VIRT - Earnings call transcript Q2 2020

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Operator

Good morning, and welcome to the Virtu Financial 2020 Second Quarter Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to Ms. Belevan. Debbie madam. ahead, go Please

Deborah Belevan

you, operator, us. Thanks joining morning, and good everyone. for Thank

with note Our morning that which statements, forward-looking on materially based released the on statements information and or were risks, events second results call quarter subject therefore, Mr. as our this Molluso, outside current regarding company's control. contained Today's to not and the information They made differ upon We may prepared and Mr. any becomes our are what's press and risk Chief Joe this co-President are, available. Executive your Virtu's forward-looking note co-Chief our update and our and call and be questions. to include will represent On public today's filings. you forward-looking other results new may do that uncertainties available remarks begin Douglas revise XX-K you report and review these we annual from of any which the call, take company, then to our assumptions Officer; to disclaimers belief in future release factors Cifu, description in may website. forward-looking we'll and Officer. undertake the Form encourage presently in statements available are to conditions and have Operating important to indicated statements. refer Please It's and financial actual

During today's results. and non-GAAP call, refer GAAP we'll to both

EBITDA accordance considered financial as to EBITDA Non-GAAP We our to addition portion how an consult not this measures non-GAAP measures income, term trading explanation to you'll I the the earnings well reconciliation to the listeners to call with adjusted see measures, And to as be GAAP. adjusted materials certain GAAP in turn investor superior measures. deem prepared with information meaningful of uses including margin. may we to adjusted supplemental as net to we call be income, and as direct Doug. this a in refer should GAAP where well these website In equivalent adjusted information that, with net measures supplemental to the to results, on over management as of like refer why of non-GAAP would as and

Douglas Cifu

Good joining Thank you, And results. our to quarter Deborah. you everyone. morning, thank for second us review

to provide for review those an before initiatives. second healthy. the of But safe I'd on say are of behalf performance begin, we all results highlights I open Virtu, Before at lines start and XX urgent substantially was still needs environment continues than our will on was all transition strategic More on, a deployed communities day. our and speed we adapted engagement, of base, Q&A. range to not and our implemented we've only continued like continues then updates Joe I to you markets a of our review respect and across then with this our update on which enabling first of over have liquidity sourcing, nearly a serve test a all to more our about sheet University on and globe algos, global are to workflow quarter resources also globe. expanded tools, protect improvements our sessions, home. These and up our We the hosted do crisis our our a of analytics wide programming us business, Virtu we to the have And which to from we of support I and it all and overall. across people, we understood in pivoted our our from and the we range am clients, technology employees scale outreach to work at look topics them clients. live virtual of early impressive that operate. by at how humbled the the To-date, skills the attendance and of how every and capital especially financial we XXXX balance how we to hope managing when that best COVID how we client with for globe. demanded that clients with us a quickly clients visible need will few. care client our desk simply of you seen engagement of address to We've wide from virtual practices over corner trading the to smoothly this in only tremendous teams levels name We this and

they We release how With on from or we day, are second in adjusted per landscape. services million for expertise products total support two market achieved reflecting keeping as clients quarter, our navigate can respect while the adjusted of adjusted $X.XX average delivered leverage. you our and QX, $XXX impressive of trading In them, We performance liquidity up-to-date the delivered performance. and see $XX.X exceptional million margin financial the Virtu in we and of of XX.X% to of of quarter an EPS a the straight $XXX informed income. evolving net Slide presentation quarter, high and X, EBITDA EBITDA in operating second million can adjusted on details structure and supplement

has than July's also As with see million to quarter performance $X.X strong adjusted the daily XX% continued income roughly our and per average third $X daily into in average million day, will the Slide in up you higher of XX% the than almost range net on XXXX, X, XXXX. trading higher

levels segments equities, historic making The results are behind and across growth force making initiatives. our these results the robust that organic driving averages. U.S. continued volumes higher remained most progress trading global of we in asset higher significantly classes, strong encouraged our than are importantly, market engagement in services are the execution We retail from and

up trading and in volumes, slide about three volumes, the Average with QX. to than higher it than average of almost historical Rule XXXX The XXXX QX and the XX% at volumes in XXXX than volumes realized as prior the quarter, from year XX in of daily and equity nearly As nearly full now XX% retail for engagement XX% equity all S&P remains five, were U.S. robust average. retail on higher although of quarter XXXX witnessed averages. average QX, trading continuation quarter by evidenced twice XXX% elevated second a down higher volatility the XXX of second U.S. illustrated levels we times in QX volumes accounting daily XX% year and the combined as

well volumes assets. share of is Rule broader new the this the year, sustainability morning, in overall this up opinion structural volume, retail up consistent market as at this slide been And a elevated As has XXX net retail roughly posted our industry you percentage brokers continued There Virtu which accounts, have and significantly in new volume been short dramatically change. engagement. has trading also retail of seen we can is XX%. growth see much levels but media of while itself as is activity about the speculation a and not a phenomena term in

been the activity of long factor, also secular a which a accelerated contributing has events part by from retail year. are been While home term this has of increased the trend drivers work paradigm

