Interactive Brokers (IBKR) reported third quarter earnings yesterday, and the results were largely disappointing. Interactive Brokers reported diluted earnings per share on a comprehensive basis of 30 cents per share compared to 34 cents per share in the same quarter last year. On a non-comprehensive basis, which excludes the effects of changes in the US dollar value of the company’s non-U.S. subsidiaries, the company reported net income of 26 cents per share. Analysts were expecting the company to report 35 cents per share.
What was behind the company’s earnings miss? Daily Average Revenue Trades (DARTs) decreased 19% from the year ago quarter to just 369,000. Total net revenues dropped to $318.6 million this quarter compared to a level of $385.6 million last year in the same period. The market making side of the business saw a significant drop in income. Interactive Brokers market making segment earned 30% less than it did last year. Lower volatility and lower exchange traded volumes led to this decrease. Interactive Brokers also reported that pretax profit margin for the company was 48% this year compared to 55% a year ago.
On the positive side, Interactive Brokers announced that customer equity increased 35% from a year ago to a current level of $31.5 billion. The company also declared a quarterly cash dividend of 10 cents per share.
For the entire press release of this earnings report click here.