INTERACTIVE BROKERS : ANNOUNCES 3Q2021 RESULTS - Form 8-K

INTERACTIVE BROKERS GROUP ANNOUNCES 3Q2021 RESULTS

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DILUTED EARNINGS PER SHARE OF $0.43, ADJUSTED DILUTED EARNINGS PER SHARE¹ OF $0.78.

PRETAX INCOME OF $234 MILLION ON $464 MILLION IN NET REVENUES.

ADJUSTED PRETAX INCOME OF $420 MILLION ON $650 MILLION IN ADJUSTED NET REVENUES¹.

DECLARES QUARTERLY DIVIDEND OF $0.10 PER SHARE.

GREENWICH, CONN, October 19, 2021 - Interactive Brokers Group, Inc. (Nasdaq: IBKR), an automated global electronic broker, reported diluted earnings per share of $0.43 for the quarter ended September 30, 2021 compared to $0.58 for the same period in 2020, and adjusted diluted earnings per share of $0.78 for this quarter compared to $0.53 for the year-ago quarter.

Net revenues were $464 million and income before income taxes was $234 million for this quarter, compared to net revenues of $548 million and income before income taxes of $334 million for the same period in 2020. Adjusted net revenues were $650 million and adjusted income before income taxes was $420 million for this quarter, compared to adjusted net revenues of $518 million and adjusted income before income taxes of $304 million for the same period in 2020.

Financial Highlights

•	Commission revenue increased $32 million, or 11%, from the year-ago quarter on higher customer stock and options trading volumes.

•	Net interest income increased $79 million, or 41%, from the year-ago quarter on higher margin loan balances and strong securities lending activity.

•

Other income decreased $199 million from the year-ago quarter. This decrease was mainly comprised of (1) $191 million related to our strategic investment in Up Fintech Holding Limited ("Tiger Brokers"), which decreased to a $185 million mark-to-market loss this quarter from a $6 million mark-to-market gain in the same period in 2020; and (2) $30 million related to our currency diversification strategy, which lost $3 million this quarter compared to a gain of $27 million in the same period in 2020; partially offset by (3) the non-recurrence of a $13 million impairment loss on our investment in OneChicago Exchange recognized in the year-ago quarter.

•	50% pretax profit margin for this quarter, down from 61% in the year-ago quarter. 65% adjusted pretax profit margin for this quarter, up from 59% in the year-ago quarter.

•	Total equity of $10.0 billion.

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, 2021 to shareholders of record as of December 1, 2021.

¹ See the reconciliation of non-GAAP financial measures starting on page 9.

1

Business Highlights

•	Customer accounts increased 57% from the year-ago quarter to 1.54 million.

•	Customer equity grew 52% from the year-ago quarter to $353.8 billion.

•	Total DARTs2 increased 24% from the year-ago quarter to 2.26 million.

•	Cleared DARTs increased 24% from the year-ago quarter to 2.02 million.

•	Customer credits increased 22% from the year-ago quarter to $86.2 billion.

•	Customer margin loans increased 67% from the year-ago quarter to $50.2 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 $43 million, as the U.S. dollar value of the GLOBAL decreased by approximately 0.41%. The effects of the currency diversification strategy are reported as components of (1) Other Income (loss of $3 million) and (2) Other Comprehensive Income (loss of $40 million).

Conference Call Information:

Interactive Brokers Group, Inc. will hold a conference call with investors today, October 19, 2021, 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.

For Interactive Brokers Group, Inc. Investors: Nancy Stuebe, [e-mail] or Media: Rob Garfield, [e-mail].

²Daily average revenue trades (DARTs) are based on customer orders.

