VIRT - Earnings call transcript Q2 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning. My name is Michelle and I will be your conference operator today. At this time I would like to welcome everyone to the Virtu Financial 2019 Second Quarter Earnings. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. have that related your absence follow to everyone ask question to of We allow one and up to Instructions] you questions reserve one time [Operator question. a in the

Smith, like now go call Mr. Relations. turn I Head would Investor to of over the to Andrew ahead. Please,

Andrew Smith

Good Thank you, Michelle. morning, everyone.

future our therefore second represent may call include to statements, which our quarter this and may know, Today's were you uncertainties, released are and company’s be website. morning current events belief risks, assumptions outside regarding Virtu's As subject control. results are and available on which forward-looking the

Our actual statements. what condition differ forward-looking is materially results from and financial these indicated in may

to to becomes other risk description in disclaimers revise our refer press are do as and contained important on we the that on information any factors XX-K made new We undertake in the report statements information this based and update to review of forward-looking you filings. company, annual It’s Form not call available. statements or any to you presently note encourage forward-looking release on available to public our and

In be adjusted trading These and adjusted we to income, may addition GAAP. to in EBITDA net adjusted EBITDA not considered should financial net as adjusted superior and supplemental non-GAAP with income, as measures, non-GAAP measures to margin. GAAP prepared accordance certain results, including refer to measures

all of including all materials reconciliation measures as and our fees. this refers GAAP interest be we to any trading of exchange call, management well non-GAAP net the uses to adjusted these explanation brokerage, these related and net with to this an on how earnings find income of measures. in and as expenses You'll dividend meaningful, the income When information the income, deem used equivalent trading terms why

our questions. and questions with today take Cifu, your They Financial Mr. Officer; Executive and your our Joseph then Speaking begin prepared Douglas Mr. remarks Chief Chief are, Molluso, Officer. answering and will

turn call to the like over Doug. I'd now to

Douglas Cifu

Andrew. morning for thank today's and Good you, you joining call. Thank

per earlier, trading the share reported we earnings net million of second $XXX.X adjusted in on As quarter. of we adjusted generated $X.XX income

Market including XX% Customer Market was conditions lowest over retail which and During Making retail was the market impacted one business names business Reg representing the several particular last participation, XX% by the adversely NMS the names of of from down quarter, our first in OTC in in the levels participation in and quarter, years. our Making

diminished conditions, the well set market given Despite our to the internal and metrics, performed market compared these conditions. business Market opportunity our own Making met

go business will later, into the demonstrated more in Execution ITG upside during conditions I as as the the quarter. our market addition, outperformed Services of the detail it In from business, the had integration already

solutions. with the the comments made first integrating update commitment of additional to our touch deliver our I'm and service growth the integration an very transparency continued initiatives. about pleased and to some responded on technology, we as clients second third ITG client the customer to our seen positively I ITG provide share I quarter quarter Before very we will have progress our date, and and of on Virtu organic part have we key

service, on Virtu's technologies will, who a years professionals. were client of technology a if are grow global we client right software high the I've calls, right service great first, are and That hallmark how to marry multi-asset great and at the we're on Execution but the is their over to well as engineers, technology with unitary is have, these discussed the to which you neither was class people. because you technology we example stack, which of scale people, able offering level kind Services of fluent all able necessary, ITG, also maintaining as of a Both is sufficient of say, own. while

together, that industry and of building continue changes positions global compelling in and a feel technology, its and unique through going us committed unique training sustainably Taken combination truly is model like currently it's integrated secular to the liquidity. are strategically the significant and we and to we built benefit from expertise

We to merger. are prospect organic drive would excited asset diversified client leveraging the our revenue on an across estimates Virtu's technological also about our initiatives. and update growing global provide base new products I to the to class suite ITG of dis-synergies like of related our capabilities and growth

relationships initial client employees, the we're estimate client ITG are trending and We maintaining importance million hundreds our their of report happy every to of below to part is and from our ITG utmost clients. depth by earning extensive to that $XX engagement of in trust to value and the Thanks dedicated business. of we

fact, in In our suite products. interest of meaningful we've seen

the added suite For our broker-neutral for XX of example, the just announcement of with ITG, transaction clients we've new over products.

XXXX. Our base analytic announced late to ITG since client was continues in merger grow the

we report of transaction existing a subscription added over the service million X, on decision-makers on from from their the closed the key value resonating technology proposition short, revenue and have side buy is our globally. marrying annual departures. subscribers to that pleased increasing sell deminimis new with offsetting amount than since and March I'm more of In and of clients $X side transparency

report our to our expense synergy schedule that well targets. we of excited on ahead are I'm achieving

has combined expense the technology. to combining client sales ITG internal cross-training we have migration the ago, global us and and begun actively fixed the discipline system consolidation, with our consolidation forces our five transaction cost begin strong program by our sustainable made We've achieve synergies, engage educate sales client enabled working Since overall force to target also on including expense progress great our data with firm, synergy ITG the closing as have been progress our months they Virtu clients. Our to across center offerings and increase XX%. to to integration combined overall jointly

to we're our While Virtu. also will achieving committed over places XX actively hire to to since closed added is continue synergies people around We're transaction have the through in as hiring one and at people success, right needed. key efficiency having the and globe of and the the right automation we the

is approach to slide management on our capture manner and client enhancing in of by technology, to and drive and and us initiatives to products While to materials. to a integration integration, a interfaces revenue. in dynamic the upgrading expense significant client more growth are offerings also enables product more we integrated synergies, revenue set our referred and of the clear our support multi-asset products with delivering to reoccurring by are to organic X ITG's service execute in expanding X put, to driver which expeditious interactions Simply and supplemental deliver including experience recurring globally experiences class growth clients of distributed global other clients, each performance more scalable and improving

other are improving TCA example, EMS each For integration enhancements distribution. with into to portal creating we embedding and class product client two our of and marquee delivering and greater workflows by broker-neutral them products, Triton desktop and multi-asset efficiency

with class from offerings our Triton we As in Valor new market. launching of new have generation V scalability next Valor apart for and this the The us part new will buy-side Triton further somehow deploying driving functionality we of be a shortly. to global enhancement, will begin that technology Triton, provides multi-asset and of EMS features integration will other an distribution the in TCA there get set improved that

