Interactive Brokers Group, Inc. Q1 FY2026 earnings call

• Markets had strong Jan but declined in Feb-March; S&P 500 down 5%. • Strong interest from investors in opening/funding accounts; client engagement healthy, trading activity up, risk exposure fees increased. • Incorporated AI across organization: investment themes/connections, expanded international company coverage, enhanced Ask IBKR tool, expanded AI-powered chatbot, applied AI to automate processes. • Commission revenue and net revenues at record levels; disciplined on expenses; pretax margin 77%. • Introducing broker pipeline strong; hedge fund segment's High Touch Prime Brokerage gaining traction; new product introductions in crypto and prediction markets; client outperformance campaign. • Revenue items: commissions up 19%, net interest income up 17%, other fees and services up 10%; expenses: execution, clearing and distribution costs down 12%, compensation and benefits expense ratio 10%, G&A expenses up on advertising. • Balance sheet strong: total assets up 39%, no long-term debt, firm equity up 23%; total customer DARTs up 24%, net interest income affected by rate changes.

Stocks, options and futures all delivered double-digit year-over-year growth. Futures contract volumes increased 20% to a quarterly record. New accounts drove higher clients' uninvested cash balances up 35% YOY to $169 billion. Client equity rose 38% to $789 billion. Quarterly commission revenue and total net revenues reached record levels. Pretax profit margin was 77%, sixth consecutive quarter above 70%.

• Estimate 25 basis point decrease in benchmark Fed funds rate would reduce annual net interest income by $80 million; 25 basis point decrease in all relevant non-USD benchmark rates would reduce annual net interest income by $35 million. • Business strategy continues to be effective, automating brokerage business, improving and expanding offerings while minimizing charges.

Q: Last week, the SEC eliminated the Pattern Day Trader rule. Thoughts on strategic opportunity here and account growth?

A: Milan Galik said the change broadens retail access, increases trading frequency/engagement, disciplined participants may grow accounts faster, increased volatility offsets some effects.

Q: Focus on accelerating marketing spend. Thomas Peterffy said marketing spend increased slowly as they are strict on return on marketing dollars, trying to find additional outlets.

Q: Views on AI-enabled cash optimization tools affecting pricing on deposits? Thomas Peterffy said not happy as it could increase competition; Milan Galik said banks paying little on uninvested cash, AI not needed much, brokers decide how much client enjoys interest.

Q: Update on margin balances and prediction markets? Thomas Peterffy said margin loans at end of quarter $86.6 billion; ForecastEx receiving more inquiries.

Q: Non-U.S. dollar sensitivity to rates. Paul Brody said differentiate between USD and non-USD, changes roughly symmetrical.

Q: Crypto transfer capabilities and prediction markets progress? Milan Galik said crypto transfer capabilities have amounts coming in, ForecastEx getting more inquiries.

Q: Crypto business, client demand for Coinbase Derivatives Exchange partnership? Milan Galik said partnership with Coinbase Derivatives Exchange offers perpetual cryptocurrency futures popular with retail traders, clients trading in big numbers