Attached files
| file | filename |
|---|---|
| 8-K - Q1 2012 EARNINGS RELEASE - Interactive Brokers Group, Inc. | ibkr-8k_20120419.htm |
Exhibit 99.1
INTERACTIVE BROKERS GROUP ANNOUNCES 1Q2012 RESULTS
— — —
REPORTS COMPREHENSIVE EARNINGS PER SHARE OF $0.30, INCOME BEFORE TAXES OF $150 MILLION ON $304 MILLION IN NET REVENUES AND EARNINGS PER SHARE ON NET INCOME OF $0.24.
DECLARES QUARTERLY DIVIDEND OF $0.10 PER SHARE.
GREENWICH, CONN, April 19, 2012 — Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) an automated global electronic broker and market maker, today reported diluted earnings per share on a comprehensive basis of $0.30 for the quarter ended March 31, 2012, compared to diluted earnings per share on a comprehensive basis of $0.41 for the same period in 2011.
Reported results on a comprehensive basis reflect the GAAP convention adopted in 2011 that requires the reporting of currency translation results contained in Other Comprehensive Income as part of reportable earnings. Previously, currency translation results were reported as a component of changes in Total Equity in the Statement of Financial Condition.
On a non-comprehensive basis, which excludes the effect of changes in the U.S. dollar value of the Company’s non-U.S. subsidiaries, the Company reported diluted earnings per share on net income of $0.24 for the quarter ended March 31, 2012, compared to diluted earnings per share of $0.38 for the same period in 2011.
Net revenues were $304 million and income before income taxes was $150 million for this quarter, compared to net revenues of $368 million and income before income taxes of $222 million for the same period in 2011.
The Interactive Brokers Group, Inc. Board of Directors declared a quarterly cash dividend of $0.10 per share. This dividend is payable on June 14, 2012 to shareholders of record as of June 1, 2012.
Business Highlights
|
·
|
49% pretax profit margin for this quarter.
|
|
·
|
52% Electronic Brokerage pretax profit margin for this quarter.
|
|
·
|
46% Market Making pretax profit margin for this quarter.
|
|
·
|
Customer equity grew 17% from the year-ago quarter to $28.9 billion and customer accounts increased 16%.
|
|
·
|
Cleared DARTs increased 1% from the year-ago quarter to 391,000.
|
Segment Overview
Electronic Brokerage
Electronic Brokerage segment income before income taxes decreased 7%, to $83 million, in the quarter ended March 31, 2012 compared to the same period last year. Commissions and execution fees decreased 8% from the year-ago quarter, reflecting lighter customer trading activity. Annualized DARTS per cleared customer account were 511 in this quarter, compared to 597 for the same period in 2011. These declines were consistent with lower industry volumes in this quarter compared to the same period last year.
Customer accounts grew 16% to 195,000 from the year-ago quarter. Customer equity increased 17%, to $28.9 billion, from the year-ago quarter. Net interest income grew 14% from the year-ago quarter. Pretax profit margin was 52% for this quarter, down from 55% in the same period last year. Total DARTs(1) for cleared and execution-only customers increased 1% to 428,000 from the year-ago quarter. Cleared DARTs were 391,000 in this quarter, 1% higher than the same period last year.
Market Making
Market Making segment income before income taxes decreased 51%, to $66 million, for the quarter ended March 31, 2012 from the same period in 2011. This decrease was driven by a swing in currency translation gains, which contributed 80% of the decline, reflecting a $1 million loss in this quarter, compared to a $54 million gain in the year-ago quarter. Currency translation effects are reported as part of Trading Gains in the Market Making segment. The remaining decrease reflected lower volatility levels and the actual-to-implied volatility ratio, which was at its lowest level in two years. This negatively impacted market making profits because trading gains are impacted by actual volatility, while the cost of hedging is driven by implied volatility. Bid-offer spreads in U.S. options remained stable. Pretax profit margin was 46% in this quarter, compared to 67% in the same quarter last year. Market Making options contract volume increased 21%; and futures and stock volume decreased 18% and 19%, respectively, from the year-ago quarter.
Effects of Foreign Currency Diversification
In connection with our currency strategy, we have determined to base our net worth in GLOBALs, a basket of major currencies in which we hold our equity. In this quarter, our currency hedging program increased our comprehensive earnings as the U.S. dollar value of the GLOBAL increased by approximately 0.7%. The effects of currency hedging are reported as components of (1) Market Making Trading Gains and (2) Other Comprehensive Income, described below.
