Reports Comprehensive Earnings Per Share of
($0.24), Loss Before Taxes of $111 Million on $172 Million in Net
Revenues, and Earnings Per Share on Net Loss of ($0.22). 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 ($0.24) for the
quarter ended March 31, 2015, compared to diluted earnings per
share on a comprehensive basis of $0.35 for the same period in
2014.
Excluding other comprehensive income, the Company reported
diluted earnings per share of ($0.22) for the quarter ended March
31, 2015, compared to diluted earnings per share of $0.34 for the
same period in 2014.
The results for the first quarter of 2015 were negatively
impacted by a $121 million net loss due to the sudden move in the
value of the Swiss franc, causing several of our customers who held
currency futures and spot positions to suffer losses in excess of
their deposits with us; and a $197 million loss on our currency
diversification strategy due to the strengthening of the U.S.
dollar against other major currencies.
Net revenues were $172 million and the loss before income taxes
was $111 million this quarter, compared to net revenues of $355
million and income before income taxes of $218 million for the same
period 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 June 12, 2015 to shareholders of record as of June 1,
2015.
Business Highlights
- 18% Electronic Brokerage pretax profit
margin for this quarter, or 63% excluding the negative impact of
the sudden move in the value of the Swiss franc.
- 40% Market Making pretax profit margin
for this quarter, down from 59% in the year-ago quarter.
- Customer equity grew 25% from the
year-ago quarter to $61.2 billion and customer debits increased by
20% to $17.3 billion.
- Customer accounts increased 17% from
the year-ago quarter to 296 thousand.
- Total DARTs increased 11% from year-ago
quarter to 648 thousand.
- Brokerage segment equity was $3.1
billion. Total equity was $5.0 billion.
Segment Overview
Electronic Brokerage
Electronic Brokerage segment income before income taxes
decreased 62%, to $51 million, in the quarter ended March 31, 2015
compared to the same period last year, due to unsecured customer
losses caused by the sudden move in the value of the Swiss franc as
further described below. Excluding the impact of this unusual item
segment income before taxes grew 27% to a record $172 million as
compared to the year-ago quarter. Customer accounts grew 17% to 296
thousand and customer equity increased 25% to $61.2 billion from
the year-ago quarter.
Commissions and execution fees increased 9%. Net interest income
grew 35% from the year-ago quarter, to $89 million. Pretax profit
margin was 18% in quarter ended March 31, 2015, down from 60% in
same period last year. Excluding $121 million in net losses related
to the unusual item, pretax profit margin was 63% in the current
quarter.
Total DARTs(1), for cleared and execution-only customers,
increased 11% to a record 648 thousand from the year-ago quarter.
Cleared DARTs were 590 thousand, 12% higher than the same period
last year.
Market Making
Market Making segment income before income taxes decreased 59%,
to $27 million, in the quarter ended March 31, 2015. This decrease
was driven by a market making environment with persistent low
volatility and intensive competition. Pretax profit margin
decreased to 40% in the current quarter from 59% in same period
last year. Market Making options contract volume decreased 7%
compared to the year-ago quarter.
Sudden Move in the Value of the Swiss Franc
As disclosed in our Annual Report on Form 10-K for the year
ended December 31, 2014, on January 15, 2015, due to the sudden
move in the value of the Swiss franc that followed an unprecedented
action by the Swiss National Bank, 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 the first quarter of 2015, we incurred losses, net of
hedging activity, of $121 million. We are actively pursuing
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 this quarter, our currency
diversification strategy decreased our comprehensive earnings by
$197 million, as the U.S. dollar value of the GLOBAL decreased by
approximately 3.8%. The effects of the currency diversification
strategy are reported as components of (1) Other Income in the
Corporate segment (described below) and (2) Other Comprehensive
Income (“OCI”).
Presentation of Foreign Currency Effects
In the fourth quarter of 2014, we took several steps to improve
the transparency of our currency strategy, as a result of which
nearly all currency translation gains and losses related to the
GLOBAL are reported as Other Income instead of Trading Gains and
these gains and losses are reported in the Corporate segment
instead of the Market Making segment.
These actions isolate the income statement effects of our
currency diversification in the Corporate segment, thereby leaving
a clearer picture of the core operating results in the Market
Making segment. The new reporting method is also reflected in the
comparative historical periods contained in our financial
statements.
