Virtu Financial (VIRT) 6 Nov 202020 Q3 Earnings call transcript

Company Profile

Participants

Debbie Belevan	Senior Vice President of Investor Relations & Communications
Doug Cifu	Chief Executive Officer
Joe Molluso	Co-President & Co-Chief Operating Officer
Sean Galvin	Chief Financial Officer
Rich Repetto	Piper Sandler
Ken Worthington	J.P. Morgan
Alex Blostein	Goldman Sachs
Dan Fannon	Jefferies
Chris Allen	Compass Point
Ken Hill	Loop Capital
Michael Cyprys	Morgan Stanley
Alex Kramm	UBS
Kaimon Chung	Evercore ISI

Call transcript

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Operator

Good morning, and welcome to the Virtu Financial 2020 Third Quarter Earnings 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, this event is being recorded. I would now like to turn the conference over to Debbie Belevan. ahead. go Please

Debbie Belevan

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

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

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

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

Doug Cifu

for to you, our Thank Debbie. thanks morning, third and everyone, review joining us results. Good quarter

discussion the back We'll touching and will highlights I'll him color upon welcome Q&A. plenty Virtu outlook. to to Sean our quite firm to Galvin Chief provide when and delighted time as as While KCG we that have Financial begin back then Joe knows well. the brief the of for a he acquired welcome by on Sean today's so talent the detailed for Accounting is Sean our the and Officer business new we we're like unique started, back to of get we our comments and Sean Officer. family. results our quarter, I'd previously keep firm more served Chief and

in look our investors. we for providing shareholders, well, results but navigated delivering only retail As record $XXX over year-to-date, crisis our we've at not the million also improvement performance price to

our to performance. markets, analyze and We risk, raise financial locate valuable clients global serve help transfer the markets component liquidity, key a access providing continue to them as to to services capital

opportunities to the monetize the of trading Our successful and increase in performance of aspects our business. to this our quarter reflects many enhancements ability made combination highlight our efforts

$X.X third $X.XX $X.XX, net more $XXX QX million and trading and of Year-to-date, subdued an adjusted adjusted first to million per total adjusted have income we of though of consistent with adjusted We of of strategic benefiting from or continues in EPS, of fundamentals achieved and for maintain the adjusted record EBITDA EPS continues remain day generated solid trading have efficient obviously incredibly The at $X.X per or quarter trading the environment, net model Virtu. we XX.X%. of The to XXX a of robust EBITDA to-date, making of we business share We average customer growth market underlying day, find volumes strong delivered fourth growth half margin year. daily outlook the In of as the ourselves margin QX. strong results our for continue quarter. million $X.X initiatives an level billion in positive. expansion our of in and to million the be compared performance the as elevated our that $XXX net center an trading level and including activities frenzied our income adjusted trading of retail business revenue organic market

equities, and options Our non-customer-facing business in outperformed particularly commodities. market market making indicators,

initiatives, XXXX, million our to growth have growth or income $XXX,XXX trading grow initiatives adjusted this net demonstrating net progress and of organic income first which adjusted the over these ability of quarters continue a to see strategic three X% contributed great of We Through trading as per in X% firm. year-to-date day our contributed quarter. $XXX

net XXXX. year, our our have XXX% initiative trading of expanding options enhancing grown adjusted our progressed all by initiatives our compared have growth base albeit as average infrastructure daily coverage. a -- to symbol this income efforts and We from These by modest

venues over continue our options, out we're and the our and has can focusing net a XXXX. nine versus of footprint As framework create pricing in coverage trading coming XXX% adjusted months to of XXXX ETF improving on symbols a to we symbol daily build all our that average customer-facing income in increase scalable resulted in we in Expansion to replicate first the block desk of more quarters.

launches, client very well investing we our of with enhancements ETF our grow positioned us maker. sourcing, a fixed platform to growing into product demonstrates analytics Services Algos, to a optimizing milestones had significant liquidity credit financially. as is important market quarter, as Virtu and Heading Execution Our our In income business we've and solutions. opportunities corporate trading the provides and our business throughout transparent number data XXXX, workflow through trade which in and dedication announced

extraordinary capital of for and XX-month times adjusted value authorized Given XXXX accelerate significant generated shareholders. we our equity the $XXX our long-term line year, To has that announce balance cash our million EBITDA. returning our excess our de-levered share bringing Board repurchase creation our shareholders. With to with have poised results trailing to in this we substantially we X.X outlook, sheet commitment pleased ratio leverage continue multi-year to in that of are to Directors the to a end, are

excess forward dividend that directly in able We to going be investors a portion our of are and pay comfortable will form the to incremental of shareholders we repurchases. any $X.XX substantial our share to returns quarterly devote

significant acquisitions As lowering synergies reflects fully thus and soon the higher cycles. far integrating market environment, our consistent a Joe demonstrated our Coupled a will believe in realized our is with we cost earnings expense revised all in and to post-COVID compelling discuss our investment progress guidance further base. dividend shortly, our be Virtu operating normalized capacity,

see providing income Joe, of providing estimates the I'd turn practice to if overall frequent like preliminary trading volatility address more would this our year I net updates monthly which adjusted to our call began shares. reduce earlier to Before over in

committed expense which reporting measured. revised and you long-term Joe be take perspective calls. and our transparency robust remain results not through reports our our business and we'll And quarterly the monthly aligned guidance that been has is providing on will be earnings should We experience from outlook. disclosure Joe? to around However, commentary now and with

Joe Molluso

Thank you, Doug.

