IBKR Interactive Brokers 10-Q 2026-09-30 section summaries

Results

IBKR’s single brokerage business grew revenue and earnings in Q3 and the first nine months of 2026. The company’s results include substantial income attributable to noncontrolling interests: $1.034B in Q3 and $2.964B in 9M 2026.

Q3 revenue increased 15.7% year over year, while 9M revenue rose 20.1%. Net income grew 13.7% in Q3 and 22.2% in 9M. Diluted weighted-average shares were 453.924M in Q3 2026 versus 446.529M in Q3 2025, and 450.819M in 9M versus 442.508M. Nine-month basic EPS was $1.99 versus $1.59.

Geographic results

International revenue grew faster than U.S. revenue in both periods. These geographic results reflect the location of subsidiaries recording transactions, rather than how management operates the business.

Balance sheet and cash flows

Operating cash flow declined despite higher earnings, primarily reflecting substantial movements in customer receivables and regulatory-segregated securities. Nine-month financing used $903M versus $786M, including $115M of dividends, $777M of distributions to noncontrolling interests, and $146M of common-stock repurchases for employee tax withholding.

Class A shares outstanding increased from 445.414M at Dec. 31, 2025 to 453.095M at Sep. 30, 2026. The company issued 2.500M shares in a Q3 follow-on offering. IBG, Inc. held 26.6% of IBG LLC at quarter-end; Holdings held 73.4%.

Business, funding and risk

IBKR provides automated brokerage, execution, clearing, settlement, custody, prime brokerage, securities lending and margin lending across more than 175 exchanges and market centers, in over 40 countries and territories and 29 currencies. It reports one consolidated brokerage segment. Customers may also trade certain cryptocurrencies through third-party providers that execute, clear and custody those assets.

Customer margin loans were approximately $105.6B at quarter-end. Securities loaned totaled $35.212B, all overnight and open. Collateral that IBKR was permitted to repledge was $419.561B, of which $101.703B was sold or repledged. These secured-financing activities expose the company to collateral-value, liquidity, counterparty and settlement risks. IBKR describes daily collateral monitoring, credit controls, margin calls and liquidation rights as mitigants; it reported no material credit-risk concentrations outside the ordinary course of business.

Financial assets measured at fair value totaled $13.990B at Sep. 30, 2026, versus $11.595B at year-end 2025; corresponding liabilities were $1.392B versus $1.168B. The company reported no Level 3 transfers during 9M 2026. Its market exposures include equity prices, interest rates and foreign exchange; it uses cash instruments and exchange-traded derivatives to hedge, without hedge accounting.

Regulated operating subsidiaries had $17.956B of aggregate net capital/eligible equity against $3.334B of requirements, leaving $14.622B of excess regulatory capital; all regulated subsidiaries were compliant. IB LLC accounted for $10.531B of capital, a $2.041B requirement and $8.490B of excess. Regulatory rules and customer-asset segregation requirements may constrain operations or distributions if requirements are not met.

Other material items

Stock-plan compensation expense was $96M in 9M 2026 versus $90M in 9M 2025; estimated future cost for unvested awards was $23M. Outstanding plan units declined to 6,484,440 from 11,629,417 at year-end, largely reflecting 5,060,156 distributions. The company says associated LLC ownership changes make share issuance proportionate and historical EPS dilution has not been material.

The Tax Receivable Agreement requires payment to Holdings of 85% of tax savings actually realized from tax-basis increases. Cumulative TRA payments were $321M through Sep. 30, 2026; cumulative related balances included $764M of deferred tax assets and $650M payable under the TRA. IBKR is monitoring OECD Pillar Two rules, which generally establish a 15% minimum effective tax rate in participating jurisdictions.

A customer class action concerning liquidation of margin-deficient positions was settled in 2026: the company paid $5M and IB LLC forgave approximately $1.8M of customer debt, without admitting liability. No material accruals were reported for legal, regulatory or governmental matters.

