EX-99.1 2 ibkr-8k_20231231er.htm 4Q23 EARNINGS RELEASE
INTERACTIVE BROKERS GROUP ANNOUNCES 4Q2023 RESULTS

— — —

GAAP DILUTED EPS OF $1.48, ADJUSTED1 EPS OF $1.52
GAAP NET REVENUES OF $1,139 MILLION, ADJUSTED NET REVENUES OF $1,149 MILLION

GREENWICH, CONN, January 16, 2024 — Interactive Brokers Group, Inc. (Nasdaq: IBKR), an automated global electronic broker, announced results for the quarter ended December 31, 2023.

Reported diluted earnings per share were $1.48 for the current quarter and $1.52 as adjusted. For the year-ago quarter, reported diluted earnings per share were $1.31 and $1.30 as adjusted.

Reported net revenues were $1,139 million for the current quarter and $1,149 million as adjusted. For the year-ago quarter, reported net revenues were $976 million and $958 million as adjusted.

Reported income before income taxes was $816 million for the current quarter and $831 million as adjusted. For the year-ago quarter, reported income before income taxes was $689 million and $671 million as adjusted.

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

Commission revenue increased 5% to $348 million. Customer trading volume was mixed across product types with options and futures contract volumes up 21% and 4%, respectively, while stock share volume was down 22%.

Net interest income increased 29% to $730 million on higher benchmark interest rates, customer margin loans and customer credit balances.

Other income decreased $31 million to $6 million. This decrease was mainly comprised of $20 million related to our currency diversification strategy and $8 million related to our investment in Tiger Brokers.

Execution, clearing and distribution fees expenses increased 11% to $100 million, driven by higher customer trading volume in options and futures.

Pretax profit margin for the current quarter was 72% both as reported and as adjusted. For the year-ago quarter, reported pretax margin was 71% and 70% as adjusted.

Total equity of $14.1 billion.

The Interactive Brokers Group, Inc. Board of Directors declared a quarterly cash dividend of $0.10 per share. This dividend is payable on March 14, 2024, to shareholders of record as of March 1, 2024.




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 23% to 2.56 million.
Customer equity increased 39% to $426.0 billion.
Total DARTs2 increased 2% to 1.93 million.
Cleared DARTs increased 2% to 1.73 million.
Customer credits increased 10% to $104.5 billion.
Customer margin loans increased 14% to $44.4 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 increased our comprehensive earnings by $139 million, as the U.S. dollar value of the GLOBAL increased by approximately 1.05%. The effects of the currency diversification strategy are reported as components of (1) Other Income (loss of $9 million) and (2) Other Comprehensive Income (gain of $148 million).

Conference Call Information:

Interactive Brokers Group, Inc. will hold a conference call with investors today, January 16, 2024, 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/BI9b8b0781a22347468c0936eccc35776d 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.
2

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)

       
Three Months
 
Twelve Months
       
Ended December 31,
 
Ended December 31,
       
2023
 
2022
 
2023
 
2022
       
(in millions, except share and per share data)
                             
Revenues:
                       
 
Commissions
 
$
348
 
$
331
 
$
1,360
 
$
1,322
 
Other fees and services
   
55
   
43
   
197
   
184
 
Other income (loss)
   
6
   
37
   
(11)
   
(107)
   
Total non-interest income
   
409
   
411
   
1,546
   
1,399
                             
 
Interest income
   
1,695
   
1,111
   
6,230
   
2,686
 
Interest expense
   
(965)
   
(546)
   
(3,436)
   
(1,018)
   
Total net interest income
   
730
   
565
   
2,794
   
1,668
   
Total net revenues
   
1,139
   
976
   
4,340
   
3,067
                             
Non-interest expenses:
                       
 
Execution, clearing and distribution fees
100
   
90
   
386
   
324
 
Employee compensation and benefits
   
136
   
119
   
527
   
454
 
Occupancy, depreciation and amortization
25
   
22
   
99
   
90
 
Communications
   
12
   
8
   
41
   
33
 
General and administrative
   
45
   
48
   
211
   
165
 
Customer bad debt
   
                         5
   
                         -
   
7
   
3
   
Total non-interest expenses
   
323
   
287
   
1,271
   
1,069
                             
Income before income taxes
   
816
   
689
   
3,069
   
1,998
Income tax expense
   
77
   
56
   
257
   
156
                             
Net income
   
739
   
633
   
2,812
   
1,842
Net income attributable to noncontrolling interests
 
579
   
497
   
2,212
   
1,462
                             
Net income available for common stockholders
$
160
 
$
136
 
$
600
 
$
380
                             
Earnings per share:
                       
