Interactive Brokers Group Announces 3Q2024 Results

Rhea-AI Summary

Interactive Brokers Group (Nasdaq: IBKR) reported strong financial results for Q3 2024. GAAP diluted EPS increased to $1.81 from $1.56 year-over-year, while adjusted EPS rose to $1.75 from $1.55. Net revenues grew to $1,365 million (GAAP) and $1,327 million (adjusted) from $1,145 million and $1,139 million respectively in the previous year.

Key highlights include:

• Commission revenue up 31% to $435 million
• Net interest income increased 9% to $802 million
• Customer accounts grew 28% to 3.12 million
• Customer equity rose 46% to $541.5 billion
• Total DARTs increased 42% to 2.70 million

The company declared a quarterly cash dividend of $0.25 per share, payable on December 13, 2024.

Positive

• GAAP diluted EPS increased 16% to $1.81
• Net revenues grew 19% to $1,365 million (GAAP)
• Commission revenue up 31% to $435 million
• Net interest income increased 9% to $802 million
• Customer accounts grew 28% to 3.12 million
• Customer equity rose 46% to $541.5 billion
• Total DARTs increased 42% to 2.70 million
• Customer margin loans increased 28% to $55.8 billion
• Pretax profit margin remained strong at 72%

Negative

• General and administrative expenses increased 67% to $75 million
• Execution, clearing and distribution fees expenses increased 18% to $116 million

Insights

Financial Analyst

Interactive Brokers Group's Q3 2024 results show robust growth across key metrics. GAAP diluted EPS increased 16% to $1.81, while adjusted EPS rose 12.9% to $1.75. Net revenues grew 19.2% to $1.365 billion, driven by strong performance in commission revenue and net interest income.

Notably, commission revenue surged 31% to $435 million, reflecting higher customer trading volumes. The 9% increase in net interest income to $802 million is particularly impressive given the current interest rate environment. The company's customer base expanded significantly, with accounts up 28% to 3.12 million and customer equity jumping 46% to $541.5 billion.

While expenses increased, particularly in general and administrative costs, the company maintained a strong pretax profit margin of 72%. The declared quarterly dividend of $0.25 per share demonstrates confidence in ongoing financial stability. These results indicate IBKR's continued ability to capitalize on market volatility and grow its user base, positioning it well in the competitive online brokerage space.

Market Research Analyst

Interactive Brokers' Q3 results reveal significant market share gains and increased engagement from retail investors. The 42% surge in Daily Average Revenue Trades (DARTs) to 2.70 million, coupled with the 28% growth in customer accounts, suggests a continued trend of retail investor participation in the markets.

The company's ability to grow customer equity by 46% to $541.5 billion is particularly noteworthy, as it outpaces account growth. This indicates that IBKR is not only attracting new clients but also capturing a larger share of existing clients' assets. The 28% increase in margin loans to $55.8 billion further demonstrates increased client activity and confidence in the platform.

IBKR's growth in various product segments, with options, stocks and futures trading volumes up 35%, 22% and 13% respectively, showcases its diverse appeal across different asset classes. The company's strong performance amidst market volatility and changing economic conditions positions it favorably against competitors in the online brokerage industry.

GAAP Diluted EPS of $1.81, Adjusted¹ EPS of $1.75

GAAP Net Revenues of $1,365 Million, Adjusted Net Revenues of $1,327 Million

GREENWICH, Conn.--(BUSINESS WIRE)-- Interactive Brokers Group, Inc. (Nasdaq: IBKR), an automated global electronic broker, announced results for the quarter ended September 30, 2024.

Reported diluted earnings per share were $1.81 for the current quarter and $1.75 as adjusted. For the year-ago quarter, reported diluted earnings per share were $1.56 and $1.55 as adjusted.

Reported net revenues were $1,365 million for the current quarter and $1,327 million as adjusted. For the year-ago quarter, reported net revenues were $1,145 million and $1,139 million as adjusted.

Reported income before income taxes was $987 million for the current quarter and $949 million as adjusted. For the year-ago quarter, reported income before income taxes was $840 million and $834 million as adjusted.

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

• Commission revenue increased 31% to $435 million on higher customer trading volumes. Customer trading volume in options, stocks and futures increased 35%, 22% and 13%, respectively.

• Net interest income increased 9% to $802 million on higher customer margin loans and customer credit balances.

• Other fees and services increased $20 million, or 38%, to $72 million, driven by increases of $13 million in risk exposure fees, $5 million in payments for order flow from exchange-mandated programs, and $2 million in FDIC sweep program fees.

• Execution, clearing and distribution fees expenses increased 18% to $116 million, driven by a higher SEC fee rate and higher customer trading volumes.

