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Interactive Brokers Group Announces 3Q2023 Results

GAAP DILUTED EPS OF $1.56, ADJUSTED1 EPS OF $1.55

GAAP NET REVENUES OF $1,145 MILLION, ADJUSTED NET REVENUES OF $1,139 MILLION

Interactive Brokers Group, Inc. (Nasdaq: IBKR), an automated global electronic broker, announced results for the quarter ended September 30, 2023.

Reported diluted earnings per share were $1.56 for the current quarter and $1.55 as adjusted. For the year-ago quarter, reported diluted earnings per share were $0.97 and $1.08 as adjusted.

Reported net revenues were $1,145 million for the current quarter and $1,139 million as adjusted. For the year-ago quarter, reported net revenues were $790 million and $847 million as adjusted.

Reported income before income taxes was $840 million for the current quarter and $834 million as adjusted. For the year-ago quarter, reported income before income taxes was $523 million and $580 million as adjusted.

Financial Highlights

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

  • Commission revenue increased 4% to $333 million. Customer trading volume was mixed across product types with options contracts volume up 18% while futures contracts and stock share volumes were down 1% and 22%, respectively.
  • Net interest income increased 55% to $733 million on higher benchmark interest rates and customer credit balances.
  • Other income increased $75 million to a gain of $27 million. This increase was mainly comprised of $37 million related to our investment in Tiger Brokers and $23 million related to our currency diversification strategy.
  • Execution, clearing and distribution fees expenses increased 14% to $98 million, driven by higher customer trading volume in options.
  • Pretax profit margin for the current quarter was 73% as reported and as adjusted. For the year-ago quarter, reported pretax margin was 66% and 68% as adjusted.
  • Total equity of $13.3 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, 2023, to shareholders of record as of December 1, 2023.

Business Highlights

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

  • Customer accounts increased 21% to 2.43 million.
  • Customer equity increased 29% to $369.8 billion.
  • Total DARTs2 decreased 1% to 1.91 million.
  • Cleared DARTs increased slightly to 1.71 million.
  • Customer credits increased 3% to $98.0 billion.
  • Customer margin loans increased 8% to $43.6 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 $93 million, as the U.S. dollar value of the GLOBAL decreased by approximately 0.66%. The effects of the currency diversification strategy are reported as components of (1) Other Income (loss of $17 million) and (2) Other Comprehensive Income (loss of $76 million).

Conference Call Information:

Interactive Brokers Group, Inc. will hold a conference call with investors today, October 17, 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/BIcf6925535ae646959727257076fcafce 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 serve 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 sixth consecutive year, Barron’s ranked Interactive Brokers #1 with 5 out of 5 stars in its June 9, 2023, 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.

___________________________________

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

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,

2023

2022

2023

2022

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

333

 

$

320

 

$

1,012

 

$

991

 

Other fees and services

52

 

45

 

142

 

141

 

Other income (loss)

27

 

(48

)

(17

)

(144

)

Total non-interest income

412

 

317

 

1,137

 

988

 

 
Interest income

1,643

 

783

 

4,535

 

1,575

 

Interest expense

(910

)

(310

)

(2,471

)

(472

)

Total net interest income

733

 

473

 

2,064

 

1,103

 

Total net revenues

1,145

 

790

 

3,201

 

2,091

 

 
Non-interest expenses:
Execution, clearing and distribution fees

98

 

86

 

286

 

234

 

Employee compensation and benefits

127

 

112

 

391

 

335

 

Occupancy, depreciation and amortization

25

 

23

 

74

 

68

 

Communications

10

 

8

 

29

 

25

 

General and administrative

45

 

37

 

166

 

117

 

Customer bad debt

-

 

1

 

2

 

3

 

Total non-interest expenses

305

 

267

 

948

 

782

 

 
Income before income taxes

840

 

523

 

2,253

 

1,309

 

Income tax expense

68

 

40

 

180

 

100

 

 
Net income

772

 

483

 

2,073

 

1,209

 

Net income attributable to noncontrolling interests

605

 

384

 

1,633

 

965

 

 
Net income available for common stockholders $

167

 

$

99

 

$

440

 

$

244

 

 
Earnings per share:
Basic $

1.57

 

$

0.98

 

$

4.22

 

$

2.45

 

Diluted $

1.56

 

$

0.97

 

$

4.19

 

$

2.43

 

 
Weighted average common shares outstanding:
Basic

106,233,557

 

101,818,667

 

104,271,921

 

99,646,091

 

Diluted

107,011,427

 

102,555,482

 

105,184,572

 

100,505,075

 

 

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

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

2023

2022

2023

2022

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

167

 

$

99

 

$

440

 

$

244

 

