Virtu Financial, Inc. · NYSE:VIRT
Virtu Financial — Q2 2020 Earnings Presentation
23 slides from Virtu Financial's earnings presentation, Aug 7, 2020
Slide 1: Second Quarter 2020 Earnings Presentation
Presentation Title in Second Title Case Quarter 2020 Earnings Presentation 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 © 2020 Virtu Financia
Slide 2: Second Quarter Highlights
Second Quarter Highlights Adj. NTI1 Adj. EPS1 Sustained Strong Results $668.7M $1.73 • Strategic execution of organic growth initiatives and sustained retail participation drove Adj. NTI of $668.7M and Adj. EPS of $1.73 • Strong results continue in Q3: Adj. NTI1/day estimate for July of $6.7M to $7.
Slide 3: Financial Snapshot
Financial Snapshot YTD 2Q 2020 vs 2Q 2019 3Q 2019 4Q 2019 1Q 2020 2Q 2020 ($mm) 2020 1Q 2020 2Q 2019 1 Adjusted Net Trading Income $239 $250 $257 $784 $669 $1,453 Daily Average Adj. NTI $3.79 $3.90 $4.08 $12.65 $10.61 $11.63 - 16% + 180% Market Making ANTI $134 $142 $151 $652 $552 $1,204 Mark et Mak
Slide 4: Strong Performance Continued in Q2
Strong Performance Continued in Q2 July results remain 70%-80% above historical average Average Daily Adjusted Net Trading Income1 $14 $12.65 $12 $10.61 $10 Millions per Day $8 $6.70 - $7.00 $6 $4.06 $3.90 $4.08 $3.88 $3.75 $3.79 $4 $2 $0 FY 2018* 1Q19* 2Q19 3Q19 4Q19 FY 2019* 1Q20 2Q20 Jul-20 Estim
Slide 5: Adjusted NTI Highlights and Drivers
Adjusted NTI Highlights and Drivers Adjusted Net Trading Income (NTI)1 2Q 2020 v Jul 2020 1Q 20192 2Q 2019 3Q 2019 4Q 2019 FY 20192 1Q 2020 2Q 2020 ($mm) 1Q 2020 Estimate Market Making Global Equities $139.6 $107.5 $102.5 $126.2 $475.8 $571.8 $474.0 - 18% Global FICC, Options, Other $36.1 $28.3 $39.
Slide 6: Secular Increase in Retail Engagement
Secular Increase in Retail Engagement Democratization of markets has been building for years • Information is better, cheaper and more accessible • New technologies are catalysts for regulatory change • Acceleration of long-term trends driven by work • Retail trading experience improved by brokers'
Slide 7: Organic Growth Initiatives Contributed 7% of Adjusted Net Trading Income in 1H20
Organic Growth Initiatives Contributed 7% of Adjusted Net Trading Income1 in 1H20 $105 1H Total Organic Growth $75 $105 Initiatives Adj. NTI1 ($M) $40 FY2018 2018 FY2019 2019 1H2020 2020 Global expansion of Virtu’s customer-facing ETF block franchise desk • Average daily Adj. NTI1 has increased 236%
Slide 8: Operating Expense Summary
Operating Expense Summary Adj. Operating Expense Forecast Full Year YTD FY 2020 1 2Q 2019 3Q 2019 4Q 2019 1Q 2020 2Q 2020 ($mm) 2019 2020 Guidance Cash Compensation $230 $64 $61 $62 $138 $104 $243 Operations & Administrative 103 31 25 27 22 23 44 Occupancy, Overhead & Cash Compensation $334 $95 $86
Slide 9: Appendix
VIRTU @ FINANCIAL ¥ Appendix
Slide 10: Retail Volume Growth
Retail Volume Growth Sustained growth in retail participation % reflects long-term trends Average Daily US Total Consolidated Volume (TCV) 14 12 10 Shares (Billions) 8 6 4 2 0 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 Executed Rule 605 Shares as % of T
Slide 11: Sustained Growth in Retail Engagement
Sustained Growth in Retail Engagement Virtu 605 Volume Virtu’s Rule 605 Marketable Share Volume Virtu’s Rule 605 Marketable Volume and Market Share 53% 2Q20 vs. 1Q20 900 7% 800 34% Average Shares per Day (millions) Average Shares per Day (millions) 800 700 6% 32% 700 600 5% 30% 600 500 500 4% 28% 40
Slide 12: Strong Track Record of Capital Return