• General and administrative expenses increased $30 million, or 67%, to $75 million, driven primarily by a one-time charge of $12 million related to the consolidation of our European subsidiaries and a $9 million increase related to legal and regulatory matters.

• Pretax profit margin for the current quarter was 72% both as reported and as adjusted. For the year-ago quarter, pretax margin was 73% both as reported and as adjusted.

• Total equity of $16.1 billion.

The Interactive Brokers Group, Inc. Board of Directors declared a quarterly cash dividend of $0.25 per share. This dividend is payable on December 13, 2024, to shareholders of record as of November 29, 2024.

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

• Customer accounts increased 28% to 3.12 million.
• Customer equity increased 46% to $541.5 billion.
• Total DARTs² increased 42% to 2.70 million.
• Customer credits increased 19% to $116.7 billion.
• Customer margin loans increased 28% to $55.8 billion.

Other Items

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 $178 million, as the U.S. dollar value of the GLOBAL increased by approximately 1.14%. The effects of the currency diversification strategy are reported as components of (1) Other Income (gain of $25 million) and (2) Other Comprehensive Income (gain of $153 million).

Conference Call Information:

Interactive Brokers Group, Inc. will hold a conference call with investors today, October 15, 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/BI3215f73851b048a8b64604af65ed4ff9 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. Interactive Brokers has consistently earned recognition as a top broker, garnering multiple awards and accolades from respected industry sources such as Barron’s, Investopedia, Stockbrokers.com, and many others.

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								Nine Months
		Ended September 30,								Ended September 30,
		2024				2023				2024				2023
		(in millions, except share and per share data)
Revenues:
Commissions		$	435			$	333			$	1,220			$	1,012
Other fees and services			72				52				199				142
Other income (loss)			56				27				38				(17	)
Total non-interest income			563				412				1,457				1,137
Interest income			1,888				1,643				5,476				4,535
Interest expense			(1,086	)			(910	)			(3,135	)			(2,471	)
Total net interest income			802				733				2,341				2,064
Total net revenues			1,365				1,145				3,798				3,201
Non-interest expenses:
Execution, clearing and distribution fees			116				98				332				286
Employee compensation and benefits			145				127				436				391
Occupancy, depreciation and amortization			26				25				77				74
Communications			9				10				29				29
General and administrative			75				45				177				166
Customer bad debt			7				-				14				2
Total non-interest expenses			378				305				1,065				948
Income before income taxes			987				840				2,733				2,253
Income tax expense			80				68				222				180
Net income			907				772				2,511				2,073
Net income attributable to noncontrolling interests			708				605				1,958				1,633
Net income available for common stockholders		$	199			$	167			$	553			$	440
Earnings per share:
Basic		$	1.83			$	1.57			$	5.12			$	4.22
Diluted		$	1.81			$	1.56			$	5.08			$	4.19
Weighted average common shares outstanding:
Basic			108,757,991				106,233,557				107,852,597				104,271,921
Diluted			109,536,360				107,011,427				108,774,195				105,184,572

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

		Three Months							Nine Months
		Ended September 30,							Ended September 30,
		2024			2023				2024			2023
			(in millions, except share and per share data)
Comprehensive income:
Net income available for common stockholders		$	199		$	167			$	553		$	440
Other comprehensive income:
Cumulative translation adjustment, before income taxes			39			(19	)			11			(7	)
Income taxes related to items of other comprehensive income			-			-				-			-
Other comprehensive income (loss), net of tax			39			(19	)			11			(7	)
Comprehensive income available for common stockholders		$	238		$	148			$	564		$	433
Comprehensive earnings per share:
Basic		$	2.19		$	1.39			$	5.23		$	4.15
Diluted		$	2.18		$	1.38			$	5.18		$	4.12
Weighted average common shares outstanding:
Basic			108,757,991			106,233,557				107,852,597			104,271,921
Diluted			109,536,360			107,011,427				108,774,195			105,184,572
Comprehensive income attributable to noncontrolling interests:
Net income attributable to noncontrolling interests		$	708		$	605			$	1,958		$	1,633
Other comprehensive income - cumulative translation adjustment			114			(57	)			30			(19	)
Comprehensive income attributable to noncontrolling interests		$	822		$	548			$	1,988		$	1,614

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)

