Q1 2021 Virtu Financial Inc Earnings Call
And then take your questions for.
A few reminders today's call may include forward looking statements, which represent virtues current belief regarding future events and are therefore subject to risks assumptions and uncertainties, which may include.
Which may be outside the company's control.
Please note that our actual results and financial condition may differ materially from what is indicated in these forward looking statements.
It's important to note that any forward looking statements made on this call are based upon information presently available to the company and we do not undertake to update or revise any forward looking statements as new information becomes available.
For you to disclaimers in our press release and encourage you to review the description of risk factors contained in our annual report and form 10, and 10-K and other public filings.
During today's call and in addition to GAAP results, we may refer to certain non-GAAP measures, including adjusted net trading income adjusted net income adjusted EBITDA and adjusted EBITDA margin.
Non-GAAP measures should be considered of supplemental to and not superior to financial measures prepared in accordance with GAAP.
We direct listeners to consult the investor portion of our website, where you will find supplemental information referred to on this call as well as reconciliation of non-GAAP measures to the equivalent GAAP term and.
And the earnings materials with an explanation of why we deem this information to be meaningful as well as how management uses these measures and with that I'll turn the call over to Doug.
Thank you Andrew Good morning, everyone and thank you for joining our first quarter earnings call I will start with a brief overview of our near record results and the quarter and highlight some recent successes, including the strong contribution from our organic growth initiatives and provide an update on the record quarter delivered by our execution services business.
Yes.
And our core everything and Virtu is driven by our ability to apply technology to efficiently and transparently serve our customers and of market.
Of course of this business model centered on building and leveraging our operating scale.
We're able to generate a record 77, 6% adjusted EBITDA margin and the first quarter this year.
And I'll get to more of our results in a moment, but I want to point out how the market changes over the last year created last day of opportunities for Virtu.
And the levels of activity and the market and Q1 were extremely robust our performance was driven however by the beneficial long term trends and the market as well as our organic growth initiatives.
Getting in 2020 and to this day, we see a new level of engagement from first time market participants and the way they are engaged and continues to evolve.
But Deutsche Bank study from early this year reported net 45% of retail investors are new to the market and the last year and why.
One of the major E. Brokers recently commented that that almost 70% of of daily logins or from a mobile device.
And while it is difficult to estimate of levels at which these activities will continue compared to the recent past we are confident of the underlying trends will remain in place supported by Virtu and a robust market ecosystem system capable of handling this level of extraordinary activity during.
During the first quarter, our market, making results reflected continued strength across the board and our underlying businesses are.
Our customer market, making business performed exceptionally well and the long term trend is driven by technology innovation and competition continued to enable and support unprecedented levels of retail and professional investor engagement. This.
This performance was buttressed by our of non customer market, making business, which saw a healthy and steady performance across asset classes and geographies, where we make market.
And total our market, making business realized $575 million and adjusted net trading income or $99 4 billion per day on par with of first half of 2020, we.
We also provided a total of $470 million and price improvement to retail investors and Q1.
And it's important to note that while this amount is impressive as a standalone matter. It is more impressive when what we call size improvement is conservative we not only offer investors excellent execution prices would do so and sizes that are often about three times larger than what is available at the top of book National Best.
First off of prices none of this size of improvement is included and any rule 605 or 606 filings.
Our growth to execution services business has also performed exceedingly well this quarter, we realized $153 million and adjusted net trading income a record quarter performance for the year.
We are of slide in our supplemental materials, which provides a snapshot of this business.
Joining of the second quarter Mark of the second anniversary of our closed on the acquisition of ITG and slide three illustrates the 26% CAGR we achieved over this timeframe.
Two years later, you can see the business remains truly global and our clients represent the largest global institution and our connected the virtue of across a broad array of products and services.
If you recall our entrance into the execution services business and again as an organic initiative and its growth was accelerated through the acquisition of KCG and ITG at.
And at the time, when we acquired KCG and ITG net profitability in each of their execution services businesses were struggling burdened by legacy technology cost and efficiencies and a backward looking view of these businesses.