 
Basic
 
$
1.49
 
$
1.32
 
$
5.72
 
$
3.78
 
Diluted
 
$
1.48
 
$
1.31
 
$
5.67
 
$
3.75
                             
Weighted average common shares outstanding:
                 
 
Basic
   
107,021,836
   
102,875,250
   
104,965,050
   
100,460,016
 
Diluted
   
107,811,190
   
103,656,668
   
105,846,877
   
101,299,609

3

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)

       
Three Months
 
Twelve Months
       
Ended December 31,
 
Ended December 31,
       
2023
 
2022
 
2023
 
2022
         (in millions, except share and per share data)
                             
Comprehensive income:
                       
 
Net income available for common stockholders
 
$
160
 
$
136
 
$
600
 
$
380
 
Other comprehensive income:
                       
   
Cumulative translation adjustment, before income taxes
                       37
   
                       38
   
                       30
   
                     (26)
   
Income taxes related to items of other comprehensive income
 
                         -
   
                         -
   
                         -
   
                         -
 
Other comprehensive income (loss), net of tax
   
                       37
   
                       38
   
                       30
   
                     (26)
Comprehensive income available for common stockholders
$
197
 
$
174
 
$
630
 
$
354
                             
Comprehensive earnings per share:
                       
 
Basic
 
$
1.84
 
$
1.70
 
$
6.00
 
$
3.53
 
Diluted
 
$
1.83
 
$
1.68
 
$
5.95
 
$
3.50
                             
Weighted average common shares outstanding:
                       
 
Basic
   
107,021,836
   
102,875,250
   
104,965,050
   
100,460,016
 
Diluted
   
107,811,190
   
103,656,668
   
105,846,877
   
101,299,609
                             
                             
Comprehensive income attributable to noncontrolling interests:
                 
 
Net income attributable to noncontrolling interests
 
$
579
 
$
497
 
$
2,212
 
$
1,462
 
Other comprehensive income - cumulative translation adjustment
 
111
   
120
   
92
   
(85)
Comprehensive income attributable to noncontrolling interests
$
690
 
$
617
 
$
2,304
 
$
1,377


4

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
 
         
December 31,
2023
 
December 31,
2022
         
(in millions)
                   
Assets
               
Cash and cash equivalents
     
$
                 3,753
 
$
                 3,436
Cash - segregated for regulatory purposes
       
               28,840
   
               25,167
Securities - segregated for regulatory purposes
       
               35,386
   
               31,781
Securities borrowed
       
                 5,835
   
                 4,749
Securities purchased under agreements to resell
       
                 5,504
   
                 6,029
Financial instruments owned, at fair value
       
                 1,488
   
                    485
Receivables from customers, net of allowance for credit losses
     
               44,472
   
               38,760
Receivables from brokers, dealers and clearing organizations
     
                 1,643
   
                 3,469
Other assets
       
                 1,502
   
                 1,267
 
Total assets
     
$
128,423
 
$
115,143
                   
Liabilities and equity
               
                   
Liabilities
               
Short-term borrowings
     
$
                     17
 
$
                     18
Securities loaned
       
               11,347
   
                 8,940
Financial instruments sold but not yet purchased, at fair value
     
                    193
   
                    146
Other payables:
               
 
Customers
       
              101,012
   
               93,195
 
Brokers, dealers and clearing organizations
       
                    590
   
                    291
 
Other payables
       
                 1,197
   
                    938
           
              102,799
   
               94,424
 
Total liabilities
       
              114,356
   
              103,528
                   
Equity
               
Stockholders' equity
       
                 3,584
   
                 2,848
Noncontrolling interests
       
               10,483
   
                 8,767
 
Total equity
       
               14,067
   
               11,615
 
Total liabilities and equity
     
$
128,423
 
$
115,143
                   
   
December 31, 2023
 
December 31, 2022
Ownership of IBG LLC Membership Interests
Interests
 
 %
 
Interests
   
 %
                   
IBG, Inc.
107,049,483
 
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
421,025,837
 
100.0%
 
419,536,805
   
100.0%


5

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
2021
 
              871,319
     
       78,276
     
       32,621
     
     982,216
     
            3,905
2022
 
              735,619
 
 (16%)
 
       70,049
 
 (11%)
 
       32,863
 
1%
 
     838,531
 
 (15%)
 
            3,347
2023
 
              670,263
 
 (9%)
 
       58,580
 
 (16%)
 
