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Interactive Brokers Group Announces 2013 Results

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 $0.67 for the year ended December 31, 2013, compared to diluted earnings per share on a comprehensive basis of $1.13 for 2012.

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 $0.73 for the year ended December 31, 2013, compared to diluted earnings per share of $0.89 for the same period in 2012.

Net revenues were $1,076 million and income before income taxes was $451 million for the year, compared to net revenues of $1,131 million and income before income taxes of $527 million for 2012.

The Interactive Brokers Group, Inc. Board of Directors declared a quarterly cash dividend of $0.10 per share. This dividend is payable on March 14, 2014 to shareholders of record as of February 28, 2014.

Business Highlights
  • 42% pretax profit margin for 2013, or 48% without unusual item.
  • 48% Electronic Brokerage pretax profit margin for 2013, or 56% excluding unusual item.
  • 26% Market Making pretax profit margin for 2013.
  • Customer equity grew 39% from 2012 to $45.7 billion.
  • Customer accounts increased 14% in 2013 to 239,000.
  • Total DARTs increased 18% from 2012 to 486,000.
  • Brokerage segment equity was $2.5 billion. Total equity was $5.1 billion.

Segment Overview

Electronic Brokerage

Electronic Brokerage segment income before income taxes grew 15%, to $391 million, in 2013. Customer accounts grew 14% from the prior year and customer equity increased 39% during 2013 (1). Commissions and execution fees increased 22%. Net interest income grew 24% from the prior year, to $228 million. Pretax profit margin was 48% in 2013, down from 51% in 2012. Excluding $64.3 million in expense related to an unusual item (see below), pretax profit margin was 56% in 2013.

Total DARTs (2), for cleared and execution-only customers, increased 18% to 486,000 in 2013, compared to 413,000 during 2012. Cleared DARTs were 441,000 in 2013, 15% higher than in 2012.

Market Making

Market Making segment income before income taxes decreased 62%, to $72 million, in 2013. This decrease was driven by a market making environment with persistent low volatility and low actual-to-implied volatility, and by a greater loss from holding our equity in a basket of currencies, as measured in U.S. dollars. In 2013, our currency diversification strategy resulted in a reported loss of $89 million, compared to a $39 million loss in 2012. Currency translation effects are reported as part of Trading Gains in the Market Making segment. Including balance sheet effects, our currency strategy resulted in a loss of $116 million in 2013, as compared to a loss of $19 million in the prior year. Pretax profit margin decreased to 26% in 2013 from 41% in 2012. Market Making options contract volume decreased 12% in 2013.

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