Interactive Brokers Group, Inc. Earnings: What to Watch

A meaningful jump in customer accounts looks poised to help its brokerage business continue to grow at rapid rates.

Daniel Sparks
Daniel Sparks
Oct 13, 2015 at 6:52PM

After a great year so far, with shares up about 31% year to date, Interactive Brokers (NYSEMKT:IBKR) is expected to continue serve up solid business results for investors when it reports its third-quarter earnings next week.

Image source: Interactive Brokers.

Analysts, on average, expect Interactive Brokers to report revenue and EPS of $367 million and $0.32 per share for Q3, respectively. This compares with revenue and EPS of $387 million and $0.44 in Q2 and $171 million and a $0.13 loss in the year-ago quarter, respectively.

Expectations for year-over-year growth in revenue and EPS reflect the company's excellent execution on a strategy emphasizing customer profitability and marketing.

What to watch
Beyond Interactive Brokers' revenue and EPS, here are other key items to watch for when the company reports third-quarter results.

Customer account growth
Since Interactive Brokers reports monthly brokerage metrics, some information is available ahead of the report. One area the company is doing particularly well is its growth in customer accounts.

During September, Interactive Brokers customer accounts reached 322,000, representing 18% year-over-year growth and 1% growth compared to the prior month.

Investors should look for management to discuss how they feel about the company's recent growth and whether or not it is representative growth expectations for the coming quarters.

Earnings excluding other comprehensive income
Interactive Brokers also reports its earnings excluding "other comprehensive income," or OCI, every quarter. Interactive Brokers' OCI is primarily represented by the effects of the company's currency diversification strategy. By reporting its net income excluding the impacts of OCI, investors can get a better look at Interactive Brokers' core brokerage business.

During Q2, Interactive Brokers EPS excluding OCI was $0.37, up significantly from $0.26 in the year-ago quarter.

Customer profits
One of the key metrics Interactive Brokers CEO Thomas Peterffy likes to keep an eye on is customer profits. Look for an update during the third-quarter earnings call from management on how the company is emphasizing strategies that will maximize customer profits over the long haul.

During Q2, Interactive Brokers' customer equity reached $66 billion, up 22% from the year-ago quarter. The company attributed the rise in customer equity to an inflow of new accounts and customer assets, and "to some extent customer profit."

Interactive Brokers will announce its third-quarter financial results on Tuesday, Oct. 20, at approximately 4 p.m. ET. Investors can tune in to its live conference call, where management will discuss the quarter's results at 4:30 p.m. ET. Both the release and a link to the conference call will be available at the company's investor-relations website.