TD Ameritrade Reports Strong Q3- FY2018 Earnings, Revenue up by 33.5% Y-o-Y

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

TD Ameritrade Holdings, the parent company of Omaha-based brokerage firm TD Ameritrade on Monday has announced unaudited results for the third quarter of 2018 fiscal year. The company has beaten all analysts expectation by a huge margin, with a revenue growth of 33.5 per cent to $1.38 billion compared to $931 million but is marginally lower from $1.42 billion in the second quarter. 

Operating income during the quarter came in at $631 million, up from $396 million in the second quarter of the fiscal and on the yearly interval, the growth is 37 per cent. Net income witnessed similar growth to $451 million, up by 40 per cent in the second quarter which reported a figure of $271 million and on yearly basis, the growth was up by 49 per cent from $231 million.

During the quarter, the average clients’ trades per day surged 54 per cent to 784,000 from 510,358. Commission and transaction fee revenue jumped 46 per cent from a year ago to $490 million but is 12 per cent lower compared to the previous quarter. Net new client assets were down 10 per cent annually to $20 billion and total client assets has grown by over 39 per cent to $1.2 trillion. Revenue from bank account deposits fees rose 35 per cent YoY, net interest income soared by up to 90 per cent to $332 million and investment product fees has risen 25 per cent to $140 million. 

The strong result was attributed to the huge reduction in company’s operating expenses. In the third quarter of FY 2018, operating expenses were recorded at $751 million, down by 35 per cent from the second quarter ending 31st March 2018, but on yearly basis, the expenses are still high by up to 28 per cent from $537 million. 

Tim Hockey, TD Ameritrade President and CEO said:

“Thanks to outstanding operational and business performance, we delivered strong profitability in the quarter. We’re on a mission to leverage our size, scale and know-how to make investing simpler and more personal than ever before… TD Ameritrade is leveraging technology and people to break down barriers, bringing greater ease and accessibility to investing. It’s about what we offer, and how we offer it.”

Steve Boyle, TD Ameritrade Executive VP and CFO
Steve Boyle, Executive VP and CFO

The Executive VP and CFO, Steve Boyle, also added:

“It was an excellent quarter as substantial expense reductions drove record net income and EPS. Investor engagement was robust, with strong client net buying. At the same time, we’re clearly seeing the expected benefits of our Scottrade acquisition. In fact, we achieved many cost savings sooner than expected, with approximately $212 million in synergies realized through June. The strength of these results more than offset a slight decline in trading revenue compared to the prior record quarter.”