Key Takeaways:
- EPS of $0.07 beat consensus of $0.03, versus a $1.10 loss a year ago
- Revenue of $198.8 million topped estimates by 13.6 percent, up 51 percent YoY
- PDT rule elimination drove record volumes, with DARTs up 62 percent
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Webull beats Q2 estimates with $0.07 EPS on PDT volume surge
Webull reported Q2 EPS of $0.07, beating consensus of $0.03, on revenue of $198.8 million that topped estimates by 13.6 percent.
"I'm proud to report a record second quarter for Webull, highlighted by our successful implementation of updated active trader functionality following the June 4 elimination of the Pattern Day Trader Rule," CEO Anthony Denier said.
Revenue rose 51 percent year over year from $131.49 million, while trading-related revenue jumped 66 percent to $147.7 million. Adjusted operating profit nearly tripled to $62.6 million, producing a 31.5 percent margin. The company swung from a $28.3 million net loss a year ago to $24.4 million in net income. Customer assets climbed 79 percent to $28.5 billion.
Equity notional volume increased 73 percent year over year to $279 billion, options volume surged 68 percent to 213 million contracts, and daily average revenue trades climbed 62 percent to 1.6 million. Funded accounts rose 8 percent to 5.13 million.
The June 4 elimination of the Pattern Day Trader Rule by FINRA removed the $25,000 minimum equity requirement for day trading, unlocking activity from smaller accounts. Webull had updated functionality ready for eligible traders on the first day of the new environment. Denier had previously guided to a low-end 20 percent transaction lift from the rule change, with Q3 impact expected to exceed Q2.
The beat follows a difficult Q1, when the company posted a $21.72 million GAAP net loss as marketing spend more than doubled to $49.41 million, approaching 30 percent of revenue. The CFO has said ex-marketing operating margin has held at 40 percent or higher every quarter since Q3 2024, suggesting marketing intensity is the primary margin drag.
Shares rose 7.95 percent to $8.56 on the day and initially jumped 11 percent after the release. The stock remains up just 2.1 percent year to date versus the S&P 500's 12.4 percent gain, and down roughly 50 percent over the past year. The company carries a Zacks Rank #3 (Hold), reflecting mixed estimate revisions ahead of the release. Consensus EPS for the current quarter stands at $0.04 on $186.69 million in revenue, while full-year estimates call for $0.14 on $719.22 million.
The beat signals operating leverage is materializing as the PDT rule change drives sustained volume growth. Q3 earnings, expected in November, will capture the first full quarter under the new rule and test whether marketing expenses normalize. Peer Robinhood (HOOD) has also benefited from the regulatory shift, with both brokerages seeing elevated retail trading activity.
This article is for informational purposes only and does not constitute investment advice.