2
Comprehensive Income
Reported results on a comprehensive basis reflect the Company’s early adoption of U.S. GAAP guidance (2) issued in June 2011 that requires the presentation of a Statement of Comprehensive Income, replacing the former Statement of Income. The Statement of Comprehensive Income reports currency translation results that are a component of Other Comprehensive Income (“OCI”) directly in this statement. Previously, OCI was reported as a component of changes in Total Equity in the Statement of Financial Condition. In periods prior to the quarter ending June 30, 2011, we reported non-GAAP measures for the purpose of incorporating all currency translation gains and losses in the Statement of Income. This reporting method is now required under GAAP guidance.
|
(1)
|
Daily average revenue trades (DARTs) are based on customer orders.
|
|
(2)
|
Accounting Standards Update 2011-05, Comprehensive Income.
|
_____________________
Conference Call Information:
Interactive Brokers Group will hold a conference call with investors today, April 19, 2012, at 4:30 p.m. ET to discuss its quarterly results. Investors who would like to listen to the conference call live should dial 877-324-1965 (U.S. domestic) and 631-291-4512 (international). The number should be dialed approximately ten minutes prior to the start of the conference call. Ask for the “Interactive Brokers Conference Call.”
The conference call will also be accessible simultaneously, and through replays, as an audio webcast through the Investor Relations section of the Interactive Brokers web site, www.interactivebrokers.com/ir.
About Interactive Brokers Group, Inc.:
Interactive Brokers Group, Inc., together with its subsidiaries, is an automated global electronic broker that specializes in catering to financial professionals by offering state-of-the-art trading technology, superior execution capabilities, worldwide electronic access, and sophisticated risk management tools at exceptionally low costs. The brokerage trading platform utilizes the same innovative technology as the Company’s market making business, which specializes in routing orders and executing and processing trades in securities, futures, foreign exchange instruments, bonds and funds on more than 100 electronic exchanges and trading venues around the world. As a market maker, we provide liquidity at these marketplaces and, as a broker, we provide professional traders and investors with electronic access to stocks, options, futures, forex, bonds and mutual funds from a single IB Universal AccountSM. Employing proprietary software on a global communications network, Interactive Brokers is continuously integrating its software with a growing number of exchanges and trading venues into one automatically functioning, computerized platform that requires minimal human intervention.
Cautionary Note Regarding Forward-Looking Statements:
The foregoing information contains certain forward-looking statements that reflect the company's current views with respect to certain current and future events and financial performance. These forward-looking statements are and will be, as the case may be, subject to many risks, uncertainties and factors relating to the company's operations and business environment which may cause the company's actual results to be materially different from any future results, expressed or implied, in these forward-looking statements. Any forward-looking statements in this release are based upon information available to the company on the date of this release. The company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any statements expressed or implied therein will not be realized. Additional information on risk factors that could potentially affect the company's financial results may be found in the company's filings with the Securities and Exchange Commission.
For Interactive Brokers Group, Inc. Media: Caitlin Duffy, 203-913-1369 or Investors: Deborah Liston, 203-618-4070.
3
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
OPERATING DATA
|
TRADE VOLUMES:
|
|||||||||
|
(in 000's, except %)
|
Brokerage
|
||||||||
|
Market
|
Brokerage
|
Non
|
Avg. Trades
|
||||||
|
Making
|
%
|
Cleared
|
%
|
Cleared
|
%
|
Total
|
%
|
per U.S.
