Q3 2025 Virtu Financial Inc Earnings Call

Speaker #1: Hello everybody , and welcome to the Virtu Financial Third Quarter 2025 Earnings call . My name is Elliot and I'll be coordinating your call today .

Operator: Hello everybody, and welcome to the Virtu Financial Q3 2025 earnings call. My name is Elliot, and I'll be coordinating your call today. If you would like to register a question during today's event, please press *1 on your telephone keypad. Now, I'll hand over to Andrew Smith, Head of Investor Relations. Please go ahead.

Speaker #1: If you would like to register a question during today's event , please press Star One on your telephone keypad . And I'll hand it over to Andrew Smith , head of Investor Relations .

Speaker #1: Please go ahead .

Speaker #2: Thank you , Elliot , and good morning , everyone . Thank you for joining us . Our third quarter 2020 results were released this morning and are available on our website .

Andrew Smith: Thank you, Elliot, and good morning everyone. Thank you for joining us. Our Q3 2025 results were released this morning and are available on our website. With us today this morning, we have Mr. Aaron Simons, our Chief Executive Officer, Mr. Joseph Molluso, our Co-President and Co-Chief Operating Officer, and Ms. Cindy Lee, our Chief Financial Officer. We will begin with prepared remarks and then take your questions. First, a few reminders. Today's call may include forward-looking statements which represent Virtu Financial's current beliefs regarding future events and are therefore subject to risks, assumptions, and uncertainties which may be outside the company's control. Please note that our actual results and financial conditions may differ materially from what is indicated in these forward-looking statements.

Speaker #2: With us today . This morning we have Mr. Aaron Simonds , our chief Executive Officer , Mr. Joseph Molluso , our Co-President and Co-Chief Operating Officer , and Miss Cindy Lee , our Chief Financial officer .

Speaker #2: We will begin with prepared remarks and then take your questions . First , a few reminders . Today's call may include forward looking statements , which represent Virtue's current beliefs regarding future events and are therefore subject to risks , assumptions and uncertainties which may be outside the company's control .

Speaker #2: Please note that our actual results and financial conditions may differ materially from what is indicated in these forward looking statements . It is important to note that any forward looking statements made on this call are based on information presently available to the company , and we do not undertake to update or revise any forward looking statements as new information becomes available .

Andrew Smith: It is important to note that any forward-looking statements made on this call are based on information presently available to the company, and we do not undertake to update or revise any forward-looking statements as new information becomes available. We refer you to disclaimers in our press release and encourage you to review the description of risk factors contained in our annual report, Form 10-K, and other public filings. During today's call, in addition to GAAP measures, we may refer to certain non-GAAP measures, including Adjusted Net Trading Income, Adjusted Net Income, Adjusted EBITDA, and Adjusted EBITDA Margin. These non-GAAP measures should be considered as supplemental to and not as superior to financial measures as reported in accordance with GAAP.

Speaker #2: We refer you to disclaimers in our press release and discourage you and encourage you to review the description of risk factors contained in our annual Report on Form 10-K and other public filings .

Speaker #2: During today's call . In addition to GAAP measures , we may refer to certain non-GAAP measures , including adjusted net trading income , adjusted net income , adjusted EBITDA , and adjusted EBITDA margin .

Speaker #2: These non-GAAP measures should be considered as supplemental to and not as superior to financial measures as reported in accordance with GAAP . We direct listeners to consult the investor portion of our website , where you will find additional supplemental information referred to on this call , as well as the reconciliation of non-GAAP measures to the equivalent GAAP term in the earnings materials with an explanation of why we deem this information meaningful as as well as how management uses these measures .

Andrew Smith: We direct listeners to consult the investor portion of our website, where you'll find additional supplemental information referred to on this call, as well as a reconciliation of non-GAAP measures to the equivalent GAAP term in the earnings materials, with an explanation of why we deem this information meaningful, as well as how management uses these measures. With that, I'd like to turn the call over to Aaron.

Speaker #2: And with that , I'd like to turn the call over to Aaron .

Speaker #3: Thanks , Andrew . Good morning . Let me begin by noting this quarter's prepared remarks are brief . In order to leave more time for questions .

Aaron Simons: Thanks, Andrew. Morning. Let me begin by noting this quarter's prepared marks are brief in order to leave more time for questions. As usual, all relevant performance data are included in our earnings release and supplemental material. Before I turn it over to Cindy to discuss our results, I just wanted to make a few high-level marks to orient everyone as the company's direction moving forward. Over the past several years, we've completed major integrations, established trading in new asset classes, and returned significant capital to shareholders. Our edge in the market is created by our technology, our risk management, and our operational efficiency. Additionally, as a business, we carry over our attention to detail to expense management, as well as our client relationships. None of that is changing.

