Interactive Brokers Group (NASDAQ GS: IBKR) an automated global electronic market maker and broker, today reported pro forma diluted earnings per share of $0.28 for the quarter ended June 30, 2007, compared to $0.24 for the same period in 2006.
On a non-GAAP basis, operating earnings per share, which exclude non-recurring items, amounted to $0.33.
Net revenues were $294.7 million and income before income taxes was $164.5 million for the quarter, compared to net revenues of $290.8 million and income before income taxes of $164.4 million for the same period in 2006.
- 55.8% pre-tax GAAP margin, 60.6% operating pre-tax margin.
- Pro forma diluted earnings per share increased 16.7% year over year, while operating earnings increased 37.5%.
- Electronic Brokerage income before income taxes increased 51.9% year over year and 29.1% sequentially.
- Electronic Brokerage total DARTs (Daily Average Revenue Trades) were 236,000 and cleared DARTS were 189,000.
- Market Making GAAP income before income taxes decreased 13.4% year over year. while operating income increased 13.4%.
- Market Making options contract volume decreased 5% year over year.
"The quarter was marked by a stunning, 51% earnings increase in our Electronic Brokerage, which presently accounts for about a quarter of our business," said Thomas Peterffy, Chairman and CEO. "This rate of growth validates our business model of delivering a technologically ever more sophisticated trading and investment management platform at very low cost to a growing number of financial professionals around the world*. Our Market Making results grew soundly on a non-GAAP basis. GAAP earnings were negatively affected by an unusual event in Europe, but considering our sale of the related legal claim, the event had zero economic impact on the Company."
* For a list of features included in our latest update to our brokerage platform please see the Web site.
Electronic Brokerage segment income before income taxes increased 51.9% in the quarter ended June 30, 2007 compared with the same period in 2006 and 29.1% sequentially, reflecting higher revenues from commission and execution fees and growth in net interest income. In the past quarter, we discontinued servicing certain non-cleared institutional customers who received Payment For Order Flow. This impacted our overall volumes unfavorably, but had a positive impact on earnings. Total DARTs for cleared and execution-only customers increased 13.7% to 236,000 during the three months ended June 30, 2007, compared to 207,000 during the three months ended June 30, 2006. Cleared DARTS increased by 12.9% to 189,000.
Market Making segment GAAP income before income taxes, which excludes a gain from the sale of a legal claim, decreased 13.4% in the quarter ended June 30, 2007 compared with the same period in 2006. Taking into account the sale of the legal claim, which offset a non-recurring loss of $37 million, and removing the impact of a non-recurring $11 million tax recovery, operating income before income taxes grew by 13.4%. Market Making options contract volume in the quarter ended June 30, 2007 decreased by 5% from the same period in 2006, as we decreased our quote sizes in many options in order to reduce our exposure to front running of corporate announcements.
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