Interactive Brokers Group Announces 4Q2021 Results

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.

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.

______________________

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 MonthsTwelve 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

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

 
Three MonthsTwelve 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

 

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

%

 

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
 

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

OPERATING DATA, CONTINUED

 
CONTRACT AND SHARE VOLUMES, continued:
(in 000's, except %)
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.
 

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

NET INTEREST MARGIN

(UNAUDITED)

 
Three MonthsTwelve 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.

  

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(UNAUDITED)

 
Three MonthsTwelve 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

%

Three MonthsTwelve 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 MonthsTwelve 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.

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.

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.

Contacts:

For Interactive Brokers Group, Inc.
Investors:

Nancy Stuebe, investor-relations@ibkr.com
or
Media: Rob Garfield, media@ibkr.com

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