Exhibit 99.1
INTERACTIVE BROKERS GROUP ANNOUNCES FIRST QUARTER RESULTS
— — —
REPORTS INCOME BEFORE TAX OF $190.3 MILLION ON $330.8 MILLION
IN NET REVENUES, PRO FORMA EARNINGS PER SHARE OF $0.31
GREENWICH, CONN, May 29, 2007 — Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) an automated global electronic market maker and broker, which priced its initial public offering (“IPO”) on May 3, 2007, today reported pro forma earnings per share of $0.31 for its quarter ended March 31, 2007, compared to $0.34 for the same period in 2006.
For the quarter ended March 31, 2007, net revenues were $330.8 million and income before income tax was $190.3 million, compared to net revenues of $328.6 million and income before income tax of $215.4 million for the same period in 2006.
These results are the high end of the range of estimated results previously reported on April 13, 2007.
Business Highlights
· 57.5% pre-tax margin
· Electronic Brokerage income before income tax increased 59.2%
· Electronic Brokerage DARTs increased 28% to 245,000
· Market Making income before income tax decreased 20.9%, in part reflecting lower trading gains driven by options activity prior to corporate announcements
· Market Making options contract volume increased 11%
· Interactive Brokers Group accounted for approximately 14.8% of exchange-listed options volume worldwide and approximately 19.9% of exchange-listed options volume in the United States
“During the quarter, the demand for our services continued to expand globally,” said Thomas Peterffy, Chief Executive Officer and President. “As the leading automated broker and market maker in exchange traded equities and derivatives, we are continuing to grow by leveraging our proprietary technology and network of connections to market centers around the world to deliver superior value for financial professionals and institutions (including broker-dealers, hedge funds and conventional money managers) that make up our customer base.”
1
Segment Overview
Market Making
Market making options contract volume generated through Timber Hill subsidiaries in the quarter ended March 31, 2007 grew by 11% from the same period in 2006. Market making segment income before income tax decreased 20.9% in the quarter ended March 31, 2007 compared with the same period in 2006, reflecting lower trading gains driven in part by heavy options activity in advance of certain corporate announcements, which had a negative impact on profits.
Electronic Brokerage
Electronic brokerage segment income before income tax increased 59.2% in the quarter ended March 31, 2007 compared with the same period in 2006, reflecting higher revenues from commission and execution fees and growth in net interest income. Total DARTs for cleared and execution-only customers increased 28% to 245,000 during the three months ended March 31, 2007, compared to 192,000 during the three months ended March 31, 2006. The increase in net interest was driven by the growth in customer balances and fully secured margin loans.
Global Volumes
According to data compiled by the Futures Industry Association, global equity-based options exchange volume grew by approximately 23.5% and U.S. exchange volume grew by approximately 25.6%. Interactive Brokers Group accounted for approximately 14.8% of exchange-listed equity options volume traded worldwide and approximately 19.9% of U.S. volume in the first three months of 2007. This compared to approximately 15.6% of exchange-listed equity options volume traded worldwide and approximately 21.7% of U.S. volume in the first three months of 2006.
_____________________
2
Conference Call Information:
Interactive Brokers Group will hold a conference call with investors today, May 29, 2007, at 5:30 p.m. EST to discuss its first quarter results. Investors who would like to listen to the conference call live should dial 888-802-2266 (U.S. domestic) and 913-312-1270 (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 is an automated global electronic market maker and broker specializing in routing orders and executing and processing trades in securities, futures and foreign exchange instruments as a member of more than 60 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 direct access to stocks, options, futures, forex and bonds from a single IB Universal AccountSM. Employing proprietary software on a global communications network, Interactive Brokers Group continuously integrates 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.
For Interactive Brokers Group, Inc. Media: Andrew Wilkinson, 203-913-1369 or Investors: 888-919-0022 (domestic) and 312-542-6890 (international).
