UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): March 12, 2024
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation) | (Commission File No.) | (IRS Employer Identification No.) | ||||||
(Address of principal executive offices)
(212 ) 418-0100
(Registrant’s telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class: | Trading Symbol(s) | Name of each exchange on which registered: | ||||||||||||
The | ||||||||||||||
ITEM 7.01 REGULATION FD DISCLOSURE
Virtu Financial, Inc. (the “Company”) plans to make a presentation to investors and industry participants (the “Presentation”) a copy of which is attached as Exhibit 99.1 to this Current Report on Form 8-k and is incorporated herein by reference. The Company expects to use the Presentation at investor conferences beginning on March 12, 2024 in connection with the FIA Boca International Futures Industry Conference (the “Conference”), and from time to time thereafter in connection with presentations to investors and potential investors, clients and potential clients, industry analysts and others. The Presentation is available in the “Investor Relations” section of the Company’s website, located at https://ir.virtu.com/investor-relations/default.aspx.
The information contained in the Presentation is summary information that is intended to be considered in the context of the Company’s Securities and Exchange Commission (“SEC”) filings and other public announcements that the Company may make, by press release or otherwise, from time to time. The Company undertakes no duty or obligation to publicly update or revise the information contained in the Presentation or this report, although it may do so from time to time as its management believes is warranted. Any such updating may be made through the filing of other reports or documents with the SEC, through press releases or through other public disclosure.
By filing this Current Report on Form 8-K and furnishing the information contained herein, the Company makes no admission as to the materiality of any information in the Presentation or this report that is required to be disclosed solely by reason of Regulation FD. The Company uses, and will continue to use, its website, public conference calls, and social media channels, including its Twitter account (twitter.com/virtufinancial) and our LinkedIn account (linkedin.com/company/virtu-financial), as additional means of disclosing public information to investors, the media and others interested in the Company. It is possible that certain information that the Company posts on its website and on social media could be deemed to be material information, and the Company encourages investors, the media and others interested in the Company to review the business and financial information that the Company posts on its website and on the social media channels identified above.
The information presented in Item 7.01 of this Current Report on Form 8-K and in Exhibit 99.1 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, unless the Company specifically states that the information is to be considered “filed” under the Exchange Act or specifically incorporates it by reference into a filing under the Securities Act of 1933, as amended, or the Exchange Act.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d)Exhibits
| Exhibit No. | Description | |||||||
| 99.1 | ||||||||
| 104 | The cover page from this Current Report on Form 8-K, formatted in Inline XBRL | |||||||
2
EXHIBIT INDEX
| Exhibit No. | Description | |||||||
| 99.1 | ||||||||
| 104 | The cover page from this Current Report on Form 8-K, formatted in Inline XBRL | |||||||
3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
| VIRTU FINANCIAL, INC. | |||||||||||
| By: | /s/ JUSTIN WALDIE | ||||||||||
| Name: | Justin Waldie | ||||||||||
| Title: | Senior Vice President, Secretary and General Counsel | ||||||||||
Dated: March 12, 2024
4
Presentation Title in Title Case Presentation subtitle in sentence case Presenter Name Event name xx Month 201x © 201X Virtu Financial. All rights reserved. Not to be reproduced or retransmitted without permission. Compliance #XXXX-XXXX FIA Boca 2024 Int rna ional F tures I dustry Conference © 2024 Virtu Financial. All rights reserved.
