Business Wire | Jul 21, 2020 04:01PM EDT

Interactive Brokers Group Announces 2Q2020 Results

Jul. 21, 2020

GREENWICH, Conn.--(BUSINESS WIRE)--Jul. 21, 2020--Interactive Brokers Group, Inc. (Nasdaq: IBKR), an automated global electronic broker, reported diluted earnings per share of $0.40 for the quarter ended June 30, 2020 compared to $0.43 for the same period in 2019, and adjusted diluted earnings per share of $0.57 for both this quarter and for the year-ago quarter.

Net revenues were $539 million and income before income taxes was $222 million this quarter, compared to net revenues of $413 million and income before income taxes of $225 million for the same period in 2019. Adjusted net revenues were $523 million and adjusted income before income taxes was $310 million this quarter, compared to adjusted net revenues of $488 million and adjusted income before income taxes of $300 million for the same period in 2019.

Financial Highlights

* Commission revenue showed strong growth, increasing $98 million, or 55%, from the year-ago quarter on higher customer trading volumes within an active trading environment worldwide. * Net interest income decreased $63 million, or 24%, from the year-ago quarter as the average Federal Funds effective rate decreased to 0.06% from 2.40% in the year-ago quarter. * Other income increased $86 million from the year-ago quarter. This increase was mainly comprised of (1) $88 million related to our strategic investment in Up Fintech Holding Limited ("Tiger Brokers"), which swung to a $14 million mark-to-market gain this quarter from a $74 million mark-to-market loss in the same period in 2019; and (2) $22 million related to our currency diversification strategy, which gained $16 million this quarter compared to a loss of $6 million in the same period in 2019; partially offset by (3) $18 million related to our U.S. government securities portfolio, which swung to a $13 million mark-to-market loss this quarter from a $5 million mark-to-market gain in the same period in 2019. * General and administrative expenses increased $106 million from the year-ago quarter, primarily due to $103 million in expenses incurred to compensate certain affected customers in connection with their losses resulting from the West Texas Intermediate Crude Oil contracts settling at a price below zero on April 20, 2020, as described below. * 41% pretax profit margin for this quarter, down from 54% in the year-ago quarter. 59% adjusted pretax profit margin for this quarter, down from 61% in the year-ago quarter. * Total equity of $8.3 billion.

The Interactive Brokers Group, Inc. Board of Directors declared a quarterly cash dividend of $0.10 per share. This dividend is payable on September 14, 2020 to shareholders of record as of September 1, 2020.

_____________________________1 See the reconciliation of non-GAAP financial measures starting on page 11.

Business Highlights

* Customer equity grew 33% from the year-ago quarter to $203.2 billion. * Customer credits increased 30% from the year-ago quarter to $71 billion. * Customer margin loans decreased 3% from the year-ago quarter to $24.9 billion. * Customer accounts increased 36% from the year-ago quarter to 876 thousand. * Total DARTs2 increased 111% from the year-ago quarter to 1.75 million. * Cleared DARTs increased 111% from the year-ago quarter to 1.56 million.

West Texas Intermediate Crude Oil Event

On April 20, 2020 the energy markets exhibited extraordinary price activity in the New York Mercantile Exchange ("NYMEX") West Texas Intermediate Crude Oil contract. The price of the May 2020 physically-settled contract dropped to an unprecedented negative price of $37.63. This price was the basis for determining the settlement price for cash-settled contracts traded on the CME Globex and also for a separate, expiring cash-settled futures contract listed on the Intercontinental Exchange Europe ("ICE Europe"). Several of the Company's customers held long positions in these CME and ICE Europe contracts, and as a result they incurred losses, including losses in excess of the equity in their accounts. The Company fulfilled the required variation margin settlements with the respective clearinghouses on behalf of its customers. The Company subsequently compensated certain affected customers in connection with their losses resulting from the contracts settling at a price below zero. As a result, the Company recognized an aggregate loss of approximately $104 million.