And the years following of these acquisitions for the heavy lifting of integrating and of leadership of Steve Kibali. We have if we were able to successfully invest and the customer technology enhancements necessary to thrive and compete in this business while at the same time Manning managing the cost basis, and a virtu way.
While we do not breakout segment profitability I am proud to report that the profit margin and this business are far superior sort of marginally profitable businesses, we acquire and likely among the most profitable global institutional businesses and.
Along the path to improving profitability of this segment, we continue to find efficient ways to offer more value for our clients without the risks inherent in a more traditional prime brokerage model run by nearly every competing scaled player.
Offerings of our organic because of our scale and integration often generate almost 100% incremental margin.
One such driver of our growth story of constantly of unique offerings and sausage sources, which our clients can only access for our execution tools, including allowing customers to realize the potential benefit available by assessing accessing excuse me the multiple sources of unique liquidity by virtue of our global market and make it real.
<unk> chips, and our U S 605 wholesale business as well as the 2000 and VEGF client I mentioned just now.
With this with this offering our global client network of investors, including buy side and sell side of institution.
As asset managers, and ETF issuers are able to transparently interact with pools of unique liquidity from across our businesses, including retail order flow to achieve their investment objectives by trading with more offsetting flow and assure and achieving larger sized fills.
And again access to all of this liquidity is only available through Virtu and now we have spoken briefly about this offering and the past what I provided update the highlight of meaningful progress. We've made of the last several months and the larger opportunity ahead.
Continuing along our growth of the one aspect of the Virtu story that we are very proud of and I think we'll make increasing important contribution for the coming years as the performance of our organic growth initiatives.
Overall since 2018, the investments we have made and these various businesses on slide for now comprised 8% of our adjusted net trading income.
You can see that our myriad avenues of growth contributed.
Contributed.
Two our performance our 900 $942000 per day of and from these growth initiatives represent 8% of our anti <unk> for the quarter.
These initiatives are truly organic and that our anti from any of these revenue sources was immaterial only a few years ago and we've achieved these results without additional acquisition.
We achieved this the virtu way, which means by leveraging our scale of infrastructure supplemented with a handful of individual hires.
And there are a few initiatives that deserve mentioned beyond what is presented in slide four and the supplemental materials first our options market, making business continues to make significant progress compared to 2020, our daily average adjusted net trading income and options increased over 50% and the first quarter of 2021.
Non <unk>.
<unk> is of high priority growth Avenue for Virtu, and we're investing and and made us a handful of strategic hires to help accelerate our time.
Our recent efforts and the crypto asset space also contributed to strong results and the first quarter our focus on trading crypto of products comes from the launch of the bitcoin and either Etfs and Canada in late February of this year. The VTS now have over $1 billion Canadian assets, and Canada or to work with the ETF issuers to launch the <unk>.
Products and become the designated broker of lead market maker and and authorized participants on a handful of the new Etfs, providing liquidity on screen and and blocks to our client as an AP, we create redeem ETF shares with ETF issuers and trade and the underlying crypto assets. The takeaway here that the growth of of liquid tradable.
Of crypto related product is another way that the total addressable market is growing for virtu scaled liquidity provision and executing executing execution services.
Our growing aftermarket business had a strong quarter setting a new record, helping clients raised nearly $900 million of capital from the public markets by leveraging our existing electronic execution capabilities and network of clients.
This is another example of how we generate very high incremental margin revenue due to our operating scale common technology platform and sizable footprint.
First quarter Holst included more of more net its share of discussion around market structure rules and regulations congressional hearings around the so-called bienstock payment for order flow investor education, shortly and of settlement cycles gamification and other important issues.
We welcome SFC, Chairman and Gensler and congratulate him on his new role, we will continue to maintain and open dialogue with all of our global regulators about how to continue to improve the global market structure for all market participants. We believe that we operate in a transparent market structure and the U S that serve all market participants.
Exceedingly well and.
U S. Equities for example, U S. Virtu returned one 3 billion for retail investors and the form of price improvement and 2020 without giving effect to the size of improvement noted above.
