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Interactive Brokers (IBKR) Beats on Q4 Earnings, Costs Fall
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Interactive Brokers Group, Inc. (IBKR - Free Report) released its fourth-quarter and full-year 2017 results. Adjusted earnings for the quarter came in at 43 cents per share, surpassing the Zacks Consensus Estimate of 39 cents. Also, earnings came in higher than the prior-year quarters figure of 7 cents per share.
Results benefited from improvement in revenues, lower operating expenses and a rise in DARTs, while lower trading volumes were the undermining factor. Further, the Electronic Brokerage segment continued to perform decently.
For the quarter, the company reported comprehensive net loss of $2 million or 2 cents per share, compared with loss of $3 million or 5 cents per share in the prior-year quarter.
For 2017, the company reported adjusted earnings per share of $1.53, increasing from $1.25 registered in the prior year. However, the figure lagged the Zacks Consensus Estimate of $1.65 per share. Comprehensive net income for the year came in at $87 million, up from $80 million reported in 2016.
Quarterly as well as full-year earnings per share were negatively impacted by 45 cents and 46 cents, respectively, as a result of the Tax Act.
Revenues Improve, Expenses Decrease
Total net revenues for the quarter increased significantly year over year to $515 million. The rise was primarily driven by an increase in commission fees and interest income, partially offset by a decline in trading gains. The figure surpassed the Zacks Consensus Estimate of $399 million.
For 2017, total net revenues came in at $1.7 billion, up from $1.4 billion registered in the previous year. Also, the figure surpassed the Zacks Consensus Estimate of $1.6 billion.
Total non-interest expenses fell 8.5% from the year-ago quarter to $151 million. The decrease was primarily due to lower execution and clearing expense, and employee compensation and benefits costs.
Income before income taxes came in at $364 million in the quarter, surging from $28 million in the prior-year quarter. Similarly, pre-tax profit margin was 71% compared with 15% in the prior-year quarter.
Quarterly Segment Performance
Electronic Brokerage: Net revenues increased 32.7% year over year to $390 million. Pre-tax income rose 50% to $252 million. Total DARTs for cleared and execution-only customers were 730,000, up 14% from the year-ago quarter. Pre-tax profit margin improved to 65% from 57% in the prior-year quarter.
Market Making: Net revenues plunged 44.4% year over year to $25 million. Pre-tax income was $8 million, down 33.3% from the year-ago quarter. The decline was mainly due to lower trading gains, partly offset by lower operating costs, as the company completed the winding down of its U.S. options market making business. Pre-tax profit margin improved to 32% from 27% in the prior-year quarter.
Moreover, the Corporate segment reported net revenues of $100 million against negative revenues of $146 million in the year-ago quarter. Pre-tax income was $104 million compared with pre-tax loss of $152 million in the prior-year quarter.
Capital Position
As of Dec 31, 2017, cash and cash equivalents (including cash and securities set aside for regulatory purposes) totaled $22.0 billion compared with $25.9 billion as of Dec 31, 2016. As of Dec 31, 2017, total assets amounted to $61.2 billion compared with $54.7 billion as of Dec 31, 2016. Total equity was $6.4 billion compared with $5.8 billion at the end of December 2016.
Our Take
Interactive Brokers is poised to capitalize on growth scopes backed by its market-leading position, technological advancement and optimization of resource allocation across global electronic networks. With completion of the sale of its U.S. options-market-making business, the company plans to focus on strengthening its Electronic Brokerage segment. These restructuring efforts will likely support its financials going forward.
Interactive Brokers Group, Inc. Price, Consensus and EPS Surprise
We now look forward to TD Ameritrade Holding Corporation (AMTD - Free Report) , E*TRADE Financial Corporation and LPL Financial Holdings Inc. (LPLA - Free Report) , which are slated to report results on Jan 22, Jan 25 and Feb 1, respectively.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Image: Bigstock
Interactive Brokers (IBKR) Beats on Q4 Earnings, Costs Fall
Interactive Brokers Group, Inc. (IBKR - Free Report) released its fourth-quarter and full-year 2017 results. Adjusted earnings for the quarter came in at 43 cents per share, surpassing the Zacks Consensus Estimate of 39 cents. Also, earnings came in higher than the prior-year quarters figure of 7 cents per share.