|
|
|
Period
|
Trades
|
Change
|
Trades
|
Change
|
Trades
|
Change
|
Trades
|
Change
|
Trading Day
|
|
2007
|
99,086
|
72,931
|
16,638
|
188,655
|
752
|
||||
|
2008
|
101,672
|
3%
|
120,195
|
65%
|
16,966
|
2%
|
238,833
|
27%
|
944
|
|
2009
|
93,550
|
-8%
|
127,338
|
6%
|
13,636
|
-20%
|
234,524
|
-2%
|
934
|
|
2010
|
75,169
|
-20%
|
133,658
|
5%
|
18,732
|
37%
|
227,559
|
-3%
|
905
|
|
2011
|
63,602
|
-15%
|
160,567
|
20%
|
19,187
|
2%
|
243,356
|
7%
|
968
|
|
1Q2011
|
14,488
|
38,023
|
4,458
|
56,969
|
919
|
||||
|
1Q2012
|
15,045
|
4%
|
37,521
|
-1%
|
4,826
|
8%
|
57,392
|
1%
|
926
|
|
CONTRACT AND SHARE VOLUMES:
|
|||||||
|
(in 000's, except %)
|
|||||||
|
TOTAL
|
Options
|
%
|
Futures*
|
%
|
Stocks
|
%
|
|
|
Period
|
(contracts)
|
Change
|
(contracts)
|
Change
|
(shares)
|
Change
|
|
|
2007
|
673,144
|
83,134
|
47,324,798
|
||||
|
2008
|
757,732
|
13%
|
108,984
|
31%
|
55,845,428
|
18%
|
|
|
2009
|
643,380
|
-15%
|
82,345
|
-24%
|
75,449,891
|
35%
|
|
|
2010
|
678,856
|
6%
|
96,193
|
17%
|
84,469,874
|
12%
|
|
|
2011
|
789,370
|
16%
|
106,640
|
11%
|
77,730,974
|
-8%
|
|
|
1Q2011
|
168,164
|
24,138
|
22,028,447
|
||||
|
1Q2012
|
180,786
|
8%
|
21,690
|
-10%
|
17,862,025
|
-19%
|
|
|
MARKET MAKING
|
Options
|
%
|
Futures*
|
%
|
Stocks
|
%
|
|
|
Period
|
(contracts)
|
Change
|
(contracts)
|
Change
|
(shares)
|
Change
|
|
|
2007
|
447,905
|
14,520
|
24,558,314
|
||||
|
2008 **
|
514,629
|
15%
|
21,544
|
48%
|
26,008,433
|
6%
|
|
|
2009 **
|
428,810
|
-17%
|
15,122
|
-30%
|
26,205,229
|
1%
|
|
|
2010 **
|
435,184
|
1%
|
15,371
|
2%
|
19,165,000
|
-27%
|
|
|
2011 **
|
503,053
|
16%
|
15,519
|
1%
|
11,788,769
|
-38%
|
|
|
1Q2011 **
|
97,595
|
3,428
|
2,633,325
|
||||
|
1Q2012 **
|
118,438
|
21%
|
2,828
|
-18%
|
2,138,451
|
-19%
|
|
|
BROKERAGE TOTAL
|
Options
|
%
|
Futures*
|
%
|
Stocks
|
%
|
|
|
Period
|
(contracts)
|
Change
|
(contracts)
|
Change
|
(shares)
|
Change
|
|
|
2007
|
225,239
|
68,614
|
22,766,484
|
||||
|
2008
|
243,103
|
8%
|
87,440
|
27%
|
29,836,995
|
31%
|
|
|
2009
|
214,570
|
-12%
|
67,223
|
-23%
|
49,244,662
|
65%
|
|
|
2010
|
243,672
|
14%
|
80,822
|
20%
|
65,304,874
|
33%
|
|
|
2011
|
286,317
|
18%
|
91,121
|
13%
|
65,942,205
|
1%
|
|
|
1Q2011
|
70,569
|
20,710
|
19,395,122
|
||||
|
1Q2012
|
62,348
|
-12%
|
18,862
|
-9%
|
15,723,574
|
-19%
|
|
|
* Includes options on futures
|
|
** In Brazil, an equity option contract typically represents 1 share of the underlying stock; however, the typical minimum
|
|
trading quantity is 100 contracts. To make a fair comparison to volume at other exchanges, we have adopted a policy
|
|
of reporting Brazilian equity options contracts divided by their trading quantity of 100.
