Interactive Brokers Earnings: Strong 2023 Results, but Interest Rates a Headwind

Interactive Brokers had a record year in terms of both top-line and bottom-line results. 2023 net revenue increased 42% to $4.34 billion compared with 2022, mostly driven by a 68% increase in net interest income. The fourth quarter of 2023 was like the previous quarters, with net revenue up 17% from the previous year’s quarter driven by stronger net interest income. Sequentially, net interest income was flat as the federal-funds rate plateaued and commission revenue increased by 5%. For the full year, the company had a record-high operating margin of 71% and earnings per share of $5.67. We don’t anticipate making a material change to our $112 fair value estimate for narrow-moat-rated Interactive Brokers and assess shares as undervalued.