INTERACTIVE BROKERS : ANNOUNCES 1Q2023 RESULTS - Form 8-K

INTERACTIVE BROKERS GROUP ANNOUNCES 1Q2023 RESULTS

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GAAP DILUTED EPS OF $1.42, ADJUSTED¹ EPS OF $1.35

GAAP NET REVENUES OF $1,056 MILLION, ADJUSTED NET REVENUES OF $1,015 MILLION

GREENWICH, CONN, April 18, 2023 - Interactive Brokers Group, Inc. (Nasdaq: IBKR), an automated global electronic broker, announced results for the quarter ended March 31, 2023.

Reported diluted earnings per share were $1.42 for the current quarter and $1.35 as adjusted. For the year-ago quarter, reported diluted earnings per share were $0.74 and $0.82 as adjusted.

Reported net revenues were $1,056 million for the current quarter and $1,015 million as adjusted. For the year-ago quarter, reported net revenues were $645 million and $692 million as adjusted.

Reported income before income taxes was $761 million for the current quarter and $720 million as adjusted. For the year-ago quarter, reported income before income taxes was $394 million and $441 million as adjusted.

Financial Highlights

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

•	Commission revenue increased 2% to $357 million on record contract volumes in futures and larger average trade sizes in options and futures, tempered by lower customer stock trading volume.

•	Net interest income increased 126% to $637 million on higher benchmark interest rates and customer credit balances.

•	Other income increased $58 million to a gain of $19 million. This increase was mainly comprised of $39 million related to our U.S. government securities portfolio, all of which matures within three months, and $19 million related to our currency diversification strategy.

•	Reported pretax profit margin was 72% for the current quarter and 71% as adjusted. For the year-ago quarter, reported pretax margin was 61% and 64% as adjusted.

•	Total equity of $12.2 billion.

The Interactive Brokers Group, Inc. Board of Directors declared a quarterly cash dividend of $0.10 per share. This dividend is payable on June 14, 2023, to shareholders of record as of June 1, 2023.

¹ See the reconciliation of non-GAAP financial measures starting on page 9.

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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 $20 million, as the U.S. dollar value of the GLOBAL increased by approximately 0.17%. The effects of the currency diversification strategy are reported as components of (1) Other Income (gain of $1 million) and (2) Other Comprehensive Income (gain of $19 million).

Conference Call Information:

Interactive Brokers Group, Inc. will hold a conference call with investors today, April 18, 2023, 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 athttps://register.vevent.com/register/BIc01d49ab32cf4e9899e9034f6068f3f2 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 service individual investors, hedge funds, proprietary trading groups, financial advisors and introducing brokers. Our four decades of focus on technology and automation has enabled us to equip our clients with a uniquely sophisticated platform to manage their investment portfolios. We strive to provide our clients with advantageous execution prices and trading, risk and portfolio management tools, research facilities and investment products, all at low or no cost, positioning them to achieve superior returns on investments. For the fifth consecutive year, Barron's ranked Interactive Brokers #1 with 5 out of 5 stars in its March 25, 2022, Best Online Brokers Review.

Cautionary Note Regarding Forward-Looking Statements:

The foregoing information contains certain forward-looking statements that reflect the Company's current views with respect to certain current and future events and financial performance. These forward-looking statements are and will be, as the case may be, subject to many risks, uncertainties and factors relating to the Company's operations and business environment which may cause the Company's actual results to be materially different from any future results, expressed or implied, in these forward-looking statements. Any forward-looking statements in this release are based upon information available to the Company on the date of this release. The Company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any statements expressed or implied therein will not be realized. Additional information on risk factors that could potentially affect the Company's financial results may be found in the Company's filings with the Securities and Exchange Commission.

For Interactive Brokers Group, Inc. Investors: Nancy Stuebe, [e-mail] or Media: Rob Garfield, [e-mail].

² Daily average revenue trades (DARTs) are based on customer orders.

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INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

				Three Months
				Ended March 31,
				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

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INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

				Three Months
				Ended March 31,
				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

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INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(UNAUDITED)

					March 31, 2023		December 31, 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
		March 31, 2023		December 31, 2022
Ownership of IBG LLC Membership Interests	Interests		%		Interests			%
IBG, Inc.	102,999,265		24.5%		102,927,703			24.5%
Noncontrolling interests (IBG Holdings LLC)	316,609,102		75.5%		316,609,102			75.5%
Total IBG LLC membership interests	419,608,367		100.0%		419,536,805			100.0%

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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
2020		620,405				56,834				27,039				704,278				2,795
2021		871,319		40%		78,276		38%		32,621		21%		982,216		39%		3,905
2022		735,619		(16%)		70,049		(11%)		32,863		1%		838,531		(15%)		3,347
1Q2022		212,818				20,671				9,225				242,714				3,915
1Q2023		180,261		(15%)		15,369		(26%)		8,187		(11%)		203,817		(16%)		3,287
4Q2022		165,769				14,923				7,358				188,050				3,009
1Q2023		180,261		9%		15,369		3%		8,187		11%		203,817		8%		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		42%		154,866		(7%)		771,273,709		128%
2022		908,415		2%		207,138		34%		330,035,586		(57%)
1Q2022		245,343				53,570				97,406,991
1Q2023		247,508		1%		55,197		3%		75,522,066		(22%)
4Q2022		229,441				51,519				75,713,964
1Q2023		247,508		8%		55,197		7%		75,522,066		(0%)