IBKR — Q3 2026 and nine months ended September 30, 2026

Consolidated results

Q3 revenue rose 16%, and nine-month revenue rose 20%. Net interest income growth reflected higher average customer margin loans and credit balances, partly offset by lower benchmark rates. Management’s nine-month narrative reports net interest income of $3.115B, up $518M; the filing excerpt also contains a table figure of $3.244B versus $2.654B, which is not reconciled. Adjusted Q3 revenue was $1.872B versus $1.610B, and adjusted pretax income was $1.454B versus $1.267B; for 9M, adjusted revenue was $5.435B versus $4.486B and adjusted pretax income was $4.196B versus $3.395B. Adjusted results exclude currency-diversification and investment mark-to-market effects.

Q3 pretax margin eased to 78% from 79%; nine-month margin improved to 77% from 76%. Non-interest expenses rose 22% in Q3, but were 22% of revenue versus 21%; for 9M they rose 14% while falling to 23% of revenue from 24%. Q3 execution, clearing and distribution fees increased 46% to $134M, including $26M of additional regulatory fees after SEC Section 31 fees resumed on April 4, 2026; these fees are passed through to customers. Compensation rose 7% to $167M as average headcount increased 5% to 3,274. Nine-month compensation was $516M, up 9%, while average employees rose 6% to 3,241. Automation, management says, has kept staffing growth relatively modest as the business expands. Q3 tax expense also reflected higher taxable income and IBG, Inc.’s higher average ownership of IBG LLC.

Customer and trading metrics

Q3 DARTs rose 18% year over year but fell 11% from Q2’s 4.824M. Nine-month DARTs rose 26% to 4.5M from 3.6M, indicating faster year-to-date growth than in Q3. Nine-month commissions increased 20% to $1.89B, while average commission per order declined 2% to $2.64 from $2.70, partly due to greater liquidity rebates passed through to customers. Q3’s 4% decline in commission per order reflected smaller order sizes. Total executed orders were up 20% year over year but down 10% sequentially.

Interest, liquidity and balance sheet

Yields declined across customer balances as rates fell: Q3 yields on segregated cash and securities, margin loans, and customer credit balances were 3.40%, 4.25%, and 2.31%, respectively, versus 3.81%, 4.60%, and 2.64%. The Federal Reserve raised its target range 25 basis points to 3.75%–4.00% on September 16, its first increase since August 2023. IBKR maintains a short-duration portfolio, with substantially all maturities under three months. Securities-lending balances grew, but reported securities-lending net interest was affected by classification of interest on cash collateral; including that collateral interest, estimated Q3 securities-lending net interest was $427M versus $314M, with no effect on total net interest income or NIM.

At September 30, total assets were $243.2B, of which $240.6B (98.9%) were considered liquid. Consolidated equity was $23.3B, up from $19.5B a year earlier. Management expects operating cash flow, available cash and borrowing capacity to cover liquidity needs for more than 12 months. Non-U.S. operating subsidiaries held $2.3B of cash, intended for local operations, with no intention to repatriate it.

Cash flows and capital spending

Operating cash flow reflected growth in customer credit balances and securities loaned, partly offset by increases in customer receivables and securities segregated for regulatory purposes. Capital spending supports technology infrastructure, capacity, cybersecurity and regulatory needs.

Business conditions and risks

Commission growth reflected higher DARTs, while Q3 trading volumes were mixed: customer stock and options activity fell even as futures volume increased. Other fees rose partly on higher risk exposure, exchange-mandated order-flow and market-data fees. Other income declined in Q3, primarily from a decrease related to investing activities; currency diversification partly offset that weakness. The currency basket reduced comprehensive earnings by $4M in Q3, comprising a $40M gain in other income and a $44M OCI loss, compared with a $33M reduction a year earlier.

IBKR operates an automated global brokerage platform serving clients in more than 200 countries and territories, routing across more than 175 exchanges and market centers. It continues to consider strategic investments and opportunistic acquisitions; no definitive agreement for a material acquisition existed at quarter-end. Results remain exposed to variable trading activity, interest rates, market structure and regulatory changes, geopolitical developments, and competition. Management also highlights cybersecurity and operational risks, tax uncertainty across jurisdictions, and potential interim mark-to-market movements in U.S. government securities held with the intent to maturity. All operating subsidiaries complied with regulatory capital requirements at September 30, 2026.

