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    IBKR
    Earnings call· Jun 2025(Q2 FY25)

    Interactive Brokers Group Q2 FY25 earnings call IBKR

    Jul 17, 2025 Source

    Executive summary

    Interactive Brokers Q2 FY25 — Record Revenue and Pretax Income Driven by Strong Account Growth and Trading Volumes

    Interactive Brokers delivered a record-breaking Q2 FY25, driven by robust net new account growth and increased client trading activity across stocks, options, and futures. The company achieved record net revenues and pretax income, alongside an industry-leading 75% pretax margin, underscoring the effectiveness of its automated, low-cost, and broad product offering. Management continues to focus on expanding its global reach and product suite, including significant enhancements in digital assets, while maintaining strong capital returns.

    Highlights

    5

    • Record net revenues and pretax income, with pretax income exceeding $1 billion for the third consecutive quarter.

    • Client trading volumes expanded for stocks, options, and futures, with commission revenue increasing by 27% compared to last year.

    • Added 250,000 net new accounts in the quarter, bringing year-to-date total to over 528,000, surpassing all of 2023.

    • Client credit balances grew 34% to a record $144 billion, and client equity rose 34% to $664 billion.

    • Pretax profit margin reached an industry-leading 75%, a record for the company.

    Concerns

    3

    • Other fees and services generated $62 million, down 9% from the prior year, driven by more cautious risk-taking by clients.

    • Net interest income sensitivity: a 25-basis point decrease in the benchmark Fed funds rate is estimated to reduce annual net interest income by $73 million.

    • Disappointment in crypto market share gains despite lower costs, attributed to inability to transfer crypto assets directly.

    Guidance & targets

    3
    CategoryTargetConfidence
    Annual Net Interest Income (NII) sensitivity to Fed funds rate decrease
    $73 million reduction
    high materiality
    High
    Annual Net Interest Income (NII) sensitivity to non-U.S. benchmark rate decrease
    $8 million reduction
    medium materiality
    High
    Annual Net Interest Income (NII) sensitivity to 1% decrease in all benchmark rates
    $335 million reduction
    high materiality
    High

    Operational metrics

    38
    Commission revenue
    $516 millionup 27% YoY
    Q2 FY25

    Record commission revenue, slightly understated due to SEC fee rate reduction to zero mid-quarter.

    Net interest income
    $860 millionup 9% YoY
    Q2 FY25

    Record NII, driven by higher segregated cash balances and strong securities lending, and lower interest expense on customer cash balances.

    Other fees and services
    $62 milliondown 9% YoY
    Q2 FY25

    Driven by more cautious risk-taking by clients leading to lower risk exposure fees, partially offset by higher market data and FDIC sweep fees.

    Other income
    $42 million
    Q2 FY25

    Includes gains and losses on investments, currency diversification strategy, and principal transactions. Both as reported and as adjusted.

    Execution, clearing and distribution costs
    $116 millionup 1% YoY
    Q2 FY25

    Despite significantly higher volumes in options and futures. SEC fee is a pass-through and does not impact profitability.

    Gross transactional profit margin
    82%
    Q2 FY25

    Calculated as a percent of commission revenues.

    Compensation and benefits expense
    $163 million
    Q2 FY25

    Higher due to stock incentive plan bonuses vesting in Q2.

    Compensation expense to adjusted net revenues ratio
    11%unchanged YoY
    Q2 FY25
    Headcount
    3,087up 5% YoY
    as of June 30

    Moderate staff increase reflecting expense discipline.

    G&A expenses
    $61 millionup YoY
    Q2 FY25

    Mainly on higher advertising expenses.

    Pretax profit margin
    75%record
    Q2 FY25

    Industry-leading, both as reported and as adjusted.

    Income taxes
    $98 million
    Q2 FY25
    Public company effective tax rate
    18.1%within usual range
    Q2 FY25
    Total assets
    $181 billionup 33% YoY
    Q2 FY25

    Growth driven by higher segregated cash balances and higher margin lending.

