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Interactive Brokers Group Announces 4Q2023 Results

GAAP DILUTED EPS OF $1.48, ADJUSTED1 EPS OF $1.52

GAAP NET REVENUES OF $1,139 MILLION, ADJUSTED NET REVENUES OF $1,149 MILLION

Interactive Brokers Group, Inc. (Nasdaq: IBKR), an automated global electronic broker, announced results for the quarter ended December 31, 2023.

Reported diluted earnings per share were $1.48 for the current quarter and $1.52 as adjusted. For the year-ago quarter, reported diluted earnings per share were $1.31 and $1.30 as adjusted.

Reported net revenues were $1,139 million for the current quarter and $1,149 million as adjusted. For the year-ago quarter, reported net revenues were $976 million and $958 million as adjusted.

Reported income before income taxes was $816 million for the current quarter and $831 million as adjusted. For the year-ago quarter, reported income before income taxes was $689 million and $671 million as adjusted.

Financial Highlights

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

  • Commission revenue increased 5% to $348 million. Customer trading volume was mixed across product types with options and futures contract volumes up 21% and 4%, respectively, while stock share volume was down 22%.
  • Net interest income increased 29% to $730 million on higher benchmark interest rates, customer margin loans and customer credit balances.
  • Other income decreased $31 million to $6 million. This decrease was mainly comprised of $20 million related to our currency diversification strategy and $8 million related to our investment in Tiger Brokers.
  • Execution, clearing and distribution fees expenses increased 11% to $100 million, driven by higher customer trading volume in options and futures.
  • Pretax profit margin for the current quarter was 72% both as reported and as adjusted. For the year-ago quarter, reported pretax margin was 71% and 70% as adjusted.
  • Total equity of $14.1 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, 2024, to shareholders of record as of March 1, 2024.

Business Highlights

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

  • Customer accounts increased 23% to 2.56 million.
  • Customer equity increased 39% to $426.0 billion.
  • Total DARTs2 increased 2% to 1.93 million.
  • Cleared DARTs increased 2% to 1.73 million.
  • Customer credits increased 10% to $104.5 billion.
  • Customer margin loans increased 14% to $44.4 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 $139 million, as the U.S. dollar value of the GLOBAL increased by approximately 1.05%. The effects of the currency diversification strategy are reported as components of (1) Other Income (loss of $9 million) and (2) Other Comprehensive Income (gain of $148 million).

Conference Call Information:

Interactive Brokers Group, Inc. will hold a conference call with investors today, January 16, 2024, 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 at https://register.vevent.com/register/BI9b8b0781a22347468c0936eccc35776d 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 serve 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 sixth consecutive year, Barron’s ranked Interactive Brokers #1 with 5 out of 5 stars in its June 9, 2023, 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.

___________________________________

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 Twelve Months
Ended December 31, Ended December 31,

2023

2022

2023

2022

(in millions, except share and per share data)
 
Revenues:
Commissions $

348

$

331

$

1,360

$

1,322

Other fees and services

55

43

197

184

Other income (loss)

6

37

(11)

(107)

Total non-interest income

409

411

1,546

1,399

 
Interest income

1,695

1,111

6,230

2,686

Interest expense

(965)

(546)

(3,436)

(1,018)

Total net interest income

730

565

2,794

1,668

Total net revenues

1,139

976

4,340

3,067

 
Non-interest expenses:
Execution, clearing and distribution fees

100

90

386

324

Employee compensation and benefits

136

119

527

454

Occupancy, depreciation and amortization

25

22

99

90

Communications

12

8

41

33

General and administrative

45

48

211

165

Customer bad debt

5

-

7

3

Total non-interest expenses

323

287

1,271

1,069

 
Income before income taxes

816

689

3,069

1,998

Income tax expense

77

56

257

156

 
Net income

739

633

2,812

1,842

Net income attributable to noncontrolling interests

579

497

2,212

1,462

 
Net income available for common stockholders $

160

$

136

$

600

$

380

 
Earnings per share:
Basic $

1.49

$

1.32

$

5.72

$

3.78

Diluted $

1.48

$

1.31

$

5.67

$

3.75

 
Weighted average common shares outstanding:
Basic

107,021,836

102,875,250

104,965,050

100,460,016

Diluted

107,811,190

103,656,668

105,846,877

101,299,609

 

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

 
Three Months Twelve Months
Ended December 31, Ended December 31,

2023

2022

2023

2022

(in millions, except share and per share data)
 
