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How Interactive Brokers’ April Numbers Could Affect Its Q2

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May. 30 2018, Published 2:31 p.m. ET

Daily average revenue trades

In the first quarter, trade tensions and interest rate hike expectations made equity markets volatile, resulting in brokerages’ (VFH) customers trading more and boosting brokerages’ revenue. DARTs (daily average revenue trades) are often used to assess brokerages’ performance. The higher the DARTs, the higher brokerages’ trading revenue. However, brokerages’ performance can be impacted by financial downturns, as they limit trading.

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IBKR’s April numbers

At the end of April, Interactive Brokers’ DARTs stood at 812,000. Whereas that figure marked a substantial 26% increase YoY (year-over-year), it marked a 10% decline month-over-month, which was primarily due to reduced market volatility. In April, equity markets were helped by a strong earnings season, which reduced volatility. Sequentially, Interactive Brokers’ commission revenue is expected to fall in the second quarter because of lower DARTs.

Interactive Brokers ended April with $130.4 billion in client equity, marking a 31% rise YoY. It had client credit balances and margin loan balances of $46.3 billion and $29.7 billion, respectively. While Interactive Brokers’ beta is 1.1, brokerage peers (VFH) E*TRADE Financial (ETFC), TD Ameritrade (AMTD), and Charles Schwab (SCHW) have betas of 1.2, 1.4, and 1.7, respectively.

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