盈透证券

Interactive Brokers reported strong second-quarter results, with sales growth of 28% on the back of 34% growth in client accounts, 36% growth in trading volume, and a strong equity market backdrop. Despite topping FactSet consensus estimates, shares fell modestly in aftermarket trading.

Why it matters: We view the quarter as net positive, but maintain that long-term investors should wait for a better entry point. On one hand, we're really encouraged by the firm's ability to accelerate customer acquisitions. Interactive Brokers posted sensational 34% annual growth in customer accounts, adding a record 431,000 accounts sequentially with strong payback periods. In response, we've raised our near-term growth forecasts to include astounding five- and 10-year compound annual account growth of 25.6% and 17.3%, respectively, up from 21.7% and 14.6% previously, given the firm's robust pipeline and best-in-class return on advertising spending. On the other hand, the growing skew toward retail trading accounts could weigh on the broker's assets and trading volume per funded account, margin loan growth, and potentially even revenue per employee. We'd caution investors against assuming that new accounts come with similar asset levels, activity levels, monetization, and service costs, which may be embedded in current market prices.

The bottom line: After digesting these results, we've raised our fair value estimate for wide-moat Interactive Brokers to $70 per share from $64, reflective of our more constructive account acquisition forecasts. We now expect 10-year revenue, operating profit, and EPS compound annual growth rates of 14.2%, 14.7%, and 14.7%, respectively, meaningfully ahead of our prior 11.5%, 11.9%, and 12.0% estimates.

Key stats: For context, our updated forecast implies about 21 million customers on Interactive Brokers' platform in 2035. To frame this, Charles Schwab and Robinhood Markets have 48 million and 27 million funded accounts, respectively.

We assign a $70 per-share fair value estimate to Interactive Brokers. Our valuation corresponds with 25.6 times price/forward earnings and 4.8 times enterprise value/EBITDA ratios. We use a 10.8% cost of capital in our valuation.

While we see significant uncertainty regarding our updated forecast—the global competitive set includes regional powerhouses like Futu Holdings, Swissquote, and Tiger Brokers—there is no denying that Interactive Brokers has managed to ramp up customer acquisition seamlessly, adding a record 431,000 accounts during its most recent quarter at best-in-class returns on marketing investment. The platform is undoubtedly appealing, even to retail investors, offering best-in-class trade execution and very competitive margin borrowing rates. It has unparalleled product, market, and currency access, allowing for seamless multicurrency holdings in the same account. And it grows incrementally better each quarter, with the firm innovating and launching new products at a truly blistering pace.

The big risk to our revised forecast, which calls for 21 million customer accounts by 2035 (compared with 48 million and 27 million at Charles Schwab and Robinhood markets today), is the potential need for incremental income statement investments in customer service, where the firm has historically lagged its peers materially. If this becomes table stakes to maintain heady growth rates in the retail channel (likely the firm's strongest prospective growth vector), then our forecasts for nearly 80% midcycle operating margins would prove optimistic, even as we appropriately capture the dilutive effect of retail accounts on per-account assets, trading activity, and margin borrowing.

Consistent with other retail brokerage firms, the key variables driving our valuation for Interactive Brokers are balance sheet growth, net interest margin, trading volume, revenue per trade, and operating margin.

Addressing these in sequence, we expect 14.7% compound annual growth in earning assets over the next decade, driven by 5.9% annual market returns and 17.3% annual growth in active accounts, partially offset by a mix shift toward accounts with fewer assets as the firm's mix of retail and international traders, which tend to have fewer assets per account, continues to grow. Married with our forecast for declining interest rates and net interest margin, which we expect to average 1.89% through the cycle (compared with 2.09% in 2025), we project 15.4% compound annual growth in net interest income over the decade to come.

On the trading side of the ledger, newer accounts tend to trade at least somewhat less frequently on a per-account basis than the firm's existing clientele, although this effect should ease over time as customer acquisition growth slows. In the background, ongoing fee compression drives our forecast for a roughly 0.6% annual decline in commission per cleared commissionable order, with customers continuing to demand better service levels at lower prices with few signs of easing. Still, driven by strong customer account growth, we project 13.3% annual growth in customer revenue trades and a bit shy of 13% consolidated growth in trading revenue over the next 10 years.

While Interactive Brokers has done an excellent job keeping a lid on fixed costs, we don't envision much incremental operating margin expansion, driven in no small part by a competitive labor market for software engineers. Our forecasts contemplate a 10-year revenue and operating profit compound annual growth rate of 14.2% and 14.7%, respectively.

We believe that Interactive Brokers warrants a Wide Morningstar Economic Moat Rating, enabled by a durable cost advantage and intangible assets. The firm's highly automated brokerage platform allows it to operate at structurally lower costs than competitors, while its superior order execution, enabled by deep market access and its BestX suite of order routing tools, is considered to be an intangible asset. Quantitatively, our thesis is corroborated by average ROICs of 25% over the past decade, comfortably exceeding our 9% cost of capital estimate.

