Virtu Financial, Inc. · NYSE:VIRT
Virtu Financial — Q1 2023 Earnings Presentation
26 slides from Virtu Financial's earnings presentation, Apr 20, 2023
Slide 1: First Quarter 2023 Earnings Supplement
Presentation Title in First Quarter 2023 Title Case Earnings Supplement Presentation subtitle in sentence case Presenter Name Event name xx Month 201x © 201X Virtu Financial. All rights reserved. Not to be reproduced or retransmitted without permission. Compliance #XXXX-XXXX © 2022 Virtu Financial.
Slide 2: Performance Highlights
Performance Highlights 1Q 2023 Key Financials Commentary & Highlights FY 2020 Accomplishments Normalized • Market Making and Execution Services Adj. NTI1 Adj. NTI/day1,2 Adj. EPS1 capitalized on opportunities presented in $373M $6.0M $0.74 1Q 2023 across myriad global asset classes Adj. EBITDA Debt
Slide 3: Key Financial Metrics
Key Financial Metrics Annual Quarterly Comparison FY FY FY FY 2022 FY 2023 1Q 2023 v YTD'23 v ($M) 2020 2021 2022 1Q 2Q 3Q 4Q 1Q 4Q'22 1Q'22 FY'22 Total Adjusted Net Trading Income 1,2 $2,271 $1,910 $1,468 $505 $357 $331 $274 $373 + 38% - 26% + 3% Daily Average Adj. NTI 1,2 $9.0 $7.6 $5.8 $8.1 $5.8
Slide 4: Major Market Metrics
Major Market Metrics Annual Quarterly Comparison FY FY FY FY 2022 FY 2023 1Q 2023 v YTD'23 v 2020 2021 2022 1Q 2Q 3Q 4Q 1Q 4Q'22 1Q'22 FY'22 Market Metrics (Average Daily) Volume Metrics US Equity Consolidated Volume (M shares) 10,924 11,404 11,874 12,880 12,585 10,899 11,174 11,784 + 5% - 9% - 1% U
Slide 5: Organic Business Growth
Organic Business Growth CAGR2 + 39% $806K per day $656K $614K $658K $576K $658K $579K per day per day $548K per day per day per day per day $501K per day per day $296K $160K per day Daily Average Adj. NTI1 from per day Organic Growth Initiatives FY'18 FY'19 FY'20 FY'21 FY'22 YTD'23 1Q'22 2Q'22 3Q'22
Slide 6: Capital Management
Capital Management Ongoing share repurchases reduced share count by 3.9M to 170.2M Steady Payout in All Environments Share Buybacks2,3 Dividends declared per share and Adjusted EPS1, quarterly Shares outstanding and share repurchases, quarterly $2.04 Weighted $10 198.1M 197.5M Avg. Share 201.0 196.9
Slide 7: Update on Share Buybacks
Update on Share Buybacks Cumulative Shares Repurchased to Date 1,2 60M 13.6% 14.0% 16% 12.9% 14% 50M 11.8% 10.0% 12% 40M 9.1% 36.3M 36.9M 10% 30M 30.3M 32.3M 8% 5.2% 5.6% 25.1M 26.8M 20M 6% 1.0% 2.7% 16.1M 4% 10M 0.8% 12.5M 7.1M 2% 1.4M 3.7M - 0% Cumulative Shares Repurchased % of Shares Outstanding
Slide 8: Operating Expenses and Long-Term Debt
Operating Expenses and Long-Term Debt Disciplined focus on expense management Operating Expense Results Annual Quarterly Adjusted Operating Expenses FY FY FY FY 2022 2022 2022 2022 2023 ($M) 20192 2020 2021 2022 1Q 2Q 3Q 4Q 1Q Adj. Cash Compensation1 $230 $321 $314 $315 $88 $79 $84 $65 $85 1 209 214
Slide 9: Growing Consensus Supports Phased & Limited Reforms
Growing Consensus Supports Phased & Limited Reforms Except for the proposal to enhance Rule 605, there is broad opposition to Gensler’s proposals. Two joint comment letters (NYSE/Charles Schwab/Citadel Securities and Cboe/State Street Global Advisors/T. Rowe Price/UBS/Virtu Financial) urged the SEC
Slide 10: GAAP Reconciliations and Other Information
GAAP Reconciliations and Other Information
Slide 11: Growing Consensus Supports Phased & Limited Reforms: Rule 605
Growing Consensus Supports Phased & Limited Reforms Proposed Rule 605 Reform Broad Consensus: Take a phased approach, start with enacting Rule 605 reform and then pause the remaining proposals until after reassessing its impact on liquidity and competition. “The Commission Should Implement Market St
Slide 12: Growing Consensus: Auction Proposal (1/2)
Growing Consensus Supports Phased & Limited Reforms Auction Proposal (1/2) Broad Consensus: The SEC should NOT adopt this proposal; Will harm investor execution quality. “[W]e think the proposed auction mechanism could have unintended consequences that actually increase volatility of lower liquidity
Slide 13: Growing Consensus: Auction Proposal (2/2)
Growing Consensus Supports Phased & Limited Reforms Auction Proposal (2/2) Broad Consensus: Institutions will not replace lost wholesaler liquidity. “Several of our broker counterparties provide Capital Group with access to their retail order flow. It is our experience that this flow provides limite
