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Interactive Brokers Group Announces 1Q2023 Results

GAAP DILUTED EPS OF $1.42, ADJUSTED1 EPS OF $1.35

GAAP NET REVENUES OF $1,056 MILLION, ADJUSTED NET REVENUES OF $1,015 MILLION

Interactive Brokers Group, Inc. (Nasdaq: IBKR), an automated global electronic broker, announced results for the quarter ended March 31, 2023.

Reported diluted earnings per share were $1.42 for the current quarter and $1.35 as adjusted. For the year-ago quarter, reported diluted earnings per share were $0.74 and $0.82 as adjusted.

Reported net revenues were $1,056 million for the current quarter and $1,015 million as adjusted. For the year-ago quarter, reported net revenues were $645 million and $692 million as adjusted.

Reported income before income taxes was $761 million for the current quarter and $720 million as adjusted. For the year-ago quarter, reported income before income taxes was $394 million and $441 million as adjusted.

Financial Highlights

(All comparisons are to the year-ago quarter.)

  • Commission revenue increased 2% to $357 million on record contract volumes in futures and larger average trade sizes in options and futures, tempered by lower customer stock trading volume.
  • Net interest income increased 126% to $637 million on higher benchmark interest rates and customer credit balances.
  • Other income increased $58 million to a gain of $19 million. This increase was mainly comprised of $39 million related to our U.S. government securities portfolio, all of which matures within three months, and $19 million related to our currency diversification strategy.
  • Reported pretax profit margin was 72% for the current quarter and 71% as adjusted. For the year-ago quarter, reported pretax margin was 61% and 64% as adjusted.
  • Total equity of $12.2 billion.

The Interactive Brokers Group, Inc. Board of Directors declared a quarterly cash dividend of $0.10 per share. This dividend is payable on June 14, 2023, to shareholders of record as of June 1, 2023.

____________________________________

1 See the reconciliation of non-GAAP financial measures starting on page 9.

Business Highlights

(All comparisons are to the year-ago quarter.)

  • Customer accounts increased 21% to 2.20 million.
  • Customer equity decreased 4% to $343.1 billion.
  • Total DARTs2 decreased 19% to 2.05 million.
  • Cleared DARTs decreased 17% to 1.85 million.
  • Customer credits increased 4% to $96.6 billion.
  • Customer margin loans decreased 18% to $39.4 billion.

Effects of Foreign Currency Diversification

In connection with our currency diversification strategy, we base our net worth in GLOBALs, a basket of 10 major currencies in which we hold our equity. In this quarter, our currency diversification strategy increased our comprehensive earnings by $20 million, as the U.S. dollar value of the GLOBAL increased by approximately 0.17%. The effects of the currency diversification strategy are reported as components of (1) Other Income (gain of $1 million) and (2) Other Comprehensive Income (gain of $19 million).

Conference Call Information:

Interactive Brokers Group, Inc. will hold a conference call with investors today, April 18, 2023, at 4:30 p.m. ET to discuss its quarterly results. Members of the public who would like to listen to the conference call should register at https://register.vevent.com/register/BIc01d49ab32cf4e9899e9034f6068f3f2 to obtain the dial-in details. The number should be dialed approximately ten minutes prior to the start of the conference call. The conference call will also be accessible simultaneously, and through replays, as an audio webcast through the Investor Relations section of the Interactive Brokers web site, www.interactivebrokers.com/ir.

About Interactive Brokers Group, Inc.:

Interactive Brokers Group affiliates provide automated trade execution and custody of securities, commodities and foreign exchange around the clock on over 150 markets in numerous countries and currencies, from a single unified platform to clients worldwide. We service individual investors, hedge funds, proprietary trading groups, financial advisors and introducing brokers. Our four decades of focus on technology and automation has enabled us to equip our clients with a uniquely sophisticated platform to manage their investment portfolios. We strive to provide our clients with advantageous execution prices and trading, risk and portfolio management tools, research facilities and investment products, all at low or no cost, positioning them to achieve superior returns on investments. For the fifth consecutive year, Barron’s ranked Interactive Brokers #1 with 5 out of 5 stars in its March 25, 2022, Best Online Brokers Review.

