Interactive Brokers Group, Inc. (IBKR)

CIK: 0001381197. SIC: 6211 Security Brokers, Dealers & Flotation Companies. Latest 10-K as of: 2026-02-27.

SIC breadcrumb: Finance, Insurance, And Real Estate > Security And Commodity Brokers, Dealers, Exchanges, And Services > SIC 6211 Security Brokers, Dealers & Flotation Companies

SEC company page: https://www.sec.gov/edgar/browse/?CIK=1381197. Latest filing source: 0001381197-26-000062.

Selected Fundamentals

Metric	Value	Unit	FY	Filed
Revenue	2,440,000,000	USD	2025	2026-02-27
Net income	4,357,000,000	USD	2025	2026-02-27
Assets	203,240,000,000	USD	2025	2026-02-27

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-27. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001381197.json. Derived margins are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Missing metrics are omitted rather than fabricated.

Metric	2016	2017	2018	2019	2020	2021	2022	2023	2024	2025
Revenue			925,000,000	847,000,000	1,287,000,000	1,568,000,000	1,506,000,000	1,557,000,000	1,977,000,000	2,440,000,000
Net income	699,000,000	793,000,000	1,125,000,000	1,089,000,000	1,179,000,000	1,636,000,000	1,842,000,000	2,812,000,000	3,407,000,000	4,357,000,000
Diluted EPS	1.25	1.07	2.28	2.10	2.42	3.24	3.75	1.42	1.73	2.22
Assets	54,673,000,000	61,162,000,000	60,547,000,000	71,676,000,000	95,679,000,000	109,113,000,000	115,143,000,000	128,251,000,000	150,142,000,000	203,240,000,000
Liabilities	48,853,000,000	54,729,000,000	53,391,000,000	63,736,000,000	86,676,000,000	98,891,000,000	103,528,000,000	114,184,000,000	133,545,000,000	182,768,000,000
Stockholders' equity	974,000,000	1,090,000,000	1,282,000,000	1,452,000,000	1,951,000,000	2,395,000,000	2,848,000,000	3,584,000,000	4,280,000,000	5,363,000,000
Cash and cash equivalents	1,925,000,000	1,732,000,000	2,597,000,000	2,882,000,000	4,292,000,000	2,395,000,000	3,436,000,000	3,753,000,000	3,633,000,000	4,963,000,000
Net margin			121.62%	128.57%	91.61%	104.34%	122.31%

Financial Charts

Macro Cross-References

CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
UNRATE - Unemployment Rate
FEDFUNDS - Federal Funds Effective Rate
CES0500000003 - Average Hourly Earnings of All Employees, Total Private
DFEDTARU - Federal Funds Target Range - Upper Limit
DFEDTARL - Federal Funds Target Range - Lower Limit
DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
PCEPI - Personal Consumption Expenditures: Chain-type Price Index
PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
PPIACO - Producer Price Index by Commodity: All Commodities
T10YIE - 10-Year Breakeven Inflation Rate
U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
PAYEMS - All Employees, Total Nonfarm
CIVPART - Labor Force Participation Rate
EMRATIO - Employment-Population Ratio
UNEMPLOY - Unemployed
CE16OV - Employment Level
ICSA - Initial Claims
JTSJOL - Job Openings: Total Nonfarm
JTSQUR - Quits: Total Nonfarm
GDPC1 - Real Gross Domestic Product
A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
INDPRO - Industrial Production: Total Index
TCU - Capacity Utilization: Total Index
HOUST - New Privately-Owned Housing Units Started: Total Units
PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
RSAFS - Advance Retail Sales: Retail Trade
PCE - Personal Consumption Expenditures
DSPIC96 - Real Disposable Personal Income
PSAVERT - Personal Saving Rate
M2SL - M2
BOPGSTB - U.S. International Trade in Goods and Services: Balance

Latest 10-K MD&A

Extracted between Item 7 and the next Item 7A/8 heading after HTML sanitization. Confidence: high. Filing date: 2026-02-27. Report date: 2025-12-31.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the audited consolidated financial statements and the related notes in Part II, Item 8, of this Annual Report on Form 10-K. In addition to historical information, the following discussion also contains forward-looking statements that include risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under the heading “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K.

Business Overview

We are an automated global broker. We custody and service accounts for hedge and mutual funds, ETFs, registered investment advisors, proprietary trading groups, introducing brokers and individual investors. We specialize in routing orders and executing and processing trades in stocks, options, futures, forex, bonds, mutual funds, ETFs and precious metals on more than 170 electronic exchanges and market centers in 40 countries and 29 currencies around the world. In addition, our customers can use our trading platform to trade certain cryptocurrencies through third-party cryptocurrency service providers that execute, clear and custody the cryptocurrencies. We also offer trading in forecast contracts, which are event-based contracts traded on ForecastEx, a CFTC-registered exchange and clearinghouse we established.

As a broker, we execute, clear and settle trades globally for both institutional and individual customers. Powered by our proprietary technology, our systems provide our customers with the capability to monitor multiple markets around the world simultaneously and to execute trades electronically at a low cost, in multiple products and currencies from a single trading account. Our overnight trading facilities, available for an array of instruments, support our customers who trade across time zones. The ever-growing complexity of multiple market centers across diverse geographies provides us with ongoing opportunities to build and continuously adapt our order routing software to secure excellent execution prices.

Since our inception in 1977, we have focused on developing proprietary software to automate broker-dealer functions. The proliferation of electronic exchanges and market centers has allowed us to integrate our software with an increasing number of trading venues – as well as with market data sources, securities lending platforms and regulatory reporting facilities – creating one automated platform that requires minimal human intervention.

Our customer base is diverse with respect to geography and type. Currently, our customers reside in over 200 countries and territories. We serve individuals, as well as institutional accounts such as hedge funds, financial advisors, proprietary trading firms and introducing brokers. Specialized products and services that we have developed successfully attract institutional accounts. For example, we offer prime brokerage services, including financing and securities lending, to hedge funds; our model portfolio technology and automated share allocation and rebalancing tools are particularly attractive to financial advisors; and our trading platform, global access and low pricing attract introducing brokers.

Business Environment

During 2025, global equity markets extended their multi-year advances, with several major indices reaching record levels and many recording double-digit gains. The S&P 500 Index returned 16.4% for the year, though it was outperformed by a number of international markets, including Canada, the United Kingdom, Europe, Hong Kong, Japan, and China.

Within the U.S., market performance became somewhat more diversified compared to the prior year. The group of large-cap technology stocks commonly referred to as the “Magnificent Seven” accounted for approximately 35% of the S&P 500’s total return in 2025, compared to approximately 50% in 2024. More broadly, companies associated with AI, including these large-cap technology firms, contributed more than half of the index’s overall return. Increased investor interest in AI-related companies also coincided with a partial recovery in the initial public offering market, particularly among technology-focused issuers.

Inflationary pressures moderated during 2025, contributing to monetary policy easing across several major economies. Central banks reduced policy interest rates, which supported financial market activity and economic conditions, despite ongoing geopolitical developments and trade policy uncertainty. Lower interest rates, along with expectations of additional monetary easing, were associated with higher market indices and increased trading. Retail investor participation remained elevated with continued engagement, particularly in equity and options markets.

