Interactive Brokers Group Announces 1Q2022 Results
Interactive Brokers Group, Inc. (Nasdaq: IBKR), an automated global electronic broker, announced results for the quarter ended March 31, 2022.
Reported diluted earnings per share were $0.74 for the current quarter and $0.82 as adjusted. For the year-ago quarter, reported diluted earnings per share were $1.16 and $0.98 as adjusted.
Reported net revenues were $645 million for the current quarter and $692 million as adjusted. For the year-ago quarter, reported net revenues were $893 million and $796 million as adjusted.
Reported income before income taxes was $394 million for the current quarter and $441 million as adjusted. For the year-ago quarter, reported income before income taxes was $639 million and $542 million as adjusted.
Financial Highlights
(All comparisons are to the year-ago quarter.)
Commission revenue decreased 15% to $349 million on customer stock volume that dropped from an unusually active trading period last year, but was aided by higher customer options and futures trading volumes. Net interest income decreased 8% to $282 million on a decline in securities lending activity, partially offset by gains on margin lending and segregated cash balances. Other income decreased $159 million to a loss of $39 million. This decrease was mainly comprised of the non-recurrence of a $99 million gain related to our strategic investment in Up Fintech Holding Limited (“Tiger Brokers”), $29 million related to our U.S. government securities portfolio, and $16 million related to our currency diversification strategy. Reported pretax profit margin was 61% for the current quarter and 64% as adjusted. For the year-ago quarter, reported pretax margin was 72% and 68% as adjusted. Total equity of $10.5 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, 2022, to shareholders of record as of June 1, 2022.
Business Highlights
(All comparisons are to the year-ago quarter.)
Customer accounts increased 36% to 1.81 million. Customer equity grew 8% to $355.9 billion. Total DARTs2 decreased 24% to 2.52 million. Cleared DARTs decreased 25% to 2.23 million. Customer credits increased 9% to $92.5 billion. Customer margin loans increased 14% to $48.2 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 $59 million, as the U.S. dollar value of the GLOBAL decreased by approximately 0.56%. The effects of the currency diversification strategy are reported as components of (1) Other Income (loss of $18 million) and (2) Other Comprehensive Income (loss of $41 million).
Conference Call Information:
Interactive Brokers Group, Inc. will hold a conference call with investors today, April 19, 2022, at 4:30 p.m. ET to discuss its quarterly results. Investors who would like to listen to the conference call live should dial 877-324-1965 (U.S. domestic) and 631-291-4512 (international). The number should be dialed approximately ten minutes prior to the start of the conference call. Ask for the “Interactive Brokers 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.
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 Ended March 31,2022
2021
(in millions, except share and per share data) Revenues: Commissions $349
$412
Other fees and services53
56
Other income (loss)(39)
120
Total non-interest income363
588
Interest income332
390
Interest expense(50)
(85)
Total net interest income282
305
Total net revenues645
893
Non-interest expenses: Execution, clearing and distribution fees71
68
Employee compensation and benefits111
97
Occupancy, depreciation and amortization22
20
Communications8
8
General and administrative38
59
Customer bad debt1
2
Total non-interest expenses251
254
Income before income taxes394
639
Income tax expense28
53
Net income366
586
Net income attributable to noncontrolling interests293
479
Net income available for common stockholders $73
$107
Earnings per share: Basic $0.74
$1.18
Diluted $0.74
$1.16
Weighted average common shares outstanding: Basic98,226,147
90,789,321
Diluted99,224,776
91,766,142
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
Three Months Ended March 31,2022
2021
(in millions, except share and per share data) Comprehensive income: Net income available for common stockholders $73
$107
Other comprehensive income: Cumulative translation adjustment, before income taxes(10)
(17)
Income taxes related to items of other comprehensive income-
-
Other comprehensive loss, net of tax(10)
(17)
Comprehensive income available for common stockholders $63
$90
Comprehensive earnings per share: Basic $0.65
$0.99
Diluted $0.64
$0.98
Weighted average common shares outstanding: Basic98,226,147
90,789,321
Diluted99,224,776
91,766,142
Comprehensive income attributable to noncontrolling interests: Net income attributable to noncontrolling interests $293
$479
Other comprehensive income - cumulative translation adjustment(31)
(59)
Comprehensive income attributable to noncontrolling interests $262
$420
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
March 31,2022 December 31,
2021 (in millions) Assets Cash and cash equivalents $
2,667
$2,395
Cash - segregated for regulatory purposes24,581
22,888
Securities - segregated for regulatory purposes24,350
15,121
Securities borrowed4,445
3,912
Securities purchased under agreements to resell6,268
4,380
Financial instruments owned, at fair value577
673
Receivables from customers, net of allowance for credit losses48,306
54,935
Receivables from brokers, dealers and clearing organizations2,188
3,771
Other assets1,041
1,038
Total assets $114,423
$109,113
Liabilities and equity Liabilities Short-term borrowings $11
$27
Securities loaned11,379
11,769
Securities sold under agreements to repurchase300
-
Financial instruments sold but not yet purchased, at fair value190
182
Other payables: Customers91,097