Year-to-Date Market Update 2See endnotes at end of this supplement 2024 to date has been categorized by a modest increase in volumes and a continued decline in volatility • Virtu has seen increased opportunities in its key organic growth areas: o Elevated retail-oriented Rule 605 activity ▪ Compared to 4Q 2023, Virtu’s 605 volume in January increased 7% and quoted spreads increased 15% o Spot bitcoin ETFs have created a new opportunity for Virtu to provide two-sided liquidity ▪ New ETFs have expanded the addressable market for Virtu and volumes are trending higher o Virtu’s ETF Block desk has been seeing and winning more opportunities
Major Market Metrics 3See endnotes at end of this supplement FY FY FY QTD QTD v 2021 2022 2023 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q241 4Q23 Market Metrics (Average Daily) Volume Metrics US Equity Consolidated Volume (M shares) 10,924 11,404 11,874 11,035 12,880 12,585 10,899 11,174 11,784 10,756 10,442 11,168 11,642 + 4% US Equity Consolidated Notional Volume ($B) $479 $565 $573 $516 $718 $612 $478 $488 $522 $498 $506 $535 $608 + 14% IBKR Retail Equity Share Volume (M) 1,326 3,041 1,299 1,001 1,548 1,292 1,171 1,190 1,203 931 941 930 1,002 + 8% OCC ADV (M contracts) 30 39 41 44 42 39 40 43 46 43 43 44 48 + 7% CME FX ADV (K contracts) 861 798 989 972 905 950 1,096 1,000 982 913 987 1,007 874 - 13% Hotspot ADV FX ($B) $35 $34 $40 $44 $42 $39 $40 $40 $45 $42 $42 $46 $43 - 6% Spot Bitcoin Volume ($M) 33,023 49,445 33,140 20,451 29,651 34,429 34,782 33,637 27,654 17,331 14,846 22,036 31,690 + 44% Volatility Metrics S&P 500 Average Implied Volatility (VIX) 29.3 19.7 25.6 16.8 25.4 27.4 24.8 25.0 20.7 16.4 15.0 15.3 13.7 - 11% S&P 500 Average Realized Volatility 30.4 13.0 24.0 12.9 21.4 28.6 21.3 24.8 16.7 11.9 10.8 12.3 11.7 - 5% S&P 500 Intraday Volatility 1.7% 1.0% 1.8% 1.0% 1.8% 2.1% 1.6% 1.7% 1.4% 0.9% 0.9% 0.9% 0.7% - 21% SX5E Realized Volatility 30.1 14.8 22.7 13.6 30.8 23.0 19.1 18.3 18.2 10.9 14.0 11.5 11.1 - 3% NKY Realized Volatility 24.1 18.5 20.2 16.0 25.0 19.7 18.6 17.8 14.8 14.9 15.4 18.9 16.6 - 12% CVIX Realized Volatility 66.7 29.3 54.3 29.7 61.9 55.0 58.4 42.1 35.4 28.9 25.0 29.3 27.8 - 5% Annual FY 2023FY 2022 Quarterly FY 2020
Rule 605 Volume Update 4See endnotes at end of this supplement Opportunity implied by Rule 605 execution quality disclosure reports includes the dollar value of quoted spreads for covered orders - 200M 400M 600M 800M 1,000M 1,200M - $2M $4M $6M $8M $10M $12M $14M $16M $18M $20M Virtu 605 Volume and Quoted Spread1 Avg Daily Dollar Value of Quoted Spread (L) Avg Daily Executed Shares (R) Quoted spreads +15% and executed Rule 605 shares +7% QoQ through January
5 Update on Share Buybacks See endnotes at end of this supplement 1.4M 3.7M 7.1M 12.5M 16.1M 25.1M 26.8M 30.3M 32.3M 36.3M 38.5M 41.2M 43.6M 45.2M 0.8% 1.0% 2.7% 5.2% 5.6% 9.1% 10.0% 11.8% 12.9% 13.6% 14.8% 16.2% 17.4% 17.2% 0% 5% 10% 15% 20% - 10M 20M 30M 40M 50M 60M Cumulative Shares Repurchased to Date1,2 Cumulative Shares Repurchased % of Shares Outstanding (Net) $34M $63M $101M $139M $102M $287M $47M $81M $45M $76M $42M $49M $44M $28M $23.61 $27.82 $30.17 $25.71 $27.65 $32.24 $26.94 $23.43 $21.72 $19.22 $18.32 $18.13 $18.28 $18.10 $0 $5 $10 $15 $20 $25 $30 $35 - $50M $100M $150M $200M $250M $300M $350M Total Buybacks per Quarter1 Total Repurchased (L) Average Price (R)