posit decimalization free options as We major transaction cover segment, or in many feature dramatic in levels broader a and the a and from phenomena energy, and first well on in QX Precious global also price of decline for and volatility half we matching and seamlessly move -- not client other factors for this volumes reducing unprecedented starting but investors. access listed and participants. securities metals, offering technology. orders China, and generation to trading are new markets million we results where Joe QX. and zero handling cost, continue and over In we democratization industry the of cost in in the share will improvement are then which faster foreseeable Despite milestones, ETF liquidity of posted launches etcetera markets the provide e-brokers, a highlights in volatility the algo the negative the and to overall making in made and among transparent, a services a both in now inter we financials. the been for commission acquired frontier our user alert parts segment, our last business, border been days, on another spot testament late a currencies. saw sophisticated large is markets investors as these organic liquidity easier several use. we with term of long the the are a platform May, Within such Canada term U.S. record large retail and we commitment Hong equities impact that market to from has trading long more via These same shifts. business, has continue access continue and and to condition of market see in XX% the different intra-listed the and It NMS we provide commissions clients electronic value systemic we the block field of phenomena. long market of improving implicit volumes extreme changes to we notional volumes XXX the client global historic the XXXX. April. our decades benefit allowing two in million for transaction U.S. saw future. latest retail $XXX Europe posit incredible alert. experience up headlines In are by will trading sensible details other of culminating factors structure home, This XXXXs the prevalence a the decline activating ITG, executed priced encouraging in through the cross execution Canadian I’ll Australia we of trading Long to we with U.S. contributed market and to a ATS, by further explicit benefited $XXX more which believe the record quarter shift placed fantastic sources due was in retail year, years. term to U.S. traded long work by making crude start, for in the expanded of many Although our futures policy Kong, FICC each security in above our To dramatic market rules, in developments and order opening recognitions. prices block from days engagement. in currencies. with and market initiatives the had the much quarter. new all not focusing major Reg when strong of engagement and In nor Japan, transitory base, new are access witnessed at a Today, to before this These XX% building Reg segment we product leveling playing days and record our In to of saw

to Algo featuring Survey of Most Finally, top our receive execution we providers. the our accolades algo Trades score trading in Hedge earn Funds recently, other tools. Global on algos XX the continue frontier Annual

market's While our of this to benefit the as quarter. will like retail making elevated new well opportunities activity, existing as continue baseline market level business from

In of compared segment, organic over as global all X% income making in businesses, adjusted the corporate you half ETF of lock XXXX, million of trading global making, and in investment strategic Our trading income included these alone, market adjusted Slide million contributed Virtu's net an for from options the seven. on app are desk In which team of bond issuers our trading XX continues impressive half the XXXX net platform, expand offerings $X.X quantitative raised trading Virtu to which first more $XXX to the deployment and and has or markets. our initiatives across has look like launched of market see our continued can strategies our we initiatives equity to services of In towards of capital results. making our end now the to XXXX, of buybacks. first Capital corporate into VCM most Markets, billion as markets contributions initiatives execution in market year, meaningful via last organic the the tap public equity already

repayment $XXX an $XX Match Markets, This CBOE used the addition to in completed of of the is further we Now down to the the million addition, approximately total debt paid after be reduce the incremental Now approximately $XXX in in proceeds In Global we tax QX. million, proceeds, of will debt. million first Including we quarter. a to anticipate reduction Match sale

As to We we these decision have force we that specific committed to to forward times. stated crisis year. given the continue have we people will publicly, no our expense it later remain support is to return COVID our targeted guidance in our plan as trying reductions during this

Our priorities I'll Joseph to demonstrates operating strong performance and XXXX now far our continue over strategic our to further on in business on leverage enhancing our give financials. will our scale who We turn global and reach, remain our initiatives. Joe? the technology Molluso, model. thus call organic our of our focused Co-President, details the growing expanding

Joseph Molluso

Market compared QX and and against indeed of our quarter. declined XXXX earnings quarter were both Thanks, of QX. net and earnings respectively, second versus normalized the income above diluted net income historical last $XXX the Adjusted quarter share segments outperformed GAAP quarter was GAAP record this realized per declines $X.XX. and share totaled services execution to totaled $X.XX averages Both normalized and highest Compared $XXX and the XX% our Doug. all record million, and our well trading ANT million. was In operating per second quarter, opportunity. income million $XXX behind net XXXX, volatility. making was segments just on to operating XX% of XXXX

hold any force. any this including As in noted previously, on we have expense put dramatic reductions reductions year,

first in as ANT adjusted revised includes comp remained XXXX year provide EBITDA our with of November. This the all-time of expense for on for XX% call an high. of year-to-date XXXX XX% our margins versus fiscal roughly half will percentage operating We margins very ratio XXXX. XX% guidance cash a operating Nevertheless, strong,

decline compensation year, depending approach year-end ratio we of the We performance in on plan. have and expect second to visibility this half the as year-end with more

at the million this by an would As debt Doug debt-to-EBITDA quarter. in paying consecutive Virtu a shareholders sustainability term mentioned, like the at times. environment. by an a common a our QX, ratio year We This end debt million, we is and Further, market and additional dividend $XXX expect return of our to XXst and $XXX you we of X.X the stands our testament capital this, reduced reduce operating long our have as expect already business. remain inherent attractive to to of leverage, committed this scalability marks truly to in XX% delivering quarter regardless our

Q&A. Now I'll turn over back the for call

Douglas Cifu

to that, entire their recognize and times. Joe. would their for to challenging like ready spite ahead. the for we've of work step opportunities first of And will Virtu hard question. in up be happy I the I'm questions. Sherry, proud these you, team to look the Thank take what now and congratulate we unflagging energy with accomplished forward to your

Operator

sir. you, Thank

Okay.

go first Rich of is The ahead. Piper from Sandler. Please question Repetto

Rich Repetto

and the Doug morning, that thanks of, Doug. Good Joe. regulatory the Yeah. for laying And guess I Good out timeline secular the structural morning, changes helps.

can talk maker? performance the Virtu bit at in Can talk legacy, you the market any qualitatively pretty the you is happenings I in just of about little results. whole above exchange So the least guess at looking market making, of inner quarter astonishing and again, a

Douglas Cifu

Yeah.

the thanks So, for Rich. question

is to, as the business, alluded which we our that's you GETCO making namely market the facing business old nature across geographies. a and with then is business, some together. we night market have, great business the old business in And the business put a within a night a -- So making business non-customer asset class of legacy customer of market i.e. which business legacy global kind legacy elements and Virtu great, have

have, if best basis that the history separately half We’re the reported a non-customer that for standalone on have that in first would where business. firm, business had that been

around scale businesses in in obviously the we've those geographies. business is run believe currency. commodities it particular proud equities and Virtu, a clearly everyone's focused very legacy It in asset customer to the first with just GETCO phenomenal XXX, FICC home we But So, a and a volume global improved. are retail well on that very and materially half businesses, It's run. classes, we're market it's and had across does making, phenomenal combined legacy

returns. So if point to and of again, market -- and the invested heavily would is that strategy structure, of infrastructure all to we here leverage in that you -- of will, across market technology part significant continued out market to reap the all I our and making business be of understanding segments.