Strong Track Record of Capital Return 21 consecutive quarters of paying a $0.24 dividend1 120% $2.00 100% $ per Share $1.50 80% Payout Ratio 60% $1.00 40% $0.50 20% $0.00 0% Announced Adj EPS* Dividends Declared Cumulative % Payout See endnotes at end of this supplement 12
Slide 13: Income Statement
Income Statement Income Statement YTD FY 2018 FY 20191 1Q 2020 2Q 2020 ($mm) 2020 Trading income, net $1,266.7 $912.3 $802.5 $744.0 $1,546.5 Commissions, net and technology services 184.3 499.5 170.7 147.7 318.5 Interest and dividend income 87.5 108.8 26.5 9.3 35.9 Direct Expenses: (-) Brokerage, ex
Slide 14: Adjusted EBITDA & Adjusted EPS
Adjusted EBITDA & Adjusted EPS Adj. EBITDA / Adj. EPS YTD FY 2018 FY 20191 1Q 2020 2Q 2020 ($mm) 2020 Income (Loss) Before income taxes $696.4 ($116.0) $466.3 $404.5 $870.8 (+) Financing interest expense 71.8 121.9 25.7 21.7 47.4 (+) Debt issue cost related to debt refinancing and prepayment 11.7 41
Slide 15: Debt Capitalization
Debt Capitalization Current debt structure at June 30, 2020 Debt Description Annual Maturity Rate Balance ($mm) Interest Paydown of $188M First Lien Debt - Floating Mar 2026 L + 3.00% $212 $6.8 of term loan in 2Q20 First Lien Debt - Fixed with 4.4% swap1 Mar 2026 4.40% $1,000 $44.0 created an additi
Slide 16: Balance Sheet & Trading Capital
Balance Sheet & Trading Capital Assets Liabilities and Equity 6/30/2020 6/30/2020 ($mm) ($mm) Cash and cash equivalents $670.8 Short-term borrowings, net $26.3 Cash and securities segregated under regulations and other 77.2 Securities loaned 1,204.1 Securities borrowed 1,435.8 Securities sold under
Slide 17: GAAP Income Statement
GAAP Income Statement Income Statement YTD FY 2018 FY 20191 1Q 2020 2Q 2020 ($mm) 2020 Trading income, net $1,266.7 $912.3 $802.5 $744.0 $1,546.5 Commissions, net and technology services 184.3 499.5 170.7 147.7 318.5 Interest and dividends income 87.5 108.8 26.5 9.3 35.9 Other 340.2 (2.2) 0.9 4.8 5.
Slide 18: Adjusted Net Trading Income Reconciliation
Adjusted Net Trading Income Reconciliation Operating segments Adjusted Net Trading Income Reconciliation Market Making ($mm) 1Q 20191 2Q 2019 3Q 2019 4Q 2019 1Q 2020 2Q 2020 Trading income, net $255.1 $205.6 $219.5 $228.1 $802.7 $744.7 Commissions, net and technology services 5.0 5.0 7.3 6.3 0.8 (0.
Slide 19: Adjusted Net Trading Income Reconciliation
Adjusted Net Trading Income Reconciliation Market Making Adjusted Net Trading Income Reconciliation Global Equities ($mm) 1 2Q 2019 3Q 2019 4Q 2019 1Q 2020 1Q 2019 2Q 2020 Trading income, net $208.6 $163.0 $166.0 $192.5 $708.3 660.4 Commissions, net and technology services 5.0 5.0 7.3 6.3 0.8 (0.6)
Slide 20: Adjusted Operating Expense Reconciliation
Adjusted Operating Expense Reconciliation Adjusted Operating Expenses Reconciliation FY 20191 1Q 2020 2Q 2020 ($mm) Employee compensation and payroll taxes $383.7 $170.4 $120.9 Operations and administrative 104.0 27.1 21.7 Communications and data processing 209.4 55.0 55.7 Depreciation and amortizat
Slide 21: 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 22: End Notes
End Notes These notes refer to metrics and/or defined terms presented on: Slide 2 1. This reflects a non-GAAP measure. Please refer to slides at the end of this presentation for reconciliation to the equivalent GAAP measure. 2. Adj. EBITDA margin is calculated as Adjusted EBITDA / Adj. Net Trading I
Slide 23: End Notes—continued
End Notes—continued These notes refer to metrics and/or defined terms presented on: Slide 12 * This reflects a non-GAAP measure. Please refer to slides at the end of this presentation for reconciliation to the equivalent GAAP measure. 1. Virtu Financial, Inc. went public in 2Q 2015. Slide 13 1. ITG