Interactive Brokers Group, Inc. : Interactive Brokers Group Announces 2012 Results

Reports Comprehensive Earnings Per Share of $0.92, Income before Taxes of $527 Million on $1,131 Million in Net Revenues, and Earnings Per Share on Net Income of $0.89 Declares Quarterly Dividend of $0.10 Per Share

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 $0.92 for the year ended December 31, 2012, compared to diluted earnings per share on a comprehensive basis of $1.31 for 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.

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 $0.89 for the year ended December 31, 2012, compared to diluted earnings per share on net income of $1.37 for 2011.

Net revenues were $1,131 million and income before income taxes was $527 million for the year, compared to net revenues of $1,358 million and income before income taxes of $741 million for 2011.

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, 2013 to shareholders of record as of March 1, 2013.

Business Highlights

• 47% pretax profit margin for 2012.
• 51% Electronic Brokerage pretax profit margin for 2012.
• 41% Market Making pretax profit margin for 2012.
• Customer equity grew 31% from 2011 to $32.9 billion and customer accounts increased 11%.
• Cleared DARTs decreased 6% from 2011 to 384,000.

Segment Overview

Electronic Brokerage

Electronic Brokerage segment income before income taxes decreased 8%, to $342 million, in 2012. Customer accounts grew 11% from the prior year and customer equity increased 31% during 2012. Commissions and execution fees decreased 10%, consistent with the subdued trading environment. Net interest income grew 9% from the prior year. Pretax profit margin was 51% in 2012, down from 54% in 2011. Total DARTs⁽¹⁾ for cleared and execution-only customers decreased 7% to 413,000 in 2012, compared to 444,000 during 2011. Cleared DARTs were 384,000 in 2012, 6% lower than in 2011.

Market Making

Market Making segment income before income taxes decreased 54%, to $189 million, in 2012. This decrease was driven by lower exchange volumes, lower actual-to-implied volatility and a swing in currency translation gains. In 2012, our currency diversification strategy negatively impacted the income statement by $39 million, compared to an $11 million gain in 2011. Including balance sheet effects, our currency strategy resulted in a slightly smaller loss than last year. Currency translation effects are reported as part of Trading Gains in the Market Making segment. Pretax profit margin decreased to 41% in 2012 from 59% in 2011. Market Making options contract volume decreased 9% in 2012.

Effects of Foreign Currency Diversification

As a global broker and market maker trading on exchanges around the world and transacting in multiple currencies, we are exposed to fluctuations in foreign exchange rates. We actively manage this exposure by maintaining our net worth in GLOBALs, a basket of 16 currencies in which we hold our equity. In 2012, this currency strategy decreased our profits, as measured in U.S. dollars, as the U.S. dollar value of the GLOBAL decreased by approximately 0.4%. The effects of our currency strategy are reported as components of (1) Market Making Trading Gains and (2) Other Comprehensive Income, described below.

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, January 15, 2013, 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
2008		101,672					120,195						16,966						238,833						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
2012		60,421		-5	%		150,000			-7	%		16,118			-16	%		226,540			-7	%		904
4Q2011		15,093					39,554						5,432						60,079						961
4Q2012		14,477		-4	%		37,300			-6	%		3,532			-35	%		55,309			-8	%		878
CONTRACT AND SHARE VOLUMES:
(in 000's, except %)
TOTAL				Options			%			Futures*			%			Stocks			%
Period				(contracts)			Change			(contracts)			Change			(shares)			Change
2008				757,732						108,984						55,845,428
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	%
2012				698,140			-12	%		98,801			-7	%		65,872,960			-15	%
4Q2011				203,566						26,655						16,012,605
4Q2012				159,048			-22	%		25,591			-4	%		17,278,459			8	%
MARKET MAKING				Options			%			Futures*			%			Stocks			%
Period				(contracts)			Change			(contracts)			Change			(shares)			Change
2008 **				514,629						21,544						26,008,433
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	%
2012 **				457,384			-9	%		12,660			-18	%		9,339,465			-21	%
4Q2011 **				135,559						3,672						2,687,537
4Q2012 **				102,703			-24	%		3,203			-13	%		2,361,442			-12	%
BROKERAGE TOTAL				Options			%			Futures*			%			Stocks			%
Period				(contracts)			Change			(contracts)			Change			(shares)			Change
2008				243,103						87,440						29,836,995
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	%
2012				240,756			-16	%		86,141			-5	%		56,533,495			-14	%
4Q2011				68,007						22,983						13,325,068
4Q2012				56,345			-17	%		22,388			-3	%		14,917,017			12	%

