Interactive Brokers Group Announces 4Q2023 Results
Interactive Brokers Group, Inc. (Nasdaq: IBKR), an automated global electronic broker, announced results for the quarter ended December 31, 2023.
Reported diluted earnings per share were $1.48 for the current quarter and $1.52 as adjusted. For the year-ago quarter, reported diluted earnings per share were $1.31 and $1.30 as adjusted.
Reported net revenues were $1,139 million for the current quarter and $1,149 million as adjusted. For the year-ago quarter, reported net revenues were $976 million and $958 million as adjusted.
Reported income before income taxes was $816 million for the current quarter and $831 million as adjusted. For the year-ago quarter, reported income before income taxes was $689 million and $671 million as adjusted.
Financial Highlights
(All comparisons are to the year-ago quarter.)
The Interactive Brokers Group, Inc. Board of Directors declared a quarterly cash dividend of $0.10 per share. This dividend is payable on March 14, 2024, to shareholders of record as of March 1, 2024.
Business Highlights
(All comparisons are to the year-ago quarter.)
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 $139 million, as the U.S. dollar value of the GLOBAL increased by approximately 1.05%. The effects of the currency diversification strategy are reported as components of (1) Other Income (loss of $9 million) and (2) Other Comprehensive Income (gain of $148 million).
Conference Call Information:
Interactive Brokers Group, Inc. will hold a conference call with investors today, January 16, 2024, 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/BI9b8b0781a22347468c0936eccc35776d 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 Twelve Months Ended December 31, Ended December 31,2023
2022
2023
2022
(in millions, except share and per share data) Revenues: Commissions $348
$331
$1,360
$1,322
Other fees and services55
43
197
184
Other income (loss)6
37
(11)
(107)
Total non-interest income409
411
1,546
1,399
Interest income1,695
1,111
6,230
2,686
Interest expense(965)
(546)
(3,436)
(1,018)
Total net interest income730
565
2,794
1,668
Total net revenues1,139
976
4,340
3,067
Non-interest expenses: Execution, clearing and distribution fees100
90
386
324
Employee compensation and benefits136
119
527
454
Occupancy, depreciation and amortization25
22
99
90
Communications12
8
41
33
General and administrative45
48
211
165
Customer bad debt5
-
7
3
Total non-interest expenses323
287
1,271
1,069
Income before Income taxes816
689
3,069
1,998
Income tax expense77
56
257
156
Net income739
633
2,812
1,842
Net income attributable to noncontrolling interests579
497
2,212
1,462
Net income available for common stockholders $160
$136
$600
$380
Earnings per share: Basic $1.49
$1.32
$5.72
$3.78
Diluted $1.48
$1.31
$5.67
$3.75
Weighted average common shares outstanding: Basic107,021,836
102,875,250
104,965,050
100,460,016
Diluted107,811,190
103,656,668
105,846,877
101,299,609
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
Three Months Twelve Months Ended December 31, Ended December 31,2023
2022
2023
2022
(in millions, except share and per share data) Comprehensive income: Net income available for common stockholders $160
$136
$600
$380
Other comprehensive income: Cumulative translation adjustment, before income taxes37
38
30
(26)
Income taxes related to items of other comprehensive Income-
-
-
-
Other comprehensive income (loss), net of tax37
38
30
(26)
Comprehensive income available for common stockholders $197
$174
$630
$354
Comprehensive earnings per share: Basic $1.84
$1.70
$6.00
$3.53
Diluted $1.83
$1.68
$5.95
$3.50
Weighted average common shares outstanding: Basic107,021,836
102,875,250
104,965,050
100,460,016
Diluted107,811,190
103,656,668
105,846,877
101,299,609
Comprehensive income attributable to noncontrolling interests: Net income attributable to noncontrolling interests $579
$497
$2,212
$1,462
Other comprehensive income - cumulative translation adjustment111
120
92
(85)
Comprehensive income attributable to noncontrolling interests $690
$617
$2,304
$1,377
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
December 31,2023 December 31,
2022 (in millions) Assets Cash and cash equivalents $
3,753
$3,436
Cash - segregated for regulatory purposes28,840
25,167
Securities - segregated for regulatory purposes35,386
31,781
Securities borrowed5,835
4,749
Securities purchased under agreements to resell5,504
6,029
Financial instruments owned, at fair value1,488
485
Receivables from customers, net of allowance for credit losses44,472
38,760
Receivables from brokers, dealers and clearing organizations1,643
3,469
Other assets1,502
1,267
Total assets $128,423
$115,143
Liabilities and equity Liabilities Short-term borrowings $17
$18
Securities loaned11,347
8,940
Financial instruments sold but not yet purchased, at fair value193
146
Other payables: Customers101,012
93,195
Brokers, dealers and clearing organizations590
291
Other payables1,197
938
102,799
94,424
Total liabilities114,356
103,528
Stockholders' equity3,584
2,848
Noncontrolling interests10,483
8,767
Total equity14,067
11,615
Total liabilities and equity $128,423
$115,143
December 31, 2023 December 31, 2022 Ownership of IBG LLC Membership InterestsInterests
%
Interests
%
IBG, Inc.107,049,483
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 interests421,025,837
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.