Market risk

IBKR’s principal market risks are residual market-making positions, foreign-exchange exposure, interest-rate sensitivity, and customer margin lending. Market-making positions are generally small and automated: proprietary pricing systems update quotes and rebalance exposures many times per second, with real-time monitoring and daily mark-to-market. The company says historical losses from pricing-model outcomes that diverged from historical price behavior have been immaterial relative to annual trading profits, but this does not eliminate the risk.

Foreign-currency exposure

About 24% of IBKR’s equity was denominated in non-U.S.-dollar currencies at September 30, 2026. The U.S.-dollar value of the GLOBAL currency basket decreased 0.66% from September 30, 2025, although its reported dollar equivalent increased:

IBKR generally does not hedge its consolidated foreign-currency exposure to the U.S. dollar, citing the long-term cost of continuous hedging; instead, it manages exposure through a diversified currency basket. Currency effects flow through both “Other income” and other comprehensive income (OCI). The filing says the full GLOBAL effect is captured in the consolidated statements of comprehensive income. Revaluation of foreign-subsidiary balances may affect income, while translation of subsidiary equity affects OCI.

Interest-rate exposure

IBKR had no variable-rate debt outstanding at September 30, 2026. Customer cash interest and margin-loan pricing are tied to benchmark rates. Interest on customer cash generally applies to qualifying balances above $10,000 in securities accounts with more than $100,000 in net assets; smaller accounts receive lower tiered rates. Given the current rate environment, investments of these funds mature within three months.

Based on September 30, 2026 balances and assuming maturities are fully reinvested at short-term rates, the estimated annualized net interest income sensitivities are:

These estimates isolate reinvestment effects and do not include mark-to-market changes in securities. If rates rise rapidly, income on fixed-yield investments may lag the increase. Declines in fixed-rate securities would reduce Other income, and losses would be realized if securities were sold before maturity. IBKR says its current market-making positions do not indicate material interest-rate or dividend exposure.

Customer credit and margin lending

Customer margin loans totaled $105.6B at September 30, 2026. Exposure may increase sharply during fast market moves, particularly where collateral is concentrated or illiquid; customer short sales may produce losses exceeding invested capital. IBKR also indemnifies clearing houses and counterparties for certain liabilities. If collateral is insufficient and customers default, these obligations could create significant off-balance-sheet exposure; the ultimate exposure is described as unlimited and not quantifiable.

Controls include account-level margin requirements that meet or exceed applicable Regulation T and FINRA portfolio-margin rules, real-time monitoring and liquidation of under-margined accounts, and surveillance for concentration and other risk indicators. These protections may not work effectively in illiquid markets or when automated liquidation is disabled.

Risk measurement and limitations

IBKR monitors market-making portfolios (except fixed income) and currency exposures using historical covariant value-at-risk (VaR), and measures fixed-income risk through stress tests. One-day VaR is a 99% confidence estimate based on historical market-factor changes and implied volatility. The company cautions that VaR is not predictive, may omit some trading risks, can understate losses in extreme or illiquid markets, and does not capture losses on positions that cannot be liquidated or hedged within one day. Fixed-income stress scenarios include parallel U.S. Treasury-curve shifts of ±100 and ±200 basis points for corporate bonds and ±50 basis points for U.S. government securities.

Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective in all material respects at quarter-end. No changes during the quarter materially affected, or were reasonably likely to materially affect, internal control over financial reporting. Remote work by employees had no material impact on those controls.

The company reported no material changes to the risk factors disclosed in Part I, Item 1A of its Form 10-K filed February 27, 2026. This section describes no new financial metrics, business developments, or industry-specific risk updates.

For the quarter ended September 30, 2026, no directors or officers adopted, modified, or terminated a Rule 10b5-1(c) trading plan or a non-Rule 10b5-1 trading arrangement. This section reports no financial results or other material business developments.