Comprehensive income:
Net income available for common stockholders $

160

$

136

$

600

$

380

Other comprehensive income:
Cumulative translation adjustment, before income taxes

37

38

30

(26)

Income taxes related to items of other comprehensive income

-

-

-

-

Other comprehensive income (loss), net of tax

37

38

30

(26)

Comprehensive income available for common stockholders $

197

$

174

$

630

$

354

 
Comprehensive earnings per share:
Basic $

1.84

$

1.70

$

6.00

$

3.53

Diluted $

1.83

$

1.68

$

5.95

$

3.50

 
Weighted average common shares outstanding:
Basic

107,021,836

102,875,250

104,965,050

100,460,016

Diluted

107,811,190

103,656,668

105,846,877

101,299,609

 
 
Comprehensive income attributable to noncontrolling interests:
Net income attributable to noncontrolling interests $

579

$

497

$

2,212

$

1,462

Other comprehensive income - cumulative translation adjustment

111

120

92

(85)

Comprehensive income attributable to noncontrolling interests $

690

$

617

$

2,304

$

1,377

 

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(UNAUDITED)

 
December 31,

2023
December 31,

2022
(in millions)
 
Assets
Cash and cash equivalents $

3,753

$

3,436

Cash - segregated for regulatory purposes

28,840

25,167

Securities - segregated for regulatory purposes

35,386

31,781

Securities borrowed

5,835

4,749

Securities purchased under agreements to resell

5,504

6,029

Financial instruments owned, at fair value

1,488

485

Receivables from customers, net of allowance for credit losses

44,472

38,760

Receivables from brokers, dealers and clearing organizations

1,643

3,469

Other assets

1,502

1,267

Total assets $

128,423

$

115,143

 
Liabilities and equity
 
Liabilities
Short-term borrowings $

17

$

18

Securities loaned

11,347

8,940

Financial instruments sold but not yet purchased, at fair value

193

146

Other payables:
Customers

101,012

93,195

Brokers, dealers and clearing organizations

590

291

Other payables

1,197

938

102,799

94,424

Total liabilities

114,356

103,528

 
Equity
Stockholders' equity

3,584

2,848

Noncontrolling interests

10,483

8,767

Total equity

14,067

11,615

Total liabilities and equity $

128,423

$

115,143

December 31, 2023 December 31, 2022
Ownership of IBG LLC Membership Interests

Interests

%

Interests

%

 
IBG, Inc.

107,049,483

25.4%

102,927,703

24.5%

Noncontrolling interests (IBG Holdings LLC)

313,976,354

74.6%

316,609,102

75.5%

 
Total IBG LLC membership interests

421,025,837

100.0%

419,536,805

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

2021

871,319

78,276

32,621

982,216

3,905

2022

735,619

(16

%)

70,049

(11

%)

32,863

1

%

838,531

(15

%)

3,347

2023

670,263

(9

%)

58,580

(16

%)

36,725

12

%

765,568

(9

%)

3,075

 

4Q2022

165,769

14,923

7,358

188,050

3,009

4Q2023

164,975

(0

%)

14,922

(0

%)

10,047

37

%

189,944

1

%

3,039

 

3Q2023

163,318

14,218

10,109

187,645

3,002

4Q2023

164,975

1

%

14,922

5

%

10,047

(1

%)

189,944

1

%

3,039

 
CONTRACT AND SHARE VOLUMES:

(in 000's, except %)

 

TOTAL

Options

%

Futures1

%

Stocks

%

Period

(contracts)

Change

(contracts)

Change

(shares)

Change

2021

887,849

154,866

771,273,709

2022

908,415

2

%

207,138

34

%

330,035,586

(57

%)

2023

1,020,736

12

%

209,034

1

%

252,742,847

(23

%)

 

4Q2022

229,441

51,519

75,713,964

4Q2023

279,945

22

%

53,883

5

%

59,046,908

(22

%)

 

3Q2023

256,481

50,309

59,453,190

4Q2023

279,945

9

%

53,883

7

%

59,046,908

(1

%)

 

ALL CUSTOMERS

Options

%

Futures1

%

Stocks

%

Period

(contracts)

Change

(contracts)

Change

(shares)

Change

2021

852,169

152,787

766,211,726

2022

873,914

3

%

203,933

33

%

325,368,714

(58

%)

2023

981,172

12

%

206,073

1

%

248,588,960

(24

%)

 