3
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
OPERATING DATA
TRADE VOLUMES:
(in 000's, except %)
|
| Market |
| % growth over |
|
|
| % growth over |
|
|
| % growth over |
| Average Trades |
| ||
|
| Making |
| same period |
| Brokerage |
| same period |
| Total |
| same period |
| per US |
| ||
Period |
|
|
| trades |
| prior year |
| Trades |
| prior year |
| Trades |
| prior year |
| Trading Day |
|
2003 |
| 32,772 |
|
|
| 25,115 |
|
|
| 57,887 |
|
|
| 230 |
| ||
2004 |
| 41,506 |
| 27 | % | 31,808 |
| 27 | % | 73,314 |
| 27 | % | 290 |
| ||
2005 |
| 54,044 |
| 30 | % | 42,180 |
| 33 | % | 96,224 |
| 31 | % | 382 |
| ||
2006 |
| 66,043 |
| 22 | % | 64,066 |
| 52 | % | 130,108 |
| 35 | % | 518 |
| ||
1Q2006 |
| 15,185 |
|
|
| 15,434 |
|
|
| 30,618 |
|
|
| 494 |
| ||
1Q2007 |
| 22,844 |
| 50 | % | 20,010 |
| 30 | % | 42,854 |
| 40 | % | 703 |
| ||
CONTRACT AND SHARE VOLUMES:
(in 000's, except %)
TOTAL
|
|
|
| % growth over |
|
|
| % growth over |
|
|
| % growth over |
| ||
|
| Options |
| same period |
| Futures* |
| same period |
| Stocks |
| same period |
| ||
Period |
|
|
| (contracts) |
| prior year |
| (contracts) |
| prior year |
| (shares) |
| prior year |
|
2003 |
| 194,358 |
|
|
| 31,034 |
|
|
| 17,038,250 |
|
|
| ||
2004 |
| 269,715 |
| 39 | % | 37,748 |
| 22 | % | 17,487,528 |
| 3 | % | ||
2005 |
| 409,794 |
| 52 | % | 44,560 |
| 18 | % | 21,925,120 |
| 25 | % | ||
2006 |
| 563,623 |
| 38 | % | 62,419 |
| 40 | % | 34,493,410 |
| 57 | % | ||
1Q2006 |
| 136,272 |
|
|
| 12,406 |
|
|
| 7,814,069 |
|
|
| ||
1Q2007 |
| 159,056 |
| 17 | % | 18,644 |
| 50 | % | 10,422,130 |
| 33 | % | ||
MARKET MAKING
|
|
|
| % growth over |
|
|
| % growth over |
|
|
| % growth over |
| ||
|
| Options |
| same period |
| Futures* |
| same period |
| Stocks |
| same period |
| ||
Period |
|
|
| (contracts) |
| prior year |
| (contracts) |
| prior year |
| (shares) |
| prior year |
|
2003 |
| 177,459 |
|
|
| 6,638 |
|
|
| 12,578,584 |
|
|
| ||
2004 |
| 236,569 |
| 33 | % | 10,511 |
| 58 | % | 12,600,280 |
| 0 | % | ||
2005 |
| 308,613 |
| 30 | % | 11,551 |
| 10 | % | 15,625,801 |
| 24 | % | ||
2006 |
| 371,929 |
| 21 | % | 14,818 |
| 28 | % | 21,180,377 |
| 36 | % | ||
1Q2006 |
| 89,704 |
|
|
| 2,286 |
|
|
| 4,645,467 |
|
|
| ||
1Q2007 |
| 99,603 |
| 11 | % | 3,586 |
| 57 | % | 5,978,287 |
| 29 | % | ||
BROKERAGE
|
|
|
| % growth over |
|
|
| % growth over |
|
|
| % growth over |
| ||
|
| Options |
| same period |
| Futures* |
| same period |
| Stocks |
| same period |
| ||
Period |
|
|
| (contracts) |
| prior year |
| (contracts) |
| prior year |
| (shares) |
| prior year |
|
2003 |
| 16,898 |
|
|
| 24,396 |
|
|
| 4,459,667 |
|
|
| ||
2004 |
| 33,146 |
| 96 | % | 27,237 |
| 12 | % | 4,887,247 |
| 10 | % | ||
2005 |
| 101,181 |
| 205 | % | 33,009 |
| 21 | % | 6,299,319 |
| 29 | % | ||
2006 |
| 191,694 |
| 89 | % | 47,601 |
| 44 | % | 13,313,033 |
| 111 | % | ||
1Q2006 |
| 46,568 |
|
|
| 10,120 |
|
|
| 3,168,601 |
|
|
| ||
1Q2007 |
| 59,453 |
| 28 | % | 15,057 |
| 49 | % | 4,443,843 |
| 40 | % | ||
* Includes options on futures
4
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
OPERATING DATA
ELECTRONIC BROKERAGE STATISTICS:
(in 000's, except %)
| 1Q2007 |
| 1Q2006 |
| % Change |
| |||
Total Accounts |
| 82 |
| 67 |
| 22 | % | ||
Customer Equity |
| $ | 6,900,000 |
| $ | 4,600,000 |
| 51 | % |
Cleared DARTs |
| 190 |
| 151 |
| 26 | % | ||
Total Customer DARTs |
| 245 |
| 192 |
| 28 | % | ||
Note: Interactive Brokers Group, Inc. vs. IBG LLC
On May 3, 2007, Interactive Brokers Group, Inc. priced its initial public offering (“IPO”) and purchased a 10.0% interest in IBG LLC. The historical financial statements for March 31, 2007 and prior periods set forth herein reflect the results of operations for IBG LLC and its subsidiaries, without giving effect to the IPO and related transactions. The pro forma effects of the IPO for the quarters ended March 31, 2006 and 2007 are separately set forth herein.
