IBKR Interactive Brokers Group Inc

Reports Comprehensive Earnings Per Share of $0.62, Income before Taxes of $458 Million on $1,189 Million in Net Revenues, and Earnings Per Share on Net Income of $0.78

Declares Quarterly Dividend of $0.10 Per Share

Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) an automated global electronic broker and market maker, today reported diluted earnings per share on a comprehensive basis of $0.62 for the year ended December 31, 2015, compared to diluted earnings per share on a comprehensive basis of $0.51 for 2014.

Excluding other comprehensive income, the Company reported diluted earnings per share of $0.78 for the year ended December 31, 2015, compared to diluted earnings per share of $0.77 for 2014.

Net revenues were $1,189 million and income before income taxes was $458 million for the year, compared to net revenues of $1,043 million and income before income taxes of $506 million in 2014.

The Interactive Brokers Group, Inc. Board of Directors declared a quarterly cash dividend of $0.10 per share. This dividend is payable on March 14, 2016 to shareholders of record as of March 1, 2016.

Business Highlights

• 39% pretax profit margin for 2015.
• 49% Electronic Brokerage pretax profit margin for 2015.
• 44% Market Making pretax profit margin for 2015.
• Customer equity grew 19% from 2014 to $67.4 billion.
• Customer accounts increased 18% in 2015 to 331 thousand.
• Total DARTs increased 14% from 2014 to 647 thousand.
• Brokerage segment equity was $3.5 billion. Total equity was $5.3 billion.

Segment Overview

Electronic Brokerage

Electronic Brokerage segment income before income taxes decreased 9%, to $536 million, in 2015, due to unsecured customer losses caused by the sudden, large move in the value of the Swiss franc as further described below. Net revenues increased 15% to $1.1 billion on higher commissions revenue and net interest income. Excluding the impact of this unusual item, segment income before taxes grew to a record $655 million, an 11% increase over 2014. Customer accounts grew 18% to 331 thousand and customer equity increased 19% to $67.4 billion compared to 2014.

Commissions and execution fees increased 13% in 2015, to $618 million and net interest income grew 24%, to $400 million. Pretax profit margin was 49% in 2015, down from 62% in 2014.

Total DARTs(1) for cleared and execution-only customers increased 14% to 647 thousand in 2015, compared to 566 thousand during 2014. Cleared DARTs were 589 thousand, 14% higher than in 2014.

Market Making

Market Making segment income before income taxes increased 14%, to $130 million in 2015, driven by higher market volatility and periods of higher trading activity during 2015. Pretax profit margin increased to 44% in 2015 from 40% in 2014.

Sudden Move in the Value of the Swiss Franc

On January 15, 2015, due to the sudden, large move in the value of the Swiss franc that followed an unprecedented action by the Swiss National Bank, which removed a previously instituted and repeatedly reconfirmed cap of the currency relative to the Euro, several of our customers who held currency futures and spot positions suffered losses in excess of their deposits with us. We took immediate action to hedge our exposure to the foreign currency receivables from these customers. During 2015, we incurred losses, net of hedging activity and debt collection efforts, of $119 million. We continue to actively pursue collection of these debts. The ultimate effect of this incident on our results will depend upon the outcome of our debt collection efforts.

Effects of Foreign Currency Diversification

In connection with our currency strategy, we have determined to base our net worth in GLOBALs, a basket of 16 major currencies in which we hold our equity. In 2015, our currency diversification strategy decreased our comprehensive earnings by $269 million, as the U.S. dollar value of the GLOBAL decreased by approximately 5%. The effects of the currency diversification strategy are reported as components of (1) Other Income in the Corporate segment and (2) Other Comprehensive Income (“OCI”). As previously disclosed, certain reclassifications have been made to previously reported amounts to conform to the current presentation of currency translation gains and losses related to our currency diversification strategy.

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

_____________________

Conference Call Information:

Interactive Brokers Group will hold a conference call with investors today, January 19, 2016, at 4:30 p.m. ET to discuss its quarterly results. Investors who would like to listen to the conference call live should dial 877-324-1965 (U.S. domestic) and 631-291-4512 (international). The number should be dialed approximately ten minutes prior to the start of the conference call. Ask for the “Interactive Brokers Conference Call.”

The conference call will also be accessible simultaneously, and through replays, as an audio webcast through the Investor Relations section of the Interactive Brokers web site, www.interactivebrokers.com/ir.

About Interactive Brokers Group, Inc.:

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

Cautionary Note Regarding Forward-Looking Statements:

The foregoing information contains certain forward-looking statements that reflect the Company’s current views with respect to certain current and future events and financial performance. These forward-looking statements are and will be, as the case may be, subject to many risks, uncertainties and factors relating to the Company’s operations and business environment which may cause the Company’s actual results to be materially different from any future results, expressed or implied, in these forward-looking statements. Any forward-looking statements in this release are based upon information available to the company on the date of this release. The company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any statements expressed or implied therein will not be realized. Additional information on risk factors that could potentially affect the Company’s financial results may be found in the Company’s filings with the Securities and Exchange Commission.

