IBKR 3Q25 - More money, more volume. Bull case $110. Bear case $45

Cheat Sheets

October 17, 2025

IBKR Investment Report - Q3 2025 Record Quarter EPS $0.57 Beats $0.54 Est (+6%), Revenue +21% to $1.66B

INTERACTIVE BROKERS GROUP (IBKR)

🌐 Global Electronic Broker | EPS $0.57 Beats Est (+6%), Revenue +21% to $1.66B

Q3 2025: 79% PreTax Margin | 4.13M Accounts (+32%) | $757.5B Client Equity (+40%)

💰 $31.1B Market Cap | 🌍 150+ Exchanges, 34 Countries | 📊 S&P 500 (Aug 2025)
👨‍💼 CEO Milan Galik | Founder Thomas Peterffy | 💎 Founded 1977 | 🇺🇸 Greenwich, CT
$68.51
📉 -$0.01 (-0.01%) Today
+55% YTD
Price Target Scenarios

18-Month Horizon (Mid-2027 Targets) - Based on Current Price $68.51

$110.00
Bull Case (+61%)
Retail Trading Boom
Global Expansion Accelerates
📊 Valuation:
2027E EPS: $2.75 × 40x P/E = $110/share
🚀 What's Needed:
Market volatility stays high • Accounts grow 40%+ yearly • DARTs hit 5M+ • Crypto adds 15-20% revenue • Margin loans reach $120B+ • International = 40%+ revenue • Zero-commission wars end • Higher rates boost NII • 78-82% pretax margins • Tech moat widens • Crypto transfers drive growth • Major partnerships signed • Market rerates to 38-42x P/E
$82.00
Base Case (+20%)
Steady Growth
Market Share Gains Continue
📊 Valuation:
2027E EPS: $2.35 × 35x P/E = $82/share
⚖️ What's Needed:
Accounts grow 25-30% yearly • Client equity hits $1.1T by 2027 • DARTs stay 3.5-4.0M • Commissions grow mid-teens • NII grows 15-20% yearly • Crypto launches on schedule (stablecoins Q4 2025, transfers early 2026) • Europe expansion succeeds • 75-79% pretax margins hold • Growth stays organic • International = 25-30% of accounts • Tech lead maintained • Interest rates stay 4-5% • Market values at 33-37x P/E
$45.00
Bear Case (-34%)
Trading Activity Crashes
Competition Intensifies
📊 Valuation:
2027E EPS: $1.80 × 25x P/E = $45/share
🔻 What Could Go Wrong:
Market crash + low volatility = traders flee • DARTs fall to 2.0-2.5M • Account growth hits single digits • Commissions down 20-30% • Rate cuts slash NII 25%+ • Margin loans fall to $50-55B • Robinhood/Schwab pricing war • Crypto delayed by regulations • Europe rollout blocked • Tech failures hurt reputation • Customer costs spike • Compliance burdens rise • Pretax margins fall to 65-70% • Recession = low volumes • Market derates to 22-28x P/E
Bottom Line for Retail Investors
🏆
Blowout Quarter - Trading Volumes Exploded
EPS $0.57 BEAT $0.54 (+6%). Revenue $1.66B BEAT $1.53B (+8%!). PreTax profit +44% to $1.31B. Margin 79% (was 67%). Stocks volume +67%! Options +27%. Commissions $537M (+23%). Net interest $967M (+21%). Milan (CEO): "Investors bought dips and rallies, showing comfort with markets." "We attract clients without bonuses. Our products and pricing speak for themselves."
💎
Customer Growth Machine - 4M+ Accounts, $750B+ Equity
Accounts 4.13M (+32%). Hit 4M milestone in Q3! Client equity $757.5B (+40% vs S&P +16%). "Took us 4 years to go from $250B to $500B. Took just ONE YEAR to add next $250B to $750B+." Margin loans $77.3B (+39%, ALL-TIME HIGH). DARTs 3.62M (+34%). 790K new accounts YTD exceeds all of 2024. New products: Connections (20K daily users), ForecastEx (8,200+ contracts, +165% volumes), Overnight Trading (+90%), crypto expansion.
📈
Crypto Expansion Coming - Massive Growth Driver
Crypto volumes +87% QoQ, +500% YoY! Available in US + Hong Kong, Europe "soon" via ZeroHash Dutch license (Oct/Nov). TIMELINE: Stablecoin funding end of October. Crypto transfers by year-end/early 2026. WHY IT MATTERS: Milan: "If someone wants to switch from Coinbase or Robinhood with embedded tax gains, they'd have to sell and realize gains now. With transfers, they won't. Should see increased activity." Also coming: STAKING. Pricing very competitive vs bigger players.
⚠️
Valuation Still High + Volume Risk + Volatility Warning
Stock +55% YTD, bounced from $65.75 to $68.51 = high volatility. Trading at 34x P/E vs 25x historical = expensive. Recent -4% drop showed valuation concerns. Any volume slowdown = selloff risk. Rate cuts = -$417M NII per 1% (per CFO). Crypto depends on ZeroHash execution. Post-earnings volatility shows market debating "too expensive vs great growth." Bounce shows buying support, but valuation concerns remain.