The following is a summary of the key economic drivers that affect our business and how they compared to the prior year:

Global trading volumes. Worldwide, equities volumes at most major trading venues increased in the current year, while major market indices reached all-time highs in the U.S., Canada, Europe, U.K., Germany, Japan, and Australia. In the U.S., according to industry data, average daily volume in listed cash equities increased by 45%, exchange-listed equity-based options by 25%, and futures by 6%, compared to 2024. Options trading volumes have risen with the growing popularity of shorter-dated options contracts. In futures markets, volumes increased across most product segments, particularly in metals, energy, equity index, agriculture and interest rate products, as investors sought to mitigate their exposure to ongoing economic and geopolitical uncertainties.

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These factors led to strong results across our major product types. Our customer equities, options, foreign exchange, and futures volumes were up 38%, 26%, 15%, and 12%, respectively, compared to the prior year.

Note that while U.S. options, futures and cash equities volumes are readily comparable measures, they reflect most but not all of the global volumes that generate our commission revenue. See ‘‘Trading Volumes and Customer Statistics’’ below in this Item 7 for additional details regarding our trade volumes, contract and share volumes, and customer statistics.

Volatility. U.S. market volatility, as measured by the average Chicago Board Options Exchange Volatility Index (‘‘VIX®’’), increased by 22%, from an average of 15.6 in 2024 to 18.9 in the current year, the highest annual level seen since 2022. In general, higher volatility typically enhances our performance because it often correlates positively with customer trading activity across product types.

Interest Rates. During 2025, the U.S. Federal Reserve cut the benchmark federal funds rate by a total of 75 basis points, with 25 basis point reductions at its September, October, and December meetings. This resulted in a target range of 3.50% to 3.75% at year end, the lowest level since late 2022. Over the course of the year, the U.S. Treasury yield curve moved toward normalization but remained partially inverted at year end, with short- to intermediate-term yields flat to inverted, while longer-term yields exceeded shorter-term rates. In most countries with developed financial markets, benchmark interest rates also declined during 2025 as inflationary pressures eased and central banks adjusted monetary policy accordingly.

Lower U.S. benchmark rates reduce the interest we earn on our segregated cash, the majority of which is invested in short-term U.S. government securities and related instruments. Higher short-term rates and uncertainty over future U.S. Federal Reserve rate policy have led us to maintain a short duration portfolio, all of which matured within three months at December 31, 2025, to more closely match our asset and liability maturities on our interest-sensitive assets. Further, our margin balances are tied to benchmark rates, so lower rates also limit the interest we earn on margin lending to our customers. We continue to offer among the lowest rates in the industry on margin lending, and we believe our low rates are an important feature that attracts customers to our platform.

As an offset, lower rates also reduce our interest expense. For example, in U.S. dollars we pay interest to customers on their qualified cash balances when the federal funds effective rate is above 0.50%, which it has been since May 2022. At this benchmark rate level, we are able to earn our full 0.50% spread. We believe the attractive rates we pay on customer cash are among the highest in the industry and are another important feature that draws customers to our platform.

Net interest income on margin loan balances rose compared to the prior year. This increase was due to the growth in margin loan balances in the current active market environment despite the average federal funds effective rate declining to 4.21% in the current year from 5.14% in the prior year.

Higher average balances contributed to a 13% rise in net interest income over the prior year. Net interest margin declined from 2.35% in the prior year to 2.08% in the current year primarily due to lower interest rates.

Currency fluctuations. As a global broker trading on exchanges around the world in multiple currencies, we are exposed to foreign currency risk. We actively manage this exposure by keeping our equity in proportion to a defined basket of 10 currencies we call the ‘‘GLOBAL’’ to diversify our risk and to align our hedging strategy with the currencies that we use in our business. Because we report our financial results in U.S. dollars, the change in the value of the GLOBAL versus the U.S. dollar affects our earnings. During the current year, the value of the GLOBAL, as measured in U.S. dollars, increased 2.05% compared to its value at December 31, 2024, which had a positive impact on our comprehensive earnings for the current year. A discussion of our approach for managing foreign currency exposure is contained in Part II, Item 7A of this Annual Report on Form 10-K entitled ‘‘Quantitative and Qualitative Disclosures about Market Risk.”

Financial Overview

We report non-GAAP financial measures, which exclude certain items that may not be indicative of our core operating results and business outlook and are useful in evaluating the operating performance of our business. See the “Non-GAAP Financial Measures” section below in this Item 7 for additional details.

Diluted earnings per share were $2.22 for the year ended December 31, 2025 (“current year”), compared to $1.73 for the year ended December 31, 2024 (“prior year”). Adjusted diluted earnings per share were $2.19 for the current year, compared to $1.76 for the prior year. The calculation of diluted earnings per share is detailed in Note 4 – “Equity and Earnings Per Share” to the audited consolidated financial statements, in Part II, Item 8 of this Annual Report on Form 10-K.

For the current year, our net revenues were $6,205 million and income before income taxes was $4,771 million, compared to net revenues of $5,185 million and income before income taxes of $3,695 million in the prior year. Adjusted net revenues were $6,156 million and adjusted income before income taxes was $4,722 million, compared to adjusted net revenues of $5,257 million and adjusted income before income taxes of $3,767 million in the prior year.

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The financial highlights for the current year were:

•
Net interest income increased 13% from the prior year to $3,563 million, driven by higher average customer margin loans and customer credit balances, and by stronger securities lending activity.

•
Commission revenue increased 27% from the prior year to $2,149 million on higher stocks, options and futures volumes.

•
Other fees and services increased 4% from the prior year to $291 million on higher Insured Bank Deposit Sweep Program fees (“FDIC sweep fees”), market data fees and payments for order flow from exchange-mandated programs, partially offset by lower risk exposure fees.

•
Other income increased $142 million from the prior year to $202 million.

•
Execution, clearing and distribution fees expenses decreased 6% to $420 million, driven by greater capture of liquidity rebates from certain exchanges due to higher trading volumes in stocks and options, and by the elimination of SEC fees beginning in May 2025.

•
Pretax profit margin was 77%, up from 71% in the prior year. Adjusted pretax profit margin was 77%, up from 72% in the prior year.

In connection with our currency diversification strategy as of December 31, 2025, approximately 25% of our equity was denominated in currencies other than the U.S. dollar. In the current year, our currency diversification strategy increased our comprehensive earnings by $387 million (compared to a decrease of $222 million in the prior year), as the U.S. dollar value of the GLOBAL increased by approximately 2.05%, compared to its value as of December 31, 2024. The effects of our currency diversification strategy are reported as (1) a component of “Other Income” (loss of $4 million) in the consolidated statements of comprehensive income and (2) other comprehensive income (“OCI”) (gain of $391 million) in the consolidated statements of financial condition and the consolidated statements of comprehensive income. The full effect of the GLOBAL is captured in comprehensive income.

Certain Trends and Uncertainties

We believe that our current operations may be favorably or unfavorably impacted by the following trends and uncertainties that may affect our financial condition and results of operations:

•
Retail participation in the equity markets has fluctuated in the past due to investor sentiment, market conditions and a variety of other factors. Retail transaction volumes may not be sustainable and are not predictable.

•
Consolidation among market centers may adversely affect the value of our IB SmartRoutingSM software.

•
Competition among broker-dealers may continue to intensify.

•
Benchmark interest rates tend to fluctuate with economic conditions. Changes in interest rates may not be predictable.

