Tiger Brokers IPO Adds $103M to Interactive Brokers’ Q1 Earnings

Interactive Brokers LLC (NASDAQ:IBKR) said on Tuesday its first-quarter net profit stayed flat from a year ago amid a slowing electronic brokerage segment.

The listed discount broker also reported flat growth in revenues for the three months through March 2019. The company posted net revenues for Q1 2019 at $558 million, up by six percent compared with $527 million in the same period last year. Income before tax totaled $339 million, almost unchanged over a yearly basis from $340 million in Q1 2018.

Delving further into financial metrics, Interactive Brokers reported diluted gain per share (EPS) on a comprehensive basis at $0.64 for the quarter ended March 31, 2019, reflecting a minor improvement year-over-year from $0.63 per share during the January-March quarter in 2018.

According to its recent disclosures, Interactive Brokers serves more than 600,000 accounts in over 200 countries, with more than $140 billion in client equity.

The Greenwich, Connecticut-based company said the stable revenue was primarily due to strong growth in net interest income, which jumped $29 million or 13 percent year-on-year. However, the positive figures were partially offset by the negative impact of the company’s currency diversification strategy which decreased its earnings by $19 million compared to a $38 million gain in the year-ago quarter.

The company holds its cash reserves in different currencies to reflect its global operations which include significant overseas segments. Interactive Brokers’ commissions revenue also decreased $47 million, or 21 percent from the same period a year earlier.

Interactive Brokers, which went public a decade ago, has been trying to tap the brokerage market, which has a relatively steady source of revenue.

Aside from its core electronic-brokerage business, the IB earnings for the first quarter included two one-time items. Specifically, the company captured a $103 million float gain from its 7.7 percent stake in the Chinese brokerage Tiger Brokers which raised $104 million from its IPO on Nasdaq Stock Exchange Stock Exchange A stock exchange, also known as a securities exchange or bourse represents is a facility where stockbrokers and traders can buy and sell securities.This includes shares of stock, bonds, exchange-traded funds (ETFs), or other financial instruments. By extension, stock exchanges can also provide facilities for the issue and redemption of such securities and instruments and capital events including the payment of income and dividendsStock exchanges have developed into a permanent fixture in the fin A stock exchange, also known as a securities exchange or bourse represents is a facility where stockbrokers and traders can buy and sell securities.This includes shares of stock, bonds, exchange-traded funds (ETFs), or other financial instruments. By extension, stock exchanges can also provide facilities for the issue and redemption of such securities and instruments and capital events including the payment of income and dividendsStock exchanges have developed into a permanent fixture in the fin Read this Term. The company also booked losses of $42 million in bad debt expense.

The earnings report also shows the following business highlights

• 61 percent pretax profit margin for this quarter, down from 65% in the year-ago quarter.
• 55 percent Electronic Brokerage pretax profit margin for this quarter, down from 63 percent in the year-ago quarter.
• Customer equity grew 14 percent from the year-ago quarter to $147.6 billion, and customer debits decreased 13 percent to $25.5 billion.
• Customer accounts increased 21 percent from the year-ago quarter to 623 thousand.
• Total DARTs1 decreased ten percent from the year-ago quarter to 848 thousand.
• Brokerage segment equity was $6.2 billion. Total equity was $7.4 billion.