Tuesday, April 21, 2026 at 4:30 p.m.
ET Call participants Chief Executive Officer — Milan GalikChairman — Thomas PeterffyChief Financial Officer — Paul BrodyCorporate Secretary — Nancy Stuebe Need a quote from a Motley Fool analyst? Email [email protected] Net Revenue -- Reached a record level in the quarter, supported by double-digit growth across key products.Clients' Uninvested Cash Balances -- Rose 35% to $169 billion, marking a record high.Client Equity -- Increased 38% to $789 billion and was up 1% sequentially, despite a 5% market decline.DARTs (Daily Average Revenue Trades) -- Grew 24% to 4.4 million per day.Stock Share Volumes -- Rose 25% year over year, reflecting shifts to larger, higher-quality names.Options Contract Volume -- Advanced 16% compared to the prior year.Futures Contract Volume -- Gained 20%, reaching a new quarterly record.Commissions Revenue -- Increased 19% to over $600 million for the first time.Net Interest Income -- Up 17% year over year to $904 million on higher balances, partly offset by lower benchmark interest rates.Other Fees and Services -- Generated $86 million, up 10%, primarily driven by higher market data, FDIC sweep fees, and mandated options payment for order flow.Pretax Profit Margin -- Maintained at 77%, representing the sixth consecutive quarter above 70%.Dividend -- Increased from $0.32 to $0.35 per year, reflecting confidence in capital strength and growth potential.Total Assets -- Rose 39% to $219 billion, driven by higher-margin lending and segregated balances.Firm Equity -- Increased 23% to $21.3 billion.Customer Credit Balances -- Achieved a record level, supported by new account growth.Execution, Clearing, and Distribution Costs -- Totaled $106 million, down 12% from the previous year, mainly due to lower SEC regulatory fees.Compensation and Benefits Expense -- Reached $167 million, with a ratio of 10% to adjusted net revenues, down from 11% last year.Headcount -- Reported at 3,232 employees as of March 31.Overnight Trading -- Volumes nearly tripled to 8.1 million trades, up from 2.8 million a year ago and 6.2 million in the previous quarter.Securities Lending Net Revenue -- Would be $270 million for the quarter if including additional interest, up 45% from the prior year.Rate Sensitivity -- A 25 basis-point Fed funds rate decrease estimated to reduce annual net interest income by $80 million; simultaneous 25 basis-point decreases in non-USD currencies would reduce annual net interest income by $35 million.AI Initiatives -- Expanded across research, client service, onboarding, compliance, and operations, with ongoing enhancements to Ask IBKR and chatbot capabilities.Crypto Offering -- Expanded to EEA, added transfer capabilities, and launched perpetual futures via Coinbase Derivatives Exchange; staking functionality to be integrated pending partner readiness.Prediction Markets -- Saw growing interest, particularly with the launch of Election Board ahead of U.S.
midterms.Marketing Spend -- Increased primarily due to a global advertising campaign focusing on client account outperformance.
Interactive Brokers Group (IBKR 2.01%) reported increased client engagement and consistently set records across net revenue, client equity, new accounts, and trading activity, in contrast to a weaker backdrop for overall equity markets.
AI-driven products and operational enhancements were emphasized as central to current strategy, with significant improvements in client tools, automated services, and global customer support highlighted during the call.
The company framed the SEC’s elimination of the Pattern Day Trader rule as a business opportunity due to their large base of smaller individual accounts, potentially increasing trading frequency and engagement.
New initiatives included wider cryptocurrency offerings in Europe and new perpetual futures products aimed at retail, while prediction market activity showed early momentum ahead of U.S.
Balance sheet expansion, disciplined expense controls, and increased returns to shareholders through a raised dividend underscored management’s strategic capital allocation approach.
Chairman Peterffy stated, "we are hell bent on trying to increase our marketing spend, but we are also very strict about getting the required minimum return on every additional marketing dollar," signaling a cautious yet persistent approach to growth investments.The launch of the Election Board tool aligned with anticipated demand for political event trading leading into the 2026 midterm cycle.Discussion of AI-based cash optimization tools was met with skepticism; CEO Galik said, "there isn't that much that AI needs to do here," contrasting IBKR's longstanding policy of paying near-market rates on client cash with anticipated competitive responses.In crypto, the company confirmed ongoing geographic expansion and a roadmap for staking capabilities after recent launches in Europe and new product integration via Zero Hash and Coinbase.
