Interactive Brokers Group, Inc. (IBKR) Earnings Call Transcript & Summary

Good day and welcome to the Interactive Annual Meeting of Stockholders. I'd now like to turn the conference over to Nancy Stuebe, Director of Investor Relations. Please go ahead.

Good morning, ladies and gentlemen, and welcome to Interactive Broker's 2020 Annual Meeting of Shareholders. I am Nancy Stuebe, Director of Investor Relations. We are pleased to conduct our annual meeting virtually via the Internet this year. We adopted this meeting format to best preserve the health of our shareholders, Board, officers and employees and look forward to meeting in person next year if conditions permit. On the call with me are Thomas Peterffy, our Founder and Chairman; Earl Nemser, Vice Chairman and Director; Milan Galik, our President, Chief Executive Officer and Director; Paul Brody, Chief Financial Officer, Treasurer and Secretary and Director. In addition, we have with us today Larry Harris, Chairman of the Audit Committee; Gary Katz and John Damgard, who are members of our Audit Committee; and Director Philip Uhde; and Director-elect, William Peterffy. Chris Donovan and Ben [indiscernible] are on as representatives of our independent registered public accounting firm, Deloitte & Touche, whom we have retained for our 2020 financial statement audit, subject to shareholder approval. Also on is Tony Carideo of Broadridge, whom the Board of Directors appointed to act as inspector of elections. After the formal portion of the meeting has concluded, if you have a question to ask, please enter it in the box on the virtual Annual Meeting page on the lower left of your screen under Ask a Question. Your question will then be read aloud. I'd like to remind you that some of the statements made at this meeting may be considered forward-looking. Interactive Brokers cautions investors that results of future operations may differ from those anticipated. We urge you to review the cautionary statements and other information contained in the company's filings with the SEC, including our annual report on Form 10-K for the fiscal year 2019, which identifies certain factors that could cause actual results to differ, possibly materially, from those projected in any forward-looking statements made during this meeting. Copies of the 10-K and other filings are available through the company or online. Now Paul Brody, who will act as secretary of the meeting, will formally open the meeting and review the proposals. Those who wish to vote may do so on the main Annual Meeting page by clicking on the Vote Here button. At the conclusion of the meeting, Thomas will address any general questions. Paul?

Thank you, Nancy. Thanks, everyone, joining our call. We will now discuss and vote on the matters described in our proxy statement. We will vote on 2 proposals: the election of 9 directors and the ratification of the appointment of Deloitte & Touche as Interactive Brokers independent registered public accounting firm for the fiscal year ending December 31, 2020. By notice of meeting, Interactive Brokers shareholders as of February 27, 2020, the date of record, were sent notice of the annual meeting on or about March 11, 2020, along with a proxy statement. The notice of the annual meeting also stated the date, time and meeting purpose along with the web address for participating in today's virtual meeting. There are present by proxy a sufficient number of voting shares of the company to constitute a quorum. Accordingly, this meeting is duly called to order. Copy of the notice, proxy statement and the form of proxies as well as an affidavit of distribution of Broadridge Financial Solutions shall be made a part of the record of this meeting. At this time, any shareholders who are logged in and who have not already submitted a proxy and wish to vote their shares may do so now by clicking on the Vote Here button on your screen. At this point, the polls are closed, and I will now report the preliminary results of voting. There are 2 proposals to be considered during this meeting, both of which were described in detail in the proxy statement furnished to the shareholders. First item of business is the election of directors. Based on the recommendation of the nominating and Corporate Governance Committee of the Board, the 9 individuals whose names appear in the proxy statement have been nominated for election as directors of the company. If elected, each of the nominees will serve until the 2021 Annual Meeting of Stockholders. I'm pleased to report that each of the directors have received an affirmative vote of the majority of the shares voted and are hereby elected. The second proposal concerns the ratification of Deloitte & Touche to serve as Interactive Brokers independent registered public accounting firm for the company's 2020 fiscal year. The number of shares voted by proxy, which consists of a majority of the shares represented at this meeting, have voted in favor of this proposal. Consequently, the proposal has been approved. The final tabulation of these votes will appear in our required Form 8-K to be filed with the Securities and Exchange Commission. I will now turn it back to Nancy. Nancy?

Hello? Hi, thank you. We seem to have one question, and that is somebody asking about the process of -- that we use Mediant, and Mediant control numbers did not appear to work and that one needs to call Mediant manually to request a control number that works, and that proxy push has often not given correct Mediant control numbers. Can we do something to make the process work better?

So Nancy, I think you can address that. And I think you have the information, yes?

Yes. So Mediant does have a process where they should be -- Broadridge contacts Mediant in order to give a proper control number. We -- unless Broadridge controls every single broker, they're not able to get everybody using their control numbers, so they actually give the proper control numbers to the people at Mediant. So that's something that does need to get taken up by Mediant. We do not provide those -- and Broadridge, who is our proxy tabulator, we do not supply those numbers. The second question is when will Milan be doing earnings calls?

Thomas, you want to address that? I think maybe Thomas needs to be unmuted. Yes.

Milan and I have discussed this, and we feel that Milan would be more useful paying close attention to running the business. And I, for the time being, would relate to investors. But that may change depending upon my health.

The next question is, can we discuss which stock exchanges we're considering expanding into next, particularly with regard to the frontier markets? We just added Moscow, but is Vietnam possibly on the horizon?

Milan, you want to address that?

Milan needs to be unmuted.

I'm not muted now. Can you hear me?

Yes.

Yes.

Yes. So as far as the Far East is concerned, Vietnam would not be our first choice. We're looking at the opportunities in China right now. We have looked at Saudi Arabia. We have seen some difficulties with establishing a membership there. So we are keeping our minds open, and we will continue looking for the next best one to join.

Thanks. And then next will be that Interactive Brokers announced an $88 million hit from the WTI. Can you please give some details about what happened and what we are doing to prevent a recurrence?

So let's just ask this question -- as you know, at 10 o' clock, we are having a webcast question-and-answer section that we expect would go on for an hour. I am sure that these same questions will come up at that time. Would we not be better off postponing these questions to that session?

If you're asking me, it is just that -- well, it's just the limitation of space on the call. But if people would like to email me, I'm nstuebe, S-T-U-E-B-E, @ibkr.com. The last question is, next year, can we get video for the meeting?

Yes. That's what I'm addressing. So the issue is that Broadridge does not run a meeting with video. So for that reason, we put this meeting into 2 sections. First is the voting, which we have just done on the phone, and the next meeting is on video. So I'm asking you if you could please bear with us until the video section starts at 10 o'clock. But if you do not, please tell us. And of course, we'll answer the question right now.

And then our last question is, can you please give more details about difficulties connecting to Saudi Arabia?

Again, same response. Could we please do that in the video session?

Okay. For people who would like try to connect to the video session, you'll have to e-mail me for the link. It is nstuebe, N-S-T-U-E-B-E, @ibkr.com. So that now concludes our annual meeting. Thank you for attending, and thank you for your continuing support of the company.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.