just really the and continuation multi-asset it's scale that theme provide of these enables so a and of And a us having marketplaces. multi-currency to platform different services all diversification class, these

kind really really, businesses. business hard those this on you all it's amalgamate little we guys to year a been it's for a the it, for strong obviously, to So so outside see phenomenal of but now,

Rich Repetto

Got it.

peer it pass-through And there's would tell well. opportunity sort as question. an organic is about working some second that out get revenue the but what Okay, in you're order equities organic one It's say in The big break Doug. to me your that a know And the talk equities. we because on what for the flow. me just at I'll thanks And options to or I you talking tell customer for you in there. breaking order would more how growth guess. me when there's the out And than I payment in or marketplace I options initiatives relationships, know you payment flow move of what it for is as about looked the you for back of see options, double jump to paid they pays almost into can have it, to pay in and competitive but payments,

So any color on options, I guess.

Sorry…

Douglas Cifu

and Citadel options Susquehanna, great of yet. obviously we're of on to that don't amount compete them incumbents compete right there's equities. Yeah, as we opposed and rebates equities. We them in are board. Obviously, with with which in cognizant options for not cash the cash paid there, firms, you're the no, obviously, two we're And are

calls, As more equities And in firm not said previously, built I've then Vinnie's cash of from on an in commodities background the a my we given that cash partner business. these was were and perspective, our options kind firm. equities,

an the a firm take ago to an That environment parallel be architecture. to competitive level would decision in to calls can an Apple different. order enable as the important of if us a stock, effectively individual because of instrument thousands look that many as be environment, at put and in years So We obviously, the opposed in very and simply and is an Apple different you strategic a strikes, couple across made literally level thousands you it's DNA effort time instruments. one to if look at quote build exploration

the of a us type than environment brilliant to an of people got that. dynamic do to in architecture how So cash that We've is It's different be seems not environment. equities to materially indecipherable competitive that some here.

so be business, group it To in that eight of would the it's across accomplished. a it same a options the I'm revenues, has the in It's of of But, the we're out have that very, larger obviously, kind -- there. other of any stand the now even getting already names generated and half. where And major it year this we've the But smaller. year, well. billion an business. looks is be nearly gross proud what fact architected very first $X indices that handful grown. -- the Right, business a given scaled figure operational because way, equities It we cash need be in to we are we not and competitive, is single in as and way

New We pass have We between and Chicago the the have within. low infrastructure. obviously latency York,

we to competitors have brokers there, a to as the the environment. infrastructure than I participant two be number would three So relationships four the all happy that major long they entire a said, down us with of we're it's And and way have number and because mentioned, in leveraging marketplace. other the you the Virtu be

I a spot where think. quickly, So become could comfortably, can very it's we three number relatively

And over key five what firm's years. the do one, three, next driver growth two, so going a certainly, it this for is to

Rich Repetto

Thanks. Got it, on that's congrats phenomenal helpful, Doug. quarter. And a

Douglas Cifu

much. very Thanks

Operator

question is Ken Morgan. Worthington The next JP with from

Ken Worthington

good Hey, morning.

for they've that and a the because to Are and higher these initial consistently launch Virtu costs? rebates what startup curious economics you the evolving. for I'm do volume you better about you losses symbiotic changes really trading how to costs? relationship and their lean overtime of is the less as you then question. launch things to clearly look activities into is like I compensate the MEMEX. of new nature And And regularly, more at products. tack of of demanding relationship? or of it new So of are We're overtime, between symbiotic exchanges. I'll launched guess on you products, getting you've the economics are got for the Virtu going support this command the you are these last to in phase And part higher sort Are startup your generating your able What

about So how their them go you thinking for are into they as launch? support

Douglas Cifu

obviously about I'll MEMEX. question. talk Good one I'll first take Sure. then the and

think really I to So the it to the products, us partnering with answer launch with world the around exchanges. depends exchanges regard on

provide. United product, to regard we bring States. So a this we and they they'll States. can in prices as come and Europe do in the trying United of we in collaborate terms the side to futures business And scale the out, we attract Asia with two to as can point the that do obviously in Europe a the this when as particularly provide in creating it Asia we or us you do to natural in equities interact doing liquidity attractive with in have liquidity product because it I'll and to with the in exchanges the major then much so our and of in launch here. two with look We alike new to we're want they U.S. mentioned, them exchanges, done futures and We've liquidity. programs exchanges Asia,

business creating liquidity tell the the we of Switzerland always we competition. to want are be so, that people I And provisioning. in

whatnot, and So deal market although, I've had and around my we're we exchanges data with commercial them. differences with

what make an a rebates in of by and are the HFTs cognizant that they it terms subsidize to form an investment willing -- is as how that And what the back our and that need beginning, Ken, the depends are of the I by the to may economics the others marketplace is of bunch create the off product they matter, In to we fact that trying picked liquidity get and and modest of typical see bouncing and to exchanges that, really then provide forth associated to cost And mean, investment that best there's a on -- we're in competition. of the do in prognosticate need terms come And and to with a will between exchanges. with up be, a we that. what our sort reasonable basis. make

So dollars It's board scheme completely to because to an on member exchanges trouble then of It's day speaking be a make we as I of regard me to good create I With investment. collaborative ask Virtu, something I'm competition, lose I'm in never don't utterly in around of MEMEX, always investment. immaterial willing again, tens a but and I'm thousands trying mean, MEMEX willing say stupid. try grand I of only people But we behalf make partner material. the with Virtu. per and to world. an get questions the to

venue to best U.S. great a founding the would extent, say do to to disruptive MEMEX. be to CEO, cost, try somewhat would market be be we're execution believe will We whole predicate and member's have is advocate best is behind product mean, Virtu requirements. have transparent behind to not subject provide Jonathan we that investor we MEMEX an regarding will, anything in a create what That's ask you for low I equities MEMEX. that I our be very stupid. should would the and the we Kellner an my would a about Obviously, in And interest the him thought a the business flow in shareholder and obligations also and in to MEMEX. clients proposition So execution. Washington. best great

always be cognizant regulatory will obligations. our of and We respectful

in those do amount MEMEX flow obligations. certainly, regards. post violation We and discretionary to to not So go have those we're order fair going TI a of would here. go in of And