6 Analysis at Various Levels of ANTI See endnotes at end of this supplement Reflects 4Q23 weighted average shares outstanding of 164M $5.00 M $1,255 $643 $612 49% $2.09 $50-$120 $6.00 M $1,506 $643 $863 57% $3.25 $120-$160 $7.00 M $1,757 $643 $1,114 63% $4.42 $160-$270 $8.00 M $2,008 $643 $1,365 68% $5.58 $270-$400 $9.00 M $2,259 $643 $1,616 72% $6.74 $400-$500 $10.00 M $2,510 $674 $1,836 73% $7.77 $500-$600 $11.00 M $2,761 $709 $2,052 74% $8.77 $600-$700 Target Available for Buybacks Annually4 Adj. EPS1,3($M) ANTI/Day1 Full Year Adj. NTI1 Adj. EBITDA1,2 EBITDA Margin 1,2 Cash OpEx Total1,2 Since inception of the share repurchase program in November 2020, Virtu has repurchased 17% of our outstanding shares (net of new issuances)
GAAP Reconciliations and Other Information
8 Key Financial Metrics See endnotes at end of this supplement FY FY FY FY FY'23 v 2020 2021 2022 2023 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 3Q'23 4Q'22 FY'22 Total Adjusted Net Trading Income1,2 $2,271 $1,910 $1,468 $1,211 $505 $357 $331 $274 $373 $279 $298 $261 Daily Average Adj. NTI 1,2 $9.0 $7.6 $5.8 $4.8 $8.1 $5.8 $5.2 $4.4 $6.0 $4.5 $4.7 $4.1 Market Making Adj. NTI1 $1,782 $1,428 $1,058 $847 $382 $254 $238 $185 $278 $193 $208 $167 Market Making Daily Average Adj. NTI 1 $7.0 $5.7 $4.2 $3.4 $6.2 $4.1 $3.7 $2.9 $4.5 $3.1 $3.3 $2.7 Execution Services Adj. NTI1,2 $489 $482 $409 $364 $123 $104 $93 $89 $95 $85 $90 $93 Execution Services Daily Average Adj. NTI 1,2 $1.9 $1.9 $1.6 $1.5 $2.0 $1.7 $1.5 $1.4 $1.5 $1.4 $1.4 $1.5 Adjusted Cash Operating Expenses1 $623 $609 $609 $643 $161 $148 $150 $149 $166 $157 $158 $162 + 2% + 9% + 6% Total Adjusted Operating Expenses1 $690 $677 $675 $706 $179 $164 $167 $165 $181 $173 $174 $178 + 2% + 8% + 5% Adjusted EBITDA1 $1,648 $1,301 $859 $568 $344 $209 $181 $125 $207 $122 $140 $99 - 29% - 21% - 34% Adjusted EBITDA Margin 1,3 73% 68% 59% 47% 68% 59% 55% 46% 56% 44% 47% 38% - 9 pts - 8 pts - 12 pts Long-Term Debt (at end of period) $1,670 $1,630 $1,824 $1,752 $1,829 $1,826 $1,824 $1,824 $1,808 $1,806 $1,805 $1,752 - 3% - 4% - 4% Debt / LTM Adjusted EBITDA 1 1.0x 1.3x 2.1x 3.1x 1.7x 1.7x 1.7x 2.1x 2.5x 2.8x 3.0x 3.1x Normalized Adjusted EPS1 $5.76 $4.57 $3.00 $1.84 $1.27 $0.73 $0.61 $0.37 $0.74 $0.37 $0.45 $0.27 - 40% - 27% - 39% - 12% - 5% ($M) - 11% Annual Quarterly FY 2023 - 17% - 20%- 20% + 4% Comparison - 9% + 4% FY 2022 4Q 2023 v 44% 43% 41% 17% 17% 29% 30% 21% 32% 30% 23% 24% 29% 28% 33% 26% 31% 30% 36% 56% 57% 59% 83% 83% 71% 70% 79% 68% 70% 77% 76% 71% 72% 67% 74% 69% 70% 64% $3.8M $3.9M $4.1M $12.7M $10.6M $5.7M $7.1M $11.9M $5.4M $5.5M $7.6M $8.1M $5.8M $5.2M $4.4M $6.0M $4.5M $4.7M $4.1M - $2M $4M $6M $8M $10M $12M $14M 2Q'19 3Q'19 4Q'19 1Q'20 2Q'20 3Q'20 4Q'20 1Q'21 2Q'21 3Q'21 4Q'21 1Q'22 2Q'22 3Q'22 4Q'22 1Q'23 2Q'23 3Q'23 4Q'23 Daily Average Adj. NTI1 Trend Execution Services Market Making
9 GAAP Income Statement See endnotes at end of this supplement FY FY FY FY FY FY 2018 20191 2020 2021 2022 2023 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Trading income, net $1,267 $912 $2,493 $2,105 $1,629 $1,301 $522 $396 $397 $313 $413 $306 $316 $267 Commissions, net and technology services 184 499 601 614 530 456 155 136 121 118 121 110 110 114 Interest and dividends income 88 109 62 75 159 463 21 31 44 64 82 98 128 155 Other, net 340 (2) 83 16 47 74 3 42 (1) 3 4 (7) 76 0 Total Revenues $1,879 $1,517 $3,239 $2,811 $2,365 $2,293 $701 $605 $561 $498 $620 $507 $630 $536 Brokerage, exchange, clearance fees and payments for order flow, net 376 387 759 745 619 508 150 157 169 143 146 122 123 117 Communications and data processing 176 209 214 212 220 231 56 56 53 55 57 57 57 60 Employee compensation and payroll taxes 216 384 394 376 391 394 103 99 103 86 103 96 97 98 Interest and dividends expense 142 158 126 140 231 500 43 49 62 78 98 112 133 158 Operations and administrative 67 104 95 88 86 99 25 14 14 