Interactive Brokers’ Results Slump in Third Quarter 2015

On the positive side, IB's Market Making income before taxes increased 557% YoY to $46 million, driven by higher volatility.

Interactive Brokers Group (NASDAQ GS: IBKR), an online broker and market maker, just released somewhat disappointing results for the third quarter (Q3) ending September 30, 2015.

The group reported diluted earnings per share on a comprehensive basis of just $0.23 for the quarter, down from $0.44 in Q2 2015. Still, the figure seems less negative when compared to the diluted loss per share on a comprehensive basis of $0.13 for the same period in 2014.

Net revenues were $359 million and income before income taxes was $202 million this quarter, down from $387 million and $240 million respectively in Q2 2015. Again, the figures look better when compared to net revenues of $171 million and income before income taxes of $40 million for the same period in 2014.

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Q3 Business Highlights

Electronic Brokerage segment income before income taxes increased 19% to $184 million, compared to the same period last year, due to higher commissions revenue and net interest income. Customer accounts grew 18% to 322,000 and customer equity increased 13% to $62.1 billion from the year-ago quarter.

Commissions and execution fees increased 26% from the year-ago quarter to $168 million. Net interest income grew 11% from the year-ago quarter to $102 million. Pretax profit margin was 61% in quarter ending September 30, 2015, down from 63% in the same period last year.

Total DARTs for cleared and execution-only customers increased 28% from the year-ago quarter to 683,000. Cleared DARTs were 620,000, 28% higher than the same period last year.

Market Making segment income before income taxes increased 557% to $46 million, in the quarter ending September 30, 2015 compared to the same period last year, driven by higher volatility and active trading in the late August period. Pretax profit margin increased to 51% in the current quarter from 14% in the same period last year.

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