2

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

				Three Months		Nine Months
				Ended September 30,		Ended September 30,
				2021		2020		2021		2020
				(in millions, except share and per share data)
Revenues:
	Commissions		$	311		$	279		$	1,030		$	824
	Other fees and services			49			45			160			123
	Other income (loss)			(170)			29			68			25
		Total non-interest income			190			353			1,258			972
	Interest income			325			240			1,022			853
	Interest expense			(51)			(45)			(169)			(206)
		Total net interest income			274			195			853			647
		Total net revenues			464			548			2,111			1,619
Non-interest expenses:
	Execution, clearing and distribution fees	61			74			183			227
	Employee compensation and benefits			98			77			291			239
	Occupancy, depreciation and amortization	19			17			58			51
	Communications			8			6			24			19
	General and administrative			44			37			138			206
	Customer bad debt			-			3			3			13
		Total non-interest expenses			230			214			697			755
Income before income taxes			234			334			1,414			864
Income tax expense			28			32			116			65
Net income			206			302			1,298			799
Net income attributable to noncontrolling interests		164			256			1,057			675
Net income available for common stockholders	$	42		$	46		$	241		$	124
Earnings per share:
	Basic		$	0.44		$	0.59		$	2.60		$	1.60
	Diluted		$	0.43		$	0.58		$	2.58		$	1.58
Weighted average common shares outstanding:
	Basic			96,229,958			78,509,625			92,814,767			77,543,008
	Diluted			96,989,968			79,120,548			93,671,689			78,243,699

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INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

				Three Months		Nine Months
				Ended September 30,		Ended September 30,
				2021		2020		2021		2020
					(in millions, except share and per share data)
Comprehensive income:
	Net income available for common stockholders		$	42		$	46		$	241		$	124
	Other comprehensive income:
		Cumulative translation adjustment, before income taxes	(9)			8			(21)			5
		Income taxes related to items of other comprehensive income		-			-			-			-
	Other comprehensive income (loss), net of tax			(9)			8			(21)			5
Comprehensive income available for common stockholders	$	33		$	54		$	220		$	129
Comprehensive earnings per share:
	Basic		$	0.34		$	0.69		$	2.37		$	1.67
	Diluted		$	0.34		$	0.69		$	2.35		$	1.65
Weighted average common shares outstanding:
	Basic			96,229,958			78,509,625			92,814,767			77,543,008
	Diluted			96,989,968			79,120,548			93,671,689			78,243,699
Comprehensive income attributable to noncontrolling interests:
	Net income attributable to noncontrolling interests		$	164		$	256		$	1,057		$	675
	Other comprehensive income - cumulative translation adjustment		(31)			37			(74)			24
Comprehensive income attributable to noncontrolling interests	$	133		$	293		$	983		$	699

4

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(UNAUDITED)

					September 30, 2021		December 31, 2020
					(in millions)
Assets
Cash and cash equivalents				$	2,838		$	4,292
Cash - segregated for regulatory purposes				23,125			15,903
Securities - segregated for regulatory purposes				14,400			27,821
Securities borrowed					3,811			4,956
Securities purchased under agreements to resell				6,108			792
Financial instruments owned, at fair value				659			630
Receivables from customers, net of allowance for credit losses		50,503			39,333
Receivables from brokers, dealers and clearing organizations		4,038			1,254
Other assets					800			698
	Total assets				$	106,282		$	95,679
Liabilities and equity
Liabilities
Short-term borrowings				$	28		$	118
Securities loaned					10,535			9,838
Financial instruments sold but not yet purchased, at fair value		233			153
Other payables:
	Customers					84,087			75,882
	Brokers, dealers and clearing organizations				781			182
	Other payables					607			503
						85,475			76,567
	Total liabilities					96,271			86,676
Equity
Stockholders' equity					2,331			1,951
Noncontrolling interests					7,680			7,052
	Total equity					10,011			9,003
	Total liabilities and equity				$	106,282		$	95,679
		September 30, 2021		December 31, 2020
Ownership of IBG LLC Membership Interests	Interests		%		Interests			%
IBG, Inc.	98,175,951		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	418,056,443		100.0%		416,740,478			100.0%

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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
2018		328,099				21,880				18,663				368,642				1,478
2019		302,289		(8%)		26,346		20%		17,136		(8%)		345,771		(6%)		1,380
2020		620,405		105%		56,834		116%		27,039		58%		704,278		104%		2,795
3Q2020		160,015				14,701				7,453				182,169				2,846
3Q2021		193,218		21%		18,106		23%		8,228		10%		219,552		21%		3,431
2Q2021		196,659				16,130				7,975				220,764				3,504
3Q2021		193,218		(2%)		18,106		12%		8,228		3%		219,552		(1%)		3,431

CONTRACT AND SHARE VOLUMES:

(in 000's, except %)