And of to execution going possibly MEMEX. supportive our so of the can bounds do everything to best we we're be within obligations,

JP have banks what Jane frankly of to partners I scale scope big ask Jonathan friends our mean, and all there's You'd Street, Citadel, Flow the operations of But our given at a or our certainly, projections to and all institutional Traders, of tell support We the it. in MEMEX his initiative be all be going the the are. Jonathan same and behind we And want see, et thing execution best successful. team everyone's want his cetera And Morgan, lot all to again, MEMEX in you to to requirements. subject supportive.

So I'm a in very, value ability the provide voice very optimistic about to new and its to world. provide equities

Ken Worthington

that trading, products do rebound pullback of institutional starting to many retail since the slow volumes, the Thanks. And been you is attribute then side or the that -- is trading industry are indications the Are down. at Great, really slowing signs COVID. activity awesome. seeing like a all? retail some in sort the you institution -- just on what institutional there's in more is There of divergence between which the and trading products? institutional institutional pronounced And

Douglas Cifu

a market certainly, question elevated it's overall have volumes Yeah, good and this been year. very

’XX is to again, relative pullback ’XX volume along a in levels So and lines. ’XX, and those things

So, happening marketplace lot you trade. they sometimes of if right. what's April, hearing the in we it's days I isn't the markets difficult March real really the to institutions real and mirroring think during the were were what of mean, will, look, I economy hard a -- dramatic certainly to

lot -- where So would were I of a sitting what on managers think, this end asset our trying up larger sort see frankly. was of the to sidelines

as as marketplaces trading continued those of secular of activity not my retail has that change And so, And I along change. I market. retail and a you said well, overall a futures in see an things we did is that other see think explosion In percentage a cyclical of remarks, as lines.

accessible wouldn't to to micro And these launching some -- others retail. be to are The it see so surprise me to CME we products more make micro going if e-mini runway. them and started

I So, be support marketplaces shouldn't view balance still retail healthy flow. still and kid institutional. these that a gorillas, I the the we and going But we move institutional that look, think ourselves. investors in that my XX% there's are the XX% of to mean between XXX-pound provide

folks great So, CNBC the certainly retail is hedge and and pension large for about the and talk think dominated a a it to managers. this funds, at on is of the I funds marketplace our end asset still business. But like lot by day, whatnot

Ken Worthington

much. very you Thank

Operator

Please Jefferies. question is Fannon from Next go of Dan ahead.

James Steele

Thanks Good morning. This Dan. filling question. for our taking in for is James Steele

to wanted it new obviously, if this a this a due just trend. the of take engagement know any order potential you're just I where some that area curious levels retail, out might proposals. regulation risk highlighting I'm is to of of there's impact? an back highlighting temporal of article Bloomberg flow reflected SEC's power So, to distinct and

So just outlook? curious if could [Indiscernible] that if of and about broadly kind then characterization you talk you the just more agree with

Douglas Cifu

Yeah.

folks NMS, going think the the do. of mean, is context kind Bloomberg regime -- Because on. a mean, point, I have articles lot I frankly, they're missed which right. I I of don't as XXX Reg think embedded in article what's the of these just the

some orders now. it's And offer. and not the missed best are for So years And has in price marketplace. and XX of price the quality XX% of execution is for the I over by that FINRA bid order for to folks is improvement. years. fascination the examined codified with flow" paradigm off because think it's This national come improved regulatorily of SEC exceptional competitors over to of what been amount "payment the XX been best and and new the Virtu

commission we That's So, paying $XXX a are investor shifted to the receive. retail market pay provided Right? the markets any the Virtu and And National are and quote, happy of half and in my get improvement the retail institutional market receive investors they're folks the math Citadel, so better headline. price at you benefit, a you receiving commission. million price millions can of access NBBO. to terms value the NBBO of prices did, Offer. do And was pockets are that can than And makers directly over roughly the a of so, to Sigma Bid Two or the if Susquehanna XX% of Best did U.S. Best investors institutional from zero we're into the equities don't And, they that of investors have literally off what as dollars billion friends a improvement. that

you article end tomorrow. this, understand environment at the focus. I of that says, they day, there's that the about SEC, under of a But a So, perhaps type any I but Oh, statistics, a Virtu, that, markets this of that and politics reporter highlight looks on go headlines what of it everything half and try than the that. an Susquehanna, at go and we on for well. dynamic the spoken it, can There's that XXXX. money, to will improvement pension can again, that? Citadel, in understanding I'm opposed the some caught in that. and first about billion of to price and with to And take and of. manager. at improvement provided wrong price lens to have nothing an looks there'll now price There's of regulator wrong nonsensical applaud system asset concern call, on this I through Maybe that I bet. say, iPhone, my as that right at listening large reality Sigma at a the why length be computer, and get get article is. which aware environment, the zero with or they some look don't better political it's I'll of no $X.X the regulatory the fund God, the can as I've we’ll What's But obviously Two see that's

James Steele

Thank you. Understood.

