IBKR — Q3 2026 Financial Report Analysis

Overview

Interactive Brokers grew more slowly than in the spring, and interest income did more of the work. In the three months to September 30, 2026, total net revenues rose 15.6% to $1,914 million (from $1,655 million), and income before income taxes rose 14.0% to $1,496 million. Diluted earnings per share (EPS) were $0.69, up from $0.59. Net interest income, the interest the broker earns on customer cash and loans minus the interest it pays customers, rose 19% to $1,154 million and made up 60% of net revenues. Commissions rose 12% to $602 million, but they were down from $673 million in the second quarter because customers traded less often.

The board raised the quarterly dividend 71%, from $0.0875 to $0.15 a share, payable December 14, 2026.

This analysis is based on the earnings release filed on October 15, 2026 (Exhibit 99.1 to a Form 8-K). The full quarterly report (10-Q) has not been filed yet. The release does not include a cash-flow statement, headcount, interest-rate sensitivity, or management's explanation for some of the changes below. Where an explanation is missing, this report says so.

At a glance

• Revenue +15.6% to $1.91 billion. Growth slowed from 28% in Q2. The business is still growing, but at about half the pace of the previous quarter.
• Net interest income +19% to $1.15 billion. Average margin loans grew 47% to $104.0 billion, which more than offset lower interest rates than a year ago. Interest income carried this quarter.
• Trades per account fell 14% from a year ago. The average cleared account placed 168 revenue-earning orders a year (annualized), down from 195. The 35% rise in accounts to 5.58 million made up for it, but customers were trading less than in the busy second quarter.

A note on ownership: why "net income" has two numbers

The listed company, Interactive Brokers Group, Inc. (IBG, Inc.), owns 26.6% of IBG LLC, the entity that runs the brokerage. The other 73.4% belongs to IBG Holdings LLC, which is owned by founder Thomas Peterffy, his affiliates, and employees. The income statement includes 100% of the business, so the headline net income was $1,348 million. Of that, $1,034 million belongs to the Holdings owners ("noncontrolling interests") and $314 million belongs to public shareholders ("net income available for common stockholders"). EPS is calculated from the $314 million, so this report uses that figure for net income. The tax bill ($148 million, 9.9% of pretax income) looks low because IBG, Inc. pays corporate tax only on its own share.

Key metrics

Pretax profit margin is income before taxes as a share of net revenues: the share of revenue left after all operating costs, before tax. The release gives period-end margin loans and customer credits only as a current balance and a percentage change, so the year-ago figures are left blank.

Interest income: bigger balances outweighed lower rates

A large part of IBKR's business works like a bank's. It earns interest on customer cash that it invests, mostly in short-term government securities. It also earns interest on margin loans, which are loans to customers backed by the securities in their accounts. It pays interest on the cash customers leave with it. Net interest income is the difference.

Interest rates were lower than a year ago on every line the company reports:

Balances grew much faster than rates fell. Average margin loans rose $33.2 billion (47%) to $104.0 billion, and net interest from margin lending rose $293 million to $1,114 million. That one line accounts for most of the year-on-year gain. Average customer cash balances rose $34.8 billion to $176.6 billion. Interest paid on them rose only $83 million to $1,028 million because the rate paid fell to 2.31% from 2.64%.

Net interest margin (NIM), net interest income as a share of the assets that earn interest, fell to 1.99% from 2.16% a year ago because of lower rates. It rose from 1.93% in Q2, and all three yields in the table were higher than in Q2. The company's NIM calculation uses $1,191 million of net interest income. That is $37 million more than the income-statement figure, because it includes interest-like income that the income statement reports under other fees and other income.

Securities lending looks weaker than it is. The line "securities borrowed and loaned, net" fell to $65 million from $133 million. In a footnote, the company says that if interest on the cash collateral from those loans were counted too, securities-lending net interest would be $427 million, up from $314 million (+36%).

Trading: more accounts, fewer trades per account

Commissions rose $65 million (12%) to $602 million. The company credits 18% higher DARTs and higher regulatory fees, which it passes through to customers. DARTs (daily average revenue trades) are the average number of customer orders that earn revenue each trading day. They rose to 4.27 million from 3.62 million a year ago but fell 11% from 4.82 million in Q2.

What customers traded changed a lot:

• Futures contracts rose 13%.
• Options contracts fell 1%.
• Shares traded fell 24%, to 90.2 billion from 118.3 billion.

Commission per cleared commissionable order fell 4% to $2.59 from $2.70. The release does not explain why. In Q2, the company blamed smaller foreign-exchange orders and higher exchange rebates.

All of the year-on-year growth came from more customers. Accounts rose 35% to 5.58 million, and the company added 391,000 in the quarter (from 5.19 million at June 30). Each account traded less, though. Annualized DARTs per cleared account fell to 168 from 195 a year ago and from 207 in Q2.

