Company Announcements

Interactive Brokers Group Announces 4Q2019 Results

Diluted Earnings Per Share of $0.57, Adjusted Diluted Earnings Per Share of $0.58

Income Before Taxes of $312 Million on $500 Million in Net Revenues. Adjusted Income Before Taxes of $315 Million on $503 Million in Adjusted Net Revenues1

Declares Quarterly Dividend of $0.10 Per Share

GREENWICH, Conn.--(BUSINESS WIRE)--Jan. 21, 2020-- Interactive Brokers Group, Inc. (NASDAQ GS:IBKR), an automated global electronic broker, reported diluted earnings per share of $0.57 for the quarter ended December 31, 2019 compared to $0.57 for the same period in 2018, and adjusted diluted earnings per share of $0.58 for both this quarter and for the same period in 2018.

Net revenues were $500 million and income before income taxes was $312 million this quarter, compared to net revenues of $492 million and income before income taxes of $309 million for the same period in 2018. Adjusted net revenues were $503 million and adjusted income before income taxes was $315 million this quarter, compared to adjusted net revenues of $496 million and adjusted income before income taxes of $313 million. The results for the quarter were positively impacted by strong growth in net interest income, which increased $44 million, or 18%, from the year-ago quarter; partially counterbalanced by lower commissions revenue, which decreased $37 million, or 18%, from the year-ago quarter.

The Interactive Brokers Group, Inc. Board of Directors declared a quarterly cash dividend of $0.10 per share. This dividend is payable on March 13, 2020 to shareholders of record as of February 28, 2020.

Effective this quarter, we introduced the reporting of non-GAAP financial measures which exclude certain items that may not be indicative of our core operating results and business outlook and may be useful in evaluating the operating performance of our business and provide a better comparison of our results in the current period to those in prior and future periods. See the reconciliation of non-GAAP financial measures starting on page 11.

Business Highlights

Fourth Quarter 2019:

  • 62% pretax profit margin for this quarter, down from 63% in the year-ago quarter.
  • 65% Electronic Brokerage pretax profit margin for this quarter, up from 63% in the year-ago quarter.
  • Customer equity grew 36% from the year-ago quarter to $174.1 billion and customer debits increased 15% to $31.0 billion.
  • Customer accounts increased 15% from the year-ago quarter to 690 thousand.
  • Total DARTs2 decreased 16% from the year-ago quarter to 797 thousand.
  • Brokerage segment equity was $6.8 billion. Total equity was $7.9 billion.

Full Year 2019:

  • 60% pretax profit margin for 2019, down from 63% in 2018.
  • 62% Electronic Brokerage pretax profit margin for 2019, down from 64% in 2018.
  • Total DARTs decreased 3% from 2018 to 833 thousand.

____________________
1
See the reconciliation of non-GAAP financial measures starting on page 11.
2 Daily average revenue trades (DARTs) are based on customer orders.

Segment Overview

Electronic Brokerage

Electronic brokerage segment income before income taxes increased 1% to $314 million in the quarter ended December 31, 2019, compared to the same period last year. Net revenues decreased 1% to $486 million on lower commissions revenue and other income, partially offset by higher net interest income.

Commissions revenue decreased 18% from the year-ago quarter on lower customer trading volume in options, futures and stocks. Net interest income increased 19% as average customer credit balances and securities lending balances increased from the year-ago quarter. Pretax profit margin was 65% for the quarter ended December 31, 2019, up from 63% in the same period last year.

Customer accounts grew 15% to 690 thousand and customer equity increased 36% from the year-ago quarter to $174.1 billion. Total DARTs for cleared and execution-only customers decreased 16% to 797 thousand from the year-ago quarter. Cleared DARTs decreased 16% to 719 thousand from the same period last year.

Market Making

Market making segment income before income taxes decreased 44% to $5 million in the quarter ended December 31, 2019, compared to the same period last year, primarily due to lower net revenues from the remaining operations.

Corporate

For the quarter ended December 31, 2019, we recognized a mark-to-market loss of approximately $7 million on our strategic investment in Up Fintech Holding Limited (“Tiger Brokers”). For the twelve months ended December 31, 2019 we recognized a net mark-to-market gain of $9 million on this investment.

