Interactive Brokers Group, Inc. (NASDAQ: IBKR) stock fell over 1% on July 18th, 2018 (as of 10:10 AM GMT-4; Source: Google finance) after the company posted mixed results for the second quarter. The company ended the quarter with $134.7 billion. IBKR in the second quarter of FY 18 has reported the adjusted earnings per share of 39 cents, missing the analysts’ estimates for the adjusted earnings per share of 42 cents.
On the other hand, IBKR has also hit an all time high in customer accounts up 27% to over 542,000. Margin lending at over $28 billion outstanding was also up 27% from the year ago quarter although it did moderate somewhat sequential.
The company had reported the adjusted revenue growth of 35.9 percent to $445 million in the second quarter of FY 18, beating the analysts’ estimates for revenue of $409 million. The results for the second quarter were positively affected due to strong growth in net interest income, which increased $70 million, or 45%, and higher commissions, which increased $25 million, or 16% from the year-ago quarter.
Moreover, the pretax margin in the brokerage business reached 64% for the quarter. DARTs this quarter was 797,000, which grew 19% over last year though they were down from the very active first quarter as market volatility slowed from the high levels earlier this year.
Commissions per DART were $3.86 down slightly from last year. Commissions per DART will probably continue to decline slowly as the find out more and more introducing broker accounts where the brokers pay the company based on their customers combined volume and charge their customers the price the company would charge them as an individual account or possibly even more.
Further, for the second quarter hedge funds and proprietary trading firms were 4% of the accounts, 20% of our clients equity, and 26% of our commissions. Our hedge fund business alone saw 35% rise in customer equity as the low margin rates and high cash interest give more institutions reasons to move their assets to the company to improve their returns.
Additionally, IBKR has declared a quarterly cash dividend of $0.10 per share. This dividend will be payable on September 14, 2018 to shareholders of record as of August 31, 2018.
In addition, the company continued to roll out new products and services in the second quarter. IBKR has released the new integrated cash management which adds the variety of financial transactions. The company now offer the recently introduced Master Card, the new bill pay function, and will soon be introducing payroll direct deposits. This means the customers will have less and less reason to leave the platform to transact any of their financial business.