Cautionary Note Regarding Forward-Looking Statements:

The foregoing information contains certain forward-looking statements that reflect the Company’s current views with respect to certain current and future events and financial performance. These forward-looking statements are and will be, as the case may be, subject to many risks, uncertainties and factors relating to the Company’s operations and business environment which may cause the Company’s actual results to be materially different from any future results, expressed or implied, in these forward-looking statements. Any forward-looking statements in this release are based upon information available to the Company on the date of this release. The Company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any statements expressed or implied therein will not be realized. Additional information on risk factors that could potentially affect the Company’s financial results may be found in the Company’s filings with the Securities and Exchange Commission.

____________________________________

2 Daily average revenue trades (DARTs) are based on customer orders.

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

    Three Months
    Ended March 31,
   

2023

 

2022

    (in millions, except share and per share data)
             
Revenues:            
Commissions   $

357

  $

349

Other fees and services   

43

 

53

Other income (loss)    

19

   

(39)

Total non-interest income    

419

   

363

             
Interest income    

1,347

   

332

Interest expense    

(710)

   

(50)

Total net interest income    

637

   

282

Total net revenues     

1,056

   

645

             
Non-interest expenses:            
Execution, clearing and distribution fees    

95

   

71

Employee compensation and benefits    

128

   

111

Occupancy, depreciation and amortization    

24

   

22

Communications    

9

   

8

General and administrative

36

 

38

Customer bad debt  

3

 

1

Total non-interest expenses     

295

   

251

 
Income before income taxes    

761

   

394

Income tax expense    

61

   

28

 
Net income    

700

   

366

Net income attributable to noncontrolling interests    

552

   

293

Net income available for common stockholders   $

148

  $

73

             
Earnings per share:            
Basic   $

1.44

  $

0.74

Diluted   $

1.42

  $

0.74

             
Weighted average common shares outstanding:            
Basic    

102,958,660

   

98,226,147

Diluted    

104,042,571

   

99,224,776

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

    Three Months
    Ended March 31,
   

2023

 

2022

    (in millions, except share and per share data)
             
Comprehensive income:            
Net income available for common stockholders    $

148

  $

73

Other comprehensive income:             
Cumulative translation adjustment, before income taxes     

5

(10)

Income taxes related to items of other comprehensive income     

-

   

-

Other comprehensive income (loss), net of tax     

5

   

(10)

Comprehensive income available for common stockholders   $

153

  $

63

             
Comprehensive earnings per share:            
Basic    $

1.48

  $

0.65

Diluted    $

1.47

  $

0.64

             
Weighted average common shares outstanding:            
Basic     

102,958,660

   

98,226,147

Diluted     

104,042,571

 

99,224,776

             
         
Comprehensive income attributable to noncontrolling interests:        
Net income attributable to noncontrolling interests   $

552

$

293

Other comprehensive income - cumulative translation adjustment    

14

 

(31)

Comprehensive income attributable to noncontrolling interests   $

566

$

262

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(UNAUDITED)

    March 31,

2023
  December 31,

2022
    (in millions)
           
Assets          
Cash and cash equivalents   $

3,214

  $

3,436

Cash - segregated for regulatory purposes    

24,354

 

25,167

Securities - segregated for regulatory purposes    

36,987

 

31,781

Securities borrowed    

5,306

 

4,749

Securities purchased under agreements to resell    

6,699

 

6,029

Financial instruments owned, at fair value    

383

 

485

Receivables from customers, net of allowance for credit losses    

39,491

 

38,760

Receivables from brokers, dealers and clearing organizations    

1,666

 

3,469

Other assets    

1,369

 

1,267

Total assets   $

119,469

  $

115,143

           
Liabilities and equity          
           
Liabilities          
Short-term borrowings   $

10

  $

18

Securities loaned    

10,719

 

8,940

Financial instruments sold but not yet purchased, at fair value    

190

 

146

Other payables:          
Customers    

94,897

 

93,195

Brokers, dealers and clearing organizations    

369

 

291

Other payables    

1,051

 

938

     

96,317

 

94,424

Total liabilities    

107,236

 

103,528

           
Equity          
Stockholders' equity    

3,001

 

2,848

Noncontrolling interests    

9,232

 

8,767

Total equity    

12,233

 

11,615

Total liabilities and equity    $

119,469

  $

115,143

    March 31,

2023
  December 31,

2022
Ownership of IBG LLC Membership Interests   Interests    %   Interests    %
                 
IBG, Inc.  

