StockBrokers.com is keeping an eye on the publicly-traded online brokers quarterly earnings reports. Now that earnings season is over, we can take a look back at the fourth quarter, as well as earnings for the full year 2013. After a very shaky 2012, the online brokers have been reporting better numbers in 2013. Did their positive earnings momentum continue in the fourth quarter? How did things look for the fiscal year 2013? We’ll take a look at fast facts from each brokers’ results, and then examine what it means for the industry overall. Here’s a look at results from Charles Schwab (SCHW), Interactive Brokers (IBKR), E*TRADE (ETFC), and TD Ameritrade (AMTD).
How did the brokers do compared to the same period a year ago? Charles Schwab reported a profit of 23 cents per share versus just 15 cents per share last year. Interactive Brokers reported a 7 cent profit in the fourth quarter, which was down 63% compared to last year. TD Ameritrade reported a bottom line profit of 35 cents per share in the quarter, which was up 30 percent from last year. E*TRADE lost 65 cents per share last year in the fourth quarter due to one time charges, but the company made a profit of 20 cents per share in the fourth quarter of 2013.
Charles Schwab 2013 4th Quarter Earnings Fast Facts:
Schwab reported revenue of $1.44 billion in the quarter, which was their most since the height of the Internet bubble
Schwab has $2.25 trillion in client assets as of the end of 2013
Pre-tax profit margin jumped from 28.3% last year to 34.7% this year
Net new retail brokerage accounts were 34,000 in the fourth quarter
Charles Schwab delivered another positive earnings result in the fourth quarter. The online broker beat analysts estimates on all measures. Schwab also reported fiscal year 2013 earnings of 78 cents per share. For the full year, Schwab saw a 5% rise in trading revenue. Asset management and administration fees were up 13% from the previous year. The stock market seemed to like what they heard from Charles Schwab this time around.
Interactive Brokers 2013 4th Quarter Earnings Fast Facts:
Analysts expected 15 cents per share on the bottom line, but Interactive Brokers earned just 7 cents per share
Net revenue was expected to come in at $317 million, but the company reported $249.9 million
Net Revenue in the electronic brokerage business jumped by 22.9% from a year ago
Significantly higher general and administrative expenses hampered the company this quarter
Interactive Brokers was able to beat analysts estimates on the top line in the third quarter, but they came up far short in the fourth quarter. Total non-interest expenses jumped by 39.9% in the fourth quarter. The market making segment once again had a weak quarter. The market making business saw revenue fall approximately 27% from a year ago. Interactive reported earnings of 73 cents per share for the full year. Customer accounts increased by 14% to 239,000 in the year overall. For the year, total Daily Average Revenue Trades (DARTs) increased by 18 percent to a level of 486,000 in 2013.
TD Ameritrade 2013 4th Quarter Earnings Fast Facts:
TD Ameritrade brought in $752 million in revenue in the fourth quarter
DARTs were up 24% from a year ago to a level of 414,000 in the quarter
TD Ameritrade said they are seeing 2,500 new mobile users every day
Net new client assets in the quarter came in at $14.5 billion
TD Ameritrade beat analysts estimates across the board with this report. TD Ameritrade derives half of its revenue from trading, so the retail investor getting back into the market was a huge boost to TD Ameritrade’s bottom line. Total client assets are now $596 billion at TD Ameritrade. That figure is up 24% from the same quarter a year ago. This was the second best asset gathering quarter in the company’s history. Shares of TD Ameritrade hit their highest level since 1999 following this earnings release.
E*TRADE 2013 4th Quarter Earnings Fast Facts:
E*TRADE’s entire loan portfolio is now down to just $8.6 million
Reserve for loan losses fell to $17.3 million in the quarter, down from $74.3 million last year
DARTs jumped 25 percent from last year to a level of 160,000
Revenue for the quarter came in at $447.1 million versus an estimate of $425.8 million
Paul Idzik deserves a lot of credit for getting things turned around at E*TRADE. Idzik has made a ton of moves in his one year as CEO at E*TRADE, and they seem to be making a big difference. The company’s balance sheet is in a much better position than it was this time last year. The loan portfolio is no longer such a big drag on the company as a whole. The reported DARTs were the highest level in two years for E*TRADE. E*TRADE reported a full year profit of 70 cents per share. E*TRADE’s stock is up more than 100 percent in the last 12 months.
Three out of four brokers that we are closely monitoring managed to beat analysts estimates. Interactive Brokers had some operating expenses issues that really drug down the entire business in the quarter. For the sector as a whole though, the fourth quarter of 2013 was a very positive one. Anytime you see online brokers reporting DARTs that are up somewhere around 20% versus the same quarter last year, it is going to help the bottom lines in a big way.
After a down 2012, it’s clear that 2013 was a solid year for the online brokerage sector. The second half of the year was even stronger than the first, and the brokers hope to carry that momentum into the first half of 2014. StockBrokers.com will be back with the 2014 first quarter earnings results in three months. A one year stock chart of all four of these online brokers is included below.