Interactive Brokers Group, Inc. [IBKR] Filings

10-Q 1 ibkr-20220331x10q.htm 10-Q ibkr-20220331x10q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________

FORM 10-Q

_________________________________


(Mark One)

þ			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022 OR

o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-33440

INTERACTIVE BROKERS GROUP, INC.

(Exact name of registrant as specified in its charter)


Delaware ‎(State or other jurisdiction of ‎incorporation or organization)	30-0390693 ‎(I.R.S. Employer ‎Identification No.)

One Pickwick Plaza

Greenwich, Connecticut 06830

(Address of principal executive office)

(203) 618-5800

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o ‎	Smaller reporting company o	Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ


Title of each class	Trading Symbol	Name of the exchange on which registered
Common Stock, par value $.01 per share	IBKR	The Nasdaq Global Select Market

As of May 6, 2022, there were 98,262,340 shares of the issuer’s Class A common stock, par value $0.01 per share, outstanding and 100 shares of the issuer’s Class B common stock, par value $0.01 per share, outstanding.

Table of Contents

QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2022

Table of Contents


PART I	FINANCIAL INFORMATION
ITEM 1.	Financial Statements (Unaudited)
	Condensed Consolidated Statements of Financial Condition	2
	Condensed Consolidated Statements of Comprehensive Income	3
	Condensed Consolidated Statements of Cash Flows	4
	Condensed Consolidated Statements of Changes in Equity	5
	Notes to Condensed Consolidated Financial Statements	7
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	55
ITEM 4.	Controls and Procedures	60
PART II.	OTHER INFORMATION
ITEM 1.	Legal Proceedings	61
ITEM 1A.	Risk Factors	61
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	61
ITEM 3.	Defaults upon Senior Securities	61
ITEM 5.	Other Information	61
ITEM 6.	Exhibits	62
	Signature

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (Unaudited)

Interactive Brokers Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Financial Condition

(Unaudited)



	March 31,		December 31,
(in millions, except share amounts)	2022		2021
Assets
Cash and cash equivalents	$	2,667	$	2,395
Cash - segregated for regulatory purposes		24,581		22,888
Securities - segregated for regulatory purposes		24,350		15,121
Securities borrowed		4,445		3,912
Securities purchased under agreements to resell		6,268		4,380
Financial instruments owned, at fair value
Financial instruments owned		491		559
Financial instruments owned and pledged as collateral		86		114
Total financial instruments owned, at fair value		577		673
Receivables
Customers, less allowance for credit losses of $9 and $8 as of March 31, 2022 and December 31, 2021		48,306		54,935
Brokers, dealers, and clearing organizations		2,188		3,771
Interest		118		127
Total receivables		50,612		58,833
Other assets		923		911
Total assets	$	114,423	$	109,113
Liabilities and equity
Short-term borrowings	$	11	$	27
Securities loaned		11,379		11,769
Securities sold under agreements to repurchase		300		—
Financial instruments sold, but not yet purchased, at fair value		190		182
Payables
Customers		91,097		85,634
Brokers, dealers, and clearing organizations		230		557
Affiliate		222		222
Accounts payable, accrued expenses and other liabilities		504		492
Interest		8		8
Total payables		92,061		86,913
Total liabilities		103,941		98,891
Commitments, contingencies and guarantees (see Note 13)
Equity
Stockholders’ equity
Common stock, $0.01 par value per share
Class A – Authorized - 1,000,000,000, Issued - 98,409,572 and 98,359,572 shares, Outstanding – 98,247,247 and 98,204,658 shares as of March 31, 2022 and December 31, 2021		1		1
Class B – Authorized, Issued and Outstanding – 100 shares as of March 31, 2022 and December 31, 2021		—		—
Additional paid-in capital		1,449		1,442
Retained earnings		1,017		953
Accumulated other comprehensive income, net of income taxes of $0 and $0 as of March 31, 2022 and December 31, 2021		(6)		4
Treasury stock, at cost, 162,325 and 154,914 shares as of March 31, 2022 and December 31, 2021		(5)		(5)
Total stockholders’ equity		2,456		2,395
Noncontrolling interests		8,026		7,827
Total equity		10,482		10,222
Total liabilities and equity	$	114,423	$	109,113

See accompanying notes to the condensed consolidated financial statements.

