10-QPeriod: Q2 FY2012

Interactive Brokers Group, Inc. Quarterly Report for Q2 Ended Jun 30, 2012

Filed August 31, 2012For Securities:IBKR

Summary

Interactive Brokers Group, Inc. (IBKR) reported its financial results for the quarter ending June 30, 2012. The company saw a decline in net revenues and income before income taxes compared to the same period in the prior year. This was primarily driven by significant currency translation losses, which negatively impacted trading gains. While commissions and execution fees saw a modest increase, higher employee compensation and benefits expenses also contributed to the reduced profitability. Despite the year-over-year decrease in revenue and income, the company maintained a strong liquidity position with total assets of $32.38 billion, of which approximately 98.7% were considered liquid. IBKR's electronic brokerage segment showed resilience with slight revenue growth and improved pre-tax margin, supported by an increase in customer accounts and equity. However, the market-making segment experienced a significant decline in income before taxes, largely due to adverse currency movements. The company also addressed an accounting error related to noncontrolling interests, leading to a restatement of prior periods' earnings per share, though it did not affect net income or cash flows.

Financial Highlights

28 data points
Beta

Revenue

$277.02M

Net Income

$7.98M

2.9% Net Margin

EPS (Diluted)

$0.04

Total Assets

$32.38B

Cash & Equivalents

$2.00B

Free Cash Flow

$573.49M

Financial Statements
Beta
Revenue$277.02M
Net Income$7.98M
EPS (Basic)$0.04
EPS (Diluted)$0.04
Shares Outstanding (Basic)186.75M
Shares Outstanding (Diluted)187.83M

Key Highlights

  • 1Net revenues decreased by 12% to $260.9 million for the three months ended June 30, 2012, compared to the prior year's quarter.
  • 2Income before income taxes fell by 27% to $108.5 million for the three months ended June 30, 2012, compared to the prior year's quarter.
  • 3Currency translation losses significantly impacted trading gains, contributing to the overall decline in profitability.
  • 4The electronic brokerage segment demonstrated stability with a 1% increase in net revenues and a slight improvement in pre-tax margin.
  • 5The market-making segment experienced a substantial 27% decrease in net revenues, primarily due to adverse currency translation effects.
  • 6Total assets remained strong at $32.38 billion as of June 30, 2012, with approximately 98.7% classified as liquid.
  • 7The company restated prior period earnings per share due to an accounting error related to redeemable noncontrolling interests.

Frequently Asked Questions

The primary drivers for the decrease in net revenues and income before taxes were significant currency translation losses that negatively impacted trading gains. Additionally, higher employee compensation and benefits expenses also contributed to the reduced profitability.

The Electronic Brokerage segment showed relative stability with a slight increase in net revenues and a slight improvement in its pre-tax margin, driven by increased customer accounts and equity. In contrast, the Market Making segment experienced a significant decline in net revenues, largely due to adverse currency translation effects.

The company maintains a strong liquidity position, with total assets of $32.38 billion as of June 30, 2012. Approximately 98.7% of these assets were considered liquid, consisting mainly of marketable securities, customer cash, and collateralized receivables. The company also has a committed senior secured revolving credit facility.

Yes, the company restated prior period earnings per share due to an accounting error related to the classification and accounting for redeemable noncontrolling interests. While this impacted EPS calculations for prior periods, it did not affect reported net income attributable to common stockholders or cash flows.