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TD Ameritrade Tops Estimates, Cites ‘Breakaway Brokers’ as a Factor

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TD Ameritrade (AMTD) beat analysts’ estimates for its performance in the quarter ending June 30, with executives on Tuesday pointing to added business from breakaway brokers.

The company’s net income rose 4%  to $197 million, or $0.36 a share, from $190 million, or $0.34 a share, a year earlier. Revenue grew 4% year over year to $794 billion, with 57% of sales coming from asset-based services.

“Within the institutional channel, we saw an increase both in the number of new breakaway brokers added to our platform, and in the average size of the advisor,” said President & CEO Fred Tomczyk, on a conference call with equity analysts.

“We remain committed to building awareness in the space, creating leads and filling our sales pipeline. We don’t see any signs of the breakaway broker trend slowing down,” Tomczyk added. “… We make it easy for them to move assets, because they don’t have to worry about changing vendors, and we have the flexibility to add new technology as trends evolve.”

Average balances in market fee-based assets at the end of the June were $161.3 billion, up from $155.1 billion on March 31 and $138.5 billion a year ago. Total client assets top $702 billion.

“At $161 billion, balances were up 16% over last year, and revenue is up 8%,” the executive explained. “Growth and interest in these products remain strong. Balances in both Amerivest and AdvisorDirect are up 22% year over year.”

Amerivest is an online retail advice platform. AdvisorDirect is a service that refers clients to RIAs.

“We continue to see positive growth in both the retail and institutional channels,” Tomczyk said on the call. “Net new client assets are up 17% year over year in each channel. On the retail side, net new client assets are up year over year for the eighth-consecutive quarter. Marketing efforts targeting new funded accounts for mass affluent prospects are yielding good results and providing a lift to overall asset-gathering efforts.”

Other Results

In the latest quarter, the company had $11.7 billion in net new client assets vs. $13.4 billion in the year-ago quarter and $16.3 billion in the prior period (ended March 31).

“Net revenues were up 4% from last year, driven by continued growth in trading and asset gathering,” said CFO William Gerber in a statement.

Average client trades per day were about 433,760 as of June 30, down from roughly 476,590 in the prior period but up from some 401,470 in the year-ago quarter. Total trades in the quarter ended June 30 were 27.3 million, down from 29.1 million in the earlier period but up from 25.3 million a year ago.

Still, the company is cautiously upbeat about its full fiscal year’s results.

“Our EPS guidance for this fiscal year was $1.45 to $1.70. With one quarter to go, we are on pace to be near the low end of that range,” Gerber said on the call, which was transcribed by Seeking Alpha. “Despite this, keep in mind that this is still on track to be one of the best [fiscal] years in our history.”

— Check out TD Ameritrade’s Apple Watch App Puts Markets On Your Wrist on ThinkAdvisor.