A significant rise in the top line drove
Interactive Brokers Group, Inc.'s
) first-quarter 2014 adjusted earnings per share of 34 cents,
which surpassed the Zacks Consensus Estimate of 29 cents.
Moreover, the reported figure was up from 14 cents earned in the
Better-than-expected results were mainly due to appreciable
growth in revenues, partially offset by a slight rise in
expenses. Results were also aided by solid performance of both
the Electronic Brokerage and Market Making segments.
Our quantitative model had also conclusively projected that
Interactive Brokers would beat the Zacks Consensus Estimate, as
it had the right combination of two key components - a positive
and a Zacks Rank #1 (Strong Buy).
Net income available to common shareholders in the reported
quarter was $19.1 million, up significantly from $6.6 million in
the prior-year quarter.
Performance in Detail
Interactive Brokers' net revenue in the quarter came in at $354.9
million, up 64.2% year over year. The rise was mainly driven by
substantial trading gains as well as higher commission and
execution fees and interest income, partly offset by a fall in
other income and higher interest expenses.
Total non-interest expenses were $136.8 million, up 2.2% from the
prior-year quarter. The increase was primarily due to rise in
employee compensation and benefits, communications expenses as
well as general and administrative expenses. These negatives were
partly offset by a fall in execution and clearing expenses,
occupancy costs along with lower depreciation and amortization
Income before income taxes rose from $82.2 million in the
year-ago quarter to $218.1 million. Similarly, pre-tax profit
margin increased to 61% from 38% in the prior-year quarter.
As of Mar 31, 2014, cash and cash equivalents (including cash and
securities set aside for regulatory purposes) were $16.6 billion,
up 9.0% year over year. Total assets were $39.0 billion, up 2.9%
year over year.
Total equity came in at $5.2 billion versus $5.1 billion as of
Mar 31, 2013.
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Net revenue grew from $23.6 million in the prior-year quarter to
$133.1 million. Similarly, pre-tax income was $88.1 million
compared with a pre-tax loss of $29.0 million. Further, pre-tax
profit margin was 66% compared with a pre-tax loss margin of 123%
in the year-ago quarter.
Net revenue improved 14.5% year over year to $223.7 million.
Pre-tax income increased 21.0% to $134.3 million. Further,
pre-tax profit margin rose to 60% from 57% in the prior-year
quarter. Additionally, total daily average revenue trades (DARTs)
for cleared-only customers increased 25.0% year over year to
Interactive Brokers' healthy balance sheet with low leverage and
strong financials are expected to boost investors' confidence in
the stock. Further, the company's increased focus on
diversification and technological excellence will likely aid
growth going forward.
However, rise in Interactive Brokers' interest expenses as well
as non-interest expenses are causes of concern. Still a
significant increase in customer accounts and higher average
trading activity in the Electronic Brokerage segment are
Performance of Other Investment Brokers
) first-quarter 2014 earnings of 24 cents per share beat the
Zacks Consensus Estimate of 22 cents. Results benefited from
strong revenue growth and prudent expense management, partially
offset by decline in benefit from provisions.
Among other major investment brokers,
) is slated to announce results on Apr 23 and
) is scheduled to report second-quarter fiscal 2014 results on