‎

Table of Contents

Interactive Brokers Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)



	Three Months Ended March 31,
(in millions, except share or per share amounts)	2022		2021
Revenues
Commissions	$	349	$	412
Other fees and services		53		56
Other income (loss)		(39)		120
Total non-interest income		363		588

Interest income		332		390
Interest expense		(50)		(85)
Total net interest income		282		305
Total net revenues		645		893

Non-interest expenses
Execution, clearing and distribution fees		71		68
Employee compensation and benefits		111		97
Occupancy, depreciation and amortization		22		20
Communications		8		8
General and administrative		38		59
Customer bad debt		1		2
Total non-interest expenses		251		254
Income before income taxes		394		639
Income tax expense		28		53
Net income		366		586
Less net income attributable to noncontrolling interests		293		479
Net income available for common stockholders	$	73	$	107

Earnings per share
Basic	$	0.74	$	1.18
Diluted	$	0.74	$	1.16
Weighted average common shares outstanding
Basic		98,226,147		90,789,321
Diluted		99,224,776		91,766,142

Comprehensive income
Net income available for common stockholders	$	73	$	107
Other comprehensive income
Cumulative translation adjustment, before income taxes		(10)		(17)
Income taxes related to items of other comprehensive income		—		—
Other comprehensive income (loss), net of tax		(10)		(17)
Comprehensive income available for common stockholders	$	63	$	90

Comprehensive income attributable to noncontrolling interests
Net income attributable to noncontrolling interests	$	293	$	479
Other comprehensive income - cumulative translation adjustment		(31)		(59)
Comprehensive income attributable to noncontrolling interests	$	262	$	420

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

Interactive Brokers Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)



	Three Months Ended March 31,
(in millions)	2022		2021
Cash flows from operating activities
Net income	$	366	$	586
Adjustments to reconcile net income to net cash from operating activities
Deferred income taxes		2		15
Depreciation and amortization		15		13
Amortization of right-of-use assets		6		5
Employee stock plan compensation		21		17
Unrealized gain on other investments, net		—		(108)
Bad debt expense		1		2
Shares distributed to customers under IBKR Promotions		3		2
Change in operating assets and liabilities
Securities - segregated for regulatory purposes		(9,229)		2,752
Securities borrowed		(533)		(752)
Securities purchased under agreements to resell		(1,888)		(900)
Financial instruments owned, at fair value		96		(4)
Receivables from customers		6,628		(3,314)
Other receivables		1,592		(2,126)
Other assets		(20)		(6)
Securities loaned		(390)		2,029
Securities sold under agreement to repurchase		300		—
Financial instruments sold, but not yet purchased, at fair value		8		38
Payable to customers		5,463		5,322
Other payables		(316)		163
Net cash provided by operating activities		2,125		3,734
Cash flows from investing activities
Purchases of other investments		—		(1)
Distributions received and proceeds from sales of other investments		5		1
Purchase of property, equipment and intangible assets		(19)		(21)
Net cash used in investing activities		(14)		(21)
Cash flows from financing activities
Short-term borrowings, net		(16)		(10)
Dividends paid to stockholders		(9)		(9)
Distributions from IBG LLC to noncontrolling interests		(80)		(86)
Issuances of senior notes		—		602
Redemptions of senior notes		—		(498)
Net cash used in financing activities		(105)		(1)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(41)		(76)
Net increase in cash, cash equivalents and restricted cash		1,965		3,636
Cash, cash equivalents and restricted cash at beginning of period		25,283		20,195
Cash, cash equivalents and restricted cash at end of period	$	27,248	$	23,831
Cash, cash equivalents and restricted cash
Cash and cash equivalents		2,667		2,627
Cash segregated for regulatory purposes		24,581		21,204
Cash, cash equivalents and restricted cash at end of period	$	27,248	$	23,831
Supplemental disclosures of cash flow information
Cash paid for interest	$	50	$	79
Cash paid for taxes, net	$	16	$	24
Cash paid for amounts included in lease liabilities	$	8	$	6
Non-cash financing activities
Adjustments to additional paid-in capital for changes in proportionate ownership in IBG LLC	$	1	$	1
Adjustments to noncontrolling interests for changes in proportionate ownership in IBG LLC	$	(1)	$	(1)

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

Interactive Brokers Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Equity

Three Months Ended March 31, 2022

(Unaudited)

Class A Common Stock

Accumulated

Additional

Other

Total

Non-

Issued

Par

Paid-In

Treasury

Retained

Comprehensive

Stockholders'

controlling

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