PeriodTrades
Change
Trades
Change
Trades
Change
Trades
Change
Trading Day
2021
871,319
78,276
32,621
982,216
3,905
2022
735,619
(16
%)
70,049
(11
%)
32,863
1
%
838,531
(15
%)
3,347
2023
670,263
(9
%)
58,580
(16
%)
36,725
12
%
765,568
(9
%)
3,075
4Q2022
165,769
14,923
7,358
188,050
3,009
4Q2023
164,975
(0
%)
14,922
(0
%)
10,047
37
%
189,944
1
%
3,039
3Q2023
163,318
14,218
10,109
187,645
3,002
4Q2023
164,975
1
%
14,922
5
%
10,047
(1
%)
189,944
1
%
3,039
CONTRACT AND SHARE VOLUMES:(in 000's, except %)
TOTAL
Options
%
1
%
Stocks
%
Period
(contracts)
Change
(contracts)
Change
(shares)
Change
2021
887,849
154,866
771,273,709
2022
908,415
2
%
207,138
34
%
330,035,586
(57
%)
2023
1,020,736
12
%
209,034
1
%
252,742,847
(23
%)
4Q2022
229,441
51,519
75,713,964
4Q2023
279,945
22
%
53,883
5
%
59,046,908
(22
%)
3Q2023
256,481
50,309
59,453,190
4Q2023
279,945
9
%
53,883
7
%
59,046,908
(1
%)
ALL CUSTOMERS
Options
%
1
%
Stocks
%
Period
(contracts)
Change
(contracts)
Change
(shares)
Change
2021
852,169
152,787
766,211,726
2022
873,914
3
%
203,933
33
%
325,368,714
(58
%)
2023
981,172
12
%
206,073
1
%
248,588,960
(24
%)
4Q2022
221,855
50,773
74,353,901
4Q2023
269,082
21
%
52,996
4
%
58,112,082
(22
%)
3Q2023
245,169
49,459
58,202,858
4Q2023
269,082
10
%
52,996
7
%
58,112,082
(0
%)
CLEARED CUSTOMERS
Options
%
1
%
Stocks
%
Period
(contracts)
Change
(contracts)
Change
(shares)
Change
2021
773,284
151,715
752,720,070
2022
781,373
1
%
202,145
33
%
314,462,672
(58
%)
2023
834,866
7
%
204,691
1
%
240,270,617
(24
%)
4Q2022
194,962
50,326
71,924,864
4Q2023
222,082
14
%
52,883
5
%
56,240,615
(22
%)
3Q2023
209,097
49,345
56,323,672
4Q2023
222,082
6
%
52,883
7
%
56,240,615
(0
%)
1 Includes options on futures
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
OPERATING DATA, CONTINUED
PRINCIPAL TRANSACTIONS
Options
%
1
%
Stocks
%
Period
(contracts)
Change
(contracts)
Change
(shares)
Change
2021
35,680
2,079
5,061,983
2022
34,501
(3
%)
3,205
54
%
4,666,872
(8
%)
2023
39,564
15
%
2,961
(8
%)
4,153,887
(11
%)
4Q2022
7,586
746
1,360,063
4Q2023
10,863
43
%
887
19
%
934,826
(31
%)
3Q2023
11,312
850
1,250,332
4Q2023
10,863
(4
%)
887
4
%
934,826
(25
%)
1 Includes options on futures
CUSTOMER STATISTICS Year over Year4Q2023
4Q2022
% Change
Total Accounts (in thousands)2,562
2,091
23
%
Customer Equity (in billions)1 $426.0
$306.7
39
%
Cleared DARTs (in thousands)1,727
1,689
2
%
Total Customer DARTs (in thousands)1,934
1,889
2
%
Cleared Customers Commission per Cleared Commissionable Order2 $3.19
$3.15
1
%
Cleared Avg. DARTs per Account (Annualized)172
206
(17
%)
Consecutive Quarters4Q2023
3Q2023
% Change
Total Accounts (in thousands)2,562
2,431
5
%
Customer Equity (in billions)1 $426.0
$369.8
15
%
Cleared DARTs (in thousands)1,727
1,709
1
%
Total Customer DARTs (in thousands)1,934
1,907
1
%
Cleared Customers Commission per Cleared Commissionable Order2 $3.19
$3.11
3
%
Cleared Avg. DARTs per Account (Annualized)172
180
(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 Twelve Months Ended December 31, Ended December 31,2023
2022
2023
2022
(in millions) Average interest-earning assets Segregated cash and securities $
59,482
$
57,327
$
59,582
$
51,644
Customer margin loans
42,769
39,277
41,229
43,402
Securities borrowed
5,185
4,368
5,315
3,961
Other interest-earning assets
10,534
9,203
10,114
9,000
FDIC sweeps1
3,554
2,347
3,003
2,229
$
121,524
$
112,522
$
119,242
$
110,235
Average interest-bearing liabilities Customer credit balances $
96,598
$
93,401
$
96,081
$
90,172
Securities loaned
9,922
9,071
9,518
10,095
Other interest-bearing liabilities
1
1
1
4
$
106,521
$
102,473
$
105,599
$
100,271
Net interest income Segregated cash and securities, net $
760
$
454
$
2,791
$
742
Customer margin loans2
631
420
2,278
1,083
Securities borrowed and loaned, net
43
73
276
413
Customer credit balances, net2
(866
)
(487
)
(3,125
)
(763
)
Other net interest income1/3171
112
600
207
Net interest income3 $
739
$
572
$
2,820
$
1,682
Net interest margin ("NIM")
2.41
%
2.02
%
2.36
%
1.53
%
Annualized yields Segregated cash and securities5.07
%
3.14
%
4.68
%
1.44
%
Customer margin loans5.85
%
4.24
%
5.53
%
2.50
%
Customer credit balances3.56
%
2.07
%
3.25
%
0.85
%
______________________________________________________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 twelve months ended December 31, 2023 and 2022, $5 million, $19 million, $3 million, and $10 million were reported in other fees and services, respectively. For the three and twelve months ended December 31, 2023 and 2022, $4 million, $7 million, $3 million, and $4 million were reported in other income, respectively.
