Diluted Earnings Per Share of $0.43,
Adjusted Diluted Earnings Per Share1 of $0.78.
Pretax Income of $234 Million on $464
Million in Net Revenues.
Adjusted Pretax Income of $420 Million on
$650 Million in Adjusted Net Revenues1.
Declares Quarterly Dividend of $0.10 Per
Share.
Interactive Brokers Group, Inc. (Nasdaq: IBKR), an automated
global electronic broker, reported diluted earnings per share of
$0.43 for the quarter ended September 30, 2021 compared to $0.58
for the same period in 2020, and adjusted diluted earnings per
share of $0.78 for this quarter compared to $0.53 for the year-ago
quarter.
Net revenues were $464 million and income before income taxes
was $234 million for this quarter, compared to net revenues of $548
million and income before income taxes of $334 million for the same
period in 2020. Adjusted net revenues were $650 million and
adjusted income before income taxes was $420 million for this
quarter, compared to adjusted net revenues of $518 million and
adjusted income before income taxes of $304 million for the same
period in 2020.
Financial Highlights
- Commission revenue increased $32 million, or 11%, from the
year-ago quarter on higher customer stock and options trading
volumes.
- Net interest income increased $79 million, or 41%, from the
year-ago quarter on higher margin loan balances and strong
securities lending activity.
- Other income decreased $199 million from the year-ago quarter.
This decrease was mainly comprised of (1) $191 million related to
our strategic investment in Up Fintech Holding Limited (“Tiger
Brokers”), which decreased to a $185 million mark-to-market loss
this quarter from a $6 million mark-to-market gain in the same
period in 2020; and (2) $30 million related to our currency
diversification strategy, which lost $3 million this quarter
compared to a gain of $27 million in the same period in 2020;
partially offset by (3) the non-recurrence of a $13 million
impairment loss on our investment in OneChicago Exchange recognized
in the year-ago quarter.
- 50% pretax profit margin for this quarter, down from 61% in the
year-ago quarter. 65% adjusted pretax profit margin for this
quarter, up from 59% in the year-ago quarter.
- Total equity of $10.0 billion.
The Interactive Brokers Group, Inc. Board of Directors declared
a quarterly cash dividend of $0.10 per share. This dividend is
payable on December 14, 2021 to shareholders of record as of
December 1, 2021.
Business Highlights
- Customer accounts increased 57% from the year-ago quarter to
1.54 million.
- Customer equity grew 52% from the year-ago quarter to $353.8
billion.
- Total DARTs2 increased 24% from the year-ago quarter to 2.26
million.
- Cleared DARTs increased 24% from the year-ago quarter to 2.02
million.
- Customer credits increased 22% from the year-ago quarter to
$86.2 billion.
- Customer margin loans increased 67% from the year-ago quarter
to $50.2 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
$43 million, as the U.S. dollar value of the GLOBAL decreased by
approximately 0.41%. The effects of the currency diversification
strategy are reported as components of (1) Other Income (loss of $3
million) and (2) Other Comprehensive Income (loss of $40
million).
Conference Call Information:
Interactive Brokers Group, Inc. will hold a conference call with
investors today, October 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 26,
2021, 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.