TOTAL

		Options		%		Futures1		%		Stocks		%
Period		(contracts)		Change		(contracts)		Change		(shares)		Change
2018		408,406				151,762				210,257,186
2019		390,739		(4%)		128,770		(15%)		176,752,967		(16%)
2020		624,035		60%		167,078		30%		338,513,068		92%
3Q2020		163,972				39,186				87,514,614
3Q2021		214,988		31%		36,940		(6%)		172,828,874		97%
2Q2021		196,715				35,061				172,099,915
3Q2021		214,988		9%		36,940		5%		172,828,874		0%

ALL CUSTOMERS

		Options		%		Futures1		%		Stocks		%
Period		(contracts)		Change		(contracts)		Change		(shares)		Change
2018		358,852				148,485				198,909,375
2019		349,287		(3%)		126,363		(15%)		167,826,490		(16%)
2020		584,195		67%		164,555		30%		331,263,604		97%
3Q2020		153,612				38,685				85,893,357
3Q2021		205,797		34%		36,473		(6%)		172,082,316		100%
2Q2021		189,073				34,635				171,417,373
3Q2021		205,797		9%		36,473		5%		172,082,316		0%

CLEARED CUSTOMERS

		Options		%		Futures1		%		Stocks		%
Period		(contracts)		Change		(contracts)		Change		(shares)		Change
2018		313,795				146,806				194,012,882
2019		302,068		(4%)		125,225		(15%)		163,030,500		(16%)
2020		518,965		72%		163,101		30%		320,376,365		97%
3Q2020		137,660				38,405				83,246,086
3Q2021		186,656		36%		36,245		(6%)		169,002,045		103%
2Q2021		170,902				34,355				168,601,027
3Q2021		186,656		9%		36,245		6%		169,002,045		0%

1	Includes options on futures.

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INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

OPERATING DATA, CONTINUED

PRINCIPAL TRANSACTIONS

		Options		%		Futures1		%		Stocks		%
Period		(contracts)		Change		(contracts)		Change		(shares)		Change
2018		49,554				3,277				11,347,811
2019		41,452		(16%)		2,407		(27%)		8,926,477		(21%)
2020		39,840		(4%)		2,523		5%		7,249,464		(19%)
3Q2020		10,360				501				1,621,257
3Q2021		9,191		(11%)		467		(7%)		746,558		(54%)
2Q2021		7,642				426				682,542
3Q2021		9,191		20%		467		10%		746,558		9%

1	Includes options on futures.

CUSTOMER STATISTICS

Year over Year

		3Q2021			3Q2020		% Change
Total Accounts (in thousands)		1,536			981		57%
Customer Equity (in billions)1	$	353.8		$	232.7		52%
Cleared DARTs (in thousands)		2,017			1,629		24%
Total Customer DARTs (in thousands)		2,263			1,832		24%
Cleared Customers
Commission per Cleared Commissionable Order2	$	2.46		$	2.69		(9%)
Cleared Avg. DARTs per Account (Annualized)		343			442		(22%)
Consecutive Quarters		3Q2021			2Q2021		% Change
Total Accounts (in thousands)		1,536			1,414		9%
Customer Equity (in billions)1	$	353.8		$	363.5		(3%)
Cleared DARTs (in thousands)		2,017			2,082		(3%)
Total Customer DARTs (in thousands)		2,263			2,304		(2%)
Cleared Customers
Commission per Cleared Commissionable Order2	$	2.46		$	2.38		3%
Cleared Avg. DARTs per Account (Annualized)		343			382		(10%)

1	Excludes non-customers.
2	Commissionable Order - a customer order that generates commissions.

7

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

NET INTEREST MARGIN

(UNAUDITED)

				Three Months		Nine Months
				Ended September 30,		Ended September 30,
				2021		2020		2021		2020
				(in millions)
Average interest-earning assets
	Segregated cash and securities		$	37,239		$	43,589		$	41,212		$	41,283
	Customer margin loans			46,636			28,490			43,611			27,052
	Securities borrowed			3,567			4,477			3,836			4,448
	Other interest-earning assets			7,426			5,075			6,751			5,288
	FDIC sweeps1			2,707			2,982			2,758			2,864
				$	97,575		$	84,613		$	98,168		$	80,935
Average interest-bearing liabilities
	Customer credit balances		$	78,625		$	68,867		$	78,063		$	65,716
	Securities loaned			10,489			5,756			10,891			5,304
	Other interest-bearing liabilities			-			251			145			313
				$	89,114		$	74,874		$	89,099		$	71,333
Net interest income
	Segregated cash and securities, net		$	(4)		$	14		$	(4)		$	159
	Customer margin loans2			141			83			386			287
	Securities borrowed and loaned, net			123			86			434			228
	Customer credit balances, net2			8			8			25			(55)
	Other net interest income1/3			9			10			25			47
		Net interest income3		$	277		$	201		$	866		$	666
Net interest margin ("NIM")			1.13%			0.94%			1.18%			1.10%
Annualized yields
	Segregated cash and securities			-0.04%			0.13%			-0.01%			0.51%
	Customer margin loans			1.20%			1.16%			1.18%			1.41%
	Customer credit balances			-0.04%			-0.05%			-0.04%			0.11%