COVID-19 Pandemic

In March 2020, the World Health Organization recognized the outbreak of Coronavirus Disease 2019 (COVID-19) caused by a novel strain of the coronavirus as a pandemic. The pandemic affects all countries in which we operate. The response of governments and societies to the COVID-19 pandemic, which includes temporary closures of certain businesses; social distancing; travel restrictions, "shelter in place" and other governmental regulations; and reduced consumer spending due to job losses, has significantly impacted market volatility and general economic conditions.

The COVID-19 pandemic has precipitated unprecedented market conditions with equally unprecedented social and community challenges. Amid these challenges:

* The Company is committed to ensuring the highest levels of service to its customers so they can effectively manage their assets, portfolios and risks. The Company's technical infrastructure has withstood the challenges presented by the extraordinary volatility and increased market volume. * The Company can run its business from alternate office locations and/or remotely if a Company office must temporarily close due to the spread of the COVID-19 pandemic. * As announced on April 9, 2020, the Company donated $5 million to assist efforts to provide food and support for people affected by the COVID-19 pandemic in the United States as well as to advance medical solutions.

The effects of the COVID-19 pandemic on the Company's financial results for the second quarter of 2020 can be summarized as follows: (1) higher commission revenue due to increased trading activity and a higher rate of customer accounts opened during this period; and (2) lower net interest income resulting from lower benchmark interest rates and smaller aggregate margin loans extended to customers as they de-leveraged their exposures.

The impact of the COVID-19 pandemic on the Company's future financial results could be significant but currently cannot be quantified, as it depends on numerous evolving factors that currently cannot be accurately predicted, including, but not limited to the duration and spread of the pandemic; its impact on our customers, employees and vendors; governmental actions in response to the pandemic; and the overall impact of the pandemic in the economy and society; among other factors. Any of these events could have a materially adverse effect on the Company's financial results.

_____________________________2 Daily average revenue trades (DARTs) are based on customer orders.

Effects of Foreign Currency Diversification

In connection with our currency diversification strategy, we base our net worth in GLOBALs, a basket of 14 major currencies in which we hold our equity. In this quarter, our currency diversification strategy increased our comprehensive earnings by $38 million, as the U.S. dollar value of the GLOBAL increased by approximately 0.50%. The effects of the currency diversification strategy are reported as components of (1) Other Income ($16 million) and (2) Other Comprehensive Income ($22 million).

As a result of a periodic assessment, we have decided to reduce the number of currencies in the GLOBAL and realign the relative weights of each component to better reflect the global diversification of our business going forward. We removed the Danish krone (DKK), the Mexican peso (MXN), the Norwegian krone (NOK) and the Swedish krona (SEK). The new composition contains 10 currencies, down from 14 in the prior composition. The new composition took effect as of the close of business on June 30, 2020 and the conversion to the new targeted currency holdings took place over a short time period. The detailed component changes were disclosed with the June Monthly Brokerage Metrics on July 1, 2020. A copy of that press release is available through the Investor Relations section of the Interactive Brokers website at www.interactivebrokers.com/ir.

Regulatory Matters

The Company has provided information to FINRA, the SEC, and the CFTC concerning its historical anti-money laundering and Bank Secrecy Act practices and procedures, and these agencies have indicated that they believe that these historical practices and procedures were inadequate. The Company periodically reviews these practices and procedures to make them more robust and to respond to changing regulatory standards; and we have been enhancing and augmenting them, including hiring additional personnel, over the past several years.

We are in discussions with these agencies to settle matters arising from their reviews, and while no agreements have been finalized, we believe that such settlements will entail monetary payments and the retention of an independent consultant to review the implementation of the Company's enhanced practices and procedures. The Company has established a reserve that it deems adequate for such settlements. The Company is also cooperating with a Department of Justice inquiry concerning these matters, and while its outcome cannot be predicted, we do not believe that this inquiry is likely to have a materially adverse effect on the Company's financial results.

Conference Call Information:

Interactive Brokers Group, Inc. will hold a conference call with investors today, July 21, 2020, 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 24, 2020, 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.