Operator

Alex Next UBS. Kramm question from is of

Alex Kramm

Hey, good the I mean, little morning, they're nicely everyone. a elevated levels. color Can you these on and just still are give us down a what But from very bit obviously, July? XQ. in you're seeing more bit

the maybe on execution what asset side making So, what the market, in by classes some services, seeing Thanks. helpful? of really retail, your in be you're will and in businesses, you're seeing

Douglas Cifu

Yes, good question.

monthly the into provide it. guidance to tried and you a give we yeah, guys So, there view

as least And and I results my elevated highly I XXXX XXXX. so look, at from I still mean said are it's in our mean, script, it's,

significantly dose than XXX continue a higher is we volumes to are see so, great. historical, of and that U.S. healthy volumes equity And which

mean, the the the in So, it mean, and gives seems I rest I other we're runway a there metals don't third I be to and fundamental would real seeing, a stocks days. us But by of and a volatility I'm that investor don't buy advice. also of year. quarter again, lot not of any I volumes point I kind into precious of interest episodic out these and asset classes. stretch give imagination. the investment individual

corporate seen seen time its and real maybe supply my then of not we lastly, the business, increase income And now gold of there a in had, significant in which gas that fixed of business, or We've acquisition particular. continues ETFs, volumes And that that's we're and the ETF Again, focus related Alex income in again, and natural ETF and participant related. on because the people to the some natural silver be volatility fixed we've great gas fortunately, re-platforming prices in weather in then. corporate a and so, real increased focus. some for fairly first Knight,

are from those the And this benefited on of well. the emphasis options Again, then by pointed, that's XXX. thing overshadowed to And gets due volumes. elevated we've I of some last volumes lot maybe highly as a So competition.

great that two now I there service. think and the and provide and great market obviously, I makers option XX there's venues great some mentioned value

and the initial the our single will, to of leads it's U.S. just the the from of class, COVID if a asset results U.S. volumes certainly of volatility equities, July. crisis. in just saw just not all real volatility it's that you of compilation, the and April of end tail a shock So, not of kind sort not

amplify as And it seen going results dramatic bit and at the little seasonality years. been weekends. but guess a the sure dramatic we think, on in right. as the is a Hamptons to of off. that ready not Hamptons it be quarter, business well, really so helped may I I that, But haven't as some mean, in and typically, fall hasn't I there's encouraged prior the see not in I'm really people the second I'm but summer the that you

Alex Kramm

I Thank look where Can organic that volumes I quantitative. there the sort of any how bit, on is contributing us happening opportunities, And you that. there's of one update then stand business, business, can an kind been shifting when for of those internally Maybe you more on gears on market and may maybe little your between a making just much other of great. list the cross What's is efforts, if give retail things institutional Okay, you the missing your be at business. a put that that? you just that number efforts to that?

Douglas Cifu

guess is Yeah, point. no, why. opportunity, class, or don’t that it's great organic I I that's a asset consider new an if class. you a don't asset like sub know It's I that will, not

that do. So apologize for of a part I Certainly, is that. keen important yeah, what we

So example, money run at offering Capital the business, for that our Virtu Markets friends our business.

have we've really most those We heard share, to to or an would research, of the ability come don't One why is issuer of of market companies before. Virtu? we probably I got internalize orders. what Yeah, but never cross have the, mean, us these

corporate And because and I'm and here obviously to understanding selling in $XX there's market issuer, million And we've raise cornucopia cross going to internally of they're be business half so price so one, have run fellows that any a if that's of this internalize structure. because a to not able and it tool. you the stock, electronic can your you. secondly, could say listen, of going and to powerful came that we got, frankly, cross here, But products that good I'm for a impact flow

wouldn't number. Virtu in have what it probably business, my a market to the and significant don't institutional head. the the part i.e. maker. and it's But of Market both I the that, business, anyhow doing we're ATM do a it I give yes, we helps So Capital

Joseph Molluso

growth I specific an zero, can opposed you're grow and sort synergy, then would internal to of say opportunity is to number. revenue that going you Alex, to it like organic as a an that call

Alex Kramm

Thank you. point. Fair

Douglas Cifu

Thank Alex. you,

Operator

question Rosenblatt. of Next is Hill Ken from

Ken Hill

Good morning. build on question. to I that wanted last

initiatives the new Just there. about talking

X% X% organic up it first was -- contribute in about mentioned, You half. the

quant than X% I areas blocks businesses think I that's from between and macro better might might normalized legacy little in maybe? in there. factors much capital down What markets of environment? in your play I'm nitpicking I'm XQ that kind the curious options a and worse how But a strategies, just the a role know perform bit or ETF more

Douglas Cifu

is it. I in proud of you're percentage year, that so you concur the nitpicking, that. the have that A smarter answer but answer like for would half to of it, I'm the Yes. I I recognizing business the hadn't of million can with know characterization as been the very Thank It I a that. of give your question, because of I'll larger $XXX And still already. rest well, you guess done the you first

long-term. It environment. look, business a it as has year it hasn't is contributed normalized block for think, as I that's this built to be would a have certainly -- the sure. business nearly the contributed So going benefited ETF global But is from much in volatility,

that got We from to people What some there added have was transaction the We what and importantly, distribution. don't distribution. we is most Knight And Knight really, understand inherited great we've have technology. we people gave ITG really them. and great us

need thousands want of end know ETFs. and now who screen that do size are, we who We users and than liquidity to exchange, they are. know that we have And liquidity, larger they

RFQ that because would have heck our Virtu the got know who have So we Knight we and the thanks they were. we've to distribution, business, wouldn't we plans pension European ITG folks, never up friends former sales environment, in colleagues lit from and have

Now lighting us up.

doing for obviously the a sustained same long, everything else we're with is that opportunity thing and And So there. with frankly, options us.

a those we oriented, mentioned would but it the quantitative world. adjusted overall around in of probably environment, none is because certainly haven't we and style of all, which slides strategies not the normalized dependent is the bringing the taking last more at it a really income. right. is Knight That percentage as trading in thing So represented, can our it about have net talked slightly And

to world the continues and to outside that happening grow what's really it's So expand. and

Ken Hill

detail up you get to just deemed MATCHNow really about is non-core to those the MATCHNow that the and as My I'm wondering of you follow to think assets and of kind rid decided for there. decision Thanks that. sell is Cboe. on

in You decide facilitate about I market what a rid to was mean, that to better that find keep the like other positive. get like that home and maybe decision it past a that Cboe? that assets the might of