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 nine months ended September 30, 2021 and 2020, $2 million, $6 million, $14 million, and $14 million were reported in other fees and services, respectively. For the three and nine months ended September 30, 2021 and 2020, $0 million, $0 million, -$1 million, and $5 million were reported in other income, respectively.

8

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(UNAUDITED)

			Three Months		Nine Months
			Ended September 30,		Ended September 30,
			2021		2020		2021		2020
			(in millions)
Adjusted net revenues1
Net revenues - GAAP		$	464		$	548		$	2,111		$	1,619
Non-GAAP adjustments
	Currency diversification strategy, net			3			(27)			14			6
	Mark-to-market on investments2			184			(3)			(28)			(3)
	Remeasurement of TRA liability3			(1)			-			(1)			-
Total non-GAAP adjustments			186			(30)			(15)			3
Adjusted net revenues		$	650		$	518		$	2,096		$	1,622
Adjusted income before income taxes1
Income before income taxes - GAAP		$	234		$	334		$	1,414		$	864
Non-GAAP adjustments
	Currency diversification strategy, net			3			(27)			14			6
	Mark-to-market on investments2			184			(3)			(28)			(3)
	Remeasurement of TRA liability3			(1)			-			(1)			-
	Customer compensation expense4			-			-			-			103
	Bad debt expense5			-			-			-			1
Total non-GAAP adjustments			186			(30)			(15)			107
Adjusted income before income taxes		$	420		$	304		$	1,399		$	971
Adjusted pre-tax profit margin			65%			59%			67%			60%

9

			Three Months		Nine Months
			Ended September 30,		Ended September 30,
			2021		2020		2021		2020
			(in millions)
Adjusted net income available for common stockholders1
Net income available for common stockholders - GAAP	$	42		$	46		$	241		$	124
Non-GAAP adjustments
	Currency diversification strategy, net			1			(5)			3			1
	Mark-to-market on investments2			43			(1)			(6)			(1)
	Remeasurement of TRA liability3			(1)			-			(1)			-
	Customer compensation expense4			-			-			-			19
	Bad debt expense5			-			-			-			0
	Income tax effect of above adjustments6			(10)			1			1			(4)
	Remeasurement of deferred income taxes7			1			-			1			-
Total non-GAAP adjustments			33			(4)			(2)			16
Adjusted net income available for common stockholders	$	75		$	42		$	239		$	140

Note: Amounts may not add due to rounding.

			Three Months		Nine Months
			Ended September 30,		Ended September 30,
			2021		2020		2021		2020
			(in dollars)
Adjusted diluted EPS1
Diluted EPS - GAAP		$	0.43		$	0.58		$	2.58		$	1.58
Non-GAAP adjustments
	Currency diversification strategy, net			0.01			(0.06)			0.03			0.02
	Mark-to-market on investments2			0.44			(0.01)			(0.06)			(0.01)
	Remeasurement of TRA liability3			(0.01)			0.00			(0.01)			0.00
	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			(0.10)			0.02			0.01			(0.05)
	Remeasurement of deferred income taxes7			0.01			0.00			0.01			0.00
Total non-GAAP adjustments			0.34			(0.05)			(0.02)			0.20
Adjusted diluted EPS		$	0.78		$	0.53		$	2.55		$	1.79
Diluted weighted average common shares outstanding	96,989,968			79,120,548			93,671,689			78,243,699

Note: Amounts may not add due to rounding.

10

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 GLOBAL 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 GLOBAL 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 GLOBAL 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 GLOBAL 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 nine months ended September 30, 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.

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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.

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