•
Fiscal and/or monetary policy may change and impact the financial services business and securities markets.

•
New legislation or modifications to existing regulations and rules could occur in the future. Scrutiny in the use of AI and information security by regulatory and legislative authorities has increased.

•
The impact of a pandemic or other public health emergency will depend on numerous evolving factors that cannot be accurately predicted, including the duration and spread of the pandemic, governmental regulations in response to the pandemic, and the effectiveness of vaccinations and other medical advancements.

•
We continue to be exposed to the risks and uncertainties of doing business in international markets, particularly in the heavily regulated brokerage industry. Such risks and uncertainties include political, economic and financial instability, and foreign policy changes. For example, tensions between the U.S. and China have escalated in recent years, and changes in Chinese governmental oversight of the Chinese and Hong Kong capital markets could result in adverse effects on our business and loss of assets we hold in the region. Additionally, although our direct and indirect exposures to Russia and Ukraine are not material, the war in Ukraine and related sanctions have created substantial uncertainty in the global economy and financial markets. Finally, government actions such as tariff policy changes may create uncertainty that affects volumes and volatility in the financial markets.

•
Our remaining market making activities, while not material, will continue to be impacted by market structure changes, market conditions, the level of automation of competitors, and the relationship between actual and implied volatility in the equities markets.

See “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K for a discussion of other risks that may affect our financial condition and results of operations.

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Trading Volumes and Customer Statistics

The tables below present historical trading volumes and customer statistics for our business. Trading volumes are the primary driver in our business. Information on our net interest income can be found elsewhere in this report.

EXECUTED ORDER VOLUMES:

(in thousands, except %)

Customer

Principal

Total

Period

Orders

Change

Orders

Change

Orders

Change

2021

646,440

27,334

673,774

2022

532,064

(18%)

26,966

(1%)

559,030

(17%)

2023

483,015

(9%)

29,712

10%

512,727

(8%)

2024

661,666

37%

63,348

113%

725,014

41%

2025

915,616

38%

121,972

93%

1,037,588

43%

CONTRACT AND SHARE VOLUMES:

(in thousands, except %)

TOTAL

Options

Futures 1

Stocks

Period

(contracts)

Change

(contracts)

Change

(shares)

Change

2021

887,849

154,866

771,273,709

2022

908,415

207,138

34%

330,035,586

(57%)

2023

1,020,736

12%

209,034

252,742,847

(23%)

2024

1,344,855

32%

218,327

307,489,711

22%

2025

1,668,228

24%

241,631

11%

421,707,895

37%

CUSTOMER

Options

Futures 1

Stocks

Period

(contracts)

Change

(contracts)

Change

(shares)

Change

2021

852,169

152,787

766,211,726

2022

873,914

203,933

33%

325,368,714

(58%)

2023

981,172

12%

206,073

248,588,960

(24%)

2024

1,290,770

32%

214,864

302,040,873

22%

2025

1,623,384

26%

240,120

12%

417,457,770

38%

PRINCIPAL

Options

Futures 1

Stocks

Period

(contracts)

Change

(contracts)

Change

(shares)

Change

2021

35,680

2,079

5,061,983

2022

34,501

(3%)

3,205

54%

4,666,872

(8%)

2023

39,564

15%

2,961

(8%)

4,153,887

(11%)

2024

54,085

37%

3,463

17%

5,448,838

31%

2025

44,844

(17%)

1,511

(56%)

4,250,125

(22%)

(1)
Futures contract volume includes options on futures.

CUSTOMER STATISTICS:

Year over Year

2025

2024

% Change

Total Accounts (in thousands)

4,399

3,337

32%

Customer Equity (in billions) 1

779.9

568.2

37%

Total Customer DARTs (in thousands) 2

3,685

2,641

40%

Cleared Customers

Commission per Cleared Commissionable Order 3

2.68

2.86

(6%)

Cleared Avg. DARTs per Account (Annualized)

203

213

(5%)

(1)
Excludes non-customers.

(2)
Daily average revenue trades ("DARTs") are based on customer orders.

(3)
Commissionable order – a customer order that generates commissions.

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Results of Operations

The table below presents our consolidated results of operations for the periods indicated. The period-to-period comparisons below of financial results are not necessarily indicative of future results.

Year-Ended December 31,

2025

2024

2023

(in millions, except share and per share amounts)

Revenues

Commissions

2,149

1,697

1,360

Other fees and services

291

280

197

Other income (loss)

202

(11)

Total non-interest income

2,642

2,037

1,546

Interest income

7,782

7,339

6,230

Interest expense

(4,219)

(4,191)

(3,436)

Total net interest income

3,563

3,148

2,794

Total net revenues

6,205

5,185

4,340

Non-interest expenses

Execution, clearing and distribution fees

420

447

386

Employee compensation and benefits

626

574

527

Occupancy, depreciation and amortization

101

Communications

General and administrative

247

314

211

Customer bad debt

Total non-interest expenses

1,434

1,490

1,271

Income before income taxes

4,771

3,695

3,069

Income tax expense

414

288

257

Net income

4,357

3,407

2,812

Less net income attributable to noncontrolling interests

3,373

2,652

2,212

Net income available for common stockholders

984

755

600

Earnings per share

Basic

2.23

1.75

1.43

Diluted

2.22

1.73

1.42

Weighted average common shares outstanding

Basic

440,931,909

432,448,796

419,860,200

Diluted

443,859,546

436,011,752

423,387,508

Comprehensive income

Net income available for common stockholders

984

755

600

Other comprehensive income

Cumulative translation adjustment, before income taxes

101

(53)

Income taxes related to items of other comprehensive income

Other comprehensive income (loss), net of tax

101

(53)

Comprehensive income available for common stockholders

1,085

702

630

Comprehensive income attributable to noncontrolling interests

Net income attributable to noncontrolling interests

3,373

2,652

2,212

Other comprehensive income - cumulative translation adjustment

290

(154)

Comprehensive income attributable to noncontrolling interests

3,663

2,498

2,304

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The table below presents our consolidated results of operations as a percent of our total net revenues for the periods indicated.

Year Ended December 31,

2025

2024

2023

Revenues

Commissions

35%

33%

31%

Other fees and services

Other income (loss)

(0%)

Total non-interest income

43%

39%

36%

Interest income

125%

142%

144%

Interest expense

(68%)

(81%)

(79%)

Total net interest income

57%

61%

64%

Total net revenues

100%

Non-interest expenses

Execution, clearing and distribution fees

Employee compensation and benefits

10%

11%

12%

Occupancy, depreciation and amortization

Communications

General and administrative

Customer bad debt

Total non-interest expenses

23%

29%

Income before income taxes

77%

71%

Income tax expense

Net income

70%

66%

65%

Less net income attributable to noncontrolling interests

54%

51%

Net income available for common stockholders

16%

15%

14%

Year Ended December 31, 2025 (“current year”) compared to the Year Ended December 31, 2024 (“prior year”)

Net Revenues

Total net revenues, for the current year, increased $1,020 million, or 20%, compared to the prior year, to $6,205 million. The increase in net revenues was due to higher commissions, net interest income, other income, and other fees and services.

