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VF

Virtu Financial, Inc. (VIRT)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered strong results: total revenues $837.9m (+30.3% y/y), adjusted EBITDA $319.9m (+57.7% y/y, 64.4% margin), normalized adjusted EPS $1.30; Market Making had its best quarter since Q1 2021, and Execution Services posted its 7th straight quarter of increasing net trading income .
  • Against S&P Global consensus, EPS materially beat (actual $1.30 vs $1.19*), revenue beat (actual $676.0m* vs $469.5m*), and adjusted EBITDA exceeded the $286.3m* consensus; management also highlighted retail engagement momentum and diversified non-customer Market Making strength, including metals amid tariff-driven volatility .
  • Capital returns remained a focus: $48.1m in buybacks (1.3m shares) and a $0.24 quarterly dividend declared; buyback capacity was $373.8m as of April 17, 2025 .
  • Catalysts: record per-day adjusted net trading income ($8.3m), VES scaling (management’s medium-term $2m/day run-rate target), and product innovation (Virtu Technology Solutions launch for the sell-side) supporting momentum beyond near-term volatility .

What Went Well and What Went Wrong

What Went Well

  • Market Making best since Q1 2021, with outsized performances in non-customer global equities, digital assets, ETF block, and metals (tariff-driven volatility) — “This represents our highest net trading income per day since 2021” .
  • Execution Services momentum: 7th straight quarter of increasing net trading income; management sees medium-term potential to achieve ~$2m/day run-rate in VES through cross-selling, workflow upgrades, and multi-asset capabilities .
  • Operational resilience through extreme volatility: “no counterparty issues… liquidity was more than sufficient to meet all associated obligations”; retail participation trending above pre-pandemic baseline .

What Went Wrong

  • Direct market costs rose with activity: brokerage/exchange/clearance/PFOF net expenses increased to $221.9m from $139.8m y/y, pressuring gross capture despite higher volumes .
  • Interest and dividends expense increased to $131.3m (vs $126.0m y/y); blended long-term debt cost ~7.1% indicates elevated funding costs despite refinancings .
  • Other, net swung to a loss (-$12.5m vs +$10.1m y/y), creating a headwind within total revenue composition .

Financial Results

MetricQ1 2024Q3 2024Q4 2024Q1 2025
Total Revenues ($USD Millions)$642.8 $706.8 $834.3 $837.9
Trading Income, net ($USD Millions)$408.1 $444.0 $544.0 $590.0
Adjusted Net Trading Income ($USD Millions)$366.9 $388.0 $457.7 $497.1
Adjusted EBITDA ($USD Millions)$202.8 $214.8 $283.5 $319.9
Adjusted EBITDA Margin (%)55.3% 55.4% 61.9% 64.4%
Net Income ($USD Millions)$111.3 $119.0 $176.1 $189.6
Net Income Margin (%)17.3% 16.8% 21.1% 22.6%
Diluted EPS ($)$0.59 $0.64 $1.03 $1.08
Normalized Adjusted EPS ($)$0.76 $0.82 $1.14 $1.30

Segment breakdown (Total Revenues, $USD Thousands):

SegmentQ1 2024Q1 2025
Market Making$521,008 $691,172
Execution Services$117,788 $141,008
Corporate$4,043 $5,689
Total$642,839 $837,869

Segment breakdown (Adjusted Net Trading Income, $USD Thousands):

SegmentQ1 2024Q1 2025
Market Making$273,678 $382,018
Execution Services$93,193 $115,122
Corporate— —
Total$366,871 $497,140

KPIs

KPIQ1 2025
Adjusted Net Trading Income per day ($mm)$8.3
Market Making ANTI per day ($mm)$6.4
Execution Services ANTI per day ($mm)$1.9
Adjusted Operating Expenses ($mm)$193
Financing interest expense on long-term borrowings ($mm)$29.9
Blended interest rate on long-term debt~7.1%
Share repurchases (shares, $mm)1.3m; $48.1
Quarterly dividend$0.24/share
Cash, cash equivalents & restricted cash ($mm)$771.0
Long-term debt principal ($mm)$1,768.3
Weighted Avg Adjusted shares (for Normalized EPS)160.302m

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per shareQuarterly$0.24 (Q4 2024) $0.24 (Q1 2025) Maintained
Share repurchase capacityProgram-to-date$423.8m remaining (as of Jan 27, 2025) $373.8m remaining (as of Apr 17, 2025) Lowered (usage)
VES run-rate targetMedium-term—Management targets ~$2m/dayIntroduced
Blended interest rate on long-term debtCurrent run-rate—~7.1%New disclosure

