INTERACTIVE BROKERS : ANNOUNCES 4Q2021 RESULTS - Form 8-K

INTERACTIVE BROKERS GROUP ANNOUNCES 4Q2021 RESULTS

- - -

GAAP DILUTED EPS OF $0.67, ADJUSTED¹ EPS OF $0.83

GAAP NET REVENUES OF $603 MILLION, ADJUSTED NET REVENUES OF $683 MILLION

GREENWICH, CONN, January 18, 2022 - Interactive Brokers Group, Inc. (Nasdaq: IBKR), an automated global electronic broker, announced results for the quarter ended December 31, 2021.

Reported diluted earnings per share were $0.67 for the current quarter and $0.83 as adjusted. For the year-ago quarter, reported diluted earnings per share were $0.81 and $0.69 as adjusted.

Reported net revenues were $603 million for the current quarter and $683 million as adjusted. For the year-ago quarter, reported net revenues were $599 million and $582 million as adjusted.

Reported income before income taxes was $373 million for the current quarter and $453 million as adjusted. For the year-ago quarter, reported income before income taxes was $392 million and $375 million as adjusted.

Financial Highlights

•	Commission revenue increased $32 million, or 11%, from the year-ago quarter on higher customer options and futures trading volumes and higher average per share commission in stocks.

•	Net interest income increased $70 million, or 31%, from the year-ago quarter on higher margin loan balances and strong securities lending activity.

•	Other income decreased $104 million from the year-ago quarter. This decrease was mainly comprised of $89 million related to our strategic investment in Up Fintech Holding Limited ("Tiger Brokers") and $10 million related to our currency diversification strategy.

•	Reported pretax profit margin was 62% for the current quarter and 66% as adjusted. For the year-ago quarter, reported pretax margin was 65% and 64% as adjusted.

•	Total equity of $10.2 billion.

The Interactive Brokers Group, Inc. Board of Directors declared a quarterly cash dividend of $0.10 per share. This dividend is payable on March 14, 2022 to shareholders of record as of March 1, 2022.

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

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Business Highlights

•	Customer accounts increased 56% from the year-ago quarter to 1.68 million.

•	Customer equity grew 30% from the year-ago quarter to $373.8 billion.

•	Total DARTs2 increased 16% from the year-ago quarter to 2.44 million.

•	Cleared DARTs increased 16% from the year-ago quarter to 2.16 million.

•	Customer credits increased 12% from the year-ago quarter to $87.1 billion.

•	Customer margin loans increased 40% from the year-ago quarter to $54.6 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 $25 million, as the U.S. dollar value of the GLOBAL decreased by approximately 0.22%. The effects of the currency diversification strategy are reported as components of (1) Other Income (loss of $23 million) and (2) Other Comprehensive Income (loss of $2 million).

Conference Call Information:

Interactive Brokers Group, Inc. will hold a conference call with investors today, January 18, 2022, 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.

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		Twelve Months
				Ended December 31,		Ended December 31,
				2021		2020		2021		2020
				(in millions, except share and per share data)
Revenues:
	Commissions		$	320		$	288		$	1,350		$	1,112
	Other fees and services			58			52			218			175
	Other income (loss)			(70)			34			(2)			59
		Total non-interest income			308			374			1,566			1,346
	Interest income			350			280			1,372			1,133
	Interest expense			(55)			(55)			(224)			(261)
		Total net interest income			295			225			1,148			872
		Total net revenues			603			599			2,714			2,218
Non-interest expenses:
	Execution, clearing and distribution fees		53			66			236			293
	Employee compensation and benefits			108			86			399			325
	Occupancy, depreciation and amortization	22			18			80			69
	Communications			9			7			33			26
	General and administrative			38			30			176			236
	Customer bad debt			-			-			3			13
		Total non-interest expenses			230			207			927			962
Income before income taxes			373			392			1,787			1,256
Income tax expense			35			12			151			77
Net income			338			380			1,636			1,179
Net income attributable to noncontrolling interests		271			309			1,328			984
Net income available for common stockholders	$	67		$	71		$	308		$	195
Earnings per share:
	Basic		$	0.68		$	0.82		$	3.27		$	2.44
	Diluted		$	0.67		$	0.81		$	3.24		$	2.42
Weighted average common shares outstanding:
	Basic			98,181,875			87,076,038			94,167,572			79,939,289
	Diluted			98,980,339			87,772,443			95,009,880			80,638,908

