8-K/A
Interactive Brokers Group, Inc. (IBKR)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
Amendment No. 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): October 15, 2024
Interactive Brokers Group, Inc.
(Exact Name of Registrant as Specified in its Charter)
| Delaware | 001-33440 | 30-0390693 |
|---|---|---|
| (State or Other Jurisdiction<br><br> <br>of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification Number) |
One Pickwick Plaza, Greenwich, Connecticut 06830
(Address of Principal Executive Offices) (Zip Code)
(203) 618-5800
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
|---|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |
| Title of each class | Trading Symbol | Name of the exchange on which registered |
| --- | --- | --- |
| Class A common stock, par value $.01<br> per share | IBKR | The Nasdaq Global Select Market |
| Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (230.405 of this<br> chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (240.12b-2 of this chapter). | ||
| --- | ||
| Emerging growth company ☐ | ||
| If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any<br> new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ |
Item 2.02 Results of Operations and Financial Condition
On October 15, 2024, Interactive Brokers Group, Inc. (the “Company”) issued a press release reporting its financial results for the quarter ended September 30, 2024. Subsequently, Interactive Brokers LLC reached agreements in principle to settle certain disputes which relate back to events that took place prior to the end of the quarter ended September 30, 2024. The settlement will add $78 million to reported general and administrative expenses for the quarter ended September 30, 2024, and will result in the following revised operating results for the Company:
• General and administrative expenses: $153 million
• Income available for common stockholders: $184 million
• Adjusted net income available for common stockholders: $176 million
• Diluted earnings per share: $1.67
• Adjusted diluted earnings per share: $1.61
• Total equity: $16.0 billion
The Company is also furnishing revised unaudited Consolidated Statements of Income, Consolidated Statements of Comprehensive Income, Condensed Consolidated Statements of Financial Condition, and Reconciliation of Non-GAAP Financial Measures. The statements that were included in the October 15, 2024 press release should no longer be relied upon.
The information disclosed under this Item 2.02 is being “furnished” and shall not be deemed “filed” by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, and shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
1
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
REVISED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
| Three Months | Nine Months | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Ended September 30, | Ended September 30, | |||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||
| (in millions, except share and per share data) | ||||||||||
| Revenues: | ||||||||||
| Commissions | $ | 435 | $ | 333 | $ | 1,220 | $ | 1,012 | ||
| Other fees and services | 72 | 52 | 199 | 142 | ||||||
| Other income (loss) | 56 | 27 | 38 | (17) | ||||||
| Total non-interest income | 563 | 412 | 1,457 | 1,137 | ||||||
| Interest income | 1,888 | 1,643 | 5,476 | 4,535 | ||||||
| Interest expense | (1,086) | (910) | (3,135) | (2,471) | ||||||
| Total net interest income | 802 | 733 | 2,341 | 2,064 | ||||||
| Total net revenues | 1,365 | 1,145 | 3,798 | 3,201 | ||||||
| Non-interest expenses: | ||||||||||
| Execution, clearing and distribution fees | 116 | 98 | 332 | 286 | ||||||
| Employee compensation and benefits | 145 | 127 | 436 | 391 | ||||||
| Occupancy, depreciation and amortization | 26 | 25 | 77 | 74 | ||||||
| Communications | 9 | 10 | 29 | 29 | ||||||
| General and administrative | 153 | 45 | 255 | 166 | ||||||
| Customer bad debt | 7 | - | 14 | 2 | ||||||
| Total non-interest expenses | 456 | 305 | 1,143 | 948 | ||||||
| Income before income taxes | 909 | 840 | 2,655 | 2,253 | ||||||
| Income tax expense | 75 | 68 | 217 | 180 | ||||||
| Net income | 834 | 772 | 2,438 | 2,073 | ||||||
