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Interactive Brokers Group Announces 4Q2021 Results

GAAP DILUTED EPS OF $0.67, ADJUSTED1 EPS OF $0.83

GAAP NET REVENUES OF $603 MILLION, ADJUSTED NET REVENUES OF $683 MILLION

Interactive Brokers Group, Inc. (Nasdaq: IBKR), an automated global electronic broker, announced results for the quarter ended December 31, 2021.

Reported diluted earnings per share were $0.67 for the current quarter and $0.83 as adjusted. For the year-ago quarter, reported diluted earnings per share were $0.81 and $0.69 as adjusted.

Reported net revenues were $603 million for the current quarter and $683 million as adjusted. For the year-ago quarter, reported net revenues were $599 million and $582 million as adjusted.

Reported income before income taxes was $373 million for the current quarter and $453 million as adjusted. For the year-ago quarter, reported income before income taxes was $392 million and $375 million as adjusted.

Financial Highlights

  • Commission revenue increased $32 million, or 11%, from the year-ago quarter on higher customer options and futures trading volumes and higher average per share commission in stocks.
  • Net interest income increased $70 million, or 31%, from the year-ago quarter on higher margin loan balances and strong securities lending activity.
  • Other income decreased $104 million from the year-ago quarter. This decrease was mainly comprised of $89 million related to our strategic investment in Up Fintech Holding Limited (“Tiger Brokers”) and $10 million related to our currency diversification strategy.
  • Reported pretax profit margin was 62% for the current quarter and 66% as adjusted. For the year-ago quarter, reported pretax margin was 65% and 64% as adjusted.
  • Total equity of $10.2 billion.

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, 2022 to shareholders of record as of March 1, 2022.

Business Highlights

  • Customer accounts increased 56% from the year-ago quarter to 1.68 million.
  • Customer equity grew 30% from the year-ago quarter to $373.8 billion.
  • Total DARTs2 increased 16% from the year-ago quarter to 2.44 million.
  • Cleared DARTs increased 16% from the year-ago quarter to 2.16 million.
  • Customer credits increased 12% from the year-ago quarter to $87.1 billion.
  • Customer margin loans increased 40% from the year-ago quarter to $54.6 billion.

Effects of Foreign Currency Diversification

In connection with our currency diversification strategy, we base our net worth in GLOBALs, a basket of 10 major currencies in which we hold our equity. In this quarter, our currency diversification strategy decreased our comprehensive earnings by $25 million, as the U.S. dollar value of the GLOBAL decreased by approximately 0.22%. The effects of the currency diversification strategy are reported as components of (1) Other Income (loss of $23 million) and (2) Other Comprehensive Income (loss of $2 million).

Conference Call Information:

Interactive Brokers Group, Inc. will hold a conference call with investors today, January 18, 2022, 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 affiliates provide automated trade execution and custody of securities, commodities and foreign exchange around the clock on over 135 markets in numerous countries and currencies, from a single IBKR Integrated Investment Account to clients worldwide. We service individual investors, hedge funds, proprietary trading groups, financial advisors and introducing brokers. Our four decades of focus on technology and automation has enabled us to equip our clients with a uniquely sophisticated platform to manage their investment portfolios. We strive to provide our clients with advantageous execution prices and trading, risk and portfolio management tools, research facilities and investment products, all at low or no cost, positioning them to achieve superior returns on investments. Barron’s ranked Interactive Brokers #1 with 5 out of 5 stars in its February 26, 2021, Best Online Broker Review.

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.

______________________

1 See the reconciliation of non-GAAP financial measures starting on page 9.

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

 

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

 
Three Months Twelve Months
Ended December 31, Ended December 31,

 

2021

 

 

2020

 

 

2021

 

 

2020

 

(in millions, except share and per share data)
Revenues:
Commissions

$

320

 

 

$

288

 

 

$

1,350

 

 

$

1,112

 

Other fees and services

 

58

 

 

 

52

 

 

 

218

 

 

 

175

 

Other income (loss)

 

(70

)

 

 

34

 

 

 

(2

)

 

 

59

 

 

 

 

 

 

 

 

Total non-interest income

 

308

 

 

 

