10-KPeriod: FY2010

Interactive Brokers Group, Inc. Annual Report, Year Ended Dec 31, 2010

Filed February 28, 2011For Securities:IBKR

Summary

Interactive Brokers Group, Inc. (IBKR) reported its 2010 fiscal year results, highlighting a challenging year for its market-making segment due to increased competition from high-frequency traders (HFTs), tighter bid/offer spreads, and lower market volatility. This segment saw a significant decline in trading gains and pre-tax profit margins. Conversely, the electronic brokerage segment demonstrated robust growth, with increased customer accounts, customer equity, and trading volumes, leading to a rise in commissions, execution fees, and net interest income. The company also managed its liquidity and capital effectively, maintaining strong regulatory capital levels across its operating entities. Despite headwinds in the market-making business, IBKR's technology-driven, low-cost model continues to support the growth of its brokerage segment.

Financial Highlights

29 data points
Beta

Revenue

$988.32M

Net Income

-$9.55M

-1.0% Net Margin

EPS (Diluted)

$-0.06

Total Assets

$28.50B

Cash & Equivalents

$1.02B

Free Cash Flow

$1.69B

Financial Statements
Beta
Revenue$988.32M
Net Income-$9.55M
EPS (Basic)$-0.06
EPS (Diluted)$-0.06
Shares Outstanding (Basic)167.48M
Shares Outstanding (Diluted)169.99M

Key Highlights

  • 1Market making segment revenue decreased by 39% to $379.2 million in 2010, driven by lower trading gains due to increased competition, tighter spreads, and lower volatility.
  • 2Electronic brokerage segment revenue increased by 15% to $547.3 million in 2010, fueled by a 14% increase in options volume and a 33% increase in stock share volume.
  • 3Customer accounts in the electronic brokerage segment grew by 18% to approximately 158,000 by year-end 2010.
  • 4Total net revenues for the year decreased by 16% to $922.1 million, while income before income taxes decreased by 37% to $340.8 million.
  • 5The company paid a special cash dividend of $1.79 per share in December 2010, impacting its equity balances.
  • 6Total excess regulatory capital across all operating companies was $2.75 billion as of December 31, 2010, indicating strong capitalization.
  • 7The company continues to invest in its proprietary technology as a key competitive advantage across both business segments.

Frequently Asked Questions

The company's performance in 2010 was mixed. The market making segment faced significant headwinds from increased competition, tighter spreads, and lower volatility, leading to a substantial decrease in revenue and profitability. In contrast, the electronic brokerage segment experienced robust growth, driven by increased customer activity and higher trading volumes across various asset classes.

Interactive Brokers' market making segment saw a significant decline in performance. Total net revenues fell by 39% to $379.2 million, with trading gains decreasing by 42%. This was primarily attributed to increased competition from high-frequency traders, a continued compression of bid/offer spreads, and lower market volatility.

The electronic brokerage segment was a strong performer in 2010. Total net revenues increased by 15% to $547.3 million. This growth was supported by a 10% rise in commissions and execution fees, driven by higher customer trading volumes and account growth (up 18% to 158,000 accounts). Net interest income also saw a substantial increase of 78%.

The company demonstrated a strong capital position, with aggregate excess regulatory capital of $2.75 billion across all operating entities at the end of 2010. Total assets stood at $28.5 billion, with approximately 98% considered liquid. Despite the challenges in the market-making segment, the company's overall financial health remained solid, underpinned by the growth in its brokerage operations and its robust technological infrastructure.