We believe that the levels of activity and the market is evident and itself of the open and transparent access that all investors and joined today.
Finally, given the strength of the results from the beginning of this year and the continued cash generative nature of our business.
We are meaningfully expanding our share buyback program by an incremental $300 million.
Which represents an increase to the existing $170 million authorization and of <unk>.
Moment, Joe will provide more detail on this and other matters and then Shawn will wrap up our call with a review of our numbers.
Before I conclude my prepared remarks, I want to pause for a moment to honor the memory of an industry leader and a longtime member of the Virtu Board of directors, Mr. Jack Standard Jack.
Jack was a mentor to many and myself and was and was of Great Man Jack was the chairman of the CMA and for the better part of two decades of among those responsible for guiding the CME into the modern electronic age Jack We will Miss you and are grateful for all you of all of your efforts over the years on behalf of Virtu and the capital markets more generally rest of.
And piece, Jeff now I will turn the call over to Jeff.
Doug.
Measuring against and progress we have made versus the model that we presented and the second half of last share.
And how the progress of our growth initiatives and performance are consistent with what we outlined and expressing confidence and the.
The future long term growth of our business, we are increasing our share repurchase program, meaning.
Our share repurchase program began in November 2020, with an initial $100 million authorization and increased.
$170 million and total when we announced our Q4 earnings and.
Doug just mentioned our board has authorized an incremental $300 million increase to our repurchase program, bringing the total of $470 million.
And can provide and specific parameters for earnings and share repurchases and prior communication equal.
And you believe and increasing the share repurchase authorization by an additional $300 million and consistent with our prior guidance.
This increase allows us to achieve our goal of of returning excess capital and efficient manner for our shareholders allows us to be and continuous purchaser and the market for our shares reduced the share of outstanding overtime and allows us to remain flexible to increase the authorization and the future and conditions and our results of Wow.
To date, we have repurchased $151 million of our share at an average cost of $27 77.
Resolving of $5 4 million share repurchase and.
The inception of our buyback program about six months ago.
And is important to note and our share buybacks of the result of excess cash generated by our business after making proper allowance for adequate amount of trading capital and liquidity to allow us to take advantage of market opportunities.
Our ability to devote excess cash for share repurchase program is also related to our total capitalization and long term debt outstanding.
Given that our total debt ratio stands at 100 trailing EBITDA as of March 30 for us.
We would expect to maintain our current level of indebtedness for the foreseeable future.
Turning to slide five of the supplemental materials to review of our capital management snapshot.
As you know Mercury has consistently paid of 24 quarterly dividends and since our IPO in 2015.
There are two important things to point out on this slide.
And just stick with guidance, our share count and declining due to our buyback program.
Your line is net of vesting of restricted stock and of the share awards and are part of our regular employee compensation.
You would expect and as we consummate the existing repurchase authorization within the next 12 months and net shares outstanding will continue to decline.
And portable wanted to point out what we believe is of significant and underappreciated aspect of virtuous upward from operations. Despite.
Despite virtuous growth as a global multi asset credit market maker, and our strategic expansion and two offerings of execution workflow and analytics products to the buy side and sell side. We continue to remain focused on capital efficiency and <unk>.
Each of our operations and services, we provide are non capital intensive and allow us to maintain a relatively consistent level of capital and cross market environment.
You can see from this slide and EBIT of 2019 of trough year for market, making and a year that also included.
And of the ITG acquisition, we were able to achieve strong cash returns on invested capital.
We are prepared for 2020 were driven by.
Virtu, realizing additional expense synergies from integration executing on our organic growth initiatives and a new level of market average.
Market activity Virtu generated a return on invested capital of 100% of 2020.
It's extraordinary outcome of a number of factors, including our disciplined management of capital Hong Kong and.
And our business model designed to leverage our global operating scale, all of which helps us generate more free cash flow.
I'll now turn the call over to Shaun for a review of our financial results before moving to questions and answers.
Thank you Chuck and the first quarter as presented on slide three of our supplemental materials are adjusted net trading income, which represents our trading gains net of direct trading expenses totaled $728 million or 11 9 million per day, which is 7% lower than Q1 2020.
