The second quarter earnings season is over for the online brokers, so it’s time for our quarterly earnings review. Each quarter, examines the earnings reports from all four of the publicly-traded online brokers. We’ll take a look at some fast facts from each broker’s results, and then at the end of this post we’ll try to explain what these reports mean for the online brokerage industry as a whole. Here’s a look at results from Charles Schwab (SCHW), TD Ameritrade (AMTD), Interactive Brokers (IBKR), and E*TRADE (ETFC).

Before we go even more in-depth, let’s have a look at how these brokerages did this quarter compared to the second quarter last year. Schwab earnings increased from 23 cents per share last year to 25 cents this year. TD Ameritrade bumped their earnings up from 34 cents per share last year to 36 cents this year. Interactive Brokers earnings went up to 37 cents per share compared to just 26 cents per share in 2014. E*TRADE earnings edged up to 25 cents per share this year after earnings 24 cents per share last year.

Charles Schwab Second Quarter Earnings Fast Facts

Earnings Per Share bested analysts estimates by a penny

Trading income dropped four percent from a year ago

Schwab Intelligent Portfolios had more than 39,000 accounts at the end of the quarter

Pre-tax profit margin was 36.2 percent

Daily Average Revenue Trades (DARTs) were down about 3 percent from the second quarter of 2014 to a level of 267,000. Revenue per trade dropped about two percent from last year. Schwab continued to bring in new assets at a record pace. The broker brought in $37 billion in core new assets, the most ever for them in a second quarter. Schwab saw clients open 280,000 new brokerage accounts in the second quarter. Schwab’s interest-earning-assets grew by nearly 12 percent in the second quarter. Asset management and administration fees were up six percent from a year ago. Net income of $353 million was up nine percent from the same quarter last year.

TD Ameritrade Second Quarter Earnings Fast Facts

Ameritrade narrowly missed revenue estimates of $797 million by reporting $794.5 million

Brought in $11.7 billion in net new assets in the second quarter 

Investment product fee revenues were up eight percent from a year ago

DARTs came in eight percent higher than a year ago at 434,000 

The DARTs number was definitely stronger than expected. Retail traders trading more derivatives was the main reason for this increase. Ameritrade reported record client assets of $702 billion, up eight percent from last year. TD Ameritrade noted that they don’t see any interest rate hike coming soon. The company guided toward the bottom of their $1.45-$1.70 per share estimate for full year earnings. While activity levels have been strong through July because of the news cycle, Ameritrade officials noted they believe trading activity will slow in the near future as we enter August, which is historically the slowest trading month of the year.

Interactive Brokers Second Quarter Earnings Fast Facts

Earnings of 37 cents per share easily beat analysts estimates of 32 cents per share

DARTs jumped by 16 percent from a year ago 

Commissions and execution fees increased by 27 percent from the second quarter of 2014

Electronic Brokerage unit delivered a 65 percent pre-tax profit margin, up from 59 percent last year

After struggling due to currency losses in the first quarter, Interactive Brokers delivered with a strong second quarter report. The DARTs number was particularly impressive, especially when compared to the rest of the online brokerage industry. Customer equity grew by 22 percent from last year. The market making segment earned $30 million in the quarter as volatility increased enough to make a difference here. Expenses did rise by eight percent compared to last year. Customer accounts were 310,000, up 18 percent from a year ago.

E*TRADE Second Quarter Earnings Fast Facts

Earnings per share fell two cents short of analysts estimates of 27 cents per share

DARTs dropped four percent year over year and 12 percent from the first quarter

Average commission per trade was $10.96 in the quarter, which was up nicely from $10.72 last year

Total customer assets were at $302 billion at the end of the second quarter

E*TRADE added 25,000 net new accounts during the quarter, compared to 33,000 in the second quarter of 2014. E*TRADE now has a total of 3.2 million brokerage accounts. Total operating expenses were $309 million (up $25 million from last year), including severance of $6 and $9 million related to a third party contract amendment. Provision for loan losses stood at $3 million. E*TRADE narrowly missed analysts estimates on the top line as well by reporting revenues of $445 million compared to expectations of $447 million.


The second quarter brings a little bit more of a mixed bag for the sector than we have seen in recent quarters. There was a clear split when it came to client activity. Interactive Brokers and TD Ameritrade had nice year over year jumps in activity, likely due in large part to derivatives trading. Charles Schwab and E*TRADE saw slight decreases in client activity. At the same time, all of these companies continue to bring in new assets at an incredible pace. There’s no doubt that the online brokers would like to see interest rates go up, but at this point it’s hard to predict when that might occur. The third quarter is usually the slowest as far as trading volumes, so we’ll see what the DARTs look like next quarter. will be back in three months with a full review of the third quarter!

Below is a yearly chart of all four of the online brokers.