Effects of Foreign Currency Diversification

In connection with our currency diversification strategy, we have determined to base our net worth in GLOBALs, a basket of 14 major currencies in which we hold our equity. In this quarter, our currency diversification strategy increased our comprehensive earnings by $50 million, as the U.S. dollar value of the GLOBAL increased by approximately 0.74%. The effects of the currency diversification strategy are reported as components of (1) Other Income ($12 million) in the corporate segment and (2) Other Comprehensive Income ($38 million). With the introduction of non-GAAP measures, which exclude the impact of the GLOBAL, the Company has removed diluted earnings per share on comprehensive income from the above disclosures.

Regulatory Matters

The Company is subject to regulatory oversight and examination by numerous governmental and self-regulatory authorities. The Company is currently providing information to certain of such authorities, including FINRA, the SEC, the CFTC and the United States Department of Justice, and cooperating with those authorities. The Company believes that the regulators are focused on compliance practices, including anti money laundering and Bank Secrecy Act practices. The Company periodically reviews these practices to make them more robust and to keep pace with changing regulatory standards, and the Company has been enhancing and augmenting its procedures and personnel in these areas over the past several years. While the outcome of the examinations and inquiries currently in progress cannot be predicted, the Company does not believe that they are likely to have a materially adverse effect on the Company’s financial results.

Conference Call Information:

Interactive Brokers Group, Inc. will hold a conference call with investors today, January 21, 2020, 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 affiliates provide automated trade execution and custody of securities, commodities and foreign exchange around the clock on over 125 markets in numerous countries and currencies, from a single IBKR Integrated Investment Account to customers worldwide. We service individual investors, hedge funds, proprietary trading groups, financial advisors and introducing brokers. Our four decades of focus on technology and automation has enabled us to equip our customers with a uniquely sophisticated platform to manage their investment portfolios at the lowest cost according to Barron's Best Online Brokers review, February 25, 2019. We strive to provide our customers with advantageous execution prices and trading, risk and portfolio management tools, research facilities and investment products, all at low or no cost, positioning them to achieve superior returns on investments.

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.

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

2017

31,282

265,501

14,835

311,618

1,246

2018

18,663

(40%)

328,099

24%

21,880

47%

368,642

18%

1,478

2019

17,136

(8%)

302,289

(8%)

26,346

20%

345,771

(6%)

1,380

 

 

4Q2018

4,825

88,806

7,251

100,882

1,627

4Q2019

4,204

(13%)

73,291

(17%)

6,284

(13%)

83,779

(17%)

1,330

 

 

3Q2019

4,738

78,793

6,566

90,097

1,419

4Q2019

4,204

(11%)

73,291

(7%)

6,284

(4%)

83,779

(7%)

1,330

 
 
CONTRACT AND SHARE VOLUMES:
(in 000's, except %)
 

TOTAL

Options % Futures1 % Stocks %

Period

(contracts) Change (contracts) Change (shares) Change

2017

395,885

124,123

220,247,921

2018

408,406

3%

151,762

22%

210,257,186

(5%)

2019

390,739

(4%)

128,770

(15%)

176,752,967

(16%)

 

 

4Q2018

107,417

41,684

44,933,688

4Q2019

100,520

(6%)

29,078

(30%)

39,391,536

(12%)

 

 

3Q2019

103,972

36,124

43,107,364

4Q2019

100,520

(3%)

29,078

(20%)

39,391,536

(9%)

 

 

MARKET MAKING

Options % Futures1 % Stocks %

Period

(contracts) Change (contracts) Change (shares) Change

2017

102,025

5,696

7,139,622

2018

49,554

(51%)

3,277

(42%)

11,347,811

59%

2019

41,452

(16%)

2,407

(27%)

8,926,477

(21%)

 

 

4Q2018

12,680

828

3,091,834

4Q2019

8,958

(29%)

448

(46%)

1,403,411

(55%)

 

 

3Q2019

10,848

697

2,082,317

4Q2019

8,958

(17%)

448

(36%)

1,403,411

(33%)

 

 

BROKERAGE TOTAL

Options % Futures1 % Stocks %

Period

(contracts) Change (contracts) Change (shares) Change

2017

293,860

118,427

213,108,299

2018

358,852

22%

148,485

25%

198,909,375

(7%)

2019

349,287

(3%)

126,363

(15%)

167,826,490

(16%)

 

 

4Q2018

94,737

40,856

41,841,854

4Q2019

91,562

(3%)

