Reports Comprehensive Earnings Per Share of
$0.30, Income before Taxes of $183 Million on $345 Million in Net
Revenues, and Earnings Per Share on Net Income of $0.30
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 $0.30 for the
quarter ended September 30, 2016, compared to diluted earnings per
share on a comprehensive basis of $0.23 for the same period in
2015.
Excluding other comprehensive income, the Company reported
diluted earnings per share of $0.30 for the quarter ended September
30, 2016, compared to diluted earnings per share of $0.35 for same
period in 2015.
Net revenues were $345 million and income before income taxes
was $183 million this quarter, compared to net revenues of $359
million and income before income taxes of $202 million for the same
period in 2015.
The results for the quarter were positively impacted by strong
growth in net interest income, which increased 28% from the same
period in 2015. As compared to last summer’s unusually active
trading environment, this summer’s unusually inactive trading led
to lower commissions and execution fees and trading gains.
In addition, the results for the quarter include a $13 million
gain on our currency diversification strategy due to the weakening
of the U.S. dollar against other major currencies, compared to a
$76 million loss recognized in the same period in 2015.
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, 2016 to shareholders of record as of
December 1, 2016.
Business Highlights
- 56% Electronic Brokerage pretax profit
margin for this quarter, down from 61% in the year-ago
quarter.
- 16% Market Making pretax profit margin
for this quarter, down from 51% in the year-ago quarter.
- Customer equity grew 33% from the
year-ago quarter to $82.7 billion and customer debits increased 15%
to $18.1 billion.
- Customer accounts increased 15% from
the year-ago quarter to 370 thousand.
- Total DARTs decreased 11% from the
year-ago quarter to 609 thousand.
- Brokerage segment equity was $3.9
billion. Total equity was $5.9 billion.
Segment Overview
Electronic Brokerage
Electronic Brokerage segment income before income taxes
decreased 12%, to $162 million in the quarter ended September 30,
2016, compared to the same period last year. Net revenues decreased
4% to $288 million on lower commissions and execution fees and
mark-to-market losses on our U.S. government securities portfolio,
partially offset by higher net interest income.
Commission and execution fees decreased 15% from the year-ago
quarter driven by lower customer volumes in options, futures, and
stocks, which decreased 24%, 17%, and 5%, respectively, from the
same period last year. On a comparative basis, the prior year
period exhibited unusually active trading and the current year
period unusually inactive trading. Other income decreased 53% from
the year-ago quarter driven by mark-to-market losses on investments
in U.S. government securities, while net interest income increased
28% from the year-ago quarter. Pretax profit margin was 56% in the
quarter ended September 30, 2016, down from 61% in the same period
last year.
Customer accounts grew 15% to 370 thousand and customer equity
increased 33% to $82.7 billion from the year-ago quarter. Total
DARTs1 for cleared and execution-only customers decreased 11% to
609 thousand from the year-ago quarter. Cleared DARTs were 564
thousand, 9% lower than the same period last year.
Market Making
Market Making segment income before income taxes decreased 85%
to $7 million in the quarter ended September 30, 2016, compared to
the same period last year, due to lower trading volumes and
decreases in volatility and in the actual-to-implied volatility
ratio. Pretax profit margin decreased to 16% in the quarter ended
September 30, 2016 from 51% in the same period last year.
Effects of Foreign Currency Diversification
In connection with our currency diversification strategy, we
have determined to base our net worth in GLOBALs, a basket of 15
major currencies in which we hold our equity. In this quarter, our
currency diversification strategy increased our comprehensive
earnings by $13 million, as the U.S. dollar value of the GLOBAL
increased by approximately 0.26%. 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”).