374

 

 

 

1,566

 

 

 

1,346

 

 

 

 

 

 

 

 

Interest income

 

350

 

 

 

280

 

 

 

1,372

 

 

 

1,133

 

Interest expense

 

(55

)

 

 

(55

)

 

 

(224

)

 

 

(261

)

 

 

 

 

 

 

 

Total net interest income

 

295

 

 

 

225

 

 

 

1,148

 

 

 

872

 

 

 

 

 

 

 

 

Total net revenues

 

603

 

 

 

599

 

 

 

2,714

 

 

 

2,218

 

 

 

 

 

 

 

 

Non-interest expenses:

 

 

 

 

 

 

 

Execution, clearing and distribution fees

 

53

 

 

 

66

 

 

 

236

 

 

 

293

 

Employee compensation and benefits

 

108

 

 

 

86

 

 

 

399

 

 

 

325

 

Occupancy, depreciation and amortization

 

22

 

 

 

18

 

 

 

80

 

 

 

69

 

Communications

 

9

 

 

 

7

 

 

 

33

 

 

 

26

 

General and administrative

 

38

 

 

 

30

 

 

 

176

 

 

 

236

 

Customer bad debt

 

-

 

 

 

-

 

 

 

3

 

 

 

13

 

 

 

 

 

 

 

 

Total non-interest expenses

 

230

 

 

 

207

 

 

 

927

 

 

 

962

 

 

 

 

 

 

 

 

Income before income taxes

 

373

 

 

 

392

 

 

 

1,787

 

 

 

1,256

 

 

 

 

 

 

 

 

Income tax expense

 

35

 

 

 

12

 

 

 

151

 

 

 

77

 

 

 

 

 

 

 

 

Net income

 

338

 

 

 

380

 

 

 

1,636

 

 

 

1,179

 

 

 

 

 

 

 

 

Net income attributable to noncontrolling interests

 

271

 

 

 

309

 

 

 

1,328

 

 

 

984

 

 

 

 

 

 

 

 

Net income available for common stockholders

$

67

 

 

$

71

 

 

$

308

 

 

$

195

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

Basic

$

0.68

 

 

$

0.82

 

 

$

3.27

 

 

$

2.44

 

Diluted

$

0.67

 

 

$

0.81

 

 

$

3.24

 

 

$

2.42

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

Basic

 

98,181,875

 

 

 

87,076,038

 

 

 

94,167,572

 

 

 

79,939,289

 

Diluted

 

98,980,339

 

 

 

87,772,443

 

 

 

95,009,880

 

 

 

80,638,908

 

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

 
Three Months Twelve Months
Ended December 31, Ended December 31,

 

2021

 

 

2020

 

2021

 

 

2020

(in millions, except share and per share data)

Comprehensive income:
Net income available for common stockholders

$

67

 

 

$

71

 

$

308

 

 

$

195

Other comprehensive income:

 

 

 

 

 

 

 

Cumulative translation adjustment, before income taxes

 

(1

)

 

 

26

 

 

(22

)

 

 

26

Income taxes related to items of other comprehensive income

 

-

 

 

 

-

 

 

-

 

 

 

-

Other comprehensive income (loss), net of tax

 

(1

)

 

 

26

 

 

(22

)

 

 

26

Comprehensive income available for common stockholders

$

66

 

 

$

97

 

$

286

 

 

$

221

 

 

 

 

 

 

 

Comprehensive earnings per share:

 

 

 

 

 

 

 

Basic

$

0.67

 

 

$

1.05

 

$

3.04

 

 

$

2.77

Diluted

$

0.67

 

 

$

1.05

 

$

3.01

 

 

$

2.74

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

Basic

 

98,181,875

 

 

 

87,076,038

 

 

94,167,572

 

 

 

79,939,289

Diluted

 

98,980,339

 

 

 

87,772,443

 

 

95,009,880

 

 

 

80,638,908

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income attributable to noncontrolling interests:

 

 

 

 

 

 

 

Net income attributable to noncontrolling interests

$

271

 

 

$

309

 

$

1,328

 

 

$

984

Other comprehensive income - cumulative translation adjustment

 

(1

)

 