28,630

(30%)

37,988,125

(9%)

 

 

3Q2019

93,124

35,427

41,025,047

4Q2019

91,562

(2%)

28,630

(19%)

37,988,125

(7%)

_____________________________
1
Includes options on futures

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

OPERATING DATA, CONTINUED

 

BROKERAGE CLEARED

Options % Futures1 % Stocks %

Period

(contracts) Change (contracts) Change (shares) Change

2017

253,304

116,858

209,435,662

2018

313,795

24%

146,806

26%

194,012,882

(7%)

2019

302,068

(4%)

125,225

(15%)

163,030,500

(16%)

 

 

4Q2018

83,984

40,463

40,271,369

4Q2019

81,468

(3%)

28,307

(30%)

36,969,492

(8%)

 

 

3Q2019

80,840

35,108

39,891,867

4Q2019

81,468

1%

28,307

(19%)

36,969,492

(7%)

___________________________
1
Includes options on futures
BROKERAGE STATISTICS
(in 000's, except % and where noted)
 
Year over Year 4Q2019 4Q2018 % Change
Total Accounts

690

598

15%

Customer Equity (in billions)1

$

174.1

$

128.4

36%

Cleared DARTs

719

856

(16%)

Total Customer DARTs

797

951

(16%)

 
Cleared Customers (in $'s, except DART per account)
Commission per DART

$

3.61

$

3.79

(5%)

DART per Avg. Account (Annualized)

266

364

(27%)

Net Revenue per Avg. Account (Annualized)

$

2,801

$

3,225

(13%)

 
Consecutive Quarters 4Q2019 3Q2019 % Change
Total Accounts

690

666

4%

Customer Equity (in billions)1

$

174.1

$

156.6

11%

Cleared DARTs

719

777

(7%)

Total Customer DARTs

797

859

(7%)

 
Cleared Customers (in $'s, except DART per account)
Commission per DART

$

3.61

$

3.69

(2%)

DART per Avg. Account (Annualized)

266

297

(10%)

Net Revenue per Avg. Account (Annualized)

$

2,801

$

2,995

(6%)

__________________
1
Excludes non-Customers.

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

NET INTEREST MARGIN

(UNAUDITED)

 

Three Months

 

Twelve Months

Ended December 31,

 

Ended December 31,

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

 

 

 

(in millions)

Average interest-earning assets
Segregated cash and securities

$

29,437

 

$

21,957

 

$

27,812

 

$

20,911

 

Customer margin loans

27,529

 

28,805

 

26,483

 

29,253

 

Securities borrowed

4,026

 

3,407

 

3,930

 

3,310

 

Other interest-earning assets

5,887

 

4,825

 

5,407

 

4,362

 

FDIC sweeps1

2,201

 

1,673

 

2,046

 

1,259

 

$

69,080

 

$

60,667

 

$

65,678

 

$

59,095

 

 
Average interest-bearing liabilities
Customer credit balances

$

55,185

 

$

49,153

 

$

52,625

 

$

48,179

 

Securities loaned

4,292

 

3,729

 

4,088

 

3,982

 

Other interest-bearing liabilities

477

 

-

 

196

 

241

 

$

59,954

 

$

52,882

 

$

56,909

 

$

52,402

 

 
Net interest income
Segregated cash and securities, net

$

126

 

$

104

 

$

560

 

$

337

 

Customer margin loans2

157

 

192

 

694

 

677

 

Securities borrowed and loaned, net

80

 

50

 

257

 

216

 

Customer credit balances, net2

(94

)

(121

)

(515

)

(362

)

Other net interest income1/3

27

 

27

 

121

 

90

 

Net interest income3

$

296

 

$

252

 

$

1,117

 

$

958

 

 
Net interest margin ("NIM")

1.70

%

1.65

%

1.70

%

1.62

%

 
Annualized yields
Segregated cash and securities

1.70

%

1.88

%

2.01

%

1.61

%

Customer margin loans

2.26

%

2.64

%

2.62

%

2.31

%

Customer credit balances

0.68

%

0.98

%

0.98

%

0.75

%

_________________________________________

1

Represents the average amount of customer cash swept into FDIC-insured banks as part of our Insured Bank Deposit Sweep Program. This item is not recorded in the Company's consolidated statements of financial condition. Income derived from program deposits is reported in other net interest income in the table above.

