E*Trade (ticker: ET) met consensus EPS estimates by growing operating income significantly more than revenue (14% versus 5%). Profitability per account is rising, but account growth is weak. Details:
(all percentage changes and comparisons are year on year, unless stated otherwise)
- EPS of $0.24 in line with consensus.
- Net income of $92.0 million up from $88.5 million.
- Net revenue of $420 million up 5% percent (and 3% sequentially).
- Revenue break-down: brokerage $241 million, down 8% and , 57% of total revenue; bank $179 million, up 30%, and 43% of total revenue. Retail trading commissions accounted for 20% of total revenues, down from 28%.
- Consolidated operating income of $135 million up 14% (and 22% sequentially).
- Daily average revenue trades down 14% to 135 thousand (on 2% fewer trading days).
- Average commission per trade down 10% to $10.34.
- End of period margin debt up 6% to $2.27 billion.
- 35 thousand net new accounts; total investing accounts (end of period) up 3% to 2.975 million, bank deposit/lending accounts flat at 642 thousand.
- Assets per customer up 8% to $32,754.
- Revenue per customer up 4% to $145.
- Income per customer up 13% to $47.
- Average number of products per customer up to 1.9 from 1.7.
- Net interest spread 220 basis points, up from 185 basis points.
- Maintaining full year EPS guidance of $0.93 to $1.08, including expensing options in Q3.
- Average commission per trade expected to fall to $9.30 to $9.70 in Q2 and for the remainder of the year.
E*Trade is making more money because it's increasing assets, revenue and profits per customer. But account growth is anaemic: 3% year over year growth in brokerage accounts, flat number of bank accounts.