Reports Comprehensive Earnings Per Share of
$0.36, Income before Taxes of $213 Million on $369 Million in Net
Revenues, and Earnings Per Share on Net Income of $0.40
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 $0.36 for the
quarter ended June 30, 2016, compared to diluted earnings per share
on a comprehensive basis of $0.44 for the same period in 2015.
Excluding other comprehensive income, the Company reported
diluted earnings per share of $0.40 for the quarter ended June 30,
2016, compared to diluted earnings per share of $0.37 for same
period in 2015.
Net revenues were $369 million and income before income taxes
was $213 million this quarter, compared to net revenues of $387
million and income before income taxes of $240 million for the same
period in 2015.
The results for the quarter were positively impacted by strong
growth in net interest income, which increased 17% from the same
period in 2015.
In addition, the results for the quarter include a $2 million
loss on our currency diversification strategy due to the
strengthening of the U.S. dollar against other major currencies,
compared to a $53 million gain 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 September 14, 2016 to shareholders of record as of
September 1, 2016.
Business Highlights
- 62% Electronic Brokerage pretax profit
margin for this quarter, down from 65% in the year-ago
quarter.
- 12% Market Making pretax profit margin
for this quarter, down from 42% in the year-ago quarter.
- Customer equity grew 12% from the
year-ago quarter to $73.7 billion while customer debits decreased
by 21% to $15.0 billion.
- Customer accounts increased 15% from
the year-ago quarter to 357 thousand.
- Total DARTs increased 5% from the
year-ago quarter to 648 thousand.
- Brokerage segment equity was $3.8
billion. Total equity was $5.7 billion.
Segment Overview
Electronic Brokerage
Electronic Brokerage segment income before income taxes
increased 2%, to $191 million in the quarter ended June 30, 2016,
compared to the same period last year. Net revenues increased 8% to
$310 million on higher net interest income and marked-to-market
gains on our U.S. government securities portfolio.
Net interest income increased 11% from the year-ago quarter and
other income grew 56% over the same period driven higher by
marked-to-market gains on investments of customer funds. Commission
and execution fees decreased 3% from the year-ago quarter driven by
lower customer option contracts and stock shares volume, which
decreased 8% and 40%, respectively, from the same period last year.
Pretax profit margin was 62% in the quarter ended June 30, 2016,
down from 65% in the same period last year.
Customer accounts grew 15% to 357 thousand and customer equity
increased 12% to $73.7 billion from the year-ago quarter. Total
DARTs1 for cleared and execution-only customers increased 5% to 648
thousand from the year-ago quarter. Cleared DARTs were 597
thousand, 6% higher than the same period last year.
Market Making
Market Making segment income before income taxes decreased 83%
to $5 million in the quarter ended June 30, 2016, compared to the
same period last year, on mixed trading volumes despite modest
increases in volatility and in the actual-to-implied volatility
ratio. Pretax profit margin decreased to 12% in the current quarter
from 42% 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 16
major currencies in which we hold our equity. In this quarter, our
currency diversification strategy decreased our comprehensive
earnings by $2 million, as the U.S. dollar value of the GLOBAL
decreased by approximately 0.03%. 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”).
As a result of a periodic assessment, and in light of the
increasing importance of China to our business, we added the
Chinese renminbi (CNH), removed the South Korean won (KRW) and
Brazilian real (BRL) components, and realigned the relative weights
of the U.S. dollar (USD) and Japanese yen (JPY) components to
better reflect the global diversification of our businesses.
The new composition contains 15 currencies, one fewer than the
prior composition. The new composition was effective as of the
close of business on June 30, 2016 and the conversion to the new
targeted currency holdings took place shortly thereafter. The
detailed component changes were disclosed with the June Monthly
Brokerage Metrics on July 1, 2016. A copy of that press release is
available through the Investor Relations section of the Interactive
Brokers website, www.interactivebrokers.com/ir.
