INTERACTIVE BROKERS GROUP ANNOUNCES 3Q2022 RESULTS

— — —

GAAP DILUTED EPS OF $0.97, ADJUSTED1 EPS OF $1.08

GAAP NET REVENUES OF $790 MILLION, ADJUSTED NET REVENUES OF $847 MILLION

GREENWICH, CONN, October 18, 2022 — Interactive Brokers Group, Inc. (Nasdaq: IBKR), an automated global electronic broker, announced results for the quarter ended September 30, 2022.

Reported diluted earnings per share were $0.97 for the current quarter and $1.08 as adjusted. For the year-ago quarter, reported diluted earnings per share were $0.43 and $0.78 as adjusted.

Reported net revenues were $790 million for the current quarter and $847 million as adjusted. For the year-ago quarter, reported net revenues were $464 million and $650 million as adjusted.

Reported income before income taxes was $523 million for the current quarter and $580 million as adjusted. For the year-ago quarter, reported income before income taxes was $234 million and $420 million as adjusted.

Financial Highlights

•	Commission revenue increased 3% to $320 million on higher customer futures trading volume and higher options commission per contract, tempered by lower stock volume.

•	Net interest income increased 73% to $473 million on higher benchmark interest rates and customer credit balances, partially offset by a decline in margin lending balances.

•

Other income increased $122 million to a loss of $48 million. This increase was mainly comprised of a $171 million lesser loss related to our strategic investment in Up Fintech Holding Limited (“Tiger Brokers”), partially offset by $37 million related to our currency diversification strategy and $7 million related to trading activities.

•	Reported pretax profit margin was 66% for the current quarter and 68% as adjusted. For the year-ago quarter, reported pretax margin was 50% and 65% as adjusted.

•	Total equity of $10.9 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, 2022, to shareholders of record as of December 1, 2022.

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

Business Highlights

•	Customer accounts increased 31% to 2.01 million.

•	Customer equity decreased 19% to $287.1 billion.

•	Total DARTs2 decreased 15% to 1.92 million.

•	Cleared DARTs decreased 15% to 1.71 million.

•	Customer credits increased 10% to $94.7 billion.

•	Customer margin loans decreased 19% to $40.5 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 $163 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 $40 million) and (2) Other Comprehensive Income (loss of $123 million).

Conference Call Information:

Interactive Brokers Group, Inc. will hold a conference call with investors today, October 18, 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/BId2b20dea2a3343ec87ad7f87670ee43b 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.

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.

(UNAUDITED)

(UNAUDITED)

				Three Months						Nine Months
				Ended September 30,						Ended September 30,
				2022			2021			2022			2021
				(in millions, except share and per share data)
Comprehensive income:
	Net income available for common stockholders			$	99		$	42		$	244		$	241
	Other comprehensive income:
		Cumulative translation adjustment, before income taxes			(30)			(9)			(64)			(21)
		Income taxes related to items of other comprehensive income			-			-			-			-
	Other comprehensive loss, net of tax				(30)			(9)			(64)			(21)
Comprehensive income available for common stockholders				$	69		$	33		$	180		$	220
Comprehensive earnings per share:
	Basic			$	0.68		$	0.34		$	1.81		$	2.37
	Diluted			$	0.68		$	0.34		$	1.79		$	2.35
Weighted average common shares outstanding:
	Basic				101,818,667			96,229,958			99,646,091			92,814,767
	Diluted				102,555,482			96,989,968			100,505,075			93,671,689
Comprehensive income attributable to noncontrolling interests:
	Net income attributable to noncontrolling interests			$	384		$	164		$	965		$	1,057
	Other comprehensive income - cumulative translation adjustment				(93)			(31)			(205)			(74)
Comprehensive income attributable to noncontrolling interests				$	291		$	133		$	760		$	983

(UNAUDITED)

 

