Targeted Investments Yield Record Growth for Ameritrade
Unprecedented Growth Continues
OMAHA, Neb.--(BUSINESS WIRE)--Jan. 19, 2000--Ameritrade Holding Corporation (Nasdaq: AMTD) today reported the greatest levels of growth in the Company's thirty-year history, demonstrating the success of its award-winning ad campaign and the completion of its vision to build "the most efficient trade processing operation in the industry." For its first fiscal quarter of 2000 (ending December 31, 1999) Ameritrade's net revenues soared to $110.9 million, while it added 134,000 new core accounts, and increased average trade volume to 81,000 trades per day. Assets in customer accounts grew to $31.6 billion.
Ameritrade created the deep-discount, on-line trading business with the simple proposition of "$8 bucks a trade" for market orders and has won national acclaim for its ads, which deliver the message, "Believe in yourself!" to the rapidly expanding market of self-directed investors.
"We have learned how to achieve record growth levels with our targeted advertising and our clearly stated business proposition, which appeal to a very broad market of investors," said J. Joe Ricketts, chairman and co-chief executive officer of Ameritrade Holding Corporation. "Now we are demonstrating that last year's investments in technology and operations can be leveraged to deliver the best financial performance in the industry."
Record Quarter
Ameritrade's operating income before advertising and its investment in OnMoney increased 104 percent to $33.7 million in the first quarter of fiscal 2000, from $16.5 million in the same quarter of fiscal 1999 and 136 percent from $14.3 million in the fourth quarter of fiscal 1999. The Company reported a net loss from ongoing operations of $16.1 million, or ($0.09) per share for the quarter, excluding the $5.6 million after tax investment, or ($0.03) per share, in OnMoney. This compares to a net profit of $4.4 million or $0.03 per share for the first fiscal quarter of 1999 and a net loss of ($6.8) million or ($0.04) in the fourth quarter of fiscal 1999. The OnMoney investment, excluded from the above, was $0.6 million or ($0.01) per share and $2.4 million or ($0.01) per share for the first and fourth quarters of 1999 respectively. Commission and clearing fee revenue totaled $78.5 million for the quarter, a 114 percent increase over the comparable quarter in fiscal year 1999 and a sequential increase quarter to quarter of 60 percent.
"We had one of our best operational quarters ever," said Ricketts. "Also, it is very gratifying to see OnMoney this close to taking off as a stand-alone business. It is one of the largest potential projects with which I have ever been associated."
Customers Respond
Customer investing activity surged to new highs during the quarter with a record 81,000 trades per day. That is a 142 percent increase over the same quarter in 1999 when the Company averaged 33,500 trades per day and a 53 percent increase from the fourth quarter of fiscal 1999 when the figure was 53,100. Assets in customer accounts reached a new high of $31.6 billion, up 112% from $14.9 billion in the first quarter of fiscal 1999. Sequentially, assets increased from $22.9 billion, or 38 percent, in the fourth quarter of fiscal 1999.
The 134,000 new accounts added in the quarter brought the total number of open core discount brokerage accounts to 686,000. This compares to 354,000 in the same quarter of fiscal 1999 and 560,000 at fiscal 1999 year-end, increases of 94 percent and 24 percent respectively. "We made the decision to forgo earnings and invest heavily in advertising and marketing in the first quarter of fiscal 2000," said Thomas K. Lewis, Jr., co-chief executive officer, of Ameritrade Holding Corporation. "It was a move we felt was crucial to allow Ameritrade to aggressively build its brand as increasing numbers of individual investors turned to the Internet to personally manage their investments.
"One of the key figures we are reporting today is the $31.6 billion customers have placed in their Ameritrade accounts," said Thomas Lewis, Jr., co-chief executive officer, of Ameritrade Holding Corporation. "That averages to $46,000 per customer account, far exceeding the average of other pure-play online brokers. Our customers are highly desirable, high net worth customers who appreciate our high quality, low cost value proposition. This quarter confirms that Ameritrade is closest to the pulse of the savvy investor who realizes that he or she will get exactly what they need from an online broker focused on providing narrow and deep brokerages services."
Key Developments
During the quarter, Ameritrade added leading edge products and services ensuring its customers have the necessary tools they need to better manage their own investments.
New Online Investment Bank
In November 1999, Ameritrade, Charles Schwab & Co., Inc., and TD Waterhouse Group, Inc., jointly announced that the companies had reached an agreement to form a new online investment bank with three leading venture capital firms, Kleiner Perkins Caufield & Byers, Trident Capital and Benchmark Capital. Along with its online brokerage partners, Ameritrade will exclusively distribute the equity securities underwritten by the new bank. The three brokerage firms, the venture partners and the investment bank's management will initially own the company.
"The new investment bank combines the operations of three giants in the online brokerage industry which combined have over 50% of the online investor accounts, and over $750 billion in customer assets" said Lewis. "Our customers will benefit tremendously from the economic strength and opportunity that this will provide."
The new firm, which is yet to be named, will be based in Silicon Valley and is expected to be operational in early 2000. It will concentrate on underwriting, managing and distributing equity offerings for information technology and Internet companies. Additional plans call for providing research to individual and institutional investors and, eventually, private placement and strategic advisory services to issuers. The firm also plans to invest in later stage private companies.
Remote Access
Also in November, Ameritrade leapfrogged the competition by becoming the first brokerage to enable investors to have anytime, anywhere access capabilities to its Web site online via wireless Web. Ameritrade customers can access their accounts, place trades and receive stock alerts via the Internet using The Sprint PCS (NYSE: PCS) Wireless Web and a new generation of digital phones using WAP (wireless access protocol) technology.
Later in November, the company launched Ameritrade Reports and Alerts Service offering customers personalized financial research via digital mobile phones, alphanumeric pagers or email.
The Ameritrade Index
The Ameritrade Online Investor Index, the first daily measurement of how individual investors are participating in the stock market was launched on December 1, 1999. The index, which is available at www.ameritradeindex.com, shows whether online investors at Ameritrade are net buyers or sellers on any given day along with the top ten equities bought and sold. The index has been well received by customers, industry analysts and researchers and is often cited by media covering the securities industry.
Electronic Account Funding
In mid-December, Ameritrade added electronic funding of accounts, dramatically reducing the time required to open a new account and allowing customers to act quickly on stock purchase opportunities.
Customer Focus
"At Ameritrade, we are focused on our customers and providing them with the types and levels of brokerage products and services that they require to make the most well informed investment decision possible," Lewis said. "We never lose sight of the fact that customer satisfaction is our driving force and is what ultimately will continue to separate us from the competition."
Ameritrade Holding Corporation is a pioneer in the discount and online brokerage industry. The Company provides brokerage services and clearing services to self-directed individual investors and other financial institutions through its subsidiaries. Subsidiaries of Ameritrade Holding include: Ameritrade (Inc.) (www.ameritrade.com), a leading online discount brokerage firm; Accutrade, Inc. (www.accutrade.com), a discount brokerage firm delivering superior levels of personal service and support to its clients; AmeriVest, Inc. (www.amerivestinc.com), which provides third-party discount brokerage services and other financial services to commercial banks, credit unions and thrift institutions; as well as Advanced Clearing, Inc. (www.advancedclearing.com), a securities clearing firm providing clearing services to each subsidiary as well as other financial institutions.
For more information on Ameritrade Holding Corporation, visit the Company web site at www.amtd.com
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