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Interactive Brokers Group Announces 2Q2015 Results

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July 21, 2015 4:01 PM EDT

Reports Comprehensive Earnings Per Share of $0.44, Income before Taxes of $240 Million on $387 Million in Net Revenues, and Earnings Per Share on Net Income of $0.37

Declares Quarterly Dividend of $0.10 Per Share

GREENWICH, Conn.--(BUSINESS WIRE)-- Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) an automated global electronic broker and market maker, today reported diluted earnings per share on a comprehensive basis of $0.44 for the quarter ended June 30, 2015, compared to diluted earnings per share on a comprehensive basis of $0.29 for the same period in 2014.

Excluding other comprehensive income, the Company reported diluted earnings per share of $0.37 for the quarter ended June 30, 2015, compared to diluted earnings per share of $0.26 for the same period in 2014.

Net revenues were $387 million and income before income taxes was $240 million this quarter, compared to net revenues of $309 million and income before income taxes of $174 million for the same period in 2014.

The Interactive Brokers Group, Inc. Board of Directors declared a quarterly cash dividend of $0.10 per share. This dividend is payable on September 14, 2015 to shareholders of record as of September 1, 2015.

Business Highlights

  • 65% Electronic Brokerage pretax profit margin for this quarter, up from 59% in the year-ago quarter.
  • 42% Market Making pretax profit margin for this quarter, up from 37% in the year-ago quarter.
  • Customer equity grew 22% from the year-ago quarter to $66.0 billion and customer debits increased by 23% to $19.0 billion.
  • Customer accounts increased 18% from the year-ago quarter to 310 thousand.
  • Total DARTs increased 16% from year-ago quarter to 616 thousand.
  • Brokerage segment equity was $3.3 billion. Total equity was $5.2 billion.

Segment Overview

Electronic Brokerage

Electronic Brokerage segment income before income taxes increased 42%, to $188 million, in the quarter ended June 30, 2015 compared to the same period last year, due to higher commissions revenue and net interest income. Customer accounts grew 18% to 310 thousand and customer equity increased 22% to $66.0 billion from the year-ago quarter.

Commissions and execution fees increased 27% from the year-ago quarter, to $157 million. Net interest income grew 34% from the year-ago quarter, to $106 million. Pretax profit margin was 65% in quarter ended June 30, 2015, up from 59% in same period last year.

Total DARTs(1), for cleared and execution-only customers, increased 16% to 616 thousand from the year-ago quarter. Cleared DARTs were 565 thousand, 17% higher than the same period last year.

Market Making

Market Making segment income before income taxes increased 15%, to $30 million, in the quarter ended June 30, 2015 compared to the same period last year, driven mainly by slightly higher volatility. Pretax profit margin increased to 42% in the current quarter from 37% in same period last year.

Effects of Foreign Currency Diversification

In connection with our currency strategy, we have determined to base our net worth in GLOBALs, a basket of 16 major currencies in which we hold our equity. In this quarter, our currency diversification strategy increased our comprehensive earnings by $53 million, as the U.S. dollar value of the GLOBAL increased by approximately 1.0%. The effects of the currency diversification strategy are reported as components of (1) Other Income in the Corporate segment and (2) Other Comprehensive Income (“OCI”). As previously disclosed, certain reclassifications have been made to previously reported amounts to conform to the current presentation of currency translation gains and losses related to our currency diversification strategy.

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

_____________________

Conference Call Information:

Interactive Brokers Group will hold a conference call with investors today, July 21, 2015, 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, Inc., together with its subsidiaries, is an automated global electronic broker that specializes in catering to financial professionals by offering state-of-the-art trading technology, superior execution capabilities, worldwide electronic access, and sophisticated risk management tools at exceptionally low costs. The brokerage trading platform utilizes the same innovative technology as the Company’s market making business, which specializes in routing orders and executing and processing trades in securities, futures, foreign exchange instruments, bonds and funds on more than 100 electronic exchanges and trading venues around the world. As a market maker, we provide liquidity at these marketplaces and, as a broker, we provide professional traders and investors with electronic access to stocks, options, futures, forex, bonds and mutual funds from a single IB Universal AccountSM. Employing proprietary software on a global communications network, Interactive Brokers is continuously integrating its software with a growing number of exchanges and trading venues into one automatically functioning, computerized platform that requires minimal human intervention.

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.

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

OPERATING DATA

 

TRADE VOLUMES:
(in 000's, except %)
          Brokerage        
Market Brokerage Non Avg. Trades
Making % Cleared % Cleared % Total % per U.S.