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INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

				Three Months		Twelve Months
				Ended December 31,		Ended December 31,
				2021		2020		2021		2020
				(in millions, except share and per share data)
Comprehensive income:
	Net income available for common stockholders		$	67		$	71		$	308		$	195
	Other comprehensive income:
		Cumulative translation adjustment, before income taxes	(1)			26			(22)			26
		Income taxes related to items of other comprehensive income		-			-			-			-
	Other comprehensive income (loss), net of tax			(1)			26			(22)			26
Comprehensive income available for common stockholders	$	66		$	97		$	286		$	221
Comprehensive earnings per share:
	Basic		$	0.67		$	1.05		$	3.04		$	2.77
	Diluted		$	0.67		$	1.05		$	3.01		$	2.74
Weighted average common shares outstanding:
	Basic			98,181,875			87,076,038			94,167,572			79,939,289
	Diluted			98,980,339			87,772,443			95,009,880			80,638,908
Comprehensive income attributable to noncontrolling interests:
	Net income attributable to noncontrolling interests		$	271		$	309		$	1,328		$	984
	Other comprehensive income - cumulative translation adjustment		(1)			74			(75)			98
Comprehensive income attributable to noncontrolling interests	$	270		$	383		$	1,253		$	1,082

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INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(UNAUDITED)

					December 31, 2021		December 31, 2020
					(in millions)
Assets
Cash and cash equivalents				$	2,449		$	4,292
Cash - segregated for regulatory purposes				22,888			15,903
Securities - segregated for regulatory purposes				15,121			27,821
Securities borrowed					3,912			4,956
Securities purchased under agreements to resell				4,380			792
Financial instruments owned, at fair value				673			630
Receivables from customers, net of allowance for credit losses		54,935			39,333
Receivables from brokers, dealers and clearing organizations		3,719			1,254
Other assets					872			698
	Total assets				$	108,949		$	95,679
Liabilities and equity
Liabilities
Short-term borrowings				$	27		$	118
Securities loaned					11,769			9,838
Financial instruments sold but not yet purchased, at fair value		182			153
Other payables:
	Customers					85,634			75,882
	Brokers, dealers and clearing organizations				559			182
	Other payables					556			503
						86,749			76,567
	Total liabilities					98,727			86,676
Equity
Stockholders' equity					2,395			1,951
Noncontrolling interests					7,827			7,052
	Total equity					10,222			9,003
	Total liabilities and equity				$	108,949		$	95,679
		December 31, 2021		December 31, 2020
Ownership of IBG LLC Membership Interests	Interests		%		Interests			%
IBG, Inc.	98,230,127		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	418,110,619		100.0%		416,740,478			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
2019		302,289				26,346				17,136				345,771				1,380
2020		620,405		105%		56,834		116%		27,039		58%		704,278		104%		2,795
2021		871,319		40%		78,276		38%		32,621		21%		982,216		39%		3,905
4Q2020		178,614				17,008				7,455				203,077				3,223
4Q2021		207,457		16%		19,961		17%		8,001		7%		235,419		16%		3,707
3Q2021		193,218				18,106				8,228				219,552				3,431
4Q2021		207,457		7%		19,961		10%		8,001		(3%)		235,419		7%		3,707

CONTRACT AND SHARE VOLUMES:

(in 000's, except %)

