Interactive Brokers Group, Inc. (IBKR) 4Q25 Earnings Review
Record Adj. Revenue Driven by Commissions Growth; EPS Beats Street Forecast on Higher Revenue and Lower Expenses; Key Metrics Growth Remains Impressive
IBKR Earnings Summary – EPS Comes in Above Street on Revenue & Expense Beat
IBKR reported earnings after the close this evening. Total adjusted net revenue came in at a record $1,670M, up 4% Q/Q and up 17% Y/Y. The sequential increase in revenue was driven by commissions revenue, which increased 8% Q/Q and was up 22% Y/Y to a record $582M. Meanwhile, other fees and services increased 29% Q/Q (+5% Y/Y) to $85M, NII was essentially unchanged Q/Q at $966M (+20% Y/Y) while adjusted other income was down 8% Q/Q (-37% Y/Y) to $37M. On the expense side, total operating expenses came in at $343M, which was unchanged sequentially (-1% Y/Y) and drove pre-tax margins to 79.5% (up 77bps Q/Q and up 383bps Y/Y). Adjusted diluted EPS came in at $0.65, up 14% Q/Q (+27% Y/Y).
Relative to consensus estimates, revenue came in 2% ahead of the consensus forecast of $1,639M. Meanwhile, expenses came in 3% below street forecasts and adjusted EPS came in about 9% above consensus.
In terms of key operating metrics, average interest earning assets for the quarter increased 7% sequentially (+33% Y/Y) while the net interest margin (NIM) fell 14 bps Q/Q (-21bps Y/Y) to 2.02%. Client accounts at quarter end increased 7% from the end 3Q25 (+32% Y/Y) while customer equity increased 3% Q/Q (+37% Y/Y) to $780B. Total customer daily average revenue trades (DARTs) for the quarter were 4,043k (+12% Q/Q, +30% Y/Y) and the average commission per cleared commissionable order came in at $2.64 (-2% Q/Q, -3% Y/Y).
IBKR Earnings Summary and Key Operating Metrics
Source: company data and Tikr.com
Highlights from IBKR Earnings Call and Press Release
In terms of the outlook going forward, IBKR 0.00%↑ management touched on several details during the earnings call that are worth highlighting:
Benchmark Interest Rates – Fully rate-sensitive customer balances ended the quarter at $24.7B, up from $19.1B a year ago. A 25bps decrease in the Fed Funds rate would likely lead to a $77M reduction in annual NII. 29% of customer interest sensitive balances are not in USDs. A 25bps decrease in all non-USD benchmark rates would likely reduce NII by $31M annually
Client Performance – in 2025 the S&P rose by 17.9%. IBKR’s individual investors were up on average 19.2%, Financial Advisers were up 20.6% and Hedge Fund Clients were up 28.9%. IBKR attributes client outperformance to its focus on empowering clients through low pricing, superior execution, advanced order types and more attractive interest rates on cash
Stablecoin – clients can now fund accounts using stablecoin, enabling cross-border account funding and 24 / 7 funding
Overnight Hours Trading – Trading during overnight hours grew rapidly in 4Q, rising 76% Q/Q and 130% Y/Y
Prediction Markets / ForecastEx – Traded 286M pairs in 4Q, up from 15M pairs in 3Q and now has 4 members quoting into the exchange and over 10k listed instruments. While ForecastEx offers sports contracts, IBKR’s client base does not rely on sports. IBKR believes prediction market contracts will have enormous applicability to many in the future. Currently the most actively traded contracts on IBKR are weather and temperature contracts. IBKR is working on tying these weather contracts in with electricity and natural gas contracts. In terms of onboarding institutional clients to the prediction market it is more a matter of selling the product rather than a question of product design
M&A – Don’t see any reason to look at acquisitions in the prediction markets space given 1) many companies focus on sports contracts, which IBKR does not want to do and 2) ForecastEx currently has 10k contracts already and volumes continue to grow
Banking Licenses – Comment period with OCC is over. OCC currently reviewing and (hopefully) approving IBKR’s request for a National Trust Bank Charter. Believe they will be operational by the end of 2026. Currently no process started in Europe, but will eventually have a license in Europe and most likely geography is Ireland where IBKR’s broker dealer operations are already regulated by a banking regulator
Account Growth – Don’t see any reason why account growth will slow down. Have been successful at attracting accounts across all sizes, types and geographies. If account growth slows IBKR will lean more heavily into advertising, which they have been quite successful at and have gotten better and better at over time
Expense Growth – Broadly expense growth has been consistent over the last few years. Headcount grew around 6% in 2025 with 10% growth in compensation expense and would expect similar growth in the future. Do have a number of AI initiatives in process that could alter expense growth trajectory
Key Financial Highlights
IBKR showed solid revenue growth of 17% Y/Y, posting adjusted revenue of a record $1,670M. Meanwhile, operating expense growth remained in check with OpEx actually declining 1% Y/Y to $343M. This allowed operating margins to expand to a record 79.5% in the quarter, up 383bps Y/Y.
IBKR Revenue, Expenses and Margins
Source: company documents
Solid revenue performance came as key client metrics continued to perform well with client accounts up 32% Y/Y to 4.4M. Client equity also continued to increase, rising to $780B by the end of 4Q25 (+37% Y/Y). This drove average equity per client account to increase 4% Y/Y to $177,000 at the end of 2025.
EOP Accounts and Average Equity Per Account
Source: company documents
Within 4Q25 revenue results, NII was roughly flat sequentially despite a 14bps Q/Q reduction in IBKR’s reported NIM as average interest earning assets rose 7% Q/Q to a record $197B.
AIEAs and NIM
Source: company documents
Annualized revenue per average FTE increased 2% sequentially to a record $2.1M as revenue growth outpaced the 2% Q/Q increase in total FTEs at quarter end.
EOP FTEs and Annualized Revenue per Average FTE
Source: company documents
Broad Thoughts / Outlook
I thought the quarter itself was really strong with revenue outperforming consensus and showing sequential growth despite the rate headwind in the quarter (average Fed Funds rate was down 40 bps in 4Q25). Expense control was equally as impressive and pre-tax margins over 79% are truly mind boggling. Further, IBKR seems to continue to fire on all cylinders with respect to account growth and client metrics.
I do grow slightly concerned about the trajectory from here, however. I’m currently wondering how much juice there is left to squeeze out of the margin expansion story going forward. Just under 80% pre-tax margins are unbelievably impressive but IBKR has benefited from strong client engagement given generally rising markets which has boosted trading volumes and client appetite for margin loans / securities lending (which has aided the NII & NIM story in recent quarters). And while I have no doubt that IBKR and its management team will be successful in continuing to add accounts at a breakneck pace, I wonder how much they may need to lean into marketing spend to support continued above peer account growth, particularly if the market backdrop proves less favorable.
And while shares look cheap relative to peers HOOD 0.00%↑ or BULL 0.00%↑, IBKR is currently trading the closest to its 52-week high on an NTM P/E basis amongst the eBroker group, which makes me a bit hesitant on the valuation front.
eBroker Price / NTM EPS
Source: Yahoo Finance
All the above said, I want to reiterate that this was a really solid quarter from IBKR. I’m just growing a little cautious on it given current valuation and potential for further margin expansion to become more challenging to achieve.
it is a machine