______________________
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,
2021
2020
2021
2020
(in millions, except share
and per share data)
Revenues:
Commissions $
311
$
279
$
1,030
$
824
Other fees and services
49
45
160
123
Other income (loss)
(170)
29
68
25
Total non-interest income
190
353
1,258
972
Interest income
325
240
1,022
853
Interest expense
(51)
(45)
(169)
(206)
Total net interest income
274
195
853
647
Total net revenues
464
548
2,111
1,619
Non-interest expenses:
Execution,
clearing and distribution fees
61
74
183
227
Employee compensation and benefits
98
77
291
239
Occupancy, depreciation and amortization
19
17
58
51
Communications
8
6
24
19
General and administrative
44
37
138
206
Customer bad debt
-
3
3
13
Total non-interest expenses
230
214
697
755
Income before income taxes
234
334
1,414
864
Income tax expense
28
32
116
65
Net income
206
302
1,298
799
Net income attributable to noncontrolling interests
164
256
1,057
675
Net income available for common stockholders $
42
$
46
$
241
$
124
Earnings per
share:
Basic $
0.44
$
0.59
$
2.60
$
1.60
Diluted $
0.43
$
0.58
$
2.58
$
1.58
Weighted average common
shares outstanding:
Basic
96,229,958
78,509,625
92,814,767
77,543,008
Diluted
96,989,968
79,120,548
93,671,689
78,243,699
INTERACTIVE BROKERS GROUP, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME
(UNAUDITED)
Three Months
Nine Months Ended
September 30, Ended September 30,
2021
2020
2021
2020
(in millions, except share
and per share data)
Comprehensive income:
Net income available for common stockholders $
42
$
46
$
241
$
124
Other comprehensive income:
Cumulative translation adjustment, before income taxes
(9)
8
(21)
5
Income taxes related to items of other comprehensive
income
-
-
-
-
Other comprehensive income (loss), net of tax
(9)
8
(21)
5
Comprehensive income available for common stockholders $
33
$
54
$
220
$
129
Comprehensive earnings
per share:
Basic $
0.34
$
0.69
$
2.37
$
1.67
Diluted $
0.34
$
0.69
$
2.35
$
1.65
Weighted average common
shares outstanding:
Basic
96,229,958
78,509,625
92,814,767
77,543,008
Diluted
96,989,968
79,120,548
93,671,689
78,243,699
Comprehensive income attributable to
noncontrolling interests:
Net income
attributable to noncontrolling interests $
164
$
256
$
1,057
$
675
Other comprehensive income - cumulative translation
adjustment
(31)
37
(74)
24
Comprehensive income attributable to noncontrolling interests
$
133
$
293
$
983
$
699
INTERACTIVE BROKERS GROUP, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
FINANCIAL CONDITION
(UNAUDITED)
September 30,2021
December 31,2020 (in
millions)
Assets
Cash and cash equivalents $
2,838
$
4,292
Cash - segregated for regulatory purposes
23,125
15,903
Securities - segregated for regulatory purposes
14,400
27,821
Securities borrowed
3,811
4,956
Securities purchased under agreements to resell
6,108
792
Financial instruments owned, at fair value
659
630
Receivables from customers, net of allowance for credit losses
50,503
39,333
Receivables from brokers, dealers and clearing organizations
4,038
1,254
Other assets
800
698
Total assets
$
106,282
$
95,679
Liabilities and equity
Liabilities
Short-term borrowings
$
28
$
118
Securities loaned
10,535
9,838
Financial instruments sold but not yet purchased, at fair value
233
153
Other payables:
Customers
84,087
75,882
Brokers, dealers and clearing organizations
781
182
Other payables
607
503
85,475
76,567
Total
liabilities
96,271
86,676
Equity
Stockholders' equity
2,331
1,951
Noncontrolling interests
7,680
7,052
Total equity
10,011
9,003
Total liabilities and
equity $
106,282
$
95,679
September
30,2021 December 31,2020 Ownership of
IBG LLC Membership Interests
Interests
%
Interests
%
IBG, Inc.