📊 What Just Happened: PreTax Profit +44%, Revenue +21% YoY, EPS Beats by 6%

Revenue $1.66B (Beat by $130M!) • EPS $0.57 (Beat by $0.03) • PreTax Income $1.31B (+44% YoY) • PreTax Margin 79% (vs 67% YoY) • Commission Revenue $537M (+23% YoY, NEW RECORD) • Net Interest Income $967M (+21% YoY, NEW RECORD) • Stocks Volume +67% YoY • Options Volume +27% YoY (NEW RECORD 418M contracts!) • Futures Volume -7% YoY • Customer Accounts 4.13M (+32% YoY) • Added 4 Millionth Customer in Q3! • Customer Equity $757.5B (+40% YoY) • DARTs 3.62M (+34% YoY) • Margin Loans $77.3B (+39% YoY, ALL-TIME HIGH) • Customer Credits $154.8B (+33% YoY) • Total Equity $19.5B (+22% YoY) • Quarterly Dividend $0.08/share (Dec 12, 2025 to shareholders of record Dec 1) • Crypto Volumes +87% QoQ, +500% YoY • Forecast Contract Volumes +165% vs Q2 • Overnight Trading +90% vs 2024 • Securities Lending Revenue DOUBLED to ~$314M • 790K Net New Accounts YTD (Already Exceeds All of 2024!) • Commission per Order $2.70 (Down from $2.80 due to zero SEC fees + rebate optimization) • Headcount 3,131 (+5% YoY) • Compensation/Revenue Ratio 10% (Down from 11% YoY) 🚀

💰
$1.66B
Q3 2025 Revenue
+21.2% YoY
⚡
79%
PreTax Margin
+1200bps YoY
🎯
$0.57
EPS Q3
Beat $0.54 Est
🚀
+44%
PreTax Profit Growth
$1.31B