5
IBG LLC AND SUBSIDIARIES
SEGMENT FINANCIALS
(UNAUDITED)
|
|
|
| Three Months |
| ||||
|
|
|
| Ended March 31, |
| ||||
|
|
|
| 2007 |
| 2006 |
| ||
|
|
|
| (in millions) |
| ||||
Market |
| Net revenues |
| $ | 233.3 |
| $ | 263.1 |
|
Making |
| Non-interest expenses |
| 79.3 |
| 68.5 |
| ||
|
| Income before tax |
| $ | 154.0 |
| $ | 194.6 |
|
|
|
|
|
|
|
|
| ||
Electronic |
| Net revenues |
| $ | 94.5 |
| $ | 65.2 |
|
Brokerage |
| Non-interest expenses |
| 59.8 |
| 43.4 |
| ||
|
| Income before tax |
| $ | 34.7 |
| $ | 21.8 |
|
|
|
|
|
|
|
|
| ||
Corporate |
| Net revenues |
| $ | 3.0 |
| $ | 0.3 |
|
|
| Non-interest expenses |
| 1.4 |
| 1.3 |
| ||
|
| Income before tax |
| $ | 1.6 |
| ($1.0 | ) | |
|
|
|
|
|
|
|
| ||
Total |
| Net revenues |
| $ | 330.8 |
| $ | 328.6 |
|
|
| Non-interest expenses |
| 140.5 |
| 113.2 |
| ||
|
| Income before tax |
| $ | 190.3 |
| $ | 215.4 |
|
6
IBG LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
|
| Three Months |
| ||||
|
| Ended March 31, |
| ||||
|
| 2007 |
| 2006 |
| ||
|
| (in millions) |
| ||||
Consolidated Statement of Income Data: |
|
|
|
|
| ||
Revenues: |
|
|
|
|
| ||
Trading gains |
| $ | 198.8 |
| $ | 225.4 |
|
Commissions and execution fees |
| 56.3 |
| 39.4 |
| ||
Interest income |
| 184.5 |
| 132.1 |
| ||
Other income |
| 24.7 |
| 25.5 |
| ||
|
|
|
|
|
| ||
Total revenues |
| 464.3 |
| 422.4 |
| ||
|
|
|
|
|
| ||
Interest expense |
| 133.5 |
| 93.8 |
| ||
|
|
|
|
|
| ||
Total net revenues |
| 330.8 |
| 328.6 |
| ||
|
|
|
|
|
| ||
Non-interest expenses: |
|
|
|
|
| ||
Execution and clearing |
| 90.2 |
| 71.3 |
| ||
Employee compensation and benefits |
| 32.8 |
| 28.7 |
| ||
Occupancy, depreciation and amortization |
| 6.0 |
| 5.5 |
| ||
Communications |
| 3.4 |
| 2.7 |
| ||
General and administrative |
| 8.1 |
| 5.0 |
| ||
|
|
|
|
|
| ||
Total non-interest expenses |
| 140.5 |
| 113.2 |
| ||
|
|
|
|
|
| ||
Income before income tax |
| 190.3 |
| 215.4 |
| ||
Income tax expense |
| 6.1 |
| 9.2 |
| ||
|
|
|
|
|
| ||
Net Income |
| $ | 184.2 |
| $ | 206.2 |
|
7
INTERACTIVE BROKERS GROUP INC AND SUBSIDIARIES
1Q07 PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
|
| Three Months Ended March 31, 2007 |
| |||||||
|
| Historical |
| Adjustments |
| Pro Forma(1) |
| |||
|
| (dollars in millions except share and per share data) |
| |||||||
Statement of Income Data: |
|
|
|
|
|
|
| |||
Revenues: |
|
|
|
|
|
|
| |||
Trading gains |
| $ | 198.8 |
| $ | — |
| $ | 198.8 |
|
Commissions and execution fees |
| 56.3 |
| — |
| 56.3 |
| |||
Interest income |
| 184.5 |
| — |
| 184.5 |
| |||
Other income |
| 24.7 |
| — |
| 24.7 |
| |||
|
|
|
|
|
|
|
| |||
Total revenues |
| 464.3 |
| — |
| 464.3 |
| |||
|
|
|
|
|
|
|
| |||
Interest expense |
| 133.5 |
| — |
| 133.5 |
| |||
|
|
|
|
|
|
|
| |||
Total net revenues |
| 330.8 |
| — |
| 330.8 |
| |||
|
|
|
|
|
|
|
| |||
Non-interest expenses: |
|
|
|
|
|
|
| |||
Execution and clearing |
| 90.2 |
| — |
| 90.2 |
| |||
Employee compensation and benefits |
| 32.8 |
| — |
| 32.8 |
| |||
Occupancy, depreciation and amortization |
| 6.0 |
| — |