Commissions

We earn commissions from our cleared customers for whom we act as an executing and clearing broker and from our non-cleared customers for whom we act as an execution-only broker. Our commission structure allows customers to choose between (1) an all-inclusive fixed, or “bundled”, rate; (2) a tiered, or “unbundled”, rate that offers lower commissions for high volume customers where we pass through regulatory and exchange fees; and (3) our IBKR LiteSM offering, which provides commission-free trades on U.S. exchange-listed stocks and ETFs. IBKR LiteSM trades generate payments from market makers and others to whom we route these orders, which are reported in commissions. Our commissions are geographically diversified around the world, though a substantial majority are generated on products traded in the U.S.

Commissions for the current year increased $452 million, or 27%, compared to the prior year, to $2,149 million, driven by higher customer trading volumes in stocks, options and futures. Total customer stock share and options and futures contract volumes increased 38%, 26% and 12%, respectively, from the prior year. Total DARTs for cleared and execution-only customers, for the current year, increased 40% to 3.7 million, compared to 2.6 million for the prior year. Average commission per commissionable order for cleared customers, for the current year, decreased 6% to $2.68, compared to $2.86 for the prior year, due to smaller order sizes across all products, lower average commissions per order in options, futures and forex, and greater capture of exchange liquidity rebates passed through to customers.

Other Fees and Services

We earn fee income on services provided to customers, which includes market data fees, risk exposure fees, payments for order flow from exchange-mandated programs, FDIC sweep fees, and other fees and services charged to customers.

Other fees and services, for the current year increased $11 million, or 4%, compared to the prior year, to $291 million, driven by a $9 million increase in FDIC sweep fees on higher customer balances, an $8 million increase in market data fees due to our growing customer base, and a $6 million increase in payments for order flow from exchange-mandated programs driven by higher customer trading volume; partially offset by a $20 million decrease in risk exposure fees as customers exhibited more cautious risk-taking behavior.

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Other Income (Loss)

Other income consists of foreign exchange gains (losses) from our currency diversification strategy, gains (losses) from principal transactions, gains (losses) from our equity method and other investments, and other revenue not directly attributable to our core business offerings. A discussion of our approach to managing foreign currency exposure is contained in Part II, Item 7A of this Annual Report on Form 10-K entitled “Quantitative and Qualitative Disclosures about Market Risk.”

Other income, for the current year, increased $142 million, or 237%, compared to the prior year, to $202 million. This increase was mainly due to (1) $73 million related to our investing activities; (2) the non-recurrence of a $48 million loss on positions taken over as customer accommodation due to a technical issue at the New York Stock Exchange that occurred on the morning of June 3, 2024, as previously disclosed; (3) $11 million related to our currency diversification strategy; and (4) $6 million related to the remeasurement of our Tax Receivable Agreement liability, payable to Holdings.

Interest Income and Interest Expense

We earn interest on margin lending to customers that is secured by marketable securities and currency balances these customers hold with us; from our investments in U.S. and foreign government securities; from borrowing and lending securities; on deposits (in positive interest rate currencies) with banks; and on certain customers’ cash balances in negative rate currencies. We pay interest on customer cash balances (in sufficiently positive interest rate currencies); for borrowing and lending securities; on deposits (in negative interest rate currencies) with banks; and on our borrowings.

Net interest income (interest income less interest expense), for the current year, increased $415 million, or 13%, compared to the prior year, to $3,563 million. The increase in net interest income was driven by higher average customer margin loans and customer credit balances, and stronger securities lending activity, partially offset by lower benchmark interest rates.

Net interest income on customer balances, for the current year, increased $174 million, compared to the prior year, driven by increases of $29.6 billion, $16.5 billion and $15.1 billion in average customer credit balances, margin loans, and segregated cash and securities, respectively. Yields on all three components decreased as interest rates declined worldwide. See the “Business Environment” section above in this Item 7 for a further discussion about the change in interest rates in the current year.

The Company measures return on interest-earning assets using net interest margin (“NIM”). NIM is computed by dividing the annualized net interest income by the average interest-earning assets for the period. Interest-earning assets consist of cash and securities segregated for regulatory purposes (including U.S. government securities and securities purchased under agreements to resell), customer margin loans, securities borrowed, other interest-earning assets (solely firm assets) and customer cash balances swept into FDIC-insured banks as part of our Insured Bank Deposit Sweep Program. Interest-bearing liabilities consist of customer credit balances, securities loaned, and other interest-bearing liabilities.

Yields are generally a reflection of benchmark interest rates in each currency in which the Company and its customers hold cash balances. Because a meaningful portion of customer cash and margin loans are denominated in currencies other than the U.S. dollar, changes in U.S. benchmark interest rates do not impact the total amount of segregated cash and securities, customer margin loans and customer credit balances. Furthermore, because interest, when benchmark rates are at sufficiently high levels, is paid only on eligible cash credit balances (i.e., balances over $10 thousand or equivalent, in securities accounts with over $100 thousand in equity, and in smaller accounts at reduced rates), changes in benchmark interest rates are not passed through to the total amount of customer credit balances. Finally, the Company’s policies with respect to currencies with near zero or negative interest rates impact the overall yields on segregated cash and customer credit balances as effective interest rates in those currencies move above or below zero.

We earn income on securities loaned and borrowed to support customer long and short stock holdings in margin accounts.

A securities lending transaction generates (1) net interest earned on lending a security, which is based on supply and demand for that security, and (2) interest earned on the cash collateral deposited for the loan of that security, which is based on benchmark interest rates. Interest on this collateral is reported as net interest on segregated cash, since cash collateral from securities lending is held in specially-designated bank accounts for the benefit of customers, in accordance with U.S. customer protection rules. Generally, as benchmark interest rates rise, while the overall revenue generated from a securities lending transaction may not change, the portion derived from interest earned on the cash collateral, which is classified as net interest income on “Segregated cash and securities, net” increases, while the portion classified as “Securities borrowed and loaned, net” decreases.

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In the current year, average securities borrowed balances increased 32%, to $7.8 billion, and average securities loaned balances increased 42%, to $19.5 billion, compared to the prior year. Net interest earned from securities lending is affected by the level of demand for securities positions held by our customers that investors are looking to sell short. During the current year, net interest earned from securities lending transactions increased $195 million, or 212%, compared to the prior year, driven by a higher level of short sale activity and generally higher price levels raising the notional value of the securities we lent. However, as noted above, the rise in benchmark interest rates from March 2022 to September 2024 shifted a portion of the interest reported as generated by lending securities to interest income on segregated cash (see further explanation above). It should be noted that securities lending transactions entered into to support customer activity may produce interest income (expense) that is offset by interest expense (income) related to customer balances. With benchmark rates falling during 2025, the opposite shift occurred, from interest income on segregated cash to securities lending income.

We estimate that if the interest earned and paid on cash collateral related to our securities lending transactions were included under “Securities borrowed and loaned, net” in the table below, the total net interest income related to our securities lending activities would have been $1,041 million in the current year, compared to $699 million in the prior year. Such additional interest attributed to our securities lending activities would be reclassified from net interest income on “Segregated cash and securities, net” and “Customer credit balances, net” in the table below, so it would have no effect on our overall net interest income or net interest margin.

Our Stock Yield Enhancement Program provides an opportunity for customers with fully-paid stock to allow us to lend it out. We pay customers a rebate on the cash collateral generally equal to 50% of a market-based rate for lending the shares. We place cash and/or U.S. Treasury securities as collateral securing the loans in the customer’s account, which is held in segregated accounts, or at an affiliate acting as collateral agent for the benefit of our customer.

