Interactive Brokers Group Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: James Yaro - Goldman Sachs - Analyst : Sorry. Hello? Can you hear me? It's James. Sorry, the moderator got cut off there. So just two questions here. The first one, could you just speak to the impact of retail pressure on equity market levels on your business in April? Has there been any notable deleveraging across your client base? And what has this meant for trading activity? And then separately, could you just speak to a shift in client allocations to cash versus in risk assets? And then the impact on margin loans.

Question: James Yaro - Goldman Sachs - Analyst : Thank you, Milan. That's very helpful. Just one other one here. I know you talked a little bit about continued appetite for US investments by non-US customers. But any change in the appetite for US stocks since the tariff news began? And then, I guess, just your longer-term expectations for what tariffs could mean for that non-US appetite for trading US stocks given that of course, the fact that you do offer US markets is a key aspect of your value proposition versus local brokers? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 15, 2025 / 8:30PM, IBKR.OQ - Q1 2025 Interactive Brokers Group Inc Earnings Call

Question: Craig Siegenthaler - Bank of America - Analyst : Good evening, Thomas, Milan. I hope everyone is doing well. I wanted to ask that last question a different way. But we view IBKR's model as the ability to provide global assets to most of the individual investors around the world at a low cost. But given this new emerging trade conflict, we could see a period where investors, especially individuals, focus more domestically and less on the US market. Even though you haven't seen this yet, as you pointed out, how do you think this could impact IBKR's global model, with most of your accounts coming from outside the US?

Question: Craig Siegenthaler - Bank of America - Analyst : Thanks, Milan. And I actually had a follow-up on James' first question too, but I wanted to go outside of trading. We wanted to see if you could provide any insight on how client activity was tracking month to date. Specifically, we're curious if you saw any deviations to your 1Q trajectory for account growth, customer credit balances and margin loans? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 15, 2025 / 8:30PM, IBKR.OQ - Q1 2025 Interactive Brokers Group Inc Earnings Call

Question: Craig Siegenthaler - Bank of America - Analyst : So what I wanted to get at is, account growth, customer credit balances and margin loans, did you see any deviation in the trajectory of those three in the first two weeks of April?

Question: Patrick Moley - Piper Sandler & Co - Analyst : Maybe shifting to the product side of things. You nearly -- or you're on pace to nearly triple the size of your crypto offering this year. So can you talk about what drove the decision and your comfortability with expanding that offering? And then going forward, how are you thinking about the growth opportunity here? Is this something you could think could be a significant growth driver? Or is this more of just -- you're plugging a previous -- or what you view as a previous product gap?

Question: Patrick Moley - Piper Sandler & Co - Analyst : All right. Great. And then just a follow-up on the ForecastEx platform and maybe event contracts more broadly. We've seen -- one of your competitors has really leaned into event contracts, specifically sports events contracts. I know that IBKR in the past has been a little bit more hesitant to pursue launching sports-related event contracts. But just curious on your thoughts about expanding that offering and maybe whether you could in the future, look to maybe rethink about sports contracts?

Question: Chris Allen - Citigroup Inc - Analyst : Wanted to ask actually about Europe over the course of the first quarter, so a really strong overall European equity volumes. Anecdotally, it sounds like European retail investors are starting to increase their activity and becoming a little bit more like US-based customers. I'm just wondering, are you seeing similar things from that region? Where do things stand from adoption of options as well? Any color on that front would be helpful.

Question: Chris Allen - Citigroup Inc - Analyst : And just maybe on net interest income related to say, cash, just the sequential movement. When you -- just given the color last quarter, it seems -- I mean, it basically implies you saw an overall decline, about 100 basis points across central banks. Is that correct? Is this just driven by movements in benchmark rates? Or was there anything else underneath the surface, maybe short the duration or anything like that that impact the seg cash and --

Question: Benjamin Budish - Barclays Capital Inc - Analyst : I wanted to follow back up on the earlier comment on margin balances. Just want to make sure we're kind of clear. When you commented that margins declined 12% from the end of the quarter, is that as of sort of the lowest point, perhaps a week ago? Or is that as of yesterday? Just hoping to get a better sense of kind of where we are currently.

Question: Benjamin Budish - Barclays Capital Inc - Analyst : Understood. Very helpful. One other kind of modeling, maybe for Paul. In terms of making sure we kind of calibrate our models correctly given the SEC reduction, I think you said $27 million for the current quarter. Should it be fair to assume those kind of equally come out of commissions and transaction-based expenses? Is that the way to think about the impact going forward?

Question: Benjamin Budish - Barclays Capital Inc - Analyst : Very helpful. And then maybe one other like super kind of small one, but just curious, for the market data fees, I think you said $19 million of expense in the quarter. If I recall, that was $21 million last quarter. I know that line goes up very, very gradually over time. And I think it's kind of assumed there's cost inflation. Curious if there's any reason that number went down? Anything you can kind of comment on there?

Question: Benjamin Budish - Barclays Capital Inc - Analyst : Yeah, the $19 million.

Question: Kyle Voigt - Keefe, Bruyette & Woods, Inc - Analyst : Maybe I could ask a question about your dividend policy. You increased the dividend again this year after an increase at the same time last year. Can you just speak a bit more about your policy? Should investors expect an annual increase in the dividend going forward, whether you would be open to targeting a specific dividend payout ratio over time or whether you're instead targeting a certain implied dividend yield on the shares?

Question: Kyle Voigt - Keefe, Bruyette & Woods, Inc - Analyst : Okay. Understood, Thomas. And then, Milan, you spoke about the 12% pullback in margin balances in April, just given the equity market volatility and a move towards less risky positioning by your clients more broadly. Within your other fees and services line, it looks like your risk exposure fees fell sequentially in 1Q for the first time in over two years. Is it also fair to assume that those fees move lower throughout the first quarter and also likely move lower into April as well? Or is there anything else to note that's driving that line and the decline in the first quarter?