       36,725
 
12%
 
     765,568
 
 (9%)
 
            3,075
                                     
4Q2022
              165,769
     
       14,923
     
         7,358
     
     188,050
     
            3,009
4Q2023
              164,975
 
 (0%)
 
       14,922
 
 (0%)
 
       10,047
 
37%
 
     189,944
 
1%
 
            3,039
                                     
3Q2023
              163,318
     
       14,218
     
       10,109
     
     187,645
     
            3,002
4Q2023
              164,975
 
1%
 
       14,922
 
5%
 
       10,047
 
 (1%)
 
     189,944
 
1%
 
            3,039
CONTRACT AND SHARE VOLUMES:
(in 000's, except %)
 
TOTAL

 
Options
 
%
 
Futures1
 
%
 
Stocks
 
%
Period
 
(contracts)
Change
 
(contracts)
Change
 
(shares)
 
Change
2021
 
     887,849
     
     154,866
     
   771,273,709
   
2022
 
     908,415
 
2%
 
     207,138
 
34%
 
   330,035,586
 
 (57%)
2023
 
   1,020,736
 
12%
 
     209,034
 
1%
 
   252,742,847
 
 (23%)
                         
4Q2022
 
     229,441
     
       51,519
     
     75,713,964
   
4Q2023
 
     279,945
 
22%
 
       53,883
 
5%
 
     59,046,908
 
 (22%)
                         
3Q2023
 
     256,481
     
       50,309
     
     59,453,190
   
4Q2023
 
     279,945
 
9%
 
       53,883
 
7%
 
     59,046,908
 
 (1%)

ALL CUSTOMERS

 
Options
 
%
 
Futures1
 
%
 
Stocks
 
%
Period
 
(contracts)
 
Change
 
(contracts)
 
Change
 
(shares)
 
Change
2021
 
     852,169
     
     152,787
     
   766,211,726
   
2022
 
     873,914
 
3%
 
     203,933
 
33%
 
   325,368,714
 
 (58%)
2023
 
     981,172
 
12%
 
     206,073
 
1%
 
   248,588,960
 
 (24%)
                         
4Q2022
 
     221,855
     
       50,773
     
     74,353,901
   
4Q2023
 
     269,082
 
21%
 
       52,996
 
4%
 
     58,112,082
 
 (22%)
                         
3Q2023
 
     245,169
     
       49,459
     
     58,202,858
   
4Q2023
 
     269,082
 
10%
 
       52,996
 
7%
 
     58,112,082
 
 (0%)
CLEARED CUSTOMERS

Options
 
%
 
Futures1
 
%
 
Stocks
 
%
Period
 
(contracts)
 
Change
 
(contracts)
 
Change
 
(shares)
 
Change
2021
 
     773,284
     
     151,715
     
   752,720,070
   
2022
 
     781,373
 
1%
 
     202,145
 
33%
 
   314,462,672
 
 (58%)
2023
 
     834,866
 
7%
 
     204,691
 
1%
 
   240,270,617
 
 (24%)
                         
4Q2022
 
     194,962
     
       50,326
     
     71,924,864
   
4Q2023
 
     222,082
 
14%
 
       52,883
 
5%
 
     56,240,615
 
 (22%)
                         
3Q2023
 
     209,097
     
       49,345
     
     56,323,672
   
4Q2023
 
     222,082
 
6%
 
       52,883
 
7%
 
     56,240,615
 
 (0%)


1
Includes options on futures.

6

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
OPERATING DATA, CONTINUED

PRINCIPAL TRANSACTIONS

Options
 
%
 
Futures1
 
%
 
Stocks
 
%
Period
 
(contracts)
 
Change
 
(contracts)
 
Change
 
(shares)
 
Change
2021
 
       35,680
     
         2,079
     
       5,061,983
   
2022
 
       34,501
 
 (3%)
 
         3,205
 
54%
 
       4,666,872
 
 (8%)
2023
 
       39,564
 
15%
 
         2,961
 
 (8%)
 
       4,153,887
 
 (11%)
                         
4Q2022
 
         7,586
     
           746
     
       1,360,063
   
4Q2023
 
       10,863
 
43%
 
           887
 
19%
 
         934,826
 
 (31%)
                         
3Q2023
 
       11,312
     
           850
     
       1,250,332
   
4Q2023
 
       10,863
 
 (4%)
 
           887
 
4%
 
         934,826
 
 (25%)


1
Includes options on futures.

CUSTOMER STATISTICS
Year over Year
   
4Q2023
   
4Q2022
 
% Change
   Total Accounts (in thousands)
   
