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Interactive Brokers Q3 2025 Earnings Report: The Silent Brokerage Beast Bulks Up with 32% Customer Surge and Jaw-Dropping 79% Margins
Interactive Brokers just dropped their Q3 2025 earnings and it's a masterclass in how a brokerage can thrive amid volatile markets — think of it as the quiet giant that's been bulking up while others chase flashy trends. With customer accounts swelling to 4.13 million, up 32% from last year, and total equity hitting $19.5 billion, IBKR isn't just riding the wave of retail trading; it's engineering the surfboard. But let's get granular with the numbers, because buried in this report are gems that reveal not only what's fueling this growth but also the subtle cracks that could test their resilience.
At first glance, the headline figures scream success: GAAP diluted EPS of $0.59, beating the year-ago $0.42, and adjusted EPS at $0.57 versus $0.40. Net revenues climbed to $1,655 million GAAP, or $1,610 million adjusted, from $1,365 million and $1,327 million respectively. Pretax income? A whopping $1,312 million reported, adjusted to $1,267 million — up from $909 million and $871 million. And that pretax margin at 79%? It's the kind of efficiency that makes cost-cutters weep with joy.
#Revenue Streams: Commissions and Interest Leading the Charge
Diving into revenues, commissions jumped 23% to $537 million, powered by a 67% surge in stock trading volumes and 27% in options — futures dipped 7%, but who needs them when stocks are partying like it's 2021? This isn't just volume; it's smart execution. Customer DARTs (daily average revenue trades) hit 3.62 million, a 34% increase, reflecting how IBKR's low-cost, high-tech platform is pulling in traders who crave efficiency over bells and whistles.
Net interest income, the unsung hero, rose 21% to $967 million. Why? Stronger securities lending and higher average margin loans ($77.3 billion, up 39%) and customer credits ($154.8 billion, up 33%). In a world where interest rates are still elevated, IBKR's ability to monetize client balances is like having a printing press in the basement. But here's an under-the-radar nugget: FDIC sweep fees increased by $3 million, offsetting a $12 million drop in risk exposure fees. That sweep program, averaging $5.96 billion in the quarter, quietly adds to other net interest income — $204 million total — including bits from non-interest-like instruments reported elsewhere. It's these layered income sources that fortify IBKR against market whims.
Other income spiked 52% to $85 million, largely from $42 million in investing activities, though tempered by a $21 million lower gain on currency diversification. Speaking of which, their GLOBAL currency basket strategy dinged comprehensive earnings by $33 million this quarter as the USD weakened slightly — a 0.25% drop in GLOBAL value. It's a hedge that usually pays off long-term, but in Q3, it was more of a buzzkill, reducing other comprehensive income by $37 million after a $4 million gain in other income. Investors might overlook this, but it underscores IBKR's global savvy; they're not just a U.S. broker anymore.
Commissions
$537M (+23%), driven by stock and options volume.
Net Interest
$967M (+21%), fueled by margin loans and securities lending.
Other Fees and Services
$66M (-8%), hit by lower risk fees but buoyed by sweeps.
Other Income
$85M (+52%), boosted by investments but dragged by currency.
IBKR is nailing diversification within revenues — non-interest income at $688 million, up from $563 million — proving they're not overly reliant on rates. But that 8% dip in other fees? It signals potential vulnerability if trading cools, though the 40% customer equity growth to $757.5 billion suggests clients are sticking around and funding up.
#Expenses: Lean and Mean, With a Side of Non-Recurring Wins
On the expense side, IBKR's automation shines. Total non-interest expenses fell to $343 million from $456 million, a 25% drop. Execution, clearing, and distribution fees decreased 21% to $92 million, thanks to zero SEC Section 31 fees post-May 2025 and better liquidity rebates from higher volumes. That's clever — turning volume into rebates is like getting paid to eat your own cooking.
General and administrative plunged 59% to $62 million, mostly from non-recurring items: $88 million in legal matters and $12 million in European consolidation last year vanished, though advertising rose $10 million. Employee comp edged up to $156 million (+8%), reasonable for a growing firm, and customer bad debt flipped to a $2 million credit — impressive credit controls there.
Occupancy, depreciation, and amortization at $24 million, down from $26 million, and communications at $11 million, up slightly. These fixed-ish costs are scaling beautifully with revenue growth, pushing that 79% pretax margin. But watch the nine-month view: Expenses at $1,091 million versus $1,143 million last year, despite revenues up 20%. IBKR's doing right by obsessing over efficiency — it's why their margins crush peers — but if legal ghosts return, that could haunt the bottom line.
Execution Fees
$92M (-21%), benefiting from regulatory changes and rebates.