85,634
Brokers, dealers and clearing organizations230
557
Other payables734
722
92,061
86,913
Total liabilities103,941
98,891
Equity Stockholders' equity2,456
2,395
Noncontrolling interests8,026
7,827
Total equity10,482
10,222
Total liabilities and equity $114,423
$109,113
March 31, 2022 December 31, 2021 Ownership of IBG LLC Membership Interests Interests % Interests % IBG, Inc.98,280,127
23.5%
98,230,127
23.5%
Noncontrolling interests (IBG Holdings LLC)319,880,492
76.5%
319,880,492
76.5%
Total IBG LLC membership interests418,160,619
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 Day2019
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
1Q2021
273,985
24,079
8,418
306,482
5,024
1Q2022
212,818
(22
%)
20,671
(14
%)
9,225
10
%
242,714
(21
%)
3,915
4Q2021
207,457
19,961
8,001
235,419
3,707
1Q2022
212,818
3
%
20,671
4
%
9,225
15
%
242,714
3
%
3,915
CONTRACT AND SHARE VOLUMES:
(in 000's, except %)
TOTAL
Options % Futures1 % Stocks %Period
(contracts) Change (contracts) Change (shares) Change2019
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
%
1Q2021
231,797
40,868
308,934,824
1Q2022
245,343
6
%
53,570
31
%
97,406,991
(68
%)
4Q2021
244,349
41,997
117,410,095
1Q2022
245,343
0
%
53,570
28
%
97,406,991
(17
%)
ALL CUSTOMERS
Options % Futures1 % Stocks %Period
(contracts) Change (contracts) Change (shares) Change2019
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
%
1Q2021
221,898
40,361
306,165,385
1Q2022
234,790
6
%
52,728
31
%
95,990,985
(69
%)
4Q2021
235,400
41,318
116,546,652
1Q2022
234,790
(0
%)
52,728
28
%
95,990,985
(18
%)
CLEARED CUSTOMERS
Options % Futures1 % Stocks %Period
(contracts) Change (contracts) Change (shares) Change2019
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
%
1Q2021
202,583
40,019
301,675,030
1Q2022
212,628
5
%
52,264
31
%
92,860,481
(69
%)
4Q2021
213,143
41,096
113,441,967
1Q2022
212,628
(0
%)
52,264
27
%
92,860,481
(18
%)
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) Change2019
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
%)
1Q2021
9,899
507
2,769,439
1Q2022
10,553
7
%
842
66
%
1,416,006
(49
%)
4Q2021
8,949
679
863,443
1Q2022
10,553
18
%
842
24
%
1,416,006
64
%
1 Includes options on futures. CUSTOMER STATISTICS Year over Year
1Q2022
1Q2021
% Change Total Accounts (in thousands)1,809
1,325
36
%
Customer Equity (in billions)1 $355.9
$330.6
8
%
Cleared DARTs (in thousands)2,234
2,964
(25
%)
Total Customer DARTs (in thousands)2,522
3,308
(24
%)
Cleared Customers Commission per Cleared Commissionable Order2 $2.57
$2.31
11
%
Cleared Avg. DARTs per Account (Annualized)323
622
(48
%)
Consecutive Quarters1Q2022
4Q2021
% Change Total Accounts (in thousands)1,809
1,676
8
%
Customer Equity (in billions)1 $355.9
$373.8
(5
%)
Cleared DARTs (in thousands)2,234
2,162
3
%
Total Customer DARTs (in thousands)2,522
2,436
4
%
Cleared Customers Commission per Cleared Commissionable Order2 $2.57
$2.38
8
%
Cleared Avg. DARTs per Account (Annualized)323
339
(5
%)
(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 31,2022
2021
(in millions) Average interest-earning assets Segregated cash and securities $43,287
$46,726
Customer margin loans47,141
39,964
Securities borrowed3,467
5,108
Other interest-earning assets8,211
5,416
FDIC sweeps12,219
2,817
$104,325
$100,031
Average interest-bearing liabilities Customer credit balances $84,394
$77,887
Securities loaned11,089
11,117
Other interest-bearing liabilities12
138
$95,495
$89,142
Net interest income Segregated cash and securities, net $7
$2
Customer margin loans2149
117
Securities borrowed and loaned, net110
175
Customer credit balances, net29
9
Other net interest income1/38
9
Net interest income3 $283
$312
Net interest margin ("NIM")1.10%
1.26%
Annualized yields Segregated cash and securities0.07%
0.02%
Customer margin loans1.28%
1.19%
Customer credit balances-0.04%
-0.05%
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, 2022 and 2021, $1 million and $8 million were reported in other fees and services, respectively. For the three months ended March 31, 2022 and 2021, $0 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 Ended March 31,2022
2021
(in millions) Adjusted net revenues1 Net revenues - GAAP $645
$893
Non-GAAP adjustments Currency diversification strategy, net18
2
Mark-to-market on investments229
(99)
Total non-GAAP adjustments47
(97)
Adjusted net revenues $692
$796
Adjusted income before income taxes1 Income before income taxes - GAAP $394
$639
Non-GAAP adjustments Currency diversification strategy, net18
2
Mark-to-market on investments229
(99)
Total non-GAAP adjustments47
(97)
Adjusted income before income taxes $441
$542
Adjusted pre-tax profit margin64%
68%
Three Months Ended March 31,2022
2021
(in millions) Adjusted net income available for common stockholders1 Net income available for common stockholders - GAAP $73
$107
Non-GAAP adjustments Currency diversification strategy, net4
0
Mark-to-market on investments27
(22)
Income tax effect of above adjustments3(2)
4
Total non-GAAP adjustments9
(17)
Adjusted net income available for common stockholders $82
$90
Note: Amounts may not add due to rounding. Three Months Ended March 31,2022
2021
(in dollars) Adjusted diluted EPS1 Diluted EPS - GAAP $0.74
$1.16
Non-GAAP adjustments Currency diversification strategy, net0.04
0.00
Mark-to-market on investments20.07
(0.24)
Income tax effect of above adjustments3(0.02)
0.05
Total non-GAAP adjustments0.09
(0.19)
Adjusted diluted EPS $0.82
$0.98
Diluted weighted average common shares outstanding99,224,776
91,766,142
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 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 The income tax effect is estimated using the corporate income tax rates applicable to the Company.
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