98,175,951
23.5%
90,780,444
21.8%
Noncontrolling interests (IBG Holdings LLC)
319,880,492
76.5%
325,960,034
78.2%
Total IBG
LLC membership interests
418,056,443
100.0%
416,740,478
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
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
3Q2020
160,015
14,701
7,453
182,169
2,846
3Q2021
193,218
21%
18,106
23%
8,228
10%
219,552
21%
3,431
2Q2021
196,659
16,130
7,975
220,764
3,504
3Q2021
193,218
(2%)
18,106
12%
8,228
3%
219,552
(1%)
3,431
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%
3Q2020
163,972
39,186
87,514,614
3Q2021
214,988
31%
36,940
(6%)
172,828,874
97%
2Q2021
196,715
35,061
172,099,915
3Q2021
214,988
9%
36,940
5%
172,828,874
0%
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%
3Q2020
153,612
38,685
85,893,357
3Q2021
205,797
34%
36,473
(6%)
172,082,316
100%
2Q2021
189,073
34,635
171,417,373
3Q2021
205,797
9%
36,473
5%
172,082,316
0%
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%
3Q2020
137,660
38,405
83,246,086
3Q2021
186,656
36%
36,245
(6%)
169,002,045
103%
2Q2021
170,902
34,355
168,601,027
3Q2021
186,656
9%
36,245
6%
169,002,045
0%
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%)
3Q2020
10,360
501
1,621,257
3Q2021
9,191
(11%)
467
(7%)
746,558
(54%)
2Q2021
7,642
426
682,542
3Q2021
9,191
20%
467
10%
746,558
9%
1 Includes options on futures
CUSTOMER STATISTICS
Year over
Year
3Q2021
3Q2020
%
Change Total Accounts (in thousands)
1,536
981
57%
Customer Equity (in billions)1 $
353.8
$
232.7
52%
Cleared DARTs (in thousands)
2,017
1,629
24%
Total Customer DARTs (in thousands)
2,263
1,832
24%
Cleared
Customers
Commission per Cleared Commissionable Order2 $
2.46
$
2.69
(9%)
Cleared Avg. DARTs per Account (Annualized)
343
442
(22%)
Consecutive Quarters
3Q2021
2Q2021
% Change Total
Accounts (in thousands)
1,536
1,414
9%
Customer Equity (in billions)1 $
353.8
$
363.5
(3%)
Cleared DARTs (in thousands)
2,017
2,082
(3%)
Total Customer DARTs (in thousands)
2,263
2,304
(2%)
Cleared
Customers
Commission per Cleared Commissionable Order2 $
2.46
$
2.38
3%
Cleared Avg. DARTs per Account (Annualized)
343
382
(10%)
1 Excludes
non-customers. 2
Commissionable Order - a customer order that generates commissions.
Three Months
Nine Months
Ended September 30,
Ended September 30,
2021
2020
2021
2020
(in millions) Average interest-earning assets
Segregated cash and securities $
37,239
$
43,589
$
41,212
$
41,283
Customer margin loans
46,636
28,490
43,611
27,052
Securities borrowed
3,567
4,477
3,836
4,448
Other interest-earning assets
7,426
5,075
6,751
5,288
FDIC sweeps1
2,707
2,982
2,758
2,864
$
97,575
$
84,613
$
98,168
$
80,935
Average
interest-bearing liabilities
Customer
credit balances $
78,625
$
68,867
$
78,063
$
65,716
Securities loaned
10,489
5,756
10,891
5,304
Other interest-bearing liabilities
-
251
145
313
$
89,114
$
74,874
$
89,099
$
71,333
Net interest
income
Segregated cash and securities,
net $
(4)
$
14
$
(4)
$
159
Customer margin loans2
141
83
386
287
Securities borrowed and loaned, net
123
86
434
228
Customer credit balances, net2
8
8
25
(55)
Other net interest income1/3
9
10
25
47
Net interest income3 $
277
$
201
$
866
$
666
Net interest margin
("NIM")
1.13%
0.94%
1.18%
1.10%
Annualized yields
Segregated cash and securities
-0.04%
0.13%
-0.01%
0.51%
Customer margin loans
1.20%
1.16%
1.18%
1.41%
Customer credit balances
-0.04%
-0.05%
-0.04%
0.11%
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, 2021 and 2020, $2 million, $6
million, $14 million, and $14 million were reported in other fees
and services, respectively. For the three and nine months ended
September 30, 2021 and 2020, $0 million, $0 million, -$1 million,
and $5 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,
2021
2020
2021
2020
(in millions)
Adjusted net revenues1
Net revenues - GAAP $
464
$
548
$
2,111
$
1,619
Non-GAAP adjustments
Currency diversification strategy, net
3
(27)
14
6