                      2,562
   
                      2,091
 
23%
   Customer Equity (in billions)1
 
$
426.0
 
$
306.7
 
39%
                 
   Cleared DARTs (in thousands)
   
                      1,727
   
                      1,689
 
2%
   Total Customer DARTs (in thousands)
   
                      1,934
   
                      1,889
 
2%
                 
Cleared Customers
               
   Commission per Cleared Commissionable Order2
 
$
3.19
 
$
3.15
 
1%
   Cleared Avg. DARTs per Account (Annualized)
   
                         172
   
                         206
 
 (17%)
                 
Consecutive Quarters
   
4Q2023
   
3Q2023
 
% Change
   Total Accounts (in thousands)
   
                      2,562
   
                      2,431
 
5%
   Customer Equity (in billions)1
 
$
426.0
 
$
369.8
 
15%
                 
   Cleared DARTs (in thousands)
   
                      1,727
   
                      1,709
 
1%
   Total Customer DARTs (in thousands)
   
                      1,934
   
                      1,907
 
1%
                 
Cleared Customers
               
   Commission per Cleared Commissionable Order2
 
$
3.19
 
$
3.11
 
3%
   Cleared Avg. DARTs per Account (Annualized)
   
                         172
   
                         180
 
 (4%)


1
Excludes non-customers.
   
2
Commissionable Order - a customer order that generates commissions.


7

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
NET INTEREST MARGIN
(UNAUDITED)

       
Three Months
 
Twelve Months
       
Ended December 31,
 
Ended December 31,
       
2023
 
2022
 
2023
 
2022
       
(in millions)
Average interest-earning assets
                       
 
Segregated cash and securities
 
$
                  59,482
 
$
                  57,327
 
$
                  59,582
 
$
                  51,644
 
Customer margin loans
   
                  42,769
   
                  39,277
   
                  41,229
   
                  43,402
 
Securities borrowed
   
                    5,185
   
                    4,368
   
                    5,315
   
                    3,961
 
Other interest-earning assets
   
                  10,534
   
                    9,203
   
                  10,114
   
                    9,000
 
FDIC sweeps1
   
                    3,554
   
                    2,347
   
                    3,003
   
                    2,229
       
$
                121,524
 
$
                112,522
 
$
                119,242
 
$
                110,235
                             
Average interest-bearing liabilities
                       
 
Customer credit balances
 
$
                  96,598
 
$
                  93,401
 
$
                  96,081
 
$
                  90,172
 
Securities loaned
   
                    9,922
   
                    9,071
   
                    9,518
   
                  10,095
 
Other interest-bearing liabilities
   
                           1
   
                           1
   
                           1
   
                           4
       
$
                106,521
 
$
                102,473
 
$
                105,599
 
$
                100,271
                             
Net interest income
                       
 
Segregated cash and securities, net
 
$
                       760
 
$
                       454
 
$
                    2,791
 
$
                       742
 
Customer margin loans2
   
                       631
   
                       420
   
                    2,278
   
                    1,083
 
Securities borrowed and loaned, net
   
                         43
   
                         73
   
                       276
   
                       413
 
Customer credit balances, net2
   
                     (866)
   
                     (487)
   
                  (3,125)
   
                     (763)
 
Other net interest income1/3
   
                       171
   
                       112
   
                       600
   
                       207
   
Net interest income3
 
$
                       739
 
$
                       572
 
$
                    2,820
 
$
                    1,682
                             
Net interest margin ("NIM")
   
2.41%
   
2.02%
   
2.36%
   
1.53%
                             
Annualized yields
                       
 
Segregated cash and securities
   
5.07%
   
3.14%
   
4.68%
   
1.44%
 
Customer margin loans
   
5.85%
   
4.24%
   
5.53%
   
2.50%
 
Customer credit balances
   
3.56%
   
2.07%
   
3.25%
   
0.85%



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 twelve months ended December 31, 2023 and 2022, $5 million, $19 million, $3 million, and $10 million were reported in other fees and services, respectively. For the three and twelve months ended December 31, 2023 and 2022, $4 million, $7 million, $3 million, and $4 million were reported in other income, respectively.

