Interactive Brokers Group Announces 2Q2023 Results
Interactive Brokers Group, Inc. (Nasdaq: IBKR), an automated global electronic broker, announced results for the quarter ended June 30, 2023.
Reported diluted earnings per share were $1.20 for the current quarter and $1.32 as adjusted. For the year-ago quarter, reported diluted earnings per share were $0.72 and $0.84 as adjusted.
Reported net revenues were $1,000 million for the current quarter and $1,064 million as adjusted. For the year-ago quarter, reported net revenues were $656 million and $717 million as adjusted.
Reported income before income taxes was $652 million for the current quarter and $716 million as adjusted. For the year-ago quarter, reported income before income taxes was $392 million and $453 million as adjusted.
Financial Highlights
(All comparisons are to the year-ago quarter.)
Commission revenue was unchanged at $322 million. Customer trading volume was mixed across product types with options contracts volume up 9% while futures contracts and stock share volumes were down 3% and 28%, respectively. Net interest income increased 99% to $694 million on higher benchmark interest rates and customer credit balances. Execution, clearing and distribution fees expenses increased 21% to $93 million driven by higher customer trading volume in options, the non-recurrence of a $3 million OCC rebate in the year-ago quarter, and a $1 million increase in market data fees, which are associated with market data revenue included in other fees and services. General and administrative expenses increased $43 million to $85 million. The increase is largely attributable to reserves related to the previously-disclosed regulatory investigations into the use of unapproved electronic messaging and record-keeping requirements. As has been publicly reported, the SEC and CFTC are conducting an industry-wide sweep that has resulted in substantial settlements with other financial services firms. Reported pretax profit margin was 65% for the current quarter and 67% as adjusted. For the year-ago quarter, reported pretax margin was 60% and 63% as adjusted. Total equity of $12.7 billion.The Interactive Brokers Group, Inc. Board of Directors declared a quarterly cash dividend of $0.10 per share. This dividend is payable on September 14, 2023, to shareholders of record as of September 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 19% to 2.29 million. Customer equity increased 24% to $365.0 billion. Total DARTs2 decreased 14% to 1.87 million. Cleared DARTs decreased 13% to 1.67 million. Customer credits increased 7% to $98.9 billion. Customer margin loans decreased 2% to $41.9 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 $24 million, as the U.S. dollar value of the GLOBAL decreased by approximately 0.14%. The effects of the currency diversification strategy are reported as components of (1) Other Income (loss of $55 million) and (2) Other Comprehensive Income (gain of $31 million).
Conference Call Information:
Interactive Brokers Group, Inc. will hold a conference call with investors today, July 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/BIdb81bf27b8a947f2af9d311979370b58 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 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.
_______________________________
2 Daily average revenue trades (DARTs) are based on customer orders.
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Six Months Ended June 30, Ended June 30,2023
2022
2023
2022
(in millions, except share and per share data) Revenues: Commissions $322
$322
$679
$671
Other fees and services47
43
90
96
Other loss(63)
(57)
(44)
(96)
Total non-interest income306
308
725
671
Interest income1,545
460
2,892
792
Interest expense(851)
(112)
(1,561)
(162)
Total net interest income694
348
1,331
630
Total net revenues1,000
656
2,056
1,301
Non-interest expenses: Execution, clearing and distribution fees93
77
188
148
Employee compensation and benefits136
112
264
223
Occupancy, depreciation and amortization25
23
49
45
Communications10
9
19
17
General and administrative85
42
121
80
Customer bad debt(1)
1
2
2
Total non-interest expenses348
264
643
515
Income before Income taxes652
392
1,413
786
Income tax expense51
32
112
60
Net income601
360
1,301
726
Net income attributable to noncontrolling interests476
