8-K
Interactive Brokers Group, Inc. (IBKR)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
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 17, 2023
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 17, 2023, Interactive Brokers Group, Inc. (the “Company”) issued a press release reporting its financial results for the third quarter ended September 30, 2023. A copy of the press release is furnished as Exhibit 99.1 to this report and incorporated herein by reference. All of the information furnished in this report (including Exhibit 99.1 hereto) shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and unless expressly set forth by specific reference in such filings, shall not be incorporated by reference in any filing under the Securities Act of 1933, as amended, whether made before or after the date hereof and regardless of any general incorporation language in such filings.
Item 9.01. Financial Statements and Exhibits.
| (d) | Exhibits |
|---|---|
| 99.1 | Press Release dated October<br> 17, 2023. |
| --- | --- |
| 104 | Cover Page Interactive Data File (the cover page XBRL tags are embedded within<br> the Inline XBRL Document). |
| --- | --- |
***
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 17, 2023
| INTERACTIVE BROKERS GROUP, INC. | |
|---|---|
| By: | /s/ Paul J. Brody |
| Name: | Paul J. Brody |
| Title: | Chief Financial Officer, Treasurer<br><br> <br>and Secretary |
INTERACTIVE BROKERS GROUP ANNOUNCES 3Q2023 RESULTS
— — —
GAAP DILUTED EPS OF $1.56, ADJUSTED^1^ EPS OF $1.55
GAAP NET REVENUES OF $1,145 MILLION, ADJUSTED NET REVENUES OF $1,139 MILLION
GREENWICH, CONN, October 17, 2023 — Interactive Brokers Group, Inc. (Nasdaq: IBKR), an automated global electronic broker, announced results for the quarter ended September 30, 2023.
Reported diluted earnings per share were $1.56 for the current quarter and $1.55 as adjusted. For the year-ago quarter, reported diluted earnings per share were $0.97 and $1.08 as adjusted.
Reported net revenues were $1,145 million for the current quarter and $1,139 million as adjusted. For the year-ago quarter, reported net revenues were $790 million and $847 million as adjusted.
Reported income before income taxes was $840 million for the current quarter and $834 million as adjusted. For the year-ago quarter, reported income before income taxes was $523 million and $580 million as adjusted.
Financial Highlights
(All comparisons are to the year-ago quarter.)
| • | Commission revenue increased 4% to $333 million. Customer trading volume was mixed across product types with options contracts volume up 18% while futures contracts and stock share volumes were down 1% and 22%,<br> respectively. |
|---|---|
| • | Net interest income increased 55% to $733 million on higher benchmark interest rates and customer credit balances. |
| --- | --- |
| ~~•~~ | Other income increased $75 million to a gain of $27 million. This increase was mainly comprised of $37 million related to our investment in Tiger Brokers and $23 million related to our currency diversification<br> strategy. |
| --- | --- |
| • | Execution, clearing and distribution fees expenses increased 14% to $98 million, driven by higher customer trading volume in options. |
| --- | --- |
| • | Pretax profit margin for the current quarter was 73% as reported and as adjusted. For the year-ago quarter, reported pretax margin was 66% and 68% as adjusted. |
| --- | --- |
| • | Total equity of $13.3 billion. |
| --- | --- |
The Interactive Brokers Group, Inc. Board of Directors declared a quarterly cash dividend of $0.10 per share. This dividend is payable on December 14, 2023, to shareholders of record as of December 1, 2023.
^1^ See the reconciliation of non-GAAP financial measures starting on page 9.
1
Business Highlights
(All comparisons are to the year-ago quarter.)
| • | Customer accounts increased 21% to 2.43 million. |
|---|---|
| • | Customer equity increased 29% to $369.8 billion. |
| --- | --- |
| • | Total DARTs^2^ decreased 1% to 1.91 million. |
| --- | --- |
| • | Cleared DARTs increased slightly to 1.71 million. |
| --- | --- |
| • | Customer credits increased 3% to $98.0 billion. |
| --- | --- |
| • | Customer margin loans increased 8% to $43.6 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 $93 million, as the U.S. dollar value of the GLOBAL decreased by approximately 0.66%. The effects of the currency diversification strategy are reported as components of (1) Other Income (loss of $17 million) and (2) Other Comprehensive Income (loss of $76 million).