				September 30, 2024			December 31, 2023
				(in millions)
Assets
Cash and cash equivalents				$	3,595		$	3,753
Cash - segregated for regulatory purposes					35,216			28,840
Securities - segregated for regulatory purposes					31,103			35,386
Securities borrowed					7,513			5,835
Securities purchased under agreements to resell					8,176			5,504
Financial instruments owned, at fair value					2,949			1,488
Receivables from customers, net of allowance for credit losses					56,006			44,472
Receivables from brokers, dealers and clearing organizations					2,210			1,643
Other assets					1,758			1,502
Total assets				$	148,526		$	128,423
Liabilities and equity
Liabilities
Short-term borrowings				$	33		$	17
Securities loaned					16,818			11,347
Financial instruments sold but not yet purchased, at fair value					381			193
Other payables:
Customers					112,579			101,012
Brokers, dealers and clearing organizations					1,202			590
Other payables					1,435			1,197
					115,216			102,799
Total liabilities					132,448			114,356
Equity
Stockholders' equity					4,160			3,584
Noncontrolling interests					11,918			10,483
Total equity					16,078			14,067
Total liabilities and equity				$	148,526		$	128,423
	September 30, 2024				December 31, 2023
Ownership of IBG LLC Membership Interests	Interests		%		Interests			%
IBG, Inc.	108,879,779		25.8%		107,049,483			25.4%
Noncontrolling interests (IBG Holdings LLC)	313,643,354		74.2%		313,976,354			74.6%
Total IBG LLC membership interests	422,523,133		100.0%		421,025,837			100.0%

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
OPERATING DATA

EXECUTED ORDER VOLUMES:
(in 000's, except %)
		Customer		%		Principal		%		Total		%
Period		Orders		Change		Orders		Change		Orders		Change
2021		646,440				27,334				673,774
2022		532,064		(18%)		26,966		(1%)		559,030		(17%)
2023		483,015		(9%)		29,712		10%		512,727		(8%)
3Q2023		119,188				8,187				127,375
3Q2024		171,620		44%		17,722		116%		189,342		49%
2Q2024		150,292				13,215				163,507
3Q2024		171,620		14%		17,722		34%		189,342		16%
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%)
3Q2023		256,481				50,309				59,453,190
3Q2024		344,540		34%		56,825		13%		72,117,769		21%
2Q2024		321,141				55,171				73,734,105
3Q2024		344,540		7%		56,825		3%		72,117,769		(2%)
CUSTOMER
		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%)
3Q2023		245,169				49,459				58,202,858
3Q2024		330,173		35%		56,078		13%		70,751,412		22%
2Q2024		308,298				54,106				72,480,534
3Q2024		330,173		7%		56,078		4%		70,751,412		(2%)
PRINCIPAL
		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%)
3Q2023		11,312				850				1,250,332
3Q2024		14,367		27%		747		(12%)		1,366,357		9%
2Q2024		12,843				1,065				1,253,571
3Q2024		14,367		12%		747		(30%)		1,366,357		9%
1 Includes options on futures

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

CUSTOMER STATISTICS
Year over Year			3Q2024			3Q2023		% Change
Total Accounts (in thousands)			3,120			2,431		28%
Customer Equity (in billions)1		$	541.5		$	369.8		46%
Total Customer DARTs (in thousands)			2,703			1,907		42%
Cleared Customers
Commission per Cleared Commissionable Order2		$	2.83		$	3.11		(9%)
Cleared Avg. DARTs per Account (Annualized)			198			180		10%
Consecutive Quarters			3Q2024			2Q2024		% Change
Total Accounts (in thousands)			3,120			2,924		7%
Customer Equity (in billions)1		$	541.5		$	497.2		9%
Total Customer DARTs (in thousands)			2,703			2,386		13%
Cleared Customers
Commission per Cleared Commissionable Order2		$	2.83		$	3.01		(6%)
Cleared Avg. DARTs per Account (Annualized)			198			187		6%
(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								Nine Months
		Ended September 30,								Ended September 30,
		2024				2023				2024				2023
		(in millions)
Average interest-earning assets
Segregated cash and securities		$	61,813			$	58,131			$	61,000			$	59,616
Customer margin loans			54,647				42,853				51,240				40,715
Securities borrowed			6,241				5,557				5,836				5,358
Other interest-earning assets			11,678				10,054				10,949				9,974
FDIC sweeps1			4,330				3,311				4,071				2,819
		$	138,709			$	119,906			$	133,097			$	118,482
Average interest-bearing liabilities
Customer credit balances		$	106,865			$	95,506			$	103,028			$	95,908
Securities loaned			14,258				9,848				13,227				9,383
Other interest-bearing liabilities			1				1				1				1
		$	121,124			$	105,355			$	116,255			$	105,291
Net interest income
Segregated cash and securities, net		$	763			$	728			$	2,267			$	2,031
Customer margin loans2			787				623				2,220				1,647
Securities borrowed and loaned, net			16				66				67				233
Customer credit balances, net2			(936	)			(832	)			(2,711	)			(2,259	)
Other net interest income1/3			196				159				550				429
Net interest income3		$	826			$	744			$	2,393			$	2,081
Net interest margin ("NIM")			2.37	%			2.46	%			2.40	%			2.35	%
Annualized yields
Segregated cash and securities			4.91	%			4.97	%			4.96	%			4.55	%
Customer margin loans			5.73	%			5.77	%			5.79	%			5.41	%
Customer credit balances			3.48	%			3.46	%			3.51	%			3.15	%
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, 2024 and 2023, $7 million, $20 million, $6 million, and $14 million were reported in other fees and services, respectively. For the three and nine months ended September 30, 2024 and 2023, $17 million, $32 million, $5 million, and $3 million were reported in other income, respectively.