2

Interest income and interest expense on customer margin loans and customer credit balances, respectively, are calculated on daily cash balances within each customer’s account on a net basis, which may result in an offset of balances across multiple account segments (e.g., between securities and commodities segments).

3

Includes income from financial instruments which has the same characteristics as interest, but is reported in other income in the Company’s consolidated statements of comprehensive income, of $9 million for the three months ended December 31, 2019 and 2018, and $34 million and $29 million for the twelve months ended December 31, 2019 and 2018, respectively.

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

SEGMENT FINANCIAL INFORMATION

(UNAUDITED)

                 

Three Months

 

Twelve Months

Ended December 31,

 

Ended December 31,

2019

 

2018

 

2019

 

2018

(in millions)

 
Electronic Brokerage Net revenues

$

486

$

490

$

1,921

$

1,842

Non-interest expenses

172

179

724

665

 
Income before income taxes

$

314

$

311

$

1,197

$

1,177

 
Pre-tax profit margin

65

%

63

%

62

%

64

%

 
Market Making Net revenues

$

15

$

17

$

67

$

76

Non-interest expenses

10

8

37

42

 
Income before income taxes

$

5

$

9

$

30

$

34

 
Pre-tax profit margin

33

%

53

%

45

%

45

%

 
Corporate 1 Net revenues

$

(1)

$

(15)

$

(51)

$

(15)

Non-interest expenses

6

(4)

19

--

 
Income (loss) before income taxes

$

(7)

$

(11)

$

(70)

$

(15)

 
 
Total Net revenues

$

500

$

492

$

1,937

$

1,903

Non-interest expenses

188

183

780

707

 
Income before income taxes

$

312

$

309

$

1,157

$

1,196

 
Pre-tax profit margin

62

%

63

%

60

%

63

%

_________________________________________

1

Corporate includes corporate related activities as well as inter-segment eliminations and gains and losses on positions held as part of our overall currency diversification strategy.

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

                 

Three Months

 

Twelve Months

Ended December 31,

 

Ended December 31,

2019

 

2018

 

2019

 

2018

(in millions, except share and per share data)

 
Revenues:
Commissions

$

168

 

$

205

 

$

706

 

$

777

 

Interest income

418

 

385

 

1,726

 

1,392

 

Trading gains

7

 

7

 

27

 

39

 

Other income

38

 

37

 

121

 

158

 

 
Total revenues

631

 

634

 

2,580

 

2,366

 

 
Interest expense

131

 

142

 

643

 

463

 

 
Total net revenues

500

 

492

 

1,937

 

1,903

 

 
Non-interest expenses:
Execution, clearing and distribution fees

59

 

73

 

251

 

269

 

Employee compensation and benefits

75

 

63

 

288

 

264

 

Occupancy, depreciation and amortization

17

 

14

 

60

 

49

 

Communications

6

 

5

 

25

 

25

 

General and administrative

32

 

26

 

112

 

96

 

Customer bad debt

(1

)

2

 

44

 

4

 

 
Total non-interest expenses

188

 

183

 

780

 

707

 

 
Income before income taxes

312

 

309

 

1,157

 

1,196

 

 
Income tax expense

18

 

19

 

68

 

71

 

 
Net income

294

 

290

 

1,089

 

1,125

 

 
Net income attributable to noncontrolling interests

250

 

247

 

928

 

956

 

 
Net income available for common stockholders

$

44

 

$

43

 

$

161

 

$

169

 

 
Earnings per share:
Basic

$

0.58

 

$

0.58

 

$

2.11

 

$

2.30

 

Diluted

$

0.57

 

$

0.57

 

$

2.10

 

$

2.28

 

 
Weighted average common shares outstanding:
Basic

76,749,142

 

75,097,578

 

76,121,570

 

73,438,209

 

Diluted

77,357,093

 

75,810,322

 

76,825,863

 

74,266,370

 

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

                 

Three Months

 

Twelve Months

Ended December 31,

 

Ended December 31,

2019

 

2018

 

2019

 

2018

 

(in millions, except share and per share data)

 
Comprehensive income:
Net income available for common stockholders

$

44

$

43

 

$

161

$

169

 

Other comprehensive income:
Cumulative translation adjustment, before income taxes

7

 

-

 

4

 

(14

)

Income taxes related to items of other comprehensive income

-

 