Period

Trades

Change

Trades

Change

Trades

Change

Trades

Change

Trading Day

2012 60,421 150,000 16,118 226,540 904
2013 65,320 8% 173,849 16% 18,489 15% 257,658 14% 1,029
2014 64,530 -1% 206,759 19% 18,055 -2% 289,344 12% 1,155
 
2Q2014 14,897 48,622 4,290 67,809 1,076
2Q2015 14,852 0% 58,458 20% 4,060 -5% 77,370 14% 1,228
 
1Q2015 15,404 58,208 4,581 78,193 1,282
2Q2015 14,852 -4% 58,458 0% 4,060 -11% 77,370 -1% 1,228
 

 

CONTRACT AND SHARE VOLUMES:
(in 000's, except %)
TOTAL Options % Futures* % Stocks %

Period

(contracts)

Change

(contracts)

Change

(shares)

Change

2012 698,140 98,801 65,872,960
2013 659,673 -6% 121,776 23% 95,479,739 45%
2014 631,265 -4% 123,048 1% 153,613,174 61%
 
2Q2014 144,635 28,774 35,891,325
2Q2015 144,188 0% 34,661 20% 60,255,458 68%
 
1Q2015 154,289 33,612 35,336,325
2Q2015 144,188 -7% 34,661 3% 60,255,458 71%
 

 

MARKET MAKING Options % Futures* % Stocks %

Period

(contracts)

Change

(contracts)

Change

(shares)

Change

2012 457,384 12,660 9,339,465
2013 404,490 -12% 18,184 44% 12,849,729 38%
2014 344,741 -15% 15,668 -14% 12,025,822 -6%
 
2Q2014 78,641 4,088 2,836,471
2Q2015 74,533 -5% 3,652 -11% 4,270,738 51%
 
1Q2015 83,013 3,408 2,969,719
2Q2015 74,533 -10% 3,652 7% 4,270,738 44%
 

 

BROKERAGE TOTAL Options % Futures* % Stocks %

Period

(contracts)

Change

(contracts)

Change

(shares)

Change

2012 240,756 86,141 56,533,495
2013 255,183 6% 103,592 20% 82,630,010 46%
2014 286,524 12% 107,380 4% 141,587,352 71%
 
2Q2014 65,994 24,686 33,054,854
2Q2015 69,655 6% 31,009 26% 55,984,720 69%
 
1Q2015 71,276 30,204 32,366,606
2Q2015 69,655 -2% 31,009 3% 55,984,720 73%
 
* Includes options on futures
 

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

OPERATING DATA, CONTINUED

 
BROKERAGE CLEARED   Options   %   Futures*   %   Stocks   %

Period

(contracts)

Change

(contracts)

Change

(shares)

Change

2012 144,539 84,794 54,371,351
2013 180,660 25% 101,732 20% 78,829,785 45%
2014 225,662 25% 106,074 4% 137,153,132 74%
 
2Q2014 50,732 24,262 32,041,810
2Q2015 57,867 14% 30,717 27% 55,144,248 72%
 
1Q2015 58,537 29,824 31,418,644
2Q2015 57,867 -1% 30,717 3% 55,144,248 76%
 
* Includes options on futures
 
 
BROKERAGE STATISTICS
(in 000's, except % and where noted)

Year over Year

2Q2015

2Q2014

% Change

Total Accounts

310

262

18%

Customer Equity (in billions)*

 

$66.0

$53.9

22%
 

Cleared DARTs

565

484

17%

Total Customer DARTs

616

529

16%
 

Cleared Customers (in $'s, except DART per account)

Commission per DART

 

$4.31

$4.00

8%

DART per Avg. Account (Annualized)

469

473

-1%

Net Revenue per Avg. Account (Annualized)

 

$3,749

$3,360

12%
 

Consecutive Quarters

2Q2015

1Q2015

% Change

Total Accounts

310

296

5%

Customer Equity (in billions)*

 

$66.0

$61.2

8%
 

Cleared DARTs

565

590

-4%

Total Customer DARTs

616

648

-5%
 
Cleared Customers (in $'s, except DART per account)

Commission per DART

 

$4.31

$4.05

6%

DART per Avg. Account (Annualized)

469

513

-9%

Net Revenue per Avg. Account (Annualized)

$3,749

$4,079

-8%
 
* Excludes non-customers.
 

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

SEGMENT FINANCIAL INFORMATION

(UNAUDITED)

 
    Three Months   Six Months
Ended June 30, Ended June 30,
2015   2014 2015   2014
(in millions)
 
Electronic Brokerage Net revenues (1) $288 $222 $578 $446
Non-interest expenses 100 90 339 179
 
Income before income taxes $188 $132 $239 $267
 
Pre-tax profit margin 65% 59% 41% 60%
 
Market Making Net revenues (1) $72 $71 $139 $182
Non-interest expenses 42 45 82 90
 
Income before income taxes $30 $26 $57 $92
 
Pre-tax profit margin 42% 37% 41% 51%
 
Corporate (2) Net revenues (1) $27 $16 $(158) $36
Non-interest expenses 5

0

9 3
 
Income (loss) before income taxes $22 $16 $(167) $33
`
 
Total Net revenues (1) $387 $309 $559 $664
Non-interest expenses 147 135 430 272
 
Income before income taxes $240 $174 $129 $392
 
Pre-tax profit margin 62% 56% 23% 59%
(1)   To provide meaningful comparisons, all prior period amounts have been revised for the changes in presentation of currency translation classifications.
(2) Corporate includes corporate related activities as well as inter-segment eliminations.
 

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

 
  Three Months   Six Months
Ended June 30, Ended June 30,
2015   2014 2015   2014
(in millions, except share and per share data)
 
Revenues:
Trading gains (1) $67 $64 $129 $169
Commissions and execution fees 157 124 306 261
Interest income (1) 126 96 234 183
Other income (loss) (1) 55 37 (77) 77
 
Total revenues 405 321 592 690
 
Interest expense 18 12 33 26
 
Total net revenues 387 309 559 664
 
Non-interest expenses:
Execution and clearing 59 52 114 106
Employee compensation and benefits 58 53 115 107
Occupancy, depreciation and amortization 11 10 21 20
Communications 7 6 13 12
General and administrative 13 14 29 26
Customer bad debt (1)

0

138 1
 
Total non-interest expenses 147 135 430 272
 
Income before income taxes 240 174 129 392
 
Income tax expense 19 13 17 30
 
Net income 221 161 112 362
 
Net income attributable to noncontrolling interests 198 146 102 328
 
Net income available for common stockholders $23 $15 $10 $34
 
Earnings per share :
Basic $0.38 $0.27 $0.17 $0.62
Diluted $0.37 $0.26 $0.17 $0.60
 
Weighted average common shares outstanding:
Basic 59,481,778 56,079,813 58,980,348 55,375,929
Diluted 61,038,926 57,300,230 60,436,915 56,674,666
 
Comprehensive income:
Net income available for common stockholders $23 $15 $10 $34
Other comprehensive income:
Cumulative translation adjustment, before income taxes 4 2 3 2
Income taxes related to items of other comprehensive income

0

0

0

0

Other comprehensive income (loss), net of tax 4 2 3 2
Comprehensive income available for common stockholders $27 $17 $13 $36
 
Comprehensive income attributable to noncontrolling interests:
Net income attributable to noncontrolling interests $198 $146 $102 $328
Other comprehensive income - cumulative translation adjustment 24 9 15 12
Comprehensive income attributable to noncontrolling interests $222 $155 $117 $340
(1)   To provide meaningful comparisons, all prior period amounts have been revised for the changes in presentation of currency translation classifications.
 

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 
     

June 30,

 

December 31,

2015

2014

(in millions)
 
Assets
Cash and cash equivalents $1,041 $1,269
Cash and securities - segregated for regulatory purposes 16,762 15,404
Securities borrowed 2,834 3,660
Securities purchased under agreements to resell 148 386
Trading assets, at fair value 3,613 3,934
Receivables from customers, net of allowance 19,002 17,051
Receivables from brokers, dealers and clearing organizations 1,205 1,131
Other assets 554 550
 
Total assets $45,159 $43,385
 
Liabilities and equity
 
Liabilities
Short-term borrowings $9 $34
Securities loaned 3,141 3,199
Trading liabilities - financial instruments sold but not yet purchased, at fair value 2,183 2,561
Other payables:
Customers 33,837 31,796
Brokers, dealers and clearing organizations 376 234
Other payables 379 377
34,592 32,407
 
Equity
Stockholders' equity 774 766
Noncontrolling interests 4,460 4,418
Total equity 5,234 5,184
 
Total liabilities and equity $45,159 $43,385
 
 
June 30, 2015 December 31, 2014
Ownership of IBG LLC Membership Interests

Interests

%

Interests

%

 
IBG, Inc. 60,944,432 15.0% 58,473,186 14.5%
Noncontrolling interests (IBG Holdings LLC) 346,062,282 85.0% 346,062,282 85.5%
 
Total IBG LLC membership interests 407,006,714 100.0% 404,535,468 100.0%
 

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

EARNINGS PER SHARE ON COMPREHENSIVE INCOME

(UNAUDITED)

 
  Three Months   Six Months
Ended June 30, Ended June 30,
2015   2014 2015   2014
(in millions, except share and per share data)
 
Comprehensive income available for common stockholders, net of tax $27 $17 $13 $36
 
Comprehensive income per share:
Basic $0.45 $0.30 $0.22 $0.65
Diluted $0.44 $0.29 $0.21 $0.64
 
 
Weighted average common shares outstanding:
Basic 59,481,778 56,079,813 58,980,348 55,375,929
Diluted 61,038,926 57,300,230 60,436,915 56,674,666

For Interactive Brokers Group, Inc.
Media:
Caitlin Duffy, 203-913-1369
or
Investors:
Patrick Brennan, 203-618-4070

Source: Interactive Brokers Group, Inc.


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