What led to Interactive Brokers Group, Inc. (NASDAQ: IBKR) stock crash

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Interactive Brokers Group, Inc. (NASDAQ: IBKR) stock fell over 9.1% (as of 2:07 pm GMT-4 ; Source: Google finance) after the company’s net profit fell to $46 million in the first quarter of FY 20, compared to $49 million a year ago. The company had reported 4.7 percent decline in the adjusted revenue to $532 million in the first quarter of FY 20, missing the analysts’ estimates for revenue of $582.4 million. Despite markets had fallen by about 9% year-on-year, the company’s total client equity rose 9% to $161 billion, which is the second highest quarterly total in the history. Further, as the customer base grew, DARTs and DARTs per account also increased significantly as more clients traded actively during record-high market volatility.

Accounts grew by 22% over last year to 760,000, as the company added 70,000 net new accounts in the first quarter, which is approximately the same number of accounts adds in one quarter as the company added over the first three quarters of 2019. This implies a 40% annualized account growth rate. Account growth was experienced in all client segments and all geographic regions. There has been no change in the ability of China accounts to fund. Total DARTs reached over 1.4 million, which is up 71% from last year, while DARTs per account grew to more than 450, their highest level in about four years. And during the month of March, the DARTs exceeded two million.

Moreover, Individual customers that form about 52% of the accounts, 36% of the client equity and 51% of the commissions, were particularly solid in first quarter with 12-month account growth of 29%, client equity growth of 11% and 12% growth in commissions. Despite a background of 9% decline 9%-plus drops in most major markets, the increases in client equity and commissions indicate the strength of the growth in this segment. While all geographic regions the company saw double-digit account growth, particularly strong increases in Europe and Asia.

IBKR’s total net interest income grew by approximately 4.1% from a year earlier to $256 million. The analysts were expecting the net interest income to be of $272.1 million. The company’s total non-interest income fell about 12% to $276 million.

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