288
1,028
581
Net income available for common stockholders $125
$72
$273
$145
Earnings per share: Basic $1.21
$0.73
$2.65
$1.47
Diluted $1.20
$0.72
$2.62
$1.46
Weighted average common shares outstanding: Basic103,587,557
98,853,981
103,274,846
98,541,798
Diluted104,463,729
99,695,489
104,254,888
99,461,867
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
Three Months Six Months Ended June 30, Ended June 30,2023
2022
2023
2022
(in millions, except share and per share data) Comprehensive income: Net income available for common stockholders $125
$72
$273
$145
Other comprehensive income: Cumulative translation adjustment, before income taxes7
(24)
12
(34)
Income taxes related to items of other comprehensive Income-
-
-
-
Other comprehensive income (loss), net of tax7
(24)
12
(34)
Comprehensive income available for common stockholders $132
$48
$285
$111
Comprehensive earnings per share: Basic $1.28
$0.48
$2.76
$1.12
Diluted $1.27
$0.47
$2.74
$1.11
Weighted average common shares outstanding: Basic103,587,557
98,853,981
103,274,846
98,541,798
Diluted104,463,729
99,695,489
104,254,888
99,461,867
Comprehensive income attributable to noncontrolling interests: Net income attributable to noncontrolling interests $476
$288
$1,028
$581
Other comprehensive income - cumulative translation adjustment24
(81)
38
(112)
Comprehensive income attributable to noncontrolling interests $500
$207
$1,066
$469
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
June 30,2023 December 31,
2022 (in millions) Assets Cash and cash equivalents $
3,681
$3,436
Cash - segregated for regulatory purposes25,770
25,167
Securities - segregated for regulatory purposes33,457
31,781
Securities borrowed5,999
4,749
Securities purchased under agreements to resell6,431
6,029
Financial instruments owned, at fair value495
485
Receivables from customers, net of allowance for credit losses41,966
38,760
Receivables from brokers, dealers and clearing organizations1,400
3,469
Other assets1,394
1,267
Total assets $120,593
$115,143
Liabilities and equity Liabilities Short-term borrowings $17
$18
Securities loaned10,261
8,940
Financial instruments sold but not yet purchased, at fair value157
146
Other payables: Customers95,999
93,195
Brokers, dealers and clearing organizations376
291
Other payables1,126
938
97,501
94,424
Total liabilities107,936
103,528
Stockholders' equity3,158
2,848
Noncontrolling interests9,499
8,767
Total equity12,657
11,615
Total liabilities and equity $120,593
$115,143
June 30,2023 December 31,
2022 Ownership of IBG LLC Membership Interests Interests % Interests % IBG, Inc.
104,363,296
24.8%
102,927,703
24.5%
Noncontrolling interests (IBG Holdings LLC)316,609,102
75.2%
316,609,102
75.5%
Total IBG LLC membership interests420,972,398
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 Day2020
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
2Q2022
186,791
18,274
8,327
213,392
3,442
2Q2023
161,710
(13%)
14,071
(23%)
8,383
1%
184,164
(14%)
2,970
1Q2023
180,261
15,369
8,187
203,817
3,287
2Q2023
161,710
(10%)
14,071
(8%)
8,383
2%
184,164
(10%)
2,970
CONTRACT AND SHARE VOLUMES:(in 000's, except %)
TOTAL
Options % 1 % Stocks %Period
(contracts) Change (contracts) Change (shares) Change2020
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%)
2Q2022
217,642
51,562
81,137,875
2Q2023
236,803
9%
49,644
(4%)
58,720,684
(28%)
1Q2023
247,508
55,197
75,522,066
2Q2023
236,803
(4%)
49,644
(10%)
58,720,684
(22%)
ALL CUSTOMERS
Options % 1 % Stocks %Period
(contracts) Change (contracts) Change (shares) Change2020
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%)
2Q2022
209,124
50,707
80,079,410
2Q2023
227,884
9%
49,040
(3%)
57,711,637
(28%)
1Q2023
239,038
54,577
74,562,384
2Q2023
227,884
(5%)
49,040
(10%)
57,711,637
(23%)
CLEARED CUSTOMERS
Options % 1 % Stocks %Period
(contracts) Change (contracts) Change (shares) Change2020
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%)
2Q2022
188,617
50,313
77,283,249
2Q2023
194,082
3%
48,506
(4%)
55,664,831
(28%)
1Q2023
209,605
53,957
72,041,499
2Q2023
194,082
(7%)
48,506
(10%)
55,664,831
(23%)
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 % 1 % Stocks % Period (contracts) Change (contracts) Change (shares) Change2020
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%)
2Q2022
8,518
855
1,058,465
