Interactive Brokers Group Announces 1Q2023 Results
Interactive Brokers Group reported Q1 2023 results with a GAAP diluted EPS of $1.42 and adjusted EPS of $1.35, reflecting significant growth from $0.74 and $0.82 year-over-year, respectively. Net revenues reached $1,056 million, up from $645 million a year ago. The firm saw a 2% increase in commission revenue to $357 million, driven by record futures contract volumes, despite a dip in customer stock trading volume. Net interest income soared 126% to $637 million due to rising interest rates. Customer accounts rose 21% to 2.20 million, though customer equity fell 4% to $343.1 billion. A quarterly cash dividend of $0.10 per share was declared, payable June 14, 2023.
- GAAP diluted EPS increased to $1.42, a 92% increase year-over-year.
- Net revenues climbed to $1,056 million, marking a 64% rise from the previous year.
- Net interest income surged 126% to $637 million due to higher interest rates.
- Commission revenue rose 2% to $357 million, driven by robust futures trading.
- Customer accounts grew by 21%, reaching 2.20 million.
- Customer equity decreased by 4% to $343.1 billion.
- Total DARTs fell 19% to 2.05 million, indicating reduced trading activity.
- Customer margin loans dropped 18% to $39.4 billion.
GAAP DILUTED EPS OF
GAAP NET REVENUES OF
Reported diluted earnings per share were
Reported net revenues were
Reported income before income taxes was
Financial Highlights
(All comparisons are to the year-ago quarter.)
-
Commission revenue increased
2% to on record contract volumes in futures and larger average trade sizes in options and futures, tempered by lower customer stock trading volume.$357 million -
Net interest income increased
126% to on higher benchmark interest rates and customer credit balances.$637 million -
Other income increased
to a gain of$58 million . This increase was mainly comprised of$19 million related to our$39 million U.S. government securities portfolio, all of which matures within three months, and related to our currency diversification strategy.$19 million -
Reported pretax profit margin was
72% for the current quarter and71% as adjusted. For the year-ago quarter, reported pretax margin was61% and64% as adjusted. -
Total equity of
.$12.2 billion
The
____________________________________
1 See the reconciliation of non-GAAP financial measures starting on page 9.
Business Highlights
(All comparisons are to the year-ago quarter.)
-
Customer accounts increased
21% to 2.20 million. -
Customer equity decreased
4% to .$343.1 billion -
Total DARTs2 decreased
19% to 2.05 million. -
Cleared DARTs decreased
17% to 1.85 million. -
Customer credits increased
4% to .$96.6 billion -
Customer margin loans decreased
18% to .$39.4 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
Conference Call Information:
About
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
____________________________________
2 Daily average revenue trades (DARTs) are based on customer orders.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months | ||||||
Ended |
||||||
2023 |
2022 |
|||||
(in millions, except share and per share data) | ||||||
Revenues: | ||||||
Commissions | $ | 357 |
$ | 349 |
||
Other fees and services | 43 |
53 |
||||
Other income (loss) | 19 |
(39) |
||||
Total non-interest income | 419 |
363 |
||||
Interest income | 1,347 |
332 |
||||
Interest expense | (710) |
(50) |
||||
Total net interest income | 637 |
282 |
||||
Total net revenues | 1,056 |
645 |
||||
Non-interest expenses: | ||||||
Execution, clearing and distribution fees | 95 |
71 |
||||
Employee compensation and benefits | 128 |
111 |
||||
Occupancy, depreciation and amortization | 24 |