8

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED)

     
Three Months
 
Twelve Months
     
Ended December 31,
 
Ended December 31,
     
2023
 
2022
 
2023
 
2022
     
(in millions)
                           
Adjusted net revenues1
                       
Net revenues - GAAP
 
$
1,139
 
$
976
 
$
4,340
 
$
3,067
                           
Non-GAAP adjustments
                       
 
Currency diversification strategy, net
   
9
   
(11)
   
80
   
100
 
Mark-to-market on investments2
   
8
   
                       (1)
   
(46)
   
52
 
Remeasurement of TRA liability3
   
(7)
   
                       (6)
   
(7)
   
(6)
Total non-GAAP adjustments
   
10
   
(18)
   
27
   
146
Adjusted net revenues
 
$
1,149
 
$
958
 
$
4,367
 
$
3,213
                           
Adjusted income before income taxes1
                       
Income before income taxes - GAAP
 
$
816
 
$
689
 
$
3,069
 
$
1,998
                           
Non-GAAP adjustments
                       
 
Currency diversification strategy, net
   
9
   
(11)
   
80
   
100
 
Mark-to-market on investments2
   
8
   
                       (1)
   
(46)
   
52
 
Remeasurement of TRA liability3
   
(7)
   
                       (6)
   
(7)
   
(6)
 
Bad debt expense5
   
5
   
                         -
   
5
   
0
Total non-GAAP adjustments
   
                       15
   
                     (18)
   
                       32
   
                     146
Adjusted income before income taxes
 
$
831
 
$
671
 
$
3,101
 
$
2,144
                           
Adjusted pre-tax profit margin
   
72%
   
70%
   
71%
   
67%

9

     
Three Months
 
Twelve Months
     
Ended December 31,
 
Ended December 31,
     
2023
 
2022
 
2023
 
2022
     
(in millions)
Adjusted net income available for common stockholders1
                 
Net income available for common stockholders - GAAP
$
160
 
$
136
 
$
600
 
$
380
                           
Non-GAAP adjustments
                       
 
Currency diversification strategy, net
   
2
   
(3)
   
                       20
   
24
 
Mark-to-market on investments2
   
2
   
(0)
   
                     (12)
   
13
 
Remeasurement of TRA liability3
   
(7)
   
                       (6)
   
                       (7)
   
                       (6)
 
Bad debt expense4
   
1
   
                         -
   
                         1
   
                         -
 
Income tax effect of above adjustments5
   
(1)
   
                         1
   
                       (2)
   
                       (7)
 
Remeasurement of deferred income taxes6
   
7
   
                         7
   
                         7
   
                         7
Total non-GAAP adjustments
   
                         5
   
                       (1)
   
                         8
   
                       30
Adjusted net income available for common stockholders
$
164
 
$
135
 
$
608
 
$
410
                           
Note: Amounts may not add due to rounding.
                       

     
Three Months
 
Twelve Months
     
Ended December 31,
 
Ended December 31,
     
2023
 
2022
 
2023
 
2022
     
(in dollars)
Adjusted diluted EPS1
                       
Diluted EPS - GAAP
 
$
1.48
 
$
1.31
 
$
5.67
 
$
3.75
                           
Non-GAAP adjustments
                       
 
Currency diversification strategy, net
   
0.02
   
(0.03)
   
0.19
   
0.24
 
Mark-to-market on investments2
   
0.02
   
(0.00)
   
(0.11)
   
0.12
 
Remeasurement of TRA liability3
   
(0.07)
   
(0.06)
   
(0.07)
   
(0.06)
 
Bad debt expense4
   
0.01
   
0.00
   
0.01
   
0.00
 
Income tax effect of above adjustments5
   
(0.01)
   
0.01
   
(0.01)
   
(0.07)
 
Remeasurement of deferred income taxes6
   
0.07
   
0.07
   
0.07
   
0.07
Total non-GAAP adjustments
   
0.04
   
(0.01)
   
0.08
   
0.30
Adjusted diluted EPS
 
$
1.52
 
$
1.30
 
$
5.75
 
$
4.05
                           
Diluted weighted average common shares outstanding
107,811,190
   
103,656,668
   
105,846,877
   
101,299,609
                           
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, our net mark-to-market gains (losses) on investments2, and the remeasurement of our Tax Receivable Agreement (“TRA”) liability3.
We define adjusted income before income taxes as income before income taxes adjusted to remove the effect of our currency diversification strategy, our net mark-to-market gains (losses) on investments, the remeasurement of our TRA liability, and unusual bad debt expense4.
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 our net mark-to-market gains (losses) on investments, the remeasurement of our TRA liability, unusual bad debt expense, and the remeasurement of certain deferred tax assets6.
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 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 24, 2023.

4Unusual bad debt expense consists of a credit loss on a loan not related to margin lending.

5 The income tax effect is estimated using the statutory income tax rates applicable to the Company.
6 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 24, 2023.


11