Interactive Brokers Earnings: Strong Net Interest Income, but Flat Commissions and Legal Expenses

Interactive Brokers reported fair second-quarter results. The company reported net income to common shareholders of $125 million, or $1.20 per diluted share, on $1 billion of net revenue, which increased 52% from the previous year while decreasing 2% sequentially. The increase in revenue from the previous year was primarily due to a doubling of net interest income to $694 million. Interactive Brokers' low-duration strategy (of 40 days in its investment portfolio) benefits from the high-rate environment and has offset flat commission revenue when compared with the year-ago period. We don’t anticipate making a material change to our $113 per share fair value estimate for narrow-moat-rated Interactive Brokers and currently assess the shares as being undervalued.