📞 Key Q3 2025 Earnings Call Highlights

🎊
Organic Growth Machine - No Incentives Needed
Milan Galik (CEO): "Our strong net new account growth came from all regions and all client types. This is ORGANIC account growth. We attract clients WITHOUT temporary bonuses or incentives. Our products, pricing and execution quality speak compellingly for themselves." "Investors bought dips if the market declined and participated in rallies as they occurred, showing their continued comfort with the current economic backdrop. At IBKR, in any given week this quarter, the most active names showed a preponderance of buying over selling." 790K net new accounts through Q3 ALREADY EXCEED all of 2024! Milan: "Geographies, the different geographies are equally represented, different mix of clients...direct clients, introducing brokers, proprietary trading firms, financial advisors, it's all growing well, hedge funds of course."
🚨
Parabolic Client Equity Growth - $250B Added in ONE YEAR!
Milan: "For client equity, it took us from 2020 to 2024 to advance from $250 billion to $500 billion. It took JUST OVER ONE YEAR to add the next $250 billion. This quarter, our client equity surpassed three quarters of a trillion dollars, up 40% from last year versus 16% for the S&P." During the quarter: "We added our four millionth customer and reached $150 billion in client cash balances, both up over 30% from last year." Analyst asked about deceleration - Thomas Peterffy: "We have not seen any deceleration. As a matter of fact, we saw exactly the opposite and we expect that to continue." Client equity outpacing S&P by 2.5x = massive vote of confidence.
💎
Crypto Explosion + Why Transfers Matter = Tax-Free Migration
Crypto volumes +87% QoQ! Milan on WHY transfers critical: "If somebody wanted to switch their providers, let's say from Coinbase or Robinhood...if they already have cryptocurrency positions with embedded tax gains, the only way for them to come to us now would be to sell and realize those gains. With the asset transfer, they will not have to do that. When we put online the crypto asset transfers, I would hope to see increase in the activity." Timeline: Milan: "Funding with stablecoins end of October, crypto asset transfers by end of the year, maybe beginning of next year. It depends somewhat on our partner ZeroHash." European expansion: ZeroHash getting Dutch license "October or November" to offer crypto across Europe. Also coming: STAKING!
🔬
Securities Lending DOUBLED - Rocket Fuel for Margins
Paul Brody (CFO): "We estimate that if the additional interest earned and paid on cash collateral were included under securities borrowed and loaned, then total net revenue related to securities lending would have been $314 million this quarter, DOUBLE the $156 million we earned in the prior year quarter." Why growing? "As our account base has grown, our inventory of attractive stocks to lend has grown with it...We pay interest on short cash balances, which makes us attractive to investors who utilize short selling. Our fully paid lending program generally shares proceeds with clients on a 50-50 basis." Hard-to-borrow specials from IPOs/M&A returning = margin tailwind accelerating.

📍 CEO on Growth Strategy: Milan: "The trend towards more global investing across multiple client types and across jurisdictions and our ability to give investors the tools to invest in the companies and products they want, paying for them in currencies they wish around the clock continues. This trend and our ability to serve our clients' needs with a lower cost structure and a much broader product and tool set is what sets us apart."

🎯 Founder on Partnerships: Thomas Peterffy: "We are focusing on adding broker partners" for ForecastEx prediction markets. Also: "We are not currently contemplating to get into sports betting. We are focusing on election contracts and economic indicators and climate indicators and we are taking that global."

💰 Margin Expansion Story: PreTax margin 79% vs 67% YoY. CFO Paul: "Execution and clearing costs down 21% primarily due to: (1) SEC reducing its fee rate to ZERO after it was cut midway through Q2 - SEC fees were $20M in Q3 2024, now $0, (2) Higher rebates from smart order routing optimization. These are largely passed through to customers." G&A down 59% due to non-recurrence of $78M legal settlement + $12M European consolidation charge. Milan on margins: "We like to see margin balances going up, that's fantastic. When we see exposure fees increasing [from cheap options], that's somewhat of a mixed feeling because clients are making bets that can go bad."

🔮 Rate Sensitivity & Future Outlook: Paul: "We estimate the effect of a 25 basis point decrease in benchmark Fed funds rate to be a $77 million reduction in annual net interest income." For non-US currencies: "$35M for 25bps decrease." Full 1% decrease in ALL benchmark rates = -$417M annual NII hit. However: "Any growth in our balance sheet and interest earning assets would reduce this impact." Securities lending strength: Paul estimates total securities lending revenue $314M this quarter if all components included, vs $156M year-ago = DOUBLED. "As our account base has grown, our inventory of attractive stocks to lend has grown with it."