healthy market of when So in it exceptional quieter however, benefits sustained times return is and and and business that are our from us episodic the and increases enables margins disciplined on volumes capital to focus and our more both management favorable. returns conditions expenses margins volatility

proposition supplement, we our to in debt. turn X of So in this as performance think the we beyond. XXXX. out-sized are outlook quarterly XXXX underpinnings into wanted have million how Virtu repaid and our In $XXX XXXX if we you value already about Slide in particular, of head we to for The of XXXX highlight

million a are specific authorization. announced have Further, buyback we addition, guidance operating share for In XXXX. $XXX on expenses providing we

in excess million cash rate operating the to of total run see, reflects can operating anticipating Comparing to expense our expanding $XXX and million total completing adjusted and our of higher we're total This accomplished can synergy our cash growing $XXX you company. Virtu, relationships. to which Keep and of you We've we million. year. we XXXX for will this our the $XXX expense our also progress million of million mind, has As have this business integration To estimates. in roughly realize made than guidance, prudent adjusted acquisitions. substantial original $XXX been XX% is been combined $XXX annual to the with perspective, expenses was put synergies, while ITG into billion, KCG operating each ultimately prior see in operating global this client flows this acquisition that $X.X our expenses roughly

long-term we and focus to environment. feel returning repurchases, going which market cash This shift comfort think a with to model. any is our Our on allows debt any shareholders business billion, dedicate level in to excess forward $X.X share comfortable suits we our us plan capital to

addition in our dividend. is existing this course, to Of $X.XX

at guidance in we look and planned demonstrated across ability would flows forward going XXXX, be $X of any least Given our target earnings various to as generate income environments trading environment. net adjusted cash adjusted a our well meaningful to expense EPS always to as operating for baseline

with share addition Slide excess adjusted provided our now flow repurchases. which on Virtu expense trading the repurchases shareholders of from be levels our day of sample to debt, form evolved expect see, estimated cash for to returning plan revenues multi-year acquisitions remain we be we be free earning illustration period our as available any repurchases. can regular per various clear, dedicated you of our generate in adjusted the recent can without cash flows, we of income of over integrating to To and expect you flow guidance. form the operating dividend shareholders levels assuming the the able significant see to current In In can we've to cash XXXX and however, cash supplement to in net to an X, noise dedicate to share

of repurchase. share $XXX million Board Directors our a announced, authorized previously has As

open details performance Now up we I'd the to to our will on the further to over segment before call turn like Q&A. provide Sean, call who

Sean Galvin

you, is team. thank And Joe. It in back Doug really the warm be for good Thanks, to the introduction.

gain times of sale the four MATCHNow Income million $XX.X taxes the net was diluted our adjusted was roughly income During the $X.XX income third $X.XX was and was adjusted income normalized million million $XXX.X net Cboe fees and normalized a to of GAAP before included $XXX Markets. $XXX from higher transaction quarter. and EPS of Basic EPS million. than net quarter, year-ago related GAAP Global

As and volume Doug compared levels half but remained results the this. reflect of the settled down above volatility first year our mentioned, well have XXXX to and

net During XXXX. or higher was income, X% services net decline quarter quarter. the quarter our part which day, expenses $X.XX due year-over-year XX% trading or in gains or income Market third million is the the $XXX than represents was net of $XXX adjusted trading per income million adjusted which $XXX trading million totaled million adjusted of year-ago to direct a higher of $X.XX $X.X XX% million net MATCHNow. Execution per million day, trading third sale the making per day, trading than

to expenses. Turning

XX.X% decrease guidance. accruals net were XXXX. and Year-to-date, respectively, are compared adjusted compensation which reflected prior in with to results quarter cash income, and overall third line half the of trading discretionary of XX.X% compensation our first ratios as Our in

in remainder full around our remain and operating ratios expect EBITDA leverage year. also these an in third higher of of quarter the to million, came non-compensation margin the our with consistent $XXX Adjusted the efficient quarter. levels to structure at Continue the EBITDA year of and our XX.X% compensation third levels third run successfully expense We quarter cost for than XXXX XXX% rate XXXX. expect delivered

has and to million decreased equivalents. in ITG to Joe $XXX since have compared Finance our payout IPO. cumulative mentioned, $XX we every to million billion. have quarters buyback cash our in the At to debt for in our return and our in dividend, quarterly acquisition time, we our environment demonstrates including continued share at are XX this diligent As XXXX. million committed the by have since been XX% consistently we commitment capital XXXX million year-to-date authorization buybacks has over cash $X.XX remain to to announced interest quarter-end, which paid $XX and down our period just $XX $XXX million paying $X.XX reduced been $XXX.X our shareholders. prepayments ratio same in expense debt of Over further We million making

call Doug I closing the Now to remarks. turn will back over for

Doug Cifu

call and very for now for that you, open the review wonderful questions. up we will much Thank Sean,

Operator

the Rich begin will Please Instructions] Sandler. go The first We with [Operator ahead. from now is Piper question-and-answer Repetto question session.

Rich Repetto

Doug, morning, good Yes, Sean. and Joe and

first we should of question $X-plus little to on how NTI, floor sort and your back X, XXXX what it adjusted see a how this I'm now. say... it EPS. if as on target, you consensus it a -- of this my So into bit is normalized for you at higher -- would normalized is to be just -- this of would on look the target Is chart wonderful trying Slide view the $X view does

Joe Molluso

Yes.

