VIRT - Earnings call transcript Q2 2021

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Operator

Good day, and welcome to the Virtu Financial 2021 Second Quarter Results Conference Call. [Operator Instructions] I would now like to turn the conference over to Andrew Smith. Please go ahead.

Andrew Smith

Thanks, Tom, and good morning. Thanks for joining us today.

were morning results on are quarter website. our second released and this available Our call, Mr. we morning's this On have Douglas Cifu, our Chief Executive Officer; and Mr. Co-President Joseph our and Officer; Operating Molluso, and Co-Chief Mr. our Financial Galvin, Officer. Sean Chief take with remarks begin will They and then your prepared questions.

condition revise call Please factors Form a and results release which statements as represent differ new any forward-looking statements this in are the description may made may refer company, events are, upon information be becomes Virtu's to we other may available. information on contained risks, and to to control. future our which therefore, regarding outside XX-K, press note Report few undertake subject It what XX-Q presently reminders. note our belief in that assumptions review from First, actual is We call disclaimers not filings. forward-looking in and forward-looking to the the these or forward-looking include financial is available do that and public Today's our you and current Annual statements to and based update and you encourage important materially company's any to uncertainties, indicated statements.

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

Douglas Cifu

which morning, growth resilient the Good balanced we model morning results business initiatives. reflect our Andrew. organic second quarter of as you, thank and our well and This continued success reported our as

Trading For Adjusted we per Income, share, million quarter, announced we results and half Adjusted increase XX, Trading of program, $X.XX authorization bringing $X.X of for June $X.XX an day quarter generated million. of $XXX adjusted EPS our Net repurchase Last total average share of million the per Net a per our million $XXX and to day. the brought ended to our to which Income XXXX first $X.XX

the bringing to authorization repurchased approximately X.X We shares for total $XX of the approximately second end have million. $XXX repurchased million the over second $XXX million under the million amount quarter, since during quarter worth and the current

have to and prioritized buying shares we returning remain repurchases stated aim future. to in the as committed we capital to investors foreseeable work As share goal. our market capital We consistently back accomplish management we be for to previously, the

you'll to Income, meaningfully truly Adjusted we've distribution initiatives and see only in can a organic representing achieved nascent years initiatives was our the our from and performance, infrastructure the scaled of channel, These how growth our relative our X, a supplemented of On with quarter, compared day and individual leveraging generating Net and shine for per to hires. Trading absolute by to continue X% in results. - these more these initiatives Importantly, second Greenfield quarter. of terms, ANTI sources results our $XXX,XXX ANTI contributed are Page that historical revenue few handful both you in ago, see

options quarter-over-quarter these truly In for Net daily continued decline despite potential are example, of excited especially Income options market in the growth grew Trading our we While these volume. results are opportunities. market Adjusted the making, organic XX% impressive, about

synergies desk to quantile view the and offering enhances block US business quarter. in a the legacy of of classes their our was strategy, quarter volumes include about our X% term our market market new deployment as long options than growth Market key existing in complements our ETF declined revenue various initiatives region. that of asset conditions. our continued ETF ETF while KCG less Making continue trend creating and long term engine in down We block XX% volume the across strength key Market unique growth illustrating and making Other in

expansion market our been Ether forms, QX. of progress in our ANTI has making instruments major versus ETFs doubling the on and on from a venues QX as market focus market to making in various well cryptocurrency into spot with also Today, Bitcoin couple in as including Our futures. crypto continues making in

platform, is growth way takeaway and is the this The yet stream streaming market that dealer a total fit in direct growing block the of our globe, will addressable in for VFX. cryptocurrencies our leveraging and Through provisioning desk. the As leading We're making execution services. into here that the around key scaled provide maker also tradable liquidity crypto ETFs to cryptocurrencies the to our liquidity ETF over liquid we brokers to globe. our naturally operations ETF another growing stages Virtu's around scaled select market developing early liquidity products of ability platform is market institutions crypto-related in

initiatives cycle. tremendous our growth raise which and are progress help our together, may through Taken performance baseline making the

future will each in this our trajectory As compelling, stock progress our a contribution their believe that opportunities, of updating investors. detail our provides about We few positive term combined these story on and forward we the Joe to making moments, long with for look growth. a growth program you buyback the we're in to

for general less X% has point Income market growth public activity, average. volatile And these realized volatility. which equity volumes of United sustained a compared per volatility know results as volatility versus given Net more initiatives equity volumes levels. even XX% fell ANTI steady volumes Virtu's and million below is overall conditions were our market important to is quarter. levels Services low to down steep and Making down day. We our After of Despite continuous $XXX Market States provide performance business realized where elevated QX. It to $X.X know, this quarter retail given well XXXX that in compared second to the Additionally, the Adjusted believe the of XXXX several you million in our as performance drop retail with nearly historical the guidance. that historically was in as of around were a XX% guidance quarter the operating should dropping levels in Trading were us segment consistent quarters be, of and changing highlights US various last the despite quarter, Further, engagement Execution led

in This lower volatility, performance where than third this the of quarter albeit was is million XXXX. in quarter's day, XXXX, generated we to per XX% quarter the realized similar QX $X ANTI

in in Our market Adjusted Trading business also opportunity Net the Services Execution line Income. realizing $XXX performed with million this quarter,

operations. full exposure continued while variability We And X, still you the past years looking significant giving of This upside ITG. from progression the to at the reduces this the are bottom business. can making our quarter-to-quarter steady of acquisition growth operations global now two market see investors our of Page

and discussion a Joe, I'd for talk over around order Before structure, flow, market to I minutes wholesale payment take like recent it market about to turn making. to industry few the

first at call, around quarter welcome regulatory governs in markets. our said earnings I As we the the Virtu framework the dialogue that robust capital

marketplace fact are the unsupportable others are we that and conclusions. obscure in most the for in based we participants calls narratives and However, the These concerned robust, the misconceptions and factually world. that fair reform on transparent false are

summary, benefits including their are Europe. no structure, has execution better investors low product the superior about in high For debate structure, competition is conclusion. factual Developments resulted worse in In in United market today's the offerings, folks and US and in never advances are vastly investors, structure quantifiable, technology, retail comparison, United equity at and of and the markedly looking current many data In striking. experience of expanded profile regulators, available States, supporting trading is and Kingdom the market Canada, draw politicians cost critics introduction to or and evidence in retail importantly, the intense market the to been have the by quality.