Industry glossary DARTs: Daily Average Revenue Trades; a key brokerage metric measuring the number of executed client trades generating commissions each day.Perpetual Futures: Futures contracts without an expiry date, allowing for continuous trading and popular in cryptocurrency markets.Prediction Markets: Platforms where participants buy or sell contracts based on event outcomes, enabling trading on the probability of real-world events.Pattern Day Trader Rule: Former regulation requiring U.S.
retail traders meeting certain criteria to maintain a minimum $25,000 equity balance when executing four or more day trades in five business days; recently eliminated as noted in the call.
Full Conference Call Transcript In the first quarter, markets began with a strong January, supported by solid equity performance, optimism around corporate earnings, expanding market breadth and resilience despite geopolitical risks.
However, that momentum did not persist.
Most global market indices declined in February and fell further in March, broadly mirroring the kind of price movement we saw in the first quarter of 2025.
The S&P 500 ended the quarter down 5%.
Notably, each of the Magnificent 7 technology stocks declined by more than the broader market, resulting in relative outperformance by the rest of the index.
Despite this backdrop, we continue to see strong interest from both institutional and individual investors globally in opening and funding accounts.
Client engagement remained healthy, trading activity increased and clients gradually took on more risk since last year's tariff-driven market decline, as reflected in higher DARTs and increased risk exposure fees over the past several quarters.
We continue to set records across key metrics, including net revenue, total accounts and account adds.
Growth in new accounts has driven higher clients' uninvested cash balances, which increased 35% year-over-year to a record $169 billion.
Client equity rose 38% to $789 billion and was up 1% sequentially, despite the 5% decline in the market as continued account funding offset market performance.
Across products, stocks, options and futures all delivered double-digit year-over-year growth.
Of note, futures contract volumes increased 20% to a quarterly record, driven by higher volatility and increased demand for hedging.
Turning to our strategic initiatives.
We have been incorporating AI across the organization.
We had introduced investment themes and connections, tools which use AI to streamline research and visualize relationships among trends, companies and securities to give our clients actionable investment ideas.
This quarter, we expanded international company coverage and integrated themes into market screeners, watch lists and news summaries.
We continued enhancing our Ask IBKR tool, which enables clients to query their portfolios for insights such as sector exposure, performance, tax loss, corporate actions and fundamentals.
It now provides more direct and relevant responses.
We also expanded the number of new sources we are authorized to summarize using AI.
Within client service, our AI-powered chatbot continues to improve, successfully addressing a growing share of client inquiries in multiple languages.
We continue to increase its accuracy and coverage while enabling our reps to focus on more complex issues.
We are also applying AI to further automate processes across areas like onboarding, compliance and other operational areas.
Expanding the use of AI remains a priority across the firm, both to enhance the client experience and to improve internal efficiency.
While we have made meaningful progress, we see significant opportunities to extend it further.
Our efforts translated into strong financial performance.
Quarterly commission revenue and total net revenues, both reached record levels.
At the same time, we remain disciplined on expenses.
Our pretax profit margin was 77%, maintaining our position as an industry leader and marking the sixth consecutive quarter with margins above 70%.
In recognition of this and as a sign of confidence in the strength of our business model, its growth potential and of our capital base, we revisited our allocation of capital and decided to increase the amount of dividend we paid to $0.35 a year.
Turning to our customer segments.
Our introducing broker pipeline remains exceptionally strong.
We continue to maintain a robust pool of prospects while onboarding a substantial number of new introducing brokers and supporting the growth of existing ones.
For larger introducing brokers, we offer customized solutions and have made it easier for them to launch with a wide range of configurable features.
Many international brokers require specialized functionality to address their local investment, tax and regulatory requirements.
We have user interface enhancements and development that we look forward to discussing in future quarters.
Within our hedge fund segment, our High Touch Prime Brokerage offering continues to gain traction, and we are particularly encouraged by referrals to new clients from existing clients.
We've also received positive feedback on our ability to handle complex requirements, and several clients have launched additional strategies on our platform.
We had a productive quarter for new product introductions.
In cryptocurrency, we expanded our offering to clients in the EEA, significantly broadening our footprint.
