Interactive Brokers Group Announces 3Q2012 Results

  Interactive Brokers Group Announces 3Q2012 Results

Reports Comprehensive Earnings Per Share of $0.30, Income before Taxes of $173
 Million on $319 Million in Net Revenues and Earnings Per Share on Net Income
                    of $0.26; Equity Reaches $5.15 Billion

                Declares Quarterly Dividend of $0.10 Per Share

Business Wire

GREENWICH, Conn. -- October 16, 2012

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 $0.30 for the quarter ended September 30, 2012,
compared to diluted earnings per share on a comprehensive basis of $0.34 for
the same period in 2011.

Reported results on a comprehensive basis reflect the GAAP convention adopted
in 2011 that requires the reporting of currency translation results contained
in Other Comprehensive Income as part of reportable earnings. Previously,
currency translation results were reported as a component of changes in Total
Equity in the Statement of Financial Condition.

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 $0.26 for the quarter ended
September 30, 2012, compared to diluted earnings per share of $0.48 for the
same period in 2011.

Net revenues were $319 million and income before income taxes was $173 million
for this quarter, compared to net revenues of $386 million and income before
income taxes of $218 million for the same period in 2011.

The Interactive Brokers Group, Inc. Board of Directors declared a quarterly
cash dividend of $0.10 per share. This dividend is payable on December 14,
2012 to shareholders of record as of November 30, 2012.

                             Business Highlights

  *54% pretax profit margin for this quarter.
  *$5.15 billion in equity.
  *48% Electronic Brokerage pretax profit margin for this quarter.
  *59% Market Making pretax profit margin for this quarter.
  *Customer equity grew 35% from the year-ago quarter to $31.5 billion and
    customer accounts increased 11% to 205 thousand.
  *Cleared DARTs decreased 19% from the year-ago quarter to 369,000.

                               Segment Overview

Electronic Brokerage

Electronic Brokerage segment income before income taxes decreased 23%, to $81
million, in the quarter ended September 30, 2012 compared to the same period
last year. Commissions and execution fees decreased 23% from the year-ago
quarter, reflecting subdued trading volumes. During the same period last year
we observed a surge in volumes, driven by concerns over the European debt
crisis. Annualized DARTs^(1) per cleared customer account were 456 in this
quarter, compared to 640 for the same period in 2011. Total DARTs for cleared
and execution-only customers decreased 21% to 390,000 from the year-ago
quarter. Cleared DARTs were 369,000 in this quarter, 19% lower than the same
period last year. These declines were consistent with lower industry volumes.

Customer accounts grew 11% to 205,000 from the year-ago quarter. Customer
equity increased 35%, to $31.5 billion, from the year-ago quarter. Compared to
the same period last year customer borrowings to support trading positions
were $2.4 billion higher, ending the quarter at $9.2 billion. Pretax profit
margin was 48% for this quarter, down from 55% in the same period last year.

Market Making

Market Making segment income before income taxes decreased 30%, to $90
million, for the quarter ended September 30, 2012 from the same period in
2011. This decrease was driven by an unfavorable market making environment
with lower exchange traded volumes, low actual to implied volatility, and
tighter bid/offer spreads in options. As measured by the CBOE Volatility Index
(VIX), market volatility was at one-half of its level of the same period last
year. The ratio of actual to implied volatility was 71% compared to 111%
during the year ago quarter. On the upside, currency translation gains were
$42 million in this quarter, compared to a $23 million loss in the year-ago
quarter. Currency translation effects are reported as a component of Trading
Gains in the Market Making segment.

Pretax profit margin was 59% in this quarter, compared to 63% in the same
quarter last year. Market Making options contract volume decreased 36%, with
similar declines in futures and stock volumes from the year-ago quarter.

Effects of Foreign Currency Diversification

In connection with our currency strategy, we have determined to base our net
worth in GLOBALs, a basket of major currencies in which we hold our equity. In
this quarter, our currency hedging program increased our comprehensive
earnings as the U.S. dollar value of the GLOBAL increased by approximately
1.3%. The effects of currency hedging are reported as components of (1) Market
Making Trading Gains and (2) Other Comprehensive Income, described below. Year
to date swings in the value of the GLOBAL resulted in a net gain of $11
million.