or means, level, NBBO, size and comparing being being the XXXX investor when quality. This the and execution order SEC Rule. measures When The retail Current market in available execution regard recently NBO that measured improvement, a retail for for an most of comes significant based to happens investors retail the price shares XXX's biggest structure, investors. that furnished which Rule significantly number order's proposes no quality has more is XXX, for it few the addresses execution view a from stock, lot. fill is improvement are XXX created XXX the incomplete that the the hole we price a NBBO to data to agree, of shares which order many, price. at how for matter the many shortcomings, report quality of in example, used available competition without updates the have prevailing the fill is we NBBO Rule it enhance the We to shares and we with by published of that for an at Rule for assess benefits transparency, execution price shortcomings how However, on a regulation, and provides underestimate, and provides retail size that executed. current

the measure have In and logic were improvement retail and exchanges. we would investors updated Rule in that as size receive orders over to Thankfully, today. to and if, the including that's folks times and the on some suggest, in reported the $X would that brokers on critics provided from XX%. and and retail that requested, this It other NASDAQ, Rule billion were see XXX report all the three exchanges, to That's numerous Virtu this sent defies retail many fact, Rule to regulators outsize reviewing SEC filled XX% now in investors. XXXX, XXXX due request as exist orders retail like XXX improvement price benefit, many brokers today Virtu, If part amount size brokers in price is NBBO, exchanges conclude shares to XXX. of was entire

that imperative of with and various politicians and and to this complete is actual use we with today's every United asset mentioned, to discussions managers data multiple in misconceptions releasing the model, which we concerns, included our not a broker Hill, hurt dealers the that the means data not be which a including commissioners help, debate. having trusted manager current retail retail as myths and correct up wealth just view is important having XX to and market detail. SEC, In the in provide end, that Presentation, as had States. help on also at folks To and the available Investor follow regulators I have to we cloud but as report will buy-side the thorough all existing serve At broker addition meetings States, Appendix to of further the we and in investors. institutional a understanding paper of our proposing trade, to top conducting staff In address review well top an to the their a even changes Capitol Virtu, all nearly of structure accurate our of firms, hundreds in United counterparty and theoretical

the critics initiatives. We will reason our now more regulation, will and created retail the day the the have and benefits data transparency that - and data and and see ecosystem With on Joseph? quarter growth that, regulators, are provide details and that win in of continue for the to investors. which our will competition end, politicians massive Joe confident

Joseph Molluso

review and rates thoughts growth this excess Virtu's initiatives, both into I Hi, over revenue growth the translates cash some will flow generate Doug. generate all and time. to thanks, through we through ability on organic how earnings

you in at we growth for our X Virtu to strong supplemental a Slide try look If looks rate show good what materials, like.

distilled the here. will reproducing median on on We be this quarter-to-quarter have we results previously it we are historical that volatile pro and a our form Understanding slide for Virtu. have ANTI slide this published basis,

KCG company one time were So ITG on working and the Virtu, of PFOF. assuming I'm from

EBITDA top operating we substantial can $XXX EPS expense initiatives, volatile. long through that continue. of current we you see repurchases structure, a major six-year million growth business this translates used the them. dividend worth will has million, cash company. ability ability of current $X.X and our the focus of between this the acquisitions, to were capitalization, is assuming this growth our environment, of to underlying rate this streamlined view the term now understand performance the our more around any This generate of So sustainable excludes this subdued cash any debt periods us this this in free wanted $X.X marginal current a overall arrive is on quarter, this net, our will the initiatives EPS, now We over yes, point initiatives XX% growth this to difficult into quarterly amounts margins, determine Virtu's be our across With growth an at $X.XX themselves if approximately flow significant return We one. that over median for noting the to of these substantial our environment, XX% Layering allows revenue capital our a percentage generates And $XXX We even million to you per cash market period generated levels relation $X.XX parameters XX% is real plans see million amounts almost time The profit can current using day projections, organic open extraordinary in an in the at that repurchases. that including may per and In on look flow. a of of million. secure and notional sample time, this repurchases shares. is environment back buy day. slot. be no more and Using growth of in it's any immediate no of [profit]. And our flow that of meaningful significant is $X.X acquire generate able share out to I $X.XX set to term near in on and at cash and significant amount figures million. through market Virtu any is like apply worth to cycle EBITDA cost growth $X.X to basis, than the

Importantly, if flow amount cash expected one Slide the represent, at know at of amounts. you various hypothetical It Virtu outstanding, be of annual X, by that the can Corresponding bottom based page are be look amount the any the percentages free annual year. on at you shares see is purchased ANTI important the that to these chart of generated in amounts.

should the chart full any period, a you year, the [indiscernible]. end lower So be repurchase factor amount given even a if time in significant in of we able to

our this For total with example, of guidance we provide. year, day X% of year-to-date, in the We million representing purchased average and first per have we shares NTI. $X.X half consistent this in shares XXX million outstanding is approximately of the

Finally, with forward accrue significant while again while this These of bottom returns ability environment has shareholders. any cash going are initiatives, real debt appropriate to to to Virtu's levels substantial and themselves producing evidence together growth [runway]. volatile line, organic our flow Sean? enhance, of in significant our are thrive organic initiatives quarter-to-quarter,

