10-KPeriod: FY2022

Interactive Brokers Group, Inc. Annual Report, Year Ended Dec 31, 2022

Filed February 24, 2023For Securities:IBKR

Summary

Interactive Brokers Group, Inc. (IBKR) reported strong performance in 2022, driven by a significant increase in net interest income due to rising interest rates. Total net revenues grew by 13% to $3.07 billion, while diluted earnings per share rose to $3.75. The company's robust technology platform and diverse customer base across 200+ countries contributed to its operational efficiency and ability to attract sophisticated investors. Despite a general market downturn and a decrease in stock trading volumes, IBKR demonstrated resilience through higher volumes in futures and options, benefiting from increased market volatility. Key financial highlights include a 45% increase in net interest income to $1.67 billion, underscoring the positive impact of higher benchmark interest rates on the company's earnings from customer cash balances and margin lending. While commission revenue saw a slight decline of 2% due to lower stock trading volumes, this was partially offset by growth in other areas. IBKR continues to leverage its proprietary technology and low-cost structure as key competitive advantages in the dynamic financial services landscape.

Financial Highlights

34 data points
Beta

Revenue

$1.51B

Net Income

$380.00M

25.2% Net Margin

EPS (Diluted)

$0.94

Total Assets

$115.14B

Cash & Equivalents

$3.44B

Free Cash Flow

$3.97B

Financial Statements
Beta
Revenue$1.51B
SG&A Expenses$165.00M
Interest Expense$1.02B
Net Income$380.00M
EPS (Basic)$0.94
EPS (Diluted)$0.94
Shares Outstanding (Basic)401.84M
Shares Outstanding (Diluted)405.20M

Key Highlights

  • 1Net interest income surged by 45% to $1.67 billion in 2022, driven by rising interest rates and increased customer credit balances.
  • 2Total net revenues increased by 13% to $3.07 billion, supported by strong net interest income, despite a 2% dip in commission revenue.
  • 3Diluted earnings per share (EPS) improved to $3.75 in 2022, up from $3.24 in 2021.
  • 4Customer trading volumes in futures and options saw significant increases (33% and 3% respectively), while stock volumes declined 58% year-over-year.
  • 5The company maintained a strong pretax profit margin of 65% (67% adjusted), highlighting operational efficiency.
  • 6Interactive Brokers serves approximately 2.09 million cleared customer accounts globally, with 79% of customers residing outside the U.S.
  • 7As of December 31, 2022, the company maintained robust regulatory capital with aggregate excess regulatory capital of $8.7 billion across its operating subsidiaries.

Frequently Asked Questions

Rising interest rates significantly boosted Interactive Brokers' net interest income, which increased by 45% to $1.67 billion. This was primarily due to higher interest earned on customer cash balances and margin loans, as benchmark rates rose from near-zero levels in 2021 to much higher levels by the end of 2022.

Commission revenue decreased by 2% to $1.32 billion in 2022. This decline was mainly attributed to a significant 58% drop in customer stock trading volumes compared to the unusually high levels seen in 2021, although this was partially offset by increased volumes in futures and options.

Interactive Brokers actively manages its global currency exposure by maintaining its equity in a basket of ten currencies called the 'GLOBAL'. This strategy aims to diversify risk and align its hedging approach with the currencies used in its business operations. While this strategy can impact comprehensive earnings due to currency fluctuations against the U.S. dollar, it helps stabilize the company's overall financial position.

Interactive Brokers' core strategy revolves around its proprietary, integrated technology that automates broker-dealer functions. This focus on automation and continuous software development allows them to offer low-cost services, efficient trade execution, and a wide range of products and services. This technological superiority is a key differentiator that helps them attract and retain sophisticated investors and maintain a competitive edge in the market.