And 60% of above the fourth quarter.
Making adjusted trading net trading income was $575 million or $9 $4 million per day, 10% lower and the year ago quarter by 88% above the fourth quarter.
Execution services adjusted net trading income was $153 million for $2 $5 million per day, which is a record high and of 19% increase year over year.
Our $2 and <unk> and adjusted EPS was just a penny shy of last year's record first quarter, and well above $1 18 per share and fourth quarter of 2020.
And the first quarter, our cash and overall compensation ratios were 12% and 14% of adjusted net trading income respectively.
Of note about our compensation ratio consistent with past practice, we accrue year and incentive compensation to a range of percentage is earlier in the year and.
Ending upon how the remainder of the year unfolds. This may result in adjustments to our compensation ratio and later quarters. This year as we refine our specific compensation targets.
Overall, we believe our full year cost results and consistent with the cost guidance. We previously provided for 2021.
Sure.
Adjusted EBITDA came in at $565 million for Q1, 1% lower than the prior year quarter, and 64% above the fourth quarter.
We delivered a record adjusted EBITDA margin of 77, 6% for the first quarter by continuing.
And to successfully leverage our efficient cost structure and by carefully managing our expenses and.
And as Joe mentioned, our capitalization remains adequate and our debt remains relatively flat at $1 67 billion, reflecting a $1 5 million repayment in the first quarter.
Financing interest expense was $19 million for the first quarter of 2021 compared to $26 million the price.
Prior year first quarter with the decrease primarily due to the repayment of $289 million of long term $289 million of long term debt in 2020.
We remain committed to our 'twenty for cent quarterly dividend, which we have consistently paid over 23 quarters and every market environment since our IPO.
And of 300 million dollar increase we announced today to our existing $170 million share buyback authorization fully demonstrates our continued commitment to return capital to our shareholders.
I will now turn the call back over to the operator for Q&A.
We will now begin the question and answer session.
Question You May Press Star then one of your attention.
Gary I think and speaker.
Thank you for your handset.
Yes.
Withdraw your question. Please press Star then two.
At this time of a pause momentarily to assemble all of us.
Our first question today will come from rich for part of Piper Sandler.
Yes, good morning, Doug and Joe and Sean for.
First congrats for them over the top quarter here. So I guess my first question and it has to do and cash flow.
You did buy back shares and.
And we have paid down debt debt and the past, but and you've previously sort of public.
Statements you talked about.
And buyback commensurate with the adjusted net trading income so I mean.
And I understand the timing of the buyback and be more accelerated I guess going forward because of the increased cash and cash flow.
Yes rich.
And we put those heavy chart out of channel.
EPS and and levels of cash flow at different levels of net trading income.
So we think this is consistent and maybe.
What we've put out and the path.
And I look at this quarter to quarter right. So you want to take for full year range and we put out here with you quarter, Isaac I think of.
And.
And it's also a statement about the full year, obviously, if we continue to for a quarter like this we would have more.
We would have share buybacks and look what we've guided for the full year. So I guess, that's the first point the second point is.
Yes.
And we've already bought back of $150 million worth of share.
Sure.
It is almost the full authorization of 170 <unk> prior to this.
And.
And would expect of the board authorized a new repurchase horizon of a year from from now.
And I would target.
And starting now through the end of the per quarter of next year. So I would look at it as kind of a rolling 12 month periods.
Chosen to not trying to.
And stock prices will there will be a buyer and not the other places where it won't be a buyer.
We've tried to look at it I think most people look at these things over 12 to 18 month period, we've tried to tighten that up because we've been sort of specific collateral guidance.
And we've tried to be consistent purchaser of the market.
And at all levels and.
And I think.
Teams have worked so far.
Got it that's helpful. Joe and then I guess my follow up would be you didn't update or address the sensitivity tables on adjusted net trading income and EPS and you published I'm, assuming that you still believe.
The earnings.
And you've far surpasses, but the earnings capability in a normalized environment is at least $3.
The question of it will come from.
For me or someone else later.
Could you talk about.