Sean Galvin

of year-over-year. million quarter. million Adjusted trading Net XX% Income Income supplemental than per or Execution X Net per presented and Slide Market totaled quarter a the the XX% million was Adjusted direct or or is XX% $X.X on materials, our day, is million, Trading million, In net per Making's first our decrease $XXX expenses, trading Trading XX% below $X.X gains, lower lower was represents Adjusted first quarter. X% of as $XXX below year of day, QX XXXX $XXX quarter Net which million Joe. Income Thanks, ago a Trading Services' and than $X.X second our day,

the QX. for less quarter, Our or $XX overall second than million, our adjusted EPS was $X.XX XX% quarter. second expense In was compensation

respectively. and of Adjusted were XX% cash Trading Net Income XX% and compensation ratios overall Our

about [accrued previously year practice, and range later year our year believe EBITDA lower with we result specific provided I our may year-end] with first for XXXX. to cost compensation ratio, guidance was year. said in that previously earlier percentages unfolds, Overall, refine churn specific we the as compensation compensation the in the consistent in the year ratio we XX% we XX% compensation full are in quarter. of our consistent prior a million targets. quarter $XXX remainder past results than quarters And adjustments cost below to the this QX, our As as Adjusted the this

the be down Our which the for quarter XX.X% to adjusted points that reflective expense margin of first is EBITDA structure management. from efficient second was continues cost XX quarter our and disciplined

As Joe mentioned, capitalization our remains adequate.

to in million to for consistently our interest long the of term our every long Finance XXXX. IPO, commitment committed debt demonstrate quarter Q&A. and which expense, prior has million the - $XX at is debt second repayment $X.XX compared over paid of environment $XXX million term have in a year million $XXX now decreased back to to quarterly in reflecting I'll to $XX over Our was million our $XX to approximately share second shareholders. due quarter primarily the $X.X quarter for remain for the second of the We the quarter XXXX quarter. in turn which billion repayment we which repurchase call continued quarters capital returning since operator XX dividend, second end, our

Operator

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

Rich Repetto

with a On the Good see the team. question reception the chance about improvement. go Doug, is getting question on good guess the follow on the you're to a morning, that up guess I regulators. the morning through Doug, deck I the deck first it, and size we Joe again. got and is

that market may in evaluation structure And But whatever next XXX into getting this them, the of you sinking and the and that - in you they with it the may actually coming in, what that getting You they're said months? they're brought it call, you come factor any, they is indications Rule to absorbing this? up are - the reviewing reports.

Douglas Cifu

Yeah. the response we I From industry, lot complete thanks on are this Good were data. there the well whatever, impactful. Yeah, very the you morning, the think blah, narrative the and And regulators myth as the been And there a the and our about in it was lots primary was from, Rich I'll showed statistics. frankly, improves odd out lots question. that has recognize critics was somehow second. there report for actually force about odd The when a and behind We saying the just and driving knew it talk that that bunk, Robinhood, outdated, need for blah, said, XXX reform. blah, assume was, include We and was then skewing it's bunk. XXX we their and odd complete quotes, it very, just it. debunked data lots of actually

kind we the if So you the critics of flipped on script, there. will,

about And we're data. myth and all facts and so providing busting here

the book the sell, permits XX% is size it the wholesaler in the to the of of we order retail said let value. segment It's, that ecosystem. Securities get flow, wholesaling reiterate they provide And top I Exchange not and in is price we of you they script, the When meaningful great it, think this the think benefit that that so XX% I positive And improvement. on the orders this National when brought to were shocked, that have size. shares are exceed I robust that of to me entire the it's liquidity pretty competitors the the it we and investor other seven Virtu, the the or it's recognized six price XX%, just frankly regulators, way. at size and meaningful. a don't behind and notional my the

you And this to regulators And the and capital liquidity are, what small XX we small there in the do. it's the what at providing last mid exactly there what Well the focus folks, to do how cap-ish. was it and is helps we SEC, of formation. years, that's terms mid-cap So intense and get of Well, it want. is critics names? real liquidity in well

offer have widening the capital and there, wholesalers exchanges the in bid enormous would markets suffer. if so And would weren't you

the the that's to at rules of and for, So has compelling. SEC I enhanced and data. them, And propose datas there and driven mean, what facts then end facts the day, they're been evidence and available always that by the is Analyze regulations right? the the marketplace.

So bandied I've the will, sphere, one if effect. in Twitter proposals have thus far of would around opposite heard the the every you

- got to information, we're forceful And continue We're very, we our XXX% how updating PFOS. execution So they've that and for there's because we're going I of and transparent to XXXX. questions remarks, to - positive be address, is Europe The case, request is in they've to think that to narratives to exactly is my to better in the is to going this include said we're reports continue to out supplemental present be very advocates there. the data. what case on in actually we quality be, responsive going prepared lack since price we'll because be continue the or as the limited for - some Canada we've banned and of how improvement competition is opposite opposite exactly increased The right.

data and very this is look and facts the and And is Procedures of regulators So at laws right? country so, rules, the Act very, Administrative the And that clear. lie. when don't

changing take Again, that impacting And And our the marketplaces. process. responsibilities regulators politics. know thing. have If This rules about the is here we we're right about in to will And seriously and right? that start facts in data you're going support. we do market, very, this and regulations, isn't the you assist to very better

Rich Repetto

the can if of the being simple a big for us gap] And And said guess. do explain, that most is brief and along [audio a understand about I that's order lot Canada follow payment accepted so used not up comparison, like term, a follow can been sort it's Thanks helpful. it. of But has Doug. Europe. That's it flow could been very us in you as simple lot so could term maybe, you why and in of