33 24 25 22 27 Depreciation and amortization 61 66 67 68 66 63 17 16 17 16 15 16 16 16 Amortization of purchased intangibles and acquired capitalized software 26 71 74 70 65 64 16 16 16 16 16 16 16 16 Termination of office leases 23 66 10 28 7 0 1 1 0 5 0 (0) 0 0 Debt issue cost related to debt refinancing and prepayment 12 41 29 7 30 8 26 1 1 1 2 2 2 3 Transaction fees and expenses 11 26 3 1 1 0 0 1 0 0 0 0 0 0 Financing interest expense 72 122 88 80 92 99 21 22 23 25 24 25 25 25 Total Operating Expenses $1,182 $1,633 $1,856 $1,815 $1,808 $1,968 $460 $431 $459 $458 $486 $471 $492 $519 Income (Loss) Before income taxes $696 $(116) $1,383 $997 $557 $325 $242 $174 $102 $40 $135 $35 $138 $17 Provision for income taxes (benefit) 76 (12) 262 170 88 61 42 25 22 0 25 6 21 10 Net Income (Loss) $620 $(104) $1,121 $827 $468 $264 $200 $149 $80 $40 $110 $30 $118 $7 Quarterly FY 2022 Annual FY 2023Income Statement ($mm)
10 Adjusted Net Trading Income $975 $784 $669 $362 $456 $2,271 $724 Adjusted EBITDA & Normalized Adjusted EPS See endnotes at end of this supplement FY FY FY FY FY FY 2018 20191 2020 2021 2022 2023 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Adjusted Net Trading Income $1,020 $975 $2,271 $1,910 $1,468 $1,211 $505 $357 $331 $274 $373 $279 $298 $261 FY FY FY FY FY FY 2018 20191 2020 2021 2022 2023 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Income (Loss) Before income taxes $696 $(116) $1,383 $997 $557 $325 $242 $174 $102 $40 $135 $35 $138 $17 (+) Financing interest expense 72 122 88 80 92 99 21 22 23 25 24 25 25 25 (+) Debt issue cost related to debt refinancing and prepayment 12 41 29 7 30 8 26 1 1 1 2 2 2 3 (+) Depreciation and amortization 61 66 67 68 66 63 17 16 17 16 15 16 16 16 (+) Amortization of purchased intangibles and acquired capitalized software 26 71 74 70 65 64 16 16 16 16 16 16 16 16 EBITDA $867 $183 $1,640 $1,221 $810 $560 $323 $230 $159 $98 $193 $94 $197 $76 EBITDA Margin 2 85% 19% 72% 64% 55% 46% 64% 64% 48% 36% 52% 34% 66% 29% (+) Severance 11 103 10 6 8 9 2 1 1 4 3 1 1 4 (+) Transaction fees and expenses 11 26 3 1 1 0 0 1 0 0 0 0 0 0 (+) Termination of office leases 23 66 10 28 7 0 1 1 0 5 0 (0) 0 0 (+) Share-based compensation 35 51 60 56 67 64 14 19 18 16 16 16 15 17 (+) Other (328) 3 (75) (11) (34) (66) 4 (42) 2 2 (3) 11 (75) 2 Adjusted EBITDA $620 $432 $1,648 $1,301 $859 $568 $344 $209 $181 $125 $207 $122 $140 $99 Adjusted EBITDA Margin 3 61% 44% 73% 68% 59% 47% 68% 59% 55% 46% 56% 44% 47% 38% (-) Financing interest expense 72 122 88 80 92 99 21 22 23 25 24 25 25 25 (-) Depreciation and amortization 61 66 67 68 66 63 17 16 17 16 15 16 16 16 Normalized Adjusted Pre-Tax Income $487 $244 $1,494 $1,153 $701 $405 $305 $171 $141 $84 $168 $81 $98 $58 (-) Normalized provision for income taxes 112 59 358 277 168 97 73 41 34 20 40 19 24 14 Normalized Adjusted Net Income $375 $186 $1,135 $876 $533 $308 $232 $130 $107 $64 $128 $62 $75 $44 Weighted average fully diluted shares outstanding 191 193 197 192 178 168 183 179 176 173 171 169 167 164 Normalized Adjusted EPS $1.96 $0.96 $5.76 $4.57 $3.00 $1.84 $1.27 $0.73 $0.61 $0.37 $0.74 $0.37 $0.45 $0.27 FY 2023 Quarterly FY 2022 Annual FY 2023FY 2022 Adj. EBITDA / Adj. EPS ($M) Income Statement ($mm)
