SCHW · Q2 2025 Earnings
BullishCharles Schwab Corporation
Reported July 18, 2025
30-second summary
Schwab posted Q2 revenue of $5.85B (+25% YoY) and adjusted EPS of $1.14, with net interest revenue up 31% and bank deposit account fees up 61% as the post-Ameritrade balance sheet normalization continues to pay off. Core net new assets of $80.3B grew 31% YoY, June NNA accelerated to +46% YoY, and management raised the FY25 framework to 18.5–19.5% revenue growth and $4.55–$4.65 adjusted EPS — implying YoY EPS growth in "the very high 40% zone." The tone shift to "playing offense" with explicit hints at undisclosed monetization levers is the key signal.
Headline numbers
EPS
Q2 FY2025
$1.14
Revenue
Q2 FY2025
$5.85B
+25.0% YoY
Operating margin
Q2 FY2025
47.9%
Key financials
Q2 FY2025| Metric | Q2 FY2025 | YoY |
|---|---|---|
| Revenue | $5.85B | +25.0% |
| EPS | $1.14 | — |
| Operating margin | 47.9% | — |
Guidance
Prior quarter data unavailable — comparison not possible.
Segment performance
Q2 FY2025| Segment | Q2 FY2025 | YoY |
|---|---|---|
| Net Interest Revenue | $2.822B | +31.0% |
| Asset Management and Administration Fees | $1.57B | +14.0% |
| Trading Revenue | $0.952B | +23.0% |
| Bank Deposit Account Fees | $0.247B | +61.0% |
Capital & returns
Q2 FY2025| Segment | Q2 FY2025 |
|---|---|
| Return on Average Common Stockholders' Equity (Annualized) | 19% |
Other KPIs
Q2 FY2025| Segment | Q2 FY2025 |
|---|---|
| Core Net New Assets | $80.3 billion |
| Core Net New Assets YoY Growth | 31% |
| Total Client Assets | $10.76 trillion |
| Total Client Assets YoY Growth | 14% |
| New Brokerage Accounts | 1.1 million |
| New Brokerage Accounts YoY Growth | 11% |
| Daily Average Trading Volume | 7.6 million |
Management tone
Five distinct shifts stood out, framed against the post-Ameritrade integration narrative that has dominated Schwab calls for two years:
From defensive integration to offense. Management's anchor phrase this quarter was "From a position of strength, we are continuing to play offense." That's a meaningful departure from the 2023–24 posture, when calls were dominated by sorting cash, paying down high-cost supplemental borrowings, and reassuring investors that Ameritrade clients were sticking. The 19% ROE and 50.1% adjusted pre-tax margin give them cover to make the rhetorical pivot — but the substance behind it (crypto, AI, lending, monetization) is what makes the shift credible rather than cosmetic.
Hidden monetization upside, deliberately undisclosed. The most notable quote of the call: "We see a number of ways to monetize our product platforms beyond what we are doing today. We will share more details in the coming quarters, but I want to highlight that we see a meaningful revenue opportunity here." Management is explicitly telegraphing upside not yet in guidance. Schwab historically under-promises; flagging an unquantified opportunity is unusual and worth tracking into the back half.
Crypto pivot from cautious to leading. Schwab is now characterizing itself as an "industry leader in crypto ETPs" with $25B+ AUM and ~20% market share, with Bitcoin and Ethereum spot trading on the roadmap and stablecoins to follow. Management framed crypto with a three-bucket taxonomy (Bitcoin, utility-driven blockchain assets, meme coins to avoid) — a far more committed posture than prior quarters' arms-length stance.
Funding strategy normalization. The framing on bank supplemental borrowings shifted from urgent paydown ($12B in Q1 2025, $10B in Q2 2025) to a sustainable glide path: "We are not planning to reduce bank wholesale funding levels to zero…expect to make additional progress each quarter until these higher-cost bank liabilities are in a range more consistent with our long-term diversified funding profile." Translation: the deleveraging tailwind to NIM continues but is no longer the dominant earnings lever.
AI from staged pilots to "40 use cases." Management cited 40 AI use cases in various stages of development, with near-term focus on augmenting client-facing reps and longer-term personalization ambitions. Still no quantification of cost or revenue impact, but the surface area has clearly expanded.
Recurring themes management leaned on this quarter:
Risks management surfaced:
Q&A highlights
Ken Worthington · J.P. Morgan
How is Schwab adjusting strategy, services, and marketing to compete with disruptive younger brokers like Robinhood and Webull that are capitalizing on opportunities despite lacking Schwab's breadth? Can Schwab pursue both its traditional approach and what these competitors do well simultaneously?