*		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
BROKERAGE CLEARED		Options		%			Futures*		%			Stocks		%
Period		(contracts)		Change			(contracts)		Change			(shares)		Change
2008		77,207					85,599					26,334,752
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	%
2012		144,539		-1	%		84,794		-5	%		54,371,351		-14	%
4Q2011		32,960					22,587					12,556,217
4Q2012		36,602		11	%		21,952		-3	%		14,348,785		14	%
* Includes options on futures

BROKERAGE STATISTICS
(in 000's, except % and where noted)
		4Q2012		4Q2011		% Change
Total Accounts		210		189		11	%
Customer Equity (in billions) *		$32.9		$25.1		31	%
Cleared DARTs		378		412		-8	%
Total Customer DARTs		407		447		-9	%
Cleared Customers (in $'s, except DART per account)
Commission per DART		$4.24		$4.07		4	%
DART per Avg. Account (Annualized)		457		556		-18	%
Net Revenue per Avg. Account (Annualized)		$3,233		$3,435		-6	%
* Excludes non-customers

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES SEGMENT FINANCIAL INFORMATION (UNAUDITED)
				Three Months						Twelve Months
				Ended December 31,						Ended December 31,
				2012			2011			2012			2011
				(in millions)
Electronic Brokerage		Net revenues		$172.1			$166.4			$670.4			$691.5
		Non-interest expenses		84.8			80.7			328.7			321.2
		Income (loss) before income taxes		$87.3			$85.7			$341.7			$370.3
		Pre-tax profit margin		51	%		52	%		51	%		54	%
Market Making		Net revenues		$71.8			$166.1			$459.6			$698.5
		Non-interest expenses		63.4			75.3			271.0			285.3
		Income (loss) before income taxes		$8.4			$90.8			$188.6			$413.2
		Pre-tax profit margin		12	%		55	%		41	%		59	%
Corporate*		Net revenues		$3.2			($24.6	)		$0.5			($31.7	)
		Non-interest expenses		2.7			(0.3	)		3.8			10.7
		Income (loss) before income taxes		$0.5			($24.3	)		($3.3	)		($42.4	)
Total		Net revenues		$247.1			$307.9			$1,130.5			$1,358.3
		Non-interest expenses		150.9			155.7			603.5			617.2
		Income (loss) before income taxes		$96.2			$152.2			$527.0			$741.1
		Pre-tax profit margin		39	%		49	%		47	%		55	%
* 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						Twelve Months
				Ended December 31,						Ended December 31,
				2012			2011			2012		2011
				(in millions, except share and per share data)
Revenues:
	Trading gains			$63.1			$150.5			$435.1		$665.2
	Commissions and execution fees			103.1			109.9			412.6		456.2
	Interest income			67.8			68.4			268.4		280.2
	Other income			25.6			(0.1	)		76.4		43.0
		Total revenues		259.6			328.7			1,192.5		1,444.6
	Interest expense			12.5			20.8			62.0		86.3
		Total net revenues		247.1			307.9			1,130.5		1,358.3
Non-interest expenses:
	Execution and clearing			58.5			66.9			251.0		281.3
	Employee compensation and benefits			64.3			55.1			244.5		216.3
	Occupancy, depreciation and amortization			9.9			9.8			38.8		37.1
	Communications			6.1			5.8			23.3		23.6
	General and administrative			12.1			18.1			45.9		58.9
		Total non-interest expenses		150.9			155.7			603.5		617.2
Income before income taxes				96.2			152.2			527.0		741.1
Income tax expense				(4.4	)		7.4			30.0		53.9
Net income				100.6			144.8			497.0		687.2
Net income attributable to noncontrolling interests				91.5			131.2			456.3		625.3
Net income (loss) attributable to common stockholders				$9.1			$13.6			$40.7		$61.9
Earnings (loss) per share :
	Basic			$0.19			$0.29			$0.89		$1.39
	Diluted			$0.19			$0.29			$0.89		$1.37
Weighted average common shares outstanding:
	Basic			47,489,141			45,569,269			46,814,676		43,924,554
	Diluted			47,680,329			45,944,562			47,070,522		44,364,902
Comprehensive income:
	Net income (loss) attributable to common stockholders			$9.1			$13.6			$40.7		$61.9
	Other comprehensive income:
		Cumulative translation adjustment, before income taxes		0.9			(2.4	)		2.2		(4.5	)
		Income taxes related to items of other comprehensive income		0.3			(1.0	)		0.8		(1.8	)
	Other comprehensive income (loss), net of tax			0.6			(1.4	)		1.4		(2.7	)
Comprehensive income (loss) attributable to common stockholders				$9.7			$12.2			$42.1		$59.2
Comprehensive income attributable to noncontrolling interests:
Net income attributable to noncontrolling interests				91.5			$131.2			$456.3		$625.3
Other comprehensive income (loss) - cumulative translation adjustment				7.1			(18.6	)		17.0		(27.8	)
Comprehensive income attributable to noncontrolling interests				$98.6			$112.6			$473.3		$597.5