Douglas Cifu

Yeah.

specific. market think, is I kind everything of

us exchange. what's that's great God do there, were an dark attracted bless the they something I it's And Canada. so, how phenomenal exchange rock in how in that's it's outside is ITG. guys effectively, the frankly non-core highly But up a Canada. regulated customer and job. It's And a and on characterize to That's business up a we Brian them. it.

through A the Virtu And own benefit the internalization, SEC it. where the ATF had that's so, Unlike it. Kramm an there how to done but for lot of of by it's really we no in internalize strategic regulated asked was terms Alex question here, it's ATF. before

having function the couldn't deposit institutional ability and and whatnot. and we without orders internalize to So and and retail orders ATM cross

it, business. And, because there. it of that really real -- frankly rolled institutional exchange. I add off. and third Whereas, thrilled functionality was to a our so at introduces our to of up buy MATCHNow were making part that, we Cboe competitor parenthetically will our the an that was the it's And it friends market wanted

to as in believers we're competition marketplace. every a said, in I creating We’re question in earlier, response

incumbent Virtu is operator what third so dynamic And a there that Toronto very there. really in interjects had be Canada interest exchange And and up they're having that can group group as our Global an Exchange competitor is of the a part Canada. obviously well. And about. up in NASDAQ's integral as we and efficient ultimately a I all guess up important this third a But

it, certainly into to customer at to, be arm's as our a length they played were we just customer even it. we being it owned opposed treating it that's and So with us would better operated though thinking respect if a

Ken Hill

sense. the questions. Makes taking for it. Got Thanks

Douglas Cifu

you. Thank

Operator

Point. Allen from The Chris Compass is next question of

Chris Allen

guys. morning, Good

others, and well on you Doug First today. I later wish

-- Second

Douglas Cifu

the you We much. Thank use could luck. very

So thank you.

Chris Allen

two share stand in Where give maybe a maybe market making, Wanted hopefully organic growth you over options to where the currently perspective? opportunities, cream to get that's guys evolved how last year? the are any color you In and a from player and back one can market different the way.

Douglas Cifu

public exactly. know information. all This don't is I Yeah,

a So They've presumably as they're could or XXX XXish the look United but in great or really percent me still been firms. up like that. we're business it of a well, like probably we have something for mean, doing market don't down time. it really, States. you up the sit guys Susquehanna I long there, And excuse

market now, Chris. on are we right making exchanges So

doesn't if hey go And maker we and opportunity Certainly, the it know thrilled and be there's we open it would brokers a so cash be for retail we across an we're in just us like way. to names, for equities business hey, to but said SPY, Tesla, go that that Because to them to them, do we'd there. XXXX what in market means? work say, can't in we

that. whatnot. So across strikes ready not waste XXX two real do until and relationships goodwill to XXXX going provide to with we're basis the the names to We're sided response to our And in the and service, equities. us have opportunity. associated all that to in infrastructure is do there's brokers an Rich's question The a all we earlier welcome point cash My of we're partner trusted that. because would to

that on top us long reached a now, to continue --medium firm. every that optimistic. even out share, in I I'm three, firms and term one a point not some term thing. Broad for carve XX that that map. I But exchanges there, has Now, it's it's before involved. the And And of tomorrow. whereas kind it's or We're would those, handful come to thrilled we're plan of small five four, at incumbents probably think of to firms, we'll could of be great. and But the we we to venues single are our them great Vitru the have weren't happen and and XX the expense long broad said, out going to out there are going numbers,

internally, firm. it people the hires, great we'll we're that it way. margin technology, the rest of we're doing our as moved our some same margin with the So, smaller, we've with the doing but of We're external this is of the that we're doing over, Virtu make it doing business

throwing investments made XX% but EBITDA already. margins we've So off it's plus

Chris Allen

the or of we seems to Got should see you’re and driven market it. share just terms Do this share industry is more stabilized forward? back more a retail gain then And seeing you just activity like in in opportunities just think about XXX moving nice bounce it's it there, there.

Douglas Cifu

I'm relationships miss. think big reason Do I since that's has firms. we're overall I in that of that world, bought just no mean, complimentary we with they're And or four XXX these on focus period for compete look, we the -- been because three, one we right, is certainly supplant send all the great basis. think, business not to all individual going the Yeah, in I XXX there again, And think five, an that very Chris, to them and firms, right Knight. And of time, -- have are Citadel long institutions around the a number this thing one I people flow.

it's So become we're We truly got effort. team, global a sales all a broad focused great on those.

we Europe clients of front that as hours retail that execution cetera. buy that right. One again we door of benefits during can U.S. to banks institution management that trades, that business And obviously, have act the wealth in contacted may small on some a want an Apple, for. offer guaranteed Nikola, those They know et folks ITG have European XXX buying is were now of we Tesla,

where to at want want or or to really very want focused be So, want to provide right to business I price very, where is want XX% comfortable I I good or particularly I a a provide profitable, XX%, again, good service, be we're XX% not I'm I'm now. this on, Oh, XX% be to I -- improvement.

Chris Allen

Thanks Got guys. it.

Douglas Cifu

Thank you.

Operator

of next question The is Herbert Citi. from Ben

Ben Herbert

taking Thanks the question. morning. Hey, good for

last little services might and and any or thoughts or five the here from that from and so, just So maybe trajectory the wanted and in the months to analytics your infrastructure, environment opportunity how any have growth shift to shift takeaways impact particularly bit and gears over a strategic if workflow you priorities? side

Douglas Cifu

Yes, good question.

we're about latency a So lot I the to I rolled net, when So of issues, mean, and comes which and workflow resiliency Triton had and right? Triton. infrastructure always I particularly are it was very out thankfully buy ITG Triton talking Valor, Triton. clients. your are effectively business, for to new scalability is some improvements backbone version mean, which of had our out the launched our rolled We side obviously we