4Q2022

221,855

50,773

74,353,901

4Q2023

269,082

21

%

52,996

4

%

58,112,082

(22

%)

 

3Q2023

245,169

49,459

58,202,858

4Q2023

269,082

10

%

52,996

7

%

58,112,082

(0

%)

 

CLEARED CUSTOMERS

Options

%

Futures1

%

Stocks

%

Period

(contracts)

Change

(contracts)

Change

(shares)

Change

2021

773,284

151,715

752,720,070

2022

781,373

1

%

202,145

33

%

314,462,672

(58

%)

2023

834,866

7

%

204,691

1

%

240,270,617

(24

%)

 

4Q2022

194,962

50,326

71,924,864

4Q2023

222,082

14

%

52,883

5

%

56,240,615

(22

%)

 

3Q2023

209,097

49,345

56,323,672

4Q2023

222,082

6

%

52,883

7

%

56,240,615

(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

2021

35,680

2,079

5,061,983

2022

34,501

(3

%)

3,205

54

%

4,666,872

(8

%)

2023

39,564

15

%

2,961

(8

%)

4,153,887

(11

%)

 

4Q2022

7,586

746

1,360,063

4Q2023

10,863

43

%

887

19

%

934,826

(31

%)

 

3Q2023

11,312

850

1,250,332

4Q2023

10,863

(4

%)

887

4

%

934,826

(25

%)

 

1 Includes options on futures

 
CUSTOMER STATISTICS
 
Year over Year

4Q2023

4Q2022

% Change

Total Accounts (in thousands)

2,562

2,091

23

%

Customer Equity (in billions)1 $

426.0

$

306.7

39

%

 
Cleared DARTs (in thousands)

1,727

1,689

2

%

Total Customer DARTs (in thousands)

1,934

1,889

2

%

 
Cleared Customers
Commission per Cleared Commissionable Order2 $

3.19

$

3.15

1

%

Cleared Avg. DARTs per Account (Annualized)

172

206

(17

%)

 
Consecutive Quarters

4Q2023

3Q2023

% Change

Total Accounts (in thousands)

2,562

2,431

5

%

Customer Equity (in billions)1 $

426.0

$

369.8

15

%

 
Cleared DARTs (in thousands)

1,727

1,709

1

%

Total Customer DARTs (in thousands)

1,934

1,907

1

%

 
Cleared Customers
Commission per Cleared Commissionable Order2 $

3.19

$

3.11

3

%

Cleared Avg. DARTs per Account (Annualized)

172

180

(4

%)

 
(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,

2023

 

2022

 

2023

 

2022

 

 
(in millions)
Average interest-earning assets
Segregated cash and securities $

59,482

 

$

57,327

 

$

59,582

 

$

51,644

 

Customer margin loans

42,769

 

39,277

 

41,229

 

43,402

 

Securities borrowed

5,185

 

4,368

 

5,315

 

3,961

 

Other interest-earning assets

10,534

 

9,203

 

10,114

 

9,000

 

FDIC sweeps1

3,554

 

2,347

 

3,003

 

2,229

 

$

121,524

 

$

112,522

 

$

119,242

 

$

110,235

 

 
Average interest-bearing liabilities
Customer credit balances $

96,598

 

$

93,401

 

$

96,081

 

$

90,172

 

Securities loaned

9,922

 

9,071

 

9,518

 

10,095

 

Other interest-bearing liabilities

1

 

1

 

1

 

4

 

$

106,521

 

$

102,473

 

$

105,599

 

$

100,271

 

 
Net interest income
Segregated cash and securities, net $

760

 

$

454

 

$

2,791

 

$

742

 

Customer margin loans2

631

 

420

 

2,278

 

1,083

 

Securities borrowed and loaned, net

43

 

73

 

276

 

413

 

Customer credit balances, net2

(866

)

(487

)

(3,125

)

(763

)

Other net interest income1/3

171

 

112

 

600

 

207

 

Net interest income3 $

739

 

$

572

 

$

2,820

 

$

1,682

 

 
Net interest margin ("NIM")

2.41

%

2.02

%

2.36

%

1.53

%

 
Annualized yields
Segregated cash and securities

5.07

%

3.14

%

4.68

%

1.44

%

Customer margin loans

5.85

%

4.24

%

5.53

%

2.50

%

Customer credit balances

3.56

%

2.07

%

3.25

%

0.85

%

 
______________________________________________________

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, 2023 and 2022, $5 million, $19 million, $3 million, and $10 million were reported in other fees and services, respectively. For the three and twelve months ended December 31, 2023 and 2022, $4 million, $7 million, $3 million, and $4 million were reported in other income, respectively.