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
AI/technology initiatives (algos/workflow)Ongoing platform upgrades and margin improvement; adjusted EBITDA margin rising “Switcher algo” using ML/AI; multi-asset Triton analytics; scaling VTS to sell-side Expanding product scope and adoption
Tariffs/macro volatilityVolume/volatility supported Market Making; sequential improvement Metals outperformed amid tariff-driven volatility; strongest NTI/day since 2021 Positive tailwind to capture
Product performance (VES)Continued growth, margin accretion; 6th straight quarter of increasing NTI by Q4 7th straight quarter of increasing NTI; medium-term $2m/day target Strengthening momentum
Regional trendsGlobal footprint in equities/options; diversification Growth in options (Asia/India/Japan); ETF Block expansion in Europe Broader geographic mix
Regulatory/legal backdropSEC proposals could impact market structure (forward-looking note) Similar cautionary note in 8-K Stable risk awareness
Digital assetsNot emphasized in Q3 PR; building capabilitiesExpanded tokens/venues; institutional streaming; ETF/futures/perpetuals roadmap Accelerating build-out

Management Commentary

  • “This represents our highest net trading income per day since 2021 and reflects the continued long-term improvement of our core business as well as our expansion into new markets.” — CEO .
  • “We do not see any reason why in the medium term, we cannot achieve a $2 million per day run rate for VES.” — CEO .
  • “The past several weeks included the highest volume and volatility days in Virtu’s history… our liquidity was more than sufficient to meet all associated obligations.” — CEO .
  • “Retail participation… shows a secular uptrend… account openings have continued to grow apace.” — CEO .
  • On VTS vs competitors: Virtu offering is an agency aggregation tool for smaller/regional brokers, scalable and multi-asset; competitors’ white-label RFQ offerings are different in approach and scalability — CEO .

Q&A Highlights

  • Sustainability of retail engagement: Management emphasized a secular uptrend and elevated baseline versus pre-pandemic levels; balanced contribution between customer and non-customer Market Making in Q1 .
  • VES growth specifics: Confidence in $2m/day run-rate driven by VTS rollout, cross-selling of analytics/EMS, multi-asset coverage, distribution partnerships, and product enhancements .
  • Non-customer Market Making growth: Emphasis on tech investments, connectivity, internalization, single-dealer streaming, and multi-asset expansion (FX, options, ETF block, digital assets) .
  • Crypto product roadmap: Liquidity provision across ~dozen+ coins (expanding), connections to major venues, institutional streaming, ETF/futures/options/perpetual futures build-out and EMS integration .
  • Competitive landscape in outsourced tech: Virtu’s VTS positioned for scalability and broader addressable market vs select white-label RFQ partnerships at rivals .

Estimates Context

MetricQ3 2024Q4 2024Q1 2025
EPS Consensus Mean (S&P Global)*$0.79$0.89$1.19
EPS Actual (Normalized Adjusted EPS)$0.82 $1.14 $1.30
Surprise ($)+$0.03+$0.25+$0.11
Revenue Consensus Mean (S&P Global, $mm)*$376.0$406.0$469.5
Revenue Actual (S&P Global, $mm)*$547.1$660.3$676.0
Surprise ($mm)+$171.1+$254.3+$206.5

Values retrieved from S&P Global.*

Implications:

  • EPS beat was consistent across Q3, Q4, and Q1, with the largest dollar beat in Q4 and a notable beat in Q1 driven by Market Making strength and VES scaling .
  • Revenue (S&P Global standardized) materially exceeded consensus in each period; company GAAP total revenues were higher than SPGI standardized “revenue,” reflecting taxonomy differences; nonetheless, directional surprise is clearly positive .

Key Takeaways for Investors

  • Near-term: Strong sequential momentum and robust Q1 capture supported by diversified non-customer Market Making and volatile macro backdrops; expect volumes to normalize but retail engagement baseline remains elevated .
  • VES scaling is a structural driver: multi-asset tech stack, analytics/EMS cross-sell, and VTS launch expand TAM; management’s ~$2m/day medium-term target underscores sustainable earnings power outside pure market volatility .
  • Operating leverage: Higher ANTI/day and disciplined costs (adjusted opex $193m) expand EBITDA margin to 64.4%, enhancing cash generation and return on capital potential .
  • Capital deployment: Continued buybacks ($48.1m in Q1) and $0.24 dividend signal commitment to shareholder returns; buyback capacity remains sizable at $373.8m .
  • Funding costs: Blended long-term debt rate ~7.1%; watch interest expense trajectory against margin expansion and capture sustainability .
  • Product innovation and breadth (options, ETF block, crypto, RFQ in fixed income) broaden participation and reduce reliance on single-asset cycles; internalization enhances execution quality and cost efficiency .
  • Estimates likely move higher: Consensus should adjust to reflect sustained ANTI/day, margin expansion, and VES trajectory; monitor subsequent quarters for continuation of beats vs SPGI .

Additional Notes

  • Q1 press release detailed segment contributions and reconciliations; Market Making total revenues $691.2m and ANTI $382.0m; Execution Services total revenues $141.0m and ANTI $115.1m .
  • Conference call announcement (Apr 3) and Virtu Technology Solutions launch (Mar 6) frame the quarter’s strategic focus on scaling VES capabilities and sell-side distribution .
  • Financial condition: $771.0m in cash/cash equivalents/restricted and $1,768.3m long-term debt principal as of Mar 31, 2025 .