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

The listed discount broker also reported flat growth in net profits for the three months through March 2019.

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.

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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.

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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. 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.


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