Story Stocks^®

Interactive Brokers is trading roughly flat following a modest Q3 EPS beat. Revenue rose a healthy 21.2% yr/yr to a record $1.66 bln, topping expectations and marking its strongest growth since Q4 of last year.

• Commissions climbed to a record $537 mln, up 23% yr/yr, fueled by higher trading volumes from IBKR's expanding base of active customers. Volumes outpaced industry averages across major asset classes.
• Options volume surged 27% yr/yr to a new quarterly high, while equity volumes jumped 67% yr/yr as global participation in markets increased.
• Net interest income hit a record $967 mln, aided by higher segregated cash and margin loan balances, and a sharp rise in securities lending, despite lower benchmark rates in most major currencies.
• Crypto trading volumes rose 87% qtr/qtr and were more than 5x yr/yr. IBKR introduced recurring buy orders for crypto and added Solana to its Hong Kong crypto platform.
• Macro: The firm highlighted a more favorable macro backdrop in Q3, with the Fed's first rate cut since late last year, contributing to positive sentiment. Investors remained active during both market dips and rallies.
• Analysts took interest in ForecastEx, IBKR's prediction market platform. It now features 8,200+ open forecast contracts, up 27% qtr/qtr, and contract volumes traded surged 165% sequentially.
• When asked about launching sports betting contracts, IBKR downplayed the possibility, stating it's awaiting legal clarity and is not currently considering entry into sports betting. The firm is focused on growing broker partnerships and driving customer participation on ForecastEx.

Briefing.com Analyst Insight:

This was a solid quarter for Interactive Brokers, with record revenue, commissions, and interest income underscoring the platform's growing appeal to active traders globally. The strength in options, equities, and crypto volumes speaks to a broadening customer base and high engagement, even as market conditions fluctuate. However, the flat stock reaction suggests investors may have been looking for a bigger beat or more headline excitement. The cautious stance on sports betting likely disappointed some speculative bulls. Still, with strong core fundamentals, IBKR remains a compelling name in the brokerage space, even if the ForecastEx platform remains more of a long-term wild card than a near-term catalyst.