Interactive Brokers Group, Inc. Q2 FY2025 earnings call

• Market volatility in Q2 led to a spike in trade volumes; equities saw active use of platform tools with expansion of 'magnificent seven' related to AI. • Overnight trading volumes grew over 170% from Q2 2024 to Q2 2025; enhanced ATS and smart order router for better execution. • Strong net new account growth: 250,000 net new accounts in Q2 2025, YTD over 528,000; client credit balances at record $144 billion, client equity at $604 billion. • Record quarterly commissions, net interest, total net revenue, and pretax income; pretax margin 75%, industry-leading. • Platform enhancements: thousands of software releases; Forecast X live in Europe, US, Canada, Hong Kong; introduction of investment themes tool; completed four-for-one stock split and increased dividend.

Commissions rose to a record $516 million, a 27% increase compared to the second quarter of 2024. Net interest income reached a quarterly record of $860 million, despite lower benchmark rates in some major currencies. Other fees and services generated $62 million, down 9% from the prior year. Other income was a $42 million gain. Execution, clearing, and distribution costs were $116 million, up just 1% year-over-year despite significantly higher volumes. Compensation and benefits expense was $163 million, with a ratio of compensation expense to adjusted net revenues of 11%. G&A expenses were $61 million, up mainly due to higher advertising expenses.

• Expect to add four millionth customer in Q3 2025. • Continued focus on global investing trend, leveraging low cost structure and broad product set.

• Market volatility and uncertainty can impact trading volumes and revenue. • Regulatory changes, especially in digital assets, could affect business models and operations. • Interest rate fluctuations can impact net interest income.

Q: Follow-up on account growth comments and digital assets A: Paul Brody mentioned overdelivering on account growth projections; Milan Galik discussed Interactive Brokers' investment in Zero Hash and plans for cryptocurrency offerings like funding with stablecoins, asset transfers, and staking.

Q: Tokenized equity products in Europe A: Paul Brody contrasted Interactive Brokers' offering of over 10,000 real US shares and ETFs 24/7 with Robinhood's tokenized derivatives, highlighting higher costs and limited features for Robinhood's product.

Q: Execution costs in overnight vs market hours A: Paul Brody stated execution costs for options and futures are same overnight vs day, but stock execution costs differ due to Interactive Brokers' ATS and partnerships, offering low-cost liquidity for overnight stocks.

Q: Sec lending and introducing brokers A: Paul Brody discussed sec lending improvement due to more accounts and equity, with potential for growth with IPOs and M&A activity; Milan Galik noted increasing integrations with introducing brokers, strong pipeline, and return of firms that previously chose competitors.

Q: Interest rate sensitivity and crypto market share A: Paul Brody talked about interest rate sensitivity due to non-US low rate currencies; Milan Galik expressed disappointment in crypto market share but expects asset transfers to boost it, noting friendlier regulatory environment for crypto