|
4
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
OPERATING DATA, CONTINUED
|
BROKERAGE CLEARED
|
Options
|
%
|
Futures*
|
%
|
Stocks
|
%
|
|
|
Period
|
(contracts)
|
Change
|
(contracts)
|
Change
|
(shares)
|
Change
|
|
|
2007
|
51,586
|
66,278
|
20,353,584
|
||||
|
2008
|
77,207
|
50%
|
85,599
|
29%
|
26,334,752
|
29%
|
|
|
2009
|
93,868
|
22%
|
66,241
|
-23%
|
46,627,344
|
77%
|
|
|
2010
|
103,054
|
10%
|
79,144
|
19%
|
62,077,741
|
33%
|
|
|
2011
|
145,993
|
42%
|
89,610
|
13%
|
63,098,072
|
2%
|
|
|
1Q2011
|
33,762
|
20,332
|
18,722,839
|
||||
|
1Q2012
|
33,377
|
-1%
|
18,646
|
-8%
|
15,115,753
|
-19%
|
|
|
* Includes options on futures
|
|||||||
|
BROKERAGE STATISTICS
|
|||
|
(in 000's, except % and where noted)
|
|||
|
1Q2012
|
1Q2011
|
% Change
|
|
|
Total Accounts
|
195
|
168
|
16%
|
|
Customer Equity (in billions) *
|
$28.9
|
$24.8
|
17%
|
|
Cleared DARTs
|
391
|
387
|
1%
|
|
Total Customer DARTs
|
428
|
423
|
1%
|
|
Cleared Customers (in $'s, except DART per account)
|
|||
|
Commission per DART
|
$4.01
|
$4.38
|
-8%
|
|
DART per Avg. Account (Annualized)
|
511
|
597
|
-14%
|
|
Net Revenue per Avg. Account (Annualized)
|
$3,240
|
$3,891
|
-17%
|
|
* Excludes non-customers
|
|||
5
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
SEGMENT FINANCIAL INFORMATION
(UNAUDITED)
|
Three Months
|
||||||
|
Ended March 31,
|
||||||
|
2012
|
2011
|
|||||
|
(in millions)
|
||||||
|
Electronic Brokerage
|
Net revenues
|
$159.3
|
$163.7
|
|||
|
Non-interest expenses
|
75.9
|
73.6
|
||||
|
Income before income taxes
|
$83.4
|
$90.1
|
||||
|
Pre-tax profit margin
|
52
|
% |
55
|
% | ||
|
Market Making
|
Net revenues
|
$142.4
|
$202.3
|
|||
|
Non-interest expenses
|
76.4
|
67.7
|
||||
|
Income (loss) before income taxes
|
$66.0
|
$134.6
|
||||
|
Pre-tax profit margin
|
46
|
% |
67
|
% | ||
|
Corporate*
|
Net revenues
|
$2.2
|
$1.9
|
|||
|
Non-interest expenses
|
1.9
|
4.6
|
||||
|
Income (loss) before income taxes
|
$0.3
|
($2.7
|
) | |||
|
Total
|
Net revenues
|
$303.9
|
$367.9
|
|||
|
Non-interest expenses
|
154.2
|
145.9
|
||||
|
Income before income taxes
|
$149.7
|
$222.0
|
||||
|
Pre-tax profit margin
|
49
|
% |
60
|
% | ||
|
* Corporate includes corporate related activities as well as inter-segment eliminations.
|
||||||
6
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
|
Three Months
|
|||||
|
Ended March 31,
|
|||||
|
2012
|
2011
|
||||
|
(in millions, except share and per share data)
|
|||||
|
Revenues:
|
|||||
|
Trading gains
|
$137.3
|
$200.3
|
|||
|
Commissions and execution fees
|
100.9
|
109.2
|
|||
|
Interest income
|
66.6
|
58.7
|
|||
|
Other income
|
18.3
|
17.4
|
|||
|
Total revenues
|
323.1
|
385.6
|
|||
|
Interest expense
|
19.2
|
17.7
|
|||
|
Total net revenues
|
303.9
|
367.9
|
|||
|
Non-interest expenses:
|
|||||
|
Execution and clearing
|
64.6
|
66.2
|
|||
|
Employee compensation and benefits
|
62.7
|
52.4
|
|||
|
Occupancy, depreciation and amortization
|
9.9
|
9.2
|
|||
|
Communications
|
5.7
|
5.5
|
|||
|
General and administrative
|
11.3
|
12.6
|
|||
|
Total non-interest expenses
|
154.2
|
145.9
|
|||
|
Income before income taxes
|
149.7
|
222.0
|
|||
|
Income tax expense
|
8.7
|
18.7
|
|||
|
Net income
|
141.0
|
203.3
|
|||
|
Net income attributable to non-controlling interests
|
129.9
|
187.0
|
|||
|
Net income (loss) available for common stockholders
|
$11.1
|
$16.3
|
|||
|