Costs

Non-interest expenses rose $75 million (22%) to $418 million, which is faster than revenue:

• Execution, clearing and distribution fees rose $42 million (46%) to $134 million. Of that increase, $30 million came from a higher SEC Section 31 transaction fee rate. This regulatory fee is passed through to customers and also shows up in commissions, so it raises revenue and cost by similar amounts. It inflates expense growth more than it changes profit.
• Employee compensation rose $11 million (7%) to $167 million, which is less than in Q2 ($182 million).
• General and administrative costs rose $16 million (26%) to $78 million. The release does not say why. The 10-Q should explain it.
• Customer bad debt was a $1 million recovery, compared with a $2 million recovery a year ago.

Excluding execution fees, expenses rose 13% ($284 million against $251 million), slightly slower than revenue. The pretax margin slipped to 78.2% from 79.3%, partly because of the pass-through fees (which add the same dollars to revenue and cost) and partly because of the rise in general and administrative costs.

What the headline numbers hide

• Most of the EPS gain came from the business, but not all of it. Pretax income for the whole business rose 14% and net income rose 13.7%. Income to common stockholders rose faster (+19.4%), and EPS rose 16.9%. The difference comes from IBG, Inc.'s stake in IBG LLC growing to 26.6% (from 26.3% at the end of 2025). The public company owns a slightly bigger slice each year, so its share of profit grows faster than the business does. Diluted shares rose 1.7% to 453.9 million, which offsets part of that.
• Adjusted and reported figures are almost the same. "Adjusted" figures remove gains and losses from IBKR's currency strategy and from marking its investments to market value. Those items added $42 million to reported revenue ($40 million from currency, $3 million from investments, before rounding), against $45 million a year ago. Adjusted EPS was $0.67 against $0.69 reported. Adjusted revenue rose 16.3% and adjusted pretax income 14.8%, so the trend is the same either way.
• The currency gain in net income was cancelled out elsewhere. IBKR keeps its equity in a basket of 10 currencies it calls the "GLOBAL." In the quarter, the basket lost 0.08% against the dollar. Accounting rules split the effect into a $40 million gain inside other income and a $44 million loss in other comprehensive income, which sits outside net income. Overall, the strategy cost $4 million. Comprehensive EPS, which counts both parts, was $0.67.
• Other income fell 18% to $70 million. The company says investing activities contributed $50 million less, partly offset by $36 million more from the currency strategy. Both are non-core items.
• Cash conversion can't be checked yet. The release has no cash-flow statement, so we can't yet compare operating cash flow with net income. For a broker, cash flow mostly moves with customer balances anyway.
• Year to date. For the nine months, net revenues were $5,479 million (+20.1%), pretax income $4,240 million (+22.2%), and diluted EPS $1.98, against $1.58 (+25.3%).

Takeaway: IBKR's growth now depends more on balances than on trading. Revenue growth halved from 28% to 16% because customers traded less often: orders per account fell 19% from Q2, and share volumes fell 24% from a year ago. Net interest income still rose 19% because the margin-loan book averaged $104 billion, 47% more than a year ago. That makes earnings steadier when trading slows down, but more of them now depend on customers borrowing against their portfolios, and those loans shrink when markets fall.

Did last time's read hold up?

Our Q2 2026 analysis flagged three things to watch:

• Account growth: it held up. The company added 391,000 accounts, against 431,000 in Q2. Q2's case also assumed that activity per account would stay flat. That part did not hold: orders per account fell from 207 to 168, and commissions fell $71 million from the previous quarter.
• Margin loans: credit held. Period-end margin loans eased to $105.2 billion from $108.5 billion at June 30. Customer bad debt was a $1 million recovery, after a $10 million charge in Q2.
• Rates: they did not hurt this quarter. All three yields were higher than in Q2, and NIM rose to 1.99% from 1.93%.

Outlook

IBKR does not give revenue or earnings guidance, and the release has no outlook statement. Two things point in different directions:

• Interest income has momentum. Average margin loans in Q3 ($104.0 billion) were close to the period-end level ($105.2 billion), so Q4 starts with a loan book about as large as Q3's average. At June 30, the Q2 10-Q estimated that a 0.25-point cut in U.S. dollar rates would reduce annual net interest income by about $81 million. That is small next to a net interest income run rate of about $4.6 billion a year. The Q3 10-Q will update that sensitivity.
• Commissions depend on trading. Q3 showed that adding accounts doesn't guarantee more commission revenue if each account trades less. Q4 commissions depend on whether trading picks up again after a quieter quarter.

The 71% dividend increase suggests the board expects earnings to stay at about this level. At $0.15 a quarter, the dividend is about 22% of this quarter's $0.69 EPS.

What to watch in Q4:

• Orders per account. Q4 will show whether 168 is the new normal or a quiet-quarter dip.
• Expenses. The 10-Q should explain the 26% rise in general and administrative costs.
• Margin loans. Watch whether the book grows again after slipping between June and September, and whether bad debt stays near zero.