Douglas Cifu

in be example. want there's Canada,' in I and flow careful Well there's because price is it, - about appeal large headline the saying, 'Well, posting broker right? understand able are in the of the Yeah. motivations, order, provides so disparage very market for a time, you an Canada. I Like, in broker, to to you're the have no don't describe the market payment measure to which because retail brokers, the I market And priority structure in banned for order are financial if anybody's maker large you're want but in price how And institutions, Canada, I other Canada, of participants. over and improvement which

if a and the firms So a effectively order, National time selectively that has excluded, retail Exchange, that you're of or improve others broker price are internalize, to price. your the right? order and preference we gets Virtu, Because match have Securities even if dealers even the sent can the to Citadel, broker like ability so and

Canada. internalization you selective so have And in

creates in saw conflicts, be fire where venues. hair And is talk There taker-maker broker would right? is people's of broker. in United the maker? concern about there's that market Canada, the order a they conflict as the on How about flow if the And that here this the So between payment well level a marketplace States, retail conflict.

of then payment that's a not and paying venue, order, to function. a that you're a the name, and make, order get think Virtu, they're I choose no provided problem retail internalize we're broker part you broker, right? you have that, of making effectively like known what's can route firm prices, I taker-maker a with right? as Citadel, just order and by it and another let's if that's to flow Exchange, have marketplace. you to what Well, etc., mischaracterize not that But retail an route a So by Again, markets like makes to an rebate Virtu.

by mischaracterizing flows you But order materially a omission and the suggesting that. experience the just you're through of So ecosystem, then marketplace, at is they assure kind if worse. payments can some material look entire

Europe, and to I'm very go happy to ecosystem of it's offer bid here I'm proud want Virtu, accomplished proud very just better. don't a the through belabor is of everything we've that widened the it. I'm just I'm because There proud yes, So out. American. much I at effectively very

direct investor gets experience. a having worst than rather retail So the rebate, the

regulators marketplaces the really, day, how work of in look the United the So at ultimately the places. and Rich, at end States other understand and when facts,

I just better I the think, jurisdiction. categorically, the transparency any of is and other concern and level better markedly than competition no markedly that have is experience

lie, end will that. we're very, So, the we'll the don't of facts footed And and sense continue that prevail. very the sensibility at day, be front to confident and data about

Rich Repetto

Got it. you very Thank much.

Douglas Cifu

Thank you, Rich.

Operator

next question JP Please Worthington, ahead. with The comes from Ken go Morgan.

Ken Worthington

making both good new thinking about versions morning. to me options well Virtu seem of or to XXX like Hi, When the XXX big and crypto. both into businesses further is it potentially seems opportunities. positioned expand initiatives, market like for equity and big And

see for then ultimately and So to classes? up to is market those in extend classes options making if take I And what guess, you in you asset expect are where so, presence your of then a reasonable scale business? timeframe businesses the there? these what the is it logical current crypto to these expanding equivalent to build an asset challenges And Virtu? the your XXX And this is to

Douglas Cifu

morning good you. Thank to Great and question, you Ken.

me infrastructure, That's place. options E-Trade flow challenges, in we let most the we a the that's options address Schwab's, that way first of. and could Robinhood, to where the to nice infrastructure you the were the we in become exchanges the the want successful. and quote machete options, index the robust, have infrastructure have in plan. to be built all call, have me the So have and We I on in mean relationships be of to of is Fidelity's, categorically able saying, taking all a order a we an big firm with let latency leverage we investors, maker challenging in said the off that competitive retail country. products States, our options market knife path we you what I lead would right? of calls, many other in and United the fight if to market toward a be Well, on knife with low conversations on is being that in got the maker by began we aggregators bring seen that to a options. this success, very my which built these of I've fight the technology in times of for That and

significant So compete, to we've that. tools and the we of all do have got resources to

are Now the competitor. gotten counterparties service trust asked we're they're that three, competition. at players, other to that success equities going cash first be the - firms. side We're and experience wonderful which not instance. They to all relationships would not. and That two more have number a great are overtake our in would be on us, some point. of be firms We're want us It them and significant have the have be be to from us very candidly, there which would tomorrow. today we I great in suggesting mean,

launch, Only runway. Virtu I when great I meaningful. meaningful in XXXX. very to it. were sometime and that of starting nothing. in terms when In see had will and is a another in partner, really Virtu. bunch myself capital, Vinnie half the in will back feeling I'm we to hope similar to first about a had just and We launch And we It that something This we that XXXX, was ideas. think nothing is grew and XXXX from some we and excited of

we So feeling, it's have options. the same of kind in

supplemented wonderful outside. the which with have wonderful team, from team, both is We some and people internal an a we've

we and market. regulation can With you own want a So on make story. your a to runway that the the it's ton up crypto, to to sure make we're respect of of And obviously, television was sort similar addressable with great estimates so total excited. there, the been catches crypto ETF talking Chairman couldn't there this that's important. Canada regulation We strides morning, The taken agree We've sensible. I think that's in about avalanche. and how Europe, and where incredibly of exchanges on marketplace. There's have him. more

kind future, And spot so will, - wheelhouse. the the again, accoutrements, to a be right all our To in ETF its counterparty meaningful have if crypto, an of in risk. participant it's manage of it's you we

much be could day. be supplemented market model at that's And for possible offer with We've the the we've through Virtu's a the the long the the during that possible of the wanted of we've maker ubiquitous And market acquisition always and created. that making as beauty as that's so the that DNA. customer bid we as scale and said Knight. to And as

initiatives these two indicative expansion. of our that we've reach. expanded So And are

Ken Worthington

then And building you as those about up XXX capital out into on risks that, or even should the business, further just expand to great. other how Okay, following we businesses? think requirements

