Interactive Brokers Group Announces 1Q2022 Results

Rhea-AI Summary

Interactive Brokers Group reported GAAP diluted EPS of $0.74 for Q1 2022, down from $1.16 a year ago. Adjusted EPS was $0.82 versus $0.98 in the prior year. Net revenues fell by 28% to $645 million compared to $893 million in Q1 2021. Commission revenue decreased 15% to $349 million, while net interest income declined 8% to $282 million. Customer accounts surged 36% to 1.81 million, and customer equity rose 8% to $355.9 billion. The company declared a quarterly dividend of $0.10 per share.

Positive

• Customer accounts increased by 36% to 1.81 million.
• Customer equity grew by 8% to $355.9 billion.
• Customer margin loans increased by 14% to $48.2 billion.

Negative

• GAAP diluted EPS decreased from $1.16 to $0.74.
• Net revenues fell from $893 million to $645 million, a 28% decline.
• Commission revenue dropped by 15% to $349 million.
• Net interest income decreased by 8% to $282 million.
• Reported pretax profit margin declined from 72% to 61%.

GAAP Diluted EPS of $0.74, Adjusted¹ EPS of $0.82

GAAP Net Revenues of $645 Million, Adjusted Net Revenues of $692 Million

GREENWICH, Conn.--(BUSINESS WIRE)-- Interactive Brokers Group, Inc. (Nasdaq: IBKR), an automated global electronic broker, announced results for the quarter ended March 31, 2022.

Reported diluted earnings per share were $0.74 for the current quarter and $0.82 as adjusted. For the year-ago quarter, reported diluted earnings per share were $1.16 and $0.98 as adjusted.

Reported net revenues were $645 million for the current quarter and $692 million as adjusted. For the year-ago quarter, reported net revenues were $893 million and $796 million as adjusted.

Reported income before income taxes was $394 million for the current quarter and $441 million as adjusted. For the year-ago quarter, reported income before income taxes was $639 million and $542 million as adjusted.

Financial Highlights

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

• Commission revenue decreased 15% to $349 million on customer stock volume that dropped from an unusually active trading period last year, but was aided by higher customer options and futures trading volumes.

• Net interest income decreased 8% to $282 million on a decline in securities lending activity, partially offset by gains on margin lending and segregated cash balances.

• Other income decreased $159 million to a loss of $39 million. This decrease was mainly comprised of the non-recurrence of a $99 million gain related to our strategic investment in Up Fintech Holding Limited (“Tiger Brokers”), $29 million related to our U.S. government securities portfolio, and $16 million related to our currency diversification strategy.

• Reported pretax profit margin was 61% for the current quarter and 64% as adjusted. For the year-ago quarter, reported pretax margin was 72% and 68% as adjusted.

• Total equity of $10.5 billion.

The Interactive Brokers Group, Inc. Board of Directors declared a quarterly cash dividend of $0.10 per share. This dividend is payable on June 14, 2022, to shareholders of record as of June 1, 2022.

Business Highlights

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

• Customer accounts increased 36% to 1.81 million.
• Customer equity grew 8% to $355.9 billion.
• Total DARTs² decreased 24% to 2.52 million.
• Cleared DARTs decreased 25% to 2.23 million.
• Customer credits increased 9% to $92.5 billion.
• Customer margin loans increased 14% to $48.2 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 $59 million, as the U.S. dollar value of the GLOBAL decreased by approximately 0.56%. The effects of the currency diversification strategy are reported as components of (1) Other Income (loss of $18 million) and (2) Other Comprehensive Income (loss of $41 million).

Conference Call Information:

Interactive Brokers Group, Inc. will hold a conference call with investors today, April 19, 2022, at 4:30 p.m. ET to discuss its quarterly results. Investors who would like to listen to the conference call live should dial 877-324-1965 (U.S. domestic) and 631-291-4512 (international). The number should be dialed approximately ten minutes prior to the start of the conference call. Ask for the “Interactive Brokers 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
				Ended March 31,
				2022				2021
				(in millions, except share and per share data)
Revenues:
	Commissions			$	349			$	412
	Other fees and services				53				56
	Other income (loss)				(39)				120
		Total non-interest income			363				588
	Interest income				332				390
	Interest expense				(50)				(85)
		Total net interest income			282				305
		Total net revenues			645				893
Non-interest expenses:
	Execution, clearing and distribution fees				71				68
	Employee compensation and benefits				111				97
	Occupancy, depreciation and amortization				22				20
	Communications				8				8
	General and administrative				38				59
	Customer bad debt				1				2
		Total non-interest expenses			251				254
Income before income taxes					394				639
Income tax expense					28				53
Net income					366				586
Net income attributable to noncontrolling interests					293				479
Net income available for common stockholders				$	73			$	107
Earnings per share:
	Basic			$	0.74			$	1.18
	Diluted			$	0.74			$	1.16
Weighted average common shares outstanding:
	Basic				98,226,147				90,789,321
	Diluted				99,224,776				91,766,142