Have we returned to that more sort of of normalized environment and how close are we to it like in the and <unk> to date in April.
Yes.
I'd say.
You are not to be flip rich and I feel pretty good about $3 per share this year.
Given that we're at $2 for so.
<unk> is about 12 months, which is which is a good thing.
There is no reason to update the chart.
Given that math right.
The adjusted net trading income per day.
Number of trading day, as and when we've been really precise about expense guidance as we always are so so it's pretty easy math.
The host of the virtual book in March we put a range up of.
Of a different different outcomes around Ann Inc.
And we think Thats a relevant range now if any.
And if you look at the past year year, and a half two years and can.
For something Thats normal.
I'm all years, but yeah, I mean to answer.
The answer to your question is.
Yes.
Okay. Thank you that's helpful. Thank you.
Okay.
Our next question will come from Dan Fannon of Jefferies. Please go ahead.
Building upon that and trying to get a sense of.
And maybe somewhat normal, but just kind of what is happening in your business and you think about kind of all of the external metrics all moderated here in April and if.
And just kind of update us on how you're tracking.
Kind of backdrop.
Yeah, Dan obviously.
Look at the same metric side, there just to give you a little comment on commentary around them.
April volumes were a hair under 10 billion shares per day, which is down.
And 32, 5% from the first quarter I would point out only down 5% from Q4 of.
2020, and on a notional basis, which is important as well it's actually up from Q4. So there's always some distortion and these periods and they can look, particularly like the first quarter can look very exaggerated by a lot of these lower price names like and Sn Dl that'll trade of couple of billion shares of day and it tends to distort the data.
And on a notional basis, the changes and really not as relevant and realized volatility.
And is down in April as well of down.
30.
30% from Q1.
And I'm really trying to stay out of the commentary game going forward and it really has not served us well frankly, the way I am excited about the future of this company.
We're very very proud of the EBITDA margin that we produced and this quarter and we continue to focus on operating discipline, we're very committed to capital rich.
A return to our investors and as witnessed by buying back of $150 million of shares and my board is very supportive of that going forward and as we just articulated and.
We're running this company and I'm running this company for the next two quarters and also what April means as compared to April of 2023 kind of doesn't really matter to me.
We will continue to focus on the organic growth initiatives that have more and significant fruit and 8% of our adjusted net trading income so.
We are executing on everything that we said we were going to execute on and we have integrated two massive companies that were materially large and to us and frankly in many regards we're of math.
We created an enormous amount of value, we created and execution services business and I'm proud to say is unparalleled and scale and efficiency and doesn't rely on the vagaries of prime brokerage and risk taking.
We're finding new opportunities and options and ETF block and as we announced we're very supportive of crypto as a new asset class that we can provide a lot of value to so thats really the investment case for Virtu and.
And obviously I understand you of a job to do and investors look at monthly daily weekly volumes and get all excited about them.
And what I'm trying to stay in the middle of Fairway and run this firm for the next.
Five or more years and Thats, what we intend to do.
And then.
And we just did change some transparency and kind of narrowed over the last two years of your business.
And so just could you maybe talk about.
First of global equities and.
Yes.
Yeah, and some of that sure.
Insistent with how we report on a GAAP basis, alright, So a lot of it was historical when we were a smaller company.
And didn't have.
Our customer and non customer segment and that of execution services business et cetera. So of the company has gotten a lot larger and more complicated but again it goes back to the.
And the point I was just trying to make which is.
Virtu is a story of not whether or not our metals business is up consistent and a quarter with some metric that somebody is looking at the vagaries of of that type of analysis are not consistent and my view with long haul and shareholder value creation and.
So I'm all about providing transparency. This is not the easiest business and the world that we have to explain it but.
My conclusion was win with the support of my colleagues here in this room of my board was that providing that level of granularity I guess with not consistent with the long term value long term shareholder value, we're trying to create and all of it was encourage folks to trade in and out of the stock, which they have done with alacrity and they're entitled to do.
But certainly we're not going to.
And of providing additional information so that people can do that on a more regular basis, we want people that understand the story and the scale of electronic provider and.