102,999,265

 

24.5%

 

102,927,703

 

24.5%

Noncontrolling interests (IBG Holdings LLC)  

316,609,102

 

75.5%

 

316,609,102

 

75.5%

                 
Total IBG LLC membership interests  

419,608,367

 

100.0%

 

419,536,805

 

100.0%

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

OPERATING DATA

TRADE VOLUMES:                                  
(in 000's, except %)                                  
    Cleared        Non-Cleared                       Avg. Trades
    Customer   %   Customer   %   Principal   %   Total   %   per U.S.
Period   Trades   Change   Trades   Change   Trades   Change   Trades   Change   Trading Day

2020

 

620,405

     

56,834

     

27,039

     

704,278

     

2,795

2021

 

871,319

40%

 

78,276

 

38%

 

 32,621

 

21%

 

982,216

 

39%

 

3,905

2022

 

735,619

 

(16%)

 

70,049

 

(11%)

 

32,863

 

1%

 

838,531

 

(15%)

 

3,347

 

                           

1Q2022

 

212,818

   

20,671

   

9,225

   

242,714

   

3,915

1Q2023

 

180,261

 

(15%)

 

15,369

 

(26%)

 

8,187

 

(11%)

 

203,817

 

(16%)

 

3,287

 

                         

4Q2022

 

165,769

   

14,923

   

7,358

     

188,050

   

3,009

1Q2023

 

180,261

 

9%

 

15,369

 

3%

 

8,187

 

11%

 

 203,817

 

8%

 

3,287

CONTRACT AND SHARE VOLUMES:                      
(in 000's, except %)                      
                       
TOTAL   Options   %   Futures1   %   Stocks   %
Period   (contracts)   Change   (contracts)   Change   (shares)   Change

2020

 

624,035

     

167,078

     

338,513,068

 

2021

 

887,849

 

42%

 

154,866

 

 (7%)

 

771,273,709

 

128%

2022

 

908,415

 

2%

 

207,138

 

34%

 

330,035,586

 

(57%)

 

                 

1Q2022

 

245,343

   

53,570

     

97,406,991

 

1Q2023

 

247,508

 

1%

 

55,197

 

3%

 

75,522,066

 

(22%)

 

                 

4Q2022

 

229,441

   

51,519

     

75,713,964

 

1Q2023

 

247,508

 

8%

 

55,197

 

7%

 

75,522,066

 

(0%)

                       
ALL CUSTOMERS   Options   %   Futures1   %   Stocks   %
Period   (contracts)   Change   (contracts)   Change   (shares)   Change

2020

 

584,195

   

164,555

     

331,263,604

 

2021

 

852,169

 

46%

 

152,787

 

(7%)

 

766,211,726

 

131%

2022

 

873,914

 

3%

 

203,933

 

33%

 

325,368,714

 

(58%)

 

                     

1Q2022

 

234,790

     

52,728

     

95,990,985

 

1Q2023

 

239,038

 

2%

 

54,577

 

4%

 

74,562,384

 

(22%)

 

                   

4Q2022

 

221,855

   

50,773

     

74,353,901

   

1Q2023

 

239,038

 

8%

 

54,577

 

7%

 

74,562,384

 

0%

                 
CLEARED CUSTOMERS   Options   %   Futures1   %   Stocks   %
Period   (contracts)   Change   (contracts)   Change   (shares)   Change

2020

 

518,965

   

163,101

     

320,376,365

   

2021

 

773,284

 

49%

 

151,715

 

(7%)

 

752,720,070

 

135%

2022

 

781,373

 

1%

 

202,145

 

33%

 

314,462,672

 

 (58%)

 

                   

1Q2022

 

212,628

   

52,264

     

92,860,481

   

1Q2023

 

209,605

 

(1%)

 

53,957

 

3%

 

72,041,499

 

 (22%)

 

                     

4Q2022

 

194,962

   

50,326

     

71,924,864

   

1Q2023

 

209,605

 

8%

 

53,957

 

7%

 

72,041,499

 

0%

                       
1 Includes options on futures

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

OPERATING DATA, CONTINUED

CONTRACT AND SHARE VOLUMES, continued:                    
(in 000's, except %)                        
                         
PRINCIPAL TRANSACTIONS   Options   %   Futures1   %   Stocks   %
Period   (contracts)   Change   (contracts)   Change   (shares)   Change

2020

 

39,840

     

 2,523

     

7,249,464

   

2021

 

35,680

 

 (10%)

 

2,079

 

(18%)

 

5,061,983

 

(30%)

2022

 

34,501

 

(3%)

 

3,205

 

54%

 

4,666,872

 

(8%)

 

                       

1Q2022

 

10,553

     

842

     

1,416,006

   

1Q2023

 

8,470

 

(20%)

 

620

 

(26%)

 

959,682

 

(32%)

 

                       

4Q2022

 

7,586

     

746

     

1,360,063

   

1Q2023

 

8,470

 

12%

 

620

 

(17%)

 

959,682

 

(29%)

                         
1 Includes options on futures                        
CUSTOMER STATISTICS
Year over Year  

1Q2023

   

1Q2022

% Change
   Total Accounts (in thousands)

2,195

1,809

21%

   Customer Equity (in billions)1 $

343.1

$

355.9

 (4%)

   Cleared DARTs (in thousands)

1,845

2,234

(17%)

   Total Customer DARTs (in thousands)

2,054

2,522

(19%)

 
Cleared Customers 
   Commission per Cleared Commissionable Order2 $

3.16

$

2.57

23%

   Cleared Avg. DARTs per Account (Annualized)

214

321

(33%)

 
Consecutive Quarters  

1Q2023

   

4Q2022

% Change
   Total Accounts (in thousands)

2,195

2,091

5%

   Customer Equity (in billions)1 $

343.1

$

306.7

12%

   Cleared DARTs (in thousands)

1,845

1,689

9%

   Total Customer DARTs (in thousands)

2,054

1,889

9%

 
Cleared Customers 
   Commission per Cleared Commissionable Order2 $

3.16

$

3.15

0%

   Cleared Avg. DARTs per Account (Annualized)

214

206

4%

 
(1) Excludes non-Customers.
(2) Commissionable Order - a customer order that generates commissions.

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

NET INTEREST MARGIN

(UNAUDITED)

    Three Months
    Ended March 31,
   

2023

 

2022

    (in millions)
 
Average interest-earning assets            
Segregated cash and securities   $

59,679

  $

43,287

Customer margin loans  

39,303

   

47,141

Securities borrowed  

4,868

   

3,467

Other interest-earning assets  

9,777

   

8,211

FDIC sweeps1  

2,428

   

2,219

    $

116,055

  $

104,325

             
Average interest-bearing liabilities            
Customer credit balances $

95,802

  $

84,394

Securities loaned  

8,571

   

11,089

Other interest-bearing liabilities   

1

   

12

    $

104,374

  $

95,495

             
Net interest income            
Segregated cash and securities, net $

603

  $

7

Customer margin loans2  

477

   

149

Securities borrowed and loaned, net  

88

   

110

Customer credit balances, net2  

(653)

   

9

Other net interest income1/3  

125

   

8

Net interest income3 $

640

  $

283

             
Net interest margin ("NIM")    

2.24%

   

1.10%

             
Annualized yields            
Segregated cash and securities  

4.10%

   

0.07%

Customer margin loans  

4.92%

   

1.28%

Customer credit balances  

2.76%

   

-0.04%

1

  Represents the average amount of customer cash swept into FDIC-insured banks as part of our Insured Bank Deposit Sweep Program. This item is not recorded in the Company's consolidated statements of financial condition. Income derived from program deposits is reported in other net interest income in the table above.
 

2

  Interest income and interest expense on customer margin loans and customer credit balances, respectively, are calculated on daily cash balances within each customer’s account on a net basis, which may result in an offset of balances across multiple account segments (e.g., between securities and commodities segments).   
 

3

  Includes income from financial instruments that has the same characteristics as interest, but is reported in other fees and services and other income in the Company’s consolidated statements of comprehensive income. For the three months ended March 31, 2023 and 2022, $3 million and $1 million were reported in other fees and services, respectively. For the three months ended March 31, 2023 and 2022, $0 million and $0 million were reported in other income, respectively.

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(UNAUDITED)

    Three Months
    Ended March 31,
   

2023

 

2022

    (in millions)
             
Adjusted net revenues1            
Net revenues - GAAP   $

1,056

  $

645

             
Non-GAAP adjustments            
Currency diversification strategy, net    

(1)

   

18

Mark-to-market on investments2    

(40)

   

29

Total non-GAAP adjustments    

(41)

   

47

Adjusted net revenues   $

1,015

  $

692

             
Adjusted income before income taxes1            
Income before income taxes - GAAP   $

761

  $

394

             
Non-GAAP adjustments            
Currency diversification strategy, net    

(1)

   

18

Mark-to-market on investments2    

(40)

   

29

Total non-GAAP adjustments    

(41)

   

47

Adjusted income before income taxes   $

720

  $

441

           
Adjusted pre-tax profit margin    

71%

   

64%

    Three Months
    Ended March 31,
   

2023

 

2022

    (in millions)
Adjusted net income available for common stockholders1          
Net income available for common stockholders - GAAP   $

148

  $

73

           
Non-GAAP adjustments          
Currency diversification strategy, net    

-

   

4

Mark-to-market on investments2    

(10)

   

7

Income tax effect of above adjustments3    

2

   

(2)

Total non-GAAP adjustments    

(8)

   

9

Adjusted net income available for common stockholders   $

140

  $

82

             
Note: Amounts may not add due to rounding.            
             
    Three Months
    Ended March 31,
   

2023

 

2022

    (in dollars)
Adjusted diluted EPS1            
Diluted EPS - GAAP   $

1.42

  $

0.74

             
Non-GAAP adjustments            
Currency diversification strategy, net    

(0.00)

   

0.04

Mark-to-market on investments2    

(0.09)

   

0.07

Income tax effect of above adjustments3    

0.02

   

(0.02)

Total non-GAAP adjustments    

(0.07)

   

0.09

Adjusted diluted EPS   $

1.35

  $

0.82

             
Diluted weighted average common shares outstanding    

104,042,571

   

99,224,776

             
Note: Amounts may not add due to rounding.            

Note: The term “GAAP” in the following explanation refers to generally accepted accounting principles in the United States.

1 Adjusted net revenues, adjusted income before income taxes, adjusted net income available for common stockholders and adjusted diluted earnings per share (“EPS”) are non-GAAP financial measures.

  • We define adjusted net revenues as net revenues adjusted to remove the effect of our currency diversification strategy and our net mark-to-market gains (losses) on investments2.
  • We define adjusted income before income taxes as income before income taxes adjusted to remove the effect of our currency diversification strategy and our net mark-to-market gains (losses) on investments.
  • We define adjusted net income available to common stockholders as net income available for common stockholders adjusted to remove the after-tax effects attributable to IBG, Inc. of our currency diversification strategy and our mark-to-market gains (losses) on investments.
  • We define adjusted diluted EPS as adjusted net income available for common stockholders divided by the diluted weighted average number of shares outstanding for the period.

Management believes these non-GAAP items are important measures of our financial performance because they exclude certain items that may not be indicative of our core operating results and business outlook and may be useful to investors and analysts in evaluating the operating performance of the business and facilitating a meaningful comparison of our results in the current period to those in prior and future periods. Our currency diversification strategy and our mark-to-market on investments are excluded because management does not believe they are indicative of our underlying core business performance. Adjusted net revenues, adjusted income before income taxes, adjusted net income available to common stockholders and adjusted diluted EPS should be considered in addition to, rather than as a substitute for, GAAP net revenues, income before income taxes, net income attributable to common stockholders and diluted EPS.

2 Mark-to-market on investments represents the net mark-to-market gains (losses) on investments in equity securities that do not qualify for equity method accounting which are measured at fair value, on our U.S. government and municipal securities portfolio, which are typically held to maturity, and on certain other investments, including equity securities taken over by the Company from customers related to losses on margin loans.

3 The income tax effect is estimated using the statutory income tax rates applicable to the Company.

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