22 |
||||
Communications | 9 |
8 |
||||
General and administrative | 36 |
38 |
||||
Customer bad debt | 3 |
1 |
||||
Total non-interest expenses | 295 |
251 |
||||
Income before income taxes | 761 |
394 |
||||
Income tax expense | 61 |
28 |
||||
Net income | 700 |
366 |
||||
Net income attributable to noncontrolling interests | 552 |
293 |
||||
Net income available for common stockholders | $ | 148 |
$ | 73 |
||
Earnings per share: | ||||||
Basic | $ | 1.44 |
$ | 0.74 |
||
Diluted | $ | 1.42 |
$ | 0.74 |
||
Weighted average common shares outstanding: | ||||||
Basic | 102,958,660 |
98,226,147 |
||||
Diluted | 104,042,571 |
99,224,776 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
Three Months | ||||||
Ended |
||||||
2023 |
2022 |
|||||
(in millions, except share and per share data) | ||||||
Comprehensive income: | ||||||
Net income available for common stockholders | $ | 148 |
$ | 73 |
||
Other comprehensive income: | ||||||
Cumulative translation adjustment, before income taxes | 5 |
(10) |
||||
Income taxes related to items of other comprehensive income | - |
- |
||||
Other comprehensive income (loss), net of tax | 5 |
(10) |
||||
Comprehensive income available for common stockholders | $ | 153 |
$ | 63 |
||
Comprehensive earnings per share: | ||||||
Basic | $ | 1.48 |
$ | 0.65 |
||
Diluted | $ | 1.47 |
$ | 0.64 |
||
Weighted average common shares outstanding: | ||||||
Basic | 102,958,660 |
98,226,147 |
||||
Diluted | 104,042,571 |
99,224,776 |
||||
Comprehensive income attributable to noncontrolling interests: | ||||||
Net income attributable to noncontrolling interests | $ | 552 |
$ | 293 |
||
Other comprehensive income - cumulative translation adjustment | 14 |
(31) |
||||
Comprehensive income attributable to noncontrolling interests | $ | 566 |
$ | 262 |
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
2023 |
2022 |
|||||
(in millions) | ||||||
Assets | ||||||
Cash and cash equivalents | $ | 3,214 |
$ | 3,436 |
||
Cash - segregated for regulatory purposes | 24,354 |
25,167 |
||||
Securities - segregated for regulatory purposes | 36,987 |
31,781 |
||||
Securities borrowed | 5,306 |
4,749 |
||||
Securities purchased under agreements to resell | 6,699 |
6,029 |
||||
Financial instruments owned, at fair value | 383 |
485 |
||||
Receivables from customers, net of allowance for credit losses | 39,491 |
38,760 |
||||
Receivables from brokers, dealers and clearing organizations | 1,666 |
3,469 |
||||
Other assets | 1,369 |
1,267 |
||||
Total assets | $ | 119,469 |
$ | 115,143 |
||
Liabilities and equity | ||||||
Liabilities | ||||||
Short-term borrowings | $ | 10 |
$ | 18 |
||
Securities loaned | 10,719 |
8,940 |
||||
Financial instruments sold but not yet purchased, at fair value | 190 |
146 |
||||
Other payables: | ||||||
Customers | 94,897 |
93,195 |
||||
Brokers, dealers and clearing organizations | 369 |
291 |
||||
Other payables | 1,051 |
938 |
||||
96,317 |
94,424 |
|||||
Total liabilities | 107,236 |
103,528 |
||||
Equity | ||||||
Stockholders' equity | 3,001 |
2,848 |
||||
Noncontrolling interests | 9,232 |
8,767 |
||||
Total equity | 12,233 |
11,615 |
||||
Total liabilities and equity | $ | 119,469 |
$ | 115,143 |
2023 |
2022 |
|||||||
Ownership of |
Interests | % | Interests | % | ||||
102,999,265 |
|
102,927,703 |
|
|||||
Noncontrolling interests ( |
316,609,102 |
|
316,609,102 |
|
||||
419,608,367 |
|
419,536,805 |
|
OPERATING DATA
TRADE VOLUMES: | ||||||||||||||||||
(in 000's, except %) | ||||||||||||||||||
Cleared | Non-Cleared | Avg. Trades | ||||||||||||||||
Customer | % | Customer | % | Principal | % | Total | % | per |
||||||||||
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 |
