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Interactive Brokers Group Announces 2Q2022 Results

GAAP DILUTED EPS OF $0.72, ADJUSTED1 EPS OF $0.84

GAAP NET REVENUES OF $656 MILLION, ADJUSTED NET REVENUES OF $717 MILLION

Interactive Brokers Group, Inc. (Nasdaq: IBKR), an automated global electronic broker, announced results for the quarter ended June 30, 2022.

Reported diluted earnings per share were $0.72 for the current quarter and $0.84 as adjusted. For the year-ago quarter, reported diluted earnings per share were $1.00 and $0.82 as adjusted.

Reported net revenues were $656 million for the current quarter and $717 million as adjusted. For the year-ago quarter, reported net revenues were $754 million and $650 million as adjusted.

Reported income before income taxes was $392 million for the current quarter and $453 million as adjusted. For the year-ago quarter, reported income before income taxes was $541 million and $437 million as adjusted.

Financial Highlights

(All comparisons are to the year-ago quarter.)

  • Commission revenue increased 5% to $322 million on higher customer options and futures trading volume tempered by lower stock volume.
  • Net interest income increased 27% to $348 million on higher benchmark interest rates and customer balances, partially offset by a decline in securities lending activity.
  • Other income decreased $175 million to a loss of $57 million. This decrease was mainly comprised of the non-recurrence of a $113 million gain related to our strategic investment in Up Fintech Holding Limited (“Tiger Brokers”), $44 million related to our currency diversification strategy, and $7 million related to our U.S. government securities portfolio.
  • Reported pretax profit margin was 60% for the current quarter and 63% as adjusted. For the year-ago quarter, reported pretax margin was 72% and 67% as adjusted.
  • Total equity of $10.6 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, 2022, to shareholders of record as of September 1, 2022.

Business Highlights

(All comparisons are to the year-ago quarter.)

  • Customer accounts increased 36% to 1.92 million.
  • Customer equity decreased 19% to $294.8 billion, including approximately 3% due to an omnibus broker that is now using a trust company for custody.
  • Total DARTs2 decreased 6% to 2.17 million.
  • Cleared DARTs decreased 7% to 1.93 million.
  • Customer credits increased 13% to $92.5 billion.
  • Customer margin loans decreased 13% to $42.6 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 $158 million, as the U.S. dollar value of the GLOBAL decreased by approximately 1.46%. The effects of the currency diversification strategy are reported as components of (1) Other Income (loss of $53 million) and (2) Other Comprehensive Income (loss of $105 million).

Conference Call Information:

Interactive Brokers Group, Inc. will hold a conference call with investors today, July 19, 2022, 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/BI118f80f52cdc4c4bac02487cd4edacd0 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.

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

 

Six Months

Ended June 30,

 

Ended June 30,

2022

 

 

2021

 

 

2022

 

 

2021

 

(in millions, except share and per share data)
 
Revenues:
Commissions $

322

 

$

307

 

$

671

 

$

719

 

Other fees and services

43

 

55

 

96

 

111

 

Other income (loss)

(57

)

118

 

(96

)

238

 

Total non-interest income

308

 

480

 

671

 

1,068

 

 
Interest income

460

 

307

 

792

 

697

 

Interest expense

(112

)

(33

)

(162

)

(118

)

Total net interest income

348

 

274

 

630

 

579

 

Total net revenues

656

 

754

 

1,301

 

1,647

 

 
Non-interest expenses:
Execution, clearing and distribution fees

77

 

54

 

148

 

122

 

Employee compensation and benefits

112

 

96

 

223

 

193

 

Occupancy, depreciation and amortization

23

 

19

 

45

 

39

 

Communications

9

 

8

 

17

 

16

 

General and administrative

42

 

35

 

80

 

94

 

Customer bad debt

1

 

1

 

2

 

3

 

Total non-interest expenses

264

 

213

 

515

 

467

 

 
Income before income taxes

392

 

541

 

786

 

