TenQ

The Interactive Brokers story

Interactive Brokers is a low-cost global electronic broker, with expanding customer balances testing whether scale can offset narrower interest margins.

Written from Interactive Brokers's own filings with the SEC, and rewritten when it publishes a new earnings release. Updated 2026-09-30.

  • $87.08share price, last close
  • $39.5Bmarket value
  • 14/36TenQ Score checks passed

The story in brief

  • More accounts, more assets. In the quarter to June 2026, customer accounts increased 34% to 5.19 million and customer equity increased 40% to $930.3 billion from the year-earlier quarter.
  • Interest leads commissions. In the quarter to June 2026, net interest income increased 23% to $1.06 billion, exceeding commission revenue, which increased 30% to $673 million.
  • Automation supports margins. Interactive Brokers' automated brokerage model produced a pretax profit margin of 77% in the quarter to June 2026, compared with 75% a year earlier.

What drives the business

  • Interactive Brokers has built proprietary software to automate trading and account operations, offering access to more than 170 electronic exchanges and market centers in 40 countries and 29 currencies with minimal human intervention.
  • Its customers include individual investors, hedge funds, financial advisors and introducing brokers, with IBKR Pro serving sophisticated investors and IBKR Lite offering participating U.S. customers commission-free trading in U.S. exchange-listed stocks and ETFs.
  • Trading activity drives commissions, with customer options, stock and futures volumes increasing 17%, 14% and 2%, respectively, from a year earlier in the quarter to June 2026.
  • Customer balances also generate interest income, with customer margin loans increasing 67% to $108.5 billion and customer credits increasing 27% to $182.4 billion from a year earlier in the quarter to June 2026.
  • The public company owned 26.5% of operating holding company IBG LLC at June 2026, and its Exchange Agreement allows it to issue common shares in exchange for operating company interests held by IBG Holdings LLC.

What the price assumes

The growth assumption embedded in the price is not measured because TenQ excludes finance companies from its reverse DCF, as free cash flow may not measure their earnings.

At $87.08, Interactive Brokers trades at 34.3x earnings, while its earnings yield of 2.9% falls short of the 5.2% Treasury yield used in TenQ's check.

Revenue grew 21.3% and profits grew 34.4% over the last twelve months, and the company passes TenQ's price-relative-to-growth check with a PEG of 1.03.

What could change the story

  • Net interest margin narrowed to 1.93% in the quarter to June 2026 from 2.07% a year earlier, making customer balance growth important to sustaining interest income growth.
  • Revenue growth of 21.3% over the last twelve months trailed both the 26.5% annual pace over the last three years and TenQ's sector benchmark of 26.2%, failing its acceleration and recent sector-growth checks.
  • Execution, clearing and distribution fees increased 22% to $142 million in the quarter to June 2026, including a $19 million increase in regulatory fees, showing how higher trading activity can bring higher costs.
  • Currency diversification reduced comprehensive earnings by $36 million in the quarter to June 2026 even though it contributed a $21 million gain to other income, separating reported income growth from the broader currency effect.

What to watch next

  • The July 2026 earnings release included no forward guidance, leaving customer accounts, balances and trading activity as the main operating benchmarks for the next release.
  • Account growth and daily average revenue trades will show whether the customer expansion continues to translate into activity, following 5.19 million accounts and 4.82 million daily average revenue trades in the quarter to June 2026.
  • Customer margin loans, customer credits and net interest margin will show whether larger balances continue to offset narrower spreads, while diluted earnings per share can be compared with $0.69 in the quarter to June 2026.

Sources

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