01—Abstract
Summary
Summary of the 10-Q filed November 9, 2021. Cited figures are marked; the original filing is the authoritative source.
Interactive Brokers Group, Inc. (IBKR) reported its third-quarter 2021 financial results, showing a decrease in net revenues to $464 milliona from $548 million in the prior-year quarter, largely due to a significant drop in 'Other Income' driven by mark-to-market losses on its investment in Tiger Brokers and a less favorable currency diversification strategy.
Despite the revenue decline, the company demonstrated resilience and growth in core operational areas. Commissions increased by 11% to $311 millionb due to higher customer trading volumes in stocks and options, while net interest income saw a substantial 41% rise to $274 million, fueled by increased margin loan balances and strong securities lending activity.
The company's robust customer growth, with total accounts up 57%c year-over-year, and a significant increase in customer equity further underscore its operational strength. Management highlighted continued investment in technology infrastructure and customer service, positioning IBKR for future growth.
02—Key points
Key Highlights
- Net revenues decreased by 15% to $464 million in Q3 2021 compared to the prior-year quarter, primarily due to a significant decline in 'Other Income' (-$199 million), largely from mark-to-market losses on the Tiger Brokers investment.
- Commissions increased by 11% to $311 million, driven by a 34% rise in customer options contracts and a 100% increase in stock share volumes.
- Net interest income rose significantly by 41% to $274 million, attributed to higher average margin loan balances (up 64%) and strong securities lending activity (up 82% in securities loaned balances).
- Total accounts grew substantially by 57% year-over-year to 1,536 thousand, and customer equity increased by 52% to $353.8 billion, indicating strong customer acquisition and engagement.
- Diluted Earnings Per Share (EPS) decreased to $0.43 for Q3 2021 from $0.58 in the prior-year quarter, reflecting the lower overall net revenues.
- Operating expenses increased by 7% to $230 million, mainly due to a 27% rise in employee compensation and benefits, reflecting expanded staffing in key areas.
- The company maintained a strong liquidity position, with total assets of $106.3 billion, of which approximately 99.1% were considered liquid.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2021filed November 9, 2021Financial Statements
Q3 FY2021 against Q3 FY2020
| Line item | Q3 FY2021Q3 FY2020 | Change |
|---|---|---|
| Revenue | $360.00M$324.00M | +11.1% |
| Interest Expense | $51.00M$45.00M | +13.3% |
| Net Income | $42.00M$46.00M | −8.7% |
| EPS (Basic) | $0.11$0.15 | −25.4% |
| EPS (Diluted) | $0.11$0.14 | −25.9% |
| Shares Outstanding (Basic) | 384.92M314.04M | +22.6% |
| Shares Outstanding (Diluted) | 387.96M316.48M | +22.6% |
05—Questions
Frequently Asked Questions
What was the primary driver behind the decrease in net revenues for the quarter?
The primary driver for the decrease in net revenues was a significant decline in 'Other Income,' which fell by $199 million. This was mainly due to mark-to-market losses on the company's strategic investment in Tiger Brokers and a less favorable performance from its currency diversification strategy compared to the prior year.
How did the company's core commission and interest income perform?
Core revenue streams showed strength. Commissions increased by 11% year-over-year, driven by higher customer trading volumes, particularly in stocks and options. Net interest income saw a substantial 41% increase, fueled by higher average margin loan balances and robust securities lending activity.
What is the company's outlook on customer growth and engagement?
The company reported impressive customer growth, with total accounts increasing by 57% year-over-year. Customer equity also grew by 52%, indicating that new and existing customers are increasing their investment with Interactive Brokers, which is a positive sign for future revenue potential.
How are operating expenses trending, and what is impacting them?
Operating expenses increased by 7% year-over-year to $230 million. The main driver of this increase was a 27% rise in employee compensation and benefits, which the company attributes to adding staff in customer service, compliance, and software development to support business growth.
06—Continue