 

74

 

 

(75

)

 

 

98

Comprehensive income attributable to noncontrolling interests

$

270

 

 

$

383

 

$

1,253

 

 

$

1,082

 

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(UNAUDITED)

   
  December 31,

2021
December 31,

2020
  (in millions)
 
Assets  
Cash and cash equivalents  

$

2,449

 

$

4,292

 

Cash - segregated for regulatory purposes  

 

22,888

 

 

15,903

 

Securities - segregated for regulatory purposes  

 

15,121

 

 

27,821

 

Securities borrowed  

 

3,912

 

 

4,956

 

Securities purchased under agreements to resell  

 

4,380

 

 

792

 

Financial instruments owned, at fair value  

 

673

 

 

630

 

Receivables from customers, net of allowance for credit losses    

 

54,935

 

 

39,333

 

Receivables from brokers, dealers and clearing organizations    

 

3,719

 

 

1,254

 

Other assets  

 

872

 

 

698

 

 

 

 

 

Total assets  

$

108,949

 

$

95,679

 

 

 

 

 

Liabilities and equity  

 

 

 

 

 

 

 

Liabilities  

 

 

 

Short-term borrowings  

$

27

 

$

118

 

Securities loaned  

 

11,769

 

 

9,838

 

Financial instruments sold but not yet purchased, at fair value    

 

182

 

 

153

 

Other payables:  

 

 

 

Customers  

 

85,634

 

 

75,882

 

Brokers, dealers and clearing organizations  

 

559

 

 

182

 

Other payables  

 

556

 

 

503

 

 

 

86,749

 

 

76,567

 

Total liabilities  

 

98,727

 

 

86,676

 

 

 

 

 

Equity  

 

 

 

Stockholders' equity  

 

2,395

 

 

1,951

 

Noncontrolling interests  

 

7,827

 

 

7,052

 

Total equity  

 

10,222

 

 

9,003

 

 

 

 

 

Total liabilities and equity  

$

108,949

 

$

95,679

 

 

 

 

 

 

 

 

 

December 31, 2021   December 31, 2020
Ownership of IBG LLC Membership Interests

Interests

 

%

 

Interests

 

%

 

 

 

 

IBG, Inc.

98,230,127

23.5

%

 

 

90,780,444

 

 

21.8

%

Noncontrolling interests (IBG Holdings LLC)

319,880,492

76.5

%

 

 

325,960,034

 

 

78.2

%

 

 

 

 

Total IBG LLC membership interests

418,110,619

100.0

%

 

 

416,740,478

 

 

100.0

%

 

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

OPERATING DATA

 
TRADE VOLUMES:
(in 000's, except %)
 

 

 

Cleared

 

 

 

Non-Cleared

 

 

 

 

 

 

 

 

 

 

 

Avg. Trades

 

 

Customer

 

%

 

Customer

 

%

 

Principal

 

%

 

Total

 

%

 

per U.S.

Period

 

Trades

 

Change

 

Trades

 

Change

 

Trades

 

Change

 

Trades

 

Change

 

Trading Day

2019

302,289

26,346

17,136

345,771

1,380

2020

620,405

105%

56,834

116%

27,039

58%

704,278

104%

2,795

2021

871,319

40%

78,276

38%

32,621

21%

982,216

39%

3,905

 

4Q2020

178,614

17,008

7,455

203,077

3,223

4Q2021

207,457

16%

19,961

17%

8,001

7%

235,419

16%

3,707

 

3Q2021

193,218

18,106

8,228

219,552

3,431

4Q2021

207,457

7%

19,961

10%

8,001

(3%)

235,419

7%

3,707

CONTRACT AND SHARE VOLUMES:
(in 000's, except %)
 
TOTAL

Options

 

%

 

Futures1

 

%

 

Stocks

 

%

Period

(contracts)

 

Change

 

(contracts)

 

Change

 

(shares)

 

Change

2019

390,739

128,770

176,752,967

2020

624,035

60%

167,078

30%

338,513,068

92%

2021

887,849

42%

154,866

(7%)

771,273,709

128%

 

 

4Q2020

170,191

35,295

121,062,599

4Q2021

244,349

44%

41,997

19%

117,410,095

(3%)