Rich Repetto

NTI per million $X around day. Somewhere

Joe Molluso

combined years, million the produces chose have KCG I levels why five a Look least can see on and Joe. the if comfortable we're and Page Virtu it's Rich, million $X.XX that's Yes. and past at day look $X so target. a would the with it's over there, where We X, out we you that that. think ITG, with at $X started you come $X,

So on glad look, Slide we're and We lowest you based which $X chose there -- data, number KCG out. first owned like ago, those the historical that's is pretty but would five where that target because would comfortable it chose of if the you the we're we numbers. X that I'm comfortable round number come on Virtu years day ITG, with

Doug Cifu

there were management years, point form obviously at of we and has clear an Rich, the and Yes, enormous continue operational very this made few dividend think firm. it both you adjusted net how do XXXX, basis, where has then this have that larger and And expense attractive in dollars returned in we've legacy these excess in acquisitions. illustrations a form been to been the given at cash make amount company historically of always, normalized has was myself, we're what be the even will and we the of and on an terms Board in and machine of we compelling provided They difficult, And this expense the an to sheet. is, then incremental these have were direction Virtu a lot the perspective be footprint from always in, of I than and where the since EPS companies basis firm, getting shareholders in well, over wood generates frankly legacy a forward, we're on of chop we a the point an cash started they at of think, amount always next we that the we a buyback. now and acquired to large and Vinnie we machine from we to repaid cash We to footprint our trying my balance which incredibly story and technical base billions continue will that expense going is a work that on look bigger come if right a significantly is just operating income very of look extracted. borrowed and now it that's clear our and team trading to guidance from the

Rich Repetto

and but the looks Thanks, expenses. the year, bit Doug you to quarter question out in trying sort year. unusual, like range compensation million if helpful. comp in the that, used if because ratio next quarterly little for know on well the -- XX%, are unusual still expenses missed And you'd but follow-up I this sort would very annualize be well compensation, guidance you're you guide, even I you and is take below of of And be The Okay, the were you $XXX for below a Joe. level and it were comp well use you that still below. the

still the be would rather have you quarter If a the you'd X%, ratio a in expense comp had XX% well below. than

trying to understand to Is run anymore year. to synergies there come rate I'm compared for quarter? guidance of So next just out this the the

Joe Molluso

The XXXX Joe. data reflect shot right. it's for a communications option, compensation synergies, I'll additional that. processing both does in and Rich, and at guidance and take Yes

I synergies went those the you I point. we're does were further it But reflect compare When script the does through next we yes, think year this So the and the and to where would is we stop that integrated. synergies exceeding synergies. the further year reflect would substantially fully in targets sort because counting synergy we of think when are that's -- okay, the firms it say I

in on synergies calls FY things does we the I guidance of further in some yes, think there made situation include prior that XXXX given coronavirus this terms the clear year paused we've the but synergies.

Rich Repetto

the trying if jump take and get was for to this But again range expense the But is, you next million around in a it the to low the I question being the $XXX comp the you million annualized guess, ratio. $XXX year $XXX quarter, million midpoint. guidance just make I'm

Joe Molluso

you much when two given accrual where You in Rich. obviously -- first this and In the The we happened we question, of what the of answered accrue comp quarters the go quarters the two as of through first we ratio quarters we given last asked from to up a is it a pretty year the the comp cycle. the year. quarter lower generally bottoms much year two accrue our in

quarter you our can Total X%. So this the in XX.X%. this cash is as comp ratio is ratio difference see there -- comp year

done. the Year-to-date, XX.X%. that's and we're lowest ever think we've I XX.X% at

comp cash a your question and the kind would call, on third where quarter -- the I year basis But is end it mentioned headed. answer in lower accrual. that mid-teens up compensation is, the on so an quarterly we're on a in for of I to we last this think annual that's

Rich Repetto

Got it. Got it.

Joe Molluso

quarter third the number. annualize wouldn't I

understand I you're Now No. what asking.

Rich Repetto

Thank Understood. Thanks. you.

Joe Molluso

you, Thank Rich.

Operator

The question from with Ken ahead. comes Morgan. J.P. go next Worthington Please

Ken Worthington

you your the I morning. my migration more I ones, know year works for good to business commissions. the been Hi, last over trend retail with taking than Thank Maybe we picture, a bigger has on bigger brokers the the and focus questions. believe XXX zero

So that really of do Or this the that migrate how benefit the trend gone are in zero, or played point? you to is, this willing brokers this out have the get question XXX with to the more Virtu? many for you to sense volumes and all deal direction traded so is of at

Doug Cifu

great for thanks Yes, it's question asking. a and

the, you we those, way of of whole of word, the Stanley, their receive of sort some probably clearly I And describe all Robinhoods, firms, better great Morgan at of more a about commissions may it model. wholesale rates universe flow, There's have brokerage the map, into there for the style firms look management whatnot, etcetera, order and two what what ours. kind of XXX-eligible discount is Kenneth, was dividing you're over the TradeStations, will etcetera, the range the the, wealth if lack dozen with And that of is so think etcetera. there probably And commission a and service kind to is gone really fees model. what of, now asset I'll advisory are it. be then -- or the blended call, clients full and call I'll of if you right, to the they E-Trade discount into zero a old merged all buckets,

J.P. would know You well of Morgan one be because very those.

we we Europe buckets, flow it's It's looking with. globally divided with sort there not U.S. firms have Asia so and based that eligible those retail in of is at U.S.-bound and that hundreds Canada just in that that of relationships those have way. both literally deal firms, and so it's And

and Obviously flow as client it. toxicity improvement look whatnot. agnostic attractiveness determine to the measure form we of we're price and we at of we that the and provide sends can again, level the then its So and its what it

price relationship. entrant, for business as nuanced in new improvement we're basis, in Europe next and a service a over business. wealth customer-by-customer we're very a It's manager always a business it's that not new So as on much a that that have really may looking

Ken Worthington

it. Got

still So firms has -- you as -- is lower is these do U.S. going zero globally? lower from or benefits to it migrate the in come there to -- either other commissions are think more and

Doug Cifu

Yes.