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIESOPERATING DATA

                 

TRADE VOLUMES:

(in 000's, except %)

Brokerage Market Brokerage Non Avg. Trades Making % Cleared % Cleared % Total % per U.S.

Period

Trades

Change

Trades

Change

Trades

Change

Trades

Change

Trading Day

2013 65,320 173,849 18,489 257,658 1,029 2014 64,530 -1% 206,759 19% 18,055 -2% 289,344 12% 1,155 2015 65,937 2% 242,846 17% 18,769 4% 327,553 13% 1,305   4Q2014 16,126 57,773 4,621 78,520 1,246 4Q2015 16,985 5% 60,848 5% 4,863 5% 82,696 5% 1,313   3Q2015 18,696 65,333 5,266 89,295 1,395

4Q2015

16,985 -9% 60,848 -7% 4,863 -8% 82,696 -7% 1,313               CONTRACT AND SHARE VOLUMES: (in 000's, except %)   TOTAL Options % Futures* % Stocks %

Period

(contracts)

Change

(contracts)

Change

(shares)

Change

2013 659,673 121,776 95,479,739 2014 631,265 -4% 123,048 1% 153,613,174 61% 2015 634,388 0% 140,668 14% 172,742,520 12%   4Q2014 173,284 34,259 36,973,639 4Q2015 156,125 -10% 33,436 -2% 35,150,818 -5%   3Q2015 179,786 38,960 41,999,917 4Q2015 156,125 -13% 33,436 -14% 35,150,818 -16%   MARKET MAKING Options % Futures* % Stocks %

Period

(contracts)

Change

(contracts)

Change

(shares)

Change

2013 404,490 18,184 12,849,729 2014 344,741 -15% 15,668 -14% 12,025,822 -6% 2015 335,406 -3% 14,975 -4% 15,376,076 28%   4Q2014 95,625 3,462 3,093,170 4Q2015 82,106 -14% 4,047 17% 3,677,274 19%   3Q2015 95,754 3,868 4,458,343 4Q2015 82,106 -14% 4,047 5% 3,677,274 -18%

 

BROKERAGE TOTAL Options % Futures* % Stocks %

Period

(contracts)

Change

(contracts)

Change

(shares)

Change

2013 255,183 103,592 82,630,010 2014 286,524 12% 107,380 4% 141,587,352 71% 2015 298,982 4% 125,693 17% 157,366,444 11%   4Q2014 77,659 30,797 33,880,469 4Q2015 74,019 -5% 29,389 -5% 31,473,544 -7%   3Q2015 84,032 35,092 37,541,574 4Q2015 74,019 -12% 29,389 -16% 31,473,544 -16%   * Includes options on futures  

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIESOPERATING DATA, CONTINUED

            BROKERAGE CLEARED Options % Futures* % Stocks %

Period

(contracts)

Change

(contracts)

Change

(shares)

Change

2013 180,660 101,732 78,829,785 2014 225,662 25% 106,074 4% 137,153,132 74% 2015 244,356 8% 124,206 17% 153,443,988 12%   4Q2014 63,739 30,559 32,720,100 4Q2015 59,934 -6% 29,030 -5% 30,405,179 -7%   3Q2015 68,018 34,635 36,475,917 4Q2015 59,934 -12% 29,030 -16% 30,405,179 -17%     * Includes options on futures   BROKERAGE STATISTICS       (in 000's, except % and where noted)   Year over Year

4Q2015

4Q2014

% Change

Total Accounts 331 281 18% Customer Equity (in billions) * $67.4 $56.7 19%   Cleared DARTs 582 564 3% Total Customer DARTs 641 619 4%   Cleared Customers (in $'s, except DART per account) Commission per DART $3.81 $4.28 -11% DART per Avg. Account (Annualized) 447 511 -13% Net Revenue per Avg. Account (Annualized)** $3,239 $3,622 -11%   Consecutive Quarters

4Q2015

3Q2015

% Change

Total Accounts 331 322 3% Customer Equity (in billions) * $67.4 $62.1 9%   Cleared DARTs 582 620 -6% Total Customer DARTs 641 683 -6%   Cleared Customers (in $'s, except DART per account) Commission per DART $3.81 $4.10 -7% DART per Avg. Account (Annualized) 447 493 -9% Net Revenue per Avg. Account (Annualized)** $3,239 $3,584 -10%   * Excludes non-customers.

** The calculation has been revised to exclude components of other income that are not direct revenues from customers. Prior period amounts have been recalculated to conform to the current methodology.

