Interactive Brokers Group, Inc. [IBKR] Filings

10-Q 1 ibkr-20220630x10q.htm 10-Q ibkr-20220630x10q

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 June 30, 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 August 5, 2022, there were 102,844,018 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 JUNE 30, 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	39
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	63
ITEM 4.	Controls and Procedures	67
PART II.	OTHER INFORMATION
ITEM 1.	Legal Proceedings	68
ITEM 1A.	Risk Factors	68
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	68
ITEM 3.	Defaults upon Senior Securities	69
ITEM 5.	Other Information	69
ITEM 6.	Exhibits	70
	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)



	June 30,		December 31,
(in millions, except share amounts)	2022		2021
Assets
Cash and cash equivalents	$	2,881	$	2,395
Cash - segregated for regulatory purposes		23,536		22,888
Securities - segregated for regulatory purposes		30,709		15,121
Securities borrowed		3,855		3,912
Securities purchased under agreements to resell		6,288		4,380
Financial instruments owned, at fair value
Financial instruments owned		367		559
Financial instruments owned and pledged as collateral		184		114
Total financial instruments owned, at fair value		551		673
Receivables
Customers, less allowance for credit losses of $10 and $8 as of June 30, 2022 and December 31, 2021		42,552		54,935
Brokers, dealers, and clearing organizations		1,939		3,771
Interest		150		127
Total receivables		44,641		58,833
Other assets		925		911
Total assets	$	113,386	$	109,113
Liabilities and equity
Short-term borrowings	$	17	$	27
Securities loaned		10,696		11,769
Financial instruments sold, but not yet purchased, at fair value		218		182
Payables
Customers		90,765		85,634
Brokers, dealers, and clearing organizations		308		557
Affiliate		202		222
Accounts payable, accrued expenses and other liabilities		542		492
Interest		36		8
Total payables		91,853		86,913
Total liabilities		102,784		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 – 99,731,366 and 98,359,572 shares, Outstanding – 99,560,859 and 98,204,658 shares as of June 30, 2022 and December 31, 2021		1		1
Class B – Authorized, Issued and Outstanding – 100 shares as of June 30, 2022 and December 31, 2021		—		—
Additional paid-in capital		1,480		1,442
Retained earnings		1,079		953
Accumulated other comprehensive income, net of income taxes of $0 and $0 as of June 30, 2022 and December 31, 2021		(30)		4
Treasury stock, at cost, 170,507 and 154,914 shares as of June 30, 2022 and December 31, 2021		(6)		(5)
Total stockholders’ equity		2,524		2,395
Noncontrolling interests		8,078		7,827
Total equity		10,602		10,222
Total liabilities and equity	$	113,386	$	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 June 30,				Six Months Ended June 30,
(in millions, except share or per share amounts)	2022		2021		2022		2021
Revenues
Commissions	$	322	$	307	$	671	$	719
Other fees and services		43		55		96		111
Other income (loss)		(57)		118		(96)		238
Total non-interest income		308		480		671		1,068

Interest income		460		307		792		697
Interest expense		(112)		(33)		(162)		(118)
Total net interest income		348		274		630		579
Total net revenues		656		754		1,301		1,647

Non-interest expenses
Execution, clearing and distribution fees		77		54		148		122
Employee compensation and benefits		112		96		223		193
Occupancy, depreciation and amortization		23		19		45		39
Communications		9		8		17		16
General and administrative		42		35		80		94
Customer bad debt		1		1		2		3
Total non-interest expenses		264		213		515		467
Income before income taxes		392		541		786		1,180
Income tax expense		32		35		60		88
Net income		360		506		726		1,092
Less net income attributable to noncontrolling interests		288		414		581		893
Net income available for common stockholders	$	72	$	92	$	145	$	199

Earnings per share
Basic	$	0.73	$	1.01	$	1.47	$	2.19
Diluted	$	0.72	$	1.00	$	1.46	$	2.17
Weighted average common shares outstanding
Basic		98,853,981		91,365,234		98,541,798		91,078,868
Diluted		99,695,489		92,199,169		99,461,867		91,984,246

Comprehensive income
Net income available for common stockholders	$	72	$	92	$	145	$	199
Other comprehensive income
Cumulative translation adjustment, before income taxes		(24)		5		(34)		(12)
Income taxes related to items of other comprehensive income		—		—		—		—
Other comprehensive income (loss), net of tax		(24)		5		(34)		(12)
Comprehensive income available for common stockholders	$	48	$	97	$	111	$	187

Comprehensive income attributable to noncontrolling interests
Net income attributable to noncontrolling interests	$	288	$	414	$	581		893
Other comprehensive income - cumulative translation adjustment		(81)		16		(112)		(43)
Comprehensive income attributable to noncontrolling interests	$	207	$	430	$	469	$	850

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)



	Six Months Ended June 30,
(in millions)	2022		2021
Cash flows from operating activities
Net income	$	726	$	1,092
Adjustments to reconcile net income to net cash from operating activities
Deferred income taxes		6		29
Depreciation and amortization		29		25
Amortization of right-of-use assets		13		11
Employee stock plan compensation		42		34
Unrealized gain (loss) on other investments, net		7		(225)
Bad debt expense		2		3
Shares distributed to customers under IBKR Promotions		5		4
Change in operating assets and liabilities
Securities - segregated for regulatory purposes		(15,588)		12,186
Securities borrowed		57		1,326
Securities purchased under agreements to resell		(1,908)		(3,374)
Financial instruments owned, at fair value		114		(86)
Receivables from customers		12,381		(10,624)
Other receivables		1,809		(2,733)
Other assets		35		(

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