Charles Schwab (NYSE:SCHW) posted earnings and revenue for the fiscal Q3 above analyst expectations, sending its shares rising more than 8% Tuesday.
The financial services firm reported adjusted earnings per share (EPS) of $0.77, topping the average analyst estimate of $0.75.
Quarterly revenue hit $4.85 billion, also higher than the consensus estimate of $4.77 billion.
Total net new assets were reported at $90.8 billion, while total client assets jumped 27% year-over-year to a record $9.92 trillion, ahead of the estimated $9.75 trillion.
"Our momentum with clients continues to build following the successful completion of the Ameritrade conversion earlier this year," said Walt Bettinger, co-chairman and CEO of Charles Schwab.
Adjusted operating expenses during the quarter totaled $2.85 billion, slightly higher than our estimate of $2.83 billion, leading to an adjusted operating margin of 41.2%, exceeding management’s guidance of at least 40%.
Transactional cash sweep balances in September also exceeded expectations, reaching $384 billion—an almost 5% increase from August levels. This includes $17 billion in net inflows for September, despite strong customer buying activity during the month.
Short-term (ST) funding balances decreased slightly to $33.2 billion, down from $34.4 billion in the second quarter. Moreover, there was a $6 billion decline in certificate of deposit (CD) balances.
"Overall, it was a better-than-expected quarter, and given the Sept. trajectory for cash balances/ST funding, we expect the stock to react positively," Citi analysts said in a post-earnings note.
Separately, Piper Sandler analysts said Charles Schwab posted a headline EPS beat but more importantly it "showed solid growth in transactional sweep cash balances and better than expected progress in supplemental borrowing paydowns," signaling a potential start to a reversal in client cash sorting.