Interactive Brokers (IBKR) reported fourth quarter earnings that fell significantly from the same quarter a year ago. The broker reported that net income decreased by 32.8% to $9.1 million, or 19 cents per share. Revenue decreased 19.7% from a year ago to a level of $247.1 million. Analysts had much higher expectations for the company’s earnings. Analysts were expecting the company to earn 21 cents per share (the actual was 19) and analysts expected revenue to be at $273 million (it was only $247.1 million). Revenue and net income were both down about 25% from the third quarter as well.
What about the company’s full year results for 2012? The company reported diluted earnings per share of 92 cents in 2012 versus a profit of $1.31 per share in 2011. Cash and cash equivalents on the company’s balance sheet was $14.1 billion as of December 31, which is up almost 20% from a year ago.
The major problem area for Interactive Brokers was their market making division. Net revenue plunged nearly 57% from the prior year’s quarter to $71.8 million. Even more alarming was a 91% drop in pre-tax income to just $8.4 million. Pre-tax profit margin dropped to 12% from 55% a year ago. It also didn’t help that full year DARTs decreased 6% from 2011 to 384,000. The average commission rate fell slightly to $4.33. The electronic broker segment reported pre-tax income that was about 2% higher in the fourth quarter than it was in the same quarter last year.
Thomas Peterffy, Chairman and CEO of Interactive Brokers, said that the lack of volatility in the markets led to the lower earnings result. He also added, “Our results this quarter reflect the continuation of the subdued market environment we have seen all year.”
For the full press release from this earnings report click here.