10-KPeriod: FY2019

Interactive Brokers Group, Inc. Annual Report, Year Ended Dec 31, 2019

Filed February 28, 2020For Securities:IBKR

Summary

Interactive Brokers Group, Inc. (IBKR) reported its 2019 annual results, highlighting a robust electronic brokerage segment that continued to be the primary driver of revenue and profitability. The company serves a diverse global client base of approximately 690,000 institutional and individual investors, offering a technologically advanced, low-cost trading platform. Despite a slight decrease in commissions due to lower market volatility, net revenues saw a modest increase, primarily driven by strong net interest income resulting from higher customer credit balances and increased average benchmark rates. The company is in the process of winding down its market-making activities, significantly reducing its exposure in this segment. IBKR maintains a strong liquidity position and compliance with regulatory capital requirements across its global operations. The report also details the company's ongoing legal and regulatory matters, which management does not anticipate having a material adverse effect on financial results.

Financial Highlights

33 data points
Beta

Revenue

$2.58B

Net Income

$161.00M

6.2% Net Margin

EPS (Diluted)

$0.53

Total Assets

$71.68B

Cash & Equivalents

$2.88B

Free Cash Flow

$2.67B

Financial Statements
Beta
Revenue$2.58B
Interest Expense$643.00M
Net Income$161.00M
EPS (Basic)$0.53
EPS (Diluted)$0.53
Shares Outstanding (Basic)304.49M
Shares Outstanding (Diluted)307.30M

Key Highlights

  • 1Electronic brokerage is the core revenue driver, comprising 97% of net revenues from combined segments.
  • 2Total net revenues increased by 2% to $1.94 billion, driven by a 17% increase in net interest income, partially offset by a 9% decrease in commissions.
  • 3Customer accounts grew by 15% year-over-year to 690,000, and customer equity increased by 36% to $174.1 billion.
  • 4The company is actively reducing its market-making operations, having exited Canadian market making and substantially reducing options market making globally.
  • 5Interactive Brokers maintains strong regulatory capital compliance, with aggregate excess regulatory capital of $6.4 billion across its operating subsidiaries.
  • 6Diluted EPS was $2.10 for the year, a slight decrease from $2.28 in the prior year.
  • 7A significant customer bad debt expense of $42 million was recognized in 2019 related to margin lending losses.

Frequently Asked Questions

The primary business segment is electronic brokerage, which accounted for approximately 97% of net revenues from combined segments in 2019. The company also engages in market making, though this segment is being discontinued.

Total net revenues increased by 2% to $1.94 billion in 2019. This growth was largely driven by a 17% increase in net interest income, which offset a 9% decrease in commission revenue due to lower market volatility.

Interactive Brokers is in the process of winding down its market-making activities. They have exited most options market making globally and discontinued market making operations in Canada. The company intends to continue certain proprietary trading activities to facilitate brokerage customer trades but does not expect them to be significant enough to report as a separate segment.

The company maintains a strong liquidity position, with approximately 99.2% of its total assets considered liquid as of December 31, 2019. Furthermore, all operating subsidiaries were in compliance with their respective regulatory capital requirements, with aggregate excess regulatory capital totaling $6.4 billion.