Ken Worthington

you benefit has just that really it Does or out? played

Doug Cifu

don't I it out. think played

not the the think we're not game over, price and theme -- in financial right. I -- everything services is compression of market the is

dodo if or forbid, you, this bird. still heaven a not more firms trade think I again, very the something again service those -- sell if services, this a is and to going you trying if do, that like is maybe different have approach So $XXX that will, that's way broker the you model, better know is full I firms the full charging think But investors, a I you some take. than my business to than that range their they're which of online of

overall, think to be I So going compression. to continue price it's

I very think that a tailwind for significant is us.

will I dependent more and Virtu competitors, and the be and the our think price more on firms routing customers. service case execution their competitors of and in order best value to and, Virtu those the our a like the execution, firm of necessary therefore a and to meaningful expertise provide

very, improvement, a are and obviously really that maintaining community that a that best fact, firms been You other different execution, whereas Virtu function. price the of very doing function and the that performing are handful capable managers in to very are wealth outsourced guaranteeing of brokerage effectively essentially online has of seeing

in the XX now millions Options spend be you XX so National the invest exchanges of on Exchanges the the or as to of the millions kind going connected pie the So dollars United and forced rest. shrinking be do in States that to to not to they're see and we and Securities that side,

firm for positive a like that a So I think ours. trend is

Ken Worthington

for the about it efficiently you when making of arises positioned announced. how now are need the sheet's talk your efficient, Joe, up, we got opportunity can your more normalized borrow that crisis, peak now more to And if you're buyback a up the but to secured about volatility you balance You the in is ability Virtu in drive capital it? just more during again more market and the want talk get environment, up, maybe you line to Can you've the expensive efficiently trading is then Great. Joe. you business? is more where great shape activity right we've participation pretty

Joe Molluso

done Yes, number of a things. we've look, I think

I'd X, of the not Slide accounts all on share range say cushion, First for only target but available all, repurchases a for capital right. adequate

So we but going like where not for to capital we've cushion, just is adequately can cash need feel gone, expensive our in management don't and that anymore, forward, we -- referred so adequate needed. you opportunities allowed we right. The take have We line it. advantage that of don't

hard balance We of we've with we've basis think importantly, of work important which been -- is a we relationships, that have that bank like has that the on -- our through hadn't and of J.P. substantial access borrowing the consolidated work all capability kind done. legacy the self-clearing broker Morgan entered done one I this institutions settlement dealers, most to prime of and things. We year, great and sheet brokerage

So good but we we very need be very, of have where in we to or a it. take are not we a only about more standpoint capital, should day-to-day opportunities from feel advantage position

with more days of post-election, several fine past some the than of we've in in volatility the Just terms been capital.

Ken Worthington

you very much. great. Thank Okay,

Doug Cifu

Thanks.

Operator

Goldman with Sachs. comes question from Blostein Alex go ahead. The Please next

Alex Blostein

Good for on organic some morning. to of touch I growth. the wanted Thanks Great. question. this

we these and be to kind initiatives. I'm robust obviously had understand on backdrop the help but difficult understand might the of assuming highlighted X. part Some the organic boosted in two, revenue Slide Maybe year little initiatives, a of growth of kind the trading of that these year. that the some me incredibly kind of this first completely initiatives of guys growth I separate you trends organic

you without these building frame were part year, to in know into of of the you we would way I saw the if a the should kind think the more on it? So could level of in be guys might run maybe about if provide if we then quarter have third been and that volatility early importantly, annualized number kind and about I way, what how volumes a off of these If initiatives don't think is to boost the organic it's better growth that don't rate QX 'XX? know and

Doug Cifu

that's think mean to dice the very, I slice very things initiatives. have you look to it. I way many fair think various at a I as Yes, with and

not infrastructure capitalize we invested in Options wouldn't the this starting will, in XXXX, seen XXXX, we have taken that able in and any our opportunities have re-calibrating, Alex. if likely you So like have -- we had year to in had would of this initiative on wouldn't environment you -- been

So I think that's one thing.

with we've in first the and the that on quarter second in made As were certainly thing the particularly well ETF very advancements desk, the and strategies. the of significant and fixed beefed arena same up dislocation, KCG marketplace but desk very, income parts the significant obviously the

like way to at look that to what and this a probably in more an did look it at yes, -- looks environment number. interesting QX in what a quite would So normalized maybe annualize be we

it. these think are continuing same we marketplaces thing here probably options of bigger like you I this from very the hard out are know the and I is the is, and with what significant, to grow is -- that's will, data, ETF think addressable mean, you firm approach and very, trading. world very it's the separate around options the where block total So the to world obviously right. market if but here the I in business our It to right of is always kind the capable point way

present us significant the to opportunities grow So for firm. these to really continue

Alex Blostein

Got it.

is what so, the And number in QX?

Doug Cifu

Joe, you have the number?

Joe Molluso

Yes. give yes, We sure. could it,

in trading adjusted net of QX number that our income. have X% We at

Doug Cifu

Right.

So just math. do the $XXX million...

Alex Blostein

it. Got

Doug Cifu

is. of X% million $XXX

Alex Blostein

know. to We it, good That's thanks. Okay, got probably that. can do

I Rich's floor. around question question for as the kind to other back $X of earnings had number you The the guys

pretty you forma of we big to the pro for So deal in benefit majority analysis much the these of around everything term $X XXXX the basis obviously, kind you per year the of that majority trading income, longer a run boost since got given clearly, day combined happened. kind closed that of clearly were and ITG on of a have at but guys for million they've history companies can, this the

$X So on things annual basis, a, $X to front, in guys look below is in like still should it, to you you the EPS? average willing to are do event get that there call an is on million expense you be per takeaway do slip from the day the enough the conversation the number

Doug Cifu

Yes.

