Virtu Financial, Inc. and Subsidiaries Quarterly Report (Form 10-Q)
Virtu Financial, Inc. reported its quarterly financial results for the period ended March 31, 2025. The company’s revenue increased by 12% to $1.23 billion, driven by growth in its market making and agency execution services. Net income rose to $143 million, or $1.67 per diluted share, compared to $123 million, or $1.45 per diluted share, in the same period last year. The company’s operating expenses increased by 15% to $844 million, primarily due to higher compensation and benefits expenses. Virtu Financial’s cash and cash equivalents stood at $1.43 billion as of March 31, 2025, and the company had no debt. The company’s Class A common stock outstanding as of April 23, 2025, was 85,911,653 shares.
Overview of Virtu Financial’s Performance
Virtu Financial is a leading financial services firm that uses cutting-edge technology to provide liquidity and innovative trading solutions to clients around the world. The company has two main business segments - Market Making and Execution Services.
In the first quarter of 2025, Virtu Financial reported strong financial results. Total revenues increased by 30.3% to $837.9 million, driven by a 44.6% increase in trading income and a 27.6% increase in commissions and technology services revenue. The company’s Adjusted Net Trading Income, a key non-GAAP metric, grew by 35.5% to $497.1 million.
Net income available to stockholders was $99.7 million, up from $55.8 million in the same period a year earlier. Earnings per share increased from $0.59 to $1.08 on a diluted basis. The company’s GAAP net income margin improved from 17.3% to 22.6%, while its non-GAAP net income margin increased from 30.3% to 38.1%.
Segment Performance
The Market Making segment, which generates the majority of Virtu’s revenues, saw a 32.7% increase in total revenues to $691.2 million. This was primarily due to higher trading volumes and increased opportunities across global markets. The Execution Services segment also performed well, with a 19.7% increase in total revenues to $141.0 million, driven by stronger institutional engagement and higher client volumes.
The Corporate segment, which includes investments and corporate overhead, contributed $5.7 million in revenues, up 40.7% from the prior year period.
Expenses and Profitability
Virtu’s operating expenses increased by 22.1% to $614.1 million, largely due to higher brokerage, exchange and clearance fees, as well as increased employee compensation and payroll taxes. However, the company was able to leverage its scale and technology to maintain strong profitability.
EBITDA, a non-GAAP measure of operating performance, grew by 44.8% to $283.0 million, with the EBITDA margin expanding from 53.3% to 56.9%. Adjusted EBITDA, which excludes certain non-recurring items, increased by 57.6% to $319.9 million, with the Adjusted EBITDA margin improving from 55.3% to 64.4%.
Normalized Adjusted Net Income, another non-GAAP metric that adjusts for non-cash and one-time items, rose by 67.5% to $208.3 million. Normalized Adjusted Earnings per Share increased from $0.76 to $1.30.
Liquidity and Capital Resources
As of March 31, 2025, Virtu had $723.7 million in cash and cash equivalents. The company maintains various broker-dealer facilities and short-term credit facilities to support its daily trading operations, with $158.1 million in outstanding short-term borrowings and $110.0 million in broker-dealer facility borrowings as of the end of the quarter.
Virtu also has a $1.8 billion senior secured credit facility, which was recently amended to include a $1.25 billion term loan and a $300 million revolving credit facility. In addition, the company issued $500 million of 7.5% senior secured notes due 2031.
The company’s regulated subsidiaries are subject to various regulatory capital requirements, which Virtu actively manages to ensure compliance. As of March 31, 2025, Virtu was in compliance with all applicable regulatory capital requirements.
Outlook and Risks
Virtu’s management believes the company’s technology-enabled market making and execution services business model will continue to benefit from favorable industry trends, such as increased market volatility, growing institutional engagement, and the ongoing shift towards electronic trading.
However, the company faces several risks and uncertainties that could impact its future performance. These include potential changes to equity market structure and regulation, increased competition, reliance on third-party infrastructure, cybersecurity threats, and macroeconomic and geopolitical factors.
Virtu’s management team closely monitors these risks and has implemented various risk management controls and strategies to mitigate potential impacts. The company’s diversified business model, scalable technology platform, and low-cost structure are designed to help it navigate a dynamic market environment.
Overall, Virtu Financial’s strong first quarter results demonstrate the company’s ability to leverage its competitive advantages and deliver value to shareholders, even in the face of an uncertain economic and regulatory landscape. The company’s focus on technology, liquidity provision, and client-centric solutions position it well for continued growth and success.
