10-QPeriod: Q3 FY2015

Interactive Brokers Group, Inc. Quarterly Report for Q3 Ended Sep 30, 2015

Filed November 9, 2015For Securities:IBKR

Summary

Interactive Brokers Group, Inc. (IBKR) reported strong financial performance for the nine months ended September 30, 2015, driven by robust growth in its electronic brokerage segment. Net revenues increased by 10% year-over-year, reaching $918 million. While the company experienced a net loss of $119 million related to customer losses from the Swiss franc event and significant losses from its currency diversification strategy, its core operations demonstrated resilience. The electronic brokerage segment saw a 27% increase in net revenues to $878 million, fueled by higher commissions and execution fees and increased net interest income, reflecting growth in customer accounts and trading activity. Despite challenges, particularly the impact of foreign currency fluctuations and a notable increase in customer bad debt expense due to the Swiss franc event, the company's overall financial position remains solid. IBKR maintained substantial regulatory capital, exceeding requirements by $3.4 billion. The company's strategic focus on automation and technology continues to support its competitive position, with plans for continued investment in technology infrastructure to drive future growth.

Financial Highlights

29 data points
Beta

Revenue

$375.00M

Net Income

$22.00M

5.9% Net Margin

EPS (Diluted)

$0.09

Total Assets

$47.23B

Cash & Equivalents

$1.59B

Free Cash Flow

$726.00M

Financial Statements
Beta
Revenue$375.00M
Net Income$22.00M
EPS (Basic)$0.09
EPS (Diluted)$0.09
Shares Outstanding (Basic)249.83M
Shares Outstanding (Diluted)256.11M

Key Highlights

  • 1Net revenues increased by 10% to $918 million for the nine months ended September 30, 2015.
  • 2Electronic brokerage segment net revenues grew by 27% to $878 million, driven by increased commissions, execution fees, and net interest income.
  • 3The company incurred a $119 million net loss due to customer defaults following the Swiss franc devaluation.
  • 4A significant loss of $186 million was recorded due to the currency diversification strategy.
  • 5Customer bad debt expense increased substantially to $145 million for the nine months ended September 30, 2015.
  • 6Total assets grew to $47.2 billion as of September 30, 2015.
  • 7Regulatory capital exceeded requirements by $3.4 billion, indicating a strong capital position.

Frequently Asked Questions

The primary driver of revenue growth was the electronic brokerage segment, which benefited from increased commissions and execution fees due to higher customer trading volumes and accounts, as well as growth in net interest income.

The sudden move in the Swiss franc in January 2015 resulted in a $119 million net loss for the company due to customer positions exceeding their deposits. This significantly impacted customer bad debt expenses.

The company's currency diversification strategy, which aims to base its net worth in a basket of currencies (GLOBAL), resulted in a loss of $186 million for the nine months ended September 30, 2015, primarily due to the strengthening of the U.S. dollar against other major currencies. These losses are reported under 'Other Income'.

Interactive Brokers Group maintained a strong regulatory capital position, with aggregate excess regulatory capital for all operating companies totaling $3.4 billion as of September 30, 2015. All regulated operating companies were in compliance with their respective capital requirements.