 

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(UNAUDITED)

 
Three Months Twelve Months
Ended December 31, Ended December 31,

2023

 

2022

 

2023

 

2022

 

 
(in millions)
 
Adjusted net revenues1
Net revenues - GAAP $

1,139

 

$

976

 

$

4,340

 

$

3,067

 

 
Non-GAAP adjustments
Currency diversification strategy, net

9

 

(11

)

80

 

100

 

Mark-to-market on investments2

8

 

(1

)

(46

)

52

 

Remeasurement of TRA liability3

(7

)

(6

)

(7

)

(6

)

Total non-GAAP adjustments

10

 

(18

)

27

 

146

 

Adjusted net revenues $

1,149

 

$

958

 

$

4,367

 

$

3,213

 

 
Adjusted income before income taxes1
Income before income taxes - GAAP $

816

 

$

689

 

$

3,069

 

$

1,998

 

 
Non-GAAP adjustments
Currency diversification strategy, net

9

 

(11

)

80

 

100

 

Mark-to-market on investments2

8

 

(1

)

(46

)

52

 

Remeasurement of TRA liability3

(7

)

(6

)

(7

)

(6

)

Bad debt expense5

5

 

-

 

5

 

0

 

Total non-GAAP adjustments

15

 

(18

)

32

 

146

 

Adjusted income before income taxes $

831

 

$

671

 

$

3,101

 

$

2,144

 

 
Adjusted pre-tax profit margin

72

%

70

%

71

%

67

%

 
Three Months Twelve Months
Ended December 31, Ended December 31,

2023

 

2022

 

2023

 

2022

 

 
(in millions)
Adjusted net income available for common stockholders1
 
Net income available for common stockholders - GAAP $

160

 

$

136

 

$

600

 

$

380

 

 
Non-GAAP adjustments
Currency diversification strategy, net

2

 

(3

)

20

 

24

 

Mark-to-market on investments2

2

 

(0

)

(12

)

13

 

Remeasurement of TRA liability3

(7

)

(6

)

(7

)

(6

)

Bad debt expense4

1

 

-

 

1

 

-

 

Income tax effect of above adjustments5

(1

)

1

 

(2

)

(7

)

Remeasurement of deferred income taxes6

7

 

7

 

7

 

7

 

Total non-GAAP adjustments

5

 

(1

)

8

 

30

 

Adjusted net income available for common stockholders $

164

 

$

135

 

$

608

 

$

410

 

 
Note: Amounts may not add due to rounding.
 
Three Months Twelve Months
Ended December 31, Ended December 31,

2023

 

2022

 

2023

 

2022

 

 
(in dollars)
Adjusted diluted EPS1
 
Diluted EPS - GAAP $

1.48

 

$

1.31

 

$

5.67

 

$

3.75

 

 
Non-GAAP adjustments
Currency diversification strategy, net

0.02

 

(0.03

)

0.19

 

0.24

 

Mark-to-market on investments2

0.02

 

(0.00

)

(0.11

)

0.12

 

Remeasurement of TRA liability3

(0.07

)

(0.06

)

(0.07

)

(0.06

)

Bad debt expense4

0.01

 

0.00

 

0.01

 

0.00

 

Income tax effect of above adjustments5

(0.01

)

0.01

 

(0.01

)

(0.07

)

Remeasurement of deferred income taxes6

0.07

 

0.07

 

0.07

 

0.07

 

Total non-GAAP adjustments

0.04

 

(0.01

)

0.08

 

0.30

 

Adjusted diluted EPS $

1.52

 

$

1.30

 

$

5.75

 

$

4.05

 

 
Diluted weighted average common shares outstanding

107,811,190

 

103,656,668

 

105,846,877

 

101,299,609

 

 
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.

  • 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, and unusual bad debt expense4.
  • 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 net mark-to-market gains (losses) on investments, the remeasurement of our TRA liability, unusual bad debt expense, and the remeasurement of certain deferred tax assets6.
  • 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 Remeasurement of our tax receivable agreement (“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. This is related to the remeasurement of the deferred tax assets described below. 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 24, 2023.

4Unusual bad debt expense consists of a credit loss on a loan not related to margin lending.

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

6 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 24, 2023.

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