Interactive Brokers Group Earnings 2019-09-30

IBKR 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow

Comparables ($MM TTM)
Ticker	M Cap	Assets	Liab	Rev	G Profit	Net Inc	EBITDA	EV	G Margin	EV/EBITDA	ROA
DUG	4,424		0	0	0	0	0	4,424			-0%
LGF	4,389	8,437	5,585	3,712	0	-330	26	7,153	0%	279.4	-4%
COTV	4,221	2,137	936	747	495	161	340	4,756	66%	14.0	8%
COOL	4,113	0	6	0	0	-5	-3	4,113		-1,318.7	-1,028%
ILG	4,068	3,661	1,924	1,827	898	182	323	4,615	49%	14.3	5%
IBKR	4,060	66,034	58,414	2,108	0	1,148	1,211	-7,921	0%	-6.5	2%
NYLD	3,887	8,731	6,677	1,022	690	-125	680	9,775	68%	14.4	-1%
LHO	3,819	3,659	1,382	1,084	16	-38	193	4,636	1%	24.0	-1%
KLXI	3,754	3,876	1,556	1,925	535	81	236	4,617	28%	19.6	2%
UBIA	3,713	0	4	0	0	-3	-2	3,713	0%	-1,609.4	-1,203%

ibkr-20190930x10q

Table of Contents

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 September 30, 2019 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 x 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 x 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 x	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 x


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 November 7, 2019, 76,748,874 shares of the issuer’s Class A common stock, par value $0.01 per share, and 100 shares of the issuer’s Class B common stock, par value $0.01 per share, were outstanding.

Table of Contents

QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2019

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	40
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	67
ITEM 4.	Controls and Procedures	72
PART II.	OTHER INFORMATION
ITEM 1.	Legal Proceedings	73
ITEM 1A.	Risk Factors	73
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	74
ITEM 3.	Defaults upon Senior Securities	74
ITEM 5.	Other Information	74
ITEM 6.	Exhibits	75
	Signature

Table of Contents

PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (Unaudited)

Interactive Brokers Group, Inc. and Subsidiaries

Condensed Consolidated Statements of Financial Condition

(Unaudited)



	September 30,		December 31,
(in millions, except share amounts)	2019		2018
Assets
Cash and cash equivalents	$	3,035	$	2,597
Cash - segregated for regulatory purposes		8,794		7,503
Securities - segregated for regulatory purposes		21,246		15,595
Securities borrowed		4,010		3,331
Securities purchased under agreements to resell		1,391		1,242
Financial instruments owned, at fair value
Financial instruments owned		1,694		1,931
Financial instruments owned and pledged as collateral		189		188
Total financial instruments owned, at fair value		1,883		2,119
Receivables
Customers, less allowance for doubtful accounts of $85 and $42 as of September 30, 2019 and December 31, 2018		25,970		27,017
Brokers, dealers and clearing organizations		868		706
Interest		131		141
Total receivables		26,969		27,864
Other assets		476		296
Total assets	$	67,804	$	60,547
Liabilities and equity
Short-term borrowings	$	15	$	17
Securities loaned		3,955		4,037
Financial instruments sold, but not yet purchased, at fair value		977		681
Payables
Customers		54,474		47,993
Brokers, dealers and clearing organizations		245		298
Affiliate		141		171
Accounts payable, accrued expenses and other liabilities		307		153
Interest		37		41
Total payables		55,204		48,656
Total liabilities		60,151		53,391
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 - 76,878,300 and 75,230,400 shares, Outstanding – 76,748,852 and 75,100,952 shares as of September 30, 2019 and December 31, 2018		1		1
Class B – Authorized, Issued and Outstanding – 100 shares as of September 30, 2019 and December 31, 2018		—		—
Additional paid-in capital		930		898
Retained earnings		484		390
Accumulated other comprehensive income, net of income taxes of $0 and $0 as of September 30, 2019 and December 31, 2018		(7)		(4)
Treasury stock, at cost, 129,448 and 129,448 shares as of September 30, 2019 and December 31, 2018		(3)		(3)
Total stockholders’ equity		1,405		1,282
Noncontrolling interests		6,248		5,874
Total equity		7,653		7,156
Total liabilities and equity	$	67,804	$	60,547

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 September 30,				Nine Months Ended September 30,
(in millions, except share or per share amounts)	2019		2018		2019		2018
Revenues
Commissions	$	187	$	167	$	538	$	572
Interest income		468		363		1,308		1,007
Trading gains		7		7		20		32
Other income (loss)		(19)		21		83		121
Total revenues		643		558		1,949		1,732
Interest expense		177		119		512		321
Total net revenues		466		439		1,437		1,411
Non-interest expenses
Execution, clearing and distribution fees		68		57		192		196
Employee compensation and benefits		67		63		213		201
Occupancy, depreciation and amortization		15		12		43		35
Communications		7		7		19		20
General and administrative		30		25		80		70
Customer bad debt		(2)		(1)		45		2
Total non-interest expenses		185		163		592		524
Income before income taxes		281		276		845		887
Income tax expense		20		18		50		52
Net income		261		258		795		835
Less net income attributable to noncontrolling interests		225		219		678		709
Net income available for common stockholders	$	36	$	39	$	117	$	126

Earnings per share
Basic	$	0.46	$	0.52	$	1.54	$	1.73
Diluted	$	0.45	$	0.51	$	1.52	$	1.71
Weighted average common shares outstanding
Basic		76,742,789		74,649,469		75,910,080		72,879,007
Diluted		77,348,976		75,360,089		76,646,487		73,745,640

