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TheStreet Open House

Interactive Brokers Group Announces 2Q2012 Results

Comprehensive Income

Reported results on a comprehensive basis reflect the Company’s 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.

(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, July 17, 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 Account SM. 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

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
 
2Q2011 14,419 37,112 4,024 55,555 882
2Q2012 16,495 14% 38,934 5% 4,326 8% 59,755 8% 948
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%
 
2Q2011 162,737 24,013 19,091,293
2Q2012 188,561 16% 27,501 15% 15,367,826 -20%
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%
 
2Q2011 ** 98,168 3,585 2,546,066
2Q2012 ** 125,694 28% 3,622 1% 2,491,670 -2%
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%
 
2Q2011 64,569 20,428 16,545,227
2Q2012 62,867 -3% 23,879 17% 12,876,156 -22%
* 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.

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%
 
2Q2011 35,277 20,090 15,972,585
2Q2012 37,385 6% 23,510 17% 12,312,747 -23%
 
* Includes options on futures
BROKERAGE STATISTICS
(in 000's, except % and where noted)
 

2Q2012

 

2Q2011

 

% Change

Total Accounts 200 176 14%
Customer Equity (in billions) * $28.6 $25.7 11%
 
Cleared DARTs 399 378 6%
Total Customer DARTs 427 408 5%
 
 
Cleared Customers (in $'s, except DART per account)
Commission per DART $4.18 $4.33 -3%
DART per Avg. Account (Annualized) 507 554 -8%
Net Revenue per Avg. Account (Annualized) $3,356 $3,809 -12%
 
* Excludes non-customers

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

SEGMENT FINANCIAL INFORMATION

(UNAUDITED)

         
Three Months Six Months
Ended June 30, Ended June 30,
2012 2011 2012 2011
(in millions) (in millions)
 
Electronic Brokerage Net revenues $171.4 $169.7 $330.7 $333.4
Non-interest expenses 81.2   80.7   157.1   154.3  
 
Income before income taxes $90.2   $89.0   $173.6   $179.1  
 
Pre-tax profit margin 53 % 52 % 52 % 54 %
 
Market Making Net revenues $91.3 $125.8 $233.7 $328.1
Non-interest expenses 67.3   66.5   143.7   134.2  
 
Income (loss) before income taxes $24.0   $59.3   $90.0   $193.9  
 
Pre-tax profit margin 26 % 47 % 39 % 59 %
 
Corporate* Net revenues ($1.8 ) $1.4 $0.4 $3.3
Non-interest expenses 3.9   0.6   5.8   5.2  
 
Income (loss) before income taxes ($5.7 ) $0.8   ($5.4 ) ($1.9 )
 
 
Total Net revenues $260.9 $296.9 $564.8 $664.8
Non-interest expenses 152.4   147.8   306.6   293.7  
 
Income before income taxes $108.5   $149.1   $258.2   $371.1  
 
Pre-tax profit margin 42 % 50 % 46 % 56 %
 
 
* 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 Six Months
Ended June 30, Ended June 30,
2012 2011 2012 2011
(in millions, except share and per share data)
 
Revenues:
Trading gains $85.0 $120.6 $222.3 $320.9
Commissions and execution fees 108.1 106.5 209.0 215.7
Interest income 68.6 79.3 135.2 138.0
Other income 15.3   15.0 33.6   32.4
 
Total revenues 277.0 321.4 600.1 707.0
 
Interest expense 16.1   24.5 35.3   42.2
 
Total net revenues 260.9   296.9 564.8   664.8
 
Non-interest expenses:
Execution and clearing 66.2 66.1 130.8 132.3
Employee compensation and benefits 59.8 52.6 122.5 105.0
Occupancy, depreciation and amortization 10.0 9.1 19.9 18.3
Communications 5.5 6.6 11.2 12.1
General and administrative 10.9   13.4 22.2   26.0
 
Total non-interest expenses 152.4   147.8 306.6   293.7
 
Income before income taxes 108.5 149.1 258.2 371.1
 
Income tax expense 11.0   12.5 19.7   31.2
 
Net income 97.5 136.6 238.5 339.9
 
Net income attributable to non-controlling interests 89.5   127.1 219.4   314.1
 
Net income (loss) available for common stockholders $8.0   $9.5 $19.1   $25.8
 
 
Earnings (loss) per share
Basic $0.17   $0.22 $0.41   $0.61
Diluted $0.17   $0.22 $0.41   $0.60
 
Weighted average common shares outstanding
Basic 46,686,269 43,018,095 46,131,813 42,627,045
Diluted 46,957,081 43,470,928 46,452,941 43,133,155
 
Comprehensive income:
Net income (loss) available for common stockholders $8.0 $9.5 $19.1 $25.8
Other comprehensive income:
Cumulative translation adjustment, before income taxes (5.8 ) 6.1 (1.7 ) 8.1
Income taxes related to items of other comprehensive income (2.1 ) 2.2 (0.6 ) 3.0
Other comprehensive income (loss), net of tax (3.7 ) 3.9 (1.1 ) 5.1
Comprehensive income (loss) available for common stockholders $4.3   $13.4 $18.0   $30.9
 
Comprehensive income attributable to non-controlling interests:
Net income attributable to non-controlling interests 89.5 $127.1 $219.4 $314.1
Other comprehensive income (loss) - cumulative translation adjustment (43.6 ) 50.1 (12.1 ) 66.7
Comprehensive income attributable to non-controlling interests $45.9   $177.2 $207.3   $380.8

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

EARNINGS PER SHARE ON COMPREHENSIVE INCOME

(UNAUDITED)

         
Three months ended Six Months
Ended June 30, Ended June 30,
2012   2011 2012 2011
(in millions, except share and per share data)
Net income (loss) available for common stockholders $8.0 $9.5 $19.1 $25.8
 
Other comprehensive income:
Cumulative translation adjustment, before income taxes (5.8 ) 6.1 (1.7 ) 8.1
Income taxes related to items of other comprehensive income (2.1 ) 2.2 (0.6 ) 3.0
Other comprehensive income (loss), net of tax (3.7 ) 3.9 (1.1 ) 5.1
 
Comprehensive income (loss) available for common stockholders $4.3   $13.4 $18.0   $30.9
 
 
Comprehensive income (loss) per share:
Basic $0.09   $0.31 $0.39   $0.73
Diluted $0.09   $0.31 $0.39   $0.72
 
 
Weighted average common shares outstanding:
Basic 46,686,269 43,018,095 46,131,813 42,627,045
Diluted 46,957,081 43,470,928 46,452,941 43,133,155

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

(UNAUDITED)

   
June 30,
2012
(in millions)
Assets
Cash and cash equivalents $2,003.5
Cash and securities - segregated for regulatory purposes 11,030.7
Securities purchased under agreements to resell 377.9
Securities borrowed 2,639.0
Trading assets, at fair value 6,161.8
Receivables from customers, net of allowance 8,503.2
Receivables from brokers, dealers and clearing organizations 1,079.9
Other assets 587.7
 
Total assets $32,383.7
 
Liabilities and equity
 
Liabilities
Trading liabilities - financial instruments sold but not yet purchased, at fair value $5,359.3
Securities loaned 1,858.7
Short-term borrowings 13.3
Other payables:
Customers 19,237.7
Brokers, dealers and clearing organizations 513.0
Other payables 405.0
20,155.7
 
Senior notes payable and senior secured credit facility 0.0
 
Equity
Stockholders' equity 617.6
Non-controlling interests 4,379.1
Total equity 4,996.7
 
Total liabilities and equity $32,383.7




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