Skip to main content

Updated from 11:43 a.m. EDT


(AMTD) - Get TD Ameritrade Holding Corporation Report

reported Tuesday that its earnings fell 48% in its third fiscal quarter, but the results well exceeded Wall Street's expectations.

For the quarter ended June 30, the online brokerage firm reported earnings of $4.6 million, or 3 cents a diluted share, compared with earnings of $8.9 million, or 5 cents a diluted share, a year earlier. Analysts polled by

First Call/Thomson Financial

predicted that Ameritrade would lose a penny.

Investors showed a reserved reaction to the news. Shares of Ameritrade finished up 15/16, or 7.7%, to close Tuesday regular trading at 13 3/16.

Net revenues rose 91%, to $149.1 million, from $78.1 million.

Ameritrade's total expenses, which increased 220% to $141.5 million, from $64.2 million last year, contributed to the decrease in earnings. The Omaha, Neb.-based company's advertising expenses -- up to $41.2 million from $12.1 million a year ago -- were particularly a factor. Although Ameritrade's advertising costs jumped year-over-year, it fell from $54.8 million in the second quarter.

Customer activity helped Ameritrade finish off the quarter on a

positive note. Ameritrade's average number of daily trades dropped 17% to 123,929 during the quarter, compared to its rivals' 25% declines.

Scroll to Continue

TheStreet Recommends

Meanwhile, the average Ameritrade customer traded about seven times, Randy McDonald, the company's chief financial officer, said Tuesday in a conference call with analysts and investors. That compares with about four trades a quarter at competitors

Charles Schwab

( SCH) and


( EGRP), said Rich Repetto, an analyst at

Lehman Brothers

. Lehman Brothers has done no underwriting for Ameritrade.

The company cited low operating costs and the expansion of its customer base as factors that contributed to its performance. Ameritrade opened 186,000 new accounts during the third quarter, for a total of 1.2 million.

Ameritrade also reined in costs on its personal finance site,



"Ameritrade is an exceptionally lean organization, effectively managed to maintain consistent growth matched with profitability," Tom Lewis, the company's chief executive, said in a statement.