Earnings (loss) per share
|
|||||
|
Basic
|
$0.24
|
$0.38
|
|||
|
Diluted
|
$0.24
|
$0.38
|
|||
|
Weighted average common shares outstanding
|
|||||
|
Basic
|
45,576,925
|
42,231,651
|
|||
|
Diluted
|
45,951,464
|
42,791,822
|
|||
|
Comprehensive income:
|
|||||
|
Net income (loss) available for common stockholders
|
$11.1
|
$16.3
|
|||
|
Other comprehensive income:
|
|||||
|
Cumulative translation adjustment, before income taxes
|
4.1
|
1.9
|
|||
|
Income taxes related to items of other comprehensive income
|
1.5
|
0.7
|
|||
|
Other comprehensive income (loss), net of tax
|
2.6
|
1.2
|
|||
|
Comprehensive income (loss) available for common stockholders
|
$13.7
|
$17.5
|
|||
|
Comprehensive income attributable to non-controlling interests:
|
|||||
|
Net income attributable to non-controlling interests
|
129.9
|
$187.0
|
|||
|
Other comprehensive income (loss) - cumulative translation adjustment
|
31.6
|
16.6
|
|||
|
Comprehensive income attributable to non-controlling interests
|
$161.5
|
$203.6
|
|||
7
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
EARNINGS PER SHARE ON COMPREHENSIVE INCOME
(UNAUDITED)
|
Three months ended
|
||||||
|
Ended March 31,
|
||||||
|
2012
|
2011
|
|||||
|
(in millions, except share and per share data)
|
||||||
|
Net income (loss) available for common stockholders
|
$11.1
|
$16.3
|
||||
|
Other comprehensive income:
|
||||||
|
Cumulative translation adjustment, before income taxes
|
4.1
|
1.9
|
||||
|
Income taxes related to items of other comprehensive income
|
1.5
|
0.7
|
||||
|
Other comprehensive income (loss), net of tax
|
2.6
|
1.2
|
||||
|
Comprehensive income (loss) available for common stockholders
|
$13.7
|
$17.5
|
||||
|
Comprehensive income (loss) per share:
|
||||||
|
Basic
|
$0.30
|
$0.41
|
||||
|
Diluted
|
$0.30
|
$0.41
|
||||
|
Weighted average common shares outstanding:
|
||||||
|
Basic
|
45,576,925
|
42,231,651
|
||||
|
Diluted
|
45,951,464
|
42,791,822
|
||||
8
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
|
March 31,
|
December 31,
|
|||
|
2012
|
2011
|
|||
|
(in millions)
|
||||
|
Assets
|
||||
|
Cash and cash equivalents
|
$1,551.4
|
$1,695.5
|
||
|
Cash and securities - segregated for regulatory purposes
|
11,028.5
|
10,069.9
|
||
|
Securities purchased under agreements to resell
|
365.2
|
375.4
|
||
|
Securities borrowed
|
3,083.7
|
2,661.7
|
||
|
Trading assets, at fair value
|
6,443.6
|
6,615.1
|
||
|
Receivables from customers, net of allowance
|
8,458.0
|
7,024.8
|
||
|
Receivables from brokers, dealers and clearing organizations
|
1,192.3
|
1,397.8
|
||
|
Other assets
|
573.7
|
564.2
|
||
|
Total assets
|
$32,696.4
|
$30,404.4
|
||
|
Liabilities and equity
|
||||
|
Liabilities
|
||||
|
Trading liabilities - financial instruments sold but not yet purchased, at fair value
|
$5,674.5
|
$6,156.1
|
||
|
Securities loaned
|
1,768.1
|
1,386.1
|
||
|
Short-term borrowings
|
14.5
|
6.5
|
||
|
Other payables:
|
||||
|
Customers
|
19,501.9
|
17,300.1
|
||
|
Brokers, dealers and clearing organizations
|
334.1
|
247.4
|
||
|
Other payables
|
551.4
|
520.8
|
||
|
20,387.4
|
18,068.3
|
|||
|
Senior notes payable and senior secured credit facility
|
30.2
|
101.4
|
||
|
Equity
|
||||
|
Stockholders' equity
|
580.4
|
571.2
|
||
|
Non-controlling interests
|
4,241.3
|
4,114.8
|
||
|
Total equity
|
4,821.7
|
4,686.0
|
||
|
Total liabilities and equity
|
$32,696.4
|
$30,404.4
|
||
9