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 $0.51 for the year ended December 31, 2014, compared to diluted earnings per share on a comprehensive basis of $0.67 for 2013.
Excluding 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 $0.77 for the year ended December 31, 2014, compared to diluted earnings per share of $0.73 for the same period in 2013.
Net revenues were $1,043 million and income before income taxes was $506 million for the year, compared to net revenues of $1,076 million and income before income taxes of $451 million for 2013.
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, 2015 to shareholders of record as of February 27, 2015.
Business Highlights
- 49% pretax profit margin for 2014.
- 62% Electronic Brokerage pretax profit margin for 2014.
- 40% Market Making pretax profit margin for 2014.
- Customer equity grew 24% from 2013 to $56.7 billion.
- Customer accounts increased 18% in 2014 to 281 thousand.
- Total DARTs increased 16% from 2013 to 566 thousand.
- Brokerage segment equity was $3.0 billion. Total equity was $5.2 billion.
Segment Overview
Electronic Brokerage
Electronic Brokerage segment income before income taxes grew 49%, to $589 million, in 2014. Customer accounts grew 18% from the prior year and customer equity increased 24% during 2014. Commissions and execution fees increased 9%. Net interest income grew 44% from the prior year, to $333 million. Pretax profit margin was 62% in 2014, up from 48% in 2013. Excluding $64.3 million in expense related to an unusual item, pretax profit margin was 56% in 2013.
Total DARTs(1), for cleared and execution-only customers, increased 16% to 566 thousand in 2014, compared to 486 thousand during 2013. Cleared DARTs were 515 thousand in 2014, 17% higher than in 2013.
Market Making
Market Making segment income before income taxes decreased 28%, to $115 million, in 2014. This decrease was driven by a market making environment with persistent low volatility and intensive competition. Pretax profit margin decreased to 40% in 2014 from 44% in 2013. Market Making options contract volume decreased 15% in 2014.
Effects of Foreign Currency Diversification
In connection with our currency strategy, we have determined to base our net worth in GLOBALs, a basket of 16 major currencies in which we hold our equity. In 2014, our currency diversification program decreased our comprehensive earnings by $293 million, as the U.S. dollar value of the GLOBAL decreased by approximately 6.0%. The effects of currency diversification are reported as components of (1) Other Income in the Corporate segment (described below) and (2) Other Comprehensive Income (“OCI”).
Presentation of Foreign Currency Effects
The Company has taken several steps to improve the transparency of its currency strategy, as a result of which nearly all currency translation gains and losses related to the GLOBAL are reported as Other Income instead of Trading Gains and these gains and losses are reported in the Corporate segment instead of the Market Making segment.
These actions isolate the income statement effects of our currency diversification in the Corporate segment, thereby leaving a clearer picture of the core operating results in the Market Making segment. The new reporting method is also reflected in the comparative historical periods contained in our financial statements.
(1) Daily average revenue trades (DARTs) are based on customer orders.
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Conference Call Information:
Interactive Brokers Group will hold a conference call with investors today, January 20, 2015, 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.
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 | |||||||||
| 2012 | 60,421 | 150,000 | 16,118 | 226,540 | 904 | |||||||||||||
| 2013 | 65,320 | 8% | 173,849 | 16% | 18,489 | 15% | 257,658 | 14% | 1,029 | |||||||||