Alex Blostein

the that point? fair Is

Doug Cifu

we percentage Yes, pretty is incentive number this comp the very a into our which is you've significant, year. it year, a later. and I around lever Obviously And you've ebbs of accrue, articulated well. the seen accrual there to right. flows think and a said, as compensation, In Joe

certainly I right, than day. and just XXXX million don't lack per opportunity, of market of in in like volatility. a volumes of to extraordinary kind of of So terms was of year $X an you're number think less terms But

optimistic I the XXXX prognosticate to lot my his make And from we're pro made I again, you trying more you -- not not to forma out, marketplaces not which to -- and the sausage, will years I've told, like eaten we've I'm So really I've would certainly if a That's it's and right. around sausage remarks, to more you in XXXX is from trying like of this kind sausage in comes when look mentioned our when life I've stay have ever really Joe that been point done of as above IPO very make, guy pretty quarters the what expense $X base. the like been forward, a that away and back, know. as the going of

numbers the got three for we're going we've of beautiful making years we've next years. that last So sausage been to for kolbassa enjoy the now this all and

Joe Molluso

one years year, right. that the well on of the numbers the that continually one and period, going a is you year bar excess if five X there's and this firms get past million. that that income take add get years, you can to the the is any of any add you when trying going And question be substantial above $X four, In as so to like flows we're hopefully point trading bar of those a that are as Doug kind two, together, reset then to cash trough we're we're the buybacks higher, look that in premise you're is in any I'd at at thing we that's to reset the at to point. a you're buyback able share look stock year any take of if to trough outcomes you $X right. that year, that three, cash The and five this you up a cost just that one also year some but going you that net to able dedication well in base get use over where flows, the on said, above be year even year in and make Slide if other

Doug Cifu

Yes.

Alex Blostein

Great. Thanks very much.

Operator

The next go question with Dan comes Jefferies. Please from Fannon ahead.

Dan Fannon

Thanks, good morning.

backdrop that's how that So flow order changed wanted the to these been talk that's levels engagement elevated of been of happening there any retail think if and have profitability and about in price and have you or changes about the result? that provide maybe a requirements discuss competitive to and economics as to how of of the want there the or kind the of just are improvement shifting some you

Doug Cifu

It's And the regard or in benefit, us you of the is on preponderance monthly. form monitor and if the Susquehannas to first every obviously, price important price we daily, providing the direct deal great the And improvement. it. That's and competitors, vast not flow most and to we're And of the thing. calls party the counter on it's to will, based with and broker order of hourly improvement. the Yes, world I've for Dan, clinical discussed we this weekly a prior the sure but payment question. before with Citadels

to sold think competitors And of of going more the quotes, improvement best bit is more we of or as put pay, kind game the improving and more of that order we're offer cost there's goods i.e., of than get. the so order the in off obviously, theory for the and our flow a bid price national between us that right best little a to

same certainly time even of of move the of by all flow and by around and and not etcetera, broker the around. brokers However, symbol year is and kind clients by and

the retail. Not toxicities, you measuring all always sharpness flow, the retail of we're the various quotes, if in will, is So put flow. that constantly

and then quality correlated of flow harder competitive trading where to back execution would size, struggle larger participants those since professional prepared is come or other they're Capital, I it handle get give Knight ratchet tends profitability of and the bought and more periods more etcetera, the we market will, they to up, metrics. that Some if and all flow down. decide they some have and to with RIA it's business it has with a little had to be competitors you is where overall, you say

net all from meaningful And that to is meaningful the share and payment that's it some theirs. a after flow, They our clients, I of for do us moves them long a So anything. is What are right. market of anything. share. service, silly. a experience have we at customers have improvement focus we're price a in and not on this I all and cases basis providing this then is strongly it prosaic mean paid good so at -- have getting for They on otherwise are and I end the of is point obviously, paying and execution urged is very day we providing don't of to market really why Do really don't partner what -- positive we mean you net we positive guaranteed guys to happy we're not take which really focus the look order

magic great are we So there the have and marketplace. magic providing We service algorithm have, any players is all other the all all we we're compete a right. They economic animals. forth also that the don't same and value kind don't doing are with, elixir thing they back that for and of of here or and

as way incredibly but I of paid, it's be our our basis. in for So $XXX we've answer profitable improvement I there retail quotes, basis ebbs a not have back is put On million on net give continues said flows little in in a this year. but financials to price gross my around customers business that we provided about know remarks, an competition. to an profitable very us this to and a The handy

appear how in we doesn't but were wish will, acquired predictors about of are. and I the that the that that's think all algorithms, deal in you it not we we That powerful firm keep statements. number So the financial were our the this service if Knight able the is with ecosystem the do us. do and and and get why why is customers have sent that's markets to in fully there Exchanges can't these what of and financial stay. that's provide our that's that the to embedded structure we we orders to

Dan Fannon

expenses. couple more helpful just a on and clarifications Okay, that's

year-to-date Is for also inflation. or expenses about normal So that's thinking But business? for flat, do number think the the we is some the XQ, delayed you decline be of a I believe a you that on this because a comp percentage in then opposite of so baseline out level to said going but more a that. ratio. there didn't of the synergies you of year, have there assume Joe, we the you year. is And what next just then about that of to to kind synergies, some kind of ratio that talk what put is still take always of there side? should is growth your And around assume a about way I COVID stuff that I comp be mentioned the should level is

Joe Molluso

-- Yes. the the million of if Look the synergy and ITG at you $XXX you and in look up million expense guidance on expenses I the numbers was round terms in think synergy original of $XXX add targets, guidance if midpoint. was KCG terms the

$XXX total So million to year we're next expenses guiding $XXX million.

we've be cash And of always to mean of instead is do but Doug the we're then up to kind on using to the what comp long-term is portion go just substantial we of the that third quarter fourth -- glad comp. that in in And cash know compensation through guidance our the year but million, rate be flat mechanics be quarter clear, in So terms I going would expect quarter-to-date. as in run you to that of achieve the million it's $XXX comp to both I'm have so lever, share-based a we're just and not you comp $XXX quarter achieved incentive comp I brought a up, incentive last next achieving we said, to down synergy offline midpoints. of quarter-over-quarter, the difference don't going hope terms

do we lever. So have that

past have in the and we the in it would if future be. -- flex need and we So will

other that or kind processing of we've grow I to always data those in to guided low single-digits, expect communications and of terms In low really change. to wouldn't expenses, mid-single-digits

Dan Fannon

you. Thank Great.

