Bullish Investor Sentiment Lifts Interactive Brokers Earnings
reported a slightly better-than-expected bottom line Tuesday, as adjusted earnings per share of $1.64 beat analysts’ estimates by a penny.
First-quarter net revenue came in at $1.203 billion, a smidgen shy of the $1.204 billion that analysts expected, according to Factset. The revenue figure was a record for the company, however, and was up significantly from $1.056 billion in the year-earlier quarter.
Interactive Brokers said it benefited from its highest number of new account openings in three years and increased trading by its customers. Based in Greenwich, Conn., the company operates an online brokerage popular with do-it-yourself investors and traders, and also serves as a custodian for independent financial advisors.
Shares slipped 0.6% to $106.75 in after-hours trading.
Interactive Brokers also said its board of directors had increased the company’s dividend to 25 cents per share from 10 cents. The dividend is payable on June 14.
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The company said customers opened 184,000 new accounts. That’s the highest number since the first quarter of 2021, when some investors were diving headlong into meme stocks.
CEO Milan Galik, who has served as chief executive since 2019, said that while the company is seeing higher retail investor engagement, it is not approaching levels of the meme stock mania.
“We have seen an increase in activity,” he said Tuesday. “Will we see the same volume we saw during the beginning of the pandemic? Probably not. That was a different world. Everyone was stuck at home and there wasn’t much to do other than watch
and start trading.”
Still, the positive turn in investor sentiment boosted not only Interactive Brokers’ earnings, but also those of other wealth management companies and brokerage firms. This week
and
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each said they hit records for client assets during the first quarter.
Some clients may have been drawn to Interactive Brokers because it pays a high rate on cash, currently 4.83%. But investors also appeared to be investing their cash in markets. The company reported that total customer daily average revenue trades, or DARTs, rose 14% year over year to 2.35 million.
Interactive Brokers said net interest income increased 17% to $747 million on higher benchmark interest rates, customer margin loans, and customer credit balances.
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Total non-interest expenses rose to $337 million from $295 million for the same period a year ago because of higher employee compensation and administrative costs, according to the company.
Galik said the company is striving to be disciplined on expenses even as the number of accounts increases. “We are trying to reduce the number of phone calls our customer service receives… by making sure that our customers can find the help they need through our self-service platform,” he said. “But this is a process that will continue and it will be one we will always be working on.”
Write to Andrew Welsch at andrew.welsch@barrons.com