 

 

3Q2021

214,988

36,940

172,828,874

4Q2021

244,349

14%

41,997

14%

117,410,095

(32%)

 

 

ALL CUSTOMERS

Options

 

%

 

Futures1

 

%

 

Stocks

 

%

Period

(contracts)

 

Change

 

(contracts)

 

Change

 

(shares)

 

Change

2019

349,287

126,363

167,826,490

2020

584,195

67%

164,555

30%

331,263,604

97%

2021

852,169

46%

152,787

(7%)

766,211,726

131%

 

 

4Q2020

160,953

34,851

119,654,910

4Q2021

235,400

46%

41,318

19%

116,546,652

(3%)

 

 

3Q2021

205,797

36,473

172,082,316

4Q2021

235,400

14%

41,318

13%

116,546,652

(32%)

 

 

CLEARED CUSTOMERS

Options

 

%

 

Futures1

 

%

 

Stocks

 

%

Period

(contracts)

 

Change

 

(contracts)

 

Change

 

(shares)

 

Change

2019

302,068

125,225

163,030,500

2020

518,965

72%

163,101

30%

320,376,365

97%

2021

773,284

49%

151,715

(7%)

752,720,070

135%

 

 

4Q2020

144,378

34,459

116,538,527

4Q2021

213,143

48%

41,096

19%

113,441,967

(3%)

 

 

3Q2021

186,656

36,245

169,002,045

4Q2021

213,143

14%

41,096

13%

113,441,967

(33%)

 
1 Includes options on futures
 

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

OPERATING DATA, CONTINUED

 
CONTRACT AND SHARE VOLUMES, continued:
(in 000's, except %)
PRINCIPAL TRANSACTIONS

Options

 

%

 

Futures1

 

%

 

Stocks

 

%

Period

(contracts)

 

Change

 

(contracts)

 

Change

 

(shares)

 

Change

2019

41,452

2,407

8,926,477

2020

39,840

(4%)

2,523

5%

7,249,464

(19%)

2021

35,680

(10%)

2,079

(18%)

5,061,983

(30%)

 

4Q2020

9,238

444

1,407,689

4Q2021

8,949

(3%)

679

53%

863,443

(39%)

 

3Q2021

9,191

467

746,558

4Q2021

8,949

(3%)

679

45%

863,443

16%

1 Includes options on futures
CUSTOMER STATISTICS
 
Year over Year

4Q2021

4Q2020

% Change

Total Accounts (in thousands)

 

1,676

 

 

1,073

 

56%

Customer Equity (in billions)1

$

373.8

 

$

288.6

 

30%

 

 

 

 

 

Cleared DARTs (in thousands)

 

2,162

 

 

1,871

 

16%

Total Customer DARTs (in thousands)

 

2,436

 

 

2,109

 

16%

 

 

 

 

 

Cleared Customers

 

 

 

 

 

Commission per Cleared Commissionable Order2

$

2.38

 

$

2.46

 

(3%)

Cleared Avg. DARTs per Account (Annualized)

 

339

 

 

459

 

(26%)

 
Consecutive Quarters

4Q2021

3Q2021

% Change

Total Accounts (in thousands)

 

1,676

 

 

1,536

 

9%

Customer Equity (in billions)1

$

373.8

 

$

353.8

 

6%

 

 

 

 

 

Cleared DARTs (in thousands)

 

2,162

 

 

2,017

 

7%

Total Customer DARTs (in thousands)

 

2,436

 

 

2,263

 

8%

 

 

 

 

 

Cleared Customers

 

 

 

 

 

Commission per Cleared Commissionable Order2

$

2.38

 

$

2.46

 

(3%)

Cleared Avg. DARTs per Account (Annualized)

 

339

 

 

343

 

(1%)

 
(1) Excludes non-Customers.
(2) Commissionable Order - a customer order that generates commissions.
 