Slide 14: Growing Consensus: Best Execution Proposal
Growing Consensus Supports Phased & Limited Reforms Best Execution Proposal Broad Consensus: The SEC should NOT adopt this proposal; Will undermine existing investor protections. “We respectfully recommend that the Commission not adopt this proposal.” ““We … strongly support the principle of Best Ex
Slide 15: Growing Consensus: Proposed Reg NMS Changes
Growing Consensus Supports Phased & Limited Reforms Proposed Reg NMS Changes Broad Consensus: Only reduce ticks to ½ penny and only for tick-constrained symbols; Tiny ticks and harmonization would hurt investors “We are particularly concerned that tick sizes of less than one half of a cent per share
Slide 16: GAAP Balance Sheet
GAAP Balance Sheet Assets Liabilities and Equity 3/31/2023 3/31/2023 ($M) ($M) Cash and cash equivalents $769 Short-term borrowings, net $121 Cash and securities segregated under regulations and other 40 Securities loaned 1,028 Securities borrowed 1,458 Securities sold under agreements to repurchase
Slide 17: GAAP Income Statement
GAAP Income Statement Annual Quarterly Income Statement FY FY FY FY FY FY 2022 FY 2023 ($mm) 2018 1 2020 2021 2022 1Q 2Q 3Q 4Q 1Q 2019 Trading income, net $1,267 $912 $2,493 $2,105 $1,629 $522 $396 $397 $313 $412 Commissions, net and technology services 184 499 601 614 530 155 136 121 118 121 Intere
Slide 18: Adjusted EBITDA & Normalized Adjusted EPS
Adjusted EBITDA & Normalized Adjusted EPS Adj. EBITDA / Adj. EPS FY FY FY FY FY FY 2022 FY 2023 ($M) 2018 1 2020 2021 2022 1Q 2Q 3Q 4Q 1Q 2019 Income (Loss) Before income taxes $696 $(116) $1,383 $997 $557 $242 $174 $102 $40 $135 (+) Financing interest expense 72 122 88 80 92 21 22 23 25 24 (+) Debt
Slide 19: Share Count Roll Forward
Share Count Roll Forward 2021 2022 Grand (M shares) 4Q 2020 1Q 2022 2Q 2022 3Q 2022 4Q 2022 1Q 2023 Total Total Total Beginning of Period Shares 197.1 195.6 186.1 179.1 177.3 173.9 186.1 171.7 197.1 Shares Repurchased - 1.44 - 14.71 - 8.90 - 1.76 - 3.44 - 2.23 - 16.34 - 4.91 - 37.39 Net Shares Issue
Slide 20: Adjusted Net Trading Income Reconciliation
Adjusted Net Trading Income Reconciliation Operating Segments Adjusted Net Trading Income Reconciliation Total ($M) 1Q 2021 2Q 2021 3Q 2021 4Q 2021 1Q 2022 2Q 2022 3Q 2022 4Q 2022 1Q 2023 Trading income, net $813 $385 $394 $513 $522 $396 $397 $313 $412 Commissions, net and technology services 192 14
Slide 21: Adjusted Net Trading Income Reconciliation: Organic Growth Initiatives
Adjusted Net Trading Income Reconciliation Organic Growth Initiatives Organic Growth Initiatives Adjusted Net Trading Income Reconciliation Annual Quarterly ($M) 2018 2019 2020 1Q 2021 2Q 2021 3Q 2021 4Q 2021 1Q 2022 2Q 2022 3Q 2022 4Q 2022 1Q 2023 Trading income, net $36 $77 $246 $62 $35 $28 $23 $5
Slide 22: Adjusted Operating Expense Reconciliation
Adjusted Operating Expense Reconciliation Annual Quarterly Adjusted Operating Expenses Reconciliation FY FY FY FY 2022 FY 2023 ($M) 2020 2021 2022 1Q 2Q 3Q 4Q 1Q Employee compensation and payroll taxes $394 $376 $391 $103 $99 $103 $86 $103 (-) Cash Compensation Adjustments 1 (72) (62) (76) (16) (20)
Slide 23: Disclaimer
Disclaimer Cautionary Statement Regarding Forward Looking Statements This presentation may contain “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements regarding Virtu Financial, Inc.’s (“Virtu’s”, the “Company’s
Slide 24: End Notes
End Notes These notes refer to metrics and/or defined terms presented on: Slide 2 Performance Highlights 1. This reflects a non-GAAP measure. Please refer to slides at the end of this presentation for reconciliation to the equivalent GAAP measure. Prior period reconciliations available https://ir.vi
Slide 25: End Notes—continued
End Notes—continued These notes refer to metrics and/or defined terms presented on: Slide 6 Capital Management 1. This reflects a non-GAAP measure. Please refer to slides at the end of this presentation for reconciliation to the equivalent GAAP measure. Prior period reconciliations available https:/
Slide 26: End Notes—continued
End Notes—continued These notes refer to metrics and/or defined terms presented on: Slide 9 Growing Consensus Supports Phased & Limited Reforms 1. A minimum trading increment (1/10th penny) was suggested in the NYSE/Schwab/Citadel joint letter, but otherwise has not been widely supported. Slide 16 G