Sign in
IB

Interactive Brokers Group, Inc. (IBKR)·Q1 2025 Earnings Summary

Executive Summary

  • Record topline and operating leverage: GAAP net revenues rose 19% YoY to $1.43B and adjusted net revenues to $1.40B; GAAP diluted EPS was $1.94 and adjusted EPS $1.88, with a 74% reported (73% adjusted) pretax margin . Commission revenue hit a record $514M on strong volumes (stocks +47%, options +25%, futures +16%) .
  • Customer growth and activity accelerated: Accounts +32% YoY to 3.62M, total DARTs +50% YoY to 3.52M, customer equity +23% YoY to $573.5B; sequential DARTs +13% QoQ .
  • Capital actions and near-term tailwinds: Dividend increased to $0.32/quarter and a 4-for-1 forward stock split announced (record 6/16/25; trading split-adjusted 6/18/25) . SEC fee rate drops to zero effective May 15, providing a cost tailwind to execution/clearing from mid-Q2 onward .
  • Estimate context: Q1 revenue slightly beat S&P Global consensus ($1.407B actual vs $1.405B est)* while EPS was essentially in line/slightly below on a split-adjusted basis (Primary EPS $0.47 actual vs $0.483 est); results were driven by record commissions while lower benchmark rates pressured seg cash yields within NII .

What Went Well and What Went Wrong

What Went Well

  • Record commissions and total net revenues on broad-based volume strength: commissions +36% YoY to $514M; total net revenues $1.43B . “Quarterly commission revenue was a record… as were total net revenues” (CFO) .
  • Scalable model drove high profitability: reported pretax margin 74% (73% adjusted) vs 72% a year ago; expenses well controlled (compensation 11% of adjusted net revenues) .
  • Robust client growth and engagement: accounts +32% YoY to 3.62M; DARTs +50% YoY to 3.52M; margin loans +24% YoY to $63.7B; credits +19% YoY to $125.2B . “We added 279,000 new accounts, a record… Total account growth was 32%” .

What Went Wrong

  • NII headwind from lower rates: NII +3% YoY to $770M, but lower yields on segregated cash offset higher balances; NIM 2.10% vs 2.41% prior year . CFO noted a 100 bps YoY decline in average Fed funds rate; seg cash interest income fell 13% .
  • Higher regulatory/market structure costs: execution, clearing and distribution fees +20% YoY to $121M, driven by higher SEC fee rate and new FINRA CAT fee .
  • April post-quarter moderation: Management cited a ~10–12% early-April drop in margin balances amid volatility, with mix shifting to futures/FX and normalizing activity thereafter .

Financial Results

Summary P&L and Profitability (USD)

MetricQ3 2024Q4 2024Q1 2025
Net Revenues (GAAP, $B)$1.365 $1.387 $1.427
Net Revenues (Adjusted, $B)$1.327 $1.424 $1.396
Diluted EPS (GAAP)$1.81 $1.99 $1.94
Diluted EPS (Adjusted)$1.75 $2.03 $1.88
Pretax Margin (Reported)72% 75% 74%
Pretax Margin (Adjusted)72% 76% 73%

Revenue Mix (USD Millions)

ComponentQ3 2024Q4 2024Q1 2025
Commissions$435 $477 $514
Net Interest Income$802 $807 $770
Other Fees & Services$72 $81 $78
Other Income (Loss)$56 $22 $65

Expenses (USD Millions)

Line ItemQ3 2024Q4 2024Q1 2025
Execution, Clearing & Distribution$116 $115 $121
Employee Comp & Benefits$145 $138 $154
G&A$75 $59 $62
Customer Bad Debt$7 $1 $1

KPIs and Operating Metrics

KPIQ3 2024Q4 2024Q1 2025
Customer Accounts (M)3.12 3.34 3.62
Customer Equity ($B)$541.5 $568.2 $573.5
Total Customer DARTs (M/day)2.70 3.12 3.52
Commission per Cleared Order ($)$2.83 $2.72 $2.76
Customer Margin Loans ($B)$55.8 $64.2 $63.7
Customer Credits ($B)$116.7 $119.7 $125.2

Net Interest Dynamics

MetricQ3 2024Q4 2024Q1 2025
Net Interest Income (NIM table, $M)$826 $830 $794
Net Interest Margin2.37% 2.23% 2.10%
Segregated Cash & Securities Yield4.91% 4.54% 4.01%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent Guidance/CommentaryChange
Dividend per shareOngoing$0.25/quarter $0.32/quarter payable 6/13/25 (record 5/30/25) Raised
Forward stock splitJune 2025N/A4-for-1 split; record 6/16/25; distribution 6/17; trading split-adjusted 6/18 New
Execution/clearing costsFrom 5/15/25SEC fee applied SEC reduced fee rate to 0 effective May 15; tailwind to costs thereafter Tailwind
Public company adj. ETROngoingLower in Q4 due to DTA revaluation 18.2% (within usual range) in Q1 Normalized
NII rate sensitivity (USD rates)Run-ratePrior year: -$304M per -100 bps est. -$65M per -25 bps (-$260M per -100 bps) starting point 3/31 balances Updated
NII rate sensitivity (non-USD)Run-rateN/A-$29M per -25 bps across relevant non-USD benchmarks New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3’24 and Q4’24)Current Period (Q1’25)Trend
Volumes and commissionsQ3: Commissions +31% YoY; volumes up across products . Q4: Commissions +37% YoY; options/stocks strong .Record commission revenue ($514M); options +25%, futures +16%, stocks +47% .Strengthening; record levels
Profitability disciplineQ3: 72% pretax margin . Q4: 75% reported/76% adjusted; expense control .74% reported/73% adjusted; comp 11% of adjusted revenues .Sustained high margins
Client growth/engagementQ3: Accounts 3.12M; DARTs 2.70M . Q4: Accounts 3.34M; DARTs 3.12M .Accounts 3.62M; DARTs 3.52M; overnight volumes +250% YoY .Accelerating
Rates/NIIQ3/Q4: NII +9–11% YoY; NIM pressure emerging .NII +3% YoY; NIM 2.10%; -$65M per -25 bps USD; -$29M per -25 bps non-USD .NIM under pressure; balances offset
Regulatory/feesQ3/Q4: Higher SEC fee rate; FINRA CAT introduced in Q4 .SEC fee to 0 effective 5/15; Q1 had $27M SEC fees .Cost tailwind from mid-Q2
Product expansion (crypto, ForecastEx, features)Q3: New products noted . Q4: Ongoing enhancements .Added SOL/ADA/XRP/DOGE; later added LINK/AVAX/SUI; considering sports contracts via ForecastEx; IBKR undecided to offer .Broader offering; cautious on sports
Geography/macroQ3/Q4: Global growth in equity and accounts .Fastest account/equity growth in Asia/Europe; tariff discussion impact seen as limited; clients shift to futures/FX in volatility .Continued international momentum