11 Adjusted Net Trading Income Reconciliation Operating Segments See endnotes at end of this supplement 1Q 2022 2Q 2022 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023 4Q 2023 Trading income, net $522 $396 $397 $313 $413 $306 $316 $267 Commissions, net and technology services 155 136 121 118 121 110 110 114 Brokerage, exchange, clearance fees and payment for order flow, net (150) (157) (169) (143) (146) (122) (123) (117) Interest and dividends, net (22) (18) (18) (14) (15) (15) (5) (3) Adjusted Net Trading Income $505 $357 $331 $274 $373 $279 $298 $261 Adjusted Net Trading Income Reconciliation ($M) Total 1Q 2022 2Q 2022 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023 4Q 2023 Trading income, net $516 $390 $392 $309 $408 $302 $311 $263 Commissions, net and technology services 9 11 11 11 10 7 6 7 Brokerage, exchange, clearance fees and payment for order flow, net (124) (131) (147) (123) (123) (100) (101) (97) Interest and dividends, net (20) (17) (18) (13) (17) (16) (8) (5) Adjusted Net Trading Income $382 $254 $238 $185 $278 $193 $208 $167 1Q 2022 2Q 2022 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023 4Q 2023 Trading income, net $6 $6 $5 $5 $4 $4 $6 $4 Commissions, net and technology services 146 125 110 107 112 103 104 107 Brokerage, exchange, clearance fees and payment for order flow, net (27) (26) (22) (20) (23) (23) (22) (20) Interest and dividends, net (1) (1) (1) (2) 2 1 3 2 Adjusted Net Trading Income $123 $104 $93 $89 $95 $85 $90 $93 Adjusted Net Trading Income Reconciliation ($M) Adjusted Net Trading Income Reconciliation ($M) Market Making Execution Services
12 Adjusted Operating Expense Reconciliation See endnotes at end of this supplement Adjusted Operating Expenses Reconciliation FY FY FY FY ($M) 2020 2021 2022 2023 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Employee compensation and payroll taxes $394 $376 $391 $394 $103 $99 $103 $86 $103 $96 $97 $98 (-) Cash Compensation Adjustments1 (72) (62) (76) (74) (16) (20) (20) (21) (18) (18) (17) (21) Adj. Cash Compensation $321 $314 $315 $320 $88 $79 $84 $65 $85 $78 $80 $77 Communications and data processing $214 $212 $220 $231 $56 $56 $53 $55 $57 $57 $57 $60 (-) Communications & Data Processing Adjustments2 - - - - - - - - - - - - Adj. Communications & Data Processing $214 $212 $220 $231 $56 $56 $53 $55 $57 $57 $57 $60 Operations and administrative $95 $88 $86 $99 $25 $14 $14 $33 $24 $25 $22 $27 (-) Operations & Administrative Adjustments3 (6) (6) (12) (7) (8) (0) (0) (4) (1) (4) (1) (2) Adj. Operations & Administrative $88 $83 $74 $92 $18 $14 $14 $29 $24 $22 $21 $25 Adjusted Cash Operating Expenses $623 $609 $609 $643 $161 $148 $150 $149 $166 $157 $158 $162 Depreciation and amortization $67 $68 $66 $63 $17 $16 $17 $16 $15 $16 $16 $16 Total Adjusted Operating Expenses $690 $677 $675 $706 $179 $164 $167 $165 $181 $173 $174 $178 FY 2022 Annual Quarterly FY 2023
13 Disclaimer Cautionary Statement Regarding Forward Looking Statements This presentation may contain “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements regarding Virtu Financial, Inc.’s (“Virtu’s”, the “Company’s” or “our”) business that are not historical facts are forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by which, such performance or results will be achieved. The Company assumes no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, and if the Company does update one or more forward-looking statements, no inference should be drawn that the Company will make additional updates with respect thereto or with respect to other forward-looking statements. Forward-looking statements are based on information available at the time and/or management’s good faith belief with respect to future events, and is subject to risks and uncertainties, some or all of which are not predictable or within Virtu’s control, that could cause actual performance or results to differ materially from those expressed in the statements. Those risks and uncertainties include, without limitation: fluctuations in trading