Virtu Pollina, you unique tell outsourced led of Execution Virtu's of Service by to excited and also we trading global are about outsourced technology by version employee. that existing class a Concierge a to solutions offer which powered Jack are our pending Commission trading leverages complete, Business, multi-broker ITG Head our of launch calling the Management We veteran platform multi-asset

Execution meet valuable a global is clients platform products multi-broker Algos a trade deliver solutions, only Services platform unique includes EMS client extension of our and products needs benefit operational analytics, all to coverage. in-house. solution CSA Virtu and and quantifiable class giving throughout trading is Virtu's multi-asset being Virtu's fixed cycle. the transparency provider our that ECS combined able with of and ECS and of life our and multi-asset network global as trading advantage with high-touch service and Concierge the global us or class scalable of multi-broker

flexible fits class the of Our flexible will service hybrid or needs scales be level offering able that full they multi-asset our needs, client arrangement. and with their outsourcing on-demand to choose

Virtu's impact in market this are metals As client we of that reduced enhancing FX, equity, and ETF, initiative, solution liquidity offer with to global custom access part global size improvements and income. fixed price

able for clients believe to global expand be recurring create We to will in-house. client we fulfill opportunities multi-asset solutions orders enhancements liquidity these more product to with class our and increase set, revenue

million these date identified and comprise to Taken actionable compelling and we're together, revenue million the these other to of of the $XX bulk initiatives and $XX we have synergies growth quantified opportunities integrating to steps initiatives. our you focused forward We We updated and these various these transaction keeping opportunities. successfully realize growth realizing look progress. taking strategic on to remain with already

results. topline at Looking our

reduced business against expectations driven Our and metrics the opportunity quarter, saw our line Market volumes opportunities Market in performed with declines so, decreased Making noncustomer customer volatility. and our Making businesses and set. Even market by this in broad

quarter volume in the While retail and presented quarter resemblance and of one unprecedented, opportunities the significantly market-making lowest to this closest third in less albeit engagement. years not the market second the bore of XXXX, with many

prior averaged We closely from environment. the more XX.XX%, quarter. versus U.S. X% volatility prior see consolidated quarter realized quarter's down XX% Looking were to that the volumes this and down

realized U.S. the OTC on retail earlier, compared were to equity and TSE volatility the volume As share Nikkei volumes similar engagement XX, STOXX and down realized quarter. and and with global XX% for volumes volumes the prior prior also Pan-European of compared in X% was equity over volumes, lower XX% down declined down equity X% I retail down on quarters down XX%. volatility the The the mentioned Asian EURO was with to X%

in and continues that seen to evolve diminution any we affects business share market not have profitability. Our

some Market we larger fact from of share clients. recently earned our have In additional Making

While the recent the July, the improved the opportunity first in continued of markedly market has poor several weeks conditions volatility. given overall market

Beginning year favorable around and our business the the few July, of responded last the since have of we the most seen beginning accordingly. has environment days

to look our We and opportunities for globe. deploy technologies products continue the to around to markets scale

Market flow issuer relationships approved opportunities interact the Recently or by Toronto for as Canadian us create order community. our we a and to Canadian the Exchange, Market allowing Maker Exchange with Stock activity Making unique the Stock trader expand and to with us expand were registered

in increasingly existing on options In Making block Also corporate we've the bond launched become our the deck. ETF Market out global build U.S., fixed have single increased of by front, Market to the name in cost our Making options coverage infrastructure active we capabilities. our leveraging and

products I'm full first the pleased quarter which Regarding since our sell-side Execution and includes ITG Services of solid to suite our quarter buy-side the a end-to-end acquisition. business solutions, and report

despite the the And million market resilient net of stickiness revenues $XXX performed business demonstrating was and the which business. with activity this consistent Services' in the lower well, nature quarter. were overall Execution stable is first the and quarter

mentioned Alert when Execution competitors the XX% volumes our declined block Europe and by flat; volume closing. multi-asset the while Services were in saw technology decreased this Key in subscribers made have our trading the the drivers the I service platform POSIT compared market-wide, the by of second increases the main Alert analytics in demonstrating of quarter to U.S. class quarter XX% as conditional quarter, to impact POSIT improvement or U.S. in we previously; compared ATS to XX% prior growth over block performance volume first were generally in volumes

business the core portal global trading about conjunction pending launch strengthening earlier, much with expanding especially adding of the were multi-asset and in by As how offering. class our outsourced desk Valor excited we TCA mentioned we I client capabilities with our and our Triton of are

results. call the financial over Joe? Joseph to Molluso turn to we'll review Now, the

