TD Ameritrade Tops Q2 Earnings Estimates on Strong Revenue

The broker-dealer is also adding a tool for advisors to improve their access to technology on its institutional platform

TD Ameritrade CEO Fred Tomczyk. TD Ameritrade CEO Fred Tomczyk.

TD Ameritrade (AMTD) said its second-quarter earnings improved close to 20% on Tuesday, beating analysts’ estimates: Net income was $184 million, or $0.33 a share, versus $154 million, or $0.28 a share, a year ago.

Total revenue increased 9% year over year and 7% from the prior quarter to $725 million.

"TD Ameritrade had a strong third quarter in virtually all metrics, as we continue to execute well against our growth strategy while being disciplined on expenses," said President & CEO Fred Tomczyk, in a press release. "We had record interest rate sensitive assets, record net revenues and record market fee-based revenue during the quarter."

Net new client assets for the period were roughly $11 billion, representing an annualized growth rate of 8%. However, client asset flows were higher in the prior quarter, at $13 billion, and slightly lower a year ago, at $10 billion.

Average daily client trades per day hit about 399,000, an activity rate of close to 7%.

Of its total second-quarter revenue, $384 million, or 53%, was asset based.

Commissions and trading fees grew to $321 million, up from $266 million a year ago and $287 million in the prior quarter. Investment product fees increased to $65 million, up 23% from $54 million last year and a jump of nearly 5% from $62 million last quarter.

Client assets now total nearly $524 billion vs. $554 billion a year ago and $517 billion on March 31.

"We are pleased with our performance this quarter," said Bill Gerber, executive vice president and chief financial officer, in a statement. "We benefited from the improved trading environment, and we kept our eyes focused on disciplined expense management and maintaining our strong balance sheet. We have good momentum, and we're well positioned as we look ahead to fiscal 2014."

In additional news, the company announced a new “Veo Integrated” logo that it says makes it easy for registered investment advisors (RIAs) to identify technology providers that have built integrations with TD Ameritrade Institutional’s Veo platform. RIAs in the market that purchase technology can look for the logo on participating technology providers’ marketing materials including Web sites, brochures and videos.

“We reached a significant milestone with 50 vendors now on the platform with which advisors can now integrate,” said Jon Patullo, managing director of technology, TD Ameritrade Institutional.

“In order to participate in the Veo open access initiative, all third-party technology providers must meet a set of stringent security requirements and have the ability to deliver quality service to advisors,” Patullo said. “It’s important that firms eligible to display the ‘Veo Integrated’ logo demonstrate a high standard of care and commitment to RIAs.”

TD Ameritrade Institutional president Tom Nally added that overall advisor adoption of Veo open access integrations is up 104% in 2013. The customized Salesforce CRM app is one of the most widely adopted, with more than 1,000 users.

Nally also noted that iRebal, which he announced at the company’s annual conference in February, would be added to Veo and free for TD advisors, is now in beta and on track for release in August.

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Check out ThinkAdvisor’s 2013 Q2 Earnings Calendar for the Finance Sector.

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