TD Ameritrade Records Strong Momentum in Q2FY18 Results

Tim Hockey,  President and CEO at TD Ameritrade
Tim Hockey,  President and CEO at TD Ameritrade

TD Ameritrade (Nasdaq: AMTD), the brokerage firm based in Omaha, Nebraska on Monday reported its second-quarter earnings results for fiscal 2018. Aided strong market moves and heightened volatility in the first quarter of 2018, the brokerage house reported record rise in trading volumes and client’s asset in the quarter.

During the quarter, the company witnessed an average 943,000 client trades per day ( up by 82% year-over-year) and gathered $22.2 billion of net new client assets and $1.2 trillion in net clients assets. The company in its press release termed the growth is driven mainly due to the resurgence of volatility in the equity markets, that helped increased investor engagement and trading.

The company registered a record revenue of $1.4 billion during the quarter, which is 12 percent higher quarter-on-quarter and 56 percent higher year-on-year. Out of the total revenue, 59 percent were asset-based. The pre-tax GAAP income during the quarter is $372 million (26% of the total revenue), which is 18 percent higher compared to previous quarter and 8 percent compared to a year ago.

The EPS for the company arrived at 73 cents which is 66 percent higher compared to a year ago but it missed the analysts’ expectation of a jump of over 80 percent. The company recorded a sharp increase in Commissions and transaction fees at $556 million, 52 percent higher compared to a year ago.

Tim Hockey,  President and CEO at TD Ameritrade said:

“Early results of our dual strategy to successfully integrate Scottrade while continuing to accelerate and diversify revenue growth in our core business have exceeded our expectations.”

“With the Scottrade client conversion now successfully behind us, we are turning our focus to increasing our momentum and profitably growing our business. Further enhancing the client experience, investing in innovation and employee development, and increasing our competitive edge will be our priorities as we work through the balance of the fiscal year.”

Steve Boyle, Executive VP and CFO
Steve Boyle, Executive VP and CFO

Steve Boyle, Executive VP and CFO said:

“In our second quarter, market volatility returned in full force as the implications of tax reform became clearer, interest rates continued to rise, and tariff talks surprised the markets. These events drove record revenue in the quarter and more than offset some volatility-related losses. Scottrade expense synergies remain on track, and we expect total operating expenses to decline significantly over the remainder of the fiscal year. Leading with technology remains a key focus that necessitates continued investment in order to enhance our offerings and drive efficient growth in the future.”

The company declared a cash dividend of 21 cents per share. Post the announcement of results, the company share prices slipped over 2 percent in aftermarket hours as it missed the earnings estimates.