UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): July 27, 2020
INTERACTIVE BROKERS GROUP, INC.
(Exact Name of Registrant as Specified in its Charter)
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Delaware |
001-33440 |
30-0390693 |
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(State or Other Jurisdiction
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(Commission File Number) |
(I.R.S. Employer Identification Number) |
One Pickwick Plaza, Greenwich, CT 06830
(Address of Principal Executive Offices) (Zip Code)
(203) 618-5800
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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□ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Title of each class |
Trading Symbol |
Name of the exchange on which registered |
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Common Stock, par value $.01 per share |
IBKR |
The Nasdaq Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company □
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. □
Item 8.01 Other Information
Selected Financial Information
As previously disclosed in Interactive Brokers Group, Inc.’s (the “Company”) Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, filed with the Securities and Exchange Commission (the “SEC”) on May 8, 2017, and in subsequent filings, the Company intended to eliminate the reporting of separate operating business segments upon its determination that the continued wind-down of the Company’s market making activity rendered it no longer reportable as a business segment. Pursuant to the requirements of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 280, “Segment Reporting,” the Company performed a quantitative and a qualitative assessment of its business and determined that its remaining market making activity no longer supports the Company’s reporting of separate business segments. Accordingly, effective for the quarter ended March 31, 2020, the Company discontinued the reporting of separate business segments. Since the Company’s decision to wind down its market making activities, management has continued to shift its focus to growing and strengthening the Company’s electronic brokerage business. The Company believes the elimination of segment reporting aligns its financial reporting with its business strategy and management’s focus on the electronic brokerage business. In addition, the Company changed the presentation of its consolidated statements of comprehensive income to better align with its business strategy. As a result, the Company made the following changes to the presentation of its consolidated statement of comprehensive income:
Other fees and services – reclassified previously reported amounts as other income to other fees and services, which includes market data fees, account activity fees, risk exposure fees, order flow income from options exchange-mandated programs, and revenues from other fees and services.
Other income – reclassified previously reported as trading gains to other income as a component of “principal transactions.” Other income includes gains (losses) from principal transactions; the impact of the currency diversification strategy; gains (losses) from equity method investments; and other revenues not directly attributable to the Company’s core business offerings.
The Company has determined that the discontinuation of reporting separate business segments and the change in presentation of its consolidated statements of comprehensive income does not constitute a material change as per Item 11(a) of Form S-3. The change in presentation of its consolidated statements of comprehensive income did not change the amounts reported as total net revenues or net income for the years ended December 31, 2017, 2018, and 2019 disclosed in the Company’s audited consolidated statements of comprehensive income reported in the Company’s Annual Report on Form 10-K, filed with the SEC on February 28, 2020.
The Company is providing this selected financial information to provide investors and other users of the Company’s financial statements with the most recent presentation of its consolidated statements of comprehensive income on a historical basis.
