Summary
Interactive Brokers Group, Inc. (IBKR) filed an 8-K on October 22, 2009, reporting its third-quarter 2009 financial results. The company announced diluted earnings per share (EPS) of $0.20 for the quarter ended September 30, 2009, a significant decrease from $0.65 in the same period of 2008. This decline was driven by lower net revenues of $272 million compared to $497 million in Q3 2008, and reduced income before taxes to $133 million from $348 million year-over-year. The company cited intensifying competition and compressed spreads in exchange-listed derivatives markets as key factors affecting performance, particularly impacting its Market Making segment. Despite the year-over-year decline in earnings and revenue, IBKR highlighted strong operational growth within its Electronic Brokerage segment. Customer accounts increased by 20% and customer equity saw a substantial 43% rise compared to the prior year. The company maintained a robust pre-tax profit margin of 49% overall for the quarter, with its Electronic Brokerage segment achieving a 51% margin. The report indicates a challenging environment for market makers due to tighter bid/offer spreads, leading to a 74% decrease in Market Making segment income before taxes compared to Q3 2008, though its pre-tax margin remained strong at 49%.
Key Highlights
- 1Diluted Earnings Per Share (EPS) for Q3 2009 was $0.20, a significant decrease from $0.65 in Q3 2008.
- 2Net revenues for Q3 2009 were $272 million, down from $497 million in Q3 2008.
- 3Income before income taxes for Q3 2009 was $133 million, compared to $348 million in Q3 2008.
- 4Customer accounts in the Electronic Brokerage segment grew by 20% year-over-year.
- 5Customer equity in the Electronic Brokerage segment increased by 43% year-over-year.
- 6Market Making segment income before taxes decreased by 74% year-over-year due to compressed spreads, though the pre-tax margin remained strong at 49%.
- 7Electronic Brokerage segment pre-tax margin improved to 51% from 47% in the prior year period.