-

 

-

 

(1

)

Other comprehensive income (loss), net of tax

7

 

-

 

4

 

(13

)

Comprehensive income available for common stockholders

$

51

 

$

43

 

$

165

 

$

156

 

 
Comprehensive earnings per share:
Basic

$

0.67

 

$

0.56

 

$

2.18

 

$

2.12

 

Diluted

$

0.66

 

$

0.56

 

$

2.16

 

$

2.09

 

 
Weighted average common shares outstanding:
Basic

76,749,142

 

75,097,578

 

76,121,570

 

73,438,209

 

Diluted

77,357,093

 

75,810,322

 

76,825,863

 

74,266,370

 

 
 
Comprehensive income attributable to noncontrolling interests:
Net income attributable to noncontrolling interests

$

250

 

$

247

 

$

928

 

$

956

 

Other comprehensive income - cumulative translation adjustment

31

 

(6

)

20

 

(66

)

Comprehensive income attributable to noncontrolling interests

$

281

 

$

241

 

$

948

 

$

890

 

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

   
December 31,
2019
December 31,
2018
(in millions)
Assets
Cash and cash equivalents

$

2,882

 

$

2,597

 

Cash - segregated for regulatory purposes

9,400

 

7,503

 

Securities - segregated for regulatory purposes

17,824

 

15,595

 

Securities borrowed

3,916

 

3,331

 

Securities purchased under agreements to resell

3,111

 

1,242

 

Financial instruments owned, at fair value

1,916

 

2,119

 

Receivables from customers, net of allowance for doubtful accounts  

31,304

 

27,017

 

Receivables from brokers, dealers and clearing organizations  

685

 

706

 

Other assets

638

 

437

 

Total assets

$

71,676

 

$

60,547

 

Liabilities and equity
Liabilities
Short-term borrowings

$

16

 

$

17

 

Securities loaned

4,410

 

4,037

 

Securities sold under agreements to repurchase

1,909

 

-

 

Financial instruments sold but not yet purchased, at fair value  

457

 

681

 

Other payables:
Customers

56,248

 

47,993

 

Brokers, dealers and clearing organizations

220

 

298

 

Other payables

476

 

365

 

56,944

 

48,656

 

Total liabilities

63,736

 

53,391

 

Equity
Stockholders' equity

1,452

 

1,282

 

Noncontrolling interests

6,488

 

5,874

 

Total equity

7,940

 

7,156

 

Total liabilities and equity

$

71,676

 

$

60,547

 

December 31, 2019 December 31, 2018
Ownership of IBG LLC Membership Interests Interests % Interests %
IBG, Inc.

76,759,595

18.5

%

75,100,955

18.1

%

Noncontrolling interests (IBG Holdings LLC)

338,670,642

 

81.5

%

338,691,717

 

81.9

%

Total IBG LLC membership interests

415,430,237

 

100.0

%

413,792,672

 

100.0

%

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(UNAUDITED)

                 

Three Months

 

Twelve Months

Ended December 31,

 

Ended December 31,

2019

 

2018

 

2019

 

2018

(in millions)

 
Adjusted net revenues1
Net revenues - GAAP

$

500

 

$

492

 

$

1,937

 

$

1,903

 

Non-GAAP adjustments
Currency diversification strategy, net

(12

)

12

 

60

 

19

 

Mark-to-market on investments2

15

 

(8

)

(13

)

(9

)

Total non-GAAP adjustments

3

 

4

 

47

 

10

 

Adjusted net revenues

$

503

 

$

496

 

$

1,984

 

$

1,913

 

 
Adjusted income before income taxes1
 
Income before income taxes - GAAP

$

312

 

$

309

 

$

1,157

 

$

1,196

 

Non-GAAP adjustments
Currency diversification strategy, net

(12

)

12

 

60

 

19

 

Mark-to-market on investments2

15

 

(8

)

(13

)

(9

)

Unusual bad debt expense3

-

 

-

 

42

 

-

 

Total non-GAAP adjustments

3

 

4

 

89

 

10

 

 
Adjusted income before income taxes

$

315

 

$

313

 

$

1,246

 

$

1,206

 

 
 

Three Months

 

Twelve Months

Ended December 31,

 

Ended December 31,

2019

 

2018

 

2019

 

2018

(in millions)