Rest assured our our FIC numbers are completely in line with historical averages, but just and we've said this on the last earnings call. We're going to narrow the focus of this firm if you will and the review of this firm as a technologically enabled financial services firm that is broad and is unique and the market and will continue to return capital to investors and just trying to reduce.
The noise quarter to quarter.
Understood. Thank you.
Our next question will come from Chris Allen of Compass point. Please go ahead.
Good morning, everyone.
I wanted to ask a little bit of execution services last quarter, you noted of growing recurring revenue base for the near term.
One maybe you could give us some color in terms of framing of that at the top and then as a percentage of of that segment.
And obviously first quarter was good for.
And she backdrop as well and within the business.
Yeah, Yeah, Great question, Chris and me, we don't traditionally kind of break it out instead of recurring versus nonrecurring and theres, a little bit of of a mixture and there as you know.
If you think of of the recurring segments, we have a workflow solutions and analytics business.
We're obviously very focused on that we launched.
And some new products, which we outlined that in the quarter.
Our open Intel are open Python products really re platform in large measure of our Triton product and.
Delivering our analytics solution and a very very.
Material way so the way we look at it as like kind of be for Mike reoccurring revenues and we have 2000 global clients. The vast preponderance of them use two or more products, including Commission management, which is really important.
Part of that and so sure there is going to be elements of.
Transactional activity that will that will impact those products, but it's no different than and institutional business and a large scale and broker dealer as I've pointed out absent of course of the vagaries of prime brokerage and risk taking price and we're providing the scale of execution service solutions multi product and a very very.
And for way the key the key though to this quarter. It was two years after the acquisition having launched a number of these new products, having re platform virtually all of the IPG product. It's working right. There was concern of that clients would resonate to the offerings because of the market maker HFC and actually we thought the opposite was true.
And indeed, the opposite is true.
And our clients that have opted in to our pools of natural liquidity and our ability to cross clients against each other have given that service rave reviews, and I would stipulate of argue that way of the only firm and the planet that can provide that type of unique liquidity provision and coupled with a.
<unk> enabled view of of global equities markets and the deep markets around the world. So we think it's a very very unique scale of business. We're very excited about it again because of all we've done a great job integrating it and we've taken at literally hundreds of millions of dollars of cost of of business without sacrificing any client of customer served.
And indeed, we've gotten a hell of a lot better so I'm very very proud of what we've created and execution services two years two years hence.
Got it and then.
And on the organic growth opportunities.
Maybe you can give us some color on the big data analytics launch.
And one thing that did not see an assortment of corporate credit would you talk a little bit about and so any color there would be helpful. Yes, yes, great. So.
Look I mean, I, just kind of went through our commitment for the analytics business and we look at that and.
And again this is probably a little bit of a silly analogy, but we kind of want to be the app store growth alright, as opposed to we always have provided consulting services and whatnot, but we want to enable our clients to access their data and a scaled way and enable them to have access to peer reports.
And pure data, obviously and Anonymize fashion.
In a way that is where they can then take that information.
Along with a library of API of where we're going to provide and drive significant value for that that's really what our clients want they don't want to be pushed a bunch of PDF that say, okay, well here would be your impact analysis on your parent.
Whenever I mean, that's literally like the late nineties type of delivery and so.
We've revamped the way that we look at that business and say, we want to be in the platform a delivery and data provisioning business and clients have really resonates and asked and we think Thats certainly unique and we've got one of the technology footprint to do that and to the peer of clients to be able to provide that in terms of corporate credit again it is.
Something that we're very committed to it.
Told you that we launched it.
Late last year early this year. So its contributions are kind of swallowed up by the rest of the results, but it's certainly something that we're very very excited about.
It is not a standalone product and scales and leverages very well, our existing capabilities globally and Etfs.
And it further bolsters the fixed income ETF market, making offering.
That we have so we will continue to be.
And continue to invest and then and we think will be a significant player and the address of the skus and the addressable market and fixed income Etfs just continues to grow and so it's a very exciting opportunity for us going forward.
Thanks Ross.
Thank you.