Other comprehensive income:
Cumulative translation adjustment, before income taxes

(19

)

(30

)

(7

)

(64

)

Income taxes related to items of other comprehensive income

-

 

-

 

-

 

-

 

Other comprehensive loss, net of tax

(19

)

(30

)

(7

)

(64

)

Comprehensive income available for common stockholders $

148

 

$

69

 

$

433

 

$

180

 

 
Comprehensive earnings per share:
Basic $

1.39

 

$

0.68

 

$

4.15

 

$

1.81

 

Diluted $

1.38

 

$

0.68

 

$

4.12

 

$

1.79

 

 
Weighted average common shares outstanding:
Basic

106,233,557

 

101,818,667

 

104,271,921

 

99,646,091

 

Diluted

107,011,427

 

102,555,482

 

105,184,572

 

100,505,075

 

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

605

 

$

384

 

$

1,633

 

$

965

 

Other comprehensive income - cumulative translation adjustment

(57

)

(93

)

(19

)

(205

)

Comprehensive income attributable to noncontrolling interests $

548

 

$

291

 

$

1,614

 

$

760

 

 

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(UNAUDITED)

September 30,

2023
December 31,

2022
(in millions)
 
Assets
Cash and cash equivalents $

3,824

$

3,436

Cash - segregated for regulatory purposes

26,385

25,167

Securities - segregated for regulatory purposes

31,335

31,781

Securities borrowed

5,478

4,749

Securities purchased under agreements to resell

5,480

6,029

Financial instruments owned, at fair value

1,324

485

Receivables from customers, net of allowance for credit losses

43,602

38,760

Receivables from brokers, dealers and clearing organizations

1,726

3,469

Other assets

1,482

1,267

Total assets $

120,636

$

115,143

 
Liabilities and equity
 
Liabilities
Short-term borrowings $

11

$

18

Securities loaned

10,482

8,940

Financial instruments sold but not yet purchased, at fair value

198

146

Other payables:
Customers

94,873

93,195

Brokers, dealers and clearing organizations

627

291

Other payables

1,181

938

96,681

94,424

Total liabilities

107,372

103,528

 
Equity
Stockholders' equity

3,390

2,848

Noncontrolling interests

9,874

8,767

Total equity

13,264

11,615

Total liabilities and equity $

120,636

$

115,143

 
September 30,

2023
December 31,

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

106,996,044

25.4

%

102,927,703

24.5

%

Noncontrolling interests (IBG Holdings LLC)

313,976,354

74.6

%

316,609,102

75.5

%

 
Total IBG LLC membership interests

420,972,398

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

 

3Q2022

170,240

16,181

7,953

194,374

3,037

3Q2023

163,318

(4%)

14,218

(12%)

10,109

27%

187,645

(3%)

3,002

 

2Q2023

161,710

14,071

8,383

184,164

2,970

3Q2023

163,318

1%

14,218

1%

10,109

21%

187,645

2%

3,002

 
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%)

 

3Q2022

215,988

50,486

75,776,756

3Q2023

256,481

19%

50,309

(0%)

59,453,190

(22%)

 

2Q2023

236,803

49,644

58,720,684

3Q2023

256,481

8%

50,309

1%

59,453,190

1%

 
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%)

 

3Q2022

208,145

49,725

74,944,418

3Q2023

245,169

18%

49,459

(1%)

58,202,858

(22%)

 

2Q2023

227,884

49,040

57,711,637

3Q2023

245,169

8%

49,459

1%

58,202,858

1%

 
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%)

 

3Q2022

185,166

49,242

72,394,078

3Q2023

209,097

13%

49,345

0%

56,323,672

(22%)

 

2Q2023

194,082

48,506

55,664,831

3Q2023

209,097

8%

49,345

2%

56,323,672

1%

 
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%)

 

3Q2022

7,843

761

832,338

3Q2023

11,312

44%

850

12%

1,250,332

50%

 

2Q2023

8,919

604

1,009,047

3Q2023

11,312

27%

850

41%

1,250,332

24%

 
1 Includes options on futures
 
CUSTOMER STATISTICS
 
Year over Year

3Q2023

 

 

3Q2022

 

% Change

Total Accounts (in thousands)

2,431

2,012

21%

Customer Equity (in billions)1 $

369.8

$

287.1

29%

 
Cleared DARTs (in thousands)

1,709

1,706

0%

Total Customer DARTs (in thousands)

1,907

1,920

(1%)

 
Cleared Customers
Commission per Cleared Commissionable Order2 $

3.11

$

2.96

5%

Cleared Avg. DARTs per Account (Annualized)

180

217

(17%)

 
Consecutive Quarters

3Q2023

2Q2023

% Change

Total Accounts (in thousands)