Conference Call Information:
Interactive Brokers Group, Inc. will hold a conference call with investors today, October 17, 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 at https://register.vevent.com/register/BIcf6925535ae646959727257076fcafce 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.
For Interactive Brokers Group, Inc. Investors: Nancy Stuebe, investor-relations@ibkr.com or Media: Rob Garfield, media@ibkr.com.
^2^ Daily average revenue trades (DARTs) are based on customer orders.
2
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
| Three Months | Nine Months | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Ended September 30, | Ended September 30, | |||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||
| (in millions, except share and per share data) | ||||||||||
| Revenues: | ||||||||||
| Commissions | $ | 333 | $ | 320 | $ | 1,012 | $ | 991 | ||
| Other fees and services | 52 | 45 | 142 | 141 | ||||||
| Other income (loss) | 27 | (48) | (17) | (144) | ||||||
| Total non-interest income | 412 | 317 | 1,137 | 988 | ||||||
| Interest income | 1,643 | 783 | 4,535 | 1,575 | ||||||
| Interest expense | (910) | (310) | (2,471) | (472) | ||||||
| Total net interest income | 733 | 473 | 2,064 | 1,103 | ||||||
| Total net revenues | 1,145 | 790 | 3,201 | 2,091 | ||||||
| Non-interest expenses: | ||||||||||
| Execution, clearing and distribution fees | 98 | 86 | 286 | 234 | ||||||
| Employee compensation and benefits | 127 | 112 | 391 | 335 | ||||||
| Occupancy, depreciation and amortization | 25 | 23 | 74 | 68 | ||||||
| Communications | 10 | 8 | 29 | 25 | ||||||
| General and administrative | 45 | 37 | 166 | 117 | ||||||
| Customer bad debt | - | 1 | 2 | 3 | ||||||
| Total non-interest expenses | 305 | 267 | 948 | 782 | ||||||
| Income before income taxes | 840 | 523 | 2,253 | 1,309 | ||||||
| Income tax expense | 68 | 40 | 180 | 100 | ||||||
| Net income | 772 | 483 | 2,073 | 1,209 | ||||||
| Net income attributable to noncontrolling interests | 605 | 384 | 1,633 | 965 | ||||||
| Net income available for common stockholders | $ | 167 | $ | 99 | $ | 440 | $ | 244 | ||
| Earnings per share: | ||||||||||
| Basic | $ | 1.57 | $ | 0.98 | $ | 4.22 | $ | 2.45 | ||
| Diluted | $ | 1.56 | $ | 0.97 | $ | 4.19 | $ | 2.43 | ||
| Weighted average common shares outstanding: | ||||||||||
| Basic | 106,233,557 | 101,818,667 | 104,271,921 | 99,646,091 | ||||||
| Diluted | 107,011,427 | 102,555,482 | 105,184,572 | 100,505,075 |
3
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
| Three Months | Nine Months | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Ended September 30, | Ended September 30, | |||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||
| (in millions, except share and per share data) | ||||||||||
| Comprehensive income: | ||||||||||
| Net income available for common stockholders | $ | 167 | $ | 99 | $ | 440 | $ | 244 | ||
| Other comprehensive income: | ||||||||||
| Cumulative translation adjustment, before income taxes | (19) | (30) | (7) | (64) | ||||||
| Income taxes related to items of other comprehensive income | - | - | - | - | ||||||
| Other comprehensive loss, net of tax | (19) | (30) | (7) | (64) | ||||||
| Comprehensive income available for common stockholders | $ | 148 | $ | 69 | $ | 433 | $ | 180 | ||
| Comprehensive earnings per share: | ||||||||||
| Basic | $ | 1.39 | $ | 0.68 | $ | 4.15 | $ | 1.81 | ||
| Diluted | $ | 1.38 | $ | 0.68 | $ | 4.12 | $ | 1.79 | ||
| Weighted average common shares outstanding: | ||||||||||
| Basic | 106,233,557 | 101,818,667 | 104,271,921 | 99,646,091 | ||||||