__________________________________
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, July 19, 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 2Q2015
14,852 58,458 4,060 77,370 1,228 2Q2016 16,056 8% 64,531 10% 4,114
1% 84,701 9% 1,323 1Q2016 17,255 71,145 4,731 93,131 1,527
2Q2016 16,056 -7% 64,531 -9% 4,114 -13% 84,701 -9% 1,323
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% 2Q2015
144,188 34,661 60,255,458 2Q2016 140,461 -3% 35,355 2% 36,768,094
-39% 1Q2016 151,912 41,238 38,350,112 2Q2016 140,461 -8%
35,355 -14% 36,768,094 -4%
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% 2Q2015 74,533
3,652 4,270,738 2Q2016 76,223 2% 3,042 -17% 3,340,316 -22%
1Q2016 82,345 4,344 4,618,495 2Q2016 76,223 -7% 3,042 -30%
3,340,316 -28%
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% 2Q2015
69,655 31,009 55,984,720 2Q2016 64,238 -8% 32,313 4% 33,427,778
-40% 1Q2016 69,567 36,894 33,731,617 2Q2016 64,238 -8%
32,313 -12% 33,427,778 -1% * 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% 2Q2015
57,867 30,717 55,144,248 2Q2016 53,951 -7% 32,037 4% 32,491,500
-41% 1Q2016 58,531 36,546 32,617,117 2Q2016 53,951 -8%
32,037 -12% 32,491,500 0% * Includes options on futures
BROKERAGE STATISTICS (in
000's, except % and where noted) Year over Year
2Q2016 2Q2015 % Change Total Accounts 357 310
15% Customer Equity (in billions) * $ 73.7 $ 66.0 12%
Cleared DARTs 597 565 6% Total Customer DARTs 648 616 5%
Cleared Customers (in $'s, except DART per account)
Commission per DART $ 3.91 $ 4.31 -9% DART per Avg. Account
(Annualized) 428 469 -9% Net Revenue per Avg. Account
(Annualized)** $ 3,256 $ 3,747 -13%
Consecutive
Quarters 2Q2016 1Q2016 % Change Total
Accounts 357 345 3% Customer Equity (in billions) * $ 73.7 $ 70.1
5% Cleared DARTs 597 688 -13% Total Customer DARTs 648 748
-13%
Cleared Customers (in $'s, except DART per
account) Commission per DART $ 3.91 $ 3.86 1% DART per Avg.
Account (Annualized) 428 513 -17% Net Revenue per Avg. Account
(Annualized)** $ 3,256 $ 3,709 -12% * 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 Six Months Ended June 30,
Ended June 30, 2016 2015 2016
2015
(in millions)
Electronic Brokerage Net revenues $ 310 $ 288 $ 657 $
578 Non-interest expenses 119 100 231
339 Income before income taxes $ 191 $ 188 $ 426 $ 239
Pre-tax profit margin 62% 65% 65% 41%
Market
Making Net revenues $ 43 $ 72 $ 102 $ 139 Non-interest expenses
38 42 77 82 Income before income
taxes $ 5 $ 30 $ 25 $ 57 Pre-tax profit margin 12% 42% 25%
41%
Corporate (1) Net revenues $ 16 $ 27 $ 99
$ (158) Non-interest expenses (1) 5 0 9
Income (loss) before income taxes $ 17 $ 22 $ 99 $ (167)
Total Net revenues $ 369 $ 387 $ 858 $ 559
Non-interest expenses 156 147 308 430
Income before income taxes $ 213 $ 240 $ 550 $ 129
Pre-tax profit margin
58%
62% 64% 23% (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 Six
Months Ended June 30, Ended June 30, 2016
2015 2016 2015 (in millions, except
share and per share data) Revenues: Trading gains $ 34 $
67 $ 86 $ 129 Commissions and execution fees 152 157 318 306
Interest income 144 126 289 234 Other income (loss) 57
55 201 (77 ) Total
revenues 387 405 894 592 Interest expense 18
18 36 33 Total net
revenues 369 387 858 559
Non-interest expenses: Execution and clearing 59 59
121 114 Employee compensation and benefits 58 58 116 115 Occupancy,
depreciation and amortization 13 11 25 21 Communications 9 7 16 13