(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, April 21, 2015, 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 2012
60,421 150,000 16,118 226,540 904 2013 65,320 8% 173,849 16% 18,489
15% 257,658 14% 1,029 2014 64,530 -1% 206,759 19% 18,055 -2%
289,344 12% 1,155 1Q2014 15,643 50,727 4,862 71,232 1,168
1Q2015 15,404 -2% 58,208 15% 4,581 -6% 78,193 10% 1,282
4Q2014 16,126 57,773 4,621 78,520 1,246 1Q2015 15,404 -4% 58,208 1%
4,581 -1% 78,193 0% 1,282
CONTRACT AND SHARE
VOLUMES: (in 000's, except %) TOTAL
Options % Futures* % Stocks
% Period (contracts)
Change (contracts)
Change (shares)
Change 2012 698,140 98,801 65,872,960 2013
659,673 -6% 121,776 23% 95,479,739 45% 2014 631,265 -4% 123,048 1%
153,613,174 61% 1Q2014 161,578 30,661 44,707,956 1Q2015
154,289 -5% 33,612 10% 35,336,325 -21% 4Q2014 173,284 34,259
36,973,639 1Q2015 154,289 -11% 33,612 -2% 35,336,325 -4%
MARKET MAKING Options % Futures*
% Stocks % Period
(contracts) Change
(contracts) Change
(shares) Change 2012
457,384 12,660 9,339,465 2013 404,490 -12% 18,184 44% 12,849,729
38% 2014 344,741 -15% 15,668 -14% 12,025,822 -6% 1Q2014
89,079 4,575 2,958,853 1Q2015 83,013 -7% 3,408 -26% 2,969,719 0%
4Q2014 95,625 3,462 3,093,170 1Q2015 83,013 -13% 3,408 -2%
2,969,719 -4%
BROKERAGE TOTAL Options
% Futures* % Stocks %
Period (contracts)
Change (contracts)
Change (shares)
Change 2012 240,756 86,141 56,533,495 2013
255,183 6% 103,592 20% 82,630,010 46% 2014 286,524 12% 107,380 4%
141,587,352 71% 1Q2014 72,499 26,086 41,749,103 1Q2015
71,276 -2% 30,204 16% 32,366,606 -22% 4Q2014 77,659 30,797
33,880,469 1Q2015 71,276 -8% 30,204 -2% 32,366,606 -4% *
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 2012
144,539 84,794 54,371,351 2013 180,660 25% 101,732 20% 78,829,785
45% 2014 225,662 25% 106,074 4% 137,153,132 74% 1Q2014
54,367 25,694 40,576,558 1Q2015 58,537 8% 29,824 16% 31,418,644
-23% 4Q2014 63,739 30,559 32,720,100 1Q2015 58,537 -8%
29,824 -2% 31,418,644 -4% * Includes options on futures
BROKERAGE
STATISTICS (in 000's, except % and where noted)
1Q2015 1Q2014 %
Change Year over Year Total Accounts 296 252 17%
Customer Equity (in billions)* $61.2 $49.0 25% Cleared DARTs
590 527 12% Total Customer DARTs 648 582 11%
Cleared
Customers (in $'s, except DART per account) Commission per DART
$4.05 $4.14 -2% DART per Avg. Account (Annualized) 513 539 -5% Net
Revenue per Avg. Account (Annualized) $4,079 $3,661 11%
Consecutive Quarters 1Q2015
4Q2014 % Change Total
Accounts 296 281 5% Customer Equity (in billions)* $61.2 $56.7 8%
Cleared DARTs 590 564 5% Total Customer DARTs 648 619 5%
Cleared Customers (in $'s, except DART per account)
Commission per DART $4.05 $4.28 -5% DART per Avg. Account
(Annualized) 513 511 0% Net Revenue per Avg. Account (Annualized)
$4,079 $3,700 10% * Excludes non-customers.
INTERACTIVE BROKERS GROUP, INC. AND
SUBSIDIARIES
SEGMENT FINANCIAL INFORMATION
(UNAUDITED)
Three Months Ended March 31,
2015
2014
(in millions) Electronic Brokerage Net
revenues(1) $290 $224 Non-interest expenses
239
89 Income before income taxes
$51 $135 Pre-tax
profit margin 18 % 60 %
Market Making Net revenues(1)
$67 $111 Non-interest expenses
40
45 Income before income taxes
$27 $66 Pre-tax
profit margin 40 % 59 %
Corporate(2) Net
revenues(1) ($185 ) $20 Non-interest expenses
4
3 Income (loss) before income taxes
($189 ) $17
Total Net revenues(1) $172 $355 Non-interest expenses
283 137 Income
(loss) before income taxes
($111 )
$218 Pre-tax profit margin -65 % 61 %
(1)
To provide meaningful comparisons, all
prior period amounts have been revised for changes in the
presentation of currency translation classifications.
