Interactive Brokers shares drop following mixed Q3 2024 results
Interactive Brokers shares drop following mixed Q3 2024 results
Interactive Brokers Group, Inc. released its third-quarter 2024 financial results, showing improved performance but falling short of Wall Street expectations.
The report, covering the quarter ending September 30, showed earnings per share (EPS) of $1.81 and an adjusted EPS of $1.75, up from $1.56 and $1.55 in the same quarter last year. However, analysts had expected EPS of $1.82 and revenue of $1.337 billion, leading to a 4% drop in Interactive Brokers’ stock during after-hours trading.
Interactive Brokers’ GAAP net revenue for the third quarter reached $1.365 billion, up from $1.145 billion in the previous quarter. Adjusted net revenue was $1.327 billion, but it still fell short of analyst forecasts. Operating income also rose, with pre-tax profit reaching $987 million and adjusted pre-tax profit at $949 million, compared to last year’s $840 million and $834 million, respectively.
The company’s commission revenue saw a substantial rise, increasing 31% to $435 million, driven by a 35% rise in options trading, a 22% increase in stock trading, and a 13% increase in futures trading. Net interest income grew 9% to $802 million due to higher customer margin loans and credit balances. Total equity reached $16.1 billion.
Non-interest expenses also rose, with execution, clearing, and distribution fees increasing 18% to $116 million, driven by higher SEC fees and customer trading volumes. General and administrative expenses surged by 67% to $75 million, mainly due to a one-time charge of $12 million from consolidating European subsidiaries and a $9 million increase tied to legal and regulatory matters. Despite increased expenses, Interactive Brokers maintained a pre-tax profit margin of 72%, just slightly below last year’s 73%.
The company also reported substantial growth in customer accounts, which increased by 28% to 3.12 million in the third quarter, with customer equity rising by 46% to $541.5 billion. Total Daily Average Revenue Trades (DARTs) increased 42% to 2.70 million. In light of these results, the Board of Directors declared a quarterly dividend of $0.25 per share, payable on December 13 to shareholders of record as of November 29, 2024.
Interactive Brokers noted that its currency diversification strategy had a positive impact on comprehensive earnings, amounting to $178 million, as the value of its GLOBALs basket of major currencies rose by 1.14%. This approach provided a hedge against U.S. dollar fluctuations, enhancing the firm’s international stability and profitability.
Despite strong year-to-date performance, with shares rising more than 68%, the earnings miss affected investor sentiment. The post-market drop highlights the market’s high expectations for Interactive Brokers, whose shares had been trading near historical highs.
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