Interactive Brokers Group Announces 4Q2020 Results

Rhea-AI Summary

Interactive Brokers Group reported diluted earnings per share of $0.81 for Q4 2020, an increase from $0.57 in Q4 2019. Net revenues rose to $599 million from $500 million year-over-year. Commission revenue soared 71% to $120 million due to heightened trading volumes. However, net interest income fell 22% to $222 million due to lower interest rates. Customer accounts expanded 56% to 1.07 million, and customer equity grew 66% to $288.6 billion. A quarterly dividend of $0.10 per share was declared, payable on March 12, 2021.

Positive

• Diluted earnings per share increased to $0.81 from $0.57 YoY.
• Net revenues improved to $599 million, up from $500 million YoY.
• Commission revenue grew 71% to $120 million due to rising trading volumes.
• Customer accounts increased by 56% to 1.07 million.
• Customer equity rose 66% to $288.6 billion.

Negative

• Net interest income decreased by 22% to $222 million due to lower interest rates.

Interactive Brokers Group, Inc. (Nasdaq: IBKR), an automated global electronic broker, reported diluted earnings per share of $0.81 for the quarter ended December 31, 2020 compared to $0.57 for the same period in 2019, and adjusted diluted earnings per share of $0.69 for this quarter compared to $0.58 for the year-ago quarter.

Net revenues were $599 million and income before income taxes was $392 million for this quarter, compared to net revenues of $500 million and income before income taxes of $312 million for the same period in 2019. Adjusted net revenues were $582 million and adjusted income before income taxes was $375 million for this quarter, compared to adjusted net revenues of $503 million and adjusted income before income taxes of $315 million for the same period in 2019.

Financial Highlights

• Commission revenue showed strong growth, increasing $120 million, or 71%, from the year-ago quarter on higher customer trading volumes within an active trading environment worldwide.

• Net interest income decreased $62 million, or 22%, from the year-ago quarter as the average Federal Funds effective rate decreased to 0.09% from 1.65% in the year-ago quarter.

• Other income increased $25 million from the year-ago quarter. This increase was mainly comprised of $39 million related to our strategic investment in Up Fintech Holding Limited (“Tiger Brokers”), which swung to a $32 million mark-to-market gain this quarter from a $7 million mark-to-market loss in the same period in 2019; partially offset by $25 million related to our currency diversification strategy, which lost $13 million this quarter compared to a gain of $12 million in the same period in 2019.

• 65% pretax profit margin for this quarter, up from 62% in the year-ago quarter. 64% adjusted pretax profit margin for this quarter, up from 63% in the year-ago quarter.

• Total equity of $9.0 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 12, 2021 to shareholders of record as of March 1, 2021.

Business Highlights

• Customer accounts increased 56% from the year-ago quarter to 1.07 million.
• Customer equity grew 66% from the year-ago quarter to $288.6 billion.
• Total DARTs² increased 165% from the year-ago quarter to 2.11 million.
• Cleared DARTs increased 160% from the year-ago quarter to 1.87 million.
• Customer credits increased 34% from the year-ago quarter to $77.7 billion.
• Customer margin loans increased 26% from the year-ago quarter to $39.0 billion.

COVID-19 Pandemic

In March 2020, the World Health Organization recognized the outbreak of Coronavirus Disease 2019 (COVID-19) caused by a novel strain of the coronavirus as a pandemic. The pandemic affects all countries in which we operate. The response of governments and societies to the COVID-19 pandemic, which includes temporary closures of certain businesses; social distancing; travel restrictions, “shelter in place” and other governmental regulations; and reduced consumer spending due to job losses, has significantly impacted market volatility and general economic conditions.

The COVID-19 pandemic has precipitated unprecedented market conditions with equally unprecedented social and community challenges. Amid these challenges:

• The Company is committed to ensuring the highest levels of service to its customers so they can effectively manage their assets, portfolios and risks. The Company’s technical infrastructure has withstood the challenges presented by the extraordinary volatility and increased market volume.

• The Company can run its business from alternate office locations and/or remotely if a Company office must temporarily close due to the spread of the COVID-19 pandemic.

• As announced on April 9, 2020, during the second quarter of 2020 the Company donated $5 million to assist efforts to provide food and support for people affected by the COVID-19 pandemic in the United States as well as to advance medical solutions.

The initial effects of the COVID-19 pandemic on the Company’s financial results, which may have continued through the fourth quarter of 2020, can be summarized as follows: (1) higher commission revenue due to increased trading activity and a higher rate of customer accounts opened throughout 2020; and (2) lower net interest income resulting from lower benchmark interest rates.