| 6.0 |
| |||
Communications |
| 3.4 |
| — |
| 3.4 |
| |||
General and administrative(2) |
| 8.1 |
| 0.0 |
| 8.1 |
| |||
|
|
|
|
|
|
|
| |||
Total non-interest expenses |
| 140.5 |
| 0.0 |
| 140.5 |
| |||
|
|
|
|
|
|
|
| |||
Income before income tax |
| 190.3 |
| (0.0 | ) | 190.3 |
| |||
Income tax expense(3),(4) |
| 6.1 |
| 5.9 |
| 12.0 |
| |||
Less—Minority interest(5) |
| — |
| (165.9 | ) | (165.9 | ) | |||
|
|
|
|
|
|
|
| |||
Net income |
| $ | 184.2 |
| $ | (171.8 | ) | $ | 12.4 |
|
|
|
|
|
|
|
|
| |||
Earnings per share(6): |
|
|
|
|
|
|
| |||
Basic |
|
|
|
|
| $ | 0.31 |
| ||
Diluted |
|
|
|
|
| $ | 0.31 |
| ||
Weighted average common shares outstanding |
|
|
|
|
|
|
| |||
Basic |
|
|
|
|
| 40,000,100 |
| |||
Diluted |
|
|
|
|
| 401,244,371 |
| |||
|
|
|
|
|
|
|
| |||
See accompanying notes to unaudited pro forma condensed consolidated statements of income.
8
INTERACTIVE BROKERS GROUP INC AND SUBSIDIARIES
1Q06 PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
|
| Three Months Ended March 31, 2006 |
| |||||||
|
| Historical |
| Adjustments |
| Pro Forma(1) |
| |||
|
| (in millions except share and per share data) |
| |||||||
Statement of Income Data: |
|
|
|
|
|
|
| |||
Revenues: |
|
|
|
|
|
|
| |||
Trading gains |
| $ | 225.4 |
| $ | — |
| $ | 225.4 |
|
Commissions and execution fees |
| 39.4 |
| — |
| 39.4 |
| |||
Interest income |
| 132.1 |
| — |
| 132.1 |
| |||
Other income |
| 25.5 |
| — |
| 25.5 |
| |||
|
|
|
|
|
|
|
| |||
Total revenues |
| 422.4 |
| — |
| 422.4 |
| |||
|
|
|
|
|
|
|
| |||
Interest expense |
| 93.8 |
| — |
| 93.8 |
| |||
|
|
|
|
|
|
|
| |||
Total net revenues |
| 328.6 |
| — |
| 328.6 |
| |||
|
|
|
|
|
|
|
| |||
Non-interest expenses: |
|
|
|
|
|
|
| |||
Execution and clearing |
| 71.3 |
| — |
| 71.3 |
| |||
Employee compensation and benefits |
| 28.7 |
| — |
| 28.7 |
| |||
Occupancy, depreciation and amortization |
| 5.5 |
| — |
| 5.5 |
| |||
Communications |
| 2.7 |
| — |
| 2.7 |
| |||
General and administrative(2) |
| 5.0 |
| 0.0 |
| 5.0 |
| |||
|
|
|
|
|
|
|
| |||
Total non-interest expenses |
| 113.2 |
| 0.0 |
| 113.2 |
| |||
|
|
|
|
|
|
|
| |||
Income before income tax |
| 215.4 |
| (0.0 | ) | 215.4 |
| |||
Income tax expense(3),(4) |
| 9.2 |
| 6.8 |
| 16.0 |
| |||
Less—Minority interest(5) |
| — |
| (185.6 | ) | (185.6 | ) | |||
|
|
|
|
|
|
|
| |||
Net income |
| $ | 206.2 |
| $ | (192.4 | ) | $ | 13.8 |
|
|
|
|
|
|
|
|
| |||
Earnings per share(6): |
|
|
|
|
|
|
| |||
Basic |
|
|
|
|
| $ | 0.34 |
| ||
Diluted |
|
|
|
|
| $ | 0.34 |
| ||
|
|
|
|
|
|
|
| |||
Weighted average common shares outstanding |
|
|
|
|
|
|
| |||
Basic |
|
|
|
|
| 40,000,100 |
| |||
Diluted |
|
|
|
|
| 401,244,371 |
| |||
See accompanying notes to unaudited pro forma condensed consolidated statements of income.
9
INTERACTIVE BROKERS GROUP INC AND SUBSIDIARIES
NOTES ON PRO FORMA CONSOLIDATED STATEMENT OF INCOME
Represents adjustments to reflect the following:
