Interactive Brokers Group, Inc. [IBKR] Filings

10-Q 1 ibkr-20220930x10q.htm 10-Q ibkr-20220930x10q

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, 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 November 3, 2022, there were 102,872,100 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 SEPTEMBER 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	71
	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)



	September 30,		December 31,
(in millions, except share amounts)	2022		2021
Assets
Cash and cash equivalents	$	3,184	$	2,395
Cash - segregated for regulatory purposes		25,432		22,888
Securities - segregated for regulatory purposes		31,301		15,121
Securities borrowed		3,908		3,912
Securities purchased under agreements to resell		4,860		4,380
Financial instruments owned, at fair value
Financial instruments owned		1,036		559
Financial instruments owned and pledged as collateral		57		114
Total financial instruments owned, at fair value		1,093		673
Receivables
Customers, less allowance for credit losses of $10 and $8 as of September 30, 2022 and December 31, 2021		40,424		54,935
Brokers, dealers, and clearing organizations		3,321		3,771
Interest		224		127
Total receivables		43,969		58,833
Other assets		936		911
Total assets	$	114,683	$	109,113
Liabilities and equity
Short-term borrowings	$	35	$	27
Securities loaned		9,490		11,769
Financial instruments sold, but not yet purchased, at fair value		411		182
Payables
Customers		92,594		85,634
Brokers, dealers, and clearing organizations		380		557
Affiliate		220		222
Accounts payable, accrued expenses and other liabilities		554		492
Interest		99		8
Total payables		93,847		86,913
Total liabilities		103,783		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 – 103,003,052 and 98,359,572 shares, Outstanding – 102,865,696 and 98,204,658 shares as of September 30, 2022 and December 31, 2021		1		1
Class B – Authorized, Issued and Outstanding – 100 shares as of September 30, 2022 and December 31, 2021		—		—
Additional paid-in capital		1,572		1,442
Retained earnings		1,168		953
Accumulated other comprehensive income, net of income taxes of $0 and $0 as of September 30, 2022 and December 31, 2021		(60)		4
Treasury stock, at cost, 137,356 and 154,914 shares as of September 30, 2022 and December 31, 2021		(4)		(5)
Total stockholders’ equity		2,677		2,395
Noncontrolling interests		8,223		7,827
Total equity		10,900		10,222
Total liabilities and equity	$	114,683	$	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 September 30,				Nine Months Ended September 30,
(in millions, except share or per share amounts)	2022		2021		2022		2021
Revenues
Commissions	$	320	$	311	$	991	$	1,030
Other fees and services		45		49		141		160
Other income (loss)		(48)		(170)		(144)		68
Total non-interest income		317		190		988		1,258

Interest income		783		325		1,575		1,022
Interest expense		(310)		(51)		(472)		(169)
Total net interest income		473		274		1,103		853
Total net revenues		790		464		2,091		2,111

Non-interest expenses
Execution, clearing and distribution fees		86		61		234		183
Employee compensation and benefits		112		98		335		291
Occupancy, depreciation and amortization		23		19		68		58
Communications		8		8		25		24
General and administrative		37		44		117		138
Customer bad debt		1		—		3		3
Total non-interest expenses		267		230		782		697
Income before income taxes		523		234		1,309		1,414
Income tax expense		40		28		100		116
Net income		483		206		1,209		1,298
Less net income attributable to noncontrolling interests		384		164		965		1,057
Net income available for common stockholders	$	99	$	42	$	244	$	241

Earnings per share
Basic	$	0.98	$	0.44	$	2.45	$	2.60
Diluted	$	0.97	$	0.43	$	2.43	$	2.58
Weighted average common shares outstanding
Basic		101,818,667		96,229,958		99,646,091		92,814,767
Diluted		102,555,482		96,989,968		100,505,075		93,671,689

Comprehensive income
Net income available for common stockholders	$	99	$	42	$	244	$	241
Other comprehensive income
Cumulative translation adjustment, before income taxes		(30)		(9)		(64)		(21)
Income taxes related to items of other comprehensive income		—		—		—		—
Other comprehensive income (loss), net of tax		(30)		(9)		(64)		(21)
Comprehensive income available for common stockholders	$	69	$	33	$	180	$	220

Comprehensive income attributable to noncontrolling interests
Net income attributable to noncontrolling interests	$	384	$	164	$	965	$	1,057
Other comprehensive income - cumulative translation adjustment		(93)		(31)		(205)		(74)
Comprehensive income attributable to noncontrolling interests	$	291	$	133	$	760	$	983

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)	2022		2021
Cash flows from operating activities
Net income	$	1,209	$	1,298
Adjustments to reconcile net income to net cash from operating activities
Deferred income taxes		8		18
Depreciation and amortization		43		37
Amortization of right-of-use assets		19		17
Employee stock plan compensation		64		51
Unrealized (gain) loss on other investments, net		13		(45)
Gain on remeasurement of Tax Receivable Agreement liability		—		(1)
Bad debt expense		3		3
Impairment loss		1		—
Shares distributed to customers under IBKR Promotions		7		6
Change in operating assets and liabilities
Securities - segregated for regulatory purposes		(16,180)		13,421
Securities borrowed		4		1,145
Securities purchased under agreements to resell

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