Comprehensive income
Net income available for common stockholders	$	36	$	39	$	117	$	126
Other comprehensive income
Cumulative translation adjustment, before income taxes		(6)		(1)		(3)		(14)
Income taxes related to items of other comprehensive income		—		—		—		(1)
Other comprehensive income (loss), net of tax		(6)		(1)		(3)		(13)
Comprehensive income available for common stockholders	$	30	$	38	$	114	$	113

Comprehensive income attributable to noncontrolling interests
Net income attributable to noncontrolling interests	$	225	$	219	$	678	$	709
Other comprehensive income - cumulative translation adjustment		(22)		(2)		(11)		(60)
Comprehensive income attributable to noncontrolling interests	$	203	$	217	$	667	$	649

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)



	Nine Months Ended September 30,
(in millions)	2019		2018
Cash flows from operating activities
Net income	$	795	$	835
Adjustments to reconcile net income to net cash from operating activities
Deferred income taxes		17		19
Depreciation and amortization		21		18
Amortization of right-of-use assets		15		—
Employee stock plan compensation		43		42
Unrealized (gain) loss on other investments, net		(22)		—
Bad debt expense		45		2
Impairment loss		1		1
Change in operating assets and liabilities
Securities - segregated for regulatory purposes		(5,651)		853

Closing Price ($)	Shares Out (MM)	Market Cap ($MM)
$0.00	77	$4,060

10-Q	2019-11-12	Quarter: 2019-09-30
10-Q	2019-08-08	Quarter: 2019-06-30
10-Q	2019-05-09	Quarter: 2019-03-31
10-K	2019-02-28	Annual: 2018-12-31
10-Q	2018-11-07	Quarter: 2018-09-30
10-Q	2018-08-08	Quarter: 2018-06-30
10-Q	2018-05-09	Quarter: 2018-03-31
10-K	2018-03-01	Annual: 2017-12-31
10-Q	2017-11-08	Quarter: 2017-09-30
10-Q	2017-08-08	Quarter: 2017-06-30
10-Q	2017-05-09	Quarter: 2017-03-31
10-K	2017-02-28	Annual: 2016-12-31
10-Q	2016-11-09	Quarter: 2016-09-30
10-Q	2016-08-09	Quarter: 2016-06-30
10-Q	2016-05-10	Quarter: 2016-03-31
10-K	2016-02-29	Annual: 2015-12-31
10-Q	2015-11-09	Quarter: 2015-09-30
10-Q	2015-08-10	Quarter: 2015-06-30
10-Q	2015-05-11	Quarter: 2015-03-31
10-K	2015-03-02	Annual: 2014-12-31
10-Q	2014-11-10	Quarter: 2014-09-30
10-Q	2014-08-11	Quarter: 2014-06-30
10-Q	2014-05-12	Quarter: 2014-03-31
10-K	2014-03-03	Annual: 2013-12-31
10-Q	2013-11-08	Quarter: 2013-09-30
10-Q	2013-08-09	Quarter: 2013-06-30
10-Q	2013-05-10	Quarter: 2013-03-31
10-K	2013-03-08	Annual: 2012-12-31
10-Q	2012-11-09	Quarter: 2012-09-30
10-Q	2012-08-31	Quarter: 2012-06-30
10-Q	2012-05-15	Quarter: 2012-03-31
10-K	2012-02-29	Annual: 2011-12-31
10-Q	2011-11-08	Quarter: 2011-09-30
10-Q	2011-08-09	Quarter: 2011-06-30
10-Q	2011-05-06	Quarter: 2011-03-31
10-K	2011-02-28	Annual: 2010-12-31
10-Q	2010-11-09	Quarter: 2010-09-30
10-Q	2010-08-09	Quarter: 2010-06-30
10-Q	2010-05-06	Quarter: 2010-03-31
10-K	2010-02-26	Annual: 2009-12-31

8-K	2019-11-01	Regulation FD, Exhibits
8-K	2019-10-15	Earnings, Other Events, Exhibits
8-K	2019-10-07	Other Events, Exhibits
8-K	2019-09-22	Exhibits
8-K	2019-07-26	Other Events, Exhibits
8-K	2019-07-16	Earnings, Other Events, Exhibits
8-K	2019-04-23	Shareholder Vote
8-K	2019-04-16	Earnings, Other Events, Exhibits
8-K	2019-01-28	Officers
8-K	2019-01-22	Earnings, Other Events, Exhibits
8-K	2019-01-10	Regulation FD, Exhibits
8-K	2019-01-07	Officers, Exhibits
8-K	2018-11-30	Officers
8-K	2018-10-23	Officers
8-K	2018-10-16	Earnings, Other Events, Exhibits
8-K	2018-09-11	Exhibits
8-K	2018-07-27	Other Events, Exhibits
8-K	2018-07-27	Earnings
8-K	2018-07-27	Other Events
8-K	2018-07-17	Earnings, Other Events, Exhibits
8-K	2018-04-19	Shareholder Vote
8-K	2018-04-17	Earnings, Other Events, Exhibits
8-K	2018-01-16	Earnings, Other Events, Exhibits

EX-31.1	ibkr-20190930xex31_1.htm
EX-31.2	ibkr-20190930xex31_2.htm
EX-32.1	ibkr-20190930xex32_1.htm
EX-32.2	ibkr-20190930xex32_2.htm