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,
October 16, 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
                                                                                         
3Q2011   19,602             45,879               5,273                70,754             1,106
3Q2012   14,405    -27%     36,246      -21%     3,435       -35%     54,086    -24%     865


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%
                                                                    
3Q2011   254,904                31,835                 20,598,631
3Q2012   169,745       -33%     24,020        -25%     15,364,650   -25%

                                                                 
MARKET       Options       %        Futures*      %        Stocks       %
MAKING
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%
                                                                        
3Q2011 **    171,731                4,835                  3,921,841
3Q2012 **    110,549       -36%     3,007         -38%     2,347,903    -40%

                                                                 
BROKERAGE    Options       %        Futures*      %        Stocks       %
TOTAL
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%
                                                                        
3Q2011       83,173                 27,000                 16,676,790
3Q2012       59,196        -29%     21,013        -22%     13,016,747   -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

CONTRACT AND SHARE VOLUMES, continued:
(in 000's, except %)
                                                                 
BROKERAGE    Options       %        Futures*      %        Stocks       %
CLEARED
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%
                                                                        
3Q2011       43,994                 26,601                 15,846,432
3Q2012       37,174        -16%     20,686        -22%     12,594,066   -21%
                                                                        
* Includes options on futures
                                                                        

BROKERAGE STATISTICS
(in 000's, except % and where noted)

                                                   3Q2012  3Q2011  % Change
Total Accounts                                      205      184      11%
Customer Equity (in billions) *                     $31.5    $23.3    35%
                                                                      
Cleared DARTs                                       369      457      -19%
Total Customer DARTs                                390      495      -21%
                                                                      
                                                                      
                                                                      
Cleared Customers (in $'s, except DART per
account)
Commission per DART                                 $4.23    $4.29    -1%
DART per Avg. Account (Annualized)                  456      640      -29%
Net Revenue per Avg. Account (Annualized)           $3,216   $4,024   -20%
                                                                      
* Excludes non-customers
                                                                      


INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

SEGMENT FINANCIAL INFORMATION

(UNAUDITED)

                                 Three Months         Nine Months
                                   Ended September 30,   Ended September 30,
                                   2012      2011       2012      2011
                                   (in millions)
                                                                    
Electronic      Net revenues       $167.6     $191.7     $498.3     $525.1
Brokerage
                Non-interest       86.8      86.2      243.9     240.5    
                expenses
                                                                    
                Income before      $80.8     $105.5    $254.4    $284.6   
                income taxes
                                                                    
                Pre-tax profit     48     %   55     %   51     %   54       %
                margin
                                                                    
Market Making   Net revenues       $154.1     $204.3     $387.8     $532.4
                Non-interest       63.9      75.8      207.6     210.0    
                expenses
                                                                    
                Income (loss)
                before income      $90.2     $128.5    $180.2    $322.4   
                taxes
                                                                    
                Pre-tax profit     59     %   63     %   46     %   61       %
                margin
                                                                    
Corporate*      Net revenues       ($3.1  )   ($10.4 )   ($2.7  )   ($7.1    )
                Non-interest       (4.7   )   5.8       1.1       11.0     
                expenses
                                                                    
                Income (loss)
                before income      $1.6      ($16.2 )   ($3.8  )   ($18.1   )
                taxes
                                                                    
                                                                    
Total           Net revenues       $318.6     $385.6     $883.4     $1,050.4
                Non-interest       146.0     167.8     452.6     461.5    
                expenses
                                                                    
                Income before      $172.6    $217.8    $430.8    $588.9   
                income taxes
                                                                    
                Pre-tax profit     54     %   56     %   49     %   56       %
                margin
                                                                    
                                                                    
* 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                Nine Months
                        Ended September 30,         Ended September 30,
                        2012         2011           2012         2011
                        (in millions, except share and per share data)
                                                                 
                        (As Restated)                            (As Restated)
                                                                 
Revenues:
Trading gains           $149.7       $193.8         $372.0       $514.7
Commissions and         100.5        130.6          309.5        346.3
execution fees
Interest income         65.4         73.8           200.6        211.8
Other income            17.2         10.7          50.8         43.1        
                                                                 
Total revenues          332.8        408.9          932.9        1,115.9
                                                                 
Interest expense        14.2         23.3          49.5         65.5        
                                                                 
Total net revenues      318.6        385.6         883.4        1,050.4     
                                                                 
Non-interest
expenses:
Execution and           61.7         82.1           192.5        214.4
clearing
Employee compensation   57.7         56.2           180.2        161.2
and benefits
Occupancy,
depreciation and        9.0          9.0            28.9         27.3
amortization
Communications          6.0          5.7            17.2         17.8
General and             11.6         14.8          33.8         40.8        
administrative
                                                                 
Total non-interest      146.0        167.8         452.6        461.5       
expenses
                                                                 
Income before income    172.6        217.8          430.8        588.9
taxes
                                                                 
Income tax expense      14.7         15.3          34.4         46.5        
                                                                 
Net income              157.9        202.5          396.4        542.4
                                                                 
Net income
attributable to         145.4        180.0         364.8        494.1       
noncontrolling
interests
                                                                 
Net income (loss)
attributable to         $12.5        $22.5         $31.6        $48.3       
common stockholders
                                                                 
                                                                 
Earnings (loss) per
share :
Basic                   $0.26        $0.48         $0.70        $1.10       
Diluted                 $0.26        $0.48         $0.70        $1.09       
                                                                 
Weighted average
common shares
outstanding:
Basic                   47,488,459   44,832,545     46,588,213   43,370,291
Diluted                 47,679,818   45,208,557     46,865,770   43,832,558
                                                                 