|
78,276 |
|
32,621 |
|
982,216 |
|
3,905 |
|||||||||
2022 |
735,619 |
( |
70,049 |
( |
32,863 |
|
838,531 |
( |
3,347 |
|||||||||
|
||||||||||||||||||
1Q2022 |
212,818 |
20,671 |
9,225 |
242,714 |
3,915 |
|||||||||||||
1Q2023 |
180,261 |
( |
15,369 |
( |
8,187 |
( |
203,817 |
( |
3,287 |
|||||||||
|
||||||||||||||||||
4Q2022 |
165,769 |
14,923 |
7,358 |
188,050 |
3,009 |
|||||||||||||
1Q2023 |
180,261 |
|
15,369 |
|
8,187 |
|
203,817 |
|
3,287 |
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 |
|
154,866 |
( |
771,273,709 |
|
||||||
2022 |
908,415 |
|
207,138 |
|
330,035,586 |
( |
||||||
|
||||||||||||
1Q2022 |
245,343 |
53,570 |
97,406,991 |
|||||||||
1Q2023 |
247,508 |
|
55,197 |
|
75,522,066 |
( |
||||||
|
||||||||||||
4Q2022 |
229,441 |
51,519 |
75,713,964 |
|||||||||
1Q2023 |
247,508 |
|
55,197 |
|
75,522,066 |
( |
||||||
ALL CUSTOMERS | Options | % | Futures1 | % | Stocks | % | ||||||
Period | (contracts) | Change | (contracts) | Change | (shares) | Change | ||||||
2020 |
584,195 |
164,555 |
331,263,604 |
|||||||||
2021 |
852,169 |
|
152,787 |
( |
766,211,726 |
|
||||||
2022 |
873,914 |
|
203,933 |
|
325,368,714 |
( |
||||||
|
||||||||||||
1Q2022 |
234,790 |
52,728 |
95,990,985 |
|||||||||
1Q2023 |
239,038 |
|
54,577 |
|
74,562,384 |
( |
||||||
|
||||||||||||
4Q2022 |
221,855 |
50,773 |
74,353,901 |
|||||||||
1Q2023 |
239,038 |
|
54,577 |
|
74,562,384 |
|
||||||
CLEARED CUSTOMERS | Options | % | Futures1 | % | Stocks | % | ||||||
Period | (contracts) | Change | (contracts) | Change | (shares) | Change | ||||||
2020 |
518,965 |
163,101 |
320,376,365 |
|||||||||
2021 |
773,284 |
|
151,715 |
( |
752,720,070 |
|
||||||
2022 |
781,373 |
|
202,145 |
|
314,462,672 |
( |
||||||
|
||||||||||||
1Q2022 |
212,628 |
52,264 |
92,860,481 |
|||||||||
1Q2023 |
209,605 |
( |
53,957 |
|
72,041,499 |
( |
||||||
|
||||||||||||
4Q2022 |
194,962 |
50,326 |
71,924,864 |
|||||||||
1Q2023 |
209,605 |
|
53,957 |
|
72,041,499 |
|
||||||
1 Includes options on futures |
OPERATING DATA, CONTINUED
CONTRACT AND SHARE VOLUMES, continued: | ||||||||||||
(in 000's, except %) | ||||||||||||
PRINCIPAL TRANSACTIONS | Options | % | Futures1 | % | Stocks | % | ||||||
Period | (contracts) | Change | (contracts) | Change | (shares) | Change | ||||||
2020 |
39,840 |
2,523 |
7,249,464 |
|||||||||
2021 |
35,680 |
( |
2,079 |
( |
5,061,983 |
( |
||||||
2022 |
34,501 |
( |
3,205 |
|
4,666,872 |
( |
||||||
|
||||||||||||
1Q2022 |
10,553 |
842 |
1,416,006 |
|||||||||
1Q2023 |
8,470 |
( |
620 |
( |
959,682 |
( |
||||||
|
||||||||||||
4Q2022 |
7,586 |
746 |
1,360,063 |
|||||||||
1Q2023 |
8,470 |
|
620 |
( |
959,682 |
( |
||||||
1 Includes options on futures |
CUSTOMER STATISTICS | ||||||||
Year over Year | 1Q2023 |
1Q2022 |
% Change | |||||
Total Accounts (in thousands) | 2,195 |
1,809 |
|
|||||
Customer Equity (in billions)1 | $ | 343.1 |
$ | 355.9 |
( |
|||
Cleared DARTs (in thousands) | 1,845 |
2,234 |
( |
|||||
Total Customer DARTs (in thousands) | 2,054 |
2,522 |
( |
|||||
Cleared Customers | ||||||||
Commission per Cleared Commissionable Order2 | $ | 3.16 |
$ | 2.57 |
|
|||
Cleared Avg. DARTs per Account (Annualized) | 214 |
321 |
( |
|||||
Consecutive Quarters | 1Q2023 |
4Q2022 |
% Change | |||||
Total Accounts (in thousands) | 2,195 |
2,091 |
|
|||||
Customer Equity (in billions)1 | $ | 343.1 |
$ | 306.7 |
|
|||
Cleared DARTs (in thousands) | 1,845 |
1,689 |
|
|||||
Total Customer DARTs (in thousands) | 2,054 |
1,889 |
|
|||||
Cleared Customers | ||||||||
Commission per Cleared Commissionable Order2 | $ | 3.16 |
$ | 3.15 |
|
|||
Cleared Avg. DARTs per Account (Annualized) | 214 |
206 |
|
|||||
(1) Excludes non-Customers. | ||||||||
