Interactive Brokers (IBKR, Financial) released its third-quarter financial results, showcasing impressive growth in revenue but missing earnings expectations. The online brokerage's revenue surged 19% year-over-year to $1.365 billion, surpassing market forecasts of $1.337 billion. However, earnings per share came in at $1.75, falling short of the projected $1.82, despite a 13% increase from the previous year.
The surge in revenue was largely driven by a 31% increase in commission income, attributed to higher client trading volumes. Net interest income also saw an 8% rise, while customer accounts soared by 28%. Additionally, Daily Average Revenue Trades (DARTs) experienced a remarkable 42% jump. On the downside, general and administrative expenses increased by 67%, partly due to a one-time cost of $12 million related to the merger of European subsidiaries and an additional $9 million in legal and regulatory expenses.
According to FactSet data, analysts forecast a 21% growth in Interactive Brokers' earnings per share for the full year, a decline from the 42% growth in 2023, with a potential 2% decrease predicted for 2025. The brokerage remains a favorite among institutional traders, benefiting from a strong U.S. stock market. Interactive Brokers noted significant monthly increases in customer accounts and DARTs during the third quarter. The company also introduced new products, such as the 2024 U.S. election prediction contracts, allowing investors to hedge against political volatility and position themselves for key political and economic outcomes. Interactive Brokers facilitates trading in stocks, options, futures, and more.
Before the release of its third-quarter report, Interactive Brokers' stock surged nearly 10% in the first half of October, leading to an impressive 84.4% gain for 2024. However, following the earnings announcement, its stock price fell 4.07%, closing at $146.75.
