Third quarter adjusted EPS: $0.82.
Adjusted net trading income: $388 million, or $6.1 million per day.
Market-making adjusted net trading revenue: $288 million, or $4.5 million per day.
Adjusted net trading revenue for execution services: $100 million or $1.6 million per day.
Adjusted EBITDA: $215 million.
Adjusted EBITDA margin: 55.4%.
Adjusted operating expenses: $190 million.
Cash operating expenses: $173 million.
Cash compensation ratio: 23% for the quarter.
Total compensation rate: 28% for the current quarter.
Share repurchases: 1.7 million shares, average price per share of $28.80.
Number of shares at end of quarter: 161 million shares outstanding.
Dividend commitment: 20% quarterly.
Release date: October 24, 2024
For a complete record of financial statements, see Complete Record of Financial Statements.
Virtu Financial Inc (NASDAQ:VIRT) reported strong performance in both its customer and non-customer market-making businesses, with an adjusted EBITDA margin of 55% and EBITDA of $215 million.
The company continues to advance its growth initiatives, particularly in crypto options and ETF blocks, and has shown positive results from multi-year investments.
Virtu Technology Solutions (VTS) provides cutting-edge technology to regional broker-dealers, contributing to the company’s growth in the Virtu Execution Services (VES) business.
The company is expanding its footprint in low-penetration regions such as the Middle East, India and Japan, and is finding success with new customer segments.
Virtu Financial Inc (NASDAQ:VIRT) is committed to maintaining a 20% quarterly dividend, aggressive share buybacks, and returning capital to shareholders.
Global volumes remain low, with lower volumes and nominal carryovers for US equities compared to the previous quarter, impacting overall market conditions.
The company saw its adjusted net trading income (ANTI) decline from the previous quarter, due in part to a significant drop in Bitcoin ETF activity.
Brokerage fees reached the highest level since the coronavirus outbreak due to transaction taxes and Article 31 fees, which affected the company’s finances.
The regulatory environment, particularly the SEC’s proposed stock market structure, poses potential challenges and unintended consequences for the market.
Virtu Financial Inc (NASDAQ:VIRT) is facing competitive pressure in the U.S. options market. This market remains a challenging area for growth despite international opportunities.
Q: There is a proliferation of brokers offering access to options and futures to retail investors. How does this impact Virtu’s business model? And how does futures trading compare to options and stocks in terms of profitability? A: Douglas Cifu, CEO: For us, this means This is a great opportunity to complement our existing physical equity wholesale business. We have strong relationships with retail broker-dealers and pride ourselves on providing efficient liquidity. Futures products may attract more active day traders, which is a different demographic than casual retail investors. This expansion is beneficial for Virtu as it strengthens its partnerships with retail companies.
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Q: Brokerage costs are at their highest since COVID-19. Was there anything about the structure of your business that caused these costs to rise? How should we think about them going forward? A: Douglas Cifu, CEO: This increase is primarily due to Section 31 fees. is. This is a transaction tax that is measured in arrears and can be high. Additionally, from September we started paying some fees in cash. These factors resulted in an increase in brokerage fees this quarter.
Q: Despite positive factors such as ETF launches and strong trading volumes, ANTI has continued to decline. What could have caused this? A: Douglas Cifu, CEO: This decline was primarily due to a significant drop in Bitcoin ETF activity, with ANTI down approximately 11% sequentially. Additionally, spreads on index options declined, impacting market-making opportunities. However, we remain optimistic about growth, particularly in the options and international markets.
Q: Can you give us your latest thoughts on the SEC’s stock market structure proposal and how it will impact Virtu? And how important is the foreign exchange market-making business? A: Douglas Cifu, CEO: We believe that the proposal could increase transaction costs for large orders, which could have unintended negative consequences. Although we are not a rebate trading company, reductions in rebates may widen spreads. Our foreign exchange market making business will not be materially affected by these changes.
Q: How is Virtu progressing in the US options market and how does it see opportunities set up internationally compared to the US? A: Douglas Cifu, CEO: We are expanding our symbol range and investing in exchange-traded investments. Internationally, we see opportunities in Asia, particularly India, South Korea and Japan. Our global scale and trading infrastructure positions us to take full advantage of these opportunities.
For a complete record of financial statements, see Complete Record of Financial Statements.
This article first appeared on GuruFocus.