2Q2023
8,919
5%
604
(29%)
1,009,047
(5%)
1Q2023
8,470
620
959,682
2Q2023
8,919
5%
604
(3%)
1,009,047
5%
1 Includes options on futures CUSTOMER STATISTICS Year over Year2Q2023
2Q2022
% Change Total Accounts (in thousands)2,290
1,923
19%
Customer Equity (in billions)1 $365.0
$294.8
24%
Cleared DARTs (in thousands)1,673
1,927
(13%)
Total Customer DARTs (in thousands)1,865
2,173
(14%)
Cleared Customers Commission per Cleared Commissionable Order2 $3.11
$2.74
14%
Cleared Avg. DARTs per Account (Annualized)186
259
(28%)
Consecutive Quarters2Q2023
1Q2023
% Change Total Accounts (in thousands)2,290
2,195
4%
Customer Equity (in billions)1 $365.0
$343.1
6%
Cleared DARTs (in thousands)1,673
1,845
(9%)
Total Customer DARTs (in thousands)1,865
2,054
(9%)
Cleared Customers Commission per Cleared Commissionable Order2 $3.11
$3.16
(2%)
Cleared Avg. DARTs per Account (Annualized)186
214
(13%)
(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 Six Months Ended June 30, Ended June 30,2023
2022
2023
2022
(in millions) Average interest-earning assets Segregated cash and securities $61,038
$50,508
$60,359
$46,898
Customer margin loans39,989
44,764
39,646
45,953
Securities borrowed5,649
3,775
5,259
3,621
Other interest-earning assets10,090
9,482
9,934
8,847
FDIC sweeps12,719
2,176
2,574
2,198
$119,485
$110,705
$117,770
$107,517
Average interest-bearing liabilities Customer credit balances $96,416
$90,048
$96,109
$87,222
Securities loaned9,729
10,599
9,150
10,844
Other interest-bearing liabilities-
1
1
7
$106,145
$100,648
$105,260
$98,073
Net interest income Segregated cash and securities, net $700
$53
$1,303
$60
Customer margin loans2547
197
1,024
346
Securities borrowed and loaned, net79
116
167
226
Customer credit balances, net2(774)
(37)
(1,427)
(28)
Other net interest income1/3145
22
270
30
Net interest income3 $697
$351
$1,337
$634
Net interest margin ("NIM")2.34%
1.27%
2.29%
1.19%
Annualized yields Segregated cash and securities4.60%
0.42%
4.35%
0.26%
Customer margin loans5.49%
1.77%
5.21%
1.52%
Customer credit balances3.22%
0.17%
2.99%
0.06%
1Represents 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 six months ended June 30, 2023 and 2022, $5 million, $8 million, $3 million, and $4 million were reported in other fees and services, respectively. For the three and six months ended June 30, 2023 and 2022, -$2 million, -$2 million, $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 Six Months Ended June 30, Ended June 30,2023
2022
2023
2022
(in millions) Adjusted net revenues1 Net revenues - GAAP $1,000
$
656
$
2,056
$
1,301
Non-GAAP adjustments Currency diversification strategy, net55
53
54
71
Mark-to-market on investments29
8
(31)
37
Total non-GAAP adjustments64
61
23
108
Adjusted net revenues $1,064
$717
$2,079
$1,409
Adjusted income before income taxes1 Income before Income taxes - GAAP $652
$
392
$
1,413
$
786
Non-GAAP adjustments Currency diversification strategy, net55
53
54
71
Mark-to-market on investments29
8
(31)
37
Total non-GAAP adjustments64
61
23
108
Adjusted income before income taxes $716
$453
$1,436
$894
Adjusted pre-tax profit margin67%
63%
69%
63%
Three Months Six Months Ended June 30, Ended June 30,2023
2022
2023
2022
(in millions) Adjusted net income available for common stockholders1 Net income available for common stockholders - GAAP $125
$72
$
273
$145
Non-GAAP adjustments Currency diversification strategy, net14
13
14
17
Mark-to-market on investments22
2
(8)
9
Income tax effect of above adjustments3(3)
(3)
(1)
(5)
Total non-GAAP adjustments13
12
5
20
Adjusted net income available for common stockholders $138
$84
$278
$165
Note: Amounts may not add due to rounding. Three Months Six Months Ended June 30, Ended June 30,2023
2022
2023
2022
(in dollars) Adjusted diluted EPS1 Diluted EPS - GAAP $1.20
$0.72
$
2.62
$1.46
Non-GAAP adjustments Currency diversification strategy, net0.13
0.13
0.13
0.17
Mark-to-market on investments20.02
0.02
(0.07)
0.09
Income tax effect of above adjustments3(0.03)
(0.03)
(0.01)
(0.05)
Total non-GAAP adjustments0.12
0.12
0.04
0.20
Adjusted diluted EPS $1.32
$0.84
$2.67
$1.66
Diluted weighted average common shares outstanding104,463,729
99,695,489
104,254,888
99,461,867
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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20230718163574/en/