TOTAL

		Options		%		Futures1		%		Stocks		%
Period		(contracts)		Change		(contracts)		Change		(shares)		Change
2019		390,739				128,770				176,752,967
2020		624,035		60%		167,078		30%		338,513,068		92%
2021		887,849		42%		154,866		(7%)		771,273,709		128%
4Q2020		170,191				35,295				121,062,599
4Q2021		244,349		44%		41,997		19%		117,410,095		(3%)
3Q2021		214,988				36,940				172,828,874
4Q2021		244,349		14%		41,997		14%		117,410,095		(32%)

ALL CUSTOMERS

		Options		%		Futures1		%		Stocks		%
Period		(contracts)		Change		(contracts)		Change		(shares)		Change
2019		349,287				126,363				167,826,490
2020		584,195		67%		164,555		30%		331,263,604		97%
2021		852,169		46%		152,787		(7%)		766,211,726		131%
4Q2020		160,953				34,851				119,654,910
4Q2021		235,400		46%		41,318		19%		116,546,652		(3%)
3Q2021		205,797				36,473				172,082,316
4Q2021		235,400		14%		41,318		13%		116,546,652		(32%)

CLEARED CUSTOMERS

		Options		%		Futures1		%		Stocks		%
Period		(contracts)		Change		(contracts)		Change		(shares)		Change
2019		302,068				125,225				163,030,500
2020		518,965		72%		163,101		30%		320,376,365		97%
2021		773,284		49%		151,715		(7%)		752,720,070		135%
4Q2020		144,378				34,459				116,538,527
4Q2021		213,143		48%		41,096		19%		113,441,967		(3%)
3Q2021		186,656				36,245				169,002,045
4Q2021		213,143		14%		41,096		13%		113,441,967		(33%)

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
2019		41,452				2,407				8,926,477
2020		39,840		(4%)		2,523		5%		7,249,464		(19%)
2021		35,680		(10%)		2,079		(18%)		5,061,983		(30%)
4Q2020		9,238				444				1,407,689
4Q2021		8,949		(3%)		679		53%		863,443		(39%)
3Q2021		9,191				467				746,558
4Q2021		8,949		(3%)		679		45%		863,443		16%

1	Includes options on futures.

CUSTOMER STATISTICS

Year over Year		4Q2021			4Q2020		% Change
Total Accounts (in thousands)		1,676			1,073		56%
Customer Equity (in billions)1	$	373.8		$	288.6		30%
Cleared DARTs (in thousands)		2,162			1,871		16%
Total Customer DARTs (in thousands)		2,436			2,109		16%
Cleared Customers
Commission per Cleared Commissionable Order2	$	2.38		$	2.46		(3%)
Cleared Avg. DARTs per Account (Annualized)		339			459		(26%)
Consecutive Quarters		4Q2021			3Q2021		% Change
Total Accounts (in thousands)		1,676			1,536		9%
Customer Equity (in billions)1	$	373.8		$	353.8		6%
Cleared DARTs (in thousands)		2,162			2,017		7%
Total Customer DARTs (in thousands)		2,436			2,263		8%
Cleared Customers
Commission per Cleared Commissionable Order2	$	2.38		$	2.46		(3%)
Cleared Avg. DARTs per Account (Annualized)		339			343		(1%)

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		Twelve Months
				Ended December 31,		Ended December 31,
				2021		2020		2021		2020
				(in millions)
Average interest-earning assets
	Segregated cash and securities		$	37,674		$	43,128		$	40,328		$	41,898
	Customer margin loans			51,889			32,775			45,681			28,960
	Securities borrowed			3,200			3,808			3,677			4,235
	Other interest-earning assets			7,861			5,799			7,029			5,593
	FDIC sweeps1			2,377			2,919			2,663			2,882
				$	103,001		$	88,429		$	99,376		$	83,568
Average interest-bearing liabilities
	Customer credit balances		$	83,001		$	71,190		$	79,297		$	67,540
	Securities loaned			10,810			6,499			10,871			5,702
	Other interest-bearing liabilities			1			17			109			215
				$	93,812		$	77,706		$	90,277		$	73,457
Net interest income
	Segregated cash and securities, net		$	(5)		$	7		$	(9)		$	166
	Customer margin loans2			149			93			535			380
	Securities borrowed and loaned, net			134			115			568			343
	Customer credit balances, net2			8			9			33			(46)
	Other net interest income1/3			11			8			36			55
		Net interest income3		$	297		$	232		$	1,163		$	898
Net interest margin ("NIM")			1.14%			1.04%			1.17%			1.07%
Annualized yields
	Segregated cash and securities			-0.05%			0.06%			-0.02%			0.40%
	Customer margin loans			1.14%			1.13%			1.17%			1.31%
	Customer credit balances			-0.04%			-0.05%			-0.04%			0.07%

