INTERACTIVE BROKERS GROUP ANNOUNCES 1Q10 RESULTS
— — —
REPORTS INCOME BEFORE TAXES OF $65 MILLION ON $211 MILLION IN NET REVENUES, EARNINGS PER SHARE OF $0.09
GREENWICH, CONN, April 22, 2010 — Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) an automated global electronic market maker and broker, today reported diluted earnings per share of $0.09 for the quarter ended March 31, 2010, compared to diluted earnings per share of $0.30 for the same period in 2009.
Net revenues were $211 million and income before income taxes was $65 million for this quarter, compared to net revenues of $296 million and income before income taxes of $167 million for the same period in 2009.
Business Highlights
| · | 31% pre-tax profit margin for this quarter. |
| · | $4.9 billion in equity. |
| · | 21% increase in customer accounts and 74% increase in customer equity from the year-ago quarter. |
| · | Electronic Brokerage pre-tax income grew 42% from the year-ago quarter. |
| · | Cleared DARTs were 328,000 for this quarter. |
| · | 51% Electronic Brokerage pre-tax profit margin for this quarter. |
| · | 7% Market Making pre-tax profit margin for this quarter. |
“The past quarter was characterized by shrinking volatilities in the equity markets, which continued to impact our market-making results; while our global brokerage business is proceeding to grow along a very high trajectory that remains unparalleled in the industry,” said Thomas Peterffy, our CEO.
Segment Overview
Electronic Brokerage
Electronic Brokerage segment income before income taxes grew 42% in the quarter ended March 31, 2010 compared to the same period in 2009. This increase is attributable to higher commissions and higher net interest earned on customer balances. Commissions and execution fees grew by 9% and net interest income increased 98% from the same quarter last year. Customer accounts grew 21% to 140,000 and customer equity grew 74% to $16.7 billion. Cleared DARTs* were roughly even with the year-ago quarter at 328,000. Pre-tax profit margin increased from 42% to 51% for the quarter ended March 31, 2010 from the same period in 2009.
Market Making
Market Making segment income before income taxes was $5.5 million in the quarter ended March 31, 2010, an increase from the prior quarter but a decrease of 95% from the same period last year. Pre-tax profit margin was 7% in this quarter, down from 65% in the same period last year. Low actual volatility, relatively high implied volatility and narrow bid/offer spreads contributed to the decrease in market making profits this quarter. Market Making options contract volume decreased 13% compared to the same period last year, but increased 6% from the prior quarter.
* Daily average revenue trades (DARTs) are based on customer orders.
_____________________
Conference Call Information:
Interactive Brokers Group will hold a conference call with investors today, April 22, 2010, 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.”
PLEASE NOTE: This is half an hour earlier than our fourth quarter 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 market maker and broker specializing in routing orders and executing and processing trades in securities, futures and foreign exchange instruments on more than 80 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 Group continuously integrates its software with a growing number of exchanges and trading venues into one a utomatically 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 n ot 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: Deborah Liston, 203-618-4070.
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 |
| 2005 | 54,044 | | 34,800 | | 7,380 | | 96,224 | | 382 |
| 2006 | 66,043 | 22% | 51,238 | 47% | 12,828 | 74% | 130,109 | 35% | 518 |
| 2007 | 99,086 | 50% | 72,931 | 42% | 16,638 | 30% | 188,655 | 45% | 752 |
| 2008 | 101,672 | 3% | 120,195 | 65% | 16,966 | 2% | 238,833 | 27% | 944 |