The impact of the COVID-19 pandemic on the Company’s future financial results could be significant but currently cannot be quantified, as it depends on numerous evolving factors that currently cannot be accurately predicted, including, but not limited to the duration and spread of the pandemic; its impact on our customers, employees and vendors; governmental actions in response to the pandemic; and the overall impact of the pandemic in the economy and society; among other factors. Any of these events could have a materially adverse effect on the Company’s financial results.

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 $82 million, as the U.S. dollar value of the GLOBAL increased by approximately 1.01%. The effects of the currency diversification strategy are reported as components of (1) Other Income (loss of $13 million) and (2) Other Comprehensive Income (gain of $95 million).

Conference Call Information:

Interactive Brokers Group, Inc. will hold a conference call with investors today, January 19, 2021, 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 135 markets in numerous countries and currencies, from a single IBKR Integrated Investment Account 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. Barron’s ranked Interactive Brokers #1 with 5 out of 5 stars in its February 24, 2020, Best Online Broker 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.

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¹ See the reconciliation of non-GAAP financial measures starting on page 10.
² Daily average revenue trades (DARTs) are based on customer orders.

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
2018		328,099				21,880				18,663				368,642				1,478
2019		302,289		(8%)		26,346		20%		17,136		(8%)		345,771		(6%)		1,380
2020		620,405		105%		56,834		116%		27,039		58%		704,278		104%		2,795
4Q2019		73,291				6,284				4,204				83,779				1,330
4Q2020		178,614		144%		17,008		171%		7,455		77%		203,077		142%		3,223
3Q2020		160,015				14,701				7,453				182,169				2,846
4Q2020		178,614		12%		17,008		16%		7,455		0%		203,077		11%		3,223

CONTRACT AND SHARE VOLUMES:
(in 000's, except %)
TOTAL		Options		%		Futures1		%		Stocks		%
Period		(contracts)		Change		(contracts)		Change		(shares)		Change
2018		408,406				151,762				210,257,186
2019		390,739		(4%)		128,770		(15%)		176,752,967		(16%)
2020		624,035		60%		167,078		30%		338,513,068		92%
4Q2019		100,520				29,078				39,391,536
4Q2020		170,191		69%		35,295		21%		121,062,599		207%
3Q2020		163,972				39,186				87,514,614
4Q2020		170,191		4%		35,295		(10%)		121,062,599		38%
ALL CUSTOMERS		Options		%		Futures1		%		Stocks		%
Period		(contracts)		Change		(contracts)		Change		(shares)		Change
2018		358,852				148,485				198,909,375
2019		349,287		(3%)		126,363		(15%)		167,826,490		(16%)
2020		584,195		67%		164,555		30%		331,263,604		97%
4Q2019		91,562				28,630				37,988,125
4Q2020		160,953		76%		34,851		22%		119,654,910		215%
3Q2020		153,612				38,685				85,893,357
4Q2020		160,953		5%		34,851		(10%)		119,654,910		39%
CLEARED CUSTOMERS		Options		%		Futures1		%		Stocks		%
Period		(contracts)		Change		(contracts)		Change		(shares)		Change
2018		313,795				146,806				194,012,882
2019		302,068		(4%)		125,225		(15%)		163,030,500		(16%)
2020		518,965		72%		163,101		30%		320,376,365		97%
4Q2019		81,468				28,307				36,969,492
4Q2020		144,378		77%		34,459		22%		116,538,527		215%
3Q2020		137,660				38,405				83,246,086
4Q2020		144,378		5%		34,459		(10%)		116,538,527		40%
1 Includes options on futures

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES OPERATING DATA, CONTINUED
PRINCIPAL TRANSACTIONS		Options		%		Futures1		%		Stocks		%
Period		(contracts)		Change		(contracts)		Change		(shares)		Change
2018		49,554				3,277				11,347,811
2019		41,452		(16%)		2,407		(27%)		8,926,477		(21%)
2020		39,840		(4%)		2,523		5%		7,249,464		(19%)
4Q2019		8,958				448				1,403,411
4Q2020		9,238		3%		444		(1%)		1,407,689		0%
3Q2020		10,360				501				1,621,257
4Q2020		9,238		(11%)		444		(11%)		1,407,689		(13%)
1 Includes options on futures