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 Day2017 265,501 14,835 31,282 311,618 1,246

2018 328,099 24% 21,880 47% 18,663 (40%) 368,642 18% 1,478

2019 302,289 (8%) 26,346 20% 17,136 (8%) 345,771 (6%) 1,380



2Q2019 74,269 6,827 3,853 84,949 1,348

2Q2020 153,212 106% 13,752 101% 7,252 88% 174,216 105% 2,765



1Q2020 128,564 11,373 4,879 144,816 2,336

2Q2020 153,212 19% 13,752 21% 7,252 49% 174,216 20% 2,765

CONTRACT AND SHARE VOLUMES:(in 000's, except%) TOTAL Options % Futures^1 % Stocks %Period (contracts) Change (contracts) Change (shares) Change2017 395,885 124,123 220,247,921

2018 408,406 3% 151,762 22% 210,257,186 (5%)

2019 390,739 (4%) 128,770 (15%) 176,752,967 (16%)



2Q2019 96,007 32,424 42,995,205

2Q2020 151,665 58% 43,393 34% 67,637,445 57%



1Q2020 138,206 49,204 62,298,036

2Q2020 151,665 10% 43,393 (12%) 67,637,445 9%





ALL CUSTOMERS Options % Futures^1 % Stocks %

Period (contracts) Change (contracts) Change (shares) Change

2017 293,860 118,427 213,108,299

2018 358,852 22% 148,485 25% 198,909,375 (7%)

2019 349,287 (3%) 126,363 (15%) 167,826,490 (16%)



2Q2019 85,999 31,803 40,396,674

2Q2020 140,787 64% 42,582 34% 65,818,295 63%



1Q2020 128,842 48,437 59,897,045

2Q2020 140,787 9% 42,582 (12%) 65,818,295 10%



CLEARED CUSTOMERS Options % Futures^1 % Stocks %Period (contracts) Change (contracts) Change (shares) Change

2017 253,304 116,858 209,435,662

2018 313,795 24% 146,806 26% 194,012,882 (7%)

2019 302,068 (4%) 125,225 (15%) 163,030,500 (16%)



2Q2019 71,524 31,564 39,086,399

2Q2020 124,010 73% 42,259 34% 62,937,898 61%



1Q2020 112,916 47,979 57,653,853

2Q2020 124,010 10% 42,259 (12%) 62,937,898 9%

^1 Includes options on futures

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

OPERATING DATA, CONTINUED

PRINCIPAL Options % Futures^1 % Stocks %TRANSACTIONSPeriod (contracts) Change (contracts) Change (shares) Change2017 102,025 5,696 7,139,622

2018 49,554 (51%) 3,277 (42%) 11,347,811 59%

2019 41,452 (16%) 2,407 (27%) 8,926,477 (21%)



2Q2019 10,008 621 2,598,531

2Q2020 10,878 9% 811 31% 1,819,150 (30%)



1Q2020 9,364 767 2,400,991

2Q2020 10,878 16% 811 6% 1,819,150 (24%)

^1 Includes options on futures

CUSTOMER STATISTICS Year over Year 2Q2020 2Q2019 % Change

Total Accounts (in thousands) 876 645 36%

Customer Equity (in billions)^(1) $ 203.2 $ 153.1 33%



Cleared DARTs (in thousands) 1,558 740 111%

Total Customer DARTs (in thousands) 1,746 828 111%



Cleared Customers

Commission per Cleared Commissionable Order^(2) $ 2.81 $ 3.68 (24%)

Cleared Avg. DARTs per Account (Annualized) 480 293 64%

Net Revenue per Avg. Account (Annualized) $ 2,442 $ 2,863 (15%)



Consecutive Quarters 2Q2020 1Q2020 % Change

Total Accounts (in thousands) 876 760 15%

Customer Equity (in billions)^(1) $ 203.2 $ 160.7 26%



Cleared DARTs (in thousands) 1,558 1,301 20%

Total Customer DARTs (in thousands) 1,746 1,454 20%



Cleared Customers

Commission per Cleared Commissionable Order^(2) $ 2.81 $ 3.30 (15%)