Operator

with Point. The question from go is ahead. Chris next Allen Compass Please

Chris Allen

Services. I little be morning, I'm to Good would volume everyone. to a about wanted bit on given trying think why ask we the see? bit a backdrop just just little down Execution year-over-year that of

Doug Cifu

say so old particular, the disposed, the one about couple million of I Cboe, this a to is more United business which then, business comparison. look with sold, at you 'XX than we MATCHNow, a wouldn't of 'XX -- good Chris. that's this a disposed you in have filings, as for and ITG States. adjust bit to right, know to A $X And can reasons, outside you we Yes, we half is quarter sold question, harsh--

regions, equity of of more legacy Knight U.S sub you quarter-over-quarter, were each And obviously have at and those right. fixed equity the then businesses. one, to XX%, equity outperformed firm those look a down volumes market firm market than was where to unlike U.S. our Market Canada more we're So down firm, other business as but metrics down equity in a XX% number know Making Europe global thanks U.S. than of a volumes. each you of XX%, all we

through in that kind is Our institutional the statements, of the our institutional somewhere regionally the regional I business. think footnote business in the financial breakout lot from a is much P&L, I'm of go more sure of bound. we our XX-Q

quarter the go look if block on third in So volumes when block XX%, Europe data like volumes and they United down if block at the down the way look volumes down the you in in at were are where particular, volumes look were same in you States, at FINRA way Europe, significantly. you

is our So disproportionately POSIT Alert hurts that block have really been business. -- our which business,

actually it basis So a looked solid group a was of a certainly but given the it marketplace, had quarter -- the like significantly. really comparison lot obviously, on nice down

Chris Allen

to roughly expect then should buybacks, be we I of $X, kind expressed to assuming next timing $XX minimum $XX be sort should start pace just $XX we And Yes. and will those the of million you -- year immediately, on million that mean the $X range, and for the quarter? million of per

Doug Cifu

Yes, would you? Joe

Joe Molluso

us The of Yes doing the be in year more away. in. look, for preclude doesn't we will would a as year come next results is opened there kind authorization would get that time as from on started for -- no we of them the price depending us where to out be share kind But think reason We is. as prudent aggressive quarter-to-quarter. we right

Chris Allen

quick a just question. And it. Got

revenues other normal volumes spending about MATCHNow's The quarter? million less $XX than it's within million, than $XX $XX much million higher this

Joe Molluso

our of We investments. had up one to mark

doing accounting us is an mark require have market. and a the in very Japan investment We to in rules that PTS well to

but So us. that's not a it's a gain for nice investment cash

Doug Cifu

Yes, that business...

Chris Allen

you. Thank

Doug Cifu

a Operator? We're is in happy it. and partner well. SBI over very there with be PTS proud exceptionally doing The to

Operator

you Allen, are questions? Mr. Yes. with your done

Doug Cifu

I is done. he believe

Chris Allen

sorry. Yes,

Operator

from go Okay, Loop thank The comes Ken next Hill Capital. ahead. Please with question you.

Ken Hill

good Hey, morning.

hoping curious a lot you had and you update how term you're I you might data uptake can there, was sales and quick longer with, kind like on kind update I'm the what looks progressing investing given guys on it an Just so it technologies of a interact the client of data had have there one just be give of if seemed like there? could data in potential give how at open platform. saw all your service an

Doug Cifu

let want, file that non-manipulatable which me separately we Yes, data, in to our which delivery a that, segment and analytics We platform undertake It's services the client to the positive question. very their VES very of than what that marketplace, Yes, something workflow they we tools put are think access our wonderful all analytics rather don't it the very, this PDF break future the some flat or giving I our that to mean it. the way, about has been is but thanks. Ken, of the own on excited right. because like response out we're -- them side. great under sending We have it's a

what functionality, it So giving will, it business. mean, reduces vision also has of analytics clients the and want that's for manual if advantage that they the business. the of the I have obviously, that you the we

client happy tends the market -- I'm to has with had maker We've in the returns what great. very, client it. the performance of response it been is the segment. it market but of this to So wins side, happened Obviously, given very worst because making get by that

Ken Hill

question. taking the appreciate Thanks I details for there. the Okay,

Doug Cifu

Thank you.