| 2014 | 64,530 | -1% | 206,759 | 19% | 18,055 | -2% | 289,344 | 12% | 1,155 | |||||||||
| 4Q2013 | 14,437 | 45,167 | 4,585 | 64,189 | 1,019 | |||||||||||||
| 4Q2014 | 16,126 | 12% | 57,773 | 28% | 4,621 | 1% | 78,520 | 22% | 1,246 | |||||||||
| 3Q2014 | 17,864 | 49,636 | 4,282 | 71,782 | 1,130 | |||||||||||||
| 4Q2014 | 16,126 | -10% | 57,773 | 16% | 4,621 | 8% | 78,520 | 9% | 1,246 | |||||||||
| CONTRACT AND SHARE VOLUMES: | ||||||||||||||
| (in 000's, except %) | ||||||||||||||
| TOTAL | Options | % | Futures* | % | Stocks | % | ||||||||
Period | (contracts) | Change | (contracts) | Change | (shares) | Change | ||||||||
| 2012 | 698,140 | 98,801 | 65,872,960 | |||||||||||
| 2013 | 659,673 | -6% | 121,776 | 23% | 95,479,739 | 45% | ||||||||
| 2014 | 631,265 | -4% | 123,048 | 1% | 153,613,174 | 61% | ||||||||
| 4Q2013 | 155,216 | 28,724 | 27,042,356 | |||||||||||
| 4Q2014 | 173,284 | 12% | 34,259 | 19% | 36,973,639 | 37% | ||||||||
| 3Q2014 | 151,768 | 29,352 | 36,040,255 | |||||||||||
| 4Q2014 | 173,284 | 14% | 34,259 | 17% | 36,973,639 | 3% | ||||||||
| MARKET MAKING | Options | % | Futures* | % | Stocks | % | ||||||||
Period | (contracts) | Change | (contracts) | Change | (shares) | Change | ||||||||
| 2012 | 457,384 | 12,660 | 9,339,465 | |||||||||||
| 2013 | 404,490 | -12% | 18,184 | 44% | 12,849,729 | 38% | ||||||||
| 2014 | 344,741 | -15% | 15,668 | -14% | 12,025,822 | -6% | ||||||||
| 4Q2013 | 87,498 | 4,245 | 2,776,564 | |||||||||||
| 4Q2014 | 95,625 | 9% | 3,462 | -18% | 3,093,170 | 11% | ||||||||
| 3Q2014 | 81,395 | 3,542 | 3,137,329 | |||||||||||
| 4Q2014 | 95,625 | 17% | 3,462 | -2% | 3,093,170 | -1% | ||||||||
| BROKERAGE TOTAL | Options | % | Futures* | % | Stocks | % | ||||||||
Period | (contracts) | Change | (contracts) | Change | (shares) | Change | ||||||||
| 2012 | 240,756 | 86,141 | 56,533,495 | |||||||||||
| 2013 | 255,183 | 6% | 103,592 | 20% | 82,630,010 | 46% | ||||||||
| 2014 | 286,524 | 12% | 107,380 | 4% | 141,587,352 | 71% | ||||||||
| 4Q2013 | 67,718 | 24,479 | 24,265,792 | |||||||||||
| 4Q2014 | 77,659 | 15% | 30,797 | 26% | 33,880,469 | 40% | ||||||||
| 3Q2014 | 70,373 | 25,810 | 32,902,926 | |||||||||||
| 4Q2014 | 77,659 | 10% | 30,797 | 19% | 33,880,469 | 3% | ||||||||
| * Includes options on futures | ||||||||||||||
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES OPERATING DATA, CONTINUED | ||||||||||||||
| BROKERAGE CLEARED | Options | % | Futures* | % | Stocks | % | ||||||||
Period | (contracts) | Change | (contracts) | Change | (shares) | Change | ||||||||
| 2012 | 144,539 | 84,794 | 54,371,351 | |||||||||||
| 2013 | 180,660 | 25% | 101,732 | 20% | 78,829,785 | 45% | ||||||||
| 2014 | 225,662 | 25% | 106,074 | 4% | 137,153,132 | 74% | ||||||||
| 4Q2013 | 49,181 | 24,020 | 23,208,208 | |||||||||||
| 4Q2014 | 63,739 | 30% | 30,559 | 27% | 32,720,100 | 41% | ||||||||
| 3Q2014 | 56,824 | 25,559 | 31,814,664 | |||||||||||
| 4Q2014 | 63,739 | 12% | 30,559 | 20% | 32,720,100 | 3% | ||||||||
| * Includes options on futures | ||||||||||||||
| BROKERAGE STATISTICS | ||||||
| (in 000's, except % and where noted) | ||||||
Year over Year | 4Q2014 | 4Q2013 | % Change | |||
| Total Accounts | 281 | 239 | 18% | |||
| Customer Equity (in billions)* | $56.7 | $45.7 | 24% | |||
| Cleared DARTs | 564 | 453 | 25% | |||
| Total Customer DARTs | 619 | 499 | 24% | |||
| Cleared Customers (in $'s, except DART per account) | ||||||
| Commission per DART | $4.28 | $4.23 | 1% | |||
| DART per Avg. Account (Annualized) | 511 | 483 | 6% | |||
| Net Revenue per Avg. Account (Annualized) | $3,700 | $3,375 | 10% | |||
| Consecutive Quarters | 4Q2014 | 3Q2014 | % Change | |||
| Total Accounts | 281 | 272 | 3% | |||
| Customer Equity (in billions)* | $56.7 | $54.9 | 3% | |||
| Cleared DARTs | 564 | 485 | 16% | |||