| Diluted | 107,011,427 | 102,555,482 | 105,184,572 | 100,505,075 | ||||||
| Comprehensive income attributable to noncontrolling interests: | ||||||||||
| Net income attributable to noncontrolling interests | $ | 605 | $ | 384 | $ | 1,633 | $ | 965 | ||
| Other comprehensive income - cumulative translation adjustment | (57) | (93) | (19) | (205) | ||||||
| Comprehensive income attributable to noncontrolling interests | $ | 548 | $ | 291 | $ | 1,614 | $ | 760 |
4
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
| September 30,<br><br> <br>2023 | December 31,<br><br> <br>2022 | ||||||
|---|---|---|---|---|---|---|---|
| (in millions) | |||||||
| Assets | |||||||
| Cash and cash equivalents | $ | 3,824 | $ | 3,436 | |||
| Cash - segregated for regulatory purposes | 26,385 | 25,167 | |||||
| Securities - segregated for regulatory purposes | 31,335 | 31,781 | |||||
| Securities borrowed | 5,478 | 4,749 | |||||
| Securities purchased under agreements to resell | 5,480 | 6,029 | |||||
| Financial instruments owned, at fair value | 1,324 | 485 | |||||
| Receivables from customers, net of allowance for credit losses | 43,602 | 38,760 | |||||
| Receivables from brokers, dealers and clearing organizations | 1,726 | 3,469 | |||||
| Other assets | 1,482 | 1,267 | |||||
| Total assets | $ | 120,636 | $ | 115,143 | |||
| Liabilities and equity | |||||||
| Liabilities | |||||||
| Short-term borrowings | $ | 11 | $ | 18 | |||
| Securities loaned | 10,482 | 8,940 | |||||
| Financial instruments sold but not yet purchased, at fair value | 198 | 146 | |||||
| Other payables: | |||||||
| Customers | 94,873 | 93,195 | |||||
| Brokers, dealers and clearing organizations | 627 | 291 | |||||
| Other payables | 1,181 | 938 | |||||
| 96,681 | 94,424 | ||||||
| Total liabilities | 107,372 | 103,528 | |||||
| Equity | |||||||
| Stockholders' equity | 3,390 | 2,848 | |||||
| Noncontrolling interests | 9,874 | 8,767 | |||||
| Total equity | 13,264 | 11,615 | |||||
| Total liabilities and equity | $ | 120,636 | $ | 115,143 | |||
| September 30, 2023 | December 31, 2022 | ||||||
| Ownership of IBG LLC Membership Interests | Interests | % | Interests | % | |||
| IBG, Inc. | 106,996,044 | 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 | 420,972,398 | 100.0% | 419,536,805 | 100.0% |
5
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 |
| 3Q2022 | 170,240 | 16,181 | 7,953 | 194,374 | 3,037 | ||||
| 3Q2023 | 163,318 | (4%) | 14,218 | (12%) | 10,109 | 27% | 187,645 | (3%) | 3,002 |
| 2Q2023 | 161,710 | 14,071 | 8,383 | 184,164 | 2,970 | ||||
| 3Q2023 | 163,318 | 1% | 14,218 | 1% | 10,109 | 21% | 187,645 | 2% | 3,002 |
CONTRACT AND SHARE VOLUMES:
(in 000's, except %)
TOTAL
| Options | % | Futures^1^ | % | 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%) |
| 3Q2022 | 215,988 | 50,486 | 75,776,756 | |||
| 3Q2023 | 256,481 | 19% | 50,309 | (0%) | 59,453,190 | (22%) |
| 2Q2023 | 236,803 | 49,644 | 58,720,684 | |||
| 3Q2023 | 256,481 | 8% | 50,309 | 1% | 59,453,190 | 1% |
ALL CUSTOMERS
| Options | % | Futures^1^ | % | 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%) |
| 3Q2022 | 208,145 | 49,725 | 74,944,418 | |||
| 3Q2023 | 245,169 | 18% | 49,459 | (1%) | 58,202,858 | (22%) |
| 2Q2023 | 227,884 | 49,040 | 57,711,637 | |||
| 3Q2023 | 245,169 | 8% | 49,459 | 1% | 58,202,858 | 1% |
CLEARED CUSTOMERS
| Options | % | Futures^1^ | % | 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%) |
| 3Q2022 | 185,166 | 49,242 | 72,394,078 | |||
| 3Q2023 | 209,097 | 13% | 49,345 | 0% | 56,323,672 | (22%) |
| 2Q2023 | 194,082 | 48,506 | 55,664,831 | |||