🚀 Why IBKR Bulls Are Right
💎
Network Effects + Organic Growth = Sustainable Moat
No customer bonuses needed - grows organically. Milan: "Products, pricing and execution speak for themselves." 32% account growth without churn. 150+ exchanges, 34 countries = unmatched. Pays 3.59% on USD cash = attracts customers. Comp expense only 10% of revenue (peers = 20-30%+). Automation = margin expansion. 48-year-old tech platform can't be copied quickly.
⚡
Crypto Wildcard = Billions in New AUM Potential
Crypto +87% QoQ, just getting started. IBKR owns ~30% of ZeroHash (getting Dutch license Oct/Nov for Europe). Stablecoin funding Oct 2025. Transfers end 2025/early 2026. Milan: "If someone wants to switch from Coinbase/Robinhood with embedded gains, only option now is sell and pay taxes. With transfers, they won't have to." Capturing 2-3% of $2T crypto market = $40-60B+ new client equity. Staking coming soon.
👑
Margin Expansion Story Just Beginning + Client Risk Appetite Surging
PreTax margin 79% vs 67% year-ago = +1200bps! Why? (1) SEC fee cut to ZERO, (2) Better rebates, (3) G&A down 59% (legal costs ended). Fixed costs absorbed, new revenue = pure profit. Comp stays 10% of revenue. Milan on margin loans at ALL-TIME HIGH $77.3B: "Appetite for risk has grown...markets going up...customers trading stock on leverage. High margin numbers, we like them a lot."
🚀
Democratization of Trading + Prime Brokerage Power = TAM Expansion
Traditional US TAM = 100-150M. IBKR TAM = 500M+ globally. 4.13M accounts now, still early. New products: Connections (20K daily users), ForecastEx (8,200+ contracts, +165% volumes), overnight trading (+90%), fractional shares (19,200+ securities). Preqin ranked IBKR #4 for hedge funds (behind only Goldman, Morgan Stanley, JPMorgan). Joined S&P 500 Aug 2025. Fortune 500 #432.
🐻 Why IBKR Bears Have Valid Concerns
📉
Stock Up 55% YTD = Valuation Still Extreme Despite Bounce
Stock was $44 in Jan, now $68.51 = +55% YTD (+95% last 12 months). Bounced from $65.75 after -4% drop but still vulnerable. P/E ~34x vs 20-25x historical = EXPENSIVE. Perfect Q3 yet stock sold off = shows valuation sensitivity. If volumes normalize = EPS down 25-30% = stock to $45-50. Recent volatility = warning. Counter: Analysts raised targets (Piper $80, Barclays $81) + bounce shows support.
🌊
Volume Cyclicality = Revenue Cliff Risk
DARTs 3.62M (+34% YoY) driven by 2024-2025 volatility boom. What if volatility dies? 2022 showed retail volumes can drop 40-50%. Stocks +67%, options +27% = unsustainable. Futures -7% = warning sign. Low-vol period (like 2017-2019) = DARTs to 2.0-2.5M = commissions down 30%+. Revenue $1.66B/qtr assumes high activity. Return to normal = $1.2-1.3B/qtr = -25-30%. All brokers are volume-cyclical.
💸
Interest Rate Cuts = Net Interest Income Collapse
Net interest income $967M = 58% of revenue! Driven by $77.3B margin loans + $154.8B cash balances. CFO quantified: 25bps Fed cut = -$77M annual NII. Non-US: -$35M per 25bps. TOTAL: 1% cut across all rates = -$417M annually. If Fed cuts 200-300bps (recession scenario) = NII down $800M-$1.25B. Stock priced like rates stay high = risky. Counter: Balance sheet growth reduces impact.
⚠️
Competition + Regulatory + Crypto Execution Risk + China Clampdown
Robinhood expanding globally. Schwab has 35M accounts vs IBKR's 4M. Zero-commission already commoditized trading. CHINA: Milan confirmed regulators "clamped down on foreign brokers...now require proof of residency outside Mainland...smaller number than before." CRYPTO RISK: Transfers depend on ZeroHash = execution risk. Europe = "hopefully soon" = not guaranteed. Milan: "It depends somewhat on our partner." Delayed crypto = major disappointment. ForecastEx sports betting uncertain pending court decisions.

This analysis is for informational purposes only and should not be considered investment advice. Please consult with a financial advisor before making investment decisions.