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
			December 31, 2012		December 31, 2011
			(in millions)
Assets
Cash and cash equivalents			$1,614.6		$1,695.5
Cash and securities - segregated for regulatory purposes			12,482.4		10,069.9
Securities purchased under agreements to resell			428.9		375.4
Securities borrowed			2,837.3		2,661.7
Trading assets, at fair value			4,518.3		6,615.1
Receivables from customers, net of allowance			9,851.0		7,024.8
Receivables from brokers, dealers and clearing organizations			872.3		1,397.8
Other assets			596.1		564.2
	Total assets		$33,200.9		$30,404.4
Liabilities and equity
Liabilities
Trading liabilities - financial instruments sold but not yet purchased, at fair value			$4,286.3		$6,156.1
Securities loaned			1,840.6		1,386.1
Short-term borrowings			110.4		6.5
Other payables:
	Customers		21,422.0		17,300.1
	Brokers, dealers and clearing organizations		361.8		247.4
	Other payables		376.5		394.9
			22,160.3		17,942.4
Senior notes payable and senior secured credit facility			0.0		101.4
Redeemable noncontrolling interests			0.0		5,269.6
Equity
Stockholders' equity			588.7		(457.7	)
Noncontrolling interests			4,214.6		0.0
	Total equity		4,803.3		(457.7	)
	Total liabilities and equity		$33,200.9		$30,404.4

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES EARNINGS PER SHARE ON COMPREHENSIVE INCOME (UNAUDITED)
				Three Months					Twelve Months
				Ended December 31,					Ended December 31,
				2012		2011			2012		2011
				(in millions, except share and per share data)
Net income (loss) attributable to common stockholders				$9.1		$13.6			$40.7		$61.9
Add (deduct) net income attributable to non-fair value redemption rights				0.0		(0.4	)		1.1		(0.9	)
Net income (loss) available for common stockholders				$9.1		$13.2			$41.8		$61.0
Other comprehensive income:
	Cumulative translation adjustment, before income taxes			0.9		(2.4	)		2.2		(4.5	)
	Income taxes related to items of other comprehensive income			0.3		(1.0	)		0.8		(1.8	)
Other comprehensive income (loss), net of tax				0.6		(1.4	)		1.4		(2.7	)
Comprehensive income (loss) available for common stockholders				$9.7		$11.8			$43.2		$58.3
Comprehensive income (loss) per share:
	Basic			$0.20		$0.26			$0.92		$1.33
	Diluted			$0.20		$0.26			$0.92		$1.31
Weighted average common shares outstanding:
	Basic			47,489,141		45,569,269			46,814,676		43,924,554
	Diluted			47,680,329		45,944,562			47,070,522		44,364,902

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