1,180

 

Income tax expense

32

 

35

 

60

 

88

 

Net income

360

 

506

 

726

 

1,092

 

Net income attributable to noncontrolling interests

288

 

414

 

581

 

893

 

Net income available for common stockholders $

72

 

$

92

 

$

145

 

$

199

 

 
Earnings per share:
Basic $

0.73

 

$

1.01

 

$

1.47

 

$

2.19

 

Diluted $

0.72

 

$

1.00

 

$

1.46

 

$

2.17

 

 
Weighted average common shares outstanding:
Basic

98,853,981

 

91,365,234

 

98,541,798

 

91,078,868

 

Diluted

99,695,489

 

92,199,169

 

99,461,867

 

91,984,246

 

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

 

Three Months

 

Six Months

Ended June 30,

 

Ended June 30,

2022

 

 

2021

 

2022

 

 

2021

 

(in millions, except share and per share data)
 
Comprehensive income:
Net income available for common stockholders $

72

 

$

92

$

145

 

$

199

 

Other comprehensive income:
Cumulative translation adjustment, before income taxes

(24

)

5

(34

)

(12

)

Income taxes related to items of other comprehensive income

-

 

-

-

 

-

 

Other comprehensive income (loss), net of tax

(24

)

5

(34

)

(12

)

Comprehensive income available for common stockholders $

48

 

$

97

$

111

 

$

187

 

 
Comprehensive earnings per share:
Basic $

0.48

 

$

1.06

$

1.12

 

$

2.06

 

Diluted $

0.47

 

$

1.05

$

1.11

 

$

2.04

 

 
Weighted average common shares outstanding:
Basic

98,853,981

 

91,365,234

98,541,798

 

91,078,868

 

Diluted

99,695,489

 

92,199,169

99,461,867

 

91,984,246

 

 
 
Comprehensive income attributable to noncontrolling interests:
Net income attributable to noncontrolling interests $

288

 

$

414

$

581

 

$

893

 

Other comprehensive income - cumulative translation adjustment

(81

)

16

(112

)

(43

)

Comprehensive income attributable to noncontrolling interests $

207

 

$

430

$

469

 

$

850

 

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(UNAUDITED)

 
June 30,

2022
December 31,

2021
(in millions)
 
Assets
Cash and cash equivalents $

2,881

$

2,395

 

Cash - segregated for regulatory purposes

23,536

22,888

 

Securities - segregated for regulatory purposes

30,709

15,121

 

Securities borrowed

3,855

3,912

 

Securities purchased under agreements to resell

6,288

4,380

 

Financial instruments owned, at fair value

551

673

 

Receivables from customers, net of allowance for credit losses

42,552

54,935

 

Receivables from brokers, dealers and clearing organizations

1,939

3,771

 

Other assets

1,003

1,038

 

 
Total assets $

113,314

$

109,113

 

 
Liabilities and equity
 
Liabilities
Short-term borrowings $

17

$

27

 

Securities loaned

10,696

11,769

 

Financial instruments sold but not yet purchased, at fair value

218

182

 

Other payables:
Customers

90,765

85,634

 

Brokers, dealers and clearing organizations

308

557

 

Other payables

708

722

 

91,781

86,913

 

Total liabilities

102,712

98,891

 

 
Equity
Stockholders' equity

2,524

2,395

 

Noncontrolling interests

8,078

7,827

 

Total equity

10,602

10,222

 

 
Total liabilities and equity $

113,314

$

109,113

 

 
June 30,

2022
December 31,

2021
Ownership of IBG LLC Membership Interests Interests % Interests %
 
IBG, Inc.