| 3Q2023 | 209,097 | 8% | 49,345 | 2% | 56,323,672 | 1% |
| ^1^ | Includes options on futures. |
|---|
6
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
OPERATING DATA, CONTINUED
PRINCIPAL TRANSACTIONS
| Options | % | Futures^1^ | % | 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%) |
| 3Q2022 | 7,843 | 761 | 832,338 | |||
| 3Q2023 | 11,312 | 44% | 850 | 12% | 1,250,332 | 50% |
| 2Q2023 | 8,919 | 604 | 1,009,047 | |||
| 3Q2023 | 11,312 | 27% | 850 | 41% | 1,250,332 | 24% |
| ^1^ | Includes options on futures. |
|---|
CUSTOMER STATISTICS
| Year over Year | 3Q2023 | 3Q2022 | % Change | ||
|---|---|---|---|---|---|
| Total Accounts (in thousands) | 2,431 | 2,012 | 21% | ||
| Customer Equity (in billions)^1^ | $ | 369.8 | $ | 287.1 | 29% |
| Cleared DARTs (in thousands) | 1,709 | 1,706 | 0% | ||
| Total Customer DARTs (in thousands) | 1,907 | 1,920 | (1%) | ||
| Cleared Customers | |||||
| Commission per Cleared Commissionable Order^2^ | $ | 3.11 | $ | 2.96 | 5% |
| Cleared Avg. DARTs per Account (Annualized) | 180 | 217 | (17%) | ||
| Consecutive Quarters | 3Q2023 | 2Q2023 | % Change | ||
| Total Accounts (in thousands) | 2,431 | 2,290 | 6% | ||
| Customer Equity (in billions)^1^ | $ | 369.8 | $ | 365.0 | 1% |
| Cleared DARTs (in thousands) | 1,709 | 1,673 | 2% | ||
| Total Customer DARTs (in thousands) | 1,907 | 1,865 | 2% | ||
| Cleared Customers | |||||
| Commission per Cleared Commissionable Order^2^ | $ | 3.11 | $ | 3.11 | 0% |
| Cleared Avg. DARTs per Account (Annualized) | 180 | 186 | (3%) |
| ^1^ | Excludes non-customers. |
|---|---|
| ^2^ | Commissionable Order - a customer order that generates commissions. |
7
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
NET INTEREST MARGIN
(UNAUDITED)
| Three Months | Nine Months | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Ended September 30, | Ended September 30, | |||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||
| (in millions) | ||||||||||
| Average interest-earning assets | ||||||||||
| Segregated cash and securities | $ | 58,131 | $ | 55,453 | $ | 59,616 | $ | 49,749 | ||
| Customer margin loans | 42,853 | 42,425 | 40,715 | 44,777 | ||||||
| Securities borrowed | 5,557 | 4,235 | 5,358 | 3,826 | ||||||
| Other interest-earning assets | 10,054 | 9,103 | 9,974 | 8,932 | ||||||
| FDIC sweeps^1^ | 3,311 | 2,173 | 2,819 | 2,189 | ||||||
| $ | 119,906 | $ | 113,389 | $ | 118,482 | $ | 109,473 | |||
| Average interest-bearing liabilities | ||||||||||
| Customer credit balances | $ | 95,506 | $ | 92,846 | $ | 95,908 | $ | 89,096 | ||
| Securities loaned | 9,848 | 9,622 | 9,383 | 10,437 | ||||||
| Other interest-bearing liabilities | 1 | 1 | 1 | 5 | ||||||
| $ | 105,355 | $ | 102,469 | $ | 105,291 | $ | 99,537 | |||
| Net interest income | ||||||||||
| Segregated cash and securities, net | $ | 728 | $ | 228 | $ | 2,031 | $ | 288 | ||
| Customer margin loans^2^ | 623 | 317 | 1,647 | 663 | ||||||
| Securities borrowed and loaned, net | 66 | 114 | 233 | 340 | ||||||
| Customer credit balances, net^2^ | (832) | (248) | (2,259) | (276) | ||||||
| Other net interest income^1/3^ | 159 | 65 | 429 | 95 | ||||||
| Net interest income^3^ | $ | 744 | $ | 476 | $ | 2,081 | $ | 1,110 | ||
| Net interest margin ("NIM") | 2.46% | 1.67% | 2.35% | 1.36% | ||||||
| Annualized yields | ||||||||||
| Segregated cash and securities | 4.97% | 1.63% | 4.55% | 0.77% | ||||||
| Customer margin loans | 5.77% | 2.96% | 5.41% | 1.98% | ||||||
| Customer credit balances | 3.46% | 1.06% | 3.15% | 0.41% |