Okay.
Our next question will come from.
Sean.
RASM plus securities. Please go ahead.
Hey, good morning, Thanks for taking my question guys.
And one on credit that was.
Wondering if you could expand on the Mark and making initiative there.
Can we get a sense of the net.
The contribution of crypto market, making.
Organic growth.
And how impactful do you see this opportunity and how.
Should we think of the business ramping up yes.
Yes, I mean look I mean, the complex candidates.
Net country with the home of hockey and all of that kind of stuff and I Love hockey So.
And the Ontario Securities Commission of first of all fit to approve a couple of Etfs and.
We looked at that as an opportunity for us too.
B of significant market makers, thats, right and our wheelhouse if and.
Equity security against either of cash for future of both right and that's what we do with the market maker.
Like being and authorized participant we want to partner with issuers for that day.
Issue product better.
Are attractive to investors otherwise, what's the point and it scales very very nicely into our debt.
Our existing infrastructure, so the incremental spend to become and AP and of direct market maker up there. It was effectively zero. So the incremental margin of any revenue there is 100% effectively right now.
We've been a market maker and crypto futures for a long time.
As a part of our contribution it's a small market and these are small products right now the exciting thing. However is there's obviously been a lot of talk about what's going to happen and the United States and.
And if there are five or six or seven and fidelity wisdom tree and other world class issuers that have proposals pending SEC.
I think.
The chairman is extremely well versed on these issues electric about them and and I watch. This lecture he is very very thoughtful on it and.
And so I'm guardedly optimistic that net product or product will launch in the analyst day, and then of sort of floodgate open up and we can grow very very quickly with these issue of issuers excuse me and partner with these issuers and it's just another example, again I don't I'm, not a bitcoin and I'm not talking about whether or not the underlying.
Assets and sort of you shouldnt come to me for that kind of questioning.
And the opportunity however for us as a market maker is if this is viewed as a store of value people are going to want to access it as an ETF and.
And our spark position and as the future. That's Virtu 101, right. So and the exciting thing from US is that you have this entirely new addressable market with presumably trillions of dollars of value that needs to be market make and these type of price discovery on and we can do that without increasing our risk at all.
And without any real investment other than the.
X technology plant, we have and the personnel that we have today and that's why we're very excited about.
Okay got it great. Thanks, that's helpful and just one other one I guess same question with the options market, making and how should we think about.
And the trajectory going Paul and Paul.
Obviously, as I said and the script.
For a 50% incremental growth against a really good quarter and the fourth quarter as exciting alright, and so we're building that business to Virtu way from scratch and as I said earlier in my prepared remarks, we're at.
And we're adding a couple of <unk>.
Really talented free agents, if you will.
And half from subject matter expertise and the fact that we were lacking here and so doing it for Virtu way, having a team right now and that is.
And our smaller than a bread box. If you will will grow somewhat but will never be a giant large scale group of folks and so we will have a significant margin. So I would say we're in the first inning and right now we have not addressed individual names. We're certainly not in the retail fixed for five business, which I've read it and it can be pretty profitable and options right and so there is a lot of.
Opportunity, there and a lot of growth for US again, the significant thing is it's and Virtu style growth story, we have the fixed cost plant for technological infrastructure, we had and we're continuing to address and tweak it for options I am very confident we will get there because we've had meaningful success there.
We have all of the connectivity to the exchanges we have the relationships, we have prime brokerage and more importantly, we have relationships with the retail providers for the retail brokers. If you will for all of adoption. So we have all of the making of of a global scale of options business. It's just a question of blocking and tackling and executing.
And that's something that I'm very proud to say we have been excellent in over the last 13 years. So I have every reason to believe that we will continue to see very significant improvements in this area and we're making Austin progress and I'm very happy with where we're at right now.
Okay got it thanks, Doug thank.
Thank you.
Okay.
Okay.
Our next question will come from Alex.
Graham.
EPS.
Sure.
Yes, good morning, everyone.
Sorry to harp on the transparency of discussion from earlier, but just coming back to the question that was asked I think twice about second quarter trends so far.