					September 30, 2022			December 31, 2021
					(in millions)
Assets
Cash and cash equivalents					$	3,184		$	2,395
Cash - segregated for regulatory purposes						25,432			22,888
Securities - segregated for regulatory purposes						31,301			15,121
Securities borrowed						3,908			3,912
Securities purchased under agreements to resell						4,860			4,380
Financial instruments owned, at fair value						1,093			673
Receivables from customers, net of allowance for credit losses						40,424			54,935
Receivables from brokers, dealers and clearing organizations						3,321			3,771
Other assets						1,160			1,038
	Total assets				$	114,683		$	109,113
Liabilities and equity
Liabilities
Short-term borrowings					$	35		$	27
Securities loaned						9,490			11,769
Financial instruments sold but not yet purchased, at fair value						411			182
Other payables:
	Customers					92,594			85,634
	Brokers, dealers and clearing organizations					380			557
	Other payables					873			722
						93,847			86,913
	Total liabilities					103,783			98,891
Equity
Stockholders' equity						2,677			2,395
Noncontrolling interests						8,223			7,827
	Total equity					10,900			10,222
	Total liabilities and equity				$	114,683		$	109,113
		September 30, 2022				December 31, 2021
Ownership of IBG LLC Membership Interests		Interests		%		Interests			%
IBG, Inc.		102,873,607		24.5%		98,230,127			23.5%
Noncontrolling interests (IBG Holdings LLC)		316,609,102		75.5%		319,880,492			76.5%
Total IBG LLC membership interests		419,482,709		100.0%		418,110,619			100.0%

CLEARED CUSTOMERS

		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%)
3Q2021		9,191				467				746,558
3Q2022		7,843		(15%)		761		63%		832,338		11%
2Q2022		8,518				855				1,058,465
3Q2022		7,843		(8%)		761		(11%)		832,338		(21%)

Year over Year			3Q2022			3Q2021		% Change
Total Accounts (in thousands)			2,012			1,536		31%
Customer Equity (in billions)1		$	287.1		$	353.8		(19%)
Cleared DARTs (in thousands)			1,706			2,017		(15%)
Total Customer DARTs (in thousands)			1,920			2,263		(15%)
Cleared Customers
Commission per Cleared Commissionable Order2		$	2.96		$	2.46		20%
Cleared Avg. DARTs per Account (Annualized)			217			343		(37%)
Consecutive Quarters			3Q2022			2Q2022		% Change
Total Accounts (in thousands)			2,012			1,923		5%
Customer Equity (in billions)1		$	287.1		$	294.8		(3%)
Cleared DARTs (in thousands)			1,706			1,927		(11%)
Total Customer DARTs (in thousands)			1,920			2,173		(12%)
Cleared Customers
Commission per Cleared Commissionable Order2		$	2.96		$	2.74		8%
Cleared Avg. DARTs per Account (Annualized)			217			259		(16%)

(UNAUDITED)

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(UNAUDITED)

 

			Three Months						Nine Months
			Ended September 30,						Ended September 30,
			2022			2021			2022			2021
			(in millions)
Adjusted net revenues1
Net revenues - GAAP			$	790		$	464		$	2,091		$	2,111
Non-GAAP adjustments
	Currency diversification strategy, net			40			3			111			14
	Mark-to-market on investments2			17			184			54			(28)
	Remeasurement of TRA liability3			-			(1)			0			(1)
Total non-GAAP adjustments				57			186			165			(15)
Adjusted net revenues			$	847		$	650		$	2,256		$	2,096
Adjusted income before income taxes1
Income before income taxes - GAAP			$	523		$	234		$	1,309		$	1,414
Non-GAAP adjustments
	Currency diversification strategy, net			40			3			111			14
	Mark-to-market on investments2			17			184			54			(28)
	Remeasurement of TRA liability3			-			(1)			-			(1)
Total non-GAAP adjustments				57			186			165			(15)
Adjusted income before income taxes			$	580		$	420		$	1,474		$	1,399
Adjusted pre-tax profit margin				68%			65%			65%			67%

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 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 25, 2022.

4 The income tax effect is estimated using the corporate income tax rates applicable to the Company.

5 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 25, 2022.