Joseph Molluso

Doug. you, Thank

quarter GAAP trading net results Our share $XXX.X second revenues and million. loss was a GAAP $XX.X of $X.XX. included of income $XXX.X Adjusted the loss diluted for million, million, per of net

on the just ITG closed Xst, ago. March XXXX, Virtu reminder, months five a As acquisition of

The full quarter reflects first ITG. second include quarter consolidated the which results of

year. Services net quarter ITG income on for as results To segment included have apples-to-apples for if the more compare a Execution the included across trading adjusted were overall the basis entire the we

market merger despite was in business down that Execution adverse volumes events closing the was were by see disruption X.X% quarter-over-quarter can Services conditions market down and X%. caused face of You and the the the while these the resilient

volumes for reduction revenue Doug reduced significant quarter Market adjusted segment driven Making our largely spreads, segment. opportunity mentioned, reduced in driven diminished retail customer and Making period As reflected the Market opportunity particular realized overall by in this was ITG together The bid/ask for this from decreased with volatility the participation. decline by

for expense be Turning to expense synergy are expenses, outlook the and raising and targets lowering expense we operating continues acquisition. ITG our guidance performance to and strong

the Full of target already the XXXX, expenses quarter we year $XX synergies versus Comparing of operating expenses were of this ITG to share gross $XXX million. realized million for have full million. program $XXX adjusted original

on our XX% basis target of run to the XXXX. over a call, we reported track As realize rate were end original on last by of the on

of As briefly, over we XXX% now target the Doug mentioned end. to original achieve by are year expecting

full XXXX on guidance. reducing year operating million realized million gross $XXX for the million midpoint to of full year of implying to are We based $XXX adjusted that expenses guidance $XXX synergies

are We XXXX expense at the time a of the year in full to million million, also million introducing results amount for XX% $XXX the of $XXX over the $XXX increase transaction. guidance announced synergies at overall which gross for

$XX.X $XX million. was quarter, Net adjusted million for adjusted million of XX%. Turning adjusted the debt EPS and grants. net and compensation leasehold the expense of employee the excluded effective quarter City. of tax $XX abandonment income X.X shares We to to rent increased intangibles, million times adjusted $X.XX for a York XXXX, the stood $XX.X EBITDA QX, The was of EBITDA and used for and of back of normal due at X.XX% in to as stock-based the Diluted share results. quarter of mostly quarter end of the offices of interest New vesting to at related rate million amortization ex-KCG $XX.X this over our this write-off second of earned quarter improvements future

XX, million sheet cash trading billion debt. on down approximately paid and ITG equivalents. in we balance of $X.X of $XXX cash June On $XX including closing our capital March, we This million as of of had

XX% we on slide supplemental payout a since you XX% know, you the is in IPO time. our As dividend over track In buybacks. the see payout business cumulative share our period XX, and our materials long is can of including cumulative

cyclical have business stated view a long we times, payout current and many the as term. As and we over ours adequate is the sustainable

call the would operator like Q&A. I for to Now the turn over to

Operator

[Operator first comes Instructions] O'Neill. Richard from question Your from Repetto Sandler

Your open. is line

Richard Repetto

will report Market wondering the give Doug. morning, that results but some any increased into time My question good increased Making volumes, us be triangulate insight this Yeah, on volatility I having trying Do know did to a And in dollar I we're to it, Good difficult think its quarter. the possibility volume. were was obviously opportunity, think we to Knight transparency between Joe. old you tough would morning, some a as dollar segment. get And the because as be well Market that into more just could Making or retail metrics the segment intra-quarter? days

Douglas Cifu

Yes. a around a obviously in the amount in obviously making really that Making we're on our also mentioned all we with lot fair markets fair segment. It's the a point. obviously, metrics, internally non-customer track remarks very both because I And of the segment, detail but Yes. Market world of different in my retail

internal XX we measures. between different or so have XX And somewhere

be difficult do would it to obviously, So that.

of maybe available there's gross that dice And side, you I Making, guys -- kind information retail Market large notional publicly because the we If amount U.S. because slice that of gave necessarily amount making it we'll business. the wouldn't fairly are you enough it just would the and of be consider amount extraordinary there of on notional don't doing our will instructive to huge our an larger. be than notional think allows a all treasuries just a something the right, significantly market and be obviously transaction

of the that in a cash those you in profitability down impacts have participation. were right it pointed and out in reflect is remarks volumes aware well only XX% so as know let retail NMS Reg And point how names. that. in did I names and in out down now, comments that leading that. XX% here the and terms consider Interactive of public us The I've out OTC we make you're And definitely Brokers I do which puts what So of metric OTC and we my know,

the business customer pretty and business is wholesale less well necessarily orders NMS retail made has getting inherited a significant can with profitability. disappointment even from KCG. Reg Making And money. as It's Market impact narrowed XX% as -- the from negative lower on not not a have we impact, mean, because of that it very prior on obviously was volumes still a linear significant spreads dramatic it down, I a impact quarter. profitable, volatility come It but

Richard Repetto

that you first only Yes. the Execution of dollar guess helpful. be you side retail definitely It for Services I quarter, look it -- volume the volumes. be would my be, outperformed request follow-up so would compared related at to the would could when market the

million. it decline when on combine in somewhere guess But I'm trying that. just like around a you well that's something I look with volumes think you're attrition trading ITG as comments $XXX coming net along -- at or and revenue less seeing? XXXX the up Do I I you to because Knight the what a did a to in And Execution was the sort two all you I guess change X% basis of difference. the think reconcile average Services you that synergies that year just do heard when about the