(1) Pro forma earnings per share calculations includes the shares of Class A common stock that are to be issued upon investment of accumulated earnings on return on investment dollar units in connection with the recapitalization effected in connection with the IPO, but excludes the shares of Class A common stock that are issuable in the future pursuant to the post IPO equity incentive plan.
(2) Gives effect to Delaware franchise taxes that will be payable, estimated at $0.165 million annually.
(3) The $5.9 and $6.8 million income tax expense adjustments for the three months ended March 31, 2007 and 2006, respectively, represent the sum of the current income tax expense adjustment for these periods (referenced in this footnote 3) and the deferred income tax expense adjustment for this period (referenced in footnote 4 below). Additional current income tax expense on our 10.0% investment in IBG LLC would be $1.8 and $2.7 million, respectively, for the three months ended March 31, 2007 and 2006. In addition to increased currently payable income taxes, we will incur increased deferred income tax expense (see footnote 4).
(4) Additional deferred income tax expense of $4.1 million for each of the three month periods ended March 31, 2007 and 2006 is the result of the straight-line amortization of the deferred tax asset of $249.3 million arising from the acquisition of the 10.0% member interest in IBG LLC (see footnote 3 above) and will be amortized over 15 years.
(5) Gives effect to the 90.0% interest in IBG LLC that IBG Holdings LLC has after the IPO and the transactions consummation in connection with the IPO. The adjustments are equal to 90.0% of total net income for the three months ended March 31, 2007 and 2006, respectively.
(6) Basic pro forma earnings per share are calculated based on the estimated 40.0 million shares of Class A common stock and 100 shares of Class B common stock being outstanding. Diluted earnings per share are calculated based on an assumed purchase of all remaining IBG LLC membership interests held by IBG Holdings LLC and the issuance of a corresponding number of shares of Class A common stock, resulting in a total of 400.0 million shares deemed outstanding as of the beginning of each period. There is no impact on earnings per share for such purchase and issuance because 100% of net income before minority interest would be available to common stockholders as IBG Holdings LLC would no longer hold a minority interest, and the full difference between the book and tax basis of IBG LLC’s assets would also be available for reducing income tax expense. Therefore, the net income utilized to calculate diluted earnings per share would be $124.0 and $138.0 million, respectively, for the three months ended March 31, 2007 and 2006.
In addition, diluted weighted average common shares outstanding include 1.2 million shares of Class A common stock to be issued upon investment of accumulated earnings on return on investment dollar units in connection with the Recapitalization. Shares of Class A common stock to be issued in connection with the employee incentive plan have been excluded from diluted weighted average common shares outstanding because such shares are non-dilutive.
10
