Interactive Brokers Stocks Dip After-Hours despite Record Q1 Revenue

Wednesday, 19/04/2023 | 01:07 GMT by Arnab Shome
  • The broker missed the market earnings estimation.
  • Its net interest income jumped 126 percent.
Interactive Brokers logo

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 shaken investors' confidence. The company's shares ended Tuesday's trading hours by gaining 1.13 percent but dropped 4 percent in after-market trading as the earnings came.

Interactive Brokers share price on Tuesday
Interactive Brokers' share price on Tuesday

Considering the after-hours plunge, Interactive Brokers shares added more than 15 percent this year compared to a gain of 8.1 percent in 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 increased 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 figures and 71 percent on adjusted figures.

While the commission-based income of Interactive Brokers only increased 2 percent to $357 million, its net interest income jumped 126 percent to $637 million on 'higher benchmark interest rates and customer credit balances'. In addition, it 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, which is an increase of 5.2 percent and 21 percent on a quarterly and yearly basis, respectively. However, the total DARTs decreased 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 4 percent to $96.6 billion, customer margin loans decreased 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.

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 shaken investors' confidence. The company's shares ended Tuesday's trading hours by gaining 1.13 percent but dropped 4 percent in after-market trading as the earnings came.

Interactive Brokers share price on Tuesday
Interactive Brokers' share price on Tuesday

Considering the after-hours plunge, Interactive Brokers shares added more than 15 percent this year compared to a gain of 8.1 percent in 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 increased 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 figures and 71 percent on adjusted figures.

While the commission-based income of Interactive Brokers only increased 2 percent to $357 million, its net interest income jumped 126 percent to $637 million on 'higher benchmark interest rates and customer credit balances'. In addition, it 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, which is an increase of 5.2 percent and 21 percent on a quarterly and yearly basis, respectively. However, the total DARTs decreased 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 4 percent to $96.6 billion, customer margin loans decreased 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.

About the Author: Arnab Shome
Arnab Shome
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About the Author: Arnab Shome
Arnab is an electronics engineer-turned-financial editor. He entered the industry covering the cryptocurrency market for Finance Magnates and later expanded his reach to forex as well. He is passionate about the changing regulatory landscape on financial markets and keenly follows the disruptions in the industry with new-age technologies.
  • 6404 Articles
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