It seems to me that historically speaking Douglas reason of conferences or or though your first quarter earnings call you've been very happy to to provide us with kind of ideas of how things are trending from a from an anti perspective, when and when things were trending fairly fairly decently. So with all of these.
<unk> metrics or industry metrics, suggesting a little bit of a total of a softening here quarter to date and your lack of giving us from some insights and how are we not supposed to infer that that things are running decently softer quarter to date I'm not sure. If that's a question, but just wanted to clarify.
Definitely.
You're known Alex and I guess I'm not the price.
So look we have tried to be very transparent and we gave monthly.
Our reported in 2000 and in 'twenty, and and we plan and August report that I guess, it was lower than someone's expectations and the stock went down 15%.
And so there is no benefit to our long term investors.
And we're continuing to do that zone does not going to do it and you obviously will write whatever youre going to write you continue to be very negative on the stock and that's fine that's your prerogative.
Had you at Virtu has shown you everything and might be inner sanctum of Virtu and we've shown you how we're going to grow this firm I am running this firm for the next two quarters. If you think April is important to that story and right to note that youre going to rack I would candidly disagree with you and so therefore I've given you my commentary on April.
I'm, not giving you where we're going to be in 2026.
Where we're going to be in 2026, there is a lot more important for me than what you think about April.
Yeah, what I'd add is in the past.
Doug just mentioned there late last summer when we stopped for monthly guidance, we did that for a reason.
Because we tried to be more transparent and frankly, Inc.
And help anything for it.
Net income anyone understanding of the stock it didn't help.
Our shareholder and we heard directly from them and frankly, it didn't help any of the people who write on.
On Virtu, that's why we stopped doing it I think since then we've been burdened.
And when you look at the fourth quarter and of first quarter.
We've tried to kind of outline and.
Per day, 6789, 10, 11, and what is the range of available for share repurchase at what is the range for EPS.
Net to be a long term tool alright, that's meant to be of very long term for to help people understand what.
What to expect and build your models and <unk>.
Revenue side and on the cost side. So I think that that's the best we can do.
Yeah.
Most of the market quarter to quarter.
Guidance.
And youre getting to Outback and I don't think its I don't think and.
This is something that were and were just starting here.
Alright, I appreciate the comments I guess, sorry to hop in and one more time and just.
It's obviously not a question about being positive and negative on the stock, but if I think about it from and new Investor perspective.
And if you think about your firm I think from the beginning.
And you've tried to yourself of being an open kimono company with regulators with.
And your customers et cetera, and it.
It seems to me continuing and considering that you're complaining about the multiple that your stock trades that debt to attract new investor interest.
Wouldn't you want to.
And if people transparency of what they can actually see the path for growth, So and again, sorry to harp and just Alex.
And I candidly disagree with your characterization of Okay, we have given more transparency and any public company and this space right about what we're trying to do to grow this business for you you.
You had no two years ago, and the Virtu with the melting ice cube and you were wrong right. We've shown you all of the growth initiatives that we've initiated we started options. We started block ETF, we're going to be a major player and crypto assets that they move into a more regular life environment, Brian we've taken out of hundreds of millions of dollars for of course, we've re <unk>.
Created and execution services business that candidly your firm would love to have okay, and so if all of those things don't attract new investors.
And I don't know what else, we can do and whether or not we should harp on monthly results on a stock that has a five year story to me is not the right way to approach of stock you're going to write your note I know exactly what the headline is going to see record quarter, but softening and the future.
And I've tested that for Andrew This morning, So right you note and let's have the next question.
Thank you.
And again, if you'd like to ask a question today and the start of by the World Sparkle water cost of the question.
There being no further questions, we'll conclude the question and answer session.
And I can turn the conference back over to Douglas seafood for any closing remarks.
And I want to thank everybody for joining today again, and particularly those that are interested in and long term investing and virtu. We're here to answer any of your questions any time, and we look forward to talking to you.
Frankly, and whatever you'd like or sometime in late July or August. Thank you everybody.
Right.
The conference has now concluded. Thank you for attending today's presentation you may.
And now.