CUSTOMER STATISTICS
(in 000's, except % and where noted)
Year over Year		4Q2020			4Q2019			% Change
Total Accounts (in thousands)			1,073			690		56%
Customer Equity (in billions)1		$	288.6		$	174.1		66%
Cleared DARTs (in thousands)			1,871			719		160%
Total Customer DARTs (in thousands)			2,109			797		165%
Cleared Customers
Commission per Cleared Commissionable Order2		$	2.46		$	3.63		(32%)
Cleared Avg. DART per Account (Annualized)			459			266		73%
Net Revenue per Avg. Account (Annualized)		$	2,151		$	2,801		(23%)
Consecutive Quarters		4Q2020			3Q2020			% Change
Total Accounts (in thousands)			1,073			981		9%
Customer Equity (in billions)1		$	288.6		$	232.7		24%
Cleared DARTs (in thousands)			1,871			1,629		15%
Total Customer DARTs (in thousands)			2,109			1,832		15%
Cleared Customers
Commission per Cleared Commissionable Order2		$	2.46		$	2.69		(9%)
Cleared Avg. DART per Account (Annualized)			459			442		4%
Net Revenue per Avg. Account (Annualized)		$	2,151		$	2,154		(0%)
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								Twelve Months
		Ended December 31,								Ended December 31,
		2020				2019				2020				2019
		(in millions)
Average interest-earning assets
Segregated cash and securities		$	43,128			$	29,437			$	41,898			$	27,812
Customer margin loans			32,775				27,529				28,960				26,483
Securities borrowed			3,808				4,026				4,235				3,930
Other interest-earning assets			5,799				5,887				5,593				5,407
FDIC sweeps1			2,919				2,298				2,882				2,075
		$	88,429			$	69,177			$	83,568			$	65,707
Average interest-bearing liabilities
Customer credit balances		$	71,190			$	55,185			$	67,540			$	52,625
Securities loaned			6,499				4,292				5,702				4,088
Other interest-bearing liabilities			17				495				215				211
		$	77,706			$	59,972			$	73,457			$	56,924
Net interest income
Segregated cash and securities, net		$	7			$	126			$	166			$	560
Customer margin loans2			93				157				380				694
Securities borrowed and loaned, net			115				80				343				257
Customer credit balances, net2			9				(94	)			(46	)			(515	)
Other net interest income1/3			8				27				55				121
Net interest income3		$	232			$	296			$	898			$	1,117
Net interest margin ("NIM")			1.04	%			1.70	%			1.07	%			1.70	%
Annualized yields
Segregated cash and securities			0.06	%			1.70	%			0.40	%			2.01	%
Customer margin loans			1.13	%			2.26	%			1.31	%			2.62	%
Customer credit balances			-0.05	%			0.68	%			0.07	%			0.98	%

____________________
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, 2020 and 2019, $7 million, $5 million, $21 million, and $15 million were reported in other fees and services, respectively. For the three and twelve months ended December 31, 2020 and 2019, $0 million, $4 million, $5 million, and $19 million were reported in other income, respectively.

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
		Three Months								Twelve Months
		Ended December 31,								Ended December 31,
		2020				2019				2020				2019
		(in millions, except share and per share data)
Revenues:
Commissions		$	288			$	168			$	1,112			$	706
Other fees and services1/2			52				36				175				141
Other income 1/3			34				9				59				7
Total non-interest income			374				213				1,346				854
Interest income			280				418				1,133				1,726
Interest expense			(55	)			(131	)			(261	)			(643	)
Total net interest income			225				287				872				1,083
Total net revenues			599				500				2,218				1,937
Non-interest expenses:
Execution, clearing and distribution fees			66				59				293				251
Employee compensation and benefits			86				75				325				288
Occupancy, depreciation and amortization			18				17				69				60
Communications			7				6				26				25
General and administrative			30				32				236				112
Customer bad debt			-				(1	)			13				44
Total non-interest expenses			207				188				962				780
Income before income taxes			392				312				1,256				1,157
Income tax expense			12				18				77				68
Net income			380				294				1,179				1,089
Net income attributable to noncontrolling interests			309				250				984				928
Net income available for common stockholders		$	71			$	44			$	195			$	161
Earnings per share:
Basic		$	0.82			$	0.58			$	2.44			$	2.11
Diluted		$	0.81			$	0.57			$	2.42			$	2.10
Weighted average common shares outstanding:
Basic			87,076,038				76,749,142				79,939,289				76,121,570
Diluted			87,772,443				77,357,093				80,638,908				76,825,863

____________________
1		In the first quarter of 2020, we changed the presentation of our consolidated statements of income to better align with our business strategy. Previously reported amounts have been adjusted to conform with the new presentation.
2		Includes market data fees, account activity fees, risk exposure fees, order flow income from options exchange mandated programs, and revenues from other fees and services.
3		Includes gains (losses) from principal transactions; the impact of our currency diversification strategy; gains (losses) from our equity method investments, other revenue not directly attributable to our core business offerings.

