Interactive Brokers revenue drops 27pct in first quarter

abdelaziz Fathi

Interactive Brokers today reported first-quarter earnings that came below analysts’ expectations as the longtime leader in low-cost trading made a reversal in a couple of key areas, and its headline earnings missed estimates.

Ranked as the largest US electronic broker by some measures, Interactive Brokers’ first-quarter adjusted revenues dropped 27 percent year-over-year, to $645 million compared to $893 million in Q1 2021.

On an adjusted basis, income before tax totaled $441 million, down 19 percent year-over-year from $542 million in the previous year. Diluted earnings per share came in at $0.82 for this quarter compared to $0.98 in Q1 2021.

Amid headwinds from a push to no-fee trading and historically low interest, Interactive Brokers’ commission revenue decreased 15 percent from the year-ago quarter to $349 million. The downbeat figure was attributed to lower stock volume that dropped from an unusually active trading period last year. However, the figure was offset partially by higher customer options and futures trading volumes.

The results for the quarter were also driven by weak growth in interest revenue, which dropped to $282 million, or 8 percent on a yearly basis. This was due to a decline in securities lending activity, partially aided by gains on margin lending and segregated cash balances.

Interactive Brokers reports fewer monthly trades

Aside from its core electronic-brokerage business, the IB earnings for the first quarter included a mark-to-market loss of $99 million from its 7.7 percent stake in Tiger Brokers.

Under the other income section, Interactive Brokers also booked a $16 million loss related to currency diversification strategy, and $29 million related to its U.S. government securities portfolio.

Interactive Brokers holds its cash reserves in different currencies to reflect its global operations, which include significant overseas segments.

In terms of its operational metrics, Interactive Brokers said the number of fee-generating trades hit 2.45 million. That was 18 percent lower than the number of daily average revenue trades, or DARTS, reported in the same month a year ago. Additionally, the US-listed brokerage saw its DARTs drop from the 2.49 million transactions in the prior month.

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