Virtu Financial, Inc. · NYSE:VIRT
Virtu Financial — Investor Presentation (June 2019)
31 slides from Virtu Financial's investor presentation, Jun 5, 2019
Slide 1: Disclaimer: Cautionary Statement Regarding Forward Looking Statements
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 2: Virtu is a Technology Service Provider to the Global Financial Markets
Virtu is a Technology Service Provider to the Global Financial Markets Virtu provides an and services end-to-end suite of technology-enabled products Multi-Asset Class We transact in over 25,000 financial instruments in all major asset classes. Workflow Solutions World-class product set of execution
Slide 3: Virtu by the Numbers
Virtu by the Numbers Scale, Service, and Distribution 2,000+ Clients 235+ Venues 50+ Countries 15 Offices 10,000+ Managed FIX Connections 5,700+ Unique EMS Installations 1,600+ 3rd Party EMS / OMS Connections 900+ IOI connections Global Footprint *Shaded areas represent regions in which Virtu provid
Slide 4: Virtu's Customer Base Spans Global Retail, RIA and Institutional Firms
Virtu's Customer Base Spans Global Retail, RIA and Institutional Firms Across the Buyside and Sellside APEX FINANCIAL SERVICES A1me1ritra,de Pershing® >A BNY MELLON COMPANYSM :il LPL Financial PR.II VATE WEALTH MANAGEMENT CO UMBIA T R.EADE I VESTMENTS / DL BlackRock CAPITAL GRoup· &\ wealthfr f ont
Slide 5: Focus on Financial Technology Products: Workflow Technology
Focus on Financial Technology Products Workflow Technology Expansive, unique connections across integrated workflow products Triton EMS & OMS Broker-neutral execution management (OMS, Compliance) 5,700+ Triton EMS 400+ Triton OMS 1,600+ 3rd party EMS / OMS connections 900+ IOI connections ITG Net 10
Slide 6: Focus on Financial Technology Products: Data & Trading Analytics
Focus on Financial Technology Products Data & Trading Analytics 75% Of the largest asset management firms use our TCA Transaction Cost Analytics (TCA) (Multi-asset capabilities for equities, futures FI and FX) Global Peer database Agency Cost Estimator (ACE) Smart Trading Analytics Pre-trade TCA Glo
Slide 7: Technology-Enabled Trade Life Cycle Solutions
Technology-Enabled Trade Life Cycle Solutions Across the Pre-Trade Trade Post-Trade Analysis Post Trade Process Clearance/settlement Book and records MIS/reporting 1 2 3 4 Transaction cost, measurement, analysis, and control Venue analysis Portfolio construction optimization Transaction cost estimat
Slide 8: Virtu's Focused Growth Strategy
Virtu’s Focused Growth Strategy 1 2 3 5-June-19 Leverage Virtu’s global multi-asset capabilities to expand products and service offerings to established client base Distribute Virtu’s unique multi-asset liquidity offerings over embedded broker-neutral distribution channels Selective acquisitions foc
Slide 9: Organic Growth Opportunities Identified of $25-50 Million Annually
Organic Growth Opportunities Identified of $25-50 Million Annually 12 5-June-19 Paths to Organic Growth Improve TechnologyExpand Assets Leverage Virtu’s market makingExpand product reach to include technology and algo suite tomultiple asset classes and improve upon existing ITGproducts products & se
Slide 10: Paths to Organic Growth: Expand client base
Leverage Virtu’s global multi-asset capabilities to expand products and service client base offerings to established Expands total addressable market and creates new revenue opportunities Triton EMS Triton OMS Trading Analytics Suite Algo Suite / Smart Order Router Algo Wheel Connectivity Network (I