Adjusted net income available for common stockholders1
 
Net income available for common stockholders - GAAP

$

44

 

$

43

 

$

161

 

$

169

 

 
Non-GAAP adjustments
Currency diversification strategy, net

(2

)

2

 

11

 

3

 

Mark-to-market on investments2

3

 

(1

)

(2

)

(2

)

Unusual bad debt expense3

-

 

-

 

8

 

0

 

Income tax effect of above adjustments4

0

 

0

 

(3

)

(1

)

Total non-GAAP adjustments

1

 

1

 

13

 

1

 

Adjusted net income available for common stockholders

$

45

 

$

44

 

$

174

 

$

170

 

 
Note: Amounts may not add due to rounding.

Three Months

 

Twelve Months

Ended December 31,

 

Ended December 31,

2019

 

2018

 

2019

 

2018

(in dollars, except share amounts)

Adjusted diluted EPS1
 
Diluted EPS - GAAP

$

0.57

 

$

0.57

 

$

2.10

 

$

2.28

 

 
Non-GAAP adjustments
Currency diversification strategy, net

(0.03

)

0.03

 

0.14

 

0.05

 

Mark-to-market on investments2

0.03

 

(0.02

)

(0.03

)

(0.02

)

Unusual bad debt expense3

0.00

 

0.00

 

0.10

 

0.00

 

Income tax effect of above adjustments

0.00

 

0.00

 

(0.04

)

(0.02

)

 
Total non-GAAP adjustments

0.01

 

0.01

 

0.17

 

0.01

 

 
Adjusted diluted EPS

$

0.58

 

$

0.58

 

$

2.27

 

$

2.28

 

 
Diluted weighted average common shares outstanding

77,357,093

 

75,810,322

 

76,825,863

 

74,266,370

 

 
Note: Amounts may not add due to rounding.

Note: The term “GAAP” in the following explanation refers to generally accepted accounting principles in the United States.

1 Adjusted net revenues, adjusted income before income taxes, adjusted net income available for common stockholders and adjusted diluted earnings per share (“EPS”) are non-GAAP financial measures as defined by SEC Regulation G.

  • We define adjusted net revenues as net revenues adjusted to remove the effect of our GLOBAL currency diversification strategy and our net mark-to-market gains (losses) on investments2.
  • We define adjusted income before income taxes as income before income taxes adjusted to remove the effect of our GLOBAL currency diversification strategy, our net mark-to-market gains (losses) on investmentsand unusual bad debt expense3.
  • We define adjusted net income available to common stockholders as net income available for common stockholders adjusted to remove the after-tax effects of our GLOBAL currency diversification strategy, the mark-to-market on investments, and unusual bad debt expense attributable to IBG, Inc.

Management believes these non-GAAP items are important measures of our financial performance because they exclude certain items that may not be indicative of our core operating results and business outlook and may be useful to investors and analysts in evaluating the operating performance of the business and facilitating a meaningful comparison of our results in the current period to those in prior and future periods. Our GLOBAL currency diversification strategy, our mark-to-market on investments and unusual bad debt expense are excluded because management does not believe they are indicative of our underlying core business performance. Adjusted net revenues, adjusted income before income taxes, adjusted net income available to common stockholders and adjusted diluted EPS should be considered in addition to, rather than as a substitute for, GAAP net revenues, income before income taxes, net income attributable to common stockholders and diluted EPS.

2 Mark-to-market on investments represents the net mark-to-market gains (losses) on our U.S. government securities portfolio, which are typically held to maturity, investments in equity securities that do not qualify for equity method accounting which are measured at fair value, and equity securities taken over by the Company from customers related to losses on margin loans described below.

3 Unusual bad debt expense includes material losses on margin loans resulting from unusual events that occur in the marketplace. For the twelve months ending December 31, 2019, unusual bad debt expense reflects losses recognized on margin lending to a small number of our brokerage customers that had taken relatively large positions in a security listed on a major U.S. exchange, which lost a substantial amount of its value in a very short timeframe. (More information can be found in the disclosures in our Forms 10-Q filed with the SEC during 2019.)

4 The income tax effect is estimated using the corporate income tax rates applicable to the Company.

Source: Interactive Brokers Group, Inc.

For Interactive Brokers Group, Inc. Investors: Nancy Stuebe, 203-618-4070 or Media: Kalen Holliday, 203-913-1369