TD Ameritrade Holdings Sees Strong Revenue Growth for Q3

The company saw a significant increase in earnings due to a notable drop in expenses.

The parent company of Omaha-based brokerage firm TD Ameritrade, TD ‎Ameritrade Holding Corporation, announced its unaudited results for the third quarter of the 2018 fiscal year. According to the report, the company saw an increase in earnings due to a significant reduction in expenses.

When looking at income, both operating and net income saw yearly and quarterly growth. In the third quarter of this year, operating income was $631 million, up from $396 million in the second quarter of this fiscal year. This is an impressive 37 percent jump year-on-year.

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Net income saw similar growth. In the third quarter net income was $451 million. This is up 40 percent from the second quarter which reported a value of $271 million. When compared to the same quarter in the previous fiscal year, net income was up 49 percent from $231 million.

The financial results for the quarter ended June 30, 2018, showed that the average client trades per day was approximately 784,000. This is an increase of 54 percent year-on-year from 510,358. However, it was a decline from the previous quarter ending March 31, 2018, which had an average of around 943,000 trades per day.

In the third quarter, the company had net revenues of just under $1.4 billion. From this, 62 percent were asset-based. This figure is up by 33.5 percent from the same quarter last year, which reported net revenues of $931 million. Despite the impressive yearly increase, this was still less than the second quarter of the 2018 fiscal year, which saw net revenues of $1.42 billion.

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Reduction of operating expenses for TD Ameritrade

The reduction of operating expenses was one of the main contributors to the company’s strong financial results. In the third quarter of the 2018 fiscal year, operating expenses were $751 million. This is down by 35 percent from the second quarter ending March 31, 2018. Although expenses were down from the previous quarter, they were still up 28 percent year-on-year from $537 million.

Tim Hockey, CEO of TD Ameritrade
Tim Hockey, President & CEO, TD Ameritrade

Commenting on the financial results, Tim Hockey, TD Ameritrade president and chief executive officer said: “thanks to outstanding operational and business performance, we delivered strong profitability in the quarter.

“We’re on a mission to leverage our size, scale and know-how to make investing simpler and more personal than ever before… TD Ameritrade is leveraging technology and people to break down barriers, bringing greater ease and accessibility to investing. It’s about what we offer, and how we offer it.”

Steve Boyle, Executive Vice President and CFO of TD Ameritrade
Steve Boyle
Source: TD Ameritrade

The executive vice president and chief financial officer, Steve Boyle, also added: “it was an excellent quarter as substantial expense reductions drove record net income and EPS. Investor engagement was robust, with strong client net buying.

“At the same time, we’re clearly seeing the expected benefits of our Scottrade acquisition. In fact, we achieved many cost savings sooner than expected, with approximately $212 million in synergies realized through June. The strength of these results more than offset a slight decline in trading revenue compared to the prior record quarter.”

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