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

NET INTEREST MARGIN

(UNAUDITED)

 
Three Months Twelve Months
Ended December 31, Ended December 31,

 

2021

 

 

2020

 

 

2021

 

 

2020

 

(in millions)
Average interest-earning assets
Segregated cash and securities

$

37,674

 

 

$

43,128

 

 

$

40,328

 

 

$

41,898

 

Customer margin loans

 

51,889

 

 

 

32,775

 

 

 

45,681

 

 

 

28,960

 

Securities borrowed

 

3,200

 

 

 

3,808

 

 

 

3,677

 

 

 

4,235

 

Other interest-earning assets

 

7,861

 

 

 

5,799

 

 

 

7,029

 

 

 

5,593

 

FDIC sweeps1

 

2,377

 

 

 

2,919

 

 

 

2,663

 

 

 

2,882

 

$

103,001

 

 

$

88,429

 

 

$

99,376

 

 

$

83,568

 

 

 

 

 

 

 

 

Average interest-bearing liabilities

 

 

 

 

 

 

 

Customer credit balances

$

83,001

 

 

$

71,190

 

 

$

79,297

 

 

$

67,540

 

Securities loaned

 

10,810

 

 

 

6,499

 

 

 

10,871

 

 

 

5,702

 

Other interest-bearing liabilities

 

1

 

 

 

17

 

 

 

109

 

 

 

215

 

$

93,812

 

 

$

77,706

 

 

$

90,277

 

 

$

73,457

 

 

 

 

 

 

 

 

Net interest income

 

 

 

 

 

 

 

Segregated cash and securities, net

$

(5

)

 

$

7

 

 

$

(9

)

 

$

166

 

Customer margin loans2

 

149

 

 

 

93

 

 

 

535

 

 

 

380

 

Securities borrowed and loaned, net

 

134

 

 

 

115

 

 

 

568

 

 

 

343

 

Customer credit balances, net2

 

8

 

 

 

9

 

 

 

33

 

 

 

(46

)

Other net interest income1/3

 

11

 

 

 

8

 

 

 

36

 

 

 

55

 

Net interest income3

$

297

 

 

$

232

 

 

$

1,163

 

 

$

898

 

 

 

 

 

 

 

 

Net interest margin ("NIM")

 

1.14

%

 

 

1.04

%

 

 

1.17

%

 

 

1.07

%

 

 

 

 

 

 

 

Annualized yields

 

 

 

 

 

 

 

Segregated cash and securities

 

-0.05

%

 

 

0.06

%

 

 

-0.02

%

 

 

0.40

%

Customer margin loans

 

1.14

%

 

 

1.13

%

 

 

1.17

%

 

 

1.31

%

Customer credit balances

 

-0.04

%

 

 

-0.05

%

 

 

-0.04

%

 

 

0.07

%

 

1

Represents the average amount of customer cash swept into FDIC-insured banks as part of our Insured Bank Deposit Sweep Program. This item is not recorded in the Company's consolidated statements of financial condition. Income derived from program deposits is reported in other net interest income in the table above.

   

2

Interest income and interest expense on customer margin loans and customer credit balances, respectively, are calculated on daily cash balances within each customer’s account on a net basis, which may result in an offset of balances across multiple account segments (e.g., between securities and commodities segments).

   

3

Includes income from financial instruments that has the same characteristics as interest, but is reported in other fees and services and other income in the Company’s consolidated statements of comprehensive income. For the three and twelve months ended December 31, 2021 and 2020, $1 million, $7 million, $15 million, and $21 million were reported in other fees and services, respectively. For the three and twelve months ended December 31, 2021 and 2020, $1 million, $0 million, $0 million, and $5 million were reported in other income, respectively.

   

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(UNAUDITED)

 
Three Months Twelve Months
Ended December 31, Ended December 31,

 

2021

 

 

2020

 

 

2021

 

 

2020

 

(in millions)
Adjusted net revenues1
Net revenues - GAAP

$

603

 

 

$

599

 

 

$

2,714

 

 

$

2,218

 

 

 

 

 

 

 

 

Non-GAAP adjustments

 

 

 

 

 

 

 

Currency diversification strategy, net

 

23

 

 

 

13

 

 

 

37

 

 

 

19

 

Mark-to-market on investments2

 

57

 

 

 

(33

)

 

 

30

 

 

 

(36

)

Remeasurement of TRA liability3

 

-

 