| Net income attributable to noncontrolling interests | 650 | 605 | 1,900 | 1,633 | ||||||
| Net income available for common stockholders | $ | 184 | $ | 167 | $ | 538 | $ | 440 | ||
| Earnings per share: | ||||||||||
| Basic | $ | 1.68 | $ | 1.57 | $ | 4.98 | $ | 4.22 | ||
| Diluted | $ | 1.67 | $ | 1.56 | $ | 4.94 | $ | 4.19 | ||
| Weighted average common shares outstanding: | ||||||||||
| Basic | 108,757,991 | 106,233,557 | 107,852,597 | 104,271,921 | ||||||
| Diluted | 109,536,360 | 107,011,427 | 108,774,195 | 105,184,572 |
2
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
REVISED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
| Three Months | Nine Months | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Ended September 30, | Ended September 30, | |||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||
| (in millions, except share and per share data) | ||||||||||
| Comprehensive income: | ||||||||||
| Net income available for common stockholders | $ | 184 | $ | 167 | $ | 538 | $ | 440 | ||
| Other comprehensive income: | ||||||||||
| Cumulative translation adjustment, before income taxes | 39 | (19) | 11 | (7) | ||||||
| Income taxes related to items of other comprehensive income | - | - | - | - | ||||||
| Other comprehensive income (loss), net of tax | 39 | (19) | 11 | (7) | ||||||
| Comprehensive income available for common stockholders | $ | 223 | $ | 148 | $ | 549 | $ | 433 | ||
| Comprehensive earnings per share: | ||||||||||
| Basic | $ | 2.05 | $ | 1.39 | $ | 5.08 | $ | 4.15 | ||
| Diluted | $ | 2.03 | $ | 1.38 | $ | 5.04 | $ | 4.12 | ||
| Weighted average common shares outstanding: | ||||||||||
| Basic | 108,757,991 | 106,233,557 | 107,852,597 | 104,271,921 | ||||||
| Diluted | 109,536,360 | 107,011,427 | 108,774,195 | 105,184,572 | ||||||
| Comprehensive income attributable to noncontrolling interests: | ||||||||||
| Net income attributable to noncontrolling interests | $ | 650 | $ | 605 | $ | 1,900 | $ | 1,633 | ||
| Other comprehensive income - cumulative translation adjustment | 114 | (57) | 30 | (19) | ||||||
| Comprehensive income attributable to noncontrolling interests | $ | 764 | $ | 548 | $ | 1,930 | $ | 1,614 |
3
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
REVISED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
| September 30, 2024 | December 31, 2023 | ||||||
|---|---|---|---|---|---|---|---|
| (in millions) | |||||||
| Assets | |||||||
| Cash and cash equivalents | $ | 3,595 | $ | 3,753 | |||
| Cash - segregated for regulatory purposes | 35,216 | 28,840 | |||||
| Securities - segregated for regulatory purposes | 31,103 | 35,386 | |||||
| Securities borrowed | 7,513 | 5,835 | |||||
| Securities purchased under agreements to resell | 8,176 | 5,504 | |||||
| Financial instruments owned, at fair value | 2,949 | 1,488 | |||||
| Receivables from customers, net of allowance for credit losses | 56,006 | 44,472 | |||||
| Receivables from brokers, dealers and clearing organizations | 2,210 | 1,643 | |||||
| Other assets | 1,758 | 1,502 | |||||
| Total assets | $ | 148,526 | $ | 128,423 | |||
| Liabilities and equity | |||||||
| Liabilities | |||||||
| Short-term borrowings | $ | 33 | $ | 17 | |||
| Securities loaned | 16,818 | 11,347 | |||||
| Financial instruments sold but not yet purchased, at fair value | 381 | 193 | |||||
| Other payables: | |||||||
| Customers | 112,579 | 101,012 | |||||
| Brokers, dealers and clearing organizations | 1,202 | 590 | |||||
| Other payables | 1,508 | 1,197 | |||||
| 115,289 | 102,799 | ||||||
| Total liabilities | 132,521 | 114,356 | |||||
| Equity | |||||||
| Stockholders' equity | 4,145 | 3,584 | |||||
| Noncontrolling interests | 11,860 | 10,483 | |||||
| Total equity | 16,005 | 14,067 | |||||
| Total liabilities and equity | $ | 148,526 | $ | 128,423 | |||
| September 30, 2024 | December 31, 2023 | ||||||
| Ownership of IBG LLC Membership Interests | Interests | % | Interests | % | |||
| IBG, Inc. | 108,879,779 | 25.8% | 107,049,483 | 25.4% | |||
| Noncontrolling interests (IBG Holdings LLC) | 313,643,354 | 74.2% | 313,976,354 | 74.6% | |||
| Total IBG LLC membership interests | 422,523,133 | 100.0% | 421,025,837 | 100.0% |
4
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