(2) Commissionable Order - a customer order that generates commissions. |
NET INTEREST MARGIN
(UNAUDITED)
Three Months | ||||||
Ended |
||||||
2023 |
2022 |
|||||
(in millions) | ||||||
Average interest-earning assets | ||||||
Segregated cash and securities | $ | 59,679 |
$ | 43,287 |
||
Customer margin loans | 39,303 |
47,141 |
||||
Securities borrowed | 4,868 |
3,467 |
||||
Other interest-earning assets | 9,777 |
8,211 |
||||
2,428 |
2,219 |
|||||
$ | 116,055 |
$ | 104,325 |
|||
Average interest-bearing liabilities | ||||||
Customer credit balances | $ | 95,802 |
$ | 84,394 |
||
Securities loaned | 8,571 |
11,089 |
||||
Other interest-bearing liabilities | 1 |
12 |
||||
$ | 104,374 |
$ | 95,495 |
|||
Net interest income | ||||||
Segregated cash and securities, net | $ | 603 |
$ | 7 |
||
Customer margin loans2 | 477 |
149 |
||||
Securities borrowed and loaned, net | 88 |
110 |
||||
Customer credit balances, net2 | (653) |
9 |
||||
Other net interest income1/3 | 125 |
8 |
||||
Net interest income3 | $ | 640 |
$ | 283 |
||
Net interest margin ("NIM") |
|
|
||||
Annualized yields | ||||||
Segregated cash and securities |
|
|
||||
Customer margin loans |
|
|
||||
Customer credit balances |
|
- |
1 |
Represents the average amount of customer cash swept into |
|
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 |
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Three Months | ||||||
Ended |
||||||
2023 |
2022 |
|||||
(in millions) | ||||||
Adjusted net revenues1 | ||||||
Net revenues - GAAP | $ | 1,056 |
$ | 645 |
||
Non-GAAP adjustments | ||||||
Currency diversification strategy, net | (1) |
18 |
||||
Mark-to-market on investments2 | (40) |
29 |
||||
Total non-GAAP adjustments | (41) |
47 |
||||
Adjusted net revenues | $ | 1,015 |
$ | 692 |
||
Adjusted income before income taxes1 | ||||||
Income before income taxes - GAAP | $ | 761 |
$ | 394 |
||
Non-GAAP adjustments | ||||||
Currency diversification strategy, net | (1) |
18 |
||||
Mark-to-market on investments2 | (40) |
29 |
||||
Total non-GAAP adjustments | (41) |
47 |
||||
Adjusted income before income taxes | $ | 720 |
$ | 441 |
||
Adjusted pre-tax profit margin |
|
|
Three Months | ||||||
Ended |
||||||
2023 |
2022 |
|||||
(in millions) | ||||||
Adjusted net income available for common stockholders1 | ||||||
Net income available for common stockholders - GAAP | $ | 148 |
$ | 73 |
||
Non-GAAP adjustments | ||||||
Currency diversification strategy, net | - |
4 |
||||
Mark-to-market on investments2 | (10) |
7 |
||||
Income tax effect of above adjustments3 | 2 |
(2) |
||||
Total non-GAAP adjustments | (8) |
9 |
||||
Adjusted net income available for common stockholders | $ | 140 |
$ | 82 |
||
Note: Amounts may not add due to rounding. | ||||||
Three Months | ||||||
Ended |
||||||
2023 |
2022 |
|||||
(in dollars) | ||||||
Adjusted diluted EPS1 | ||||||
Diluted EPS - GAAP | $ | 1.42 |
$ | 0.74 |
||
Non-GAAP adjustments | ||||||
Currency diversification strategy, net | (0.00) |
0.04 |
||||
Mark-to-market on investments2 | (0.09) |
0.07 |
||||
Income tax effect of above adjustments3 | 0.02 |
(0.02) |
||||
Total non-GAAP adjustments | (0.07) |
0.09 |
||||
Adjusted diluted EPS | $ | 1.35 |
$ | 0.82 |
||
Diluted weighted average common shares outstanding | 104,042,571 |
99,224,776 |
||||
Note: Amounts may not add due to rounding. |
Note: The term “GAAP” in the following explanation refers to generally accepted accounting principles in
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
3 The income tax effect is estimated using the statutory income tax rates applicable to the Company.
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