Douglas Cifu

here absolutely it's of explosion remember to trying quarter volume XXXX, I pretty there source Yes. the much as from because you first of same just Yes. volume-related, would me get an the be the exact like numbers do. both No. think

my and -- had fourth X.X quarter. average me. QX shares, I So shares X.X that's did in the the -- million X.X to in excuse head, -- in we billion million And you came million but

segment the with lot performance written But being obviously, and really, lose a market the not very of the having a Virtu mean, the volume. of making maker drop-off we're market significant about to going business I ITG it's, this a so quarter. Services a pleased second Execution all So in really am there's I volumes.

have their it globally asset measure, would say distinct well the which continuation client minority. a and the they or enough significant really reduced pickup marry great and about of have definitely performance the about that you just the excited large the large over and relationships years. the suite from is that's managers Virtu game the; are the client compliment service needs. in turned with I here excited And you changing off. whose interaction and clients But fact that candidly with would global of had plans seen, large, know ITG And we've very And the can't on I'm that at of deep very last in XX Algo are and that client us pension I in names folks their proposition. one, the I think understanding them the transparency

liquidity We're very anybody don't side. top our market that is the place I excited buy that has unique about the that with And out there's that. our risk orders. central else layer we resonating there with in really It's offering think dynamic have something really on the of a that book it. like internal crossing from of retail

my the So in and of enthusiastic in got kind in we more a going if on proposition top cyclical you I I needs what's we're that -- enthusiastic II in really agency of client changes well-positioned marketplace really a -- to remarks here. in matters take Virtu unbundling be is business a layer world. being care the of best execution try post-MiFID to rather on a And good just the lot of think wait secular institutional seeing really

forth We so We're that putting couple why of trading. initiatives. And business. a very, very excited that's I'm about outsourced announced

initiative. going A side We're the Z press from the full to We offer buy the package that to continue can we and to to that have side. sell here

Richard Repetto

XXXX. Got down versus it. were I volumes just first half And looked

helpful. anyway very So

Douglas Cifu

you, Thank Rich.

Operator

Alex Your Goldman question Blostein from comes Sachs. next from

Your line is open.

Alex Blostein

guys. morning. good Thanks Hi,

benchmark maybe is, seen particular, the the equities like various from the we've and same seems Making Clearly to guess that But it favorable. metrics business line the in global at the swings all So business pretty underperforming guys. of been on has environment Market tend significant obviously, This you we to in questions. not is I the track. looking the building time first downside business

How confidence Doug guess that business? environmental-related me position as better for you you your issue comments of Making around position assess do help that moves these understand of Market especially that I your in So share all kind gain Virtu. help don't in see and kind competitor's a us are your to market non-retail-related

Douglas Cifu

to would Sure. trying the I'm Sure. a outperformed guy lot as I smart a out metrics in quarters of well. not point we've sometime be

non-customer understanding So a very geographies, And a a a I job complicated educate I comments what have obviously, and think all to done asset guys we volume the It to challenge do, is and global from difficult is. Thailand the lot lot It's to a which the I've we and I metric on to every said in trying for it you to we market thing really made particularly is business access, baseline a for this you -- right? in what the in to you. because know Rich, run and of repeat U.S. down not comes to is great to of different from share class the Canada I to side. Brazil have market

market Has seen not we and track What monthly we that we That Have is tell markets volumes and set. have weekly our maintained more not Yes. competitive profitability. I daily, share significant you the gotten diminution market consistent in can Sure. and religiously. the We any competitive? it opportunity some track edge? and is with

easy for to bespoke track us that's particular orders got very we retail in which of is our a because from retail, this marketplace, clients. In batch

data, which how do get that. you really do guys to should me appreciate and insight and obviously, assess difficult we that? We, should like profitability that that that. we understand look our what that. giving for be on can't absent know It's And you what very I so batch

and we and into hours we'll one had amount is up kind always suggestion quarter business we're year, consider quarter, half what really nice notional a the And good retail a side of a the our manner in sanitized the to describe that. really because last So certainly to but significantly like in could from open think FX you I first we're seeing Rich's the year. overall of nice suggestions allow on

very excited people dozen the business. has a great growth than of in I'm scales that it a So less It's about that business magnificently.

have prognosticating that more were that out impacts folks wrong. somehow been couldn't the business getting So of

about to ETF So Knight we're Virtu. our up a Asia I example, And need a because think be to there's Europe business, marrying for taking it. block excited continue it. great is test for and to of ETF of the and example with It's I our real of the DNA technology

time seeing institutional orders the first in Europe. Asia For we're and

we're going And out take as of well. bigger the so some to competitors there

So continue you… Joe some we of the to see benefits.

Joseph Molluso

second environment put Alex macro And how finer a third time of on Yeah. in right this we I is a the quarter the Doug to the modeling it macro think point But help making basis. of put just points was XXXX. sustained kind points environment on point the environment, low-volatility to finer about last right, a kind we because in of were good can just on

This six, below we The was of higher or quarter five vol to in days went eight X May. X. average to some right? because So -- a better realized little it dipped

is And of kind instance lower, the this they participation. these dovetail XX% shares -- then. the we just XXXX, I where volumes we then an you participation is what the wrong going statistics think environment that -- bulletin were last back kind volume right? to board of So number the available and the had with kind look if statistics retail then that extraordinarily share were you of compare where volatility versus at beginning you IBKR now just retail public of low macro statistics gauge time retail they OTC But way in half have