Cleared Avg. DARTs per Account (Annualized) 480 453 6%

Net Revenue per Avg. Account (Annualized) $ 2,442 $ 3,069 (20%)

^(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 Six Months

Ended June 30, Ended June 30,

2020 2019 2020 2019

(in millions)Average interest-earning assetsSegregated cash and securities $ 45,463 $ 27,313 $ 38,978 $ 26,452

Customer margin loans 22,751 26,184 25,614 25,929

Securities borrowed 4,911 3,991 4,420 3,840

Other interest-earning assets 5,157 5,105 5,501 5,095

FDIC sweeps^1 2,990 2,012 2,745 1,924

$ 81,272 $ 64,605 $ 77,258 $ 63,240

Average interest-bearingliabilitiesCustomer credit balances $ 66,673 $ 51,777 $ 62,564 $ 50,838

Securities loaned 4,972 4,131 4,852 3,913

Other interest-bearing 43 19 375 15 liabilities $ 71,688 $ 55,927 $ 67,791 $ 54,766

Net interest incomeSegregated cash and securities, $ 39 $ 145 $ 145 $ 281 netCustomer margin loans^2 65 188 204 362

Securities borrowed and loaned, 80 48 142 100 netCustomer credit balances, net^2 6 (147 ) (63 ) (284 )

Other net interest income^1/3 11 33 37 63

Net interest income^3 $ 201 $ 267 $ 465 $ 522

Net interest margin ("NIM") 0.99 % 1.66 % 1.21 % 1.66 %

Annualized yieldsSegregated cash and securities 0.34 % 2.13 % 0.75 % 2.14 %

Customer margin loans 1.15 % 2.88 % 1.60 % 2.82 %

Customer credit balances -0.04 % 1.14 % 0.20 % 1.13 %

Represents the average amount of customer cash swept into FDIC-insured^ banks as part of our Insured Bank Deposit Sweep Program. This item is not1 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. Interest income and interest expense on customer margin loans and customer^ credit balances, respectively, are calculated on daily cash balances2 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). 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 comprehensive3 income. For the three and six months ended June 30, 2020 and 2019, $4 million, $3 million, $8 million, and $6 million were reported in other fees and services, respectively. For the three and six months ended June 30, 2020 and 2019, $1 million, $5 million, $5 million, and $11 million were reported in other income, respectively.

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

Three Months Six Months

Ended June 30, Ended June 30,

2020 2019 2020 2019

(in millions, except share and per share data) Revenues:Commissions $ 276 $ 178 $ 545 $ 351

Other fees and 40 35 78 70 services^1/2Other income 27 (59 ) (4 ) 45 (loss)^1/3 Total 343 154 619 466 non-interestincome Interest income 244 432 613 840

Interest (48 ) (173 ) (161 ) (335 )expense Total net 196 259 452 505 interest income Total net 539 413 1,071 971 revenues Non-interestexpenses:Execution,clearing and 76 63 153 124 distributionfeesEmployee 82 75 162 146 compensationand benefitsOccupancy,depreciation 17 14 34 28 andamortizationCommunications 7 6 13 12

General and 132 26 169 50 administrativeCustomer bad 3 4 10 47 debt Total 317 188 541 407 non-interestexpenses Income before 222 225 530 564 income taxes Income tax 15 15 33 30 expense Net income 207 210 497 534

Net incomeattributable to 175 178 419 453 noncontrollinginterests Net incomeavailable for $ 32 $ 32 $ 78 $ 81 commonstockholders Earnings pershare:Basic $ 0.41 $ 0.43 $ 1.01 $ 1.08

Diluted $ 0.40 $ 0.43 $ 1.00 $ 1.07

Weightedaverage commonsharesoutstanding:Basic 77,357,609 75,868,349 77,054,388 75,486,825

Diluted 78,031,462 76,594,934 77,799,963 76,288,342

In the first quarter of 2020, we changed the presentation of our1 consolidated statements of income to better align with our business strategy. Previously reported amounts have been adjusted to conform with the new presentation. 2 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. Includes gains (losses) from principal transactions; the impact of our3 currency diversification strategy; gains (losses) from our equity method investments, other revenue not directly attributable to our core business offerings.