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, 2021 and 2020, $1 million, $7 million, $15 million, and $21 million were reported in other fees and services, respectively. For the three and twelve months ended December 31, 2021 and 2020, $1 million, $0 million, $0 million, and $5 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		Twelve Months
			Ended December 31,		Ended December 31,
			2021		2020		2021		2020
			(in millions)
Adjusted net revenues1
Net revenues - GAAP		$	603		$	599		$	2,714		$	2,218
Non-GAAP adjustments
	Currency diversification strategy, net			23			13			37			19
	Mark-to-market on investments2			57			(33)			30			(36)
	Remeasurement of TRA liability3			-			3			(1)			3
Total non-GAAP adjustments			80			(17)			66			(14)
Adjusted net revenues		$	683		$	582		$	2,780		$	2,204
Adjusted income before income taxes1
Income before income taxes - GAAP		$	373		$	392		$	1,787		$	1,256
Non-GAAP adjustments
	Currency diversification strategy, net			23			13			37			19
	Mark-to-market on investments2			57			(33)			30			(36)
	Remeasurement of TRA liability3			-			3			(1)			3
	Customer compensation expense4			-			-			-			103
	Bad debt expense5			-			-			-			1
Total non-GAAP adjustments			80			(17)			66			90
Adjusted income before income taxes		$	453		$	375		$	1,853		$	1,346
Adjusted pre-tax profit margin			66%			64%			67%			61%

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			Three Months		Twelve Months
			Ended December 31,		Ended December 31,
			2021		2020		2021		2020
			(in millions)
Adjusted net income available for common stockholders1
Net income available for common stockholders - GAAP	$	67		$	71		$	308		$	195
Non-GAAP adjustments
	Currency diversification strategy, net			6			3			8			4
	Mark-to-market on investments2			13			(7)			7			(7)
	Remeasurement of TRA liability3			-			3			(1)			3
	Customer compensation expense4			-			-			-			20
	Bad debt expense5			-			-			-			0
	Income tax effect of above adjustments6			(4)			1			(3)			(3)
	Remeasurement of deferred income taxes7			-			(11)			1			(11)
Total non-GAAP adjustments			15			(11)			12			6
Adjusted net income available for common stockholders	$	82		$	60		$	320		$	201

Note: Amounts may not add due to rounding.

			Three Months		Twelve Months
			Ended December 31,		Ended December 31,
			2021		2020		2021		2020
			(in dollars)
Adjusted diluted EPS1
Diluted EPS - GAAP		$	0.67		$	0.81		$	3.24		$	2.42
Non-GAAP adjustments
	Currency diversification strategy, net			0.06			0.03			0.09			0.05
	Mark-to-market on investments2			0.13			(0.08)			0.07			(0.08)
	Remeasurement of TRA liability3			0.00			0.04			(0.01)			0.04
	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			(0.04)			0.01			(0.03)			(0.04)
	Remeasurement of deferred income taxes7			0.00			(0.12)			0.01			(0.14)
Total non-GAAP adjustments			0.15			(0.12)			0.13			0.08
Adjusted diluted EPS		$	0.83		$	0.69		$	3.37		$	2.49
Diluted weighted average common shares outstanding	98,980,339			87,772,443			95,009,880			80,638,908

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 as defined by SEC Regulation G.

•	We define adjusted net revenues as net revenues adjusted to remove the effect of our 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 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 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 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 twelve months ended December 31, 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.

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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.

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