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The table below presents net interest income information corresponding to interest-earning assets and interest-bearing liabilities for the periods indicated.

Year-Ended December 31,

2025

2024

2023

(in millions)

Average interest-earning assets

Segregated cash and securities

77,217

62,117

59,582

Customer margin loans

69,978

53,503

41,229

Securities borrowed

7,792

5,899

5,315

Other interest-earning assets

15,167

11,180

10,114

FDIC sweeps 1,4

5,555

4,214

3,003

175,709

136,913

119,242

Average interest-bearing liabilities

Customer credit balances

135,487

105,840

96,081

Securities loaned

19,469

13,737

9,518

Other interest-bearing liabilities

170

155,126

119,603

105,600

Net Interest income

Segregated cash and securities, net 2

2,930

3,024

2,791

Customer margin loans 3

3,230

3,012

2,278

Securities borrowed and loaned, net

287

276

Customer credit balances, net 3

(3,545)

(3,595)

(3,125)

Other net interest income 1,4

759

690

600

Net interest income 4

3,661

3,223

2,820

Net interest margin ("NIM")

2.08%

2.35%

2.36%

Annualized Yields

Segregated cash and securities

3.79%

4.87%

4.68%

Customer margin loans

4.62%

5.63%

5.53%

Customer credit balances

2.62%

3.40%

3.25%

(1)
Represents the average amount of customer cash swept into FDIC-insured banks as part of our Insured Bank Deposit Sweep Program. This item is not recorded in the consolidated statements of financial condition. Income derived from program deposits is reported in other net interest income in the table above.

(2)
Net interest income on "Segregated cash and securities, net" for the twelve months ended December 31, 2025, excludes approximately $26 million of interest income, recorded in the consolidated statements of comprehensive income, related to taxes withheld at source in prior periods which were determined to be fully refundable.

(3)
Interest income and interest expense on customer margin loans and customer credit balances, respectively, are calculated on daily cash balances within each customer’s account on a net basis, which may result in an offset of balances across multiple account segments (e.g., between securities and commodities segments).

(4)
Includes income from financial instruments that has the same characteristics as interest, but is reported in other fees and services and other income in the Company's consolidated statements of comprehensive income. For the years ended December 31, 2025, 2024, and 2023, $38 million, $28 million and $19 million were reported in other fees and services, respectively. For the years ended December 31, 2025, 2024, and 2023, $86 million, $47 million and $7 million were reported in other income, respectively.

Non-Interest Expenses

Non-interest expenses, for the current year, decreased $56 million, or 4%, compared to the prior year, to $1,434 million, mainly due to a $67 million decrease in general and administrative expenses; a $27 million decrease in execution, clearing and distribution fees; and a $14 million decrease in customer bad debt; partially offset by a $52 million increase in employee compensation and benefits. As a percentage of total net revenues, non-interest expenses were 23% for the current year and 29% for the prior year.

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Execution, Clearing and Distribution Fees

Execution, clearing and distribution fees include the costs of executing and clearing trades, net of liquidity rebates received from various exchanges and market centers, as well as regulatory fees and market data fees. Execution fees are paid primarily to electronic exchanges and market centers on which we trade. Clearing fees are paid to clearing houses and clearing agents. Market data fees, which are associated with market data revenue included in other fees and services, are paid to third parties to receive streaming price quotes and related information.

Execution, clearing and distribution fees, for the current year, decreased $27 million, or 6%, compared to the prior year, to $420 million, primarily driven by (1) a $41 million decrease in exchange fees due to greater capture of liquidity rebates from certain exchanges on higher customer trading volumes in stocks and options; and (2) a $9 million net decrease in regulatory fees as the SEC Section 31 transaction fee rate was reduced to zero on May 14, 2025, partially offset by a new FINRA Consolidated Audit Trail (“CAT”) fee, which was initiated in the fourth quarter of 2024; partially offset by (3) a $20 million increase in clearing fees due higher customer trading volumes in stocks and options. SEC and CAT fees, as with other regulatory fees, are passed through to customers. As a percentage of total net revenues, execution, clearing and distribution fees were 7% for the current year and 9% for the prior year.

Employee Compensation and Benefits

Employee compensation and benefits include salaries, bonuses and other incentive compensation plans, group insurance, contributions to benefit programs and other related employee costs.

Employee compensation and benefits expenses, for the current year, increased $52 million, or 9%, compared to the prior year, to $626 million, associated with a combination of staffing increases and inflation, and an increase in U.S. Social Security and Medicare and other social insurance taxes driven by the annual vesting of the Company’s Stock Incentive Plan units at a higher stock price than in the prior year. The average number of employees increased 4% to 3,085 for the current year, compared to 2,960 for the prior year. We continued to add staff worldwide to support our business expansion. As we continue to grow, our focus on automation has allowed us to maintain a relatively lean staff. As a percentage of total net revenues, employee compensation and benefits expenses were 10% for the current year and 11% for the prior year.

Occupancy, Depreciation and Amortization

Occupancy expenses consist primarily of rental payments on office and data center leases and related occupancy costs, such as utilities. Depreciation and amortization expenses result from the depreciation of fixed assets, such as computing and communications hardware, as well as amortization of leasehold improvements and capitalized in-house software development.

Occupancy, depreciation and amortization expenses, for the current year, decreased $4 million, or 4%, compared to the prior year, to $97 million, mainly due to lower depreciation and amortization expense. As a percentage of total net revenues, occupancy, depreciation and amortization expenses were 2% for both the current year and the prior year.

Communications

Communications expenses consist primarily of the cost of voice and data telecommunications lines supporting our business, including connectivity to exchanges and market centers around the world.

Communications expenses, for the current year, increased $4 million, or 10%, compared to the prior year, to $43 million. As a percentage of total net revenues, communications expenses were 1% for both the current year and the prior year.

General and Administrative

General and administrative expenses consist primarily of advertising; professional services expenses, such as legal and audit work; legal and regulatory matters; and other operating expenses.

General and administrative expenses, for the current year, decreased $67 million, or 21%, compared to the prior year, to $247 million, primarily due to the non-recurrences of $82 million related to a legal settlement and $12 million related to the consolidation of our European subsidiaries in the prior year; partially offset by a $35 million increase in advertising expenses. As a percentage of total net revenues, general and administrative expenses were 4% for the current year and 6% for the prior year.

Customer Bad Debt

Customer bad debt expense consists primarily of losses incurred by customers in excess of their assets with us, net of amounts recovered by us. Customer bad debt expense, for the current year decreased $14 million, or 93%, compared to the prior year, to $1 million, mainly driven by the non-recurrence of customer losses during short periods of extreme market volatility in the prior year.

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Income Tax Expense

We pay U.S. federal, state and local income taxes on our taxable income, which is proportional to the percentage we own of IBG LLC. Also, our operating subsidiaries are subject to income tax in the respective jurisdictions in which they operate.

Income tax expense, for the current year, increased $126 million, or 44%, compared to the prior year, to $414 million, primarily due to (1) higher income before taxes at our operating subsidiaries outside the U.S. and higher income tax rates in Europe following the adoption of the minimum effective tax rate of 15% on January 1, 2025; (2) higher income before income taxes subject to U.S. income tax at IBG, Inc.; (3) IBG, Inc.’s higher average ownership percentage of IBG LLC, which rose from 25.6% to 26.0%; and (4) an $8 million lower income tax benefit, compared to the prior year, due to the remeasurement of deferred tax assets related to the step-up in basis arising from the acquisition of interests in IBG LLC, primarily due to changes in the Company’s effective tax rates.