Douglas Cifu

corporate different action Yeah, markets when with risk you're to names. question. clearly both obviously, I a more the single risk, mean, those regard the people is risk - Options dividend names, risks, just what and making feel there first. idiosyncratic perspective it's XXXX maker a different are there's Virtu. a Knight market than from I'll a we we do. in can I have great Very we from no that legacy took names. in did different a degrees, I bought and breed, speak I on became right? here we don't when we particularly in - well,

more there's those risk, in curve volatility kind manage and idiosyncratic Virtu of we of terms will in exposure, and clearly way. so And

don't We be the And don't risk the have. We built we This we're about. curve. something. But we'll in really need end subject volatility. that a market. We management the making can certainly We're which bet that on market models the on not price will what firm vol to that we've to cover not of have, the matter options to direction not going we We it of That's do. curve our and makes betting it. that's at understand already fund hedge a bet supplement to just vol what on day, not is with direction experts in style. is continue that, framework we Virtu global to

be risk meaningful. will managing there So

much capital, In to address actually I do Joe because he'll a that will. job of asked I better terms than

Joseph Molluso

required share we bit for manage buy Okay. setters. There's different a contemplates we very account. counterparties, put different and even access It's backs a actually nothing, block crypto. amounts are it's just and suited in it's prime a its that, our of - a different making market And we for little managing that - anything matter whether conservative ask, to will expansion. terms counterparties. how we of if is options, ANTI initially that doesn't capital of flow capital record out use And a levels in clear. Virtu have plan how cash in we market of with But style you broker, we that Crypto's we we're how about different it crypto, than here or terms - there get

Douglas Cifu

quarter we that's So last have with Ken. The not options. you be US products, were I options maker And positioned. the finished, thing also to I the in delta there. year. but that obviously all Right? business well we're obviously equities, which mean, in it, internationally, hedge these really regard we're in is Right? an fourth products. I then mean, should the going already to large have again, commodity of stated, this if mentioned And a really, thing we're we're is market launching Joe, Asian

in experts. adding matter terms some of that's So subject just

We have the we hedge. have connectivity, delta

options just and forward. within commodities business. to our us globally synergies our within achieve about more in it growth the So equities excited going enables business We're

Ken Worthington

Okay. you. Great, thank

Douglas Cifu

you. Thank

Operator

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

Dan Fannon

and And is coming making industry think Thanks, follow you market despite a growth, options good morning. up the when volumes obviously you about quarter-over-quarter strong on, down. just guess I and saw

built anything that from lacking kind As capabilities out, potential of growth is the think you're built to of to Are there tackling anything at just of still and what you trying and kind of functionality is need this the there you've normal business just from and look be Or end more the a about competition? on it technology either there here? blocking the now that is - capability is your and out?

Douglas Cifu

energy you new market against sudden lot it's me, he was excited and then was and to question, to then worry, Dan, And difficult a Like and launch same look have we're the man, making thing It's US said it a FX, different we first don't a we ago, you you'll had business. He the it's news X next to answer the a you in we step get we're what and taking, what? activity and day. grow to when really time Vinnie right And I add - be a good a it's banging of launched about connectivity last wall the if before. thing we equities, and good a the products. and and launched launched get It's functionality. about you getting right is we said, day ready Virtu in $XXX,XXX things. me, each when year we at structure and you'll Virtu, of tackling. blocking we've the know XXXX pittance. the younger then no. grow And this I'm options. we And when remember I market and at We very excited micro and time, and two made traded. good started question, great day. feels you And to it starting all our million. you it first like a it's morning. $ were I of done The spent as have venues a business. head a We will, laborious to It you $XX,XXX, we're time is done Yeah, with get it'll years exceptionally is, here. venue, and thing making build learn it well a

all capital at be done question hard to in do. It's the need do work a we've build and will it of it. successful it business. we And and before credibility the have because the we Virtu blocking pieces all that's We that the what and to we all the doing just

of the having personnel time there's right only to it. impediments, the So do is, no of the and impediment frustration

We of have all those things.

which at and doing we take it's down here doing our heads just And Virtu. so going like putting to the hard work,

Dan Fannon

the much environment XQ the know you monthly for and and started don't shorter of a some of you obviously, it, run of has term in kind away talk then quarters. throughout a versus context just and you've from Could stuff, previous on - I ANTI QX maybe throughout is kind Got of perspective. kind several to about basis the different maybe but rate the progression the quarter gone from how

Douglas Cifu

taken yeah, But quarter from we've up of the I probably I away Yeah, big gone the doesn't. events, months, that. choices a felt Obviously, yeah, monthly. them uptake and mean, of recall it around the It same then the like that I no could recollection have was It that's there was bit like I market deep I mean, don't election just surrounding between fine. entire quarter. was, kind breath look a and a feeling here. each a the the downtime. and little for all the was

bills, changes policy, potential COVID tax opening, administration, reopening. spending New to

and about down, spreads. engagement. example, payment a a down what's markedly QX, just Volumes those XX% taking that It retail marketplace for [indiscernible] equities, the know, was volatility of flow all was from significant breath. of lot were rollouts, You ring stuff. overall for Vaccine in going down to a kind QX our to clear happen? obviously There was was deep and was

During almost the being see realized XX%. volatility because down, quarter, of you could

quarter. the We during competitive very market business. very, were we look, So our gained share in XXX

to options business grow. continued Our

market what constant do. our grow and will, growth maintain to we our and to initiatives. fight you to here, a improve it's if share And that's So continue to continue

the made would had I'm If we satisfied I had, the was I with have we said made quarter. with satisfied have quarter? So, should if $X.XX. never No, we $X.XX,

that's been So want never made we've any what even $X.XX. had, ever out with it. satisfied when quarter you of See, I've we've

management. a grow of we're our form nailed need future. of That's to be plan making down, most we penny if we back. whenever we're know is expenses - that better. it ago, the not to for half do I my nice judicious dividend is going And that's plan investors to and a to going in our this $X.XX saying, thing, we're that sale, game same-store organically, return said, fight that we're lay what going for and do that's where our we're will to we going So buying grow here the and the to out, we way can stock foreseeable market our the going way maintain a managed and we've this capital to listen, firm to don't every better, though, always manage expenses a about incredibly we're penny continue was, continue to The important going year to do, we to