We also introduced crypto transferring capabilities, allowing clients to consolidate external holdings into their IBKR linked accounts.
In addition, we launched access to the Coinbase Derivatives Exchange, providing trading in nanosized crypto contracts and perpetual style futures.
Our prediction markets have been live in trading 24/7.
In anticipation of increased interest ahead of the 2026 U.S.
midterm elections, we introduced Election Board, a discovery and trading tool that helps clients browse and trade political event contracts.
You may also have seen our client outperformance advertising campaign.
As we shared previously, in 2025, the average account across each of our client segments outperformed the S&P on a net basis after fees and commissions.
Our average individual account returned 19.2% versus 17.9% for the S&P, while our average hedge fund account returned 28.9%.
The campaign began with digital channels and has since expanded into print and television globally.
These outperformance results reflect our low-cost offering and high interest paid on client cash, the strength of our platform and our focus on best execution.
This focus means that we seek to maximize client outcomes by routing orders directly to the venues offering the best price rather than selling order flow to third parties.
We continue to see growth in overnight trading, which is increasingly important for our global customer base.
Overnight trading volumes nearly tripled year-over-year in the first quarter, increasing to 8.1 million trades from 2.8 million, and up from 6.2 million in the fourth quarter.
We remain highly active across all areas of the business with multiple initiatives underway across platforms and client segments.
We look forward to sharing further updates in the coming quarters.
With that, I will turn the call over to Paul Brody.
Paul? Paul Brody: Thank you, Nancy, and good afternoon.
Thanks, everyone, for joining the call.
We will start with our revenue items on Page 3 of the release.
We are pleased with our financial results this quarter as we again produced record net revenues and strong results in our key operating metrics.
Commissions rose 19% versus last year's first quarter, reaching over $600 million for the first time.
We saw robust trading volumes from our growing base of active customers across stocks, options and futures.
Net interest income rose 17% year-on-year to $904 million, driven by higher balances and partially offset by lower benchmark interest rates.
We saw strength from margin borrowing and from our segregated cash portfolio, partially offset by interest we paid on our customers' cash balances.
Other fees and services generated $86 million, up 10%, primarily driven by higher market data and FDIC sweep fees, as well as higher payments for order flow from options exchange-mandated programs.
Other income includes gains and losses on our investments, our currency diversification strategy and principal transactions.
Note that many of these noncore items are excluded in our adjusted earnings.
Without these excluded items, other income was $77 million for the quarter.
Turning to expenses.
Execution, clearing and distribution costs were $106 million in the quarter, down 12% over the year ago quarter, driven by lower SEC regulatory fees, which were set at 0 in last year's second quarter.
Versus the fourth quarter, execution and clearing was higher due to exchange fees on greater futures trading volumes.
Because they were largely passed through, these fees increased both our commission revenue and execution costs.
Execution and clearing costs were 13% of commission revenues in the first quarter for a gross transactional profit margin of 87%.
We calculate this by excluding from execution, clearing and distribution $24 million of nontransaction-based costs, predominantly market data fees which do not have a direct commission revenue component.
As a reminder, for the upcoming quarters, the SEC raised its fee rate for securities from 0 to $20.60 per million effective April 4.
For comparison, based on our volume in the first quarter of 2025, SEC fees then totaled $24 million and the fee rate was $27.80.
And again, these fees are a pass-through for us, increasing both commission revenue and execution and clearing expense equally with no impact on the income we earn.
Compensation and benefits expense was $167 million for the quarter for a ratio of compensation expense to adjusted net revenues of 10%, down slightly from 11% last year.
Note, there are several calendar-based components that tend to increase comp and benefits expense modestly, such as additional U.S.
FICA tax on salaries in the first quarter and on the vesting of stock incentive plan shares in the second quarter.
Our headcount at March 31 was 3,232.
G&A expenses were $68 million, up from the year ago quarter, mainly on expansion of advertising.
Our pretax margin was 77% for the quarter as reported and as adjusted.
Income taxes of $117 million reflects the sum of the public company's $56 million and the operating company's $61 million.
This quarter, the public company's adjusted effective tax rate was 17.2%, within its usual range.
Moving to our balance sheet on Page 5 of the release.
The consistent strength of our business and our healthy balance sheet support our raising the dividend from $0.32 to $0.35 per....