_________________________________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, October 18, 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 SUBSIDIARIES OPERATING 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 3Q2015 18,696 65,333 5,266 89,295 1,395
3Q2016 15,474 -17% 61,181 -6% 3,736 -29% 80,391 -10% 1,256
2Q2016 16,056 64,531 4,114 84,701 1,323 3Q2016 15,474 -4% 61,181
-5% 3,736 -9% 80,391 -5% 1,256
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%
3Q2015 179,786 38,960 41,999,917 3Q2016 138,767 -23% 32,521 -17%
38,515,753 -8% 2Q2016 140,461 35,355 36,768,094 3Q2016
138,767 -1% 32,521 -8% 38,515,753 5%
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%
3Q2015 95,754 3,868 4,458,343 3Q2016 74,966 -22% 3,338 -14%
2,874,332 -36% 2Q2016 76,223 3,042 3,340,316 3Q2016 74,966
-2% 3,338 10% 2,874,332 -14%
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%
3Q2015 84,032 35,092 37,541,574 3Q2016 63,801 -24% 29,183 -17%
35,641,421 -5% 2Q2016 64,238 32,313 33,427,778 3Q2016 63,801
-1% 29,183 -10% 35,641,421 7% * Includes options on futures
INTERACTIVE
BROKERS GROUP, INC. AND SUBSIDIARIES OPERATING 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%
3Q2015 68,018 34,635 36,475,917 3Q2016 55,579 -18% 28,986 -16%
34,817,202 -5% 2Q2016 53,951 32,037 32,491,500 3Q2016 55,579
3% 28,986 -10% 34,817,202 7% * Includes options on futures
BROKERAGE STATISTICS (in
000's, except % and where noted) Year over Year
3Q2016
3Q2015
%
Change
Total Accounts 370 322 15%
Customer Equity (in billions)*
$ 82.7 $ 62.1 33% Cleared DARTs 564 620 -9% Total Customer
DARTs 609 683 -11%
Cleared Customers (in
$'s, except DART per account) Commission per DART $ 3.91 $ 4.10
-5% DART per Avg. Account (Annualized) 390 493 -21% Net Revenue per
Avg. Account (Annualized)** $ 3,191 $ 3,584 -11%
Consecutive Quarters
3Q2016
2Q2016
%
Change
Total Accounts 370 357 4%
Customer Equity (in billions)*
$ 82.7 $ 73.7 12% Cleared DARTs 564 597 -6% Total Customer
DARTs 609 648 -6%
Cleared Customers (in $'s, except DART
per account) Commission per DART $ 3.91 $ 3.91 0% DART per Avg.
Account (Annualized) 390 428 -9% Net Revenue per Avg. Account
(Annualized)** $ 3,191 $ 3,256 -2% * 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 SUBSIDIARIES SEGMENT FINANCIAL INFORMATION
(UNAUDITED)
Three Months Nine Months Ended
September 30, Ended September 30, 2016
2015 2016 2015
(in millions)
Electronic Brokerage Net revenues $ 288 $ 300 $ 945 $
878 Non-interest expenses 126 116 357
455 Income before income taxes $ 162 $ 184 $ 588 $ 423
Pre-tax profit margin 56% 61% 62% 48%
Market
Making Net revenues $ 43 $ 90 $ 145 $ 229 Non-interest expenses
36 44 113 126 Income before
income taxes $ 7 $ 46 $ 32 $ 103 Pre-tax profit margin 16%
51% 22% 45%
Corporate (1) Net revenues $ 14 $
(31) $ 113 $ (189) Non-interest expenses - (3)
- 6 Income (loss) before income taxes $ 14 $ (28) $
113 $ (195)
Total Net revenues $ 345 $ 359 $
1,203 $ 918 Non-interest expenses 162 157 470
587 Income before income taxes $ 183 $ 202 $ 733 $
331 Pre-tax profit margin 53% 56% 61% 36% (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 SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
Three Months Nine Months Ended
September 30, Ended September 30, 2016
2015 2016 2015 (in millions, except
share and per share data) Revenues: Trading gains $ 38 $
87 $ 124 $ 216 Commissions and execution fees 144 167 462 473
Interest income 157 122 446 356 Other income (loss)
27 (1) 228 (78) Total revenues
366 375 1,260 967 Interest expense 21
16 57 49 Total net
revenues 345 359 1,203
918 Non-interest expenses: Execution and