And so, volumes. the the it held with and up well in heightened crisis

fan effectively and enables which to we've clients. our there then portal, great analytics lot like but be market little revenue a the the And market same but market from where recurring platform maker done in gotten obviously, well. use in get information own The I with make global their counter-cyclical, equities, exceptionally clients we've to to a in a it's that a work think and tools, so certainly our that can have And of of trying because And call overshadowed, you class. it making again, if a improvements. we year ITG own business. to and It feedback steady we've this, we’re business, multi created in out business a thing, is business. it's rolled a We've doing environment good I subscription it's will, which business, a leader job, was global in the analytics, asset their the continued

it's business, those managers use of customers, the fled of And concerned pension XX hundreds about. so kind world analytics of of subscription based relationship that services,XX really asset were and really asset the top steady managers that that in buttresses are a some remarkable with the these funds that the critics HFT of none of and stuff Virtu and them because is which all pretty global

market a of dependent like and nicely volumes. revenue. recurring I not again, understanding bit And entirely it's subscription structure nice It of the is transaction financial a technology. off businesses So on of lot. scales our That

Ben Herbert

pay debt just And at is latest down on your us the a a dividend for thoughts could understand give potentially you Thanks point? doing But that priority. special I follow some then that. as up,

Joseph Molluso

the and $XXX the said year $XXX another cash think then think we've this target year constituencies, decision. Look, you've Yeah. paid a year told got as That'll I But the flow, to et we've agencies like this, always we've excess I look sale investors, already MATCHNow given Virtu and that always for ends of we that's that will us to de-lever, cetera we've credit the will through year, other various million, that use we've almost we're to get a to word your rating and with off plan kind at why make This our good I we we'll quarter the got cycle. million. that. that, you're XXX demonstrates think And where I and the in will said, that credit of in see de-lever. year think this, markets we asset like seeing

obligations, approach when And and back a at we've cash much at end our be and year that. take makes sense. of the would on the at if things de-levered we'll the those think I all and flow of look look how table it kind look we shares, including buying our definitely

Ben Herbert

Thanks questions. taking Great. for the

Douglas Cifu

Thank you.

Operator

Sachs. of Please go from is Goldman The Blostein next ahead. question Alex

Alex Blostein

morning, Hey, great. guys. Good Thanks.

how be ad term, customer of to think competed benefits Doug, be what guys? to anything being you for lower backing think mean follow for financially? an tighter just us mean perspective? U.S. down sustainability on terms eventually measure So, quantify, these bid of like them know MEMEX would the equity And of those another X% Or, gain sort the but do execution in in share what in kind that or cash services do of up of of that costs success MEMEX longer does might you I hard So contextualize of market flow, trading Thanks. you spread away about can any help helpful. benefits? it from terms you Virtu

Douglas Cifu

is Yeah, Well, a idea obviously Goldman MEMEX an investor in is thank you. it. Sachs because great

does So smart Goldman only things.

and for two the There the way and has in a Look, think for Act years So before was review exchange their controversial benefit concluded of already kind were services for kind we by approval that. we're market Alex. SEC, environment Brett a that I'll the that and other subject and the facilities of the the data doing job XX second, best the actually SEC, where Clayton XX Head to law quantify of the a SEC it had Trading Jay helped ignoring be last I with the been regulatory years you says and read and of are that an chairman and and Redfearn. thank to and what Market we certainly we

And data increases market result, have so or last didn't price had haven't we any in -- material two as years. a we connectivity the

But XX%. offer X%, as call by how those the and et communications MEMEX I'm has by don't Oh clockwork, here's I'm paid of our increases that kind concerned, I work. and used But So tell XX%. Alex, call break here's in spread bid that as here's That increasing data, say say, I itself. cetera. does already can a separately that the historically, X%, can't far to these we of And work? fidelity out the way, as CEOs part for I of came of places you like doesn't

had we've already. success So,

I'm marketplace to with And a an our always intention run more have demonstrated you has thrilled how marketplace exchange responded. So was the that that that can efficiently. solution

has And out. so, of come that I'm how kind thrilled with

And way have for should years. that interpreted some Clayton XX Act of in Redfearn and thought was it I obviously the a helped interpret having, by been

in exchanges? that every market will I liquidity than materially don't But share plans every to at ATS can share But it the We job. team doing excited speak It exchange. more other depends again, what Virtu market States, them what have Kelly talk money. exchange make great type can frankly, I know. new He's looks fabulous and that his significant United it'll share are. on and a of, how all we we're terms have They you there. In again, Yes. and there. a like be a don't be stuff, got on significant there their the market about Jonathan of we for again,

the going be to is is special I Fay, Tom phenomenal CLO, they've architect. there technology developed the that think

And for. deterministic very so, -- we they're ever highly all going have and transparent latent very deterministic to low very, asked technology is which

make profitable. Virtru good be very will able think And be so we excited, highly we're and to efficient markets there

Alex Blostein

few kind as maybe current Any being target. delete robust these is, or some of bonds Great. much this somewhat think talked opportunities you active anticipate as quick haven't a the it opportunities past, Doug still potential yourself And you about then a guys there? a just significant today. scale on around can M&A But call merger I benefits on trading follow-up you that front. M&A are to Has bring in of the talked comment being about

Douglas Cifu

Yeah, look, it's a good question.

be look come and the certainly folks environment no been say, people, unfortunately of great should not, and, you the Virtu XXXX. My a EBITDA, with how valued right? multiple okay, approached it's in by XX lot illusion, response right. it's well, doing for is, People well, and I'm look think, XXXX at if stock XXXX, I We’re off

and geography lot flows our of buyers. class those institutional the two accretive, add about both We're we're We're market smart marketplace. asset context very the process And in. every scope understand side, the that and the a we tucking to in we've products, just on very on shareholders. every making, of the acquisitions in done -- in strategic value services very, very ebbs of So

that I to company chat the certainly, a and -- XX, say here we said lot Zoom is with a I continue the the big we a tires. kicking do forestall in and a is believe really tire that constructive. at Virtu I visit when and or get difficult the cultural a I as go something. a opposed I'm this and Vinny get company successful to it's And in look or wouldn't culture a would that. them, to reason possibility what for feel that we will for over to of kicking because on difficult We last do at people is believer of zooming because Virtu you a walking to we've, continue it's started around wouldn't things, feel call, you're be And the earnings XX or

a it's only management and Joe what that our that. is agrees, for I've is many and will reach But don't to strategic will do our organic to rest times challenging team and repeat, go of And lot goods I and -- the services we right. plenty of have before, and environment of senior price I Board shareholders, we so said and value a and accretive on on a the don't and on And and all opportunities. scope plenty need us We here of we transaction anything. to

to anything Joe, you have So add? if

Joseph Molluso

point the increased I'd Doug said, also the opportunities to kind amount as environment the a I year. they we're bit were causes that of last think seeing. has Alex, No. than to actually say different Doug's little expectations of be environment But

Alex Blostein

Got so Thanks it. much.

