Interactive Brokers released its financial metrics for the second quarter that ended in June today (Tuesday), reporting quarter-over-quarter (QoQ) decreases in its net revenue, income before tax, profit margin and earnings per share (EPS).

The net revenue of the American online broker declined 5% to $1 billion, which is down from $1.06 billion in the previous quarter. However, compared to the same period last year, Interactive Broker’s net and adjusted revenues climbed 52% and 48% year-over-year (YoY) from $656 million and $717 million, respectively.

Poorer QoQ Metrics in Q2

Furthermore, during the recent quarter, Interactive Broker’s income before tax dived 14% to $652 million. The figure stood at $761 million during the first quarter.

Again, compared to the same quarter last year, the firm’s income before tax ascended 66% YoY to $652 million, with the adjusted figure rising 58% to $716 million. Additionally, the electronic brokerage’s income from interest paid by clients surged 9% QoQ to $694 million during the recent quarter.

Interactive Brokers during the last quarter reported a pretax profit margin of 65%. This represents a decrease from a previous margin of 72% maintained during Q1 2023 when the firm retained more of its revenue as profit.

In terms of earnings, the Nasdaq-listed company’s diluted earnings per share (EPS) slumped 15% from $1.42 during the first quarter to $1.20. Adjusted EPS also descended 2% to $1.32, which is down from $1.35 generated during the first quarter of 2023.

SEC’s Crackdown on ‘Off-Channel’ Communication

Meanwhile, Interactive Brokers noted its finances during the last quarter were affected by the US Securities and Exchange Commission’s recent crackdown on Wall Street firms for using ‘off-channel communications’ in their business deals. This is even as the firm’s execution, clearing and distribution fees expenses jumped 21% to $93 million, driven by higher customer trading volume in options, among other factors.

“General and administrative expenses increased $43 million to $85 million,” Interactive Brokers explained. “The increase is largely attributable to reserves related to the previously-disclosed regulatory investigations into the use of unapproved electronic messaging and record-keeping requirements.”

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