G&A
$62M (-59%), non-recurring savings galore.
Employee Comp
$156M (+8%), controlled growth.
They're struggling a bit with advertising spend — up $10 million — as competition heats up, but overall, this cost discipline is a superpower. In a brokerage arms race, IBKR wins by not overspending.
#Customer Metrics: Explosive Growth That's Hard to Ignore
Customer accounts at 4.13 million? That's a 32% leap, and from Q2's 3.87 million, a 7% sequential gain. Customer equity ballooned 40% to $757.5 billion (14% from Q2), showing not just more users but richer ones. DARTs per account dipped slightly annualized (195 vs. 198 YoY, 195 vs. 206 QoQ), but total DARTs up 34% means the pie is bigger.
Commission per cleared order at $2.70, down 5% YoY but up 2% QoQ — efficiency or mix shift? Volumes tell the story: Total executed orders up 37% to 260,294 thousand, with customer stocks up 67% to 118,308 million shares. Principal trades dipped in some areas, but that's fine; IBKR isn't a prop shop.
Cleared avg. DARTs per account down 2% YoY, hinting at perhaps more passive users or diversification into non-trading products. But with margin loans up 39%, these clients are active borrowers. This screams sticky ecosystem — once in, clients ramp up assets and activity.
IBKR's nailing customer acquisition through tech and global reach — over 160 markets! Struggling? Maybe with engaging every user maximally, but the growth trajectory is wow-worthy; it's like they've cracked the code on organic expansion without massive marketing blitzes.
#Balance Sheet: Fortress-Like, But NIM Tells a Tale
Assets swelled to $200.2 billion from $150.1 billion at year-end 2024, driven by segregated cash/securities ($48.8B + $38.7B) and customer receivables ($77.6B). Liabilities up too, with customer payables at $149.4 billion. Equity at $19.5 billion, with IBG Inc. owning 26.3% of LLC interests — up slightly.
Net interest margin at 2.16%, down from 2.37% YoY (2.11% vs. 2.40% nine months). Average interest-earning assets $183.7 billion, up 32%. Yields: Segregated cash 3.81% (down from 4.91%), margin loans 4.60% (from 5.73%), credits 2.64% (from 3.48%). The spread compression is real, but net interest income still grew to $999 million from $826 million.
Securities borrowed jumped to $11.6 billion from $5.4 billion, and loaned to $27.0 billion from $16.2 billion — net $133 million income from borrows/loans. Also, that $26 million extra interest in nine-month segregated from refundable taxes? A one-off boost, but it highlights tax savvy.
Doing right with balance sheet scale — low short-term borrowings ($10M) — but struggling with NIM squeeze as rates normalize. Future? If rates fall, this could pressure, but IBKR's low-cost model buffers it better than banks.
#Potential Headwinds: Currency, Competition, and the Inevitable Downturn
That $33 million hit this quarter? It's volatile — last year it helped. With GLOBAL exposure, IBKR's hedging against USD dominance, but short-term swings can spook investors. Also, other fees down 8%; if risk exposure fees keep falling, that's lost revenue.
As brokerages consolidate, IBKR's edge is tech, but advertising up $10 million suggests they're fighting harder. And that principal volumes drop in options/futures? Maybe intentional, but it could signal market share nibbles.
Comprehensive income had a $10 million translation loss for stockholders, $28 million for noncontrolling — global ops mean forex risks. Plus, bad debt at negative $2 million? Great now, but in a recession, watch out.
Humorously, IBKR's like that friend who's always prepared — until the party ends. The company is struggling with external volatilities, but their automation moat is deep; they'd weather storms better than most.
#Looking Ahead: Sustained Growth or Peak Efficiency?
With nine-month revenues at $4,562 million (up 20%), net income $3,156 million, IBKR's on track for a banner year. Dividend at $0.08/share, payable December — steady, if not exciting. Future looks bright: Customer growth at 32% YoY suggests compounding; if DARTs keep rising, commissions follow.
But NIM compression could cap interest gains if rates drop. Positively, energy in volumes (stocks up 65% total) points to retail boom continuing. And that S&P 500 membership? It attracts more institutional flow.
Strengths
Scale, efficiency, global reach — 79% margins are envy-inducing.
Risks
Rate sensitivity, currency volatility, potential trading slowdown.
Opportunity
Expanding into forecast contracts, more advisory — untapped?
IBKR's doing way more right than wrong — building a fortress on data and automation. The future? Bullish, as long as markets don't hibernate. This isn't a hype stock; it's the reliable engine humming in the background, and that's where the real money's made.
To view the full earnings report document from Interactive Brokers, click here.