INTERACTIVE BROKERS GROUP ANNOUNCES 3Q2023 RESULTS

— — —

GAAP DILUTED EPS OF $1.56, ADJUSTED¹ EPS OF $1.55

GAAP NET REVENUES OF $1,145 MILLION, ADJUSTED NET REVENUES OF $1,139 MILLION

GREENWICH, CONN, October 17, 2023 — 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.)

• Commission revenue increased 4% to $333 million. Customer trading volume was mixed across product types with options contracts volume up 18% while futures contracts and stock share volumes were down 1% and 22%, respectively.

• Net interest income increased 55% to $733 million on higher benchmark interest rates and customer credit balances.

• Other income increased $75 million to a gain of $27 million. This increase was mainly comprised of $37 million related to our investment in Tiger Brokers and $23 million related to our currency diversification strategy.

• Execution, clearing and distribution fees expenses increased 14% to $98 million, driven by higher customer trading volume in options.

• Pretax profit margin for the current quarter was 73% as reported and as adjusted. For the year-ago quarter, reported pretax margin was 66% and 68% as adjusted.

• Total equity of $13.3 billion.

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.

¹ See the reconciliation of non-GAAP financial measures starting on page 9.

1

Business Highlights

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

• Customer accounts increased 21% to 2.43 million.

• Customer equity increased 29% to $369.8 billion.

• Total DARTs² decreased 1% to 1.91 million.

• Cleared DARTs increased slightly to 1.71 million.

• Customer credits increased 3% to $98.0 billion.

• Customer margin loans increased 8% to $43.6 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 $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.

For Interactive Brokers Group, Inc. Investors: Nancy Stuebe, investor-relations@ibkr.com or Media: Rob Garfield, media@ibkr.com.

² Daily average revenue trades (DARTs) are based on customer orders.

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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 income			412			317			1,137			988
	Interest income				1,643			783			4,535			1,575
	Interest expense				(910)			(310)			(2,471)			(472)
		Total net interest income			733			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

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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

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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 purposes						26,385			25,167
Securities - segregated for regulatory purposes						31,335			31,781
Securities borrowed						5,478			4,749
Securities purchased under agreements to resell						5,480			6,029
Financial instruments owned, at fair value						1,324			485
Receivables from customers, net of allowance for credit losses						43,602			38,760
Receivables from brokers, dealers and clearing organizations						1,726			3,469
Other assets						1,482			1,267
	Total assets				$	120,636		$	115,143
Liabilities and equity
Liabilities
Short-term borrowings					$	11		$	18
Securities loaned						10,482			8,940
Financial instruments sold but not yet purchased, at fair value						198			146
Other payables:
	Customers					94,873			93,195
	Brokers, dealers and clearing organizations					627			291
	Other payables					1,181			938
						96,681			94,424
	Total liabilities					107,372			103,528
Equity
Stockholders' equity						3,390			2,848
Noncontrolling interests						9,874			8,767
	Total equity					13,264			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 interests		420,972,398		100.0%		419,536,805			100.0%

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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
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 %)

TOTAL

		Options		%		Futures1		%		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 CUSTOMERS

		Options		%		Futures1		%		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 CUSTOMERS

		Options		%		Futures1		%		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 futures.

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INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

OPERATING DATA, CONTINUED

PRINCIPAL TRANSACTIONS

		Options		%		Futures1		%		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 Year			3Q2023			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 Quarters			3Q2023			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.

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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 income1/3				159			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 securities				4.97%			1.63%			4.55%			0.77%
	Customer margin loans				5.77%			2.96%			5.41%			1.98%
	Customer credit balances				3.46%			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.

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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%

9

 

			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.

			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.

10

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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