volume and volatilities in the markets in which we operate; the ability of our trading counterparties and various clearing houses to perform their obligations to us; the performance and reliability of our customized trading platform; the risk of material trading losses from our market making activities; swings in valuations in securities or other instruments in which we hold positions; increasing competition and consolidation in our industry; the risk that cash flow from our operations and other available sources of liquidity will not be sufficient to fund our various ongoing obligations, including operating expenses, short term funding requirements, margin requirements, capital expenditures, debt service and dividend payments; potential consequences of recent SEC proposals focused on equity markets which may, if adopted, result in reduced overall and off-exchange trading volumes and market making opportunities, impose additional or heightened regulatory obligations on market makers and other market participants, and generally increase the implicit and explicit cost as well as the complexity of the U.S. equities eco-system for all participants; regulatory and legal uncertainties and other potential changes associated with our industry, particularly in light of increased attention from media, regulators and lawmakers to market structure and related issues including but not limited to the retail trading environment, wholesale market making and off exchange trading more generally and payment for order flow arrangements; potential adverse results from legal or regulatory proceedings; our ability to remain technologically competitive and to ensure that the technology we utilize is not vulnerable to security risks, hacking and cyber-attacks; risks associated with third party software and technology infrastructure; risks relating to the COVID-19 pandemic, including the possible effects of the economic conditions worldwide resulting from the COVID-19 pandemic and governmental and other responses thereto. For a discussion of the risks and uncertainties which could cause actual results to differ from those contained in forward-looking statements, see Virtu’s Securities and Exchange Commission filings, including but not limited to Virtu’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the SEC. GAAP and Non-GAAP Results This presentation includes or may include certain non-GAAP financial measures, including Adjusted EPS, Normalized Adjusted EPS, Adjusted Net Trading Income, Normalized Adjusted Net Income, Normalized Adjusted Pre-Tax Income, EBITDA, Adjusted EBITDA, EBITDA Margin, Adjusted EBITDA Margin, Trading Capital, Invested Capital, Adjusted Operating Expense and Adjusted Compensation Expense. Non-GAAP financial measures should be considered only as supplemental to, and not as superior to, financial measures prepared in accordance with GAAP. Other companies may use similarly titled non‐GAAP financial measures that are calculated differently from the way we calculate such measures. Accordingly, our non‐GAAP financial measures may not be comparable to similar measures used by other companies. We caution investors not to place undue reliance on such non‐GAAP measures, but instead to consider them with the most directly comparable GAAP measure. Non‐GAAP financial measures have limitations as analytical tools, and should not be considered in isolation, or as a substitute for our results as reported under GAAP. A reconciliation of non‐GAAP measures to the most directly comparable financial measure prepared in accordance with GAAP is included at the end of this presentation.