    Firm equity
    $18.5 billionup 22% YoY
    Q2 FY25

    Profit growth drove the increase.

    Dividend per share
    $0.32up from $0.25 (split-adjusted)
    quarterly

    Increased from $1 per year to $1.28 per year, or $0.32 on a split-adjusted basis, following a four-for-one stock split on June 17.

    Customer DARTs
    3.6 millionup 49% YoY
    Q2 FY25

    Strong in all product classes.

    Commission per cleared commissionable order
    $2.65down YoY
    Q2 FY25

    Primarily due to elimination of SEC fee mid-quarter and higher exchange rebates captured by Smart Order Router.

    Total GAAP Net Interest Income
    $860 millionup 9% YoY
    Q2 FY25

    Excluding $26 million recovery of taxes withheld at source, it was $834 million.

    Adjusted NIM Net Interest Income
    $861 million
    Q2 FY25

    Adjusted by removing the $26 million one-time credit from segregated cash interest.

    U.S. Fed funds rate (average)
    fell 100 bpsdown 19%
    YoY
    Segregated cash interest income
    up 2%
    Q2 FY25

    On higher balances, despite decline in Fed funds rate.

    Margin loan interest
    decreased 6%
    Q2 FY25

    On lower rates but bolstered by higher lending balances.

    Average duration of investment portfolio
    less than 30 days
    Q2 FY25

    Strategy to maximize earnings on short-term yields in inverted yield curve environment.

    Securities lending net revenue (estimated)
    $251 millionup 29% YoY
    Q2 FY25

    Actual reported was $194 million in prior year quarter. Uptick in hard-to-borrow names contributed.

    Interest paid on customer cash
    3.83%
    current

    Significant attraction to new customers.

    Fully rate sensitive customer balances
    $22.8 billionvs $18.6 billion YoY
    Q2 FY25 end
    Customer cash balances (non-U.S. dollars)
    27%
    Q2 FY25

    Portion of total customer cash balances.

    Overnight trading volumes
    grew over 170%vs Q2 FY24
    Q2 FY25

    For U.S. stocks and ETFs.

    ATS performance
    up to 20x
    Q2 FY25

    Enhanced for high-volume days.

    Software releases and product configuration changes
    thousands
    Q2 FY25

    Reflects continuous automation and effort in highly regulated environments.

    Client credit balances
    $144 billionup 34% YoY
    Q2 FY25 end

    Record high, despite strength in trading volumes.

    Client equity
    $664 billionup 34% YoY, up 16% QoQ
    Q2 FY25 end

    Compared to 11% for the S&P.

    Net new accounts
    250,000
    Q2 FY25

    Contributed to year-to-date total of over 528,000.

    Net new accounts (YTD)
    over 528,000more than all of 2023
    YTD Q2 FY25

    Application processing is highly automated.

    Options contract volumes
    rose 24%YoY
    Q2 FY25
    Futures contract volumes
    rose 18%YoY
    Q2 FY25
    Stock share volumes
    rose 31%YoY
    Q2 FY25

    Product announcements

    2
    ProductTypeDetails
    ForecastExexpansion
    Investment Themeslaunch

    Deals & partnerships

    1
    Zero HashInvestment in a cryptocurrency exchange

    Interactive Brokers participated in a continued capital raise by Zero Hash to maintain its percentage ownership. They have a good partnership and are working together on delivering new crypto features.

    Risks & headwinds

    5
    Lower benchmark rates and risk-off posturebeginning of the quarter

    lower benchmark rates in some of the major currencies

    Mitigation: Higher segregated cash balances and strong securities lending contributed to NII results, partially offsetting.

    Decline in Other Fees and Services revenueQ2 FY25

    down 9% from the prior year

    Mitigation: Partially offset by positive contributions from higher market data and FDIC sweep fees.

