continues to closely monitor quarterly earnings reports from the publicly-traded online brokers. Earnings season is now complete for this sector, so it’s time for our quarterly earnings review for the four publicly-traded brokers. 2013 was a great year for the online brokers. Did they ride the momentum right into the start of 2014? We’ll take a look at some fast facts from each brokers’ results, and then examine what it means for the overall sector. Here’s a look at results from TD Ameritrade (AMTD), Charles Schwab (SCHW), Interactive Brokers (IBKR), and E*TRADE (ETFC).

First, let’s take a look at how the brokers did compared to the same period a year ago. TD Ameritrade earned 35 cents per share this year after earning 26 cents last year. Charles Schwab reported a profit of 24 cents per share in the first quarter, which was nearly 60 percent higher than their 15 cents per share a year ago. Interactive Brokers earnings jumped from just 6 cents per share last year to 35 cents per share in the first quarter of 2014. E*TRADE reported profits that came in at 33 cents per share, versus just 12 cents per share last year.

TD Ameritrade 2014 1st Quarter Earnings Fast Facts:

TD Ameritrade reported $812 million in revenue, which was a new quarterly record for the company

Daily Average Revenue Trades were 492,000 in the quarter, which is an activity rate of 8.1%

Net new client assets of $12.2 billion were a big boost to the company this quarter

52% of net revenues were asset based for TD Ameritrade in the first quarter

TD Ameritrade’s earnings came in slightly above analysts expectations, but the market response was muted. Expenses did come in a little higher than expected. Still, this was certainly another strong quarter from TD Ameritrade. DARTs were just 378,000 in the same quarter a year ago, so activity has picked up in a big way. In fact, TD Ameritrade announced that the 8.1% activity rate from its clients was the highest recorded in the past decade.

Charles Schwab 2014 1st Quarter Earnings Fast Facts:

Net Income jumped 58% from the same quarter last year

Pre-tax profit margins at Schwab jumped to 35.3% compared to 25.7% a year ago

DARTs were 553,600 in the quarter, which made the first quarter the highest quarterly volume ever for Schwab

Gathered $34.2 billion in net new assets during the quarter

Schwab beat analysts expectations by two cents per share on the bottom line, and revenues were just above most estimates. The company held expenses down to $956 million, which was far below most analysts estimates. Schwab now has a record $2.31 trillion in total client assets. The higher profit margin allowed the net income and bottom line to rise much quicker than the overall revenue did at Schwab. The market liked what they heard from Schwab, and SCHW jumped quickly following the company’s earnings release.

Interactive Brokers 2014 1st Quarter Earnings Fast Facts:

Analysts expected Interactive Brokers to report 30 cents, but they solidly beat estimates with a 35 cent profit

The market making segment perked up in a big way. Revenue surged from just $23.6 million last year to $133.1 million this year.

Earnings rose by 21% in the electronic brokerage segment of the company

DARTs bounced by 25% from last year to 582,000

Interactive Brokers knocked the cover off the ball with their first quarter earnings release. Interactive Brokers was the most disappointing of the brokers in the fourth quarter of 2013, but their fortunes changed in a big way in the first quarter. The market making segment contributing once again is a very encouraging sign to investors. Pre-tax profit margin at Interactive Brokers came in at an amazing 61% compared to just 38% last year. Revenue was $354.9 million, which was 64% higher than the same quarter last year.

E*TRADE 2014 1st Quarter Earnings Fast Facts:

E*TRADE delivered a major earnings beat, as they reported 33 cents per share compared to estimates of 23 cents

E*TRADE reduced risk in a big way by reducing provisions for loan losses to $4 million from $43 million last year

DARTs rose 33 percent from a year ago to 198,000. That number is also 24 percent higher than E*TRADE’s fourth quarter 2013 DARTs number.

E*TRADE now has 3.1 million brokerage accounts

E*TRADE’s first quarter report was tremendous in every aspect. The company was able to further reduce risk while outperforming even the most optimistic expectations for growth. ┬áThe huge jump in DARTs was a major boost to E*TRADE’s first quarter bottom line. Fees and service charges jumped 50% to $47 million and commissions were up 28% to $128 million. E*TRADE also reported a record-low annualized attrition rate of 7.1%. Wall Street’s reception to this earnings release was extremely positive.


As good as 2013 was for the online brokers, 2014 started out even better. All four online brokers we are tracking bested analysts expectations on both the bottom and top line. There are a lot of good things going on in this sector right now. Balance sheets are looking much healthier. Growth is accelerating in a big way. Clearly, the average investor returning to the market has been a major driver to growth for all of these online brokers. The average investor was slow to come back to Wall Street, but the last couple quarters make it evident that the average investor is indeed back at this point. Interactive Brokers and E*TRADE are slightly more levered to investor activity, which is why they were able to report the biggest earnings beats. Still, everyone in this industry is faring very well in today’s environment.

The online brokers are doing great now, but the stock market can be a very tricky place. It doesn’t take much for the environment to change quickly. will be watching closely to see if the positive trends continue into the second quarter of 2014. Posted below is a yearly chart of all four of the brokers.