The following table shows the impact of the change in presentation to the consolidated statement of comprehensive income on selected historical financial and other data of the Company for the periods indicated:
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Year Ended December 31, |
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(in millions, except share or per share amounts) |
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2019 |
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2018 |
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2017 |
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2016 |
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2015 |
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Revenues |
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Commissions |
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$ |
706 |
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$ |
777 |
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$ |
647 |
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$ |
612 |
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$ |
617 |
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Other fees and services |
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141 |
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148 |
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114 |
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98 |
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95 |
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Other income (loss) |
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7 |
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49 |
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258 |
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159 |
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52 |
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Total non-interest income |
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854 |
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974 |
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1,019 |
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869 |
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764 |
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Interest income |
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1,726 |
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1,392 |
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908 |
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606 |
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492 |
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Interest expense |
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(643) |
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(463) |
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(225) |
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(79) |
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(67) |
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Total net interest income |
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1,083 |
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929 |
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683 |
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527 |
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425 |
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Total net revenues |
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1,937 |
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1,903 |
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1,702 |
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1,396 |
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1,189 |
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Non-interest expenses |
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Execution, clearing and distribution fees |
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251 |
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269 |
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241 |
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244 |
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231 |
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Employee compensation and benefits |
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288 |
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264 |
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249 |
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242 |
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227 |
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Occupancy, depreciation and amortization |
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60 |
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49 |
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47 |
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51 |
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44 |
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Communications |
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25 |
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25 |
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28 |
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30 |
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25 |
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General and administrative |
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112 |
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96 |
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86 |
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62 |
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58 |
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Customer bad debt |
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44 |
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4 |
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2 |
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6 |
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146 |
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Total non-interest expenses |
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780 |
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707 |
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653 |
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635 |
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731 |
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Income before income taxes |
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1,157 |
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1,196 |
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1,049 |
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761 |
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458 |
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Income tax expense |
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68 |
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71 |
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256 |
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62 |
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43 |
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Net income |
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1,089 |
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1,125 |
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793 |
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699 |
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415 |
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Less net income attributable to noncontrolling interests |
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928 |
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956 |
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717 |
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615 |
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366 |
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Net income available for common stockholders |
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$ |
161 |
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$ |
169 |
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$ |
76 |
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$ |
84 |
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$ |
49 |
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Earnings per share |
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Basic |
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$ |
2.11 |
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$ |
2.30 |
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$ |
1.09 |
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$ |
1.28 |
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$ |
0.80 |
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Diluted |
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$ |
2.10 |
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$ |
2.28 |
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$ |
1.07 |
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$ |
1.25 |
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$ |
0.78 |
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Weighted average common shares outstanding |
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Basic |
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76,121,570 76,121,570 |
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73,438,209 73,438,209 |
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69,926,933 69,926,933 |
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66,013,247 66,013,247 |
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61,043,071 61,043,071 |
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Diluted |
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76,825,863 76,825,863 |
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74,266,370 74,266,370 |
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70,904,921 70,904,921 |
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67,299,413 67,299,413 |
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62,509,796 62,509,796 |
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Comprehensive income |
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Net income available for common stockholders |
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$ |
161 |
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$ |
169 |
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$ |
76 |
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$ |
84 |
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$ |
49 |
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Other comprehensive income |
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Cumulative translation adjustment, before income taxes |
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4 |
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(14) |
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11 |
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(4) |
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(10) |
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Income taxes related to items of other comprehensive income |
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— |
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(1) |
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— |
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— |
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— |
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Other comprehensive income (loss), net of tax |
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4 |
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(13) |
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11 |
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(4) |
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(10) |
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Comprehensive income available for common stockholders |
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$ |
165 |
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$ |
156 |
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$ |
87 |
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$ |
80 |
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$ |
39 |
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Comprehensive income attributable to noncontrolling interests |
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Net income attributable to noncontrolling interests |
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$ |
928 |
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$ |
956 |
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$ |
717 |
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$ |
615 |
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$ |
366 |
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Other comprehensive income - cumulative translation adjustment |
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20 |
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(66) |
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54 |
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(21) |
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(53) |
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Comprehensive income attributable to noncontrolling interests |
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$ |
948 |
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$ |
890 |
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$ |
771 |
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$ |
594 |
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$ |
313 |
________________
1)The Company reclassified $141 million, $148 million, $114 million, $98 million, and $95 million for the years ended December 31, 2019, 2018, 2017, 2016, and 2015, respectively, previously reported as other income to other fees and services.
2)The Company reclassified $27 million, $39 million, $40 million, $163 million, and $269 million for the years ended December 31, 2019, 2018, 2017, 2016, and 2015, respectively, previously reported as trading gains to other income as a component of “principal transactions”.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: July 27, 2020
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INTERACTIVE BROKERS GROUP, INC. |
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By: |
/s/ Paul J. Brody |
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Name: |
Paul J. Brody |
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Title: |
Chief Financial Officer, Treasurer
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