Douglas Cifu

and last great a it's which volatility, outside OTC a point measure cut you're is realized have month. are one to five the volumes, significantly; those we've it with was Joe the four point. on has one I of because challenging big sideline; investments it were exactly that spread It's the metrics. bid/offer here months going do in makes, half seen narrows made i.e. here get of retail which a worst was and a we've months, or – time April a a worst and of long of of OTC, the years lot the April to had in think

So I way guys show your statistics hour what know and wish do and could every pages every better to those long of educate going out the I every I and I here answer show XX try go metrics question you us. I more invite on you that's month. and we're through a day believe to you And to

Alex Blostein

slightly the the again, a better guess getting it And know any as I I of the to But follow-up how environment business like? tough XQ out Thanks. really Okay. given nuances responding what you weren't month-to-month. here. again coming looks just around given is the into a quarter be understand specificity guys -- will helpful to

Douglas Cifu

And August. the surprise no -- tweeted or great of it's in quarter day XXth -- I President had day, No, than June, what what you uptick big and that's a the a April July, remember second XXth in volatility. X, with so I five then a guess, I better mean May started the like but lot it And something a exactly July that question. saw kind the and six of Yes. was that like or today days consistent don't continued mean, we've maybe like. for I off trading looked so is or August volume look

volatility think perspective what of realized the burst And billion captured a the that's shares know a in I nine I equities market. volume was. activity huge from seen you've we And don't opportunity. exactly that VIX the U.S. So went XX, above

think the increase. I I the had used be lawyer. -- dramatic a So press you release material we in was to a word used

double that of a like digits lot So means results. many

when be opportunity six the machines has it increase And broken. exceptionally to to the Market business. in and five in or the lot set aren't working side. good We there's metrics. encourage that They're So frustrates President a we capture increases people the last us. the Making like associated frustrates for on significantly that a in our know volatility tweeting. That's like earnings meeting revenue They're days we well. thing trading keep our see it consistent. I more Obviously,

trading end the retail. I'm not very, significant in other seen in in It's capture We've of very the in all Asia. wherever in the the futures there's increase our Turkey a at in and CFD the big it But it has not locations pockets business We've That's and seen Virtu it in trading, China and retail it's FX in Japanese model day in where for globally, just particular, responded of way FX happy just with example in segments. resides. -- volatility. that

Alex Blostein

Got guys. it. Thanks

Douglas Cifu

you. Thank

Operator

Your Worthington from next question from will come JPMorgan. Ken

line open. is Your

Ken Worthington

Hi. multi-asset new morning, to and on maybe the the is global And can for when for guess how about then thanks about profile? you I who on clients maybe customer taking guess, outsourced service? to any you target start talked the many trading questions. talk ITG class solutions Good fit this clients onboard this that lastly service? first you might my And

Douglas Cifu

Ken. question. Great Yeah. Thanks

existing ITG transaction and really we've got Virtu and force, that I offering. nicely, have look this the we of the benefit target is think got the perspective think buy sell clients way from we've old globally can The force which an the spend clients. existing blending to anybody great have I the client of unbelievable frankly to and is approach sales great hundreds minimize service look the Knight so folks wants that new great now sales still their and execution. it's very it I my and that side is this global at on

want us provides the or midsize is either to But the entirely, that wants customer target of have. small complete that would outsource a to resources institution holistic solution. So key use to be doesn't supplement thing buy-side some they that a to a Virtu

So Virtu give we you, box. can in a

You've got fixed desktop, right? got an you, Wheel, we that research a can you've business, TCA, Algo business complete EMS net fabulous suite, on solution got the got is got you've an Commission ITG which pay so we'll We've connectivity, you've Management for your right? Algo old you've got

portfolio your alpha at and a a good broker-neutral in solution, to on taking is executed manner really should classes So that can outsize we're can smart the get ideas what and completely on you single-source right? we global asset alpha what which managers which and managers focus portfolio is completely generation equities let from you handle they come Virtu the and other that in be Virtu focusing so give

So not solution. only build brokers, why for you it has need I have but the folks do that gentleman you relationships have over broker-neutral years. with understands turnkey can been we to everything all – Jack frankly Pollina, provide and have either the the community. don't that about or ITG it capability XX research with the a He mentioned in business internally, the

with efficiency So we grow scale, then world we can think compelling Virtu for these think a a we offering. We we a really screams that think and And do it's in becomes and long-standing clients can that. clients. it

Ken Worthington

Great. Thank you. But business And FX mentioned the is you that is I well. unrelated. apologize performing this

reporting it fixed the year-over-year. segment I way think looks a you you're It bit. it was down was like the said up

how parts having think FX - is we first, do wrong. parts really FX But maybe success well see quarter? the biggest struggled what the FX? because of that in maybe business of part this lot I the doing is really what if that that's And bucket a you're FICC So

Douglas Cifu

good Yes. Yes. a question. That's

do – right. it way Now now FICC we of kind combined it obviously do the we the banks

it's metals commodities fixed and income which it's energies And then a FX includes and – product as it's products. well well. and So

think SKU geopolitical every FX the euro and There said the currencies think are yen, dollar nice the has traded. the pairs diverse where kind far pretty year. those of everywhere a but we to be of opportunities. as business FX where trade. go globally not had a very I place capture we in and It's and try of – can It's that terms we just So I are and out

well you whole to stream directly FX we bunch offering. As people the throughout do as know, of a

business continue did I And so well. commodities mean struggle. again that to

segment that volatility which has A in natural been gas – do and with has activity a lot of lack to is a theme. long-term the of particularly

know continue about that because just it business. it but excited kind – we're disclose of too we so granular our the don't – separately to FX anymore we very And mix be that's really I business. of we was the thought

Ken Worthington

much. very you Thank Okay.