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
		Three Months						Twelve Months
		Ended December 31,						Ended December 31,
		2020			2019			2020			2019
		(in millions, except share and per share data)
Comprehensive income:
Net income available for common stockholders		$	71		$	44		$	195		$	161
Other comprehensive income:
Cumulative translation adjustment, before income taxes			21			7			26			4
Income taxes related to items of other comprehensive income			-			-			-			-
Other comprehensive income, net of tax			21			7			26			4
Comprehensive income available for common stockholders		$	92		$	51		$	221		$	165
Comprehensive earnings per share:
Basic		$	1.05		$	0.67		$	2.77		$	2.18
Diluted		$	1.05		$	0.66		$	2.74		$	2.16
Weighted average common shares outstanding:
Basic			87,076,038			76,749,142			79,939,289			76,121,570
Diluted			87,772,443			77,357,093			80,638,908			76,825,863
Comprehensive income attributable to noncontrolling interests:
Net income attributable to noncontrolling interests		$	309		$	250		$	984		$	928
Other comprehensive income - cumulative translation adjustment			74			31			98			20
Comprehensive income attributable to noncontrolling interests		$	383		$	281		$	1,082		$	948

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)
						December 31, 2020			December 31, 2019
						(in millions)
Assets
Cash and cash equivalents						$	4,292		$	2,882
Cash - segregated for regulatory purposes							15,903			9,400
Securities - segregated for regulatory purposes							27,821			17,824
Securities borrowed							4,956			3,916
Securities purchased under agreements to resell							792			3,111
Financial instruments owned, at fair value							630			1,916
Receivables from customers, net of allowance for doubtful accounts							39,333			31,304
Receivables from brokers, dealers and clearing organizations							1,254			685
Other assets							698			638
Total assets						$	95,679		$	71,676
Liabilities and equity
Liabilities
Short-term borrowings						$	118		$	16
Securities loaned							9,838			4,410
Securities sold under agreements to repurchase							-			1,909
Financial instruments sold but not yet purchased, at fair value							153			457
Other payables:
Customers							75,882			56,248
Brokers, dealers and clearing organizations							182			220
Other payables							503			476
							76,567			56,944
Total liabilities							86,676			63,736
Equity
Stockholders' equity							1,951			1,452
Noncontrolling interests							7,052			6,488
Total equity							9,003			7,940
Total liabilities and equity						$	95,679		$	71,676
		December 31, 2020				December 31, 2019
Ownership of IBG LLC Membership Interests		Interests		%		Interests			%
IBG, Inc.		90,780,444		21.8%			76,759,595			18.5%
Noncontrolling interests (IBG Holdings LLC)		325,960,034		78.2%			338,670,642			81.5%
Total IBG LLC membership interests		416,740,478		100.0%			415,430,237			100.0%

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED)
		Three Months								Twelve Months
		Ended December 31,								Ended December 31,
		2020				2019				2020				2019
		(in millions)
Adjusted net revenues1
Net revenues - GAAP		$	599			$	500			$	2,218			$	1,937
Non-GAAP adjustments
Currency diversification strategy, net			13				(12	)			19				60
Mark-to-market on investments2			(33	)			15				(36	)			(13	)
Remeasurement of TRA liability3			3				-				3				-
Total non-GAAP adjustments			(17	)			3				(14	)			47
Adjusted net revenues		$	582			$	503			$	2,204			$	1,984
Adjusted income before income taxes1
Income before income taxes - GAAP		$	392			$	312			$	1,256			$	1,157
Non-GAAP adjustments
Currency diversification strategy, net			13				(12	)			19				60
Mark-to-market on investments2			(33	)			15				(36	)			(13	)
Remeasurement of TRA liability3			3				-				3				-
Customer compensation expense4			-				-				103				-
Bad debt expense5			-				-				1				42
Total non-GAAP adjustments			(17	)			3				90				89
Adjusted income before income taxes		$	375			$	315			$	1,346			$	1,246
Adjusted pre-tax profit margin			64	%			63	%			61	%			63	%

