Interactive Brokers reports adjusted earnings of $1.35 per share in Q1 2023

Interactive Brokers Group reported adjusted earnings of $1.35 per share in its first quarter 2023 financial results. However, these results failed to meet the consensus market estimate by around $0.06. The company’s shares have dropped by 3.23% pre-market.

Interactive Brokers publishes Q1 2023 results

The figure reported by the company increased from $1.30 per share reported during the previous quarter. It was also a notable increase from the $0.82 reported during the first quarter of last year.

The diluted earnings per share reported by the company also came in at $1.42, significantly higher than the $0.74 reported in the first quarter of 2022. The figure also increased from the $1.31 per share reported in the last quarter of 2022.

The 3.57% shortfall in the earnings reported by Interactive Brokers has shaken investors’ confidence because of the market expectations. The company’s shares ended trading on Tuesday with a 1.13% increase. However, the shares are down by 3.23% in pre-market trading amid the earnings report’s release.

However, Interactive Brokers’ shares have turned positive. The shares have gained over 15% this year compared to the 8.1% gain for the S&P 500 index. The volatility in the company’s shares also comes despite positive revenue numbers.

The US-based brokerage company reported net revenues of over $1.05 billion in Q1 2023, with the adjusted figure being $1.01 billion. The figures were also a notable increase from the performances recorded during the previous quarters. The company’s revenues met the market expectations.

In Q4 2022, the broker reported revenues of $976 million, with the adjusted figure being $958 million. During the first quarter of 2022, the reported revenues were $645 million, while the adjusted figure was $692 million.

The brokerage company also reported $761 million in pre-tax income, with the adjusted figure reaching $720 million. The pre-tax profit margin also increased to 72% in the reported figure and 71% in the adjusted figure.

Interactive Brokers generates the majority of its income from commission. The commission-based income was up by 2% to $357 million, while the net interest income was up by 126% to $637 million on high benchmark interest rates and customer credit balances. The company also generated gains of $19 million from its other sources of income.

Increase in customer numbers

Interactive Brokers reported an increase of 5.2% in customer accounts quarterly. The number of customer accounts reached 2.20 million, a 21% annual increase.

However, the total DARTs were down by 19% year-over-year to 2.05 million. The cleared DARTs also dropped by 17% to 1.85 million. On the other hand, customer credits were up by 4% to 96.6 billion, while the customer margin loans declined by 18% to $39.4 billion.

The brokerage company further reported an improvement in services. The company recently increased deposits and withdrawals through the fintech platform known as Wise. The company’s Australian division faced regulatory challenges in March because of its stock lending products.