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Three Months Twelve Months Ended December 31, Ended December 31,2023
2022
2023
2022
(in millions) Adjusted net revenues1 Net revenues - GAAP $
1,139
$
976
$
4,340
$
3,067
Non-GAAP adjustments Currency diversification strategy, net
9
(11
)
80
100
Mark-to-market on investments2
8
(1
)
(46
)
52
Remeasurement of TRA liability3
(7
)
(6
)
(7
)
(6
)
Total non-GAAP adjustments10
(18
)
27
146
Adjusted net revenues $
1,149
$
958
$
4,367
$
3,213
Adjusted income before income taxes1 Income before Income taxes - GAAP $
816
$
689
$
3,069
$
1,998
Non-GAAP adjustments Currency diversification strategy, net
9
(11
)
80
100
Mark-to-market on investments2
8
(1
)
(46
)
52
Remeasurement of TRA liability3
(7
)
(6
)
(7
)
(6
)
Bad debt expense55
-
5
0
Total non-GAAP adjustments
15
(18
)
32
146
Adjusted income before income taxes $
831
$
671
$
3,101
$
2,144
Adjusted pre-tax profit margin
72
%
70
%
71
%
67
%
Three Months Twelve Months Ended December 31, Ended December 31,2023
2022
2023
2022
(in millions) Adjusted net income available for common stockholders1 Net income available for common stockholders - GAAP $
160
$
136
$
600
$
380
Non-GAAP adjustments Currency diversification strategy, net
2
(3
)
20
24
Mark-to-market on investments2
2
(0
)
(12
)
13
Remeasurement of TRA liability3
(7
)
(6
)
(7
)
(6
)
Bad debt expense41
-
1
-
Income tax effect of above adjustments5
(1
)
1
(2
)
(7
)
Remeasurement of deferred income taxes67
7
7
7
Total non-GAAP adjustments
5
(1
)
8
30
Adjusted net income available for common stockholders $
164
$
135
$
608
$
410
Note: Amounts may not add due to rounding. Three Months Twelve Months Ended December 31, Ended December 31,
2023
2022
2023
2022
(in dollars) Adjusted diluted EPS1 Diluted EPS - GAAP $
1.48
$
1.31
$
5.67
$
3.75
Non-GAAP adjustments Currency diversification strategy, net
0.02
(0.03
)
0.19
0.24
Mark-to-market on investments2
0.02
(0.00
)
(0.11
)
0.12
Remeasurement of TRA liability3
(0.07
)
(0.06
)
(0.07
)
(0.06
)
Bad debt expense40.01
0.00
0.01
0.00
Income tax effect of above adjustments5
(0.01
)
0.01
(0.01
)
(0.07
)
Remeasurement of deferred income taxes60.07
0.07
0.07
0.07
Total non-GAAP adjustments
0.04
(0.01
)
0.08
0.30
Adjusted diluted EPS $
1.52
$
1.30
$
5.75
$
4.05
Diluted weighted average common shares outstanding
107,811,190
103,656,668
105,846,877
101,299,609
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, our net mark-to-market gains (losses) on investments2, and the remeasurement of our Tax Receivable Agreement (“TRA”) liability3. We define adjusted income before income taxes as income before income taxes adjusted to remove the effect of our currency diversification strategy, our net mark-to-market gains (losses) on investments, the remeasurement of our TRA liability, and unusual bad debt expense4. 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 our net mark-to-market gains (losses) on investments, the remeasurement of our TRA liability, unusual bad debt expense, and the remeasurement of certain deferred tax assets6. 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 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 24, 2023.
4Unusual bad debt expense consists of a credit loss on a loan not related to margin lending.
5 The income tax effect is estimated using the statutory income tax rates applicable to the Company.
6 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 24, 2023.
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