Slide 11: Paths to Organic Growth: Distribute liquidity
Distribute Virtu’s unique multi-asset liquidity offerings over embedded broker-neutral distribution channels Expands total addressable market and creates new revenue opportunities ATS/MTF (POSIT) POSIT Alert RFQ-Hub OTC / Cash trading Custom Liquidity Solutions (vEQ, vFX, vFI, vEQ SI) 14 5-June-19 P
Slide 12: Workflow Technology and Trading Analytics are Attractive Businesses
Workflow Technology and Attractive Businesses Trading Analytics are Net Revenue1 $137mm $138mm $147mm Key Characteristics • • • Revenue streams are steadier Includes fees for installations and services Expansive, unique connections across integrated workflow products2 • Integral to overall growth op
Slide 13: Case Study: Virtu/MarketAxess Partnership
Case Study: Virtu/MarketAxess Partnership Delivering transparency and workflow efficiency to listed & OTC markets RFQ-hub brings asset managers and market makers together online to help electronically deliver aggregated and competitive liquidity, streamline workflow and improve pricing in OTC-negoti
Slide 14: Growth Through Acquisitions
Growth Through Acquisitions Our acquisition and inorganic value and growth investments have fostered shareholder Strategic Acquisitions 2011 2017 2019 Strategic Minority Investments 2008 2016 2019 17 5-June-19
Slide 15: Virtu's Performance History
Virtu's Performance History VIRTU FINANCIAL
Slide 16: Virtu's Run Rate Revenue Profile is Measurable Despite Inherent Volatility
Virtu’s Run Rate Revenue Profile is Measurable Despite Inherent Volatility rate Adj. NTI1 Pro Forma Combined Rolling NTM run for Virtu, KCG, and ITG $1,800 Max $1,600 2 (millions) PF Combined Rolling NTM ANTI PF Combined 2018 Adj. Operating Expense Announced Target Synergy PF Pre-Tax Income before I
Slide 17: Strong Cash Flow Generation with Focus on Returning Capital to Shareholders
Strong Cash Flow Generation with Focus on Returning Capital to Shareholders 4Q16 Total Long-Term Debt Pro Forma LTM Adjusted EBITDA $1,313 $251 $1,057 $426 $1,047 $498 $931 $527 $931 $618 $2,032 $716 Debt / Pro Forma LTM Adjusted EBITDA 5.2x 2.5x 2.1x 1.8x 1.5x 2.8x Cumulative Adjusted EPS since IPO
Slide 18: Return on Invested Capital Has Been Best-in-Class
Return on Invested Capital Has Been Best-in-Class Virtu ROIC: 25.7% Virtu returned 2.4x more on invested capital than our median peer in 2018 Peer Median ROIC: 9.7% Virtu1 Peers2 1 Pro Forma 2018, includes Virtu & ITG. This reflects a non-GAAP measure. Please refer to slides at the end of this prese
Slide 19: Financial Goals
Financial Goals additional acquisition 22 5-June-19 Revenue •Leverage growth opportunities to realize revenue Growth synergies Expense •On track for 2019 expense guidance Management •Track record of exceeding targets Capital •Reduce leverage to pre-ITG levels (1.5x to 2.0x) absent Management •Mainta
Slide 20: Financial Goals
Financial Goals Revenue Growth Expense Management Capital Management Leverage growth opportunities to realize revenue synergies On track for 2019 expense guidance Track record of exceeding targets Reduce leverage to pre-ITG levels (1.5x to 2.0x) absent additional acquisition Maintain consistent payo
Slide 21: Trading (Deployed) Capital Returns are Superior
Trading (Deployed) Capital Returns Strong Consistent Return on Deployed Capital are Superior 3,000 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2,500 2,000 1,500 1,000 500 - 2015 2016 2017 2018 Total Trading Capital ($mm) Return on Deployed Capital 24 Source: Virtu Financial Trading Capital ($mm) Ret