The table below presents information about our income tax expense for the periods indicated.

Year-Ended December 31,

2025

2024

2023

(in millions, except %)

Consolidated

Consolidated income before income taxes

4,771

3,695

3,069

Exclude IBG, Inc. stand-alone (income) loss before income taxes

Add-back IBG LLC net gain (loss) on IBKR shares eliminated in consolidation 1

(1)

Operating subsidiaries income before income taxes

4,788

3,713

3,073

Operating subsidiaries

Income before income taxes

4,788

3,713

3,065

Income tax expense

213

142

115

Net income available to members

4,575

3,571

2,950

IBG, Inc.

Average ownership percentage in IBG LLC

26.0%

25.6%

25.0%

Net income available to IBG, Inc. from operating subsidiaries

1,192

915

737

IBG, Inc. stand-alone income (loss) before income taxes

(4)

(12)

Elimination of IBG, Inc.'s portion of IBG LLC net (gain) loss on IBKR shares 1

(3)

(2)

Income before income taxes

1,185

901

742

Income tax expense

201

146

142

Net income available to common stockholders

984

755

600

Consolidated income tax expense

Income tax expense attributable to operating subsidiaries

213

142

115

Income tax expense attributable to IBG, Inc.

201

146

142

Consolidated income tax expense

414

288

257

______________________________

(1)
Represents the net gains or losses from the Company’s common stock (IBKR shares) held in treasury related to shares withheld from employees to satisfy their tax withholding obligations related to the annual vesting of shares from the amended 2007 Stock Incentive Plan and shares held for distribution to eligible customers participating in one or more promotions.

Operating Results

Income before income taxes, for the current year, increased $1,076 million, or 29%, compared to the prior year, to $4,771 million. Pretax profit margin was 77% for the current year and 71% for the prior year.

Comparing our operating results for the current year to the prior year using non-GAAP financial measures, adjusted net revenues were $6,156 million, up 17%; adjusted income before income taxes was $4,722 million, up 25%; and adjusted pre-tax profit margin was 77% for the current year and 72% for the prior year. See the “Non-GAAP Financial Measures” section below in this Item 7 for additional details.

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Noncontrolling Interest

We are the sole managing member of IBG LLC and, as such, operate and control all of the business and affairs of IBG LLC and its subsidiaries and consolidate IBG LLC’s financial results into our financial statements. As of December 31, 2025, we held approximately 26.3% ownership interest in IBG LLC and Holdings held approximately 73.7% ownership interest in IBG LLC. We reflect Holdings’ ownership as a noncontrolling interest in our consolidated statements of financial condition, consolidated statements of comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flows. Our share of IBG LLC’s net income, excluding Holdings’ noncontrolling interest, for the current year was approximately 26.0%, compared to approximately 25.6% for the prior year.

Year Ended December 31, 2024 compared to the Year Ended December 31, 2023

For a discussion of changes for the year ended December 31, 2024 compared to the Year Ended December 31, 2023 refer to the Annual Report on Form 10-K filed with the SEC on February 27, 2025.

Non-GAAP Financial Measures

We use certain non-GAAP financial measures as additional measures to enhance the understanding of our financial results. These non-GAAP financial measures include adjusted net revenues, adjusted income before income taxes, adjusted net income available for common stockholders, and adjusted diluted earnings per share (“EPS”). We believe that these non-GAAP financial measures are important measures of our financial performance because they exclude certain items that may not be indicative of our core operating results and business outlook. We believe these non-GAAP financial measures are useful to investors and analysts in evaluating the operating performance of the business.

•
We define adjusted net revenues as net revenues adjusted to remove the effect of our currency diversification strategy, our net mark-to-market gains (losses) on investments, and the remeasurement of our Tax Receivable Agreement (“TRA”) liability.

•
We define adjusted income before income taxes as income before income taxes adjusted to remove the effect of our currency diversification strategy, our net mark-to-market gains (losses) on investments, the remeasurement of our TRA liability, and unusual bad debt expense.

•
We define adjusted net income available to common stockholders as net income available for common stockholders adjusted to remove the after-tax effects attributable to IBG, Inc. of our currency diversification strategy, our net mark-to-market gains (losses) on investments, the remeasurement of our TRA liability, unusual bad debt expense, and the remeasurement of certain deferred tax assets.

•
We define adjusted diluted EPS as adjusted net income available for common stockholders divided by the diluted weighted average number of shares outstanding for the period.

Mark-to-market on investments represents the net mark-to-market gains (losses) on investments in equity securities that do not qualify for equity method accounting, which are measured at fair value; on our U.S. government and municipal securities portfolios, which are typically held to maturity; and on certain other investments, including equity securities taken over by the Company from customers as a customer accommodation due to a technical issue at the New York Stock Exchange on the morning of June 3, 2024, as previously disclosed. In the event an investment is sold prior to maturity, accumulated gains (losses) are realized and previously accumulated non-GAAP adjustments are reversed in the period of sale.

Remeasurement of our TRA liability represents the change in the amount payable to Holdings under the TRA, primarily due to changes in the Company’s effective tax rates, which is related to the remeasurement of the deferred tax assets described below. For further information refer to Note 4 – Equity and Earnings per Share under Part II, Item 8 – Financial Statements and Supplementary Data of this Annual Report on Form 10-K.

Unusual bad debt expense consists of a credit loss on a loan not related to margin lending.

Remeasurement of certain deferred tax assets represents the change in the unamortized balance of deferred tax assets related to the step-up in basis arising from the acquisition of interests in IBG LLC, primarily due to changes in the Company’s effective tax rates. For further information refer to Note 4 – Equity and Earnings per Share under Part II, Item 8 – Financial Statements and Supplementary Data of this Annual Report on Form 10-K.

We also report compensation and benefits expenses as a percentage of adjusted net revenues, as we believe this measure is useful to investors and analysts in evaluating the growth of our workforce in relation to the growth of our core revenues.

These non-GAAP financial measures should be considered in addition to, rather than as a substitute for, measures of financial performance prepared in accordance with GAAP1.

1 Refers to generally accepted accounting principles in the United States.

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The tables below present a reconciliation of consolidated GAAP to non-GAAP financial measures for the periods indicated.

