figures of the same quarter last year, but on a quarterly comparison, the results are mixed with a 6% decline in revenues from $812 million to $763 million after two consecutive quarters of record revenues.

TD Ameritrade’s Results for the Quarter Ended June 30, 2014:

• Net income of $190 million, or $0.34 per diluted share
• Net new client assets of $13.4 billion, an annualized growth rate of 9%
• Average client trades per day of 401,000, an activity rate of 6.5%
• Net revenues of $763 million, up 5% Y-o-Y, 56% of which were asset-based
• Investment product fee revenues of $79 million, up 22% Year-Over-Year
• Pre-tax income of $310 million, or 41% of net revenues
• EBITDA of $362 million, or 47% of net revenues
• Interest rate sensitive assets of $97 billion, up 3% Year-Over-Year
• Record client assets of $650 billion, up 24% Year-Over-Year

“TD Ameritrade’s earnings per share is up 21 percent year-to-date, driven primarily by strong revenue growth. We’re seeing strong demand for guidance-based solutions, increased adoption of mobile platforms and our distribution channels continue to perform well resulting in more than $40 billion in net new client assets, a 10% annualized growth rate,” said Fred Tomczyk, president and chief executive officer. “While the markets are experiencing low Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term and summer seasonality, retail investors have remained bullish. We have good momentum to finish out the year and we’re well positioned going forward.”

“TD Ameritrade delivered strong results in the third quarter and we are on pace for another solid year of asset growth. Year-to-date, revenue is $2.3 billion, up 13% year-over-year. Net new assets for the third quarter were up 24 percent year-over-year, and interest rate-sensitive assets were up 3%. Investment product fees now account for 10% of revenues and fee-based investment balances were once again at a record high for the quarter,” said Bill Gerber, executive vice president and chief financial officer. “We also continue to deliver value to our shareholders through a robust return of capital strategy. We returned $155 million to shareholders this quarter through a mix of dividends and stock repurchases.”