14 Slide 3 Major Market Metrics 1. QTD 1Q24 (Quarter-to-Date 1Q 2024) represents market activity through February 29, 2024. Note: # of trading days used in per day calculations: 253, 252, 251, 250, 62, 62, 64, 63, 62, 62, 63, 63, and 41 for FY 2020, FY 2021, FY 2022, FY 2023, 1Q 2022, 2Q 2022, 3Q 2022, 4Q 2022, 1Q 2023, 2Q 2023, 3Q 2023, 4Q 2023, and QTD 1Q24, respectively. Slide 4 Rule 605 Volume Update 1. Virtu Americas LLC Rule 605 Reports available at https://www.virtu.com/about/transparency/rule-605-and-606-reporting/ Slide 5 Update on Share Buybacks 1. Shares repurchased calculated on a settlement date basis. 2. Percentage of Shares Outstanding is calculated net of share issuances, and is calculated compared to shares outstanding on 9/30/2020 (Share Repurchase Program was incepted in November 2020). Slide 6 Analysis at Various Levels of ANTI 1. This reflects a non-GAAP measure. Ranges shown for illustrative purposes only and are not meant to reflect actual performance and therefore no quantitative reconciliation of illustrative daily or full year measures is provided in accordance with applicable exception under Regulation S-K. Assumes 251 trading days in a year. 2. Adjusted EBITDA calculated as illustrative Full Year ANTI specified in corresponding row less “Virtu management estimated” Cash Operating Expenses (see below). Adjusted EBITDA Margin calculated as Adjusted EBITDA divided by illustrative Full Year ANTI specified in corresponding row. • “Virtu management estimated” Cash Operating Expenses is equal to “estimated” Adj. Communications & Data Processing and Adj. Operations & Administrative expenses ($322M) plus “estimated” Adjusted Cash Compensation of $320M, unless the resulting compensation ratio of $320M divided by the illustrative Full Year ANTI specified in corresponding row is below 14.0% or above 30.0%, in which instances the “estimated” Adjusted Cash Compensation is equal to the illustrative Full Year ANTI specified in corresponding row multiplied by 14.0% or 30.0%, respectively. 3. Adjusted EPS calculated as Adjusted EBITDA less “Virtu management estimated” Depreciation & Amortization ($63M) less “Virtu management estimated” Financing Interest expense ($99M) less Normalized Provision for Income Taxes (24%) divided by 4Q 2023 Weighted Average Fully Diluted Shares Outstanding (164M). 4. Ranges shown for illustrative purposes only and reflect Virtu management estimates and therefore no quantitative reconciliation of illustrative target available for buybacks is provided in accordance with applicable exception under Regulation S-K. Slide 8 Key Financial Metrics 1. This reflects a non-GAAP measure. Please refer to slides at the end of this presentation for reconciliation to the equivalent GAAP measure. Prior period reconciliations available https://ir.virtu.com/financials-and-filings/quarterly-results/default.aspx. 2. Includes MatchNow revenues prior to sale in July 2020. 3. Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by Adjusted Net Trading Income. Note: # of trading days used in per day calculations: 253, 252, 251, 250, 62, 62, 64, 63, 62, 62, 63, and 63 for FY 2020, FY 2021, FY 2022, FY 2023, 1Q 2022, 2Q 2022, 3Q 2022, 4Q 2022, 1Q 2023, 2Q 2023, 3Q 2023, and 4Q 2023, respectively. End Notes These notes refer to metrics and/or defined terms presented on:
15 End Notes—continued Slide 9 GAAP Income Statement 1. ITG revenues and expenses included in financials beginning on March 1, 2019 close date. Slide 10 Adjusted EBITDA & Normalized Adjusted EPS 1. ITG revenues and expenses included in financials beginning on March 1, 2019 close date. 2. EBITDA Margin is calculated as EBITDA divided by Adjusted Net Trading Income. 3. Adj. EBITDA Margin is calculated as Adjusted EBITDA divided by Adjusted Net Trading Income. Slide 12 Adjusted Operating Expense Reconciliation 1. Includes severance, share-based compensation, one-time compensation-related COVID-19 expenses, and one-time compensation expenses related to RFQ Hub transaction. 2. Includes connectivity early termination expenses. 3. Includes write-down of assets, reserve for legal matters, and one-time operations & administrative-related COVID-19 expenses (e.g. donations). These notes refer to metrics and/or defined terms presented on: