Interactive Brokers Group Announces 1Q2023 Results
Interactive Brokers Group, Inc. (Nasdaq: IBKR), an automated global electronic broker, announced results for the quarter ended March 31, 2023.
Reported diluted earnings per share were $1.42 for the current quarter and $1.35 as adjusted. For the year-ago quarter, reported diluted earnings per share were $0.74 and $0.82 as adjusted.
Reported net revenues were $1,056 million for the current quarter and $1,015 million as adjusted. For the year-ago quarter, reported net revenues were $645 million and $692 million as adjusted.
Reported income before income taxes was $761 million for the current quarter and $720 million as adjusted. For the year-ago quarter, reported income before income taxes was $394 million and $441 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 June 14, 2023, to shareholders of record as of June 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.)
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 $20 million, as the U.S. dollar value of the GLOBAL increased by approximately 0.17%. The effects of the currency diversification strategy are reported as components of (1) Other Income (gain of $1 million) and (2) Other Comprehensive Income (gain of $19 million).
Conference Call Information:
Interactive Brokers Group, Inc. will hold a conference call with investors today, April 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/BIc01d49ab32cf4e9899e9034f6068f3f2 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)
2023
2022
(in millions, except share and per share data) Revenues: Commissions $357
$349
Other fees and services43
53
Other income (loss)19
(39)
Total non-interest income419
363
Interest income1,347
332
Interest expense(710)
(50)
Total net interest income637
282
Total net revenues1,056
645
Non-interest expenses: Execution, clearing and distribution fees95
71
Employee compensation and benefits128
111
Occupancy, depreciation and amortization24
22
Communications9
8
General and administrative36
38
Customer bad debt3
1
Total non-interest expenses295
251
Income before Income taxes761
394
Income tax expense61
28
Net income700
366
Net income attributable to noncontrolling interests552
293
Net income available for common stockholders $148
$73
Earnings per share: Basic $1.44
$0.74
Diluted $1.42
$0.74
Weighted average common shares outstanding: Basic102,958,660
98,226,147
Diluted104,042,571
99,224,776
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
2023
2022
(in millions, except share and per share data) Comprehensive income: Net income available for common stockholders $148
$73
Other comprehensive income: Cumulative translation adjustment, before income taxes5
(10)
Income taxes related to items of other comprehensive Income-
-
Other comprehensive income (loss), net of tax5
(10)
Comprehensive income available for common stockholders $153
$63
Comprehensive earnings per share: Basic $1.48
$0.65
Diluted $1.47
$0.64
Weighted average common shares outstanding: Basic102,958,660
98,226,147
Diluted104,042,571
99,224,776
Comprehensive income attributable to noncontrolling interests: Net income attributable to noncontrolling interests $552
$293
Other comprehensive income - cumulative translation adjustment14
(31)