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

Three Months Six Months

Ended June 30, Ended June 30,

2020 2019 2020 2019

(in millions, except share and per share data) Comprehensiveincome:Net incomeavailable for $ 32 $ 32 $ 78 $ 81commonstockholdersOthercomprehensiveincome:Cumulativetranslation 4 4 (3 ) 3adjustment, beforeincome taxesIncome taxesrelated to items - - - -of othercomprehensiveincomeOthercomprehensive 4 4 (3 ) 3income (loss), netof taxComprehensiveincome available $ 36 $ 36 $ 75 $ 84for commonstockholders Comprehensiveearnings pershare:Basic $ 0.46 $ 0.47 $ 0.97 $ 1.11

Diluted $ 0.46 $ 0.46 $ 0.96 $ 1.10

Weighted averagecommon sharesoutstanding:Basic 77,357,609 75,868,349 77,054,388 75,486,825

Diluted 78,031,462 76,594,934 77,799,963 76,288,342

Comprehensiveincomeattributable tononcontrollinginterests:Net incomeattributable to $ 175 $ 178 $ 419 $ 453noncontrollinginterestsOthercomprehensiveincome - 18 12 (13 ) 11cumulativetranslationadjustmentComprehensiveincome 193 190 406 464attributable to $ $ $ $noncontrollinginterests

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(UNAUDITED)

June 30, December 31, 2020 2019

(in millions) AssetsCash and cash equivalents $ 3,115 $ 2,882

Cash - segregated for 12,684 9,400 regulatory purposesSecurities - segregated for 33,450 17,824 regulatory purposesSecurities borrowed 4,836 3,916

Securities purchased under 1,367 3,111 agreements to resellFinancial instruments owned, 889 1,916 at fair valueReceivables from customers, 25,678 31,304 net of allowance for doubtfulaccountsReceivables from brokers, 1,395 685 dealers and clearingorganizationsOther assets 551 638

Total assets $ 83,965 $ 71,676

Liabilities and equity LiabilitiesShort-term borrowings $ 139 $ 16

Securities loaned 5,856 4,410

Securities sold under - 1,909 agreements to repurchaseFinancial instruments sold but 234 457 not yet purchased, at fairvalueOther payables:Customers 68,796 56,248

Brokers, dealers and clearing 218 220 organizationsOther payables 468 476

69,482 56,944

Total liabilities 75,711 63,736

EquityStockholders' equity 1,538 1,452

Noncontrolling interests 6,716 6,488

Total equity 8,254 7,940

Total liabilities and equity $ 83,965 $ 71,676

June 30, 2020 December 31, 2019Ownership of IBG LLC Interests % Interests %Membership Interests IBG, Inc. 78,057,622 18.7 % 76,759,595 18.5 %

Noncontrolling interests (IBG 338,670,642 81.3 % 338,670,642 81.5 %Holdings LLC) Total IBG LLC membership 416,728,264 100.0 % 415,430,237 100.0 %interests

INTERACTIVE BROKERS GROUP, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(UNAUDITED)

Three Months Six Months

Ended June 30, Ended June 30,

2020 2019 2020 2019

(in millions)Adjusted net revenues^1Net revenues - GAAP $ 539 $ 413 $ 1,071 $ 971

Non-GAAP adjustmentsCurrency diversification strategy, net (16 ) 6 33 25

Mark-to-market on investments^2 - 69 - (40 )

Total non-GAAP adjustments (16 ) 75 33 (15 )

