Summary of Interactive Brokers Group Conference Call Company Overview - **Company**: Interactive Brokers Group (NasdaqGS:IBKR) - **Founder**: Thomas Peterffy, who has been instrumental in the evolution of electronic market making and retail brokerage over 48 years Market Insights - **Current Economic Cycle**: The speaker believes a bull market is likely to continue, driven by potential economic initiatives from the Trump administration aimed at boosting the economy for midterm elections [4][5] - **Client Risk Appetite**: Clients are showing a willingness to engage in large trades without being front-run, facilitated by Interactive Brokers' unique algorithmic trading features [2][3] Investment Priorities - **Focus on Forecast Trader**: The company sees significant growth potential in its Forecast Trader platform, which is expected to surpass equity markets in importance [6] - **Thematic Trading**: Development of presentation layers for theme trading, allowing clients to invest in specific themes like solar energy or healthcare [7] - **Global Expansion**: Plans to add brokerage subsidiaries in various countries and new exchanges to enhance trading capabilities [6][8] Regulatory Environment - **Stablecoin Adoption**: Interactive Brokers plans to accept stablecoins from Tether, Ripple, PayPal, and Circle, which is expected to increase the velocity of money [9] - **SEC Clarification Needed**: The company seeks clarity from the SEC regarding whether certain prediction market questions related to companies would be classified as securities [10] Prediction Markets - **Development of Institutional Prediction Markets**: The company anticipates a future where prediction markets will involve economists and traders, with a focus on building liquidity [11][12] - **Integration of Weather Data**: Interest in using temperature data to gauge economic activity, with plans to include wind speed data for insurance considerations [12][13] - **Investment Models**: Investors may develop models based on prediction market data, continuously updating their portfolios [14] Client Growth and Channels - **Account Growth**: The company has achieved a 33% growth in accounts over the last 12 months, with a long-term target of 20% [18] - **Referral and Advertising**: 30% of new accounts come from referrals, 20% from sales, and 50% from advertising [18] - **Introducing Broker Channel**: Growth in this channel is slow due to existing long-term contracts with other platforms [20] Competitive Landscape - **Prime Brokerage Offering**: Ranked fourth in hedge fund clients, the company faces competition from big banks but maintains a focus on equity capital growth [22][23] - **Technology Advantage**: Interactive Brokers is recognized for its superior technology compared to competitors, which often require long-term contracts [20] Technology and Innovation - **AI Utilization**: The company is investing in AI for customer service and internal processes, with a focus on keeping costs low [26] - **Excess Capital**: Currently has $8 billion in excess capital, which is reserved for potential acquisitions, although the preference is to build rather than acquire [27][28] Crypto Products - **Crypto Custody**: The company offers crypto trading but does not custody crypto itself, which may deter some clients [31][32] Conclusion - **Future Outlook**: The company is optimistic about the growth of prediction markets and stablecoin adoption, while also focusing on enhancing its technology and global presence [30][31]

Financial Data and Key Metrics Changes - The company reported record net revenues and pre-tax income, with commissions rising 36% year-on-year, reaching over $500 million for the first time [28][12] - Net interest income increased by 3% year-on-year to $770 million, driven by higher balances, partially offset by lower benchmark interest rates [29][38] - Client credit balances rose 19% to a record $125.2 billion, while client equity increased by 23% to $573.5 billion [12][35] - The adjusted pre-tax profit margin was 74%, marking the eighth time it reached 70% or more [13][34] Business Line Data and Key Metrics Changes - Options contract volumes increased by 25%, futures volumes rose by 16%, and stock share volumes surged by 47% [10][28] - The company added 279,000 new accounts in Q1 2025, a record surpassing previous highs [12][11] - The average commission per cleared commissionable order decreased to $2.76 due to smaller average order sizes and higher rebates [37] Market Data and Key Metrics Changes - The S&P 500 ended the quarter down 5%, with a notable decline of 9% from its February peak [8] - Despite market declines, customer trading activity remained robust, with 22 out of the 25 most active names seeing net buying activity [9][10] Company Strategy and Development Direction - The company plans to continue automating its brokerage business and expanding its product offerings while minimizing costs [25][49] - A stock split of four-for-one was announced to enhance liquidity and affordability for shareholders [14] - The company is actively looking for M&A opportunities but has faced challenges in finding suitable targets at reasonable prices [15][16] Management's Comments on Operating Environment and Future Outlook - Management noted that the long-term trend towards global investing remains strong, despite short-term market fluctuations [25] - The company is well-positioned to handle market volatility, allowing clients to trade across various asset classes seamlessly [66] - There is ongoing confidence in the appetite for US investments from non-US clients, despite recent tariff discussions [58][59] Other Important Information - The company introduced several new products, including additional cryptocurrencies and trading options, to enhance its offerings [20][81] - The SEC's reduction of its fee rate to zero is expected to benefit execution and clearing costs in upcoming quarters [31] Q&A Session Summary Question: Impact of retail pressure on equity market levels - Management observed significant trading volumes during market fluctuations, with a slight decrease in margin loans by 10-12% as clients adjusted their risk posture [55] Question: Appetite for US stocks amid tariff news - There has been no noticeable decrease in non-US clients' appetite for US markets, with continued account openings and trading activity [58][59] Question: Client activity tracking in April - There was a 12% drop in margin loans, but overall trading activity returned to normal levels [71] Question: Expansion of crypto offerings - The decision to expand the crypto offering was driven by regulatory changes and increased appetite for the crypto space, although growth has not met expectations [78][81] Question: Changes in risk exposure fees - Risk exposure fees fluctuate more than margin balances, reflecting clients' quick adjustments to market conditions [121]