Comprehensive income attributable to noncontrolling interests $566
$262
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
2023 December 31,
2022 (in millions) Assets Cash and cash equivalents $
3,214
$3,436
Cash - segregated for regulatory purposes24,354
25,167
Securities - segregated for regulatory purposes36,987
31,781
Securities borrowed5,306
4,749
Securities purchased under agreements to resell6,699
6,029
Financial instruments owned, at fair value383
485
Receivables from customers, net of allowance for credit losses39,491
38,760
Receivables from brokers, dealers and clearing organizations1,666
3,469
Other assets1,369
1,267
Total assets $119,469
$115,143
Liabilities and equity Liabilities Short-term borrowings $10
$18
Securities loaned10,719
8,940
Financial instruments sold but not yet purchased, at fair value190
146
Other payables: Customers94,897
93,195
Brokers, dealers and clearing organizations369
291
Other payables1,051
938
96,317
94,424
Total liabilities107,236
103,528
Stockholders' equity3,001
2,848
Noncontrolling interests9,232
8,767
Total equity12,233
11,615
Total liabilities and equity $119,469
$115,143
March 31,2023 December 31,
2022 Ownership of IBG LLC Membership Interests Interests % Interests % IBG, Inc.
102,999,265
24.5%
102,927,703
24.5%
Noncontrolling interests (IBG Holdings LLC)316,609,102
75.5%
316,609,102
75.5%
Total IBG LLC membership interests419,608,367
100.0%
419,536,805
100.0%
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
OPERATING DATA
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
1Q2022
212,818
20,671
9,225
242,714
3,915
1Q2023
180,261
(15%)
15,369
(26%)
8,187
(11%)
203,817
(16%)
3,287
4Q2022
165,769
14,923
7,358
188,050
3,009
1Q2023
180,261
9%
15,369
3%
8,187
11%
203,817
8%
3,287
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%)
1Q2022
245,343
53,570
97,406,991
1Q2023
247,508
1%
55,197
3%
75,522,066
(22%)
4Q2022
229,441
51,519
75,713,964
1Q2023
247,508
8%
55,197
7%
75,522,066
(0%)
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%)
1Q2022
234,790
52,728
95,990,985
1Q2023
239,038
2%
54,577
4%
74,562,384
(22%)
4Q2022
221,855
50,773
74,353,901
1Q2023
239,038
8%
54,577
7%
74,562,384
0%
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%)
1Q2022
212,628
52,264
92,860,481
1Q2023
209,605
(1%)
53,957
3%
72,041,499
(22%)
4Q2022
194,962
50,326
71,924,864
1Q2023
209,605
8%
53,957
7%
72,041,499
0%
1 Includes options on futures
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
OPERATING DATA, CONTINUED
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%)
1Q2022
10,553
842
1,416,006
1Q2023
8,470
(20%)
620
(26%)
959,682
(32%)
4Q2022
7,586
746
1,360,063
1Q2023
8,470
12%
620
(17%)
959,682
(29%)
1 Includes options on futures CUSTOMER STATISTICS Year over Year1Q2023
1Q2022
% Change Total Accounts (in thousands)2,195
1,809
21%
Customer Equity (in billions)1 $343.1
$355.9
(4%)
Cleared DARTs (in thousands)1,845
2,234
(17%)
Total Customer DARTs (in thousands)2,054
2,522
(19%)
Cleared Customers Commission per Cleared Commissionable Order2 $3.16
$2.57
23%
Cleared Avg. DARTs per Account (Annualized)214
321
(33%)
Consecutive Quarters1Q2023
4Q2022
% Change Total Accounts (in thousands)2,195
2,091
5%
Customer Equity (in billions)1 $343.1
$306.7
12%
Cleared DARTs (in thousands)1,845
1,689
9%
Total Customer DARTs (in thousands)2,054
1,889
9%
Cleared Customers Commission per Cleared Commissionable Order2 $3.16
$3.15
0%
Cleared Avg. DARTs per Account (Annualized)214
206
4%
(1) Excludes non-Customers. (2) Commissionable Order - a customer order that generates commissions.
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
NET INTEREST MARGIN
(UNAUDITED)
2023
2022
(in millions) Average interest-earning assets Segregated cash and securities $59,679
$43,287
Customer margin loans39,303
47,141
Securities borrowed4,868
3,467
Other interest-earning assets9,777
8,211
FDIC sweeps12,428
2,219
$116,055
$104,325
Average interest-bearing liabilities Customer credit balances $95,802
$84,394
Securities loaned8,571
11,089
Other interest-bearing liabilities1
12
$104,374
$95,495
Net interest income Segregated cash and securities, net $603
$7
Customer margin loans2477
149
Securities borrowed and loaned, net88
110
Customer credit balances, net2(653)
9
Other net interest income1/3125
8
Net interest income3 $640
$283
Net interest margin ("NIM")2.24%
1.10%
Annualized yields Segregated cash and securities4.10%
0.07%
Customer margin loans4.92%
1.28%
Customer credit balances2.76%
-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 months ended March 31, 2023 and 2022, $3 million and $1 million were reported in other fees and services, respectively. For the three months ended March 31, 2023 and 2022, $0 million and $0 million were reported in other income, respectively.
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
2023
2022
(in millions) Adjusted net revenues1 Net revenues - GAAP $1,056
$645
Non-GAAP adjustments Currency diversification strategy, net(1)
18
Mark-to-market on investments2(40)
29
Total non-GAAP adjustments(41)
47
Adjusted net revenues $1,015
$692
Adjusted income before income taxes1 Income before Income taxes - GAAP $761
$394
Non-GAAP adjustments Currency diversification strategy, net(1)
18
Mark-to-market on investments2(40)
29
Total non-GAAP adjustments(41)
47
Adjusted income before income taxes $720
$441
Adjusted pre-tax profit margin71%
64%
Three Months Ended March 31,2023
2022
(in millions) Adjusted net income available for common stockholders1 Net income available for common stockholders - GAAP $148
$73
Non-GAAP adjustments Currency diversification strategy, net-
4
Mark-to-market on investments2(10)
7
Income tax effect of above adjustments32
(2)
Total non-GAAP adjustments(8)
9
Adjusted net income available for common stockholders $140
$82
Note: Amounts may not add due to rounding. Three Months Ended March 31,2023
2022
(in dollars) Adjusted diluted EPS1 Diluted EPS - GAAP $1.42
$0.74
Non-GAAP adjustments Currency diversification strategy, net(0.00)
0.04
Mark-to-market on investments2(0.09)
0.07
Income tax effect of above adjustments30.02
(0.02)
Total non-GAAP adjustments(0.07)
0.09
Adjusted diluted EPS $1.35
$0.82
Diluted weighted average common shares outstanding104,042,571
99,224,776
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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