J P M O R G A N Asia Pacific Equity Research 27 April 2025 Futu Holdings Our thoughts on Ant Group set to take control of a retail broker in HK Futu's share price fell 6.4% on Friday (vs. KWEB index -0.2%), following the news that Ant Group is acquiring 50.55% stake in Bright Smart Securities (耀才 證券), a retail broker in HK (link). For details about Bright Smart Securities and comparison with Futu, please refer to Table 1Comparisn betwBrigh Smartnd Fuand Table 2Sumary ofkeprating dforFut andBright Smarecuits ...

Core Insights - Sentinel Brokers Company, Inc. has received approval from FINRA to act as an underwriter and selling group member for corporate securities offerings, marking a significant regulatory milestone for the firm [1][2][3] - This approval enhances Sentinel's capabilities in capital markets, allowing participation in IPOs, follow-on offerings, and various corporate financing transactions, thereby positioning the company to better serve clients seeking capital [2][3] - The CEO of Sentinel highlighted that this advancement expands the firm's scope beyond fixed income and equity market making, enabling more effective support for corporate issuers and institutional clients throughout the capital formation process [3] Company Overview - Established in 1996, Sentinel has built a reputation for excellence in institutional fixed income trading and has recently expanded its offerings to include equity market-making [3][6] - As a subsidiary of DSS, Inc., Sentinel benefits from the strategic support and operational scale of a diversified multinational company operating across various business divisions [4][7] - The company specializes in institutional bond brokerage, equity market making, IPOs, follow-on offerings, and other corporate financing transactions, emphasizing a client-focused service approach [6]

Investors can contact the law firm at no cost to learn more about recovering their losses LOS ANGELES, April 22, 2025 (GLOBE NEWSWIRE) -- The Portnoy Law Firm advises Robinhood Markets, Inc. ("Robinhood" or "the Company") (Nasdaq: HOOD) investors that the firm has initiated an investigation into possible securities fraud and may file a class action on behalf of investors. Robinhood investors that lost money on their investment are encouraged to contact Lesley Portnoy, Esq. Investors are encouraged to contac ...

Core Insights - The Charles Schwab Corporation reported better-than-expected earnings for its first fiscal quarter, achieving over $2.0 billion in quarterly profits [1] Financial Performance - The company recorded record revenues amid strong activity in the stock market for both retail and institutional investors [1]

Core Viewpoint - Interactive Brokers Group, Inc. reported a quarterly earnings miss primarily due to a decline in net interest income, which was affected by weaker securities lending revenue [1][2]. Financial Performance - The company reported quarterly earnings of $1.88 per share, missing the analyst consensus estimate of $1.92 [1]. - Net interest income increased by 3% to $770 million, driven by higher average customer margin loans and customer credit balances [2]. Adjustments and Dividends - Non-GAAP results excluded a $5 million loss from the currency diversification strategy and a $3 million mark-to-market adjustment on investments [3]. - The quarterly dividend was raised from 25 cents to 32 cents, and a 4-for-1 forward stock split was declared, effective June 16, 2025 [3]. Analyst Ratings and Price Forecasts - Keefe, Bruyette & Woods analyst Kyle Voigt maintained a Market Perform rating with a price forecast of $181 [1]. - BofA Securities analyst Craig Siegenthaler maintained a Buy rating but lowered the price forecast from $265 to $243 [4]. - IBKR stock has gained over 45% in the past year [4]. Stock Performance - As of the latest check, IBKR shares were trading lower by 9.94% at $156.19 [5].

