Interactive Brokers reports stable metrics for monthly revenue
Despite a host of trading incentives that Interactive Brokers LLC (NASDAQ:IBKR) has introduced over the past few years, including commission-free trading and fractional shares, monthly volumes are struggling to hold their own.
In October 2022, the number of DARTs was reported at 1.965 million transactions, virtually unchanged from September. On a yearly basis, Interactive Brokers saw a notable decline in its DARTs, with the October figure down 15% from the 2.03 million reported in October 2021.
In terms of equity balance in customer accounts in October 2022, the figure totaled $297 billion, down 22% on a year-on-year basis. Interactive Brokers managed to beat its September equivalent, after posting a 3% increase from the previous month.
Elsewhere, discount brokerage gained more than 27,000 new accounts as market volatility revived interest from retail investors. October’s active accounts rose to 2.04 million, up 1% from September and 29% up from the previous year’s figure of 1.49 million accounts.
The Greenwich, Connecticut-based company also revealed that it charges customers an average commission fee of $3.09 per order. This figure includes foreign exchange, clearing and regulatory fees, the main revenue indicators amounting to $2.07 for stocks, $4.56 for stock options and $3.66 for futures orders .
Interactive Brokers reported third-quarter results last month that beat analysts’ expectations as the longtime leader in low-cost trading advanced in a few key areas, helped by choppy markets and rising rates.
Ranked as the largest U.S. e-broker by some metrics, Interactive Brokers’ third-quarter adjusted revenue increased 30% year-over-year to $847 million from $650 million in the third quarter of 2021.
On an adjusted basis, pre-tax profit totaled $580 million, up 38% year-over-year from $420 million a year earlier. Diluted earnings per share were $1.08 for this quarter, compared to $0.78 in Q3 2021.
Despite headwinds from a push to fee-free trading, Interactive Brokers’ commission revenue rose 3% from the year-ago quarter to $320 million. The growth was attributed to client futures trading volume and higher options commission per contract. However, the figure was partly tempered by lower inventory volumes.
The upbeat results for the quarter were also driven by strong interest income, which jumped to $473 million, or 73% on an annual basis. This was due to a decline in higher benchmark interest rates and customer credit balances, partially offset by a decline in margin loan balances.