Douglas Cifu

Thank you.

Operator

from from will UBS. question next Kramm come The Alex

is line Your open.

Alex Kramm

Hey, morning, Yeah. everyone. good

now. on on additional disclosure solution That's one workflow Just – I that for first the have you a of helpful. thank all analytics. question do

actually all of down. ticked quarter-over-quarter it First

sales if how million of we just $X Doug that of or business. kind help that a know comment made But new revenue I you already think that So bit business you us annualized guess you that what this wondering generated in give in then little better. it can so more I variabilities to model related to

a the but it – look So you growth annualize months, is obviously been rate that it's against the if few sub-X%. only disclosure at I new and if

can new of you what your as for some you talk wondering solutions? of kind ramp that quickly those how business So are goals you think and to that

Douglas Cifu

Yeah. Good question.

So a workflow to components if or segment fixed remember Triton will in subscription you model has to There's it. the business obviously EMS the two asset it.

brokerage will connectivity for subscription fee getting from a we're a So pay by technology the of times service. they lot and buy-side that paid customer for

As a well, is component. there transaction

will more you the trade more. through paid EMS brokers, broker-neutral So the get product if the we

And decrease we know ITG – bought very before money when this to service paying this we well. for so a as were because well, I lot of ITG volumes

Wheel EMS as component transactional of so matter the Net Triton and the decrease well. obviously declined business And ITG for Algo volumes business and business as the that the

a is did that So, just subscription quarter-to-quarter. very The really declining result volumes part of well.

and we lot a analytics your business. I was true. customers business the look of would we mean concern analytics, analytics yes at that the been I the as exodus have I'll question. separately. I this opposite has disclosure separate it the business The of of and analytics But Alex, provided look reason terms answer we In there not actually because a at disclosed

the back the market are with class end multi-asset People now product we've the the the into analytics products improvements about also being on one the Virtu made analytics delivery it. fed of nature excited portal the of data the and to

there. seen and uptake a significant we've so And interest

where business analytics it lot with of requirements. got is Europe lead is II because I and a that a particularly clients of part can you great in a MiFID think bad analytics whole you've actually debt solution. There are

incentive and be and so that's product. Europe analytics to -- And products so very a -- perspective, in pension foremost holistically, customers From right a fund that and management why going those are biggest it's business actually important it's gigantic because never dollar clients our are asset how it's some of first a priced. based on

have way a between to to X%, they're increased If me the maybe X% And I'd or modest very about to it five I is the be business. analytics the it fleeing growth it's is look was we to clients really was so, story that months there notion continues about that closed uproar actually of X% we grow I single-digit the Virtu it excited deal quarter ago believe somewhere going X%, four -- a and kind always at in here.

So that got I to of and structure we're market a think firm we're the we've hey now narrative of past better kind provide technology can we narrative solution. great a on and maybe

now the these in marketplace. Let's what we're guys seeing see have." that's indeed what And

Alex Kramm

is the last look of secondly, the quarters, for in or And the you maybe sure not Thank but $XX of helpful, of three to in for then payment if right. fair quarter. if opportunity questions kind just this range I at order same over marketplace, back flow All your that. the disclosures coming kind and million disclosures been they've around some per

flow kind decent that actually level order at of amount or getting So you suggests to order of a me flow. the that same of

the lower environment it Because lower, So the and set to has there's well is customers sort get some of sharing. asked payment volume the order actually really flow? is I dollar the for kind be understand the I having your guess are order that is, as then you -- consistent, sometimes your Rich an just up been about or opportunity and think of is pay flow to should question

net guess why is maybe your while down. just metric trading trending is clearly tell I So that flat me revenues trading

Douglas Cifu

happen even vast, Yes. very, lion's time for that great a majority rebate. providing a that doesn't than It's flow I'm but question we business in nice it's national weekly manner. we've customers them payment not to at best vast the and better a that of the price great daily, to monthly very is best trying the really the share price but offer you, order issues insightful. improvement obviously love business it the got really with good arrives structure one is, -- relationships bid of of actually XXX cases that's order and take on our improvement. And the the or don't or long-term a to be We're some and very it

share clients and whatnot sometimes by client, market set so And improvement and price is quarterly. sometimes monthly,

always in of sort if mirror you're the bit looking little So you will. a rearview

down workflow rebate the of of somewhat well is declines in to kind of So to retail number you're as keep Even that and was that even improvement fixed down is realized obligated is regard. a down or pay price in because order month the the narrow, as a indeed amount consistent opportunity fixed volatility the spread participation number. take getting like goes kind which of if goes disastrous it same April amount you're if a

you're of and amount gross that stays your if so if makes consistent sense. high you decreases making the And payments that will of kind

So just way net right? result it's be is And really actually it's more probably at on. that to so should it a going as interesting reduced, actually look focus really, and something a your we to

for you question thank Alex. So that

Alex Kramm

All right. you. Thank

Operator

Your next Point. question Compass Allen from will come from Chris

Your line is open.