Rick stated Schwab would not trade positions with competitors, emphasizing differentiated platforms, unmatched service, 400+ in-person locations, and 16,000 advisors. Noted strong POA ratio and net new assets growth. On crypto specifically: Schwab holds 20%+ of crypto ETF assets on its custody platform; clients trust Schwab for crypto exposure; Bitcoin and Ethereum launches expected to be meaningful growth drivers; clients currently holding small crypto allocations elsewhere express desire to consolidate at Schwab.
Dan Fanning · Jefferies
Given strong account growth, elevated retail trading, and June cash level increases despite market grinding up, what is the sustainability of these trends through the rest of 2025 and into 2026?
Rick reported June NNA up 46% YoY, with acceleration primarily from retail. Legacy Ameritrade clients showing over 100% growth in net new assets YoY; clients report highest satisfaction levels after integration. Mike noted cash trends normalized, allowing continued paydown of supplemental borrowings; selling activity and redemptions contributed to June cash pickup.
Brian Bedell · Deutsche Bank
What is confidence in achieving the 5-7% organic growth band on an annualized basis for full second half 2025? When will Bitcoin and Ethereum spot trading platform launch?
Rick expressed very high confidence in achieving 5-7% organic growth target, noting impressive June acceleration post-tax-related flows. Expects continued strength through second half. Growth framework: 5-7% overall with 3-5% from existing clients and 1-2% from new-to-firm. On crypto: emphasized revenue diversification opportunity; managed investing flows up 37%; loan originations and pledged asset lines up 100% YoY. Crypto platform launch timing not explicitly stated; implied early 2026 for Bitcoin/Ethereum.
Alex Blustein · Goldman Sachs
With margins expanding to over 50%, how should investors think about the ultimate profitability destination for the firm while balancing reinvestment in the business? What is the role of AI efficiency and asset monetization?
Mike outlined margin expansion driven by strong revenue growth, revenue diversification, and balanced expense management. Strategy involves opportunistic investment in growth capabilities paired with scale/efficiency initiatives. AI and expanded service offerings (wealth, lending) drive revenue diversification. Expected margin expansion to continue with balanced investment approach, though environment remains a key factor.
Michael Cypress · Morgan Stanley
Beyond Bitcoin and Ether spot trading, what is Schwab's strategy on staking, non-custodial wallets, stable coins, partnerships vs. in-house custody, and tokenization of traditional assets? How does this fit into international growth?
Rick outlined three-bucket crypto strategy: (1) Bitcoin as established trust asset, (2) blockchain-native cryptocurrencies with utility, (3) meme coins to be avoided. Stable coins planned post-Bitcoin/Ethereum launch; evaluating consortium partnership approaches with large banks and standalone solutions. On tokenization: skeptical of near-term value for public equities given existing market efficiency, transparency, and liquidity; concerns about lack of KYC/AML safeguards and external execution transparency in blockchain markets. Positioned to pivot if client demand and regulatory environment support tokenization; emphasizes innovation must maintain market quality, transparency, and client protection.
What to watch into next quarter
Whether the undisclosed "meaningful revenue opportunity" gets quantified. Management telegraphed it without sizing it; the Q3 call or a fall investor event is the logical reveal window. Absence of quantification by year-end would suggest the opportunity is smaller than the framing implied.
Bitcoin and Ethereum spot trading launch timing and any disclosed economics. Implied early 2026, but a Q3 firming of timeline (and any pricing/take-rate guidance) would be material given the $25B existing crypto ETP base.
Whether core NNA sustains above $80B and whether June's +46% YoY pace holds. A reversion below +30% YoY would undermine the "playing offense" narrative.
Q4 NIM landing in the "well into 280s bps" zone. This is the most specific dollar-translatable point in guidance; missing it would imply funding-cost normalization is slower than modeled.
Pace of bank supplemental borrowing paydown now that it's been reframed as a glide path, not a sprint. Slower paydown should still expand NIM but at a lower run rate than the past four quarters.
Whether legacy Ameritrade client NNA growth (+100% YoY) is a sustained re-rating or a one-time normalization spike. Two more quarters of this magnitude would force a revaluation of the integration's terminal value.
Sources
- Charles Schwab Q2 2025 press release (Exhibit 99.1, SEC filing): https://www.sec.gov/Archives/edgar/data/316709/000031670925000033/a2q25exhibit991.htm
- Charles Schwab Q2 2025 earnings call transcript and prepared remarks (management commentary on FY25 framework, AI, crypto, NNA trends).
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