Interactive Brokers Group Announces 3Q2023 Results
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.)
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.)
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 income412
317
1,137
988
Interest income
1,643
783
4,535
1,575
Interest expense
(910
)
(310
)
(2,471
)
(472
)
Total net interest income733
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 purposes26,385
25,167
Securities - segregated for regulatory purposes31,335
31,781
Securities borrowed5,478
4,749
Securities purchased under agreements to resell5,480
6,029
Financial instruments owned, at fair value1,324
485
Receivables from customers, net of allowance for credit losses43,602
38,760
Receivables from brokers, dealers and clearing organizations1,726
3,469
Other assets1,482
1,267
Total assets $120,636
$115,143
Liabilities and equity Liabilities Short-term borrowings $11
$18
Securities loaned10,482
8,940
Financial instruments sold but not yet purchased, at fair value198
146
Other payables: Customers94,873
93,195
Brokers, dealers and clearing organizations627
291
Other payables1,181
938
96,681
94,424
Total liabilities107,372
103,528
Stockholders' equity3,390
2,848
Noncontrolling interests9,874
8,767
Total equity13,264
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 interests420,972,398
100.0
%
419,536,805
100.0
%
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIESOPERATING 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
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 %) TOTALOptions
%
1
%
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 CUSTOMERSOptions
%
1
%
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 CUSTOMERSOptions
%
1
%
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 futuresINTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
OPERATING DATA, CONTINUED
CONTRACT AND SHARE VOLUMES, continued: (in 000's, except %) PRINCIPAL TRANSACTIONSOptions
%
1
%
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 Year3Q2023
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 Quarters3Q2023
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 income1/3159
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 securities4.97
%
1.63
%
4.55
%
0.77
%
Customer margin loans5.77
%
2.96
%
5.41
%
1.98
%
Customer credit balances3.46
%
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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