Core Viewpoint - Interactive Brokers Group (IBKR) experienced a 9.9% decline in after-market hours due to lower-than-expected quarterly results, with adjusted earnings per share of $1.88 falling short of the Zacks Consensus Estimate of $1.92, despite a 14.6% increase from the prior-year quarter [1][2] Financial Performance - The first-quarter 2025 total GAAP net revenues reached $1.43 billion, marking an 18.6% year-over-year increase, while adjusted net revenues were $1.4 billion, up 14.8% [4] - Net income available to common shareholders on a GAAP basis was $213 million or $1.94 per share, an increase from $175 million or $1.61 in the prior-year quarter [2] - Comprehensive income available to common shareholders was $241 million or $2.19 per share, compared to $149 million or $1.37 in the prior-year quarter [3] Expense Analysis - Total non-interest expenses rose by 10.4% year over year to $372 million, driven by execution, clearing and distribution fees, employee compensation, and general administrative expenses [5] - Income before income taxes increased by 21.8% to $1.06 billion, with an adjusted pre-tax profit margin of 73%, up from 72% a year ago [5] Customer Metrics - Daily average revenue trades (DARTs) surged by 49.7% year over year to 3.52 million, exceeding the estimate of 3.44 million [6] - Customer accounts grew by 31.7% from the previous year to 3,616,000, although below the prediction of 3,836,000 [6] Capital Position - As of March 31, 2025, cash and cash equivalents totaled $72.1 billion, up from $68.1 billion as of December 31, 2024 [7] - Total assets increased to $157.7 billion from $150.1 billion, and total equity rose to $17.5 billion from $16.6 billion [7] Corporate Actions - IBKR declared a quarterly cash dividend of 32 cents per share, a 28% increase from the previous payout, to be paid on June 13 to shareholders of record as of May 30 [8] - The company announced a four-for-one forward stock split, with additional shares distributed after market close on June 17, 2025, and trading expected to commence on a split-adjusted basis on June 18, 2025 [9] Future Outlook - The company is expected to benefit from proprietary software development and an increase in emerging market customers, with higher interest rates likely aiding revenue growth in the near term [11]

Core Insights - Interactive Brokers (NASDAQ: IBKR) reported a mixed Q1 performance with revenue reaching $1.43 billion, slightly exceeding analyst estimates by 1.42% [1] - The adjusted EPS for the quarter was $1.88, which fell short of street expectations by 2.66% [1] - Following the earnings report, the stock experienced a decline of approximately 3% in post-market trading [1]

Core Viewpoint - Interactive Brokers Group reported solid revenue growth in Q1 2025, although earnings per share slightly missed market expectations, indicating strong operational performance despite challenges [1][2]. Financial Performance - Earnings per share (EPS) for Q1 2025 was $1.88, below the forecast of $1.92, but an increase from $1.64 in the previous year, reflecting a year-over-year growth of 14.6% [2][3]. - Non-GAAP revenue grew by 14.8% year-over-year to $1,396 million, although it fell short of the expected $1,408 million [2][3]. - Net income (GAAP) reached $964 million, up 21.3% from $795 million in Q1 2024 [3]. - The pretax profit margin (Non-GAAP) improved to 73%, up from 72% in Q1 2024 [3]. Business Overview - Interactive Brokers Group is a global electronic brokerage firm that provides trading and investment services across various asset classes, leveraging proprietary technology for efficiency [4]. - The firm offers access to over 160 electronic exchanges and markets in 36 countries, catering to a worldwide clientele [4]. Operational Highlights - Trading volumes increased significantly in Q1 2025, with customer activity rising across stocks (47%), options (25%), and futures (16%) [6]. - Commission revenue surged by 36% to $514 million, driven by increased customer trading volumes [6]. - The number of customer accounts grew by 32% to 3.62 million, indicating robust client acquisition [6]. - Customer equity rose by 23% to $573.5 billion, reflecting investor confidence [6]. Strategic Initiatives - The company has focused on expanding its technology and enhancing client trading experiences, maintaining low-cost structures and competitive pricing [5]. - A four-for-one stock split is planned to increase stock liquidity starting June 18 [8]. - The company is set to launch cryptocurrency trading services for European Union customers, indicating a strategic expansion into new markets [9]. Future Outlook - The company's outlook remains positive, supported by proprietary innovations and expanding product diversity [11][12]. - Management's focus on maintaining a low-cost structure and high operational efficiency is expected to sustain its competitive advantage [11].

