SCHW Q3 Deep Dive: Client Engagement and Platform Expansion Drive Results

Financial services giant Charles Schwab (NYSE:SCHW) beat Wall Street’s revenue expectations in Q3 CY2025, with sales up 26.6% year on year to $6.14 billion. Its non-GAAP profit of $1.31 per share was 5.2% above analysts’ consensus estimates.

Is now the time to buy SCHW? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

Charles Schwab’s third quarter results reflected strong client activity and product adoption, with management attributing performance to robust organic asset gathering, ongoing growth in core brokerage and lending, and high engagement levels across its digital and branch networks. CEO Rick Wurster highlighted the opening of 1.1 million new brokerage accounts and $138 billion in net new assets, noting, “Clients are deepening their relationships with us by conducting more of their financial lives here.” Management emphasized that elevated margin balances and sustained high trading volumes supported the quarter’s outcome.

Looking ahead, management sees continued growth opportunities driven by further integration of legacy Ameritrade clients, expansion of digital asset offerings, and increased penetration among younger investors. Wurster stated, “We remain on track to launch spot crypto in the first half of 2026, starting with Bitcoin and Ethereum.” CFO Mike Verdeschi cautioned that while the macroeconomic environment—including potential interest rate cuts—remains fluid, Schwab expects to balance investments for client needs with a focus on top-line growth and positive operating leverage across varying market conditions.

Key Insights from Management’s Remarks

Management cited elevated client engagement, asset flows from both new and existing clients, and a broadening product set as central to the quarter’s momentum.

• Ameritrade integration progress: Enhanced satisfaction and asset growth among former Ameritrade clients were notable, with management reporting improved client satisfaction scores and a shift from net negative to net positive asset contributions.
• Wealth and lending demand: Net flows into managed investing products rose 40% year over year, and bank lending—especially pledged asset lines—set new records, reflecting increased demand for diversified financial solutions.
• Trading platform adoption: Thinkorswim, Schwab's advanced trading platform, showed a 98% increase in adoption among legacy Schwab clients, supporting elevated daily average trades and further engaging both experienced and new investors.
• Digital asset engagement: Visits to Schwab's digital assets content nearly doubled, and the company captured roughly 20% market share in spot crypto exchange-traded products, indicating client appetite for crypto exposure ahead of planned direct offerings.
• Operational efficiency gains: Initiatives in artificial intelligence, paper reduction, and service enhancements contributed to faster client service and improved ease-of-doing-business scores, helping to hold expense growth below the pace of revenue gains.

Drivers of Future Performance

Looking ahead, Schwab’s outlook is informed by its ability to deepen client relationships, expand digital asset offerings, and navigate a dynamic interest rate environment.

• Crypto platform rollout: Management expects the introduction of direct crypto trading in 2026 to attract both younger and existing clients, positioning Schwab as a competitive alternative to digital-native firms. Wurster emphasized the long-term approach and full integration into Schwab’s service platform.
• Interest rate sensitivity: CFO Mike Verdeschi indicated that lower interest rates may drive additional cash inflows and support net interest income, but acknowledged the need to manage asset sensitivity and reinvestment strategies to maintain earnings growth.
• Advisor channel expansion: Continued focus on independent advisor relationships and tailored solutions is seen as a key driver of organic asset growth, especially as Schwab leverages enhancements made through the Ameritrade integration and broadens its RIA support ecosystem.

Catalysts in Upcoming Quarters

In the quarters ahead, our analysts will track (1) Schwab’s progress in launching its spot crypto platform and capturing incremental client assets, (2) the ongoing integration and performance of legacy Ameritrade clients as their engagement and net new assets trend toward Schwab’s historic averages, and (3) the impact of interest rate changes on client cash behavior and net interest income. Execution on digital platform enhancements and continued advisor channel growth will also serve as important indicators of future performance.

Charles Schwab currently trades at $94.09, in line with $94.35 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).

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