Adjusted net revenues $ 523 $ 488 $ 1,104 $ 956

Adjusted income before income taxes^1Income before income taxes - GAAP $ 222 $ 225 $ 530 $ 564

Non-GAAP adjustmentsCurrency diversification strategy, net (16 ) 6 33 25

Mark-to-market on investments^2 - 69 - (40 )

Customer compensation expense^3 103 - 103 -

Bad debt expense^4 1 - 1 42

Total non-GAAP adjustments 88 75 137 27

Adjusted income before income taxes $ 310 $ 300 $ 667 $ 591

Adjusted pre-tax profit margin 59 % 61 % 60 % 62 %



Three Months Six Months

Ended June 30, Ended June 30,

2020 2019 2020 2019

(in millions)Adjusted net income available for commonstockholders^1Net income available for common stockholders - $ 32 $ 32 $ 78 $ 81 GAAP Non-GAAP adjustmentsCurrency diversification strategy, net (3 ) 1 6 5

Mark-to-market on investments^2 (0 ) 13 0 (7 )

Customer compensation expense^3 19 - 19 -

Bad debt expense^4 0 (0 ) 0 8

Income tax effect of above adjustments^5 (4 ) (3 ) (5 ) (1 )

Total non-GAAP adjustments 12 11 20 4

Adjusted net income available for common $ 44 $ 43 $ 98 $ 85 stockholders Note: Amounts may not add due to rounding.

Three Months Six Months

Ended June 30, Ended June 30,

2020 2019 2020 2019

(in dollars)Adjusted dilutedEPS^1 Diluted EPS - $ 0.40 $ 0.43 $ 1.00 $ 1.07 GAAP Non-GAAPadjustmentsCurrency (0.04 ) 0.01 0.08 0.06 diversificationstrategy, netMark-to-market on (0.00 ) 0.16 0.00 (0.10 )investments^2Customer 0.25 0.00 0.24 0.00 compensationexpense^3Bad debt expense^ 0.00 (0.00 ) 0.00 0.10 4Income tax effect (0.05 ) (0.04 ) (0.07 ) (0.01 )of aboveadjustments Total non-GAAP 0.16 0.14 0.26 0.05 adjustments Adjusted diluted $ 0.57 $ 0.57 $ 1.26 $ 1.12 EPS Diluted weightedaverage common 78,031,462 76,594,934 77,799,963 76,288,342 sharesoutstanding Note: Amounts maynot add due torounding.

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 GLOBAL currency diversification strategy and our net mark-to-market gains (losses) on investments2. * We define adjusted income before income taxes as income before income taxes adjusted to remove the effect of our GLOBAL currency diversification strategy, our net mark-to-market gains (losses) on investments, customer compensation expenses3 and unusual bad debt expense4. * We define adjusted net income available to common stockholders as net income available for common stockholders adjusted to remove the after-tax effects of our GLOBAL currency diversification strategy, the mark-to-market on investments, customer compensation expenses, and unusual bad debt expense attributable to IBG, Inc.

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 GLOBAL currency diversification strategy, our mark-to-market on investments and unusual bad debt expense 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 equity securities taken over by the Company from customers related to losses on margin loans described below.

3 Customer compensation expenses were incurred to compensate certain affected customers in connection with their losses resulting from the West Texas Intermediate Crude Oil contracts settling at a price below zero on April 20, 2020, as described above.

4 Unusual bad debt expense includes material losses on margin loans resulting from unusual events that occur in the marketplace. For the six months ending June 30, 2019, unusual bad debt expense reflects losses recognized on margin lending to a small number of our brokerage customers that had taken relatively large positions in a security listed on a major U.S. exchange, which lost a substantial amount of its value in a very short timeframe. For the three and six months ended June 30, 2020, unusual bad debt expense reflects losses incurred by futures customers in excess of the equity in their accounts, related the West Texas Intermediate Crude Oil event described above.

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

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CONTACT: For Interactive Brokers Group, Inc. Investors: Nancy Stuebe, 203-618-4070 or Media: Kalen Holliday, 203-913-1369