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
				Three Months
				Ended March 31,
				2022				2021
					(in millions, except share and per share data)
Comprehensive income:
	Net income available for common stockholders			$	73			$	107
	Other comprehensive income:
		Cumulative translation adjustment, before income taxes			(10)				(17)
		Income taxes related to items of other comprehensive income			-				-
	Other comprehensive loss, net of tax				(10)				(17)
Comprehensive income available for common stockholders				$	63			$	90
Comprehensive earnings per share:
	Basic			$	0.65			$	0.99
	Diluted			$	0.64			$	0.98
Weighted average common shares outstanding:
	Basic				98,226,147				90,789,321
	Diluted				99,224,776				91,766,142
Comprehensive income attributable to noncontrolling interests:
	Net income attributable to noncontrolling interests			$	293			$	479
	Other comprehensive income - cumulative translation adjustment				(31)				(59)
Comprehensive income attributable to noncontrolling interests				$	262			$	420

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)
						March 31, 2022				December 31, 2021
						(in millions)
Assets
Cash and cash equivalents						$	2,667			$	2,395
Cash - segregated for regulatory purposes							24,581				22,888
Securities - segregated for regulatory purposes							24,350				15,121
Securities borrowed							4,445				3,912
Securities purchased under agreements to resell							6,268				4,380
Financial instruments owned, at fair value							577				673
Receivables from customers, net of allowance for credit losses							48,306				54,935
Receivables from brokers, dealers and clearing organizations							2,188				3,771
Other assets							1,041				1,038
	Total assets					$	114,423			$	109,113
Liabilities and equity
Liabilities
Short-term borrowings						$	11			$	27
Securities loaned							11,379				11,769
Securities sold under agreements to repurchase							300				-
Financial instruments sold but not yet purchased, at fair value							190				182
Other payables:
	Customers						91,097				85,634
	Brokers, dealers and clearing organizations						230				557
	Other payables						734				722
							92,061				86,913
	Total liabilities						103,941				98,891
Equity
Stockholders' equity							2,456				2,395
Noncontrolling interests							8,026				7,827
	Total equity						10,482				10,222
	Total liabilities and equity					$	114,423			$	109,113
		March 31, 2022					December 31, 2021
Ownership of IBG LLC Membership Interests		Interests			%		Interests				%
IBG, Inc.		98,280,127			23.5%		98,230,127				23.5%
Noncontrolling interests (IBG Holdings LLC)		319,880,492			76.5%		319,880,492				76.5%
Total IBG LLC membership interests		418,160,619			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
1Q2021		273,985					24,079					8,418					306,482					5,024
1Q2022		212,818		(22	%)		20,671		(14	%)		9,225		10	%		242,714		(21	%)		3,915
4Q2021		207,457					19,961					8,001					235,419					3,707
1Q2022		212,818		3	%		20,671		4	%		9,225		15	%		242,714		3	%		3,915

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	%
1Q2021		231,797					40,868					308,934,824
1Q2022		245,343		6	%		53,570		31	%		97,406,991		(68	%)
4Q2021		244,349					41,997					117,410,095
1Q2022		245,343		0	%		53,570		28	%		97,406,991		(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	%
1Q2021		221,898					40,361					306,165,385
1Q2022		234,790		6	%		52,728		31	%		95,990,985		(69	%)
4Q2021		235,400					41,318					116,546,652
1Q2022		234,790		(0	%)		52,728		28	%		95,990,985		(18	%)
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	%
1Q2021		202,583					40,019					301,675,030
1Q2022		212,628		5	%		52,264		31	%		92,860,481		(69	%)
4Q2021		213,143					41,096					113,441,967
1Q2022		212,628		(0	%)		52,264		27	%		92,860,481		(18	%)
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	%)
1Q2021		9,899					507					2,769,439
1Q2022		10,553		7	%		842		66	%		1,416,006		(49	%)
4Q2021		8,949					679					863,443
1Q2022		10,553		18	%		842		24	%		1,416,006		64	%
1 Includes options on futures.