clearing 62 63 183 177 Employee compensation and benefits 58 56 174
171 Occupancy, depreciation and amortization 13 12 38 33
Communications 7 6 23 19 General and administrative 19 13 46 42
Customer bad debt 3 7 6
145 Total non-interest expenses
162 157 470 587
Income before income taxes 183 202 733 331 Income tax
expense 15 20 55
37 Net income 168 182 678 294 Net income
attributable to noncontrolling interests 148
160 598 262 Net income
available for common stockholders $ 20 $ 22 $
80 $ 32 Earnings per share: Basic $ 0.30 $
0.35 $ 1.22 $ 0.53 Diluted $ 0.30 $
0.35 $ 1.20 $ 0.52 Weighted average
common shares outstanding: Basic 67,083,654 62,458,655 65,351,842
60,152,525 Diluted 68,470,224 64,028,731 66,738,754 61,646,928
Comprehensive income: Net income available for common
stockholders $ 20 $ 22 $ 80 $ 32 Other comprehensive income:
Cumulative translation adjustment, before income taxes - (8) 3 (5)
Income taxes related to items of other comprehensive income
- - - - Other
comprehensive income (loss), net of tax -
(8) 3 (5) Comprehensive income
available for common stockholders $ 20 $ 14 $
83 $ 27 Comprehensive income attributable to
noncontrolling interests: Net income attributable to noncontrolling
interests $ 148 $ 160 $ 598 $ 262 Other comprehensive income (loss)
- cumulative translation adjustment 2
(44) 19 (29) Comprehensive income
attributable to noncontrolling interests $ 150 $ 116
$ 617 $ 233
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
September 30,
2016
December 31,
2015
(in millions) Assets Cash and cash equivalents
$ 1,550 $ 1,601 Cash and securities - segregated for regulatory
purposes 25,250 21,309 Securities borrowed 4,785 3,924 Securities
purchased under agreements to resell 148 195 Financial instruments
owned, at fair value 3,823 3,420 Receivables from customers, net of
allowance for doubtful accounts 18,223 17,050 Receivables from
brokers, dealers and clearing organizations 764 692 Other assets
521 543
Total assets $ 55,064 $ 48,734
Liabilities and equity
Liabilities Short-term borrowings $ 24 $ - Securities loaned
3,617 2,894 Financial instruments sold but not yet purchased, at
fair value 2,459 2,617 Other payables: Customers 42,486 37,084
Brokers, dealers and clearing organizations 210 423 Other payables
398 372 43,094 37,879 Total
liabilities 49,194 43,390
Equity
Stockholders' equity 981 863 Noncontrolling interests 4,889
4,481 Total equity 5,870 5,344
Total
liabilities and equity $ 55,064 $ 48,734
September 30, 2016 December 31, 2015 Ownership of
IBG LLC Membership Interests
Interests
%
Interests
%
IBG, Inc. 67,987,957 16.6% 63,991,705 15.7% Noncontrolling
interests (IBG Holdings LLC) 341,444,304 83.4% 343,040,504 84.3%
Total IBG LLC membership interests 409,432,261 100.0%
407,032,209 100.0%
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES EARNINGS PER SHARE
ON COMPREHENSIVE INCOME (UNAUDITED)
Three Months
Nine Months Ended September 30, Ended September
30, 2016 2015 2016 2015 (in
millions, except share and per share data) Comprehensive
income available for common stockholders, net of tax $ 20 $ 14 $ 83
$ 27 Comprehensive earnings per share: Basic $ 0.31 $ 0.23 $
1.27 $ 0.45 Diluted $ 0.30 $ 0.23 $ 1.25 $ 0.44
Weighted average common shares outstanding: Basic 67,083,654
62,458,655 65,351,842 60,152,525 Diluted 68,470,224 64,028,731
66,738,754 61,646,928
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161018006608/en/
For Interactive Brokers Group,
Inc.Media:Caitlin Duffy,
203-913-1369orInvestors:Nancy Stuebe,
203-618-4070
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