Speaker #3: As usual , all relevant performance data are included in our earnings release and supplemental material . Before I turn it over to Cindy to discuss our results , I just wanted to make a few high level marks to orient everyone as the company's direction moving forward .

Speaker #3: Over the past several years , we've completed major integrations , established trading , and new asset classes , and returned significant capital to shareholders .

Speaker #3: Our edge in the market is created by our technology , our risk management and our operational efficiency . Additionally , as a business , we carry over our attention to detail , to expense management as well as our client relationships .

Speaker #3: None of that is changing . However , now we feel ready to focus on growing our trading results through investing in our infrastructure , acquiring talent , and expanding our capital base .

Aaron Simons: However, now we feel ready to focus on growing our trading results through investing in our infrastructure, acquiring talent, and expanding our capital base. Importantly, this will not be limited to a small number of previously highlighted growth initiatives, but rather an overall focus on growth everywhere in the firm. You may recall in the past we have provided earnings scenarios at different levels of Adjusted Net Trading Income in the range of $6 million to $10 million per day, and our goal is to grow our business to trend toward the higher end of this range as a base case. Just on a personal note, I took over the role of CEO on August 1, almost exactly 17 years after first starting at Virtu Financial. An unbelievable amount has changed since then, and somehow now is always the most exciting time to be a part of this company.

Speaker #3: Importantly, this will not be limited to a small number of previously highlighted growth initiatives. Rather, there will be an overall focus on growth everywhere in the firm.

Speaker #3: You may recall that in the past, we have provided earnings scenarios at different levels of adjusted net trading income in the range of $6 million to $10 million per day, and our goal is to grow our business to trend toward the higher end of this range.

Speaker #3: As a base case , just on a personal note , I took over the role of CEO on August 1st , almost exactly 17 years after first starting at Br2 , an unbelievable amount has changed since then , and somehow now is always the most exciting time to be a part of this company .

Speaker #3: With that , I'd like to turn it over to Cindy for details on this quarter's performance .

Aaron Simons: With that, I'd like to turn it over to Cindy for details on this quarter's performance.

Speaker #4: Thank you Erin . Good morning everyone . Turning to this quarter's results , the firm reported normalized , adjusted EPs of $1.05 . Adjusted net income , or Auntie , was $467 million , or $7.4 million per day , predominantly driven by a positive operating environment which has persisted for most of the year , as well as a renewed focus on growth , market making , reported Auntie of $344 million , or $5.4 million per day , driven by strong performance across all businesses , particularly global equities , crypto and currencies and commodities .

Cindy Lee: Thank you, Aaron. Good morning, everyone. Turning to this quarter's results, the firm reported normalized Adjusted EPS of $1.05. Adjusted Net Trading Income, or ANTI, was $467 million, or $7.4 million per day, predominantly driven by a positive operating environment, which has persisted for most of the year, as well as a renewed focus on growth. Market making reported ANTI of $344 million, or $5.4 million per day, driven by strong performance across all businesses, particularly global equities, crypto, and currencies and commodities. We're also seeing continued momentum in Virtu Execution Services and are excited about our work expanding the VES product set to include multi-asset class capabilities. VES reported ANTI of $123 million, or $1.9 million per day, marking its best quarter since early 2021 and its sixth consecutive quarter of increased ANTI.

Speaker #4: We're also seeing continued momentum in virtue execution services and are excited about our work expanding the V's product set to include multi-asset class capabilities .

Speaker #4: As reported , anti of $123 million or $1.9 million per day , marking its best quarter since early 2021 and its sixth consecutive quarter of increased anti earlier this year .

Cindy Lee: Earlier this year, we noted a goal of $2 million per day through the cycle for VES. We're encouraged by VES performance and consistent quarter-on-quarter growth, regardless of the environment. VES offers market-leading financial trading products globally across the entire lifecycle of a trade. Notably, VES has a suite of workflow and analytics products led by Triton, which was recently awarded the top spot in Trade's 2025 EMS survey for the third year in a row. These products represent a strong embedded base of revenue. On a trailing 12-month basis, the workflow and analytics business generated $137 million of ANTI. In terms of legacy revenue disclosures, we achieved strong results on our existing growