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Interactive Brokers Group Announces 3Q2022 Results

GAAP DILUTED EPS OF $0.97, ADJUSTED1 EPS OF $1.08

GAAP NET REVENUES OF $790 MILLION, ADJUSTED NET REVENUES OF $847 MILLION

Interactive Brokers Group, Inc. (Nasdaq: IBKR), an automated global electronic broker, announced results for the quarter ended September 30, 2022.

Reported diluted earnings per share were $0.97 for the current quarter and $1.08 as adjusted. For the year-ago quarter, reported diluted earnings per share were $0.43 and $0.78 as adjusted.

Reported net revenues were $790 million for the current quarter and $847 million as adjusted. For the year-ago quarter, reported net revenues were $464 million and $650 million as adjusted.

Reported income before income taxes was $523 million for the current quarter and $580 million as adjusted. For the year-ago quarter, reported income before income taxes was $234 million and $420 million as adjusted.

Financial Highlights

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

  • Commission revenue increased 3% to $320 million on higher customer futures trading volume and higher options commission per contract, tempered by lower stock volume.
  • Net interest income increased 73% to $473 million on higher benchmark interest rates and customer credit balances, partially offset by a decline in margin lending balances.
  • Other income increased $122 million to a loss of $48 million. This increase was mainly comprised of a $171 million lesser loss related to our strategic investment in Up Fintech Holding Limited (“Tiger Brokers”), partially offset by $37 million related to our currency diversification strategy and $7 million related to trading activities.
  • Reported pretax profit margin was 66% for the current quarter and 68% as adjusted. For the year-ago quarter, reported pretax margin was 50% and 65% as adjusted.
  • Total equity of $10.9 billion.

The Interactive Brokers Group, Inc. Board of Directors declared a quarterly cash dividend of $0.10 per share. This dividend is payable on December 14, 2022, to shareholders of record as of December 1, 2022.

___________________________

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 31% to 2.01 million.
  • Customer equity decreased 19% to $287.1 billion.
  • Total DARTs2 decreased 15% to 1.92 million.
  • Cleared DARTs decreased 15% to 1.71 million.
  • Customer credits increased 10% to $94.7 billion.
  • Customer margin loans decreased 19% to $40.5 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 decreased our comprehensive earnings by $163 million, as the U.S. dollar value of the GLOBAL decreased by approximately 1.46%. The effects of the currency diversification strategy are reported as components of (1) Other Income (loss of $40 million) and (2) Other Comprehensive Income (loss of $123 million).

Conference Call Information:

Interactive Brokers Group, Inc. will hold a conference call with investors today, October 18, 2022, 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/BId2b20dea2a3343ec87ad7f87670ee43b 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 Nine Months
Ended September 30, Ended September 30,

2022

2021

2022

2021

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

320

 

$

311

 

$

991

 

$

1,030

 

Other fees and services

45

 

49

 

141

 

160

 

Other income (loss)

(48

)

(170

)

(144

)

68

 

 
Total non-interest income

317

 

190

 

988

 

1,258

 

 
Interest income

783

 

325

 

1,575

 

1,022

 

Interest expense

(310

)

(51

)

(472

)

(169

)

 
Total net interest income

473

 

274

 

1,103

 

853

 

 
Total net revenues

790

 

464

 

2,091

 

2,111

 

 
Non-interest expenses:
Execution, clearing and distribution fees

86

 

61

 

234

 

183

 

Employee compensation and benefits

112

 

98

 

335

 

291

 

Occupancy, depreciation and amortization

23

 

19

 

68

 

58

 

Communications

8

 

8

 

25

 

24

 

General and administrative

37

 

44

 

117

 

138

 

Customer bad debt

1

 

-

 

3

 

3

 

 
Total non-interest expenses

267

 

230

 

782

 

697

 

 
Income before income taxes

523

 

234

 

1,309

 

1,414

 

 
Income tax expense

40

 

28

 

100

 

116

 

 
Net income

483

 

206

 

1,209

 

1,298

 

 
Net income attributable to noncontrolling interests

384

 

164

 

965

 

1,057

 

 
Net income available for common stockholders $

99

 

$

42

 

$

244

 

$

241

 

 
Earnings per share:
Basic $

0.98

 

$

0.44

 

$

2.45

 

$

2.60

 

Diluted $

0.97

 

$

0.43

 

$

2.43

 

$

2.58

 

 
Weighted average common shares outstanding:
Basic

101,818,667

 

