TD Ameritrade (NASDAQ: AMTD) reported Q1 EPS of $0.74, $0.03 worse than the analyst estimate of $0.77. Revenue for the quarter came in at $1.92 billion versus the consensus estimate of $1.3 billion.

Financial results for the quarter ended Dec. 31, 2019 include the following:(2)

• Net new client assets of $29 billion, an annualized growth rate of 9 percent
• Total client assets of $1.4 trillion
• Record average client trades per day of 1 million
• Net revenues of $1.3 billion
• Pre-tax GAAP income of $491 million, or 38 percent of net revenues
• $0.70 in GAAP earnings per diluted share, on net income of $379 million
• $0.74 in Non-GAAP earnings per diluted share(1)

Steve Boyle, interim president and chief executive officer, said, “History was made on the first day of our new fiscal year when the cost to trade went to zero for most trades, resulting in a new world in discount brokerage where price no longer clouds the comparison for trades. Trading was very strong in the first quarter averaging 1 million trades per day – for the first time in our history – which helped offset a portion of the revenue impact from zero commissions. We had 38 days eclipsing 1 million trades in the first quarter, compared to 23 days in all of fiscal 2019. The increased trading volume, reflecting more frequent, smaller trades, was driven largely by an uptick in equity trading following our pricing changes, as well as market volatility, geopolitical headline news, and strong retail news heading into the holiday season. Trading is up roughly 40 percent January to-date, averaging 1.4 million trades per day.”

Boyle continued, “New and existing clients rewarded us with increased business and satisfaction scores. With the move to zero commissions, the immediate, positive impact to organic growth by way of new accounts and assets is indicative of the strength of our client value proposition in an ‘all else equal’ marketplace. In the retail channel, attrition slowed following our pricing changes but picked up again after the Schwab acquisition news. Outflows are in-line with the trends we observed at Scottrade in 2016, which normalized after the first two months following the deal announcement. On the institutional side of our business, new account activity and retention remained strong with only minor impacts to net new assets following the Schwab announcement and no meaningful changes in trends. Institutional net advocate and client experience scores remain strong as advisors continue to value our technology and service. Our National LINC conference next week presents us with a timely opportunity to engage with clients.”

Boyle concluded, “Today, we were named the No. 1 overall broker in the StockBrokers.com 2020 Online Broker Review, with thinkorswim recognized for No. 1 desktop platform and No. 1 trader app. Delivering a best-in-class client experience has been our focus for some time – a badge of honor for our employees who have remained committed to our mission and purpose over what was a very eventful quarter. Now we look ahead at an opportunity to join forces with Schwab, which will pool our complementary resources and expertise to meet our commitment to self-directed investors and independent registered investment advisors. Until the deal closes, which we expect will happen in the second half of 2020, we will continue to operate as separate entities focused on growing and retaining client relationships, retaining key talent, and winning in the marketplace. Required filings are in process, and integration planning teams are being formed. The TD Ameritrade team will be headed by the same leader responsible for our successful integration of Scottrade. Otherwise, it’s business as usual. The competitive environment has intensified post-announcement, as expected, and we remain fully engaged in continuing to deliver a best-in-class client experience as we plan for the future.”

Interim chief financial officer Jon Peterson commented, “We are pleased with our very strong first quarter results, which position us well to deliver profitable growth in fiscal 2020. The revenue impact of moving to zero on commissions was less severe than expected due to record trading. While there was another Federal Reserve interest rate cut, cash balances continued to grow, which partially offset declining net interest margins. We recognized some notable items in the quarter related to fluctuations in the yield curve, executive transition costs, and deal-related professional services spend which adversely impacted earnings per share by 6 cents.”

Peterson concluded, “We have a long history of focusing on what we can control and delivering on our plans in the face of uncertainty. This quarter was no different, and we are confident we will continue to do so. We remain flexible, anticipating our priorities will continue to evolve. We have a regular review process in place to ensure we are managing expenses and delivering on our financial targets. Specific tactics may shift as we move through the year, but our goals remain unchanged.”

For earnings history and earnings-related data on TD Ameritrade (AMTD) click here.