Results benefited from improvement in revenues, lower operating expenses and a rise in DARTs, while lower trading volumes were the undermining factor. Further, the Electronic Brokerage segment continued to perform decently.
For the quarter, the company reported comprehensive net loss of $2 million or 2 cents per share, compared with loss of $3 million or 5 cents per share in the prior-year quarter.
For 2017, the company reported adjusted earnings per share of $1.53, increasing from $1.25 registered in the prior year. However, the figure lagged the Zacks Consensus Estimate of $1.65 per share. Comprehensive net income for the year came in at $87 million, up from $80 million reported in 2016.
Quarterly as well as full-year earnings per share were negatively impacted by 45 cents and 46 cents, respectively, as a result of the Tax Act.
Revenues Improve, Expenses Decrease
Total net revenues for the quarter increased significantly year over year to $515 million. The rise was primarily driven by an increase in commission fees and interest income, partially offset by a decline in trading gains. The figure surpassed the Zacks Consensus Estimate of $399 million.
For 2017, total net revenues came in at $1.7 billion, up from $1.4 billion registered in the previous year. Also, the figure surpassed the Zacks Consensus Estimate of $1.6 billion.
Total non-interest expenses fell 8.5% from the year-ago quarter to $151 million. The decrease was primarily due to lower execution and clearing expense, and employee compensation and benefits costs.
Income before income taxes came in at $364 million in the quarter, surging from $28 million in the prior-year quarter. Similarly, pre-tax profit margin was 71% compared with 15% in the prior-year quarter.
Quarterly Segment Performance
Electronic Brokerage: Net revenues increased 32.7% year over year to $390 million. Pre-tax income rose 50% to $252 million. Total DARTs for cleared and execution-only customers were 730,000, up 14% from the year-ago quarter. Pre-tax profit margin improved to 65% from 57% in the prior-year quarter.
Market Making: Net revenues plunged 44.4% year over year to $25 million. Pre-tax income was $8 million, down 33.3% from the year-ago quarter. The decline was mainly due to lower trading gains, partly offset by lower operating costs, as the company completed the winding down of its U.S. options market making business. Pre-tax profit margin improved to 32% from 27% in the prior-year quarter.
Moreover, the Corporate segment reported net revenues of $100 million against negative revenues of $146 million in the year-ago quarter. Pre-tax income was $104 million compared with pre-tax loss of $152 million in the prior-year quarter.
Capital Position
As of Dec 31, 2017, cash and cash equivalents (including cash and securities set aside for regulatory purposes) totaled $22.0 billion compared with $25.9 billion as of Dec 31, 2016. As of Dec 31, 2017, total assets amounted to $61.2 billion compared with $54.7 billion as of Dec 31, 2016. Total equity was $6.4 billion compared with $5.8 billion at the end of December 2016.
Our Take
Interactive Brokers is poised to capitalize on growth scopes backed by its market-leading position, technological advancement and optimization of resource allocation across global electronic networks. With completion of the sale of its U.S. options-market-making business, the company plans to focus on strengthening its Electronic Brokerage segment. These restructuring efforts will likely support its financials going forward.
Interactive Brokers Group, Inc. Price, Consensus and EPS Surprise
Interactive Brokers Group, Inc. Price, Consensus and EPS Surprise | Interactive Brokers Group, Inc. Quote
Currently, Interactive Brokers sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Upcoming Releases of Other Investment Brokers
We now look forward to TD Ameritrade Holding Corporation (AMTD - Free Report) , E*TRADE Financial Corporation and LPL Financial Holdings Inc. (LPLA - Free Report) , which are slated to report results on Jan 22, Jan 25 and Feb 1, respectively.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>