Operator

question next go from The Please ahead. Michael comes Morgan with Stanley. Cyprys

Michael Cyprys

more the Hey, become across Maybe to question. may about good firms you on financial as pricing Virtu. compressing and industry, dependent taking making morning. just Thanks earlier makers spoke earlier for going across market services you back were of like about the points some the

preclude industry could sense help better financial I and strategically for part firm So services make a firm you potentially as could overall think evolving that? the any like of them across the Virtu compresses? there rents do could do more a it conflicts see to that combination, be how any you there be Or such about to do structure how capture think ecosystem ecosystem you guess

Doug Cifu

operating a types all are secret and discipline used us, bunk, efficiency, think growth partner what it made and markets about love the this the I what of oh people I of we've I towards etcetera, firm all got and natural and about. don't game. say comments this The running evolution firm sauce, head discipline, Vinnie your and about about I my and to ask just with used scale of that firm we I -- end here's and a keep and before worry would really efficiency. down obviously, it's firm. I operating stuff etcetera. always When say always that was started that intensity We're to been whatnot -- run HFT has and this this what's Well, my I independent firm, great I and initiatives whole leverage

best How time. that producing offer offer. You Everything have best the bid towards and that? a geared waste bid do to you that of best isn't best and is be do

best all So that's ethos the the be innovation are bid that the a the offices, kind continue firm and this firm. and of all and offer time. -- of to accoutrements to of technology Focus will ethos this the and of on best waste be

positive that's spreads marketplaces the as have competitive, most agent, a gone principal an of be the trend have commission most zero, always our as can provider firm have rates was be efficient that as right, strategic for efficient now and that a because our firm, the evolution of agent. As right, either gotten we to more as price will as and an compressed

very a with, relationships and guys us provide they not And look I We of X Morgan institutions in time rate job that in I the institution functions, is that. Stanley some so and mouse we're exceptionally of At financial and function services a a etcetera. run is globally to say in in a worry to of the larger financial could don't geographies, well any form here asset a sure. trap to a person I who an C-Suite both competitor X them wow, the each as -- all. service and That to Virtu point kind time. see all J.P. times really And built X,XXX provide these ecosystem. Goldman, do agent very, and I classes, large got of do to about more and do. a us across they've at a have XXX and some think at same never Morgan hell of work that smart as firms. I a at could wonderful saying we with we those some point have that principal, thing, somewhere and of -- day expense spending the very,

write about someday. like you that paper institutional smart will a Morgan a great it happen big like and at Someone Stanley can maybe

Michael Cyprys

you is you driven the Okay, by On transactional remind volume portion there. the Execution Services would just maybe just recurring us of in as that's Execution of could and Services more follow-up what color changing maybe revenue versus activity question. what gears portion a nature? say for is Thanks

Doug Cifu

I'm we looking at if believe out. that Joe don't I to see that do. break we

Joe Molluso

is call-- of that's break don't but proven it been going driven would was and out. Michael, this look the the business. I volatile to mean a as making volumes out. base volume-driven. scaled we if which I are revenue to would comment you is by thesis necessarily, describe -- volumes it not reoccurring I'd revenue the that time, there by make it describe that ITG be we opposed there at base portion Market was business, I really elements and is it recurring is And but I'd kind that of the volatilities. really driven it, less would in Making, market entire be volatile whole I think of when as No, bought it be going up of that over was the good to

Michael Cyprys

in grow sneak that as to there just Execution years? follow side could the the up I one revenue of next if point. just And Any sense out over you pool expect another on look on Services on that couple you how

Doug Cifu

Yes.

more, solution and right. response it, element Allen's there what a to as element let street. which we mentioned the our we is transactional volume even the a Chris obviously than So The we subscription that in fee, go just paid to EMS which a question I through that, Triton, to by workflow get is get for

see you business. volume-driven update did of in our will a So we will, some we to if you have that disclose percentage, our workflow

you wave the towards if is are said future subscription, that. technology maintain in frankly accepting looked think that is we're side need dollars customers financial and we're our model. of the I of that buy globally. to significant street a the So model not order is of going subscription style a and the on of justify of it, getting to to of each the commission to at put spend We've type accepting more The

We're an more on also that sell-side cycle smaller there. side, and it's EMS sell a tier a it. as of broker-dealers a broker-dealers of Again the some folks trend holistic complement more solution mid-sized number there. engaged a element X with of there need sales to is longer So

And again so that subscription-driven. would be

the now, something is on the preponderance we're bullish mix the right but longer that's So still very -- of it term transaction-driven. vast of business is

Michael Cyprys

you. Thank Great.

Doug Cifu

you. Thank

Operator

ahead. Kramm Alex question with go comes next UBS. from Please The

Alex Kramm

Yes. morning, everyone. Hey, good

can if the -- to Sorry little go us asked ask is, earlier year, this guess give on already the didn't I is flavor? reason still I that expenses a quarterly for -- I you a the of but through, was a next you year. bit synergies do the there that mentioned you I layoffs of guess some this is lot you that think that why

So January then where those XXXX? Xst base a one is situations process layoffs those to be is cost is and this reset over of happen it or fully the going

Joe Molluso

I scaling talk Thanks, the kind the be lay process. a of to would about out this but Again Alex. mechanics going we is No, this down. I is way can just offline think

comp of excess and kind scale would then little I And a comp overhead quarter-ize higher thing a -- in run higher I other to the the I continue like that's things the in with and rate. the acquisition, ending it. up on quarter-ize scale of answered some leases and then mentioned, may to abandoned way starting I'd we think just best Our and I some But somewhere I'd that. clean particularly up other as comp. to do things and the start down lower down of call this offices else --

Alex Kramm

decided Okay, quickly longer you quarter-to-date correctly. But monthly some then made if fair obviously, heard comments. And this NTI to you enough. no give just I

you've you money around was better to to and think us what up the I where and it seen or that other made the October you're then so assume through a what far activity and now? flavors for So quarter below running trading us we've that of so seen if right idea would how election fair give of it to is this making any far, give some