| 2009 | 93,550 | -8% | 127,338 | 6% | 13,636 | -20% | 234,524 | -2% | 934 |
| | | | | | | | | | |
| 1Q2009 | 24,753 | | 31,797 | | 2,829 | | 59,379 | | 973 |
| 1Q2010 | 19,613 | -21% | 30,967 | -3% | 4,760 | 68% | 55,340 | -7% | 907 |
CONTRACT AND SHARE VOLUMES:
(in 000's, except %)
| TOTAL | Options | % | Futures* | % | Stocks | % |
| Period | (contracts) | Change | (contracts) | Change | (shares) | Change |
| 2005 | 409,794 | | 44,560 | | 21,925,120 | |
| 2006 | 563,623 | 38% | 62,419 | 40% | 34,493,410 | 57% |
| 2007 | 673,144 | 19% | 83,134 | 33% | 47,324,798 | 37% |
| 2008 | 757,732 | 13% | 108,984 | 31% | 55,845,428 | 18% |
| 2009 | 643,380 | -15% | 82,345 | -24% | 75,449,891 | 35% |
| | | | | | | |
| 1Q2009 | 164,382 | | 21,905 | | 15,453,272 | |
| 1Q2010 | 159,802 | -3% | 21,716 | -1% | 19,906,810 | 29% |
| | | | | | | |
| MARKET MAKING | Options | % | Futures* | % | Stocks | % |
| Period | (contracts) | Change | (contracts) | Change | (shares) | Change |
| 2005 | 308,613 | | 11,551 | | 15,625,801 | |
| 2006 | 371,929 | 21% | 14,818 | 28% | 21,180,377 | 36% |
| 2007 | 447,905 | 20% | 14,520 | -2% | 24,558,314 | 16% |
| 2008 ** | 514,629 | 15% | 21,544 | 48% | 26,008,433 | 6% |
| 2009 ** | 428,810 | -17% | 15,122 | -30% | 26,205,229 | 1% |
| | | | | | | |
| 1Q2009 ** | 118,176 | | 3,981 | | 6,990,407 | |
| 1Q2010 ** | 103,056 | -13% | 3,072 | -23% | 5,014,107 | -28% |
| | | | | | | |
| BROKERAGE TOTAL | Options | % | Futures* | % | Stocks | % |
| Period | (contracts) | Change | (contracts) | Change | (shares) | Change |
| 2005 | 101,181 | | 33,009 | | 6,299,319 | |
| 2006 | 191,694 | 89% | 47,601 | 44% | 13,313,033 | 111% |
| 2007 | 225,239 | 17% | 68,614 | 44% | 22,766,484 | 71% |
| 2008 | 243,103 | 8% | 87,440 | 27% | 29,836,995 | 31% |
| 2009 | 214,570 | -12% | 67,223 | -23% | 49,244,662 | 65% |
| | | | | | | |
| 1Q2009 | 46,206 | | 17,924 | | 8,462,865 | |
| 1Q2010 | 56,746 | 23% | 18,644 | 4% | 14,892,703 | 76% |
| * Includes options on futures |
| ** In Brazil, an equity option contract typically represents 1 share of the underlying stock; however, the typical minimum |
| trading quantity is 100 contracts. To make a fair comparison to volume at other exchanges, we have adopted a policy |
| of reporting Brazilian equity options contracts divided by their trading quantity of 100. |
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
OPERATING DATA, CONTINUED
| BROKERAGE CLEARED | Options | % | Futures* | % | Stocks | % |
| Period | (contracts) | Change | (contracts) | Change | (shares) | Change |
| 2005 | 23,456 | | 30,646 | | 5,690,308 | |
| 2006 | 32,384 | 38% | 45,351 | 48% | 12,492,870 | 120% |
| 2007 | 51,586 | 59% | 66,278 | 46% | 20,353,584 | 63% |
| 2008 | 77,207 | 50% | 85,599 | 29% | 26,334,752 | 29% |
| 2009 | 93,868 | 22% | 66,241 | -23% | 46,627,344 | 77% |
| | | | | | | |
| 1Q2009 | 20,475 | | 17,739 | | 7,833,682 | |
| 1Q2010 | 23,309 | 14% | 18,315 | 3% | 14,046,381 | 79% |
| | | | | | | |
| * Includes options on futures | | | | | |
| BROKERAGE STATISTICS | | | |
| (in 000's, except % and where noted) | | | |
| | 1Q2010 | 1Q2009 | % Change |
| Total Accounts | 140 | 116 | 21% |
| Customer Equity (in billions) * | $16.7 | $9.6 | 74% |
| | | | |
| Cleared DARTs | 328 | 330 | -1% |
| Total Customer DARTs | 364 | 358 | 2% |
| | | | |
| | | | |
| | | | |
| (in $'s, except DART per account) | | | |
| Commission per DART | $4.40 | $3.96 | 11% |
| DART per Avg. Account (Annualized) | 604 | 736 | -18% |
| Net Revenue per Avg. Account (Annualized) | $3,590 | $3,604 | 0% |
| | | | |
| * Excludes non-customers | | | |
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
SEGMENT FINANCIAL INFORMATION
(UNAUDITED)
| | | Three Months |
| | | Ended March 31, |
| | | 2010 | | 2009 |
| | | (in millions) |
| | | | | |
| Market Making | Net revenues | $82.8 | | $182.0 |
| | Non-interest expenses | 77.3 | | 63.8 |
| | | | | |