| ^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<br> 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<br> 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<br> income in the Company’s consolidated statements of comprehensive income. For the three and nine months ended September 30, 2023 and 2022, $6 million, $14 million, $3 million, and $7 million were reported in other fees and services,<br> respectively. For the three and nine months ended September 30, 2023 and 2022, $5 million, $3 million, $1 million, and $1 million were reported in other income, respectively. |
8
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
| Three Months | Nine Months | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Ended September 30, | Ended September 30, | ||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||
| (in millions) | |||||||||
| Adjusted net revenues^1^ | |||||||||
| Net revenues - GAAP | $ | 1,145 | $ | 790 | $ | 3,201 | $ | 2,091 | |
| Non-GAAP adjustments | |||||||||
| Currency diversification strategy, net | 17 | 40 | 71 | 111 | |||||
| Mark-to-market on investments^2^ | (23) | 17 | (54) | 54 | |||||
| Total non-GAAP adjustments | (6) | 57 | 17 | 165 | |||||
| Adjusted net revenues | $ | 1,139 | $ | 847 | $ | 3,218 | $ | 2,256 | |
| Adjusted income before income taxes^1^ | |||||||||
| Income before income taxes - GAAP | $ | 840 | $ | 523 | $ | 2,253 | $ | 1,309 | |
| Non-GAAP adjustments | |||||||||
| Currency diversification strategy, net | 17 | 40 | 71 | 111 | |||||
| Mark-to-market on investments^2^ | (23) | 17 | (54) | 54 | |||||
| Total non-GAAP adjustments | (6) | 57 | 17 | 165 | |||||
| Adjusted income before income taxes | $ | 834 | $ | 580 | $ | 2,270 | $ | 1,474 | |
| Adjusted pre-tax profit margin | 73% | 68% | 71% | 65% |
9
| Three Months | Nine Months | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Ended September 30, | Ended September 30, | ||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||
| (in millions) | |||||||||
| Adjusted net income available for common stockholders^1^ | |||||||||
| Net income available for common stockholders - GAAP | $ | 167 | $ | 99 | $ | 440 | $ | 244 | |
| Non-GAAP adjustments | |||||||||
| Currency diversification strategy, net | 4 | 10 | 18 | 26 | |||||
| Mark-to-market on investments^2^ | (6) | 4 | (14) | 13 | |||||
| Income tax effect of above adjustments^3^ | 1 | (3) | (0) | (8) | |||||
| Total non-GAAP adjustments | (1) | 11 | 4 | 31 | |||||
| Adjusted net income available for common stockholders | $ | 166 | $ | 111 | $ | 444 | $ | 276 | |
| Note: Amounts may not add due to rounding. | |||||||||
| Ended September 30, | Ended September 30, | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2023 | 2022 | 2023 | 2022 | ||||||
| (in dollars) | |||||||||
| Adjusted diluted EPS^1^ | |||||||||
| Diluted EPS - GAAP | $ | 1.56 | $ | 0.97 | $ | 4.19 | $ | 2.43 | |
| Non-GAAP adjustments | |||||||||
| Currency diversification strategy, net | 0.04 | 0.09 | 0.17 | 0.26 | |||||
| Mark-to-market on investments^2^ | (0.05) | 0.04 | (0.13) | 0.13 | |||||
| Income tax effect of above adjustments^3^ | 0.01 | (0.03) | (0.00) | (0.08) | |||||
| Total non-GAAP adjustments | (0.01) | 0.11 | 0.04 | 0.31 | |||||
| Adjusted diluted EPS | $ | 1.55 | $ | 1.08 | $ | 4.22 | $ | 2.74 | |
| Diluted weighted average common shares outstanding | 107,011,427 | 102,555,482 | 105,184,572 | 100,505,075 | |||||
| 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 investments^2^. |
|---|---|
| • | 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<br> 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<br> 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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