Interactive Brokers’ Q2 Profit Drops; Loses $74M on Tiger Brokers

IB earnings for the Q2 included a $74 million float loss from its 7.7 percent stake in the Chinese broker

Shortly after the close of the US trading session, Interactive Brokers LLC (NASDAQ:IBKR), a global electronic multi-asset broker and market-maker listed on Nasdaq, disclosed its financial results for Q2 2019, revealing that its key metrics were less impressive from a year ago.

The Greenwich, Connecticut-based company said its net revenues for Q2 2019 amounted to $413 million, lower by seven percent compared with $445 million in the same period last year. Income before tax totaled $225 million, down 17 percent year-over-year (from $271 million).

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Aside from its core electronic-brokerage business, the IB earnings for the second quarter included a $74 million float loss from its 7.7 percent stake in the Chinese brokerage Tiger Brokers which raised $104 million from its IPO on Nasdaq stock exchange

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Meanwhile, the net revenue was positively impacted by strong growth in net interest income, which jumped 15 percent year-on-year to $34 million. However, the positive figures were partially offset by the negative impact of the company’s currency diversification strategy, which decreased its earnings by $6 million, albeit the figure was mitigated from a $21 million loss in the year-ago quarter.

Customer accounts continue to march higher

Delving further into financial metrics, Interactive Brokers reported diluted earnings per share (EPS) on a comprehensive basis at $0.43 for the quarter ended June 30, 2019, reflecting -25 percent year-over-year drop from a profit of $0.57 per share during Q2 2018.

Business highlights, according to the company’s press release, included a pretax profit margin of 54 percent, which was lower from 61 percent in 2018. During the three month period through June 2019, customer equity grew 14 percent from 2018 to $153.1 billion, while customer debits decreased 11 percent to $25.7 billion.

Finally, customer accounts at Interactive Brokers, which went public a decade ago, increased 19 percent from a year ago to 645,000, while total daily average revenue trades (DARTs) grew four percent year-over-year to 828,000.

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