99,601,921

23.7

%

98,230,127

23.5

%

Noncontrolling interests (IBG Holdings LLC)

319,880,492

76.3

%

319,880,492

76.5

%

 
Total IBG LLC membership interests

419,482,413

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 Day

2019

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

 

2Q2021

196,659

16,130

7,975

220,764

3,504

2Q2022

186,791

(5%)

18,274

13%

8,327

4%

213,392

(3%)

3,442

 

1Q2022

212,818

20,671

9,225

242,714

3,915

2Q2022

186,791

(12%)

18,274

(12%)

8,327

(10%)

213,392

(12%)

3,442

CONTRACT AND SHARE VOLUMES:
(in 000's, except %)
 
TOTAL Options % Futures1 % Stocks %
Period (contracts) Change (contracts) Change (shares) Change

2019

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%

 

2Q2021

196,715

35,061

172,099,915

2Q2022

217,642

11%

51,562

47%

81,137,875

(53%)

 

1Q2022

245,343

53,570

97,406,991

2Q2022

217,642

(11%)

51,562

(4%)

81,137,875

(17%)

 

ALL CUSTOMERS

Options % Futures1 % Stocks %

Period

(contracts) Change (contracts) Change (shares) Change

2019

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%

 

2Q2021

189,073

34,635

171,417,373

2Q2022

209,124

11%

50,707

46%

80,079,410

(53%)

 

1Q2022

234,790

52,728

95,990,985

2Q2022

209,124

(11%)

50,707

(4%)

80,079,410

(17%)

 

 

Options % Futures1 % Stocks %

Period

(contracts) Change (contracts) Change (shares) Change

2019

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%

 

2Q2021

170,902

34,355

168,601,027

2Q2022

188,617

10%

50,313

46%

77,283,249

(54%)

 

1Q2022

212,628

52,264

92,860,481

2Q2022

188,617

(11%)

50,313

(4%)

77,283,249

(17%)

 
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) Change

2019

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%)

 

2Q2021

7,642

426

682,542

2Q2022

8,518

11%

855

101%

1,058,465

55%

 

1Q2022

10,553

842

1,416,006

2Q2022

8,518

(19%)

855

2%

1,058,465

(25%)

 
1 Includes options on futures
CUSTOMER STATISTICS
 
Year over Year

2Q2022

2Q2021

% Change
Total Accounts (in thousands)

1,923

1,414

36%

Customer Equity (in billions)1 $

294.8

$

363.5

(19%)

 
Cleared DARTs (in thousands)

1,927

2,082

(7%)

Total Customer DARTs (in thousands)

2,173

2,304

(6%)

 
Cleared Customers
Commission per Cleared Commissionable Order2 $

2.74

$

2.38

15%

Cleared Avg. DARTs per Account (Annualized)

259

382

(32%)

 
Consecutive Quarters

2Q2022

1Q2022

% Change
Total Accounts (in thousands)

1,923

1,809

6%

Customer Equity (in billions)1 $

294.8

$

355.9

(17%)

 
Cleared DARTs (in thousands)

1,927

2,234

(14%)

Total Customer DARTs (in thousands)

2,173

2,522

(14%)

 
Cleared Customers
Commission per Cleared Commissionable Order2 $

2.74

$

2.57

7%

Cleared Avg. DARTs per Account (Annualized)

259

321

(19%)

 
(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,

2022

2021

2022

2021

 
(in millions)
Average interest-earning assets
Segregated cash and securities $

50,508

 

$

39,671

 

$

46,898

 

$

43,199

 

Customer margin loans

44,764

 

44,234

 

45,953

 

42,099

 

Securities borrowed

3,775

 

2,833

 

3,621

 

3,971

 

Other interest-earning assets

9,482

 

7,411

 

8,847

 

6,414

 

FDIC sweeps1

2,176

 

2,749

 

2,198

 

2,783

 

$

110,705

 

$

96,898

 

$

107,517

 

$

98,466

 

 
Average interest-bearing liabilities
Customer credit balances $

90,048

 

$

77,676

 

$

87,222

 

$

77,782

 

Securities loaned

10,599

 

11,068

 

10,844

 

11,093

 

Other interest-bearing liabilities

1

 

296

 

7

 

217

 

$

100,648

 

