This summary is based on the first quarter fiscal 2008 earnings call conducted by TD Ameritrade Holding Corporation (AMTD: chart) on January 17, 2008.

Management:

CEO: Joe Moglia
CFO: Bill Gerber
IR: Bill Murray

Key Investors Issues

- EPS were 40 cents a share compared to 24 cents a share last year.
- Net income rose to $240.8 million from $145.6 million in the year-ago period.
- Net revenue grew to $641.6 million from $545.2 million a year ago.

First Quarter Highlights

Net revenues were $642 million, 58% of that was asset based, pre-tax income was $357 million and the company had pre-tax margins at 56%.

- Net income was $241 million.
- EBITDA was $404 million and ROE was 42%.
- Client assets came in at $300 billion. That is 8% from a year ago, but it was down 1% from the September quarter.

- Inflows from E-trade were approximately $2.3 billion. The average account gotten through that time period was $250,000.
- Earnings were 40 cents per share, up 67% from a year ago.

The fee-based balances, which include mutual funds, money market funds, Amerivest, TDAX life-cycle funds, etc. are up 30% year-over-year.

The investable assets which include margin, security of borrowing MMDA, etc. are up about 10% year-over-over.

The company has seen success in a guidance campaign promoted where individuals can come in and get free evaluations with regards to their portfolio allocations et cetera. The company is starting to see referrals to sales from call centers that are starting to amount to about 200 referrals today. That number traditionally would have been half. The company is pleased with the first roll out with the TDAX independent life cycle funds.

The company is starting to see legitimate genuine traction in revenue earning assets and that all underpins what it is trying to do with regards to overall asset gathering.

- The company continues to exhibit tremendous strength in cash generation with EBITDA coming in at $404 million or 63% of net revenues. This is an increase of 39% over the $291 million or 54% of net revenues in the same quarter last year.
- Over the last four quarters, the company has generated over $1.3 billion in EBITDA. The company has a record return-in-equity of 42% up from 34% in the December quarter last year.

Asset-based revenues continue to climb and account for 60% of net revenues.

- These asset-based revenues reinforce the stability of overall revenue stream. Asset-based revenue, which is a combination of fee-based and investable asset revenue, was $373 million, an increase of $46 million year-over-year.
- The company saw a $15 million increase in fee-based revenue almost entirely due to a $14 billion increase in balances with virtually no change in the rate earned on those balances. These balances include mutual funds, money market funds, Amerivest and other products.
- Investable asset revenues were up 11% to $305 million. Half of this change was due to increased balances of $2.9 billion and half due to 8 basis points of higher net interest margin. The revenues are up primarily in margin lending, which reached to historic highs during the quarter.

- Transaction-based revenue of $260 million increased $66 million year-over-year, as clients continue to engage themselves in the market.
- The company realized the boost in training activity of 84,000 trades per day of 35% increase.
- Trading activity was 322,000 trades per day or a 5% activity rate versus last year’s activity rate of 3.8% or 238,000 trades per day.

Average commission rate was down 20 cents to $12.84 due to more promotional trades and lower fixed income commissions and was offset by the higher mix of option trades.

This commission rate was within guidance.

- The net interest margin is up 8 basis points, primarily due to earning a wider spread on the MMDA balances.
- Other revenue is down, $6 million due to higher re-org fees in the prior year.