Financial Data and Key Metrics Changes - The company reported record net revenues and pre-tax income, with commissions rising 36% year-on-year, reaching over $500 million for the first time [28][12] - Net interest income increased by 3% year-on-year to $770 million, driven by higher balances, partially offset by lower benchmark interest rates [29][38] - Client credit balances rose 19% to a record $125.2 billion, while client equity increased by 23% to $573.5 billion [12][35] - The adjusted pre-tax profit margin was 74%, marking the eighth time it reached 70% or more [13][34] Business Line Data and Key Metrics Changes - Options contract volumes increased by 25%, futures volumes rose by 16%, and stock share volumes surged by 47% [10][28] - The company added 279,000 new accounts in Q1 2025, a record surpassing previous highs [12][11] - The average commission per cleared commissionable order decreased to $2.76 due to smaller average order sizes and higher rebates [37] Market Data and Key Metrics Changes - The S&P 500 ended the quarter down 5%, with a notable decline of 9% from its February peak [8] - Despite market declines, customer trading activity remained robust, with 22 out of the 25 most active names seeing net buying activity [9][10] Company Strategy and Development Direction - The company plans to continue automating its brokerage business and expanding its product offerings while minimizing costs [25][49] - A stock split of four-for-one was announced to enhance liquidity and affordability for shareholders [14] - The company is actively looking for M&A opportunities but has faced challenges in finding suitable targets at reasonable prices [15][16] Management's Comments on Operating Environment and Future Outlook - Management noted that the long-term trend towards global investing remains strong, despite short-term market fluctuations [25] - The company is well-positioned to handle market volatility, allowing clients to trade across various asset classes seamlessly [66] - There is ongoing confidence in the appetite for US investments from non-US clients, despite recent tariff discussions [58][59] Other Important Information - The company introduced several new products, including additional cryptocurrencies and trading options, to enhance its offerings [20][81] - The SEC's reduction of its fee rate to zero is expected to benefit execution and clearing costs in upcoming quarters [31] Q&A Session Summary Question: Impact of retail pressure on equity market levels - Management observed significant trading volumes during market fluctuations, with a slight decrease in margin loans by 10-12% as clients adjusted their risk posture [55] Question: Appetite for US stocks amid tariff news - There has been no noticeable decrease in non-US clients' appetite for US markets, with continued account openings and trading activity [58][59] Question: Client activity tracking in April - There was a 12% drop in margin loans, but overall trading activity returned to normal levels [71] Question: Expansion of crypto offerings - The decision to expand the crypto offering was driven by regulatory changes and increased appetite for the crypto space, although growth has not met expectations [78][81] Question: Changes in risk exposure fees - Risk exposure fees fluctuate more than margin balances, reflecting clients' quick adjustments to market conditions [121]

Core Viewpoint - Interactive Brokers Group (IBKR) is expected to report strong first-quarter 2025 results, driven by market volatility and increased client activity, with revenue estimates suggesting a 17.6% year-over-year growth [4][5]. Financial Performance - IBKR's fourth-quarter 2024 earnings exceeded the Zacks Consensus Estimate, supported by higher total GAAP net revenues, growth in customer accounts, and an increase in daily average revenue trades (DARTs), although rising expenses posed a challenge [3]. - The consensus estimate for first-quarter revenues is $1.41 billion, indicating a 17.6% increase year-over-year, while earnings are estimated at $1.91, reflecting a 16.5% rise from the previous year [4][5]. - Commission revenues are projected at $502 million, a 32.5% increase from the prior year, while net interest income (NII) is expected to be $813 million, an 8.8% rise [9][10]. Cost and Expense Management - Total operating expenses are anticipated to be elevated, with non-interest expenses expected to reach $409.5 million, marking a 21.5% year-over-year increase [12]. Market Position and Valuation - IBKR's shares are currently trading at a price-to-tangible book (P/TB) ratio of 1.13X, significantly lower than the industry average of 2.46X, indicating a potential buying opportunity [18][21]. - The company has a strong earnings surprise history, having outperformed the Zacks Consensus Estimate in three of the last four quarters, with an average surprise of 3.05% [7][9]. Growth Strategy and Innovations - IBKR is expanding its global presence through new product offerings, including Forecast Contracts in Canada and enhanced investment accounts in the U.K. and France [22]. - The company has introduced innovative trading options, such as Overnight Trading and commission-free trading through IBKR Lite, alongside cryptocurrency trading with lower commissions [23]. - Technological advancements and proprietary software development are expected to drive revenue growth, with a compound annual growth rate (CAGR) of 21.8% in net revenues over the past five years [25]. Analyst Sentiment - Positive analyst sentiment suggests that IBKR is well-positioned for growth in a volatile market, with its diversified product offerings and strong technological capabilities enhancing its global reach [27][28].