Comprehensive income:
Net income (loss)
attributable to         $12.5        $22.5          $31.6        $48.3
common stockholders
Other comprehensive
income:
Cumulative
translation             3.0          (10.1      )   1.3          (2.1        )
adjustment, before
income taxes
Income taxes related
to items of other       1.1          (3.7       )   0.5          (0.8        )
comprehensive income
Other comprehensive
income (loss), net of   1.9          (6.4       )   0.8          (1.3        )
tax
Comprehensive income
(loss) attributable     $14.4        $16.1         $32.4        $47.0       
to common
stockholders
                                                                 
Comprehensive income
attributable to
noncontrolling
interests:
Net income
attributable to         145.4        $180.0         $364.8       $494.1
noncontrolling
interests
Other comprehensive
income (loss) -
cumulative              22.0         (75.9      )   9.9          (9.2        )
translation
adjustment
Comprehensive income
attributable to         $167.4       $104.1        $374.7       $484.9      
noncontrolling
interests
                                                                 


INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

EARNINGS PER SHARE ON COMPREHENSIVE INCOME

(UNAUDITED)
                                                            
                                                                 
                        Three Months                Nine Months
                        Ended September 30,         Ended September 30,
                        2012         2011           2012         2011
                        (in millions, except share and per share data)
                                                                 
                        (As Restated)                            (As Restated)
                                                                 
Net income (loss)
attributable to         $12.5        $22.5          $31.6        $48.3
common stockholders
Add (deduct) net
income attributable     0.0          (0.8       )   1.1          (0.4        )
to non-fair value
redemption rights
                                                                 
Net income (loss)
available for common    $12.5        $21.7          $32.7        $47.9
stockholders
                                                                 
Other comprehensive
income:
Cumulative
translation             3.0          (10.1      )   1.3          (2.1        )
adjustment, before
income taxes
Income taxes related
to items of other       1.1          (3.7       )   0.5          (0.8        )
comprehensive income
Other comprehensive
income (loss), net of   1.9          (6.4       )   0.8          (1.3        )
tax
                                                                 
Comprehensive income
(loss) available for    $14.4        $15.3         $33.5        $46.6       
common stockholders
                                                                 
                                                                 
Comprehensive income
(loss) per share:
Basic                   $0.30        $0.34         $0.72        $1.07       
Diluted                 $0.30        $0.34         $0.71        $1.06       
                                                                 
                                                                 
Weighted average
common shares
outstanding:
Basic                   47,488,459   44,832,545     46,588,213   43,370,291
Diluted                 47,679,818   45,208,557     46,865,770   43,832,558
                                                                 


INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

(UNAUDITED)
                                                              
                                                 September 30,   December 31,
                                                 2012            2011
                                                 (in millions)
                                                                 (As Restated)
                                                                 
Assets
Cash and cash equivalents                        $1,659.5        $1,695.5
Cash and securities - segregated for             12,325.8        10,069.9
regulatory purposes
Securities purchased under agreements to         344.2           375.4
resell
Securities borrowed                              2,966.1         2,661.7
Trading assets, at fair value                    5,705.0         6,615.1
Receivables from customers, net of allowance     9,391.0         7,024.8
Receivables from brokers, dealers and clearing   874.9           1,397.8
organizations
Other assets                                     595.2           564.2       
                                                                 
Total assets                                     $33,861.7       $30,404.4   
                                                                 
Liabilities and equity
                                                                 
Liabilities
Trading liabilities - financial instruments      $4,547.2        $6,156.1
sold but not yet purchased, at fair value
Securities loaned                                1,945.1         1,386.1
Short-term borrowings                            16.9            6.5
Other payables:
Customers                                        21,281.3        17,300.1
Brokers, dealers and clearing organizations      496.4           247.4
Other payables                                   420.0           394.9       
                                                 22,197.7        17,942.4    
                                                                 
Senior notes payable and senior secured credit   0.0             101.4
facility
                                                                 
Reedeemable noncontrolling interests             0.0             5,269.6
                                                                 
Equity
Stockholders' equity                             629.6           (457.7      )
Noncontrolling interests                         4,525.2         0.0         
Total equity                                     5,154.8         (457.7      )
                                                                 
Total liabilities and equity                     $33,861.7       $30,404.4   

The 2011 statement of comprehensive income, earnings per share on
comprehensive income and statement of financial condition information reported
in this earnings release are presented on an “as restated” basis to report the
effect of the correction of an error in the accounting for noncontrolling
interests as more fully disclosed in the Company’s Amended 2011 Annual Report
on form 10-K/A filed with the Securities and Exchange Commission on August 31,
2012.

Contact:

For Interactive Brokers Group, Inc.
Media:
Caitlin Duffy, 203-913-1369
or
Investors:
Deborah Liston, 203-618-4070
 
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