		Three Months								Twelve Months
		Ended December 31,								Ended December 31,
		2020				2019				2020				2019
		(in millions)
Adjusted net income available for common stockholders1
Net income available for common stockholders - GAAP		$	71			$	44			$	195			$	161
Non-GAAP adjustments
Currency diversification strategy, net			3				(2	)			4				11
Mark-to-market on investments2			(7	)			3				(7	)			(2	)
Remeasurement of TRA liability3			3				-				3				-
Customer compensation expense4			-				-				20				-
Bad debt expense5			-				-				0				8
Income tax effect of above adjustments6			1				-				(3	)			(3	)
Remeasurement of deferred income taxes7			(11	)			-				(11	)			-
Total non-GAAP adjustments			(11	)			1				6				13
Adjusted net income available for common stockholders		$	60			$	45			$	201			$	174
Note: Amounts may not add due to rounding.

		Three Months								Twelve Months
		Ended December 31,								Ended December 31,
		2020				2019				2020				2019
		(in dollars)
Adjusted diluted EPS1
Diluted EPS - GAAP		$	0.81			$	0.57			$	2.42			$	2.10
Non-GAAP adjustments
Currency diversification strategy, net			0.03				(0.03	)			0.05				0.14
Mark-to-market on investments2			(0.08	)			0.03				(0.08	)			(0.03	)
Remeasurement of TRA liability3			0.04				0.00				0.04				0.00
Customer compensation expense4			0.00				0.00				0.24				0.00
Bad debt expense5			0.00				0.00				0.00				0.10
Income tax effect of above adjustments6			0.01				0.00				(0.04	)			(0.04	)
Remeasurement of deferred income taxes7			(0.12	)			0.00				(0.14	)			0.00
Total non-GAAP adjustments			(0.12	)			0.01				0.08				0.17
Adjusted diluted EPS		$	0.69			$	0.58			$	2.49			$	2.27
Diluted weighted average common shares outstanding			87,772,443				77,357,093				80,638,908				76,825,863
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 GLOBAL 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 GLOBAL currency diversification strategy, our net mark-to-market gains (losses) on investments, the remeasurement of our TRA liability, customer compensation expenses⁴, and unusual bad debt expense⁵.
• 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 GLOBAL currency diversification strategy, the mark-to-market gains (losses) on investments, the remeasurement of our TRA liability, customer compensation expenses, unusual bad debt expense, and the remeasurement of certain deferred tax assets⁷.

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 GLOBAL currency diversification strategy, our mark-to-market on investments, the remeasurement of our TRA liability, customer compensation expense, unusual bad debt expense, and the remeasurement of certain deferred tax assets 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 equity securities taken over by the Company from customers related to losses on margin loans described below.

³ Remeasurement of our TRA liability represents the change in the amount payable to IBG Holdings LLC under the TRA as a result of changes in the Company’s effective corporate 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 28, 2020.

⁴ Customer compensation expenses were incurred to compensate certain affected customers in connection with their losses resulting from the West Texas Intermediate Crude Oil event. On April 20, 2020, the energy markets exhibited extraordinary price activity in the New York Mercantile Exchange (“NYMEX”) West Texas Intermediate Crude Oil contract. The price of the May 2020 physically-settled contract dropped to an unprecedented negative price of $37.63.

⁵ Unusual bad debt expense includes material losses on margin loans resulting from unusual events that occur in the marketplace. For the twelve months ending December 31, 2019, unusual bad debt expense reflects losses recognized on margin lending to a small number of our brokerage customers that had taken relatively large positions in a security listed on a major U.S. exchange, which lost a substantial amount of its value in a very short timeframe. For the twelve months ended December 31, 2020, unusual bad debt expense reflects losses incurred by futures customers in excess of the equity in their accounts related to the West Texas Intermediate Crude Oil event described above.

⁶ The income tax effect is estimated using the corporate income tax rates applicable to the Company.

⁷ 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 as a result of changes in the Company’s effective corporate 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 28, 2020.

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FAQ

What were the earnings per share for IBKR in Q4 2020?

IBKR reported diluted earnings per share of $0.81 for Q4 2020.

How did IBKR's net revenues change in Q4 2020 compared to Q4 2019?

Net revenues increased from $500 million in Q4 2019 to $599 million in Q4 2020.

What contributed to the increase in commission revenue for IBKR?

Commission revenue grew 71% year-over-year due to higher customer trading volumes.

What is the current customer account growth for IBKR?

Customer accounts increased by 56% from the previous year, totaling 1.07 million.

When will IBKR pay its next dividend?

IBKR will pay a quarterly cash dividend of $0.10 per share on March 12, 2021.