Live Updates: Schwab Beats Q2 Earnings & Shares Rise

SCHW | The Charles Schwab Corporation Q2’25 Earnings Highlights:

• Adj. EPS: $1.14 ✅
• Net Revenue: $5.85B (Est. $5.90B) ⚠️; DOWN -1% YoY
• Adj. Gross Margin: 50.1% ✅
• Net Income: $2.13B ✅
• Core Net New Assets: $80.3B
• Total Client Assets: $10.76T; UP +14% YoY
• New Brokerage Accounts: 1.1M; UP +11% YoY
• Daily Average Trading Volume: 7.6M; UP +38% YoY

Q2 Segment Performance:

• Net Interest Revenue: $2.82B; UP +31% YoY
• Asset Management and Administration Fees: $1.57B; UP +14% YoY
• Trading Revenue: $952M; UP +23% YoY
• Bank Deposit Account Fees: $247M; UP +61% YoY

Other Key Q2 Metrics:

• Adj. Operating Income: $2.93B; UP +52% YoY
• Adj. Operating Expenses: $3.05B; UP +4% YoY
• Free Cash Flow: $2.8B; UP +60% YoY
• Effective Tax Rate: 24.1% (vs. 23.5% YoY)
• Return on Average Common Stockholders’ Equity: 19% (vs. 14% YoY)
• Return on Tangible Common Equity: 35% (vs. 34% YoY)

CEO Commentary:

• Rick Wurster: “Retail investors and RIAs continued to turn to Schwab as a trusted partner, opening over 1 million new brokerage accounts and gathering $80.3 billion in core net new assets – up 31% versus 2Q24. Schwab delivered growth on all fronts during the second quarter. The firm’s diversified revenue model, coupled with our best-in-class scale and efficiency, produced quarterly records for both revenue and earnings per share.”

CFO Commentary:

• Mike Verdeschi: “During the second quarter, we continued to enhance stockholder value by returning excess capital through multiple forms – including redeeming approximately $2.5 billion in preferred equity and repurchasing just over $350 million of common stock.”

Strategic Updates:

• Charles Schwab recognized as Best Investing Platform Overall by U.S. News.
• Charles Schwab Bank ranked #1 in J.D. Power’s U.S. Direct Banking Satisfaction Study for the 7th consecutive year.

Here’s the headline: Adjusted EPS of $1.14. That beats consensus by $.04. We’ll continue posting new analysis.

Here are some of the key storylines headed into Q2 earnings for Schwab. If they outperform in each, it could become a catalyst for Schwab shares not only today but in the coming weeks and months:

• Ameritrade Client Momentum: Ameritrade clients still only average about 30% share of wallet compared to 50% for Schwab, but trends have been encouraging. Will this momentum continue? If so, it could be a powerful earnings tailwind in the coming years.
• Margin Trajectory: If the Fed moves toward rate cuts, it will threaten Schwab’s net interest margin (NIM). Watch for commentary today about how Schwab plans to handle future rate cuts.
• Growth Investments: Schwab continues to invest heavily in areas like physical branches and technology (for areas like AI). The company affirmed its guide of expenses rising 4.5% to 5.5% in its last earnings call, can it sustain that growth level or will expenses end up rising more than expected?