    Interest rate sensitivityannual

    a 25-basis point decrease in the benchmark Fed funds rate to be a $73 million reduction in annual net interest income

    Mitigation: Any growth in our balance sheet and interest-earning assets would reduce this impact.

    Disappointment in crypto market share gainscurrent

    how much market share we are getting in the crypto space remains. I'm still disappointed, given how much less expensive we made it for our [ clients ] to buy cryptos.

    Mitigation: Working on asset transfer capability for crypto to attract new clients and assets; expanding crypto offering geographically and with new features (stablecoin funding, staking).

    Complexity of single stock 0DTE optionsfuture

    unexpected exercise and assignment activity

    Mitigation: Industry recognizes the issue; potential solution could be cash-settled 0DTE stock options, but that comes with its own problems.

    What to watch in Q3 FY25

    5

    Crypto asset transfer capability

    later during the year
    Currentimpossible
    Targetavailable

    Why it matters

    Enabling crypto asset transfers is expected to attract new clients and assets, addressing current market share disappointment.

    We are working on the asset transfer capability in the crypto space. So we will be able to take in crypto asset transfers. And then later during the year, we will be adding staking.

    Q&A highlights

    7

    Clarification on Thomas Peterffy's prior comments about decelerating account growth given the strong Q2 performance, and expectations for future growth.

    Thomas Peterffy stated he likes to "overdeliver" and projects lower growth than he believes will occur, implying continued strong growth.

    “So I would like -- I always like to overdeliver. That's why I projected lower account growth than I really believed that would take place. And I continue to do that for the future.”

    asked by Craig Siegenthaler · answered by Thomas Peterffy

    2 min read6 chapters

    Detailed Narrative

    01

    Market Dynamics and Trading Activity

    The second quarter saw significant market volatility🌐, starting with a precipitous drop in April, followed by a recovery that surpassed February peaks, closing up over 10%. This uncertainty and volatility, combined with strong net new account growth, fueled increased client trading volumes across stocks, options, and futures. The company noted a shrinking life of market dips, with investors actively buying.

    02

    Platform Enhancements and Scalability

    Interactive Brokers continuously enhances its platform, rolling out thousands of software releases and configuration changes. Key improvements this quarter included enhancing its ATS to handle volume spikes up to 20x on high-volume days and refining its Smart Order Router for best execution, including price improvement and rebates. These advancements ensure scalability and top-tier execution for its growing client base.

    03

    Overnight Trading Expansion

    The company's overnight trading hours saw substantial growth, with volumes increasing over 170% from Q2 2024 to Q2 2025. This is particularly beneficial for its global client base, for whom these hours align with their daytime. Interactive Brokers offers the most comprehensive overnight product set, including over 10,000 U.S. stocks and ETFs, and expects this trend to continue, diminishing the differences between trading hours over time⏳.

    04

    Digital Asset Strategy Evolution

    Interactive Brokers is actively expanding its digital asset offerings, including an investment in cryptocurrency exchange Zero Hash. Future plans include enabling clients to fund accounts with stablecoins, supporting crypto asset transfers, and adding staking capabilities later in the year. The company is also working to expand cryptocurrency trading geographically, focusing on Europe in the coming quarters⏳, driven by a more crypto-friendly regulatory environment.

    05

    New Product Introductions

    The company launched several new products to enhance client experience and trading capabilities. ForecastEx is now live for retail clients across most of Europe, U.S., Canada, and Hong Kong, expanding into financial market forecast contracts. Additionally, "Investment Themes" was introduced, a discovery tool designed to help investors identify actionable trading ideas based on market trends or specific ticker symbols, streamlining the investment process.

    06

    Introducing Broker Momentum

    The pipeline for introducing brokers remains robust, with an increase in integrations delivered in Q2 compared to Q1. The company observes a trend of firms that previously chose competitors or in-house builds now returning to Interactive Brokers, recognizing the superior offering and cost structure. This indicates strong and steady demand for its platform from various types of financial intermediaries globally.

    AI-generated summary of the company’s earnings call. Not investment advice.