Management Commentary

  • “Quarterly commission revenue was a record… as were total net revenues… Our pretax margin was 74%… 73% as adjusted.” (Paul Brody, CFO) .
  • “We added 279,000 new accounts, a record… Total account growth was 32%… our adjusted pretax profit margin was an industry-leading 74%.” (Prepared remarks) .
  • “The SEC reduced its fee rate to 0, effective this coming May 15, which should be a tailwind… SEC fees totaled $27 million for the current quarter.” (CFO) .
  • “Given market expectations of further rate cuts… a 25 bps decrease in Fed funds would be a $65 million reduction in annual NII… and about $29 million for each 25 bps decrease in non-USD benchmarks.” (CFO) .
  • “We target our dividends to be between 0.5% and 1% of the stock price.” (Thomas Peterffy, Chairman) .
  • “We have not stopped looking at potential acquisitions… there is a dearth of opportunities at a price that makes sense.” (Prepared remarks) .

Q&A Highlights

  • Early-April dynamics: Margin balances fell ~10–12% quickly then stabilized; mix shifted toward futures/FX; trading volumes normalized thereafter .
  • Cost tailwinds: SEC fee elimination effective 5/15; regulatory fees are pass-through (~$27M in Q1) .
  • Dividend framework: Management targets dividend yield relative to stock price (0.5–1%) rather than fixed payout ratio .
  • Capital capacity/M&A: Excess capital remains ~$6–7B; pipeline active but disciplined on price/structure .
  • Crypto stance: Expanded token list; higher client crypto exposure limit (from 10% to 30% of NRV); more constructive regulatory signals cited .

Estimates Context

MetricQ3 2024Q4 2024Q1 2025
Revenue Consensus Mean ($B)*$1.342$1.373$1.406
Revenue Actual (S&P basis, $B)*$1.340$1.405$1.407
EPS Consensus Mean (Primary, split-adjusted, $)*$0.455$0.464$0.483
EPS Actual (Primary, split-adjusted, $)*$0.438$0.508$0.470
  • Q1: Revenue slight beat (actual $1.407B vs $1.406B est); EPS essentially in line/slight miss ($0.470 vs $0.483). Q4: Clear beat on both revenue and EPS; Q3: modest miss on both*. Drivers: volume-led commission strength, NII pressured by lower benchmarks, and higher regulatory costs offset by scale and lower customer interest expense .
    Note: Company-reported diluted EPS for Q1 was $1.94 (pre-split), equivalent to ~$0.485 on a split-adjusted basis for comparability* .
    Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Activity-driven earnings power remains intact: Record commissions and robust DARTs growth underpin revenue resilience even in down markets .
  • Operating leverage persists: Mid-70s pretax margins demonstrate scalability; comp/overall expense discipline continues .
  • Near-term catalysts: Dividend hike to $0.32 and 4-for-1 split expand investor base and could support sentiment/liquidity; SEC fee holiday from mid-Q2 lowers pass-through cost drag .
  • Rate sensitivity manageable: While lower rates pressure NII, higher balances and margin loan growth are partial offsets; sensitivity quantified for USD and non-USD rates .
  • International growth vector: Fastest growth in Asia/Europe, with clients leveraging multi-asset breadth during volatility .
  • Product breadth expanding: Crypto token additions and event contracts (via ForecastEx) widen addressable activity, though management remains prudent on sports contracts .
  • Watch April/2Q intra-quarter: Early-April deleveraging (~10–12%) and mix shifts stabilized; execution/clearing cost relief from 5/15 should aid margins into Q2 .

Appendix: Additional Data and Reconciliations

  • Non-GAAP adjustments (Q1): Adjusted net revenues $1.396B vs GAAP $1.427B (ex currency diversification + investment MTM); adjusted EPS $1.88 vs GAAP $1.94 (net -$0.06 impact) .
  • Balance sheet: Total assets $157.7B (+5% QoQ), total equity $17.5B; no long-term debt .
  • Currency diversification: Added $127M to comprehensive earnings in Q1 ($20M in other income; $107M in OCI) .

Sources: Q1’25 press release and 8‑K (including exhibits), and earnings call transcript . Prior-quarter comps: Q4’24 and Q3’24 press releases . Product updates: crypto expansion .