REVISED RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
| Three Months | Nine Months | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Ended September 30, | Ended September 30, | ||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||
| (in millions) | |||||||||
| Adjusted net revenues^1^ | |||||||||
| Net revenues - GAAP | $ | 1,365 | $ | 1,145 | $ | 3,798 | $ | 3,201 | |
| Non-GAAP adjustments | |||||||||
| Currency diversification strategy, net | (25) | 17 | (3) | 71 | |||||
| Mark-to-market on investments^2^ | (13) | (23) | 38 | (54) | |||||
| Total non-GAAP adjustments | (38) | (6) | 35 | 17 | |||||
| Adjusted net revenues | $ | 1,327 | $ | 1,139 | $ | 3,833 | $ | 3,218 | |
| Adjusted income before income taxes^1^ | |||||||||
| Income before income taxes - GAAP | $ | 909 | $ | 840 | $ | 2,655 | $ | 2,253 | |
| Non-GAAP adjustments | |||||||||
| Currency diversification strategy, net | (25) | 17 | (3) | 71 | |||||
| Mark-to-market on investments^2^ | (13) | (23) | 38 | (54) | |||||
| Total non-GAAP adjustments | (38) | (6) | 35 | 17 | |||||
| Adjusted income before income taxes | $ | 871 | $ | 834 | $ | 2,690 | $ | 2,270 | |
| Adjusted pre-tax profit margin | 66% | 73% | 70% | 71% |
5
| Three Months | Nine Months | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Ended September 30, | Ended September 30, | ||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||
| (in millions) | |||||||||
| Adjusted net income available for common stockholders^1^ | |||||||||
| Net income available for common stockholders - GAAP | $ | 184 | $ | 167 | $ | 538 | $ | 440 | |
| Non-GAAP adjustments | |||||||||
| Currency diversification strategy, net | (6) | 4 | (1) | 18 | |||||
| Mark-to-market on investments^2^ | (3) | (6) | 10 | (14) | |||||
| Income tax effect of above adjustments^3^ | 2 | 1 | (2) | (0) | |||||
| Total non-GAAP adjustments | (8) | (1) | 7 | 4 | |||||
| Adjusted net income available for common stockholders | $ | 176 | $ | 166 | $ | 545 | $ | 444 | |
| Note: Amounts may not add due to rounding. | |||||||||
| Three Months | Nine Months | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Ended September 30, | Ended September 30, | ||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||
| (in dollars) | |||||||||
| Adjusted diluted EPS^1^ | |||||||||
| Diluted EPS - GAAP | $ | 1.67 | $ | 1.56 | $ | 4.94 | $ | 4.19 | |
| Non-GAAP adjustments | |||||||||
| Currency diversification strategy, net | (0.06) | 0.04 | (0.01) | 0.17 | |||||
| Mark-to-market on investments^2^ | (0.03) | (0.05) | 0.09 | (0.13) | |||||
| Income tax effect of above adjustments^3^ | 0.02 | 0.01 | (0.02) | (0.00) | |||||
| Total non-GAAP adjustments | (0.07) | (0.01) | 0.06 | 0.04 | |||||
| Adjusted diluted EPS | $ | 1.61 | $ | 1.55 | $ | 5.00 | $ | 4.22 | |
| Diluted weighted average common shares outstanding | 109,536,360 | 107,011,427 | 108,774,195 | 105,184,572 | |||||
| Note: Amounts may not add due to rounding. |
6
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<br> mark-to-market gains (losses) on investments^2^. |
|---|---|
| • | We define adjusted income before income taxes as income before income taxes adjusted to remove the effect of our currency diversification<br> 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<br> effects attributable to IBG, Inc. of our currency diversification strategy and our net 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<br> 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 portfolios, which are typically held to maturity; and on certain other investments, including equity securities taken over by the Company as a customer accommodation due to a technical issue at the New York Stock Exchange that occurred on the morning of June 3, 2024.
^3^The income tax effect is estimated using the statutory income tax rates applicable to the Company.
Item 9.01. Financial Statements and Exhibits.
| Exhibits |
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7
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: October 20, 2024
| INTERACTIVE BROKERS GROUP, INC. | |
|---|---|
| By: | /s/ Paul J. Brody |
| Name: | Paul J. Brody |
| Title: | Chief Financial Officer, Treasurer<br><br> <br>and Secretary |