EX-99.1 2 earningsrelease_4q2014.htm 4Q2014 EARNINGS RELEASE earningsrelease_4q2014.htm
 
EXHIBIT 99.1

INTERACTIVE BROKERS GROUP ANNOUNCES 2014 RESULTS

— — —

REPORTS COMPREHENSIVE EARNINGS PER SHARE OF $0.51, INCOME BEFORE TAXES OF $506 MILLION ON $1,043 MILLION IN NET REVENUES, AND EARNINGS PER SHARE ON NET INCOME OF $0.77.
DECLARES QUARTERLY DIVIDEND OF $0.10 PER SHARE.


GREENWICH, CONN, January 20, 2015 — 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.



 
1
 


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.
 

 
2
 


 
_____________________
 
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.



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
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
 
 
 

 
4
 

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.

 
5
 

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.


 
6
 

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.


 
7
 

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%
                     

 
8
 

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



9