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

		Three Months								Nine Months
		Ended September 30,								Ended September 30,
		2024				2023				2024				2023
		(in millions)
Adjusted net revenues1
Net revenues - GAAP		$	1,365			$	1,145			$	3,798			$	3,201
Non-GAAP adjustments
Currency diversification strategy, net			(25	)			17				(3	)			71
Mark-to-market on investments2			(13	)			(23	)			38				(54	)
Total non-GAAP adjustments			(38	)			(6	)			35				17
Adjusted net revenues		$	1,327			$	1,139			$	3,833			$	3,218
Adjusted income before income taxes1
Income before income taxes - GAAP		$	987			$	840			$	2,733			$	2,253
Non-GAAP adjustments
Currency diversification strategy, net			(25	)			17				(3	)			71
Mark-to-market on investments2			(13	)			(23	)			38				(54	)
Total non-GAAP adjustments			(38	)			(6	)			35				17
Adjusted income before income taxes		$	949			$	834			$	2,768			$	2,270
Adjusted pre-tax profit margin			72	%			73	%			72	%			71	%

		Three Months								Nine Months
		Ended September 30,								Ended September 30,
		2024				2023				2024				2023
		(in millions)
Adjusted net income available for common stockholders1
Net income available for common stockholders - GAAP		$	199			$	167			$	553			$	440
Non-GAAP adjustments
Currency diversification strategy, net			(6	)			4				(1	)			18
Mark-to-market on investments2			(3	)			(6	)			10				(14	)
Income tax effect of above adjustments3			2				1				(2	)			(0	)
Total non-GAAP adjustments			(8	)			(1	)			7				4
Adjusted net income available for common stockholders		$	191			$	166			$	560			$	444
Note: Amounts may not add due to rounding.
		Three Months								Nine Months
		Ended September 30,								Ended September 30,
		2024				2023				2024				2023
		(in dollars)
Adjusted diluted EPS1
Diluted EPS - GAAP		$	1.81			$	1.56			$	5.08			$	4.19
Non-GAAP adjustments
Currency diversification strategy, net			(0.06	)			0.04				(0.01	)			0.17
Mark-to-market on investments2			(0.03	)			(0.05	)			0.09				(0.13	)
Income tax effect of above adjustments3			0.02				0.01				(0.02	)			(0.00	)
Total non-GAAP adjustments			(0.07	)			(0.01	)			0.06				0.04
Adjusted diluted EPS		$	1.75			$	1.55			$	5.14			$	4.22
Diluted weighted average common shares outstanding			109,536,360				107,011,427				108,774,195				105,184,572
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.

• 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 net 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 U.S. government and municipal securities portfolios, which are typically held to maturity; and on certain other investments, including equity securities taken over by the Company as a customer accommodation due to a technical issue at the New York Stock Exchange that occurred on the morning of June 3, 2024.

³ The income tax effect is estimated using the statutory income tax rates applicable to the Company.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241015423214/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 was Interactive Brokers Group's (IBKR) EPS for Q3 2024?

Interactive Brokers Group reported GAAP diluted EPS of $1.81 and adjusted EPS of $1.75 for Q3 2024.

How much did IBKR's net revenues grow in Q3 2024 compared to the previous year?

IBKR's net revenues grew to $1,365 million (GAAP) and $1,327 million (adjusted) in Q3 2024, up from $1,145 million and $1,139 million respectively in the previous year.

What was the increase in IBKR's customer accounts for Q3 2024?

Interactive Brokers Group's customer accounts increased 28% to 3.12 million in Q3 2024 compared to the year-ago quarter.

How much did IBKR's commission revenue grow in Q3 2024?

Interactive Brokers Group's commission revenue increased 31% to $435 million in Q3 2024 compared to the year-ago quarter.

What dividend did IBKR declare for Q3 2024?

Interactive Brokers Group declared a quarterly cash dividend of $0.25 per share, payable on December 13, 2024, to shareholders of record as of November 29, 2024.