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Interactive Brokers Group Announces 3Q10 Results

^{Published on 2010-10-21 13:13:43 - Market Wire}
 

GREENWICH, Conn.--([ BUSINESS WIRE ])--Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) an automated global electronic market maker and broker, today reported diluted earnings per share of $0.26 for the quarter ended September 30, 2010, compared to diluted earnings per share of $0.20 for the same period in 2009.

"Our results for the quarter stem from the combination of favorable currency movements when looked upon in U.S. dollar terms, continuing headwinds generated by HFTs, declining volumes in the market making area, and superb performance in our brokerage segment relative to our peers"

Net revenues were $299 million and income before income taxes was $162 million for this quarter, compared to net revenues of $272 million and income before income taxes of $133 million for the same period in 2009.

Business Highlights

• 54% pre-tax profit margin for this quarter.
• $5.1 billion in equity, up from $4.8 billion in the prior quarter.
• 18% increase in customer accounts and 41% increase in customer equity from the year-ago quarter.
• Cleared DARTs were 320,000 for this quarter, 4% increase from the year-ago quarter.
• 49% Electronic Brokerage pre-tax profit margin for this quarter.
• 61% Market Making pre-tax profit margin for this quarter.

"Our results for the quarter stem from the combination of favorable currency movements when looked upon in U.S. dollar terms, continuing headwinds generated by HFTs, declining volumes in the market making area, and superb performance in our brokerage segment relative to our peers," said Thomas Peterffy, our CEO.

Segment Overview

Electronic Brokerage

Electronic Brokerage segment income before income taxes grew 2% in the quarter ended September 30, 2010 compared to the same period in 2009. Pre-tax profit margin was 49% for this quarter. Commissions were up 1% from the prior year period. Commodities contracts volume was 26% higher and securities volume was slightly lower than in the prior year period. In general, profit margins are lower on commodities, compared to securities, due to higher execution and clearing costs at the futures exchanges. In addition, earlier this year we lowered our commissions for U.S. futures by roughly 10%, on an average order. Net interest income increased 71% from the same quarter last year. Customer accounts grew 18% to 151 thousand and customer equity grew 41% to $18.9 billion. Cleared DARTs* grew by 4% from the year-ago quarter to 320 thousand.

Market Making

Market Making segment income before income taxes was $103.9 million in the quarter ended September 30, 2010, an increase of 39% from the same period last year. Pre-tax profit margin was 61% in this quarter, up from 50% in the same period last year. Foreign exchange effects of keeping Group equity in a basket of major currencies we call the GLOBAL are reflected in the market making segment and had a positive impact on trading gains in this quarter. The market making environment was challenging in the third quarter, with lower volatility and continued tight bid/offer spreads. Actual volatility declined relative to implied volatility, increasing the cost of hedging. Market Making options contract volume increased 7% compared to the same period last year and decreased 12% sequentially, which decrease was less than the general decline in industry volumes in North America and Europe.

* Daily average revenue trades (DARTs) are based on executed customer orders.

Conference Call Information:

Interactive Brokers Group will hold a conference call with investors today, October 21, 2010, 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 aInteractive Brokers Conference Call.a

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 market maker and broker specializing in routing orders and executing and processing trades in securities, futures and foreign exchange instruments on more than 80 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 Group continuously integrates 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.