CUSTOMER STATISTICS
Year over Year			1Q2022			1Q2021		% Change
Total Accounts (in thousands)			1,809			1,325		36	%
Customer Equity (in billions)1		$	355.9		$	330.6		8	%
Cleared DARTs (in thousands)			2,234			2,964		(25	%)
Total Customer DARTs (in thousands)			2,522			3,308		(24	%)
Cleared Customers
Commission per Cleared Commissionable Order2		$	2.57		$	2.31		11	%
Cleared Avg. DARTs per Account (Annualized)			323			622		(48	%)
Consecutive Quarters			1Q2022			4Q2021		% Change
Total Accounts (in thousands)			1,809			1,676		8	%
Customer Equity (in billions)1		$	355.9		$	373.8		(5	%)
Cleared DARTs (in thousands)			2,234			2,162		3	%
Total Customer DARTs (in thousands)			2,522			2,436		4	%
Cleared Customers
Commission per Cleared Commissionable Order2		$	2.57		$	2.38		8	%
Cleared Avg. DARTs per Account (Annualized)			323			339		(5	%)
(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
				Ended March 31,
				2022				2021
				(in millions)
Average interest-earning assets
	Segregated cash and securities			$	43,287			$	46,726
	Customer margin loans				47,141				39,964
	Securities borrowed				3,467				5,108
	Other interest-earning assets				8,211				5,416
	FDIC sweeps1				2,219				2,817
				$	104,325			$	100,031
Average interest-bearing liabilities
	Customer credit balances			$	84,394			$	77,887
	Securities loaned				11,089				11,117
	Other interest-bearing liabilities				12				138
				$	95,495			$	89,142
Net interest income
	Segregated cash and securities, net			$	7			$	2
	Customer margin loans2				149				117
	Securities borrowed and loaned, net				110				175
	Customer credit balances, net2				9				9
	Other net interest income1/3				8				9
		Net interest income3		$	283			$	312
Net interest margin ("NIM")					1.10%				1.26%
Annualized yields
	Segregated cash and securities				0.07%				0.02%
	Customer margin loans				1.28%				1.19%
	Customer credit balances				-0.04%				-0.05%

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 months ended March 31, 2022 and 2021, $1 million and $8 million were reported in other fees and services, respectively. For the three months ended March 31, 2022 and 2021, $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
			Ended March 31,
			2022				2021
			(in millions)
Adjusted net revenues1
Net revenues - GAAP			$	645			$	893
Non-GAAP adjustments
	Currency diversification strategy, net			18				2
	Mark-to-market on investments2			29				(99)
Total non-GAAP adjustments				47				(97)
Adjusted net revenues			$	692			$	796
Adjusted income before income taxes1
Income before income taxes - GAAP			$	394			$	639
Non-GAAP adjustments
	Currency diversification strategy, net			18				2
	Mark-to-market on investments2			29				(99)
Total non-GAAP adjustments				47				(97)
Adjusted income before income taxes			$	441			$	542
Adjusted pre-tax profit margin				64%				68%

			Three Months
			Ended March 31,
			2022			2021
			(in millions)
Adjusted net income available for common stockholders1
Net income available for common stockholders - GAAP			$	73		$	107
Non-GAAP adjustments
	Currency diversification strategy, net			4			0
	Mark-to-market on investments2			7			(22)
	Income tax effect of above adjustments3			(2)			4
Total non-GAAP adjustments				9			(17)
Adjusted net income available for common stockholders			$	82		$	90
Note: Amounts may not add due to rounding.
			Three Months
			Ended March 31,
			2022			2021
			(in dollars)
Adjusted diluted EPS1
Diluted EPS - GAAP			$	0.74		$	1.16
Non-GAAP adjustments
	Currency diversification strategy, net			0.04			0.00
	Mark-to-market on investments2			0.07			(0.24)
	Income tax effect of above adjustments3			(0.02)			0.05
Total non-GAAP adjustments				0.09			(0.19)
Adjusted diluted EPS			$	0.82		$	0.98
Diluted weighted average common shares outstanding				99,224,776			91,766,142
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 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220419005853/en/

For Interactive Brokers Group, Inc.

Investors:

Nancy Stuebe, investor-relations@ibkr.com

or

Media: Rob Garfield, media@ibkr.com

Source: Interactive Brokers Group, Inc.

FAQ

What were the Q1 2022 earnings for Interactive Brokers (IBKR)?

Interactive Brokers reported a GAAP diluted EPS of $0.74 for Q1 2022.

How did Interactive Brokers' net revenues change in Q1 2022?

Net revenues fell by 28% to $645 million in Q1 2022, compared to $893 million in Q1 2021.

What is the dividend payout date for Interactive Brokers (IBKR)?

The quarterly cash dividend of $0.10 per share is payable on June 14, 2022.

How much did customer accounts grow for Interactive Brokers in Q1 2022?

Customer accounts increased by 36% to 1.81 million in Q1 2022.

What was the adjusted EPS for Interactive Brokers in Q1 2022?

The adjusted EPS for Interactive Brokers in Q1 2022 was $0.82.