 

 

3

 

 

 

(1

)

 

 

3

 

Total non-GAAP adjustments

 

80

 

 

 

(17

)

 

 

66

 

 

 

(14

)

Adjusted net revenues

$

683

 

 

$

582

 

 

$

2,780

 

 

$

2,204

 

 

 

 

 

 

 

 

Adjusted income before income taxes1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes - GAAP

$

373

 

 

$

392

 

 

$

1,787

 

 

$

1,256

 

Non-GAAP adjustments

 

 

 

 

 

 

 

Currency diversification strategy, net

 

23

 

 

 

13

 

 

 

37

 

 

 

19

 

Mark-to-market on investments2

 

57

 

 

 

(33

)

 

 

30

 

 

 

(36

)

Remeasurement of TRA liability3

 

-

 

 

 

3

 

 

 

(1

)

 

 

3

 

Customer compensation expense4

 

-

 

 

 

-

 

 

 

-

 

 

 

103

 

Bad debt expense5

 

-

 

 

 

-

 

 

 

-

 

 

 

1

 

Total non-GAAP adjustments

 

80

 

 

 

(17

)

 

 

66

 

 

 

90

 

Adjusted income before income taxes

$

453

 

 

$

375

 

 

$

1,853

 

 

$

1,346

 

 

 

 

 

 

 

 

Adjusted pre-tax profit margin

 

66

%

 

 

64

%

 

 

67

%

 

 

61

%

Three Months Twelve Months
Ended December 31, Ended December 31,

 

2021

 

 

2020

 

 

2021

 

 

2020

 

(in millions)
Adjusted net income available for common stockholders1
Net income available for common stockholders - GAAP

$

67

 

 

$

71

 

 

$

308

 

 

$

195

 

 

 

 

 

 

 

 

Non-GAAP adjustments

 

 

 

 

 

 

 

Currency diversification strategy, net

 

6

 

 

 

3

 

 

 

8

 

 

 

4

 

Mark-to-market on investments2

 

13

 

 

 

(7

)

 

 

7

 

 

 

(7

)

Remeasurement of TRA liability3

 

-

 

 

 

3

 

 

 

(1

)

 

 

3

 

Customer compensation expense4

 

-

 

 

 

-

 

 

 

-

 

 

 

20

 

Bad debt expense5

 

-

 

 

 

-

 

 

 

-

 

 

 

0

 

Income tax effect of above adjustments6

 

(4

)

 

 

1

 

 

 

(3

)

 

 

(3

)

Remeasurement of deferred income taxes7

 

-

 

 

 

(11

)

 

 

1

 

 

 

(11

)

Total non-GAAP adjustments

 

15

 

 

 

(11

)

 

 

12

 

 

 

6

 

Adjusted net income available for common stockholders

$

82

 

 

$

60

 

 

$

320

 

 

$

201

 

 
Note: Amounts may not add due to rounding.
Three Months Twelve Months
Ended December 31, Ended December 31,

 

2021

 

 

2020

 

 

2021

 

 

2020

 

(in dollars)
Adjusted diluted EPS1
Diluted EPS - GAAP

$

0.67

 

 

$

0.81

 

 

$

3.24

 

 

$

2.42

 

 

 

 

 

 

 

 

Non-GAAP adjustments

 

 

 

 

 

 

 

Currency diversification strategy, net

 

0.06

 

 

 

0.03

 

 

 

0.09

 

 

 

0.05

 

Mark-to-market on investments2

 

0.13

 

 

 

(0.08

)

 

 

0.07

 

 

 

(0.08

)

Remeasurement of TRA liability3

 

0.00

 

 

 

0.04

 

 

 

(0.01

)

 

 

0.04

 

Customer compensation expense4

 

0.00

 

 

 

0.00

 

 

 

0.00

 

 

 

0.24

 

Bad debt expense5

 

0.00

 

 

 

0.00

 

 

 

0.00

 

 

 

0.00

 

Income tax effect of above adjustments6

 

(0.04

)

 

 

0.01

 

 

 

(0.03

)

 

 

(0.04

)

Remeasurement of deferred income taxes7

 

0.00

 

 

 

(0.12

)

 

 

0.01

 

 

 

(0.14

)

Total non-GAAP adjustments

 

0.15

 

 

 

(0.12

)

 

 

0.13

 

 

 

0.08

 

 

 

 

 

 

 

 

Adjusted diluted EPS

$

0.83

 

 

$

0.69

 

 

$

3.37

 

 

$

2.49

 

 

 

 

 

 

 

 

Diluted weighted average common shares outstanding

 

98,980,339

 

 

 

87,772,443

 

 

 

95,009,880

 

 

 

80,638,908

 

 
Note: Amounts may not add due to rounding.

