Interactive Brokers (IBKR) second quarter earnings which came in a little below estimates. Interactive Brokers reported diluted earnings per share of 26 cents versus estimates of 29 cents per share. While the results came in slightly below estimates, they were significantly ahead of last year’s 21 cent figure in the same quarter. Net revenue came in at $309.3 million, which was up 8.9 percent from last year. Total non-interest expenses were down 9.9 percent compared to the first quarter of 2014. The all-important Daily Average Revenue Trades (DARTs) number was 529,000, which represented a gain of 5 percent. Inside the DARTs number, April was the best month and May and June were trending downward volume-wise.
With a company like Interactive Brokers, it’s always a good idea to look at how each of the business segments are doing. The electronic brokerage segment has led the way in recent quarters while the market making segment has floundered. Both segments did well in the first quarter of 2014. This time around the electronic brokerage segments income before taxes rose 7 percent. Commissions and execution fees decreased 10 percent, thanks largely to lower volumes in futures markets and foreign exchanges. Customer accounts grew 17 percent to 262,000 from the year ago quarter. The market making segment earned $47 million, but removing the effects of currency translation it earned just $31 million. The segment earned $50 million a year ago. Historically low volatility levels have badly hurt the market making business as a whole.
Interactive Brokers’ profit margin jumped to 56 percent from 47 percent a year ago. The stock market initially responded negatively to this report, but the stock has bounced back nicely in recent days.
Click here for the full second quarter earnings release from Interactive Brokers.