Slide 22: Adjusted Net Trading Income Reconciliation
Adjusted Net Trading Income Reconciliation ($mm) ($mm) Trading revenues, net Commissions and fees Investment income and other, net Exchange and clearance fees Payments for order flow Interest and dividends, net Gain from the sale of KCG Hotspot Gain on sale of investments Net gain related to tradeMO
Slide 23: Pro Forma LTM Debt-to-EBITDA Reconciliation (1 of 2)
Pro Forma LTM Debt-to-EBITDA Reconciliation (1 of 2) Pre-Tax Income (Loss) $24 $5 ($46) $131 $469 $50 $29 $149 ($16) Interest expense Depreciation and amortization Intangible amortization 7 7 0 13 7 0 29 16 6 25 18 9 25 15 7 21 16 7 21 16 6 16 14 6 32 16 11 Severance Reserve for legal matter Transac
Slide 24: Pro Forma LTM Debt-to-EBITDA Reconciliation (2 of 2)
Pro Forma LTM Debt-to-EBITDA Reconciliation (2 of 2) Pre-Tax Income (Loss) $6 ($0) $3 $2 Interest expense Depreciation and amortization 0 11 0 11 0 11 0 11 Lease consolidation SEC settlement accrual and related fees Acquisition costs Restructuring Share-based compensation Investment Income - - - 7 8
Slide 25: Return on Invested Capital Reconciliation
Return on Invested Capital Reconciliation Adjusted EBITDA $733 Depreciation and amortization (105) Pro Forma Tax (24%) (151) Total Equity Short-term borrowings Long-term borrowings Cash and cash equivalents $1,458 21 1,122 (637) $1,442 44 1,016 (660) $1,385 15 904 (416) $1,495 15 907 (736) Total Equ
Slide 26: Adjusted EPS Reconciliation
Adjusted EPS Reconciliation 1Q 2019 29 Adjusted EPS Reconciliation 2Q15 to ($mm) 4Q15 FY 2016 FY 2017 1Q 2018 2Q 2018 3Q 2018 4Q 2018 1 Pre-Tax Income (Loss) $135.8 $179.6 $113.2 $468.5 $49.6 $29.4 $148.8 ($16.2) Intangible amortization 0.2 0.2 15.4 Financing interest expense - - 4.6 Debt issue cost
Slide 27: Trading Capital Reconciliation (1 of 3)
Trading Capital Reconciliation (1 of 3) As of: 3/31/15 12/31/15 12/31/16 12/31/17 12/31/18 ($mm) (+) Cash and cash equivalents (+) Securities borrowed (+) Securities purchased under agreements to resell (+) Receivables from broker-dealers and clearing organizations (+) Trading assets, at fair value
Slide 28: Trading Capital Reconciliation (2 of 3)
Trading Capital Reconciliation (2 of 3) As of: 3/31/15 12/31/15 12/31/16 ($mm) (+) Cash and cash equivalents (+) Cash and cash equivalents segregated under federal and other regulations (+) Funds held in escrow (+) Total financial instruments owned, at fair value (+) Collateralized agreements, Secur
Slide 29: Trading Capital Reconciliation (3 of 3)
Trading Capital Reconciliation (3 of 3) As of: 3/31/15 12/31/15 12/31/16 12/31/17 12/31/18 ($mm) (+) Cash and cash equivalents (+) Cash restricted or segregated under regulations and other (+) Deposits with clearing organizations (+) Securities owned, at fair value (+) Receivables from brokers, deal
Slide 30: To learn more, contact your sales representative
To learn more, contact your sales representative or call our desk at: APAC +852.2846.3592 | CAN +1.416.874.0800 | EMEA +44.20.7670.4066 | US +1.212.444.6250 info@virtu.com | www.virtu.com © 2019 Virtu Financial, Inc. All rights reserved. Not to be reproduced or retransmitted without permission. ITG,
Slide 31: To learn more, contact your sales representative
To learn more, contact your sales representative or call our desk at: ‘APAC +852.2846.3592 | CAN +1.416.874,0800 | EMEA +44 20.7670.4066 | US +1.212.444,6250 ‘info@virtu.com | www.virtucom (© 2019 Vitu Financia, In. Al sights reserved, Not tobe reproduced or retransmitted without permission. ITG, PO