Today, Interactive Brokers is purpose-built to juggle sophisticated trading and sequencing demands, regulatory requirements, and real-time risk monitoring with limited human intervention. The firm caters to sophisticated clientele like hedge funds and proprietary traders and to international customers who want to own global securities and trade across currencies. It is one of the largest prime brokers globally, with a particularly strong position among smaller hedge funds and trading shops that are broadly underserved. With Interactive Brokers' reach across more than 170 markets, 40 countries, and 29 currencies at the end of 2025, the firm serves sophisticated traders well—and every quarter, its platform gets incrementally better, as it continues to roll out access to new markets and products at a blistering pace.

This focus on savvier clients and heavy automation, while perhaps limiting the firm's eventual addressable market, has allowed Interactive Brokers to eschew some of the customer-facing and administrative costs that larger peers like Charles Schwab and Fidelity are forced to absorb. This has led to operating margins of 77% in 2025, outpacing Charles Schwab (48%), Robinhood (47%), and Futu Holdings (62%) during that year. This same dynamic is evidenced by the firm's striking $1.95 million in revenue per employee during that year, way above the still-healthy $795,000 at Schwab or $425,000 at Fidelity (in 2024).

Further corroborating our view is Interactive Brokers' rock-bottom expenses on the client assets ratio, which clocked in at 0.21% in 2025, comfortably better than much larger peers like Bank of America (0.41%) and Morgan Stanley (0.26%) despite an asset base that was roughly a tenth of their size. Only Charles Schwab, with $11.9 trillion in client assets and an expense ratio of just 0.12%, outperformed Interactive Brokers on this front.

Importantly, we believe this metric would be exceedingly difficult for existing competitors to replicate at this juncture, because of client expectations and self-selection for higher-touch interaction and because of meaningful challenges in tweaking trading infrastructure (to this point, it took Charles Schwab the better part of five years to fully integrate TD Ameritrade's trading platform after its 2020 acquisition).

Turning to intangible assets, we view Interactive Brokers' BestX suite of trade execution tools and superior order execution as a stand-alone moat source, and don't see any clear threats on the horizon that could compete away its edge in the foreseeable future. While order execution is a black box, it's overwhelmingly clear that something about Interactive Brokers' approach, mediated through its SmartRouting algorithm and its options and US equity and ETF alternate trading system offerings, is generating superior order execution for clients.

Qualitatively, the firm's offering makes sense, with the SmartRouting algorithm sifting through lit exchanges, dark pools, and the firm's own ATS for the best possible execution prices for orders—even considering the minuscule rebates and fees that exchanges mandate for providing or absorbing liquidity. With direct market access across 160 exchanges and access to a handful of dark pools, Interactive Brokers' reach is broader than many of its peers, and the ability to split orders—separating multiple legs of a complex options trade, for instance—allows the firm to fill tricky orders across venues effectively instantly.

While comparable data is challenging to come by, a 2021 IHS Markit survey estimated that Interactive Brokers provided its clients with execution prices $0.62 per-lot better than the national best bid and offer price, way above its competitors' figure of $0.15. We can only imagine that the firm saves its clients substantially more in more opaque options trading, where it runs its own dark pool and where spreads and commissions are materially higher.

Finally, we view a wide-moat horizon for returns as appropriate given the competitive landscape. It would be practically impossible for retail brokerage peers to replicate Interactive Brokers' lean operating cost structure, given customer expectations, while investments in global trading capabilities would incur certain costs but generate uncertain benefits. For the big prime brokers, the incentives to serve smaller hedge funds and proprietary trading firms are extremely limited, given capital constraints and a lower likelihood of those clients utilizing more profitable services across the bank. It's also unclear that big banks are capable of providing superior order execution, instead competing for clients on the basis of their brand, capital introduction prowess, and research.

Last, market makers like Citadel, Virtu Financial, or Jane Street are unlikely to ramp up competition given their incentives—direct competition with retail brokers would be tantamount to killing the golden goose. On the institutional trading side, there is some risk that they provide trade execution tools as a service to institutions (Virtu does this with VTS)—but the competencies are quite different. Market makers operate within the spread, and are basically the market themselves. They have little experience with order routing, and it would flatter them to assume that they would be better at this than Interactive Brokers, with its nearly 50-year history.

Growing utilization of AI tools in trading and research could drive both higher retail participation in equity markets and, structurally rather than cyclically, higher trading volumes, to the benefit of retail brokerage firms like Interactive Brokers.

ForecastEx provides option value, especially if prediction markets prove better than expert forecasts or serve as a utility hedging instrument.

Ongoing growth in retail trading could favor firms like Interactive Brokers that specialize in the tools of the trade: cheap margin borrowing, competitive cash yields, and a deep product shelf.

Migration of passive institutional order flow toward dark pools and ATS offerings could result in wider bid-ask spreads and challenges sourcing liquidity for brokerage firms.

Without a full-service platform, the firm risks asset attrition if rivals like Schwab and Fidelity improve their margin rates, trading capabilities, and global investing tools.

Geopolitical fragmentation and commensurately lower interest in US risk assets would disproportionately affect Interactive Brokers relative to its peers, given that half of its client equity resides outside of the US.