| | Income before income taxes | $5.5 | | $118.2 |
| | | | | |
| | Pre-tax profit margin | 7% | | 65% |
| | | | | |
| Electronic Brokerage | Net revenues | $127.2 | | $107.4 |
| | Non-interest expenses | 62.8 | | 61.9 |
| | | | | |
| | Income before income taxes | $64.4 | | $45.5 |
| | | | | |
| | Pre-tax profit margin | 51% | | 42% |
| | | | | |
| Corporate* | Net revenues | $0.6 | | $6.9 |
| | Non-interest expenses | 5.6 | | 3.7 |
| | | | | |
| | Income before income taxes | ($5.0) | | $3.2 |
| | | | | |
| | | | | |
| Total | Net revenues | $210.6 | | $296.3 |
| | Non-interest expenses | 145.7 | | 129.4 |
| | | | | |
| | Income before income taxes | $64.9 | | $166.9 |
| | | | | |
| | Pre-tax profit margin | 31% | | 56% |
| | | | | |
| | | | | |
| * Corporate includes corporate related activities as well as inter-segment eliminations. |
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
| | | | Three Months |
| | | | Ended March 31, |
| | | | 2010 | | 2009 |
| | | | (in millions, except share and per share data) |
| | | | | | |
| Revenues: | | | |
| | Trading gains | $80.6 | | $180.5 |
| | Commissions and execution fees | 91.7 | | 84.3 |
| | Interest income | 36.6 | | 26.3 |
| | Other income | 16.8 | | 21.4 |
| | | | | | |
| | | Total revenues | 225.7 | | 312.5 |
| | | | | | |
| | Interest expense | 15.1 | | 16.2 |
| | | | | | |
| | | Total net revenues | 210.6 | | 296.3 |
| | | | | | |
| Non-interest expenses: | | | |
| | Execution and clearing | 69.7 | | 61.1 |
| | Employee compensation and benefits | 50.5 | | 42.8 |
| | Occupancy, depreciation and amortization | 9.2 | | 9.6 |
| | Communications | 5.4 | | 5.0 |
| | General and administrative | 10.9 | | 10.9 |
| | | | | | |
| | | Total non-interest expenses | 145.7 | | 129.4 |
| | | | | | |
| Income before income taxes | 64.9 | | 166.9 |
| | | | | | |
| Income tax expense | 5.2 | | 11.8 |
| | | | | | |
| Net income | 59.7 | | 155.1 |
| | | | | | |
| Net income attributable to non-controlling interests | 55.8 | | 142.5 |
| | | | | | |
| Net income available for common shareholders | $3.9 | | $12.6 |
| | | | | | |
| | | | | | |
| Earnings per share: | | | |
| | Basic | $0.09 | | $0.31 |
| | Diluted | $0.09 | | $0.30 |
| | | | | | |
| Weighted average common shares outstanding: | | | |
| | Basic | 41,216,879 | | 40,536,715 |
| | Diluted | 41,966,053 | | 41,484,537 |
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| | | March 31, | | December 31, |
| | | 2010 | | 2009 |
| | | (in millions) |
| Assets | | | |
| Cash and cash equivalents | $850.2 | | $806.6 |
| Cash and securities - segregated for regulatory purposes | 6,812.9 | | 6,728.9 |
| Securities purchased under agreements to resell | 449.2 | | 413.0 |
| Securities borrowed | 6,268.3 | | 5,063.0 |
| Trading assets, at fair value | 9,347.7 | | 9,344.0 |
| Receivables from customers, net of allowance | 4,429.6 | | 3,239.6 |
| Receivables from brokers, dealers and clearing organizations | 685.9 | | 493.1 |
| Other assets | 518.4 | | 517.4 |
| | | | | |
| | Total assets | $29,362.2 | | $26,605.6 |
| | | | | |
| | | | | |
| Liabilities and equity | | | |
| | | | | |
| Liabilities | | | |
| Trading liabilities - financial instruments sold but not yet purchased, at fair value | $9,627.9 | | $8,763.2 |
| Securities loaned | 1,360.7 | | 1,133.7 |
| Short-term borrowings | 406.0 | | 320.8 |
| Other payables: | | | |
| | Customers | 12,031.2 | | 10,587.7 |
| | Brokers, dealers and clearing organizations | 286.4 | | 164.5 |
| | Other payables | 549.2 | | 552.8 |
| | | 12,866.8 | | 11,305.0 |
| | | | | |
| Senior notes payable and senior secured credit facility | 218.2 | | 205.8 |
| | | | | |
| Equity | | | |
| Stockholders' equity | 577.5 | | 574.9 |
| Non-controlling interests | 4,305.1 | | 4,302.2 |
| | Total equity | 4,882.6 | | 4,877.1 |
| | | | | |
| | Total liabilities and equity | $29,362.2 | | $26,605.6 |
| | | | | |
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