Chris Allen

market-making. guys. then comments business before you to wanted it your but the morning it over for OTC the them, I them. dwindled bought about to Good in ask be Covering impact years, really KCG used around important

the we and you impact the going So should like to forward. -- how how here, it is are just why material wondering think business about what's I'm it

Douglas Cifu

And States about of. part of very, and very and got a Well, United I away in not are Market have our customer certainly a this never that and listed the pretty within do. still it's pink But share. me, what great obviously job -- and feet as from you Market inter-listed segment firm Chris, is the name a and Canada guys we've larger so we important. segment XXX we've impactful. XX market to And don't it Canadian some just Making sitting Making less you think they've think heard of done crazy within Its significant -- like stocks significant it's And stocks. bully

a have Nestlé You Tier or that one program. two sponsored ADR have Tier firms like don't

do hybrid in So we which traders, using inputs right? do on this algorithmic is and a also important basic Making tackling Making non-listed a with key securities side. customer the very Market a but what blocking and part human manner we it's for of Market So

our solution partners what where it It's well, an both obviously us part and of expect we capability. OTC provide important NMS the part have. retail As of is to

a very block very, we're as desk name that well. if go to an getting large well, NMS And So it'll it's as of important.

to what those we are and are operate. So very guys central how we

than dramatic volume so It's that may more right And not be going when volume. going to to -- XX%, to not again is down have pretty you're because declining it linear situation. be going and impact a the good spreads declining is and it's

do is certainly It important side. the what an still it. part highlighted separately I why we customer that's So of on

Joseph Molluso

also benchmark a just And I retail there's another for not it's them. participation, lot of Chris. mean

that of look So helps business directionally volumes. important it's it's an part at the retail and you when I also -- mean something we

Chris Allen

between Got like global. it. what Market going top three Making should And forward? Europe. at benchmarks the be it's we what looking used U.S., just and mean used now Asia I breakdown -- guys are I Obviously, -- Pac mean you to

the the should what of quarters. I'd terms we looking over be last playing at kind should -- metrics few You field of in changed say

you we can at misleading results. the like three businesses? to be So relative focusing think we the Because looked top clearly give to quarter metrics that all -- the were the this should on us about

Joseph Molluso

OTC volumes. most mean I IBKR of We indication the is volumes retail participation. important realized I'd use and spread and volatility And use think, the then... again, say some we I

Douglas Cifu

what's to Represent in happen going XXXX -- indication of segment. that

Joseph Molluso

vol then say, then in volatility -- you and volume not was Exactly, when point over you you I'd four lower is global retail look about two, and number if and are then global years number two got and and yes. volume metrics metrics And but volatility. past where one I things higher. like rates see that FX realized see level volatility I'd Chris FICC the and Doug's linear three, But how after think say better, quarters participation back you did XX% we

Xx bulleting see they here. OTC board were You what volumes

I to -- get but the is they're directionally So is there metric look in highly right that it imperfect, at.

Chris Allen

classes? was in of the example, the saying trading cash you're low volatility like And the bucket, within then every roughly can I -- in can quarter. FX a in you. one FX the your quarter, just weaker. little terms Thank but what is asset different last me. the a you from is bit like other for guys Because quarter, mean are was you But -- -- I better, FICC better what metric contributions in little mean I bit was obviously in futures size total low for mean some that the it's XQ. bucket low trading

think to just about it or trying So frame I'm it.

in So that within that a of for give will helpful. business terms line the size of anything me. be different guideline guys That's you it us could from

Douglas Cifu

Yes.

little Knight with ITG, and kind If we at a back the have separately you go bit. what look of - down before sliced that merged -- we and we we

between relative all They commodity changed the which then kind metals the segment fixed that shares much. FX energy are FX could and so of relative haven't see income And contributions. there you our options

like includes proportionate quarter the options, a also impact have of that muted index And the as should part me well volatility and I see in it and before family big negative where is commented VIX on to question obviously Chris. business when a Worthington fairly our name asked single you're options. going includes Ken that which

been would particular will that to if contribution the you negative so segment. And in proportional a that have revenue

broadly is FICC everything a speaking global not is that So equity.

differently. And report so company different a significantly Virtu relative from is the stand-alone -- when relative buckets not as size those

Chris Allen

Thanks.

Douglas Cifu

you. Thank

Operator

Your next Fannon question comes from Jefferies. from Dan

is open. line Your

Dan Fannon

morning. Good Thanks.

can well think July baseline the flexibility assuming? in guidance like Joe, talk backdrop or in revenue you building and in persists, about that for if in kind about gave So of we want have just XXXX obviously I to could in you're environment changes we guidance, saw of and guess guidance this Can year. any revenue you're or what as -- you reduced expenses XQ you terms flexibility of talk variability the I the terms about

Joseph Molluso

Yes. is I give Sure. why range. is I mean of that the the look, part within ranges reason think, we flexibility

the to is low a would environment gives portion to Can guide range. range significant below So us be put significant But be base in a variable. there? compensation -- -- the to our range. a persistently don't and this expense a that poor this expect like of out is want amount I our end of low of I we're compensation going it the in we

in of that's So much a the maintain. plan deal there. the processing we pretty we line plant on plan communications I -- data that think a a market There's great have latitude data compensation Obviously, set.

As the again, of Doug overhead we're process the aggressive very then consolidating down. in mentioned in side that that. we're And on carrying

know environment to environment would expect sustained like I the this sustained we where a kind it. in in like we EBITDA like historically course margin we I get think of would do a environment Of were this back or we that this you know, quarter, our XX%. would high-XXs low more. like I want -- don't in We to

do I can good So quantifying think you. I in as that's terms that of as for

Dan Fannon

are strategic that you seeing to get this or that trying for figure year? is for annualized Okay. of $XX back of start should numbers. kind And XXXX Just a a that to growth see then we that, those opportunities of period as follow-up. a million to million half $XX time identified, the that

Douglas Cifu

be going I history, right? is to in Virtu more in It's think as That's on that. class. live Triton clients Yes. it first using significant going portal now uptake so rolling are to liquidity. shortly. in see going Dan going for we've got have to said capabilities So where be time Algo Valor ITG/Virtu out multi-asset because FX a going I including our or and It's clients we're beta trading there XXXX to FX TCA we're the XX-ish

on XXXX. things they're as of working really to There's not So we well. kick to going think we're other number a happen, in starting until they're but

Dan Fannon

you. Thank it. Got

Douglas Cifu

Thank you.