Dan Fannon

my answering questions. for Thanks

Douglas Cifu

you. Thank

Operator

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

Alex Blostein

question. Thanks guys, Hey, morning. the good for

look, maybe slides. NTI - business or Joe the little Joe, so as hoping take market we to Doug in a bit $X per And continues it be But mean, could a the quarter-to-quarter. volatile, per day, step about your level of making if of know, lower I I end could back. was sort around of range So you so confidence call the day, of talk about we

frame some out, that, you are year beyond come from the initiatives growth smaller year, compensate your us in and any businesses. plans of As volatility the maybe help this that your is budget scale in expected So to and much might for right? how year, could like look legacy next that today, the of options that things

the to just a framework the So company? get trying revenue the kind how of think better about for minimum of levels to

Joseph Molluso

year, you starts of different million. than, Joe. Slide past It's those the chart $X Alex. And when really with look any Hey, at the the answer isn't ranges outcomes where over illustrative X,

out, every sort we emphasized I've time about right? blowing. range This is of annual which the from be it, put this we time think and an that would talked first I quarter-to-quarter range, annual chart this

the we million under starkly three out with why of and Looking out starting block historically, So are an Right? to have to-date, ANTI X. growth try where $X.X stick stripping we're annual at million. organic stripping via companies all of on Slide also initiatives, and initiatives, the options average the again first the of confident to talked half kind about, we at growth basis. Look we together, $X.X

the this to take that's this we're and buying think the we to we quarter-to-quarter, are looking but And and continue at these pretty things stock, the kind out I of going on to look quarter, levels chart $XXX of low this million a volatile. pinning a of environment confident, say, at step we're where company. putting end quarter, back back of X% be volatility, second where we're are, worth very

Yes, the spot-on growth that of numbers [yourself terms repurchases, just meaningful come out to that keep share right? we're all it in year-to-date said], going hammering put guidance, terms I in where on think versus in of are of They guidance. should truly in. terms

So the about it. we that of feel good Feel story pretty way. kind simplifying good pretty about

Alex Blostein

like smaller say look Okay, new two, guess you of, the could out and what do again today? the you when of that let's year I are options, ANTI much next just initiatives think things around come to percentage from

Joseph Molluso

and look initiatives But in if it, XXXX at again, look you day. I'd million see, its nearly at in the there's can like day, new $XXX,XXX a $X.X muted you chart, a quarter, a

over I'd past it at looking to just we consistently it's but X%, million. we come. to on X%, the it's the uptick range just expected year that continue million straight quarter we $X.X they'll as pinpoint grow today, $X.X they're $X basis, to to are through expect of a and X% continue think I cycle If median, look X%, quarter up then an hard to a that as First put line little think get hopefully bit, XXXX, quarters million closer $X.X - I almost to million, between couple that to versus at and scaler. And Alex, it I options it, past the been in this

Alex Blostein

cool. Thanks All right, very much.

Joseph Molluso

Thanks.

Operator

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

Chris Allen

XQXX. to the on decline was saw new on Maybe guys. XQXX a year-over-year there morning, question Good up Alex's just initiatives, follow - we the from

by your just right near others What's from businesses driven of lower growth? better new color industries us term you the most give Assuming year-over-year And basis that KCG. strategies versus Maybe now? what there. from in could within decline the some feel was contribution

Douglas Cifu

better year, position quarter I'll hit right of in that in more the have the think market opportunity. in better happen the would head, kind have is, that on because there's we example, going today, it quarter because one. I there's XXXX. you volatility environment within the so fixed growth but block which ETF you probably ETF of couldn't of you for making like a maybe, Yeah, initiatives, Chris, mean, take than to block I marketplace it wish for for second be Yeah, again income second last and be

of kind XXXX volatility this hard QX to is down realized it's So period, because to XX%. compare

of the lot but susceptible, impacted block which the is business whims a of in right, options that. And of growth to markets, volatility. to commission a share going what more So you're there, area we're is doing what lion's ETF, the volatility. doing now, be based by of we're see Capital will

you it's Joe the where meaningful. longer So, at cycle, now look CAGR at look is, at look the to over if indicated, and the way is, you it as it

Trading business. than down. really will volatility parts are have, they and to as periods there, nothing They other but It is organically P&L, they consistent. cycle So our into Income somewhat to X% there's be and a there continue overall as somewhere Joe Market ramps said, ramps firm as X%, contributor our grow. Making where of And the that, expectation will that be grow is to that X%, hope it and Net to they continue between, Adjusted up the of will our read throughout

Joseph Molluso

your existing into we growth think out, new bucket initiatives markets question versus market. we is, I break the

the in starting market, to got And from options the existing much you're [FX] those right? smaller So legacy some grow. a and base continuing the and great was have business market a that versus better, existing the where to of back strategies you quarter other a on growth environment, XXXX, is that XXXX, those Slide, amounts right? to most like at earlier If go in So a the you a if of business, markets, going cases, are base. stuff. in of the are periods, from second smaller perform the markets, look a It's volatile most quarter XXXX making which of of block

So that's another reason Doug? why your intuition correct. is

Chris Allen

about Last players. correctly, angles customer business, those about have share it's us you an the the ultimately, can on Maybe taking Services. call talked then some you're penetration about the both maybe you of of other Execution where been give talk of perspective? and And from a market for growth in recurring elements from update quarter

Douglas Cifu

Yeah, great sure, question.

together. guess Virtu We with system. look, meaningful combined is amount extracted So and terrific, drive called Frontier, be when you've every which we, but it customer a We're candid, you migrating the inorganic ITG from new affect years is you'll let's the of you migrating, and we're synergies. customer. have business, businesses a is, platform we We I using that for on new like organically a that we've it love Knight obviously, experience. I mean it and right? last everything the this it'll umpteen grown to And been start, what, the Trust better, business, be us, technology because better

they a have so do seen performing. our testing. bit of been system a the And time am that thankful very that's is process. Virtu the I who highly grateful and customers took AB to to the And

are And wallet. winning share a we so winning, and result, as

Our year. market this it time was QX share last than was in higher

We then to fixed first classes, Triton, trades income are trade. new adding FX right? Triton our asset and executed its at

new to and asset During Swaptions RFQ-hub we've class the added our quarter, CDS products. to

grow. will and We ITG thought would base things doing. help doing talked what about we we And we're impactful to merged customer us bought we're that that we our that's So with when rather, ITG. be

So core we we're we focusing do for the grow. addressing that And will technology clients, leveraging on to our in and opportunities our find to more continue marketplace.

lumpy describe see little of the the Right? is be little investment more markets probably A in And yeah, more and you'd way up down. I similar guess the what can to, - terms business bank. a In to capital right a large it.

business. fantastic a is markets capital so, And

the to my market QX, their of QX from that exceeded fault have as are and aggressive down own expectations was just by vastly robust. wonderful to not it performance. the it even was because run guys but any And own, First, less

excited subscription be continue last trajectory business to the guess the led Steve these would I a of our data with say job. by we big And our is, great who's really - to of so, And some I launched services Cavoli, business you thing about regard call job I'll it. great done execution offerings,

driven offers, of and a products, business. really be that good clients volumes it's analytics about intelligence going by again, tailwinds lot and Again, excited customers marketplace to like lot, a the of but out what business, a lot forward. python still Our open that and in our really business, our really, so going which open

Chris Allen

guys. Thanks

Operator

with question next Securities. The from comes Horgan Please go ahead. Rosenblatt Sean

Sean Horgan

It hate to on guys, of harp Hey, for morning. PFOF. do continue one flow. there's But some have wholesaler's maybe I question, Doug. seems payment to dependence for you, order good on I misperception

happening words, in So a wondering chances on was of in explain, would what but of be Virtu I own impact just general. ban putting if the the your could aside, wholesalers that you or

Douglas Cifu

diverter, you, payment should great a for in diatribe Thank actually, should my a little have It's flow statements. line thanks. our in an mentioned mean, I I Yeah, order in Sean. actually mean, our GAAP this. I expensive [PPV] I question. pickup before, financial was have actually

So it's an expense want Every on the based order that providing single stuff, paying it's right? price whatever diverter, it, them to obviously, broker, we're that to eligible retail sends improvement globally, manager, revenue of are broker. you that wealth flow, amount XXX call us not we is

us them, ecosystem XX of price them that, they Let yes, for works. we improvement, uncovered, So, not single routed know our payment the on small all subset pay based who some a but yes, is fully is and somehow this on it's It's transparent, it's rebate. flow. arrangement structure, a with public. is it's fine, right? a niche the retail market we and asked going all disclosed, new not get are, us are market me to And of order all repeat all that's conflict, broker to every that part some There years, people nefarious, out it's there to been brokers,

in payment were it fostered initiation nonsensical. order this because be rebate if So, be that is banned, is will country. in which flow It to not

am putting that so no net So, that to it? believe but might would I I about cannot happen think all. and it's two, this world on at would effect and my like just ask, right do. one am doing it aside, strident customers in thing I Virtu that it, They the why why rational have I Because a

very, think I it. I'm ecosystem, of the proud this, very

to cash end day, Not flow, take XX% one for at are that very marketable that orders the for brokers, payment in fine and they in and understanding doesn't people knows could. wholesalers there So big of the of and access six equities. Virtu that wholesalers. effectively because a nickel the they're superior getting route to market route cash They seven don't of and to really, everybody every these it equities, that's payment and a Boston, outsourced including And take or execution a really technology we Why? order with service they smart piece really guaranteed because of are they quality that of provide any really, to their they order the so flow successful deal execution and with. they've other that possibly

access what provided no $X this worth very or broker but marketplace, some for anybody some download because So commission I not be application enormous front-footed be democratization that empowering. I this is and know whatnot, just an that has they to And it ecosystem And in dollar universe is value, of an can and don't proud transparent, an has in. That's and the positive of enabled amount zero of stock dollars, that of the from, on have should enormous wholesaling can it again, about of of buy and only that retail what is, wrong? care continue a innovation. that iPhone may amount has people that the equality talk and interested an marketplace. in That's lack what universe and investor. not and this, very in is we all will that's type share, for why strident that And I good to device

be competition very, proud that. that's country. has of what and for should an order so very, And We this all regulation brought very to route,

Sean Horgan

vertical that. and of Great, integration like we've thanks. those of same talks heard the lines, And things along from sort retail then brokers

your wanted to an the in what or M&A just seeing get update on, just I thoughts front that you're So on on general?

Douglas Cifu

yeah. Yeah,

it's okay? of talk great question. love broker, the At day, my are people anybody mean, So, what about customers. them am or to - I a all the any of conflict. people we the about trying concerned Switzerland Look, end look, I think not when they're all, I I'm I that anyone customers. else I say, particular here -

about a the there making regulator's in flow, at would where Can a parties, concern first notion a third payment way, imagine about say unit, I that you a mean, providing So flow. that's thing. rebate. own fully market a and broker party, starting internalize what in start up to for up regulated retail a order the is Washington somehow try down and wholesale if with unit own transparent, its you third its multiple FINRA would the retail broker have

everybody wholesaling works. works picking Two fundamental your relationships. for else Susquehanna, doesn't today, reason The lack we is, have name that Citadel, business it ABC work second is and not in XXX be we it a maker of thing of were we the UBS Sigma, for would the understanding ecosystem market solely Virtu, because broker, way. how The If

You need orders a themselves. cornucopia that full balance against of these

meaningful had have we individuals, retail periods execution days, And of losing many money We our brokers, time, of weeks, adjust right? people quality. amount will large this we where surprise from are a months,

provide gets we broker, services sometimes if solely to would But trying gets retail work. it it better, And worse. to a making it were single market sometimes not

has to situation today wave to somehow no regard its throw a its today. it. a unity the describe Schwab is mean, which and dust ago, notion own UBS order sold wand magic almost fairy I I wholesaler business, to retail do that right years become this on guess mean, and ability way naive, into some market the I would with a candidly, is that So got the flow. a is what Susquehanna, to broker, E-TRADE is making

the XX competitive, So the ship soon. gotten port and since XXX%. out it's improved in has quality, sailed. got it's just intervening don't Because our fine efforts of back think into thanks anytime and competition, execution the broker partners, that those more of I business, to that years, of has getting firms the retail all

the dramatically. shrunk So margins in have business this

an doesn't individual just for it try make to So do it to sense broker.

too I've anyhow, answer. So on talked long that

suggest to you've counterfactual any of kind it's to think I happy questions got. And otherwise. answer I'm

Sean Horgan

the Thanks, answers. Appreciate Doug.

Operator

Cyprys Michael Instructions]. [Operator with Morgan go comes Please Stanley. ahead. from question The next

Michael Cyprys

the for at after you just $XXX for million. about year. the question. $X.X show offset Page about a $XXX sensitivity the billion ask like just that called end $X of But kind net income, with adjusted the I expense $X is the at then of you of generation yet is guidance, guys buybacks tax, I to the net of range show I'm high to billion just scenario your table daily that trading the looking a And or is cash in for thanks income about say $XXX. for on buybacks $X to that the of which about taking wanted billion X. Hey, day trading

about to then dividend that's XX% So the on XX% a top, XX%. payout that's think like ratio, another you

what could it to that And out the more So of not on and It than XX%, that, substantially more walk looks page your a that's a just you different capital XX%, ratio you're capacity to all $X. showing us lot return return flow. in, particularly like uses of free is pay debt. on would have down seem stopped just potentially payout the case since that paying you more, the you I maybe why wonder cash through sort

long the for Sorry, question.

Joseph Molluso

interest, have have dividends. taxes, you have you the Well you

flow suite, our in the in we excess because of we cash You model have - here, terms debt. have that do

well. So those to you've as in factor got things

seeing to kind like are that nominal we're level So chunk because to repayments to had that your for of, and forward, we at on outsized requires an is right an if were would appropriate, it I modeling the that it, going very I the the get items. debt kind extent called right? have today, you we're in of guess, reduction, structure that want today, of amount for where think capital going a a and refinance that the to we nominal we back we opportunity the obviously quarter repay, a So obviously, look

Michael Cyprys

Got it.

you up monthly the the progression then the months Okay, three environment those hoping on also the quarter. the a quarter. that shaping then for net to little but I talk you to how and composition about the in I environment trading this bit mix second the And throughout different And late evolved? of touch hopped how maybe missed Thanks. earlier, July strategies, of have income if the see could thanks. within second apologies adjusted of just upon relative sort And

Joseph Molluso

- I that XX% what a and share came Yeah, reduced consistent that better market it block but swing, the out earlier, kind ETF options were little I people realized of metrics we which XXX it way the you're there to month. gained terms I'll marketplace it's access to kind think provided is we material a so vol I bit, took All is, roughly of just from was of Dan June, XX%. the wind repeat, good which type volume of a did the new down did know you of aware say I obviously monthly the making take the to this and volatility. relative of were of kind about market on did down that like our being combined We'll breath. had Volumes kind results recollection, market of the my said normal to is, it opportunity of, kind a felt question. down. was have it again lines flat for - and that it's deep sure, Fannon May, in XX% April, there wasn't - relative quarter and they a from I before. was, but we've Obviously, and

So, gotten prognosticating to from we like about not, from forward. gotten the the away away next financial kind quarter. I've march Again, we're continue monthly I've and of

volatility of in comment always July. kind not were either feast coming of July kind back to some really note been So August, the I'm that on to Michael. going famine a numbers of volumes it than other like looks has or month, and

United it other a it a, when Hampton. States great a for was S&P XXXX, then Sometimes downgraded everybody's maker, market month the in the was in and the years,

already, in been they're they've time. So there Hampton it's, the maybe long a for because

I quarter-to-quarter forward the were that. look from they're in out that get to fluctuations, we're just long think we term and hard certainly trying the beyond don't of Again, kind of, trying to story meaningful lay firm forget about but here. because really kind this it's that longer So for to running month-to-month, away

Michael Cyprys

much. so thanks Great,

Douglas Cifu

you. Thank

Operator

remarks. Cifu would like for turn back conference question-and-answer our the I now session. closing concludes This to Doug to over

Douglas Cifu

Ken taking that I thank and Repetto's just and much did if we're Chris faster of I time the and exercising for running comment you Rich style. and that not I everybody Rich, be to really assure Joe proud remiss hope note are than the and after would about you want fact you're we as myself.

not are management a running team. We

- So

Joseph Molluso

shot-put. Even

Douglas Cifu

you beat much the would to shot-put. Thank engaging forward we in look Anyhow, investors and We you next with you. all quarter. to talking very our

Operator

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

disconnect. now may You

Virtu Financial (VIRT) 5 Aug 212021 Q2 Earnings call transcript