Douglas Cifu

you. Thank

Operator

The next Cyprys Morgan question is from Stanley. Michael of

Michael Cyprys

Thanks question. good the Hey, taking for morning.

of activity the bit versus back of million past functional about maybe to flavor wanted execution has in next between revenue the dig the of Just was the you couple look in more could How that over more out streams little anything how from a revenues more, you different a And on hoping bit little quarter how that us the give of the I thinking years, was What see transactional execution $XXX little just side, a services the revenue evolved of fill driven a quarters? much we services couple are there? as should over growth be you dynamics through? do little coming of two? bit contractual

Douglas Cifu

of don't why there Joe, give first you want Yeah. you the… it answer to part the

Joseph Molluso

Yeah. Look, of I Doug kind think, business. down analytics the when break a workflow is that business technology you as steady piece said,

and there contribution pretty long-term, kind that the expect much constant would grows we is constant. but of remained the So, over

due kind between U.S., mix, is to the and see and think really you I more So, the especially world. variability of rest there any Europe the of the environment business

outside especially see say attribute a business that's mix, just really I'd of U.S. to anything decline that the kind there, you would So I

Michael Cyprys

but And transactional side? look you like side steady transactional it side any kind thoughts forward? what on the more growth little the and consistent more recurring for about So as of they overtime, a bit the sounds growth

Douglas Cifu

but that, mean side, and great in time out is Yeah, recognizing. I a product spent We other I that any have as I all making medium remarks prime because invested that big lot the street things of on don't of great money all access, execution, dealers the don't think research, we look, banks -- tell lot of things and broker mentioned a of and a do I the of that. exists the quality. quality sized of do, corporate in brokerage, and do street mean we that prepared my all banks the Virtu the because service, institutional execution

to impact the the market of on on sense translate execution, built structure. we institutional and quality, and side. And market need be indeed And would products it what differentiated to make So, thought does. understanding side. We it market that's our making

We scale. also have

nuance if we're and you're know of essentially thing. a modified will the But trading so, using to going the same say to really for firm same I marketplaces. want will this the But I'll single that for access be Japan, I anyhow, the to U.S., each a do don't America, And -- Latin with it's suite, global algo the thing the you're same you across suite But a it ubiquitous different have markets, does firm, European going marketplaces. the only think algo that fact. that for Canada,

it efficient sponsorship driving of that kind surprised marketing because really that's really feedback. also And be also don't very Europe, so in we is That's think what really technology going. have great won Virtu can't pre them Triton, and all proof in that kind of cross of stuff. analytics, classes Titanic you're which and and we've those PT our here, what analytics the of profitable a will be and And a having Algo do there. what you don’t The various we the comfort sticky and don't, you real of measure just post be I and don't recognize where us adjust going so if the can in lot FX that. there's we've clients the efficacy a we I already platforms gotten our have a and And costs And to firms launched. those way. the That's an driving the think if we're have way because and people Year, outsource can going do we without doing going add, be resonates with. products And we've is great do a adding that a pudding. building. because That's because handful That's EMS already any able really We have having of will, they're to we're that And business where the scaled trading style can And again, a asset built. provide I of fire key. we've And to the have, infrastructure. in business, because or other products across geographies. add growing little that got either we would but of are those business, of Virtu markets capital businesses its can using competitors and that to you we're to those again, this boat. lot do suite of Suite

Michael Cyprys

Got it. And debt the down. pay just a quick on follow up

of down debt think, you're down how I sizing the maybe on and million right and the magnitude debt of Just third curious about that. pay $XXX pay approaching about a was thinking quarter and of EBITDA with the

faster. capacity a do So have pay bit it to you seems down like

how debt the curious you're the number just right thinking is for that down? So about pay EBITDA I looking at should for number capacity be

Joseph Molluso

our it cash then, Well, taxes historically when CapEx start of with cash are. modest. And our mean what at you look is. I flow, kind our EBITDA, remains free you are they

this starting and the transactions kind one And we we and the at of So the pay it credit of it we look I to say said, as have closer with I obligations end down we've down back bargain kind current goes that debt to is a to of debt-to-EBITDA. point. then the I financed given of debt. to through Look, markets we the And, right trajectory, year have year By that at our $XXX made year. would times X.X desire at like as end I we grand the another million think that surprising were the if think, the to we're cycle. the be wouldn't pay

a very cash. being the give on place down plan but be So including I expect excess you would consider don't think them things one don't would comfortable business. to I debt to pay it to and that do buybacks I you the volatility additional inherent alternatives other with of

we're want end that. have don't end up year. we to are, where that the I think we'll we specific So looking in the then we target for I to think And going But of to at a mind do. decide close

Michael Cyprys

Great. Thank you.

Douglas Cifu

Thanks.

Operator

question. last the it any I'll was that to And turn over you for remarks. closing

Douglas Cifu

everybody Thank look taking we to to again We much. for forward of you all today. you, and in informed Sherry. And very Thank I'd questions thank with engaging early like you received the time for the November. all

Operator

may telephones. your thank gentlemen, over. now Ladies is you you for and The joining. And conference disconnect

Virtu Financial (VIRT) 7 Aug 202020 Q2 Earnings call transcript