Note: The term “GAAP” in the following explanation refers to generally accepted accounting principles in the United States.

1 Adjusted net revenues, adjusted income before income taxes, adjusted net income available for common stockholders and adjusted diluted earnings per share (“EPS”) are non-GAAP financial measures as defined by SEC Regulation G.

  • We define adjusted net revenues as net revenues adjusted to remove the effect of our currency diversification strategy, our net mark-to-market gains (losses) on investments2, and the remeasurement of our Tax Receivable Agreement (“TRA”) liability3.
  • We define adjusted income before income taxes as income before income taxes adjusted to remove the effect of our currency diversification strategy, our net mark-to-market gains (losses) on investments, the remeasurement of our TRA liability, customer compensation expenses4, and unusual bad debt expense5.
  • We define adjusted net income available to common stockholders as net income available for common stockholders adjusted to remove the after-tax effects attributable to IBG, Inc. of our currency diversification strategy, our mark-to-market gains (losses) on investments, the remeasurement of our TRA liability, customer compensation expenses, unusual bad debt expense, and the remeasurement of certain deferred tax assets7.

Management believes these non-GAAP items are important measures of our financial performance because they exclude certain items that may not be indicative of our core operating results and business outlook and may be useful to investors and analysts in evaluating the operating performance of the business and facilitating a meaningful comparison of our results in the current period to those in prior and future periods. Our currency diversification strategy, our mark-to-market on investments, the remeasurement of our TRA liability, customer compensation expenses, unusual bad debt expense, and the remeasurement of certain deferred tax assets are excluded because management does not believe they are indicative of our underlying core business performance. Adjusted net revenues, adjusted income before income taxes, adjusted net income available to common stockholders and adjusted diluted EPS should be considered in addition to, rather than as a substitute for, GAAP net revenues, income before income taxes, net income attributable to common stockholders and diluted EPS.

2 Mark-to-market on investments represents the net mark-to-market gains (losses) on our U.S. government securities portfolio, which are typically held to maturity, investments in equity securities that do not qualify for equity method accounting which are measured at fair value, and certain other investments, including equity securities taken over by the Company from customers related to losses on margin loans.

3 Remeasurement of our TRA liability represents the change in the amount payable to IBG Holdings LLC under the TRA, primarily due to changes in the Company’s effective tax rates. For further information refer to Note 4 – Equity and Earnings per Share under Part II, Item 8 – Financial Statements and Supplementary Data of the Company’s Annual Report on Form 10 K filed with the Securities Exchange Commission (“SEC”) on February 26, 2021.

4 Customer compensation expenses were incurred to compensate certain affected customers in connection with their losses on West Texas Intermediate Crude Oil contracts on April 20, 2020, as previously disclosed.

5 Unusual bad debt expense includes material losses on margin loans resulting from unusual events that occur in the marketplace. For the twelve months ended December 31, 2020, unusual bad debt expense reflects losses incurred by customers in excess of the equity in their accounts, related to the West Texas Intermediate Crude Oil event, as previously disclosed.

6 The income tax effect is estimated using the corporate income tax rates applicable to the Company.

7 Remeasurement of certain deferred tax assets represents the change in the unamortized balance of deferred tax assets related to the step-up in basis arising from the acquisition of interests in IBG LLC, primarily due to changes in the Company’s effective tax rates. For further information refer to Note 4 – Equity and Earnings per Share under Part II, Item 8 – Financial Statements and Supplementary Data of the Company’s Annual Report on Form 10 K filed with the Securities Exchange Commission (“SEC”) on February 26, 2021.

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