ALL CUSTOMERS

		Options		%		Futures1		%		Stocks		%
Period		(contracts)		Change		(contracts)		Change		(shares)		Change
2020		584,195				164,555				331,263,604
2021		852,169		46%		152,787		(7%)		766,211,726		131%
2022		873,914		3%		203,933		33%		325,368,714		(58%)
1Q2022		234,790				52,728				95,990,985
1Q2023		239,038		2%		54,577		4%		74,562,384		(22%)
4Q2022		221,855				50,773				74,353,901
1Q2023		239,038		8%		54,577		7%		74,562,384		0%

CLEARED CUSTOMERS

		Options		%		Futures1		%		Stocks		%
Period		(contracts)		Change		(contracts)		Change		(shares)		Change
2020		518,965				163,101				320,376,365
2021		773,284		49%		151,715		(7%)		752,720,070		135%
2022		781,373		1%		202,145		33%		314,462,672		(58%)
1Q2022		212,628				52,264				92,860,481
1Q2023		209,605		(1%)		53,957		3%		72,041,499		(22%)
4Q2022		194,962				50,326				71,924,864
1Q2023		209,605		8%		53,957		7%		72,041,499		0%

1	Includes options on futures.

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INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

OPERATING DATA, CONTINUED

PRINCIPAL TRANSACTIONS

		Options		%		Futures1		%		Stocks		%
Period		(contracts)		Change		(contracts)		Change		(shares)		Change
2020		39,840				2,523				7,249,464
2021		35,680		(10%)		2,079		(18%)		5,061,983		(30%)
2022		34,501		(3%)		3,205		54%		4,666,872		(8%)
1Q2022		10,553				842				1,416,006
1Q2023		8,470		(20%)		620		(26%)		959,682		(32%)
4Q2022		7,586				746				1,360,063
1Q2023		8,470		12%		620		(17%)		959,682		(29%)

1	Includes options on futures.

CUSTOMER STATISTICS

Year over Year			1Q2023			1Q2022		% Change
Total Accounts (in thousands)			2,195			1,809		21%
Customer Equity (in billions)1		$	343.1		$	355.9		(4%)
Cleared DARTs (in thousands)			1,845			2,234		(17%)
Total Customer DARTs (in thousands)			2,054			2,522		(19%)
Cleared Customers
Commission per Cleared Commissionable Order2		$	3.16		$	2.57		23%
Cleared Avg. DARTs per Account (Annualized)			214			321		(33%)
Consecutive Quarters			1Q2023			4Q2022		% Change
Total Accounts (in thousands)			2,195			2,091		5%
Customer Equity (in billions)1		$	343.1		$	306.7		12%
Cleared DARTs (in thousands)			1,845			1,689		9%
Total Customer DARTs (in thousands)			2,054			1,889		9%
Cleared Customers
Commission per Cleared Commissionable Order2		$	3.16		$	3.15		0%
Cleared Avg. DARTs per Account (Annualized)			214			206		4%

1	Excludes non-customers.
2	Commissionable Order - a customer order that generates commissions.

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INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

NET INTEREST MARGIN

(UNAUDITED)

				Three Months
				Ended March 31,
				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
	FDIC sweeps1			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")			2.24%			1.10%
Annualized yields
	Segregated cash and securities			4.10%			0.07%
	Customer margin loans			4.92%			1.28%
	Customer credit balances			2.76%			-0.04%

1	Represents the average amount of customer cash swept into FDIC-insured banks as part of our Insured Bank Deposit Sweep Program. This item is not recorded in the Company's consolidated statements of financial condition. Income derived from program deposits is reported in other net interest income in the table above.
2	Interest income and interest expense on customer margin loans and customer credit balances, respectively, are calculated on daily cash balances within each customer's account on a net basis, which may result in an offset of balances across multiple account segments (e.g., between securities and commodities segments).
3	Includes income from financial instruments that has the same characteristics as interest, but is reported in other fees and services and other income in the Company's consolidated statements of comprehensive income. For the three months ended March 31, 2023 and 2022, $3 million and $1 million were reported in other fees and services, respectively. For the three months ended March 31, 2023 and 2022, $0 million and $0 million were reported in other income, respectively.

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INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(UNAUDITED)

			Three Months
			Ended March 31,
			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			71%			64%

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			Three Months
			Ended March 31,
			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 March 31,
			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.

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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 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 portfolio, which are typically held to maturity, and on certain other investments, including equity securities taken over by the Company from customers related to losses on margin loans.

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

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