Operator

from comes Cyprys question Stanley. from Michael next Morgan Your

is Your open. line

Michael Cyprys

Good the morning. Thanks taking question. for

diving side, a on credit. just the little more bit up following maybe FICC on Just in

opportunity you curious guys initiatives trends some in about of you're the the around How the just is you thinking that that within Just on what credit? credit. update seeing an How meaningful then And are set today? are about you Thanks. on thinking had maybe you as or as you And with us partnership place more capturing electronic, the trading you're that? know credit that MarketAxess. how I update goes have Perhaps well. can announced that about thinking

Douglas Cifu

when generated I Yes. XX months. do and the it with side portfolio at partner of a this in business that a merging have that Yes. not it Thank there a the has ETF Capital. candidly I folks number A wonderful whatever broker Capital on of with retail our they've But Yes. lot flow for Knight sales you run A of the trading is to that last years. for liquidity. then The a I lot RIAs little my we're is transition there. with of cetera do there mean, generated question. educated getting privately changed bit this Knight a to of two relationships, lot tune et provide is and from block

in lot surprisingly, that interest fixed market. the is Not of income a

a piqued a in credit we a that trade that venues one where -- And there's a we're can't If in large That so way? why there Why to other in the therefore, live that meaningful participant maker a can't electronic has market that all be and let's conclusion we're we instrument. we do So are and market us a led can revenue our participant now instrument. interest. and well obviously We're going MarketAxess good makers. do to there? way. income be That's fixed ETFs underlying on an a

electronically, are in what class. Obviously, of whatnot. different it's and terms going not big to the profile the a be. in X,XXX traded to done in Tradeweb to job bit MarketAxess to get a firms It's risk terms of like steps. that profile or a of that key will in and There's going names electronifying great have But hedging a XXX be that certainly little looks but X,XXX one lot I'm million believer asset like this

so building And are our we internally there. capabilities up

We in lot pricing my here there Asia. it we've so do, DNA take in a are significant runway both and Europe. bring that that WAP a view -- capability now. that we as significant and the capability in think there's I not technology player marry Europe -- the It's in of and a area decided But to with Virtu and to trading that U.S.

well. as now happening that's so And

think between we a base have market and a in to our So natural ETF synergy credit participant I electronically. our capability there our market customer the technology significant be

Michael Cyprys

Great, follow-up. thanks as just a for that. And maybe just

Now with evolving, set curious ITG, under industry across today, both of your out, belt, how see, your your competitive businesses. you you as just look the across

At And in businesses of business I competitive them. advantages, gives think the these together, here, guess, just or you, of you sort synergies both Market marketplace, now what customer-centric And that with Making. with, the... of do both the

Douglas Cifu

Yes. Yes.

You asked question. very a good Yeah.

and Virtu. bulge great Just they've of a firm a competitor got I other proposition Stanley very to time, all I a that have value long very look been was and different never And firms. JPMorgan I different clear, a at, firms bracket from be considered your mean, around large Morgan very for I've orientation the Goldman. these and

fact, them side. very a collaboratively customer we're those prime In then consider We back we with on the guys. customers. And work all

with firms. partnership bracket we So it's bulge symbiotic the have, a nice very

There at But that bulge maybe are significant obviously research. day, end not are the trying banks. on only. the not small global execution have that compete some really are are bracket firms either, firms Or of to

with. those we're firms competing And that the are so,

global We've invest hundreds we've We've got think resources, Making side. we're our it don't have. value a in they millions dollars I because of got scale. Market doing unique got of technology, the proposition on to that

second market market we is maker, answer in none the around names Because whole bespoke question, the which we any making natural all firms of to this of that in liquidity. of X,XXX in names, NMS importantly, a our part have, we've something own your are are we particular, most got bunch in time. where And world, equities Reg a those that and U.S. OTC and moment have

there and bit. -- or call OTC been little has Link VCRS we that so and VEQ the And

of So this. opt-in real have we've that melted that. all asset And of gives into doesn't significant that us purely dozens access have offering. competitor against, And are candidly it live. together, very that an now have other this that kind managers It's We to a competitive any business. advantage

business really retail have the in wholesale our don't aren't any competitors, this And business. frankly, because there

think -- positioned executional in completely we well end-to-end Virtu kind business. are virtually liquidity, extremely with, that of very do the global truly globally, we with is is driven. that a providers So service unique and technologies business as transparent for destination It’s integrated

Michael Cyprys

questions. Great, thanks for my taking

Douglas Cifu

Thank you much. very

Operator

in for presenters remarks. closing I I questions have no further turn to back over call queue. the the

Douglas Cifu

look you for very much your and quarter. to speaking Okay. our of the at the Thank time we interest taking with forward all Thank much. Virtu. in end you, third And you very

Operator

conference today's Thank you call. conclude everyone. will This

disconnect. now may You

Virtu Financial (VIRT) 8 Aug 192019 Q2 Earnings call transcript