2,431

2,290

6%

Customer Equity (in billions)1 $

369.8

$

365.0

1%

 
Cleared DARTs (in thousands)

1,709

1,673

2%

Total Customer DARTs (in thousands)

1,907

1,865

2%

 
Cleared Customers
Commission per Cleared Commissionable Order2 $

3.11

$

3.11

0%

Cleared Avg. DARTs per Account (Annualized)

180

186

(3%)

 
(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,

2023

2022

2023

2022

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

58,131

 

$

55,453

 

$

59,616

 

$

49,749

 

Customer margin loans

42,853

 

42,425

 

40,715

 

44,777

 

Securities borrowed

5,557

 

4,235

 

5,358

 

3,826

 

Other interest-earning assets

10,054

 

9,103

 

9,974

 

8,932

 

FDIC sweeps1

3,311

 

2,173

 

2,819

 

2,189

 

$

119,906

 

$

113,389

 

$

118,482

 

$

109,473

 

 
Average interest-bearing liabilities
Customer credit balances $

95,506

 

$

92,846

 

$

95,908

 

$

89,096

 

Securities loaned

9,848

 

9,622

 

9,383

 

10,437

 

Other interest-bearing liabilities

1

 

1

 

1

 

5

 

$

105,355

 

$

102,469

 

$

105,291

 

$

99,537

 

 
Net interest income
Segregated cash and securities, net $

728

 

$

228

 

$

2,031

 

$

288

 

Customer margin loans2

623

 

317

 

1,647

 

663

 

Securities borrowed and loaned, net

66

 

114

 

233

 

340

 

Customer credit balances, net2

(832

)

(248

)

(2,259

)

(276

)

Other net interest income1/3

159

 

65

 

429

 

95

 

Net interest income3 $

744

 

$

476

 

$

2,081

 

$

1,110

 

 
Net interest margin ("NIM")

2.46

%

1.67

%

2.35

%

1.36

%

 
Annualized yields
Segregated cash and securities

4.97

%

1.63

%

4.55

%

0.77

%

Customer margin loans

5.77

%

2.96

%

5.41

%

1.98

%

Customer credit balances

3.46

%

1.06

%

3.15

%

0.41

%

______________________________________________________

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, 2023 and 2022, $6 million, $14 million, $3 million, and $7 million were reported in other fees and services, respectively. For the three and nine months ended September 30, 2023 and 2022, $5 million, $3 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,

2023

2022

2023

2022

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

1,145

 

$

790

 

$

3,201

 

$

2,091

 

 
Non-GAAP adjustments
Currency diversification strategy, net

17

 

40

 

71

 

111

 

Mark-to-market on investments2

(23

)

17

 

(54

)

54

 

Total non-GAAP adjustments

(6

)

57

 

17

 

165

 

Adjusted net revenues $

1,139

 

$

847

 

$

3,218

 

$

2,256

 

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

840

 

$

523

 

$

2,253

 

$

1,309

 

 
Non-GAAP adjustments
Currency diversification strategy, net

17

 

40

 

71

 

111

 

Mark-to-market on investments2

(23

)

17

 

(54

)

54

 

Total non-GAAP adjustments

(6

)

57

 

17

 

165

 

Adjusted income before income taxes $

834

 

$

580

 

$

2,270

 

$

1,474

 

 
Adjusted pre-tax profit margin

73

%

68

%

71

%

65

%

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

2023

2022

2023

2022

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

167

 

$

99

 

$

440

 

$

244

 

 
Non-GAAP adjustments
Currency diversification strategy, net

4

 

10

 

18

 

26

 

Mark-to-market on investments2

(6

)

4

 

(14

)

13

 

Income tax effect of above adjustments3

1

 

(3

)

(0

)

(8

)

Total non-GAAP adjustments

(1

)

11

 

4

 

31

 

Adjusted net income available for common stockholders $

166

 

$

111

 

$

444

 

$

276

 

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

2023

2022

2023

2022

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

1.56

 

$

0.97

 

$

4.19

 

$

2.43

 

 
Non-GAAP adjustments
Currency diversification strategy, net

0.04

 

0.09

 

0.17

 

0.26

 

Mark-to-market on investments2

(0.05

)

0.04

 

(0.13

)

0.13

 

Income tax effect of above adjustments3

0.01

 

(0.03

)

(0.00

)

(0.08

)

Total non-GAAP adjustments

(0.01

)

0.11

 

0.04

 

0.31

 

Adjusted diluted EPS $

1.55

 

$

1.08

 

$

4.22

 

$

2.74

 

 
Diluted weighted average common shares outstanding

107,011,427

 

102,555,482

 

105,184,572

 

100,505,075

 

 
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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