| Total Customer DARTs | 619 | 534 | 16% | |||
| Cleared Customers (in $'s, except DART per account) | ||||||
| Commission per DART | $4.28 | $4.21 | 2% | |||
| DART per Avg. Account (Annualized) | 511 | 455 | 12% | |||
| Net Revenue per Avg. Account (Annualized) | $3,700 | $3,532 | 5% | |||
| * Excludes non-customers. | ||||||
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES SEGMENT FINANCIAL INFORMATION (UNAUDITED) | ||||||||||
| Three Months | Twelve Months | |||||||||
| Ended December 31, | Ended December 31, | |||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||
(in millions) | ||||||||||
| Electronic Brokerage | Net revenues (1) | $261.5 | $212.1 | $952.3 | $818.8 | |||||
| Non-interest expenses | 94.6 | 162.9 | 363.8 | 422.7 | ||||||
| Income before income taxes | $166.9 | $49.2 | $588.5 | $396.1 | ||||||
| Pre-tax profit margin | 64% | 23% | 62% | 48% | ||||||
| Market Making | Net revenues(1) | $53.6 | $76.2 | $284.8 | $362.1 | |||||
| Non-interest expenses | 38.5 | 46.8 | 170.3 | 202.6 | ||||||
| Income before income taxes | $15.1 | $29.4 | $114.5 | $159.5 | ||||||
| Pre-tax profit margin | 28% | 39% | 40% | 44% | ||||||
| Corporate(2) | Net revenues(1) | ($107.0) | ($38.3) | ($193.7) | ($104.7) | |||||
| Non-interest expenses | 0.7 | 1.4 | 3.1 | (0.4) | ||||||
| Loss before income taxes | ($107.7) | ($39.7) | ($196.8) | ($104.3) | ||||||
| Total | Net revenues(1) | $208.1 | $249.9 | $1,043.3 | $1,076.2 | |||||
| Non-interest expenses | 133.8 | 211.1 | 537.2 | 624.9 | ||||||
| Income before income taxes | $74.3 | $38.8 | $506.1 | $451.3 | ||||||
| Pre-tax profit margin | 36% | 16% | 49% | 42% | ||||||
(1) To provide meaningful comparisons, prior period amounts have been revised for changes in the presentation of currency translation classifications. |
| (2) Corporate includes corporate related activities as well as inter-segment eliminations. |
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) | |||||||||||||
| Three Months | Twelve Months | ||||||||||||
| Ended December 31, | Ended December 31, | ||||||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||||
| (in millions, except share and per share data) | |||||||||||||
| Revenues: | |||||||||||||
| Trading gains(1) | $50.5 | $67.3 | $261.5 | $331.9 | |||||||||
| Commissions and execution fees | 155.2 | 124.1 | 548.8 | 502.1 | |||||||||
| Interest income(1) | 121.3 | 79.9 | 426.9 | 303.7 | |||||||||
| Other income (loss)(1) | (97.0 | ) | (8.3 | ) | (121.6 | ) | (9.8 | ) | |||||
| Total revenues | 229.9 | 262.9 | 1,115.5 | 1,127.9 | |||||||||
| Interest expense | 21.8 | 13.0 | 72.2 | 51.7 | |||||||||
| Total net revenues | 208.1 | 249.9 | 1,043.3 | 1,076.2 | |||||||||
| Non-interest expenses: | |||||||||||||
| Execution and clearing | 53.5 | 62.2 | 211.5 | 242.5 | |||||||||
| Employee compensation and benefits | 48.3 | 56.7 | 204.8 | 205.3 | |||||||||
| Occupancy, depreciation and amortization | 10.5 | 10.3 | 39.4 | 38.9 | |||||||||
| Communications | 6.0 | 5.7 | 24.2 | 23.1 | |||||||||
| General and administrative | 15.5 | 76.2 | 57.3 | 115.1 | |||||||||
| Total non-interest expenses | 133.8 | 211.1 | 537.2 | 624.9 | |||||||||
| Income before income taxes | 74.3 | 38.8 | 506.1 | 451.3 | |||||||||
| Income tax expense | 9.1 | 2.5 | 47.3 | 33.7 | |||||||||
| Net income | 65.2 | 36.3 | 458.8 | 417.6 | |||||||||
| Net income attributable to noncontrolling interests | 58.1 | 32.7 | 414.3 | 380.6 | |||||||||
| Net income available for common stockholders | $7.1 | $3.6 | $44.5 | $37.0 | |||||||||
Earnings per share: | |||||||||||||
| Basic | $0.12 | $0.07 | $0.79 | $0.74 | |||||||||
| Diluted | $0.12 | $0.07 | $0.77 | $0.73 | |||||||||
| Weighted average common shares outstanding: | |||||||||||||
| Basic | 58,124,119 | 52,517,259 | 56,492,381 | 49,742,428 | |||||||||
| Diluted | 59,274,773 | 53,729,140 | 57,709,668 | 50,924,736 | |||||||||