(2)
Corporate includes corporate related
activities as well as inter-segment eliminations.
INTERACTIVE BROKERS GROUP, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME
(UNAUDITED)
Three Months Ended March 31, 2015
2014 (in millions, except share and per share
data) Revenues: Trading gains (1) $62 $105
Commissions and execution fees 149 137 Interest income (1) 108 87
Other income (loss) (1)
(132 )
40 Total revenues 187 369 Interest
expense
15 14 Total net
revenues 172 355
Non-interest expenses: Execution and clearing 55 54 Employee
compensation and benefits 57 54 Occupancy, depreciation and
amortization 10 10 Communications 6 6 General and administrative
155 13 Total
non-interest expenses 283 137
Income (loss) before income taxes (111 ) 218
Income tax expense
(2 ) 17
Net income (loss) (109 ) 201 Net income (loss)
attributable to noncontrolling interests
(96
) 182 Net income (loss)
available for common stockholders ($13
) $19 Earnings (loss)
per share : Basic
($0.22 )
$0.35 Diluted
($0.22 )
$0.34 Weighted average common shares
outstanding: Basic 58,473,348 54,664,225 Diluted 58,473,348
56,041,282
Comprehensive income: Net income (loss)
available for common stockholders ($13 ) $19 Other comprehensive
income: Cumulative translation adjustment, before income taxes (1 )
0 Income taxes related to items of other comprehensive income
0 0 Other comprehensive income
(loss), net of tax
(1 ) 0
Comprehensive income (loss) available for common
stockholders ($14 ) $19
Comprehensive income attributable to noncontrolling
interests: Net income (loss) attributable to noncontrolling
interests ($96 ) $182 Other comprehensive income (loss) -
cumulative translation adjustment
(9 )
3 Comprehensive income (loss) attributable to
noncontrolling interests ($105 )
$185
(1)
To provide meaningful comparisons, all
prior period amounts have been revised for changes in the
presentation of currency translation classifications.
INTERACTIVE BROKERS GROUP, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
March 31,2015
December 31,2014
(in millions) Assets Cash and cash equivalents
$ 990 $ 1,269 Cash and securities - segregated for regulatory
purposes 16,723 15,404 Securities borrowed 2,925 3,660 Securities
purchased under agreements to resell 167 386 Trading assets, at
fair value 3,473 3,934 Receivables from customers, net of allowance
17,437 17,051 Receivables from brokers, dealers and clearing
organizations 1,015 1,131 Other assets 564 550
Total assets $ 43,294 $ 43,385
Liabilities and
equity Liabilities Short-term borrowings $ 29 $
34 Securities loaned 3,105 3,199 Trading liabilities - financial
instruments sold but not yet purchased, at fair value 2,238 2,561
Other payables: Customers 32,225 31,796 Brokers, dealers and
clearing organizations 291 234 Other payables 368 376
32,884 32,406
Equity Stockholders'
equity 748 766 Noncontrolling interests 4,290 4,419
Total equity 5,038 5,185
Total liabilities
and equity $ 43,294 $ 43,385
March 31,
2015 December 31, 2014 Ownership of IBG LLC
Membership Interests Interests
% Interests
% Public (IBG, Inc.) 58,478,751 14.5%
58,473,186 14.5% Noncontrolling interests (IBG Holdings LLC)
346,062,282 85.5% 346,062,282 85.5% Total IBG LLC membership
interests 404,541,033 100.0% 404,535,468 100.0%
INTERACTIVE BROKERS GROUP, INC. AND
SUBSIDIARIES
EARNINGS PER SHARE ON COMPREHENSIVE
INCOME
(UNAUDITED)
Three Months Ended March 31, 2015
2014 (in millions, except share and per share
data) Comprehensive income (loss) available for
common stockholders, net of tax ($14)
$19 Comprehensive income (loss) per
share: Basic
($0.24) $0.36 Diluted
($0.24) $0.35 Weighted
average common shares outstanding: Basic 58,473,348 54,664,225
Diluted 58,473,348 56,041,282
For Interactive Brokers Group,
Inc.Media:Caitlin Duffy,
203-913-1369orInvestors:Patrick Brennan,
203-618-4070
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