Interactive Brokers Group, Inc. IBKR

Key data

The business

IBKR runs the plumbing for people who buy and sell securities for a living: active individuals, hedge funds, registered advisers, and smaller brokers that route client orders through its pipes. Two engines make the money. Customers pay a commission each time they place an order, and IBKR earns interest on the float, the cash customers leave idle, which it parks in Treasury bills, plus the margin loans it extends against portfolios. More than half of revenue is that interest. The moat is cost. Decades of automation let IBKR clear an order for a fraction of what a staffed broker spends, so it charges the lowest prices and still posts a pretax margin near 77%, and those savings pull in the next account. Founder Thomas Peterffy wrote much of the original code, and the firm still runs lean with almost no marketing.

The numbers

The line to watch is commissions, the cleanest read on customer activity, and it set a record every quarter through a volatile year.

The sequence never dipped. Commissions climbed from $578 million to $760 million in a year, up 31%, and diluted earnings for public shareholders rose from $0.51 to $0.69, up 35%, ahead of the $0.64 consensus modeled. The soft-looking $0.59 in Q1 2026 was seasonal, not a stall.

Zoom out and the compounding is the story. Split-adjusted earnings went from $0.81 in 2021 to $2.22 in 2025, about 2.7 times in four years, roughly 29% a year, and the first half of 2026 is already running 30% ahead of the first half of 2025. The step up in 2023 was rates: when the Fed lifted, the interest IBKR earns on client cash jumped and never came back down.

That last table is the one to understand. Most of the company's profit does not belong to public shareholders. Of $1,338 million earned last quarter, $1,026 million went to the partnership units Peterffy and employees hold and $312 million to Class A common. The per-share math works out the same either way, so the 37 times you pay is honest, but the corporate tax rate looks tiny, about 8%, because three-quarters of the income passes through to those partners untaxed at the company level. Nothing here is hidden. The growth, the margin and the price are all in plain view, which is why this reads as close to priced correctly, with the single swing factor being the direction of net interest income.

Management

Insiders sold about $100 million of stock over the past year against $44,000 of buys, the lopsided ratio you expect where officers are paid in shares and the founder controls the votes. General counsel Earl Nemser accounted for $14 million across two January sales and CFO Paul Brody sold $6.6 million last September. The vendor feed does not carry the 10b5-1 footnotes, so plan status is not disclosed and none should be read as a signal either way. The structure to grasp is the up-C: Peterffy and employees hold their stake as partnership units, public Class A holders own the rest, and share count drifts up as units convert rather than down. Pay is modest by Wall Street standards, the firm has never chased acquisitions, and capital comes back as a growing dividend, not buybacks or deals.

How it fails or surprises you

Rates turn. More than half of revenue is interest earned on client cash and margin balances. A sustained round of Fed cuts pulls that down mechanically, and volume cannot fully offset it. The tell is net interest income in the quarterly release: two straight down quarters while client balances hold flat means the engine is throttling.

The multiple is the whole risk. At about 37 times earnings, near the top of its twelve-year range and roughly double peer brokers, the stock prices in years of 20%-plus growth. That was the whole risk called out last time and it has not eased, with the stock about 6% below its high and the multiple richer, not cheaper. Any quarter where commissions or accounts stall re-rates it fast, and because falling rates would likely be the cause, the earnings and the multiple sink together.

New markets land (right tail). IBKR keeps opening fronts: overseas retail, options and futures, crypto, and event contracts through its ForecastEx exchange. None sits in the multiple because none is yet material. If one scales the way the core brokerage did, account and commission growth reaccelerates past the roughly 20% the Street models. The first sign is commissions growing faster than client balances.

Closing thoughts

This is the priced-correctly world, mostly. The growth is real, the margin is genuinely elite, and the market sees all of it, which is why you pay 37 times. The edge, if there is one, is a view on rates. Whoever sells to you is selling a full multiple, and you win only if net interest income holds up longer than they expect while accounts keep compounding. The fatter tail is probably still up, because IBKR's cost lead widens as it scales and the new markets are free options, but the left tail is a real double hit: falling rates take both the earnings and the multiple down at once, and at this price that is what is actually at risk.

The bet is still that active investors worldwide keep opening accounts at Interactive Brokers and borrowing against them, and that rates stay high enough to make their idle cash pay. What breaks it is the Fed. Watch net interest income against client balances quarter to quarter, and if income falls while balances hold, the interest engine is throttling and the 37 times has nothing under it.