Interactive Brokers Group Inc.
) first-quarter 2012 earnings per share came in at 24 cents,
significantly below the Zacks Consensus Estimate of 32 cents. Also,
this compared unfavorably with the year-ago quarter's earnings of
Including, the effect of changes in the U.S. dollar value of
Interactive Brokers' non-U.S. subsidiaries, the company reported
earnings of 30 cents per share compared with 41 cents in the
Interactive Brokers' results were negatively impacted by
deterioration in net revenue along with higher interest and
non-interest expenses. Moreover, the performance of Market Making
and Electronic Brokerage segments was on the downside
withsubstantially altered pre-tax income.
For the quarter under review, net income available to common
shareholders was $11.1 million compared with $16.3 million in the
Quarter in Detail
For the reported quarter, net revenue was $304 million,
substantially below the Zacks Consensus Estimate of $339 million.
This also declined 17.4% year over year from $368 million. The
decline was primarily driven by lower commission and execution fees
along with a fall in trading gains, partially mitigated by higher
Net income before taxes came down 32.5% year over year to $150
million. Pre-tax profit margin was 49% in the quarter as against
60% in the prior-year quarter.
Total non-interest expenses grew 5.7% to $154.2 million from
$145.9 million in the previous-year quarter. The rise was mainly
due to higher employee compensation and benefits (up 19.7% year
over year to $62.7 million in the quarter), partially offset by a
decrease in general and administrative expenses (down 10.3% year
over year to $11.3 million) along with execution and clearing
charges (down 2.5% year over year to $64.6 million).
: Net revenue decreased 29.6% to $142.4 million from $202.3 million
in the previous year quarter. Pre-tax income fell 51% year over
year to $66 million. The fall was caused primarily by fluctuations
in currency translation gains. Moreover, pre-tax profit margin also
declined to 46% from 67% recorded in the year-ago period.
: Net revenue was marginally down 2.7% year over year to $159.3
million. Similarly, pre-tax income stood at $83.4 million, down
7.4% from $90.1 million in the previous year quarter. Pre-tax
profit margin was 52% compared with 55% in the prior year quarter.
Total daily average revenue trades (DARTs) for cleared and
execution-only customers inched up 1% year over year to
As ofMarch 31, 2012, Interactive Brokers' consolidated equity
capital was $4.82 billion compared with $4.68 billion as of
December 31, 2011.
Despite poor results, we believe that Interactive Brokers'
strong fundamentals and highly liquid balance sheet will enhance
investor confidence in the company. Moreover, the company has been
constantly declaring dividend, which reflects its sturdy capital
However, with lower trading activity in the markets, the
company's financials may get adversely affected as its revenue
highly depends on the trading volume at the stock exchanges.
Interactive Brokers' currently holds a Zacks #3 Rank, which
translates into a short-term Hold' rating. However, the company's
Gleacher & Company, Inc.
) retains a Zacks #2 Rank (short-term 'Buy' rating).
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