 

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIESSEGMENT FINANCIAL INFORMATION(UNAUDITED)

      Three Months Twelve Months Ended December 31, Ended December 31, 2015   2014 2015   2014 (in millions)   Electronic Brokerage Net revenues $219 $261 $1,097 $952 Non-interest expenses 106 94 561 363   Income before income taxes $113 $167 $536 $589   Pre-tax profit margin 52% 64% 49% 62%   Market Making Net revenues $69 $53 $298 $284 Non-interest expenses 42 38 168 170   Income before income taxes $27 $15 $130 $114   Pre-tax profit margin 39% 28% 44% 40%   Corporate (1) Net revenues

($17)

($106)

($206)

($193)

Non-interest expenses (4) 2 2 4   Income (loss) before income taxes

($13)

($108)

($208)

($197)

    Total Net revenues $271 $208 $1,189 $1,043 Non-interest expenses 144 134 731 537   Income before income taxes $127 $74 $458 $506   Pre-tax profit margin 47% 36% 39% 49%   (1)     Corporate includes corporate related activities as well as inter-segment eliminations and gains and losses on positions held as part of our overall currency diversification strategy.  

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(UNAUDITED)

        Three Months Twelve Months Ended December 31, Ended December 31, 2015 2014 2015 2014 (in millions, except share and per share data)   Revenues: Trading gains $53 $50 $269 $261 Commissions and execution fees 144 155 617 549 Interest income 136 110 492 416 Other income (loss) (44 ) (86 ) (122 ) (111 )   Total revenues 289 229 1,256 1,115   Interest expense 18   21   67   72     Total net revenues 271   208   1,189   1,043     Non-interest expenses: Execution and clearing 54 54 231 212 Employee compensation and benefits 56 49 227 205 Occupancy, depreciation and amortization 11 10 44 39 Communications 6 6 25 24 General and administrative 16 14 58 54 Customer bad debt 1   1   146   3     Total non-interest expenses 144   134   731   537     Income before income taxes 127 74 458 506   Income tax expense 6   8   43   47     Net income 121 66 415 459   Net income attributable to noncontrolling interests 104   58   366   414     Net income available for common stockholders $17   $8   $49   $45     Earnings per share : Basic $0.26   $0.12   $0.80   $0.79   Diluted $0.25   $0.12   $0.78   $0.77     Weighted average common shares outstanding: Basic 63,685,671 58,124,119 61,043,071 56,492,381 Diluted 64,898,144 59,274,773 62,466,991 57,709,668   Comprehensive income: Net income available for common stockholders $17 $8 $49 $45 Other comprehensive income: Cumulative translation adjustment, before income taxes (5 ) (6 ) (10 ) (15 ) Income taxes related to items of other comprehensive income

0

 

0

 

0

 

0

  Other comprehensive loss, net of tax (5 ) (6 ) (10 ) (15 ) Comprehensive income available for common stockholders $12   $2   $39   $30     Comprehensive income attributable to noncontrolling interests: Net income attributable to noncontrolling interests $104 $58 $366 $414 Other comprehensive income - cumulative translation adjustment (24 ) (38 ) (53 ) (92 ) Comprehensive income attributable to noncontrolling interests $80   $20   $313   $322    

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(UNAUDITED)

        December 31,

2015

December 31,

2014

(in millions)   Assets Cash and cash equivalents $1,631

$1,269

Cash and securities - segregated for regulatory purposes 21,309 15,404 Securities borrowed 3,924 3,660 Securities purchased under agreements to resell 195 386 Trading assets, at fair value 3,420 3,978 Receivables from customers, net of allowance

17,049

17,051 Receivables from brokers, dealers and clearing organizations 663 1,131 Other assets 543 506   Total assets

$48,734

$43,385

  Liabilities and equity   Liabilities Short-term borrowings

$0

$34

Securities loaned 2,894 3,199 Trading liabilities - financial instruments sold but not yet purchased, at fair value 2,617 2,569 Other payables: Customers

37,084

31,796 Brokers, dealers and clearing organizations 423 234 Other payables 372 368

37,879

32,398   Total liabilities

43,390

38,200   Equity Stockholders' equity 863 766 Noncontrolling interests 4,481 4,419 Total equity 5,344 5,185   Total liabilities and equity

$48,734

$43,385

      December 31, 2015 December 31, 2014 Ownership of IBG LLC Membership Interests

Interests

%

Interests

%

  IBG, Inc. 63,991,705 15.7% 58,473,186 14.5% Noncontrolling interests (IBG Holdings LLC) 343,040,504 84.3% 346,062,282 85.5%   Total IBG LLC membership interests 407,032,209 100.0% 404,535,468 100.0%  

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIESEARNINGS PER SHARE ON COMPREHENSIVE INCOME(UNAUDITED)

            Three Months Twelve Months Ended December 31, Ended December 31, 2015 2014 2015 2014 (in millions, except share and per share data)   Comprehensive income available for common stockholders, net of tax $12 $2 $39 $30   Comprehensive income per share: Basic $0.18 $0.02 $0.64 $0.52 Diluted $0.18 $0.02 $0.62 $0.51     Weighted average common shares outstanding: Basic 63,685,671 58,124,119 61,043,071 56,492,381 Diluted 64,898,144 59,274,773 62,466,991 57,709,668  

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