Interactive Brokers Group Posted Strong 1Q18 Results



Exceeding expectations

Interactive Brokers Group (IBKR) posted earnings per share (or EPS) of $0.63 in 1Q18, beating Wall Street expectations by $0.07. These results represent a substantial year-over-year (or YoY) rise over 1Q17 when the company reported EPS of $0.34. The company carries out its operations via two segments: Electronic Brokerage and Market Making.

On a YoY basis, Interactive Brokers Group saw positive momentum in its daily average revenue trades (or DARTs) in March 2018. The increase in DARTs was expected due to volatility in the equity markets, prompting market participants to execute trades. However, IBKR has witnessed declining momentum in client equity since the beginning of the year.

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Revenues in 1Q18

Interactive Brokers Group (IBKR) impressed market participants by exceeding Wall Street expectations for its 1Q18 revenues. The company posted revenues of $527.0 million, exceeding estimates by $49.5 million. Among the company’s competitors (XLF), Charles Schwab (SCHW) also exceeded Wall Street expectations for its 1Q18 revenues.

Because brokerages operate in a competitive environment, they adopt measures that could attract the attention of market participants. TD Ameritrade Holding Corporation (AMTD) developed a 24-hour trading platform that’s available to select customers and on specific ETFs. E*TRADE Financial Corporation (ETFC) has been working to streamline trading through its smartphone app.

Interactive Brokers Group’s 1Q18 earnings were supported by favorable momentum in its commissions and net interest income. Brokerage companies are positively impacted by the increased volatility in the equity markets, which could lead to a rise in trading activities. Brokers also experience upward trends in their results when the Federal Reserve increases interest rates.

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