General and administrative 14 13 27 29 Customer bad debt 3
(1 ) 3 138 Total
non-interest expenses 156 147
308 430 Income before income taxes 213 240 550
129 Income tax expense 13 19
40 17 Net income 200 221 510 112
Net income attributable to noncontrolling interests 173
198 450 102 Net
income available for common stockholders $ 27 $ 23 $
60 $ 10 Earnings per share: Basic $ 0.41 $
0.38 $ 0.93 $ 0.17 Diluted $ 0.40 $ 0.37
$ 0.91 $ 0.17 Weighted average common shares
outstanding: Basic 64,967,364 59,481,778 64,476,421 58,980,348
Diluted 66,470,913 61,038,926 65,863,408 60,436,914
Comprehensive income: Net income available for common stockholders
$ 27 $ 23 $ 60 $ 10 Other comprehensive income: Cumulative
translation adjustment, before income taxes (3 ) 4 3 3 Income taxes
related to items of other comprehensive income 0
0 0 0 Other comprehensive income
(loss), net of tax (3 ) 4 3 3
Comprehensive income available for common stockholders $ 24
$ 27 $ 63 $ 13 Comprehensive income
attributable to noncontrolling interests: Net income attributable
to noncontrolling interests $ 173 $ 198 $ 450 $ 102 Other
comprehensive income (loss) - cumulative translation adjustment
(16 ) 24 17 15
Comprehensive income attributable to noncontrolling interests $ 157
$ 222 $ 467 $ 117
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
June 30,
2016
December 31,
2015
(in millions) Assets Cash and cash equivalents
$ 1,507 $ 1,601 Cash and securities - segregated for regulatory
purposes 25,257 21,309 Securities borrowed 3,760 3,924 Securities
purchased under agreements to resell 113 195 Trading assets, at
fair value 4,254 3,420 Receivables from customers, net of allowance
15,137 17,050 Receivables from brokers, dealers and clearing
organizations 1,287 692 Other assets 512 543
Total assets
$ 51,827 $ 48,734
Liabilities and equity
Liabilities Short-term borrowings $ 8 $ 0 Securities
loaned 3,270 2,894 Trading liabilities - financial instruments sold
but not yet purchased, at fair value 2,874 2,617 Other payables:
Customers
39,319 37,084
Brokers, dealers and clearing
organizations
286 423
Other payables
378 372 39,983 37,879
Total liabilities
46,135 43,390
Equity Stockholders'
equity 915 863 Noncontrolling interests 4,777 4,481
Total equity
5,692 5,344
Total liabilities and equity
$ 51,827 $ 48,734
June 30, 2016
December 31, 2015 Ownership of IBG LLC Membership
Interests
Interests
%
Interests
%
IBG, Inc. 66,386,915 16.2% 63,991,705 15.7% Noncontrolling
interests (IBG Holdings LLC) 343,040,504 83.8% 343,040,504 84.3%
Total IBG LLC membership interests 409,427,419 100.0%
407,032,209 100.0% INTERACTIVE
BROKERS GROUP, INC. AND SUBSIDIARIES EARNINGS PER SHARE ON
COMPREHENSIVE INCOME (UNAUDITED)
Three Months Six
Months Ended June 30, Ended June 30, 2016
2015 2016 2015 (in millions, except
share and per share data) Comprehensive income available
for common stockholders, net of tax $ 24 $ 27 $ 63 $ 13
Comprehensive earnings per share: Basic $ 0.36 $ 0.45 $ 0.97 $ 0.22
Diluted $ 0.36 $ 0.44 $ 0.95 $ 0.21 Weighted average
common shares outstanding: Basic 64,967,364 59,481,778 64,476,421
58,980,348
Diluted
66,470,913 61,038,926 65,863,408 60,436,914
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160719006522/en/
For Interactive Brokers Group,
Inc.Media:Caitlin Duffy,
203-913-1369orInvestors:Nancy Stuebe,
203-618-4070
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