96,229,958

 

99,646,091

 

92,814,767

 

Diluted

102,555,482

 

96,989,968

 

100,505,075

 

93,671,689

 

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

 
Three Months Nine Months
Ended September 30, Ended September 30,

2022

2021

2022

2021

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

99

 

$

42

 

$

244

 

$

241

 

Other comprehensive income:
Cumulative translation adjustment, before income taxes

(30

)

(9

)

(64

)

(21

)

Income taxes related to items of other comprehensive income

-

 

-

 

-

 

-

 

Other comprehensive loss, net of tax

(30

)

(9

)

(64

)

(21

)

Comprehensive income available for common stockholders $

69

 

$

33

 

$

180

 

$

220

 

 
Comprehensive earnings per share:
Basic $

0.68

 

$

0.34

 

$

1.81

 

$

2.37

 

Diluted $

0.68

 

$

0.34

 

$

1.79

 

$

2.35

 

 
Weighted average common shares outstanding:
Basic

101,818,667

 

96,229,958

 

99,646,091

 

92,814,767

 

Diluted

102,555,482

 

96,989,968

 

100,505,075

 

93,671,689

 

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

384

 

$

164

 

$

965

 

$

1,057

 

Other comprehensive income - cumulative translation adjustment

(93

)

(31

)

(205

)

(74

)

Comprehensive income attributable to noncontrolling interests $

291

 

$

133

 

$

760

 

$

983

 

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(UNAUDITED)

 
September 30,

2022
December 31,

2021
(in millions)
 
Assets
Cash and cash equivalents $

3,184

$

2,395

 

Cash - segregated for regulatory purposes

25,432

22,888

 

Securities - segregated for regulatory purposes

31,301

15,121

 

Securities borrowed

3,908

3,912

 

Securities purchased under agreements to resell

4,860

4,380

 

Financial instruments owned, at fair value

1,093

673

 

Receivables from customers, net of allowance for credit losses

40,424

54,935

 

Receivables from brokers, dealers and clearing organizations

3,321

3,771

 

Other assets

1,160

1,038

 

 

Total assets

$

114,683

$

109,113

 

 
Liabilities and equity
 
Liabilities
Short-term borrowings $

35

$

27

 

Securities loaned

9,490

11,769

 

Financial instruments sold but not yet purchased, at fair value

411

182

 

Other payables:
Customers

92,594

85,634

 

Brokers, dealers and clearing organizations

380

557

 

Other payables

873

722

 

93,847

86,913

 

 
Total liabilities

103,783

98,891

 

 
Equity
Stockholders' equity

2,677

2,395

 

Noncontrolling interests

8,223

7,827

 

Total equity

10,900

10,222

 

 
Total liabilities and equity $

114,683

$

109,113

 

 
September 30, 2022 December 31, 2021
Ownership of IBG LLC Membership Interests Interests % Interests %
 
IBG, Inc.

102,873,607

24.5

%

98,230,127

23.5

%

Noncontrolling interests (IBG Holdings LLC)

316,609,102

75.5

%

319,880,492

76.5

%

 
Total IBG LLC membership interests

419,482,709

100.0

%

418,110,619

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

2019

302,289

26,346

17,136

345,771

1,380

2020

620,405

105%

56,834

116%

27,039

58%

704,278

104%

2,795

2021

871,319

40%

78,276

38%

32,621

21%

982,216

39%

3,905

 

3Q2021

193,218

18,106

8,228

219,552

3,431

3Q2022

170,240

(12%)

16,181

(11%)

7,953

(3%)

194,374

(11%)

3,037

 

2Q2022

186,791

18,274

8,327

213,392

3,442

3Q2022

170,240

(9%)

16,181

(11%)

7,953

(4%)

194,374

(9%)

3,037

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

2019

390,739

128,770

176,752,967

2020

624,035

60%

167,078

30%

338,513,068

92%

2021

887,849

42%

154,866

(7%)

771,273,709

128%

 

3Q2021

214,988

36,940

172,828,874

3Q2022

215,988

0%

50,486

37%

75,776,756

(56%)

 

2Q2022

217,642

51,562

81,137,875

3Q2022

215,988

(1%)

50,486

(2%)

75,776,756

(7%)

 

ALL CUSTOMERS

Options % Futures1 % Stocks %

Period

(contracts) Change (contracts) Change (shares) Change

2019

349,287

126,363

167,826,490

2020

584,195

67%

164,555

30%

331,263,604

97%

2021

852,169

46%

152,787

(7%)

766,211,726

131%

 

3Q2021

205,797

36,473

172,082,316

3Q2022

208,145

1%

49,725

36%

74,944,418

(56%)

 

2Q2022

209,124

50,707

80,079,410

3Q2022

208,145

(0%)

49,725

(2%)

74,944,418

(6%)

 

CLEARED CUSTOMERS

Options % Futures1 % Stocks %

Period

(contracts) Change (contracts) Change (shares) Change

2019

302,068

125,225

163,030,500

2020

518,965

72%

163,101

30%

320,376,365

97%

2021

773,284

49%

151,715

(7%)

752,720,070

135%

 

3Q2021

186,656

36,245

169,002,045

3Q2022

185,166

(1%)

49,242

36%

72,394,078

(57%)

 

2Q2022

188,617

50,313

77,283,249

3Q2022

185,166

(2%)

49,242

(2%)

72,394,078

(6%)

 
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

2019

41,452

2,407

8,926,477

2020

39,840

(4%)

2,523

5%

7,249,464

(19%)

2021

35,680

(10%)

2,079

(18%)

5,061,983

(30%)

 

3Q2021

9,191

467

746,558

3Q2022

7,843

(15%)

761

63%

832,338

11%

 

2Q2022

8,518

855

1,058,465

3Q2022

7,843

(8%)

761

(11%)

832,338

(21%)

 
1 Includes options on futures
CUSTOMER STATISTICS
 
Year over Year

3Q2022

3Q2021

% Change

Total Accounts (in thousands)

2,012

1,536

31%

Customer Equity (in billions)1 $

287.1

$

353.8

(19%)

 
Cleared DARTs (in thousands)

1,706

2,017

(15%)

Total Customer DARTs (in thousands)

1,920

2,263

(15%)

 
Cleared Customers
Commission per Cleared Commissionable Order2 $

2.96

$

2.46

20%

Cleared Avg. DARTs per Account (Annualized)

217

343

(37%)

 
Consecutive Quarters

3Q2022

2Q2022

% Change

Total Accounts (in thousands)

2,012

1,923

5%

Customer Equity (in billions)1 $

287.1

$

294.8

(3%)

 
Cleared DARTs (in thousands)

1,706

1,927

(11%)

Total Customer DARTs (in thousands)

1,920

2,173

(12%)

 
Cleared Customers
Commission per Cleared Commissionable Order2 $

2.96

$

2.74

8%

Cleared Avg. DARTs per Account (Annualized)

217

259

(16%)

 
(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 Nine Months
Ended September 30, Ended September 30,

2022

2021

2022

2021

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

55,453

 

$

37,239

 

$

49,749

 

$

41,212

 

Customer margin loans

42,425

 

46,636

 

44,777

 

43,611

 

Securities borrowed

4,235

 

3,567

 

3,826

 

3,836

 

Other interest-earning assets

9,103

 

7,426

 

8,932

 

6,751

 

FDIC sweeps1

2,173

 

2,707

 

2,189

 

2,758

 

$

113,389

 

$

97,575

 

$

109,473

 

$

98,168

 

 
Average interest-bearing liabilities
Customer credit balances $

92,846

 

$

78,625

 

$

89,096

 

$

78,063

 

Securities loaned

9,622

 

10,489

 

10,437

 

10,891

 

Other interest-bearing liabilities

1

 

-

 

5

 

145

 

$

102,469

 

$

89,114

 

$

99,537

 

$

89,099

 

 
Net interest income
Segregated cash and securities, net $

228

 

$

(4

)

$

288

 

$

(4

)

Customer margin loans2

317

 

141

 

663

 

386

 

Securities borrowed and loaned, net

114

 

123

 

340

 

434

 

Customer credit balances, net2

(248

)

8

 

(276

)

25

 

Other net interest income1/3

65

 

9

 

95

 

25

 

Net interest income3 $

476

 

$

277

 

$

1,110

 

$

866

 

 
Net interest margin ("NIM")

1.67

%

1.13

%

1.36

%

1.18

%

 
Annualized yields
Segregated cash and securities

1.63

%

-0.04

%

0.77

%

-0.01

%

Customer margin loans

2.96

%

1.20

%

1.98

%

1.18

%

Customer credit balances

1.06

%

-0.04

%

0.41

%

-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 and nine months ended September 30, 2022 and 2021, $3 million, $2 million, $7 million, and $14 million were reported in other fees and services, respectively. For the three and nine months ended September 30, 2022 and 2021, $1 million, $0 million, $1 million, and -$1 million were reported in other income, respectively.

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(UNAUDITED)

 
Three Months Nine Months
Ended September 30, Ended September 30,

2022

2021

2022

2021

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

790

 

$

464

 

$

2,091

 

$

2,111

 

 
Non-GAAP adjustments
Currency diversification strategy, net

40

 

3

 

111

 

14

 

Mark-to-market on investments2

17

 

184

 

54

 

(28

)

Remeasurement of TRA liability3

-

 

(1

)

0

 

(1

)

 
Total non-GAAP adjustments

57

 

186

 

165

 

(15

)

 
Adjusted net revenues $

847

 

$

650

 

$

2,256

 

$

2,096

 

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

523

 

$

234

 

$

1,309

 

$

1,414

 

 
Non-GAAP adjustments
Currency diversification strategy, net

40

 

3

 

111

 

14

 

Mark-to-market on investments2

17

 

184

 

54

 

(28

)

Remeasurement of TRA liability3

-

 

(1

)

-

 

(1

)

 
Total non-GAAP adjustments

57

 

186

 

165

 

(15

)

 
 
Adjusted income before income taxes $

580

 

$

420

 

$

1,474

 

$

1,399

 

 
Adjusted pre-tax profit margin

68

%

65

%

65

%

67

%

Three Months Nine Months
Ended September 30, Ended September 30,

2022

2021

2022

2021

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

99

 

$

42

 

$

244

 

$

241

 

 
Non-GAAP adjustments
Currency diversification strategy, net

10

 

1

 

26

 

3

 

Mark-to-market on investments2

4

 

43

 

13

 

(6

)

Remeasurement of TRA liability3

-

 

(1

)

-

 

(1

)

Income tax effect of above adjustments4

(3

)

(10

)

(8

)

1

 

Remeasurement of deferred income taxes5

-

 

1

 

-

 

1

 

 
Total non-GAAP adjustments

11

 

33

 

31

 

(2

)

 
Adjusted net income available for common stockholders $

111

 

$

75

 

$

276

 

$

239

 

 
Note: Amounts may not add due to rounding.
 
Three Months Nine Months
Ended September 30, Ended September 30,

2022

2021

2022

2021

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

0.97

 

$

0.43

 

$

2.43

 

$

2.58

 

 
Non-GAAP adjustments
Currency diversification strategy, net

0.09

 

0.01

 

0.26

 

0.03

 

Mark-to-market on investments2

0.04

 

0.44

 

0.13

 

(0.06

)

Remeasurement of TRA liability3

0.00

 

(0.01

)

0.00

 

(0.01

)

Income tax effect of above adjustments4

(0.03

)

(0.10

)

(0.08

)

0.01

 

Remeasurement of deferred income taxes5

0.00

 

0.01

 

0.00

 

0.01

 

 
Total non-GAAP adjustments

0.11

 

0.34

 

0.31

 

(0.02

)

 
Adjusted diluted EPS $

1.08

 

$

0.78

 

$

2.74

 

$

2.55

 

 
Diluted weighted average common shares outstanding

102,555,482

 

96,989,968

 

100,505,075

 

93,671,689

 

 
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 as defined by SEC Regulation G.

  • 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.

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

3 Remeasurement of our tax receivable agreement (“TRA”) liability represents the change in the amount payable to IBG Holdings LLC under the TRA, primarily due to changes in the Company’s effective tax rates. This is related to the remeasurement of the deferred tax assets described below. For further information refer to Note 4 – Equity and Earnings per Share under Part II, Item 8 – Financial Statements and Supplementary Data of the Company’s Annual Report on Form 10 K filed with the Securities Exchange Commission (“SEC”) on February 25, 2022.

4 The income tax effect is estimated using the corporate income tax rates applicable to the Company.

5 Remeasurement of certain deferred tax assets represents the change in the unamortized balance of deferred tax assets related to the step-up in basis arising from the acquisition of interests in IBG LLC, primarily due to changes in the Company’s effective tax rates. For further information refer to Note 4 – Equity and Earnings per Share under Part II, Item 8 – Financial Statements and Supplementary Data of the Company’s Annual Report on Form 10 K filed with the Securities Exchange Commission (“SEC”) on February 25, 2022.

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