| Comprehensive income: | |||||||||||||
| Net income available for common stockholders | $7.1 | $3.6 | $44.5 | $37.0 | |||||||||
| Other comprehensive income: | |||||||||||||
| Cumulative translation adjustment, before income taxes | (6.3 | ) | 0.8 | (15.3 | ) | (3.2 | ) | ||||||
| Income taxes related to items of other comprehensive income | (0.2 | ) | (0.2 | ) | (0.3 | ) | (0.5 | ) | |||||
| Other comprehensive income (loss), net of tax | (6.1 | ) | 1.0 | (15.0 | ) | (2.7 | ) | ||||||
| Comprehensive income available for common stockholders | $1.0 | $4.6 | $29.5 | $34.3 | |||||||||
| Comprehensive income attributable to noncontrolling interests: | |||||||||||||
| Net income attributable to noncontrolling interests | $58.1 | $32.7 | $414.3 | $380.6 | |||||||||
| Other comprehensive income (loss) - cumulative translation adjustment | (37.5 | ) | 4.9 | (92.0 | ) | (24.7 | ) | ||||||
| Comprehensive income attributable to noncontrolling interests | $20.6 | $37.6 | $322.3 | $355.9 | |||||||||
(1) To provide meaningful comparisons, prior period amounts have been revised for changes in the presentation of currency translation classifications. |
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) | |||||||
| December 31, 2014 | December 31, 2013 | ||||||
| (in millions) | |||||||
| Assets | |||||||
| Cash and cash equivalents | $1,269.3 | $1,213.2 | |||||
| Cash and securities - segregated for regulatory purposes | 15,403.5 | 13,991.7 | |||||
Securities borrowed | 3,659.8 | 2,751.5 | |||||
| Securities purchased under agreements to resell | 386.2 | 386.3 | |||||
| Trading assets, at fair value | 3,934.1 | 4,448.8 | |||||
| Receivables from customers, net of allowance | 17,051.5 | 13,596.7 | |||||
| Receivables from brokers, dealers and clearing organizations | 1,131.2 | 858.2 | |||||
| Other assets | 549.4 | 624.3 | |||||
| Total assets | $43,385.0 | $37,870.7 | |||||
| Liabilities and equity | |||||||
| Liabilities | |||||||
| Trading liabilities - financial instruments sold but not yet purchased, at fair value | $2,560.8 | $3,153.7 | |||||
| Securities loaned | 3,199.1 | 2,563.7 | |||||
| Short-term borrowings | 33.8 | 24.6 | |||||
| Other payables: | |||||||
| Customers | 31,797.4 | 26,319.4 | |||||
| Brokers, dealers and clearing organizations | 234.1 | 331.0 | |||||
| Other payables | 375.2 | 386.2 | |||||
| 32,406.7 | 27,036.6 | ||||||
| Equity | |||||||
| Stockholders' equity | 766.3 | 707.3 | |||||
| Noncontrolling interests | 4,418.3 | 4,384.8 | |||||
| Total equity | 5,184.6 | 5,092.1 | |||||
| Total liabilities and equity | $43,385.0 | $37,870.7 | |||||
| December 31, 2014 | December 31, 2013 | ||||||
| Ownership of IBG LLC Membership Interests | Interests | % | Interests | % | |||
| Public (IBG, Inc.) | 58,473,286 | 14.5% | 54,663,604 | 13.6% | |||
| Noncontrolling interests (IBG Holdings LLC) | 346,062,282 | 85.5% | 347,648,001 | 86.4% | |||
| Total IBG LLC membership interests | 404,535,568 | 100.0% | 402,311,605 | 100.0% | |||
INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES EARNINGS PER SHARE ON COMPREHENSIVE INCOME (UNAUDITED) | ||||||||
| Three Months | Twelve Months | |||||||
| Ended December 31, | Ended December 31, | |||||||
| 2014 | 2013 | 2014 | 2013 | |||||
(in millions, except share and per share data) | ||||||||
| Comprehensive income available for common stockholders, net of tax | $1.0 | $4.6 | $29.5 | $34.3 | ||||
| Comprehensive income per share: | ||||||||
| Basic | $0.02 | $0.09 | $0.52 | $0.69 | ||||
| Diluted | $0.02 | $0.09 | $0.51 | $0.67 | ||||
| Weighted average common shares outstanding: | ||||||||
| Basic | 58,124,119 | 52,517,259 | 56,492,381 | 49,742,428 | ||||
| Diluted | 59,274,773 | 53,729,140 | 57,709,668 | 50,924,736 | ||||
Contacts:
Media:
Caitlin
Duffy, 203-913-1369
or
Investors:
Deborah
Liston, 203-618-4070