$

89,040

 

$

98,073

 

$

89,092

 

 
Net interest income
Segregated cash and securities, net $

53

 

$

(2

)

$

60

 

$

-

 

Customer margin loans2

197

 

128

 

346

 

245

 

Securities borrowed and loaned, net

116

 

136

 

226

 

311

 

Customer credit balances, net2

(37

)

8

 

(28

)

17

 

Other net interest income1/3

22

 

7

 

30

 

16

 

Net interest income3 $

351

 

$

277

 

$

634

 

$

589

 

 
Net interest margin ("NIM")

1.27

%

1.15

%

1.19

%

1.21

%

 
Annualized yields
Segregated cash and securities

0.42

%

-0.02

%

0.26

%

0.00

%

Customer margin loans

1.77

%

1.16

%

1.52

%

1.17

%

Customer credit balances

0.17

%

-0.04

%

0.06

%

-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 and six months ended June 30, 2022 and 2021, $3 million, $4 million, $4 million, and $12 million were reported in other fees and services, respectively. For the three and six months ended June 30, 2022 and 2021, $0 million, $0 million, $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 Six Months
Ended June 30, Ended June 30,

2022

2021

2022

2021

 
(in millions)
 
Adjusted net revenues1
Net revenues - GAAP $

656

 

$

754

 

$

1,301

 

$

1,647

 

 
Non-GAAP adjustments
Currency diversification strategy, net

53

 

9

 

71

 

11

 

Mark-to-market on investments2

8

 

(113

)

37

 

(212

)

Total non-GAAP adjustments

61

 

(104

)

108

 

(201

)

Adjusted net revenues $

717

 

$

650

 

$

1,409

 

$

1,446

 

 
Adjusted income before income taxes1
Income before income taxes - GAAP $

392

 

$

541

 

$

786

 

$

1,180

 

 
Non-GAAP adjustments
Currency diversification strategy, net

53

 

9

 

71

 

11

 

Mark-to-market on investments2

8

 

(113

)

37

 

(212

)

Total non-GAAP adjustments

61

 

(104

)

108

 

(201

)

Adjusted income before income taxes $

453

 

$

437

 

$

894

 

$

979

 

 
Adjusted pre-tax profit margin

63

%

67

%

63

%

68

%

Three Months Six Months
Ended June 30, Ended June 30,

2022

2021

2022

2021

 
(in millions)
Adjusted net income available for common stockholders1
Net income available for common stockholders - GAAP $

72

 

$

92

 

$

145

 

$

199

 

 
Non-GAAP adjustments
Currency diversification strategy, net

13

 

2

 

17

 

2

 

Mark-to-market on investments2

2

 

(25

)

9

 

(46

)

Income tax effect of above adjustments3

(3

)

6

 

(5

)

10

 

Total non-GAAP adjustments

12

 

(17

)

20

 

(34

)

Adjusted net income available for common stockholders $

84

 

$

75

 

$

165

 

$

165

 

 
Note: Amounts may not add due to rounding.
 
Three Months Six Months
Ended June 30, Ended June 30,

2022

2021

2022

2021

 
(in dollars)
Adjusted diluted EPS1
Diluted EPS - GAAP $

0.72

 

$

1.00

 

$

1.46

 

$

2.17

 

 
Non-GAAP adjustments
Currency diversification strategy, net

0.13

 

0.02

 

0.17

 

0.03

 

Mark-to-market on investments2

0.02

 

(0.27

)

0.09

 

(0.50

)

Income tax effect of above adjustments3

(0.03

)

0.06

 

(0.05

)

0.11

 

Total non-GAAP adjustments

0.12

 

(0.19

)

0.20

 

(0.37

)

Adjusted diluted EPS $

0.84

 

$

0.82

 

$

1.66

 

$

1.80

 

 
Diluted weighted average common shares outstanding

99,695,489

 

92,199,169

 

99,461,867

 

91,984,246

 

 
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 and municipal 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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