Doug Cifu

tried that's remarks, sure. have helpful said again, to the and I of to and thought around it. view, long-term was with day not since I I results, the trading a that's or here general was but as IPO August -- I us happy my more we quarter-to-quarter our not that's we've to -- the volatility think them mean, we're of responsive did as I all in trading in some number frankly. be style the prepared ecosystem address it particularly our laid talked my in really more, to obviously been stockholder why what Yes, do day-to-day. value conclusion long-term I'm is of We're and my say, frankly it building to here. value partners investors in just which I part out not frankly on was, build a a am I base, around long-term this and day-to-day, I shall in trying encouraging stock,

election, days these we performed, month I still and that it very, Global said, few busy the Trading was which volatility idea October when I we echo us of around is but comments muted thought, it and very the well-articulated, a he continue last I obviously, from came well. JPMorgan behind period So for to give And but Head exceptionally to that what certainly, was it really, it chaotic mean exactly saw was would some of and Yes, survive will I color. I at really are was wasn't more thought a crazy.

couple results the obviously, the volatility. there around seeing House so Senate seen some that around still to enough is at market excited last the days. we're and there deal of whatnot, we've market that will more increased and gets White obviously the be good and election conviction both the But a volumes I'm continue of uncertainty So -- and as

today. I think the market was down

in I'm given what fruit. just quarter marketplace really, the the really particular but are the about bearing year of investments third growth that half and like has in very come to fourth initiatives and be more think would optimistic And quarter. the have all So the we the of importantly the continue look that in through made first I

Alex Kramm

good, Very All thanks. right.

Doug Cifu

you. Thank

Operator

Chung go Please The ahead. next with Kaimon question ISI. Evercore comes from

Kaimon Chung

questions more just of for a the color maybe Hi, activity my on been little the has the looking of Markets just there? maybe answered Virtu thanks. but that on Most progress Thanks. Capital pipeline

Doug Cifu

super, initiative. talented outperformed even very, happy much. and with very with very you that rest Thank I'm mean how guys for lofty that expectations have The are I Yes. my integrate of it just would that run really super the the firm.

So about very excited very, it. I'm

we really in across As industries. our put investor it's presentation,

think a lot of natural the in one things. one -- there done is the three share have, in so two stock is, which has that we number things. be because right, compelling we're flow, crossing well, industry, hey, is One really that I see successfully they first number to One what and is that's we've their to leverage market companies their thing. we're

of have a kit also first We've in have up so going the a and that relationships then -- great of third issuers obviously on And the measured the The well regarded in by helps of Canadian terms company. to States we've Toronto sizes guys guys outcome for use that the give internalize ATM great and of that. second of having thing our tool is, that thing behalf a up got is, scaled stripes that well, our trading we all running tools a Alert the as clients analytics services. terms business in office United and group to as in obviously issuing Algos, very, can that another growth issuers business that are to that time, undertaken, opportunity running with and very can the long-term want effectively that's

better. that So borne around of fruit just excited markets it's efficiency firm-wide making about is to I'm it technology this it's a has part theme the really going truly Again, endeavor how and grow. year and

Kaimon Chung

you. Thank

Operator

Please go from question next with Fannon Jefferies. Dan ahead. follow-up a is The

Dan Fannon

Hey, thanks taking follow-up. my for

Just ask here. wanted to debt forward about pay going down

where or how do less given have environment? have balance but some type from initiatives? buyback a from you the you're seeing your assume new of successful, also, lot focus obviously less just You a in of a where organic been obviously what is so M&A M&A of of that a comfortable levels. then guys of Is of And with you're think you the this kind priority flexibility so sheet perspective these modeling is, with about

Joe Molluso

take Yes, up to our right. We've available debt decided required the Good I'll that with we'd those we be first only to from part according pay what back cash as -- there. came target question. flows our covenants, reflect

we agreement to of debt ITG, quarter and So required have guard rails the our offer we acquired credit is amount a around basically we holders. a if into and to leverage entered great when new are a repayment there we

we billion So with you're we've comfortable model any we notional. voluntary debt repayment very But modeled are right, shouldn't $X.X because in. that

CEO our forward, I'll let M&A that. answer In terms our going of strategy

Doug Cifu

strategically and look, They growth grew a this Yes, standpoint. wonderful through the acquisitions priority. definitely firm that number standpoint, integration an were I work our lot from mean -- been were hard have Dan, a expense successful obviously That's product a and two shareholders. very, from obviously we accretive of one very very to

be be we're firm, said to scaled opportunistic M&A. We've going got really a currency. something around calls, have a public going large with on been to the fully player because we that Now we're special scale -- this prior raised, has I've we're bar very here

first see year, the and not. But looked even -- the will you at quat me does at I'll at continue historic that targets a not look -- and on or looked a this based said on based to multiple. things, that in of I'm that I what's annualized XXXX strategic, examine we half historic a their my lot XXXX give see I so we out what's And that, multiple trading well, of give multiple well

So to M&A kind an the terms from I calm -- needs of perspective. marketplace down of think in

I've or right, think a can not then look then has do my that in. company of accretive I'm or now to we something -- a this to every need not big I key. and I is right is not product not And a build or time that our a can't question, we answered that's -- that on the that all people not a said shareholders we're shareholder, special because got service There own, normalized can't they whether strategically on here. conclude I at that doing we've a transaction that companies will think I fit basis I've

and be be We with and of do we're financial partners firm, the concluded so going be to to future. using fully stock foreseeable Sean shareholders extra I, will is to our MO try to best and opportunistic, to with but are now scaled the our right balance cash on way we'll value that the going to a our Joe, good that's sheet the in folks for encouragement services best my we Board our buyback what's big provide ultimately shareholders interest

Dan Fannon

Thank you. Great.

Doug Cifu

with it the April, questions look we Thank And time we the to date. forward today. to much. something I'd guess in would -- believe attention I March, happy for and have no you I queue. yes thank everybody like more we their early you will a that; Operator, very to in speaking wish conclusion XXXX. I give like everybody earnings be healthy and

We you will then. to Thank talk you.

Operator

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

disconnect. now may You

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