Year-Ended December 31,

2025

2024

2023

Adjusted net revenues (in millions)

Net revenues - GAAP

6,205

5,185

4,340

Non-GAAP adjustments

Currency diversification strategy, net

Mark-to-market on investments

(56)

(46)

Remeasurement of TRA liability

(7)

Total non-GAAP adjustments

(49)

Adjusted net revenues

6,156

5,257

4,367

Adjusted income before income taxes (in millions)

Income before income taxes - GAAP

4,771

3,695

3,069

Non-GAAP adjustments

Currency diversification strategy, net

Mark-to-market on investments

(56)

(46)

Remeasurement of TRA liability

(7)

Bad debt expense

Total non-GAAP adjustments

(49)

Adjusted income before income taxes

4,722

3,767

3,101

Adjusted pre-tax profit margin

77%

72%

71%

Adjusted net income available for common stockholders (in millions)

Net income available for common stockholders - GAAP

984

755

600

Non-GAAP adjustments

Currency diversification strategy, net

Mark-to-market on investments

(15)

(12)

Remeasurement of TRA liability

(7)

Bad debt expense

Income tax effect of above adjustments 1

(4)

(2)

Remeasurement of deferred income taxes

(3)

(11)

Total non-GAAP adjustments 2

(11)

Adjusted net income available for common stockholders 2

973

766

608

Adjusted diluted EPS (in dollars, except share amounts)

Diluted EPS - GAAP

2.22

1.73

1.42

Non-GAAP adjustments

Currency diversification strategy, net

0.00

0.01

0.05

Mark-to-market on investments

(0.03)

0.03

(0.03)

Remeasurement of TRA liability

0.01

0.02

(0.02)

Bad debt expense

0.00

Income tax effect of above adjustments 1

0.01

(0.01)

(0.00)

Remeasurement of deferred income taxes

(0.01)

(0.02)

0.02

Total non-GAAP adjustments 2

(0.02)

0.03

0.02

Adjusted diluted EPS 2

2.19

1.76

1.44

Diluted weighted average common shares outstanding

443,859,546

436,011,752

423,387,508

(1)
The income tax effect is estimated using the statutory income tax rates applicable to the Company.

(2)
Amounts may not add due to rounding.

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Liquidity and Capital Resources

We maintain a highly liquid balance sheet. The majority of our assets consists of investments of customer funds, collateralized receivables arising from customer-related and proprietary securities transactions, and exchange-listed marketable securities, which are marked-to-market daily. Collateralized receivables consist primarily of customer margin loans, securities borrowed, and securities purchased under agreements to resell. As of December 31, 2025, total assets were $203.2 billion of which $201.1 billion, or 98.9%, were considered liquid.

Decisions on the allocation of capital are based upon, among other things, prudent risk management guidelines, potential liquidity and cash flow needs for current and future business activities, regulatory capital requirements, and projected profitability. Our Treasury department, Market Risk Committee, Enterprise Risk Management department and other management control groups assist in evaluating, monitoring and controlling the impact that our business activities have on our financial condition, liquidity and capital structure. The objective of these policies is to support our business strategies while ensuring ongoing and sufficient liquidity. Our significant capital comprises an aggregate across our many regulated subsidiaries, and in addition to supporting our current business and future expansion plans we believe this financial strength provides our customers with a source of confidence.

Daily monitoring of liquidity needs and available collateral levels is undertaken to help ensure that an appropriate liquidity cushion, in the form of cash and unpledged collateral, is maintained at all times. We actively manage our excess liquidity and maintain significant borrowing capabilities through the securities lending markets and in the form of credit facilities with banks. As a general practice, we maintain sufficient levels of cash on hand to provide us with a buffer should we need immediately available funds for any reason. In addition, pursuant to our liquidity risk management plan we perform periodic liquidity stress tests, which are designed to identify and reserve liquid assets that would be available under market or idiosyncratic stress events. Based on our current level of operations, we believe our cash flows from operations, available cash and available borrowings will be adequate to meet our future liquidity needs for more than the next twelve months.

As of December 31, 2025, liability balances in connection with securities loaned and payables to customers were higher than their average monthly balances during the current year, and short-term borrowings balance was lower than its average monthly balance during the current year.

Cash and cash equivalents held by our non-U.S. operating subsidiaries as of December 31, 2025 were $2,019 million ($1,513 million as of December 31, 2024). These funds are primarily intended to finance each individual operating subsidiary’s local operations, and thus would not be available to fund U.S. domestic operations unless repatriated through payment of dividends to IBG LLC. As of December 31, 2025, we had no intention to repatriate any amounts from non-U.S. operating subsidiaries. With the enactment of the U.S. Tax Cuts and Jobs Act on December 22, 2017, we recognized a liability for the one-time transition tax on deemed repatriation of earnings of some of our foreign subsidiaries for the year ended December 31, 2017, which was paid over eight years ending in 2025. As a result, in the event dividends were to be paid to the Company in the future by a non-U.S. operating subsidiaries, the Company would not be required to accrue and pay income taxes on such dividends, except for foreign taxes in the form of dividend withholding tax, and in connection with accumulated other comprehensive income/loss from currency exchange rate changes not previously taxed in the U.S., if any, imposed on the recipient of the distribution or dividend distribution tax imposed on the payor of the distribution.

Historically, our consolidated equity has consisted primarily of accumulated retained earnings, which to date have been sufficient to fund our operations and growth. Our consolidated equity increased 23% to $20.5 billion as of December 31, 2025, from $16.6 billion as of December 31, 2024. This increase is attributable to total comprehensive income, partially offset by distributions and dividends paid during 2025.

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Cash Flows

The table below presents our cash flows from operating activities, investing activities and financing activities for the periods indicated.

Year-Ended December 31,

2025

2024

2023

(in millions)

Net cash provided by operating activities

15,811

8,724

4,544

Net cash used in investing activities

(171)

(44)

(52)

Net cash used in financing activities

(969)

(833)

(624)

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

391

(207)

122

Increase in cash, cash equivalents, and restricted cash

15,062

7,640

3,990

Our cash, cash equivalents, and restricted cash (i.e., cash and cash equivalents that are subject to withdrawal or usage restrictions) increased by $15.1 billion to $55.3 billion for the year ended December 31, 2025.

Operating Activities

Our cash flows from operating activities are largely a reflection of the changes in customer credit and margin loan balances. We raised $15.8 billion in net cash from operating activities mainly driven by customer credit balances which increased $39.0 billion and securities loaned which increased $8.5 billion; partially offset by customer margin loans which increased $26.0 billion.

Investing Activities

Our cash flows from investing activities are primarily related to other investments, capitalized internal software development, purchases and sales of memberships, trading rights and shares at exchanges where we trade, and strategic investments where such investments may enable us to offer better execution alternatives to our current and prospective customers, allow us to influence exchanges to provide competing products at better prices using sophisticated technology, or enable us to acquire either technology or customers faster than we could develop them on our own. We used net cash of $171 million in our investing activities, including strategic investments and property, equipment, and intangible assets.

Financing Activities

Our cash flows from financing activities are comprised of short-term borrowings, capital transactions, and payments made to Holdings under the Tax Receivable Agreement. Short-term borrowings from banks are part of our daily cash management in support of operating activities. Capital transactions consist primarily of quarterly dividends paid to common stockholders and related distributions paid to Holdings. We used net cash of $969 million in our financing activities, primarily for distributions to noncontrolling interests, dividends paid to common stockholders and payments made to Holdings under the Tax Receivable Agreement.

Year Ended December 31, 2024:

For a discussion of changes in cash flows for the year ended December 31, 2024 refer to our Annual Report on Form 10-K filed with the SEC on February 27, 2025.

Year Ended December 31, 2023:

For a discussion of changes in cash flows for the year ended December 31, 2023 refer to our Annual Report on Form 10-K filed with the SEC on February 27, 2024.

Regulatory Capital Requirements

As of December 31, 2025, all operating subsidiaries were in compliance with their respective regulatory capital requirements. For additional information regarding our regulatory capital requirements see Note 16 – “Regulatory Requirements” to the audited consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.

