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

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

• 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.

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Business Highlights

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

• 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 todiscuss 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.

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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,
			2022		2021		2022		2021
			(in millions, except share and per share data)
Revenues:
	Commissions		$	320	$	311	$	991	$	1,030
	Other fees and services			45		49		141		160
	Other income (loss)			(48)		(170)		(144)		68
		Total non-interest income		317		190		988		1,258
	Interest income			783		325		1,575		1,022
	Interest expense			(310)		(51)		(472)		(169)
		Total net interest income		473		274		1,103		853
		Total net revenues		790		464		2,091		2,111
Non-interest expenses:
	Execution, clearing and distribution fees			86		61		234		183
	Employee compensation and benefits			112		98		335		291
	Occupancy, depreciation and amortization			23		19		68		58
	Communications			8		8		25		24
	General and administrative			37		44		117		138
	Customer bad debt			1		-		3		3
		Total non-interest expenses		267		230		782		697
Income before income taxes				523		234		1,309		1,414
Income tax expense				40		28		100		116
Net income				483		206		1,209		1,298
Net income attributable to noncontrolling interests				384		164		965		1,057
Net income available for common stockholders			$	99	$	42	$	244	$	241
Earnings per share:
	Basic		$	0.98	$	0.44	$	2.45	$	2.60
	Diluted		$	0.97	$	0.43	$	2.43	$	2.58
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

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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,
			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

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INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(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%

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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
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
3Q2021	193,218		18,106		8,228		219,552		3,431
3Q2022	170,240	(12%)	16,181	(11%)	7,953	(3%)	194,374	(11%)	3,037
2Q2022	186,791		18,274		8,327		213,392		3,442
3Q2022	170,240	(9%)	16,181	(11%)	7,953	(4%)	194,374	(9%)	3,037

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%
3Q2021	214,988		36,940		172,828,874
3Q2022	215,988	0%	50,486	37%	75,776,756	(56%)
2Q2022	217,642		51,562		81,137,875
3Q2022	215,988	(1%)	50,486	(2%)	75,776,756	(7%)

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%
3Q2021	205,797		36,473		172,082,316
3Q2022	208,145	1%	49,725	36%	74,944,418	(56%)
2Q2022	209,124		50,707		80,079,410
3Q2022	208,145	(0%)	49,725	(2%)	74,944,418	(6%)

CLEARED CUSTOMERS

	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%
3Q2021	186,656		36,245		169,002,045
3Q2022	185,166	(1%)	49,242	36%	72,394,078	(57%)
2Q2022	188,617		50,313		77,283,249
3Q2022	185,166	(2%)	49,242	(2%)	72,394,078	(6%)

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
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%)

¹ Includes options on futures.

CUSTOMER STATISTICS

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%)

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,
			2022		2021		2022		2021
			(in millions)
Average interest-earning assets
	Segregated cash and securities		$	55,453	$	37,239	$	49,749	$	41,212
	Customer margin loans			42,425		46,636		44,777		43,611
	Securities borrowed			4,235		3,567		3,826		3,836
	Other interest-earning assets			9,103		7,426		8,932		6,751
	FDIC sweeps1			2,173		2,707		2,189		2,758
			$	113,389	$	97,575	$	109,473	$	98,168
Average interest-bearing liabilities
	Customer credit balances		$	92,846	$	78,625	$	89,096	$	78,063
	Securities loaned			9,622		10,489		10,437		10,891
	Other interest-bearing liabilities			1		-		5		145
			$	102,469	$	89,114	$	99,537	$	89,099
Net interest income
	Segregated cash and securities, net		$	228	$	(4)	$	288	$	(4)
	Customer margin loans2			317		141		663		386
	Securities borrowed and loaned, net			114		123		340		434
	Customer credit balances, net2			(248)		8		(276)		25
	Other net interest income1/3			65		9		95		25
		Net interest income3	$	476	$	277	$	1,110	$	866
Net interest margin ("NIM")				1.67%		1.13%		1.36%		1.18%
Annualized yields
	Segregated cash and securities			1.63%		-0.04%		0.77%		-0.01%
	Customer margin loans			2.96%		1.20%		1.98%		1.18%
	Customer credit balances			1.06%		-0.04%		0.41%		-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 nine months ended September 30, 2022 and 2021, $3 million, $2 million, $7 million, and $14 million were reported in other fees and services, respectively. For the three and nine months ended September 30, 2022 and 2021, $1 million, $0 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,
		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%

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		Three Months				Nine Months
		Ended September 30,				Ended September 30,
		2022		2021		2022		2021
		(in millions)
Adjusted net income available for common stockholders1
Net income available for common stockholders - GAAP		$	99	$	42	$	244	$	241
Non-GAAP adjustments
	Currency diversification strategy, net		10		1		26		3
	Mark-to-market on investments2		4		43		13		(6)
	Remeasurement of TRA liability3		-		(1)		-		(1)
	Income tax effect of above adjustments4		(3)		(10)		(8)		1
	Remeasurement of deferred income taxes5		-		1		-		1
Total non-GAAP adjustments			11		33		31		(2)
Adjusted net income available for common stockholders		$	111	$	75	$	276	$	239

Note: Amounts may not add due to rounding.

		Three Months				Nine Months
		Ended September 30,				Ended September 30,
		2022		2021		2022		2021
		(in dollars)
Adjusted diluted EPS1
Diluted EPS - GAAP		$	0.97	$	0.43	$	2.43	$	2.58
Non-GAAP adjustments
	Currency diversification strategy, net		0.09		0.01		0.26		0.03
	Mark-to-market on investments2		0.04		0.44		0.13		(0.06)
	Remeasurement of TRA liability3		0.00		(0.01)		0.00		(0.01)
	Income tax effect of above adjustments4		(0.03)		(0.10)		(0.08)		0.01
	Remeasurement of deferred income taxes5		0.00		0.01		0.00		0.01
Total non-GAAP adjustments			0.11		0.34		0.31		(0.02)
Adjusted diluted EPS		$	1.08	$	0.78	$	2.74	$	2.55
Diluted weighted average common shares outstanding			102,555,482		96,989,968		100,505,075		93,671,689

Note: Amounts may not add due to rounding.

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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.

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