Interactive Brokers' Revenue Grows 21% as Client Base Nears 4.2 Million
Interactive Brokers delivered solid third-quarter results powered by a sharp rebound in trading activity and rising interest income, signaling strong momentum among active investors despite market uncertainty.
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The brokerage reported gains across core business lines while keeping expenses under control, lifting profitability to its highest level in a year. The company posted GAAP net revenue of $1.66 billion, up from $1.37 billion in the same period last year, while adjusted net revenue reached $1.61 billion.
Diluted earnings per share came in at $0.59, compared to $0.42 a year earlier. Profit before taxes rose to $1.31 billion, reflecting a stable pre-tax margin of 79%.
Trading Volumes Boost Commission Revenue
According to the company, higher trading volumes in equity markets drove a strong rebound in commission revenue. Equity trading activity surged as market conditions attracted more speculative and short-term strategies.
Commission revenue increased 23% to $537 million. Stock trading volumes jumped 67%, while options activity rose 27%. Futures volume fell 7%, but the decline did not offset growth in other asset classes.
Interest-based income continued to play a central role in revenue growth. Interactive Brokers reported net interest income of $967 million, up 21% from a year ago, supported by higher customer margin loans and larger credit balances. Securities lending activity also remained strong during the quarter.
The firm maintained tight cost controls. General and administrative expenses dropped 59% to $62 million due to the absence of one-time legal and regulatory costs recorded last year.
Read more: Interactive Brokers Daily Average Revenue Trades Surge 47%, Client Equity Soars
The company also avoided expenses linked to the prior consolidation of its European units. However, advertising expenses increased by $10 million as Interactive Brokers continued to invest in customer acquisition. Execution and clearing fees declined 21% due to lower U.S. regulatory transaction fees and increased liquidity rebates from exchanges.
Client Growth Accelerates
Interactive Brokers continued to grow its customer base worldwide, with customer accounts rising 32% to 4.13 million. The firm also saw a sharp increase in customer equity, which climbed 40% to $757.5 billion. Customer margin loans were up 39% to $77.3 billion, and customer credit balances rose 33% to $154.8 billion.
Interactive Brokers has a long-standing strategy of diversifying equity across a basket of global currencies, known as its GLOBAL basket. Currency fluctuations, particularly a decline in the basket’s U.S. dollar value, reduced earnings by $33 million this quarter.
The company recorded a $4 million gain in Other Income tied to the strategy, partly offset by a $37 million loss in Other Comprehensive Income. Following the strong results, the board has declared a cash dividend of $0.08 per share.