Interactive Brokers signals continued global account expansion as client equity surpasses $0.25T

Earnings Call Insights: Interactive Brokers Group, Inc. (IBKR) Q3 2025

MANAGEMENT VIEW

* CEO Milan Galik, via Nancy Stuebe, highlighted that Interactive Brokers achieved strong net new account growth across all regions and client types, adding their 4 millionth customer and reaching $150 billion in client cash balances, both up over 30% year-over-year. Galik stated that "our products, pricing and execution quality speak compellingly for themselves." Client equity surpassed $0.25 trillion, representing a 40% increase from last year, with net new accounts already exceeding the total added in all of last year.
* The company reported record commission revenue, up 23% year-over-year, and noted that commission revenue was slightly understated due to a reduction of the SEC fee rate to zero in May. Net interest income rose 21%, attributed to larger balances and increased securities lending from a greater number of accounts. Total net revenues increased 21%. Options contract volumes reached a record $418 million and equities volumes were up 67%.
* Management underscored expansion in crypto, forecast contracts, and overnight trading. Crypto trade volumes rose 87% from last quarter and more than 5x year-over-year. The company introduced recurring buy orders for cryptocurrency and added Solana to its Hong Kong offering. Overnight trading activity increased by 90% in 2024.
* New liquidity providers for options, U.S. stocks, and bonds were added. The company launched proprietary features including the Connections tool, which "has resonated with our clients" and is averaging about 20,000 unique daily users. Interactive Brokers rose to #4 in Preqin’s hedge fund rankings for number of hedge funds serviced.
* CFO Paul Brody stated, "Commissions rose to a record $537 million, 23% above last year's third quarter." He added, "Net interest income also reached a quarterly record of $967 million despite lower benchmark rates in most major currencies."

OUTLOOK

* Management did not provide explicit future guidance figures in the transcript. Paul Brody discussed the potential impact of further rate cuts, estimating a 25 basis point decrease in the benchmark Fed funds rate would reduce annual net interest income by $77 million, and a full 1% decrease in all benchmark rates would decrease annual net interest income by $417 million. These estimates are based on balances as of September 30 and current rate levels.
* Management emphasized continued product and platform innovation, ongoing global expansion, and the intention to maintain a lower cost structure. The company expects to have more developments to share through the remainder of 2025 and into 2026.

FINANCIAL RESULTS

* Interactive Brokers delivered record quarterly net revenues and pretax income. Commissions rose to $537 million, with options volume up 27% and equity volumes up 67% year-over-year. Net interest income was $967 million.
* Other fees and services totaled $66 million, down 8% from the prior year. Other income was $85 million as reported, driven primarily by a gain on a long-held investment.
* Execution, clearing and distribution costs were $92 million, down 21% from the year-ago quarter, largely due to the SEC fee reduction and higher rebates from smart order routing. Compensation and benefits expense was $156 million. General and administrative expenses totaled $62 million.
* Pretax margin was 79%. Total assets ended the quarter at $200 billion, up 35% from the prior year. Firm equity increased 22% to $19.5 billion.
* Daily average revenue trades (DARTs) reached 3.6 million, up 34%. Commission per cleared commissionable order was $2.70, down from last year due to the SEC fee elimination and higher exchange rebates.

Q&A

* Brennan Hawken, BMO: Asked about the impact of capital markets activity on securities lending and AI-driven trading volume. Paul Brody responded that securities lending revenues benefit from increased balances and special hard-to-borrow stocks, which tend to arise during periods of IPOs and M&A. Milan Galik said, "we do not have an ability to see whether that's the reason behind the volumes" regarding AI’s impact on trading.
* Benjamin Budish, Barclays: Inquired about increased interest-rate sensitivity in non-USD balances. Paul Brody explained that as balances grow, non-USD sensitivity rises, but the baseline is higher. Budish also asked about forecast contracts, to which Thomas Peterffy clarified the company is not contemplating sports betting, focusing instead on election, economic, and climate indicators.
* Patrick Moley, Piper Sandler: Asked about strategy for forecast contracts and margin loan growth. Peterffy noted efforts to add broker partners and grow direct customer participation. Galik said, "the appetite for risk has grown ... our margin balances are at their all-time high."
* Daniel Fannon, Jefferies: Queried about account growth mix and expense outlook for 2026. Galik indicated geographic and client mix is unchanged. Brody and Galik stated that expense growth will be managed as opportunities arise, with no set project budgets.
* James Yaro, Goldman Sachs: Asked about geographic trends and crypto expansion. Galik reported a decrease in new mainland China accounts due to regulatory changes, but it does not materially impact figures. For crypto, the company plans to offer European trading through Zero Hash and is working on stablecoin funding and crypto asset transfers.
* Craig Siegenthaler, BofA: Asked about account growth and crypto asset transfer timelines. Peterffy reported no deceleration in account growth. Galik outlined a rollout schedule tied to partner readiness, starting with stablecoin funding and followed by crypto asset transfers and staking.

SENTIMENT ANALYSIS

* Analysts raised questions about the sustainability of securities lending revenue, margin loan growth, interest rate sensitivity, account growth, geographic expansion, and the pace of crypto and forecast contract rollouts, signaling a tone of cautious optimism and a search for clarity on growth levers.
* Management maintained a confident and constructive tone, emphasizing record results, product innovation, and disciplined expense management. Galik’s and Brody’s responses reflected assurance in the company’s trajectory and adaptability.
* Compared to the previous quarter, management conveyed increased confidence as metrics set new records and geographic and product expansion accelerated, while analysts’ tone remained inquisitive but less focused on short-term volatility.

QUARTER-OVER-QUARTER COMPARISON

* Management’s language reflected a shift from discussing recovery and volatility in Q2 to highlighting record-setting growth and product expansion in Q3. New customer account additions accelerated, with year-to-date net new accounts already surpassing the prior full-year total.
* There was a stronger focus on crypto, forecast contracts, and proprietary platform features in Q3, while the previous quarter emphasized automation and the launch of Investment Themes.
* Financial results showed continued growth in commissions, net interest income, and assets, with higher pretax margins and more pronounced global expansion. Execution and clearing costs dropped due to the full impact of the SEC fee reduction.
* Analysts’ focus shifted from concerns about market-driven volatility and interest rate sensitivity in Q2 to questions about the sustainability of recent growth trends, new product adoption, and geographic expansion in Q3.

RISKS AND CONCERNS

* Management noted that further decreases in benchmark interest rates could reduce annual net interest income, estimating a 25 basis point reduction would impact income by $77 million, and a full 1% reduction by $417 million.
* Regulatory changes in China have slowed account growth from that region, but management does not expect a material impact.
* The success of crypto expansion is partially dependent on partner readiness and regulatory approvals. Galik acknowledged the potential for risk appetite to decrease if markets experience a sudden dislocation.

FINAL TAKEAWAY

Interactive Brokers reported a quarter of record net revenues and pretax income, supported by robust global account growth, expansion in crypto and forecast contracts, and continued investment in platform innovation. Management attributes these results to the company’s broad product set, low-cost structure, and ability to capture trends in global investing, with an ongoing focus on disciplined expense management and strategic growth initiatives across regions and product categories.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/ibkr/earnings/transcripts]

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