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Capital Expenditures

We expect capital expenditures to remain primarily focused on technology infrastructure, system capacity, cybersecurity, and regulatory requirements. Our capital expenditures are comprised of compensation costs of our software engineering staff for development of software for internal use and expenditures for computer, networking and communications hardware, and leasehold improvements. These expenditure items are reported as property, equipment, and intangible assets. Capital expenditures for property, equipment, and intangible assets were $67 million, $49 million and $49 million for the three years ended December 31, 2025, 2024, and 2023, respectively. In the future, we plan to meet capital expenditure needs with cash from operations and cash on hand, as we continue our focus on technology infrastructure initiatives to further enhance our competitive position. In response to changing economic conditions, we believe we have the flexibility to modify our capital expenditures by adjusting them (either upward or downward) to match our actual performance. If we pursue any additional strategic acquisitions, we may incur additional capital expenditures.

Contractual Obligations Summary

Our contractual obligations principally include obligations associated with our outstanding indebtedness and interest payments as of December 31, 2025.

Payments Due by Year

Total

2026-2027

2028-2029

Thereafter

(in millions)

Payable to Holdings under Tax Receivable Agreement (1)

217

156

Operating leases

184

Total contractual cash obligations

401

229

(1)
As of December 31, 2025, contractual amounts owed under the Tax Receivable Agreement of $217 million have been reported in payables to affiliate in the consolidated financial statements, representing management’s best estimate of the amounts currently expected to be owed under the Tax Receivable Agreement. Through December 31, 2025, approximately $308 million of cumulative cash payments have been made.

Seasonality

Our businesses are subject to seasonal fluctuations, reflecting varying numbers of market participants at times during the year, varying numbers of trading days from quarter-to-quarter, and declines in trading activity due to holidays. Typical seasonal trends may be superseded by market or world events, which can have a significant impact on prices and trading volume.

Inflation

Although we cannot accurately anticipate the effects of inflation on our operations, we believe that for the past several years inflation may have indirectly had a material impact on our results of operations. Inflation has been one of the factors driving our employee compensation and benefits expenses higher during the current period, although as a percentage of net revenues these expenses remain stable. Inflation may also be a contributing factor to general uncertainty in the markets in the foreseeable future. Statements about future inflation are subject to the risk that actual inflation and its effects may differ, possibly materially, due to, among other things, changes in economic growth, impact of supply chain disruptions, unemployment and consumer demand.

Investments in U.S. Government Securities

We invest in U.S. government securities to satisfy U.S. regulatory requirements. As a broker-dealer, unlike banks, we are required to mark these investments to market even though we intend to hold them to maturity. Sudden increases (decreases) in interest rates will cause mark-to-market losses (gains) on these securities, which are recovered (eliminated) if we hold them to maturity, as currently intended. As of December 31, 2025, all of our U.S. government securities had maturities within three months. The impact of changes in interest rates is further described in Part II, Item 7A of this Annual Report on Form 10-K entitled “Quantitative and Qualitative Disclosures about Market Risk.”

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Strategic Investments and Acquisitions

We regularly evaluate potential strategic investments and acquisitions. We hold strategic investments in certain electronic trading exchanges, including BOX Options Exchange, LLC and Miami International Holdings Inc. We also hold strategic investments in certain businesses, including Zero Hash Holdings Ltd. (a crypto-service provider) and Next Securities Corporation (a South Korea-based securities company).

We intend to continue making acquisitions on an opportunistic basis, generally only when the acquisition candidate will, in our opinion, enable us to offer better execution alternatives to our current and prospective customers, allow us to influence exchanges to provide competing products at better prices using sophisticated technology, or enable us to acquire either technology or customers faster than we could develop them on our own.

As of December 31, 2025, there were no definitive agreements with respect to any material acquisition.

Certain Information Concerning Off-Balance-Sheet Arrangements

We may be exposed to a risk of loss not reflected in our consolidated financial statements for futures products, which represent our obligations to settle at contracted prices, and which may require us to repurchase or sell in the market at prevailing prices. Accordingly, these transactions result in off-balance sheet risk, as our cost to liquidate such futures contracts may exceed the amounts reported in our consolidated statements of financial condition.

Critical Accounting Policies and Estimates

Our consolidated financial statements have been prepared in accordance with U.S. GAAP, which requires management to make estimates and assumptions that affect the reported amounts and disclosures in the consolidated financial statements and accompanying notes. These estimates and assumptions are based on judgment and the best available information at the time. Therefore, actual results could differ materially from those estimates. We believe that the critical policies listed below represent the most significant estimates used in the preparation of our consolidated financial statements. See Note 2 – “Significant Accounting Policies” to the audited consolidated financial statements for a summary of our significant accounting policies in Part II, Item 8 of this Annual Report on Form 10-K.

Contingencies

Our policy is to estimate and accrue for potential losses that may arise out of litigation and regulatory proceedings, to the extent that such losses are probable and can be estimated. Significant judgment is required in making these estimates and our final liabilities may ultimately be materially different. Our total liability accrued with respect to litigation and regulatory proceedings is determined on a case by case basis and represents an estimate of probable losses based on, among other factors, the progress of each case, our experience with and industry experience with similar cases and the opinions and views of internal and external legal counsel. Given the inherent difficulty of predicting the outcome of litigation and regulatory matters, particularly in cases or proceedings in which substantial or indeterminate damages or fines are sought, or where cases or proceedings are in the early stages, we cannot estimate losses or ranges of losses for cases or proceedings where there is only a reasonable possibility that a loss may be incurred.

Income Taxes

Our income tax expense, deferred tax assets and liabilities, and reserves for unrecognized tax benefits are based on enacted tax laws and reflect management’s best assessment of estimated future taxes to be paid. We are subject to income taxes in both the U.S. and numerous foreign jurisdictions. Determining income tax expense requires significant judgment and estimates.

Deferred income tax assets and liabilities arise from temporary differences between the tax and financial statement recognition of the underlying assets and liabilities. In evaluating our ability to recover our deferred tax assets within the jurisdictions from which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies, and results of recent operations.

In projecting future taxable income, historical results are adjusted for changes in accounting policies and incorporate assumptions including the amount of future state, federal and foreign pre-tax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax-planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates we are using to manage the underlying businesses. In evaluating the objective evidence that historical results provide, three years of cumulative operating income (loss) are considered. Deferred income taxes have not been provided for U.S. tax liabilities or for additional foreign taxes on the unremitted earnings of foreign subsidiaries that have been indefinitely reinvested.

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The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in a multitude of jurisdictions across our global operations. Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in the future. For example, a number of jurisdictions, including the EU countries, have enacted the Pillar Two Framework established by the OECD, which generally imposes a minimum effective tax rate of 15% in each such jurisdiction. We record tax liabilities in accordance with Financial Accounting Standards Board (“FASB”) ASC Topic 740 and adjust these liabilities when management’s judgment changes as a result of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may result in payments that are different from the current estimates of these tax liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which new information becomes available.

We recognize that a tax benefit from an uncertain tax position may be recognized only when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. A tax position that meets this standard is measured at the largest amount of benefit that will more likely than not be realized on settlement.

Accounting Pronouncements Issued but Not Yet Adopted

For additional information regarding FASB Accounting Standards Updates (“ASU”s) that have been issued but not yet adopted and that may impact the Company, refer to Note 2 – “Significant Accounting Policies” to the audited consolidated financial statements in Part II, Item 8 of this Annual Report on form 10-K.

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