Mark-to-market on investments2
184
(3)
(28)
(3)
Remeasurement of TRA liability3
(1)
-
(1)
-
Total non-GAAP adjustments
186
(30)
(15)
3
Adjusted net revenues $
650
$
518
$
2,096
$
1,622
Adjusted income before income
taxes1
Income before income
taxes - GAAP $
234
$
334
$
1,414
$
864
Non-GAAP adjustments
Currency diversification strategy, net
3
(27)
14
6
Mark-to-market on investments2
184
(3)
(28)
(3)
Remeasurement of TRA liability3
(1)
-
(1)
-
Customer compensation expense4
-
-
-
103
Bad debt expense5
-
-
-
1
Total non-GAAP adjustments
186
(30)
(15)
107
Adjusted income before income taxes $
420
$
304
$
1,399
$
971
Adjusted pre-tax profit margin
65%
59%
67%
60%
Three Months Nine Months
Ended September 30, Ended
September 30,
2021
2020
2021
2020
(in millions) Adjusted net
income available for common stockholders1
Net income available for common stockholders -
GAAP $
42
$
46
$
241
$
124
Non-GAAP adjustments
Currency diversification strategy, net
1
(5)
3
1
Mark-to-market on investments2
43
(1)
(6)
(1)
Remeasurement of TRA liability3
(1)
-
(1)
-
Customer compensation expense4
-
-
-
19
Bad debt expense5
-
-
-
0
Income tax effect of above adjustments6
(10)
1
1
(4)
Remeasurement of deferred income taxes7
1
-
1
-
Total non-GAAP adjustments
33
(4)
(2)
16
Adjusted net income available for common stockholders $
75
$
42
$
239
$
140
Note: Amounts may not add due to
rounding.
Three Months Nine Months
Ended September 30, Ended
September 30,
2021
2020
2021
2020
(in dollars) Adjusted diluted EPS1
Diluted EPS - GAAP $
0.43
$
0.58
$
2.58
$
1.58
Non-GAAP adjustments
Currency diversification strategy, net
0.01
(0.06)
0.03
0.02
Mark-to-market on investments2
0.44
(0.01)
(0.06)
(0.01)
Remeasurement of TRA liability3
(0.01)
0.00
(0.01)
0.00
Customer compensation expense4
0.00
0.00
0.00
0.24
Bad debt expense5
0.00
0.00
0.00
0.00
Income tax effect of above adjustments6
(0.10)
0.02
0.01
(0.05)
Remeasurement of deferred income taxes7
0.01
0.00
0.01
0.00
Total non-GAAP adjustments
0.34
(0.05)
(0.02)
0.20
Adjusted diluted EPS $
0.78
$
0.53
$
2.55
$
1.79
Diluted weighted average common
shares outstanding
96,989,968
79,120,548
93,671,689
78,243,699
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, our 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 expenses,
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 certain other investments,
including equity securities taken over by the Company from
customers related to losses on margin loans.
3 Remeasurement of our TRA liability represents the change in
the amount payable to IBG Holdings LLC under the TRA, primarily due
to changes in the Company’s effective tax rates. 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 26, 2021.
4 Customer compensation expenses were incurred to compensate
certain affected customers in connection with their losses on West
Texas Intermediate Crude Oil contracts on April 20, 2020, as
previously disclosed.
5 Unusual bad debt expense includes material losses on margin
loans resulting from unusual events that occur in the marketplace.
For the nine months ended September 30, 2020, unusual bad debt
expense reflects losses incurred by customers in excess of the
equity in their accounts, related to the West Texas Intermediate
Crude Oil event, as previously disclosed.
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, primarily due to changes in the Company’s effective tax
rates. For further information refer to Note 4 – Equity and
Earnings per Share under Part II, Item 8 – Financial Statements and
Supplementary Data of the Company’s Annual Report on Form 10 K
filed with the Securities Exchange Commission (“SEC”) on February
26, 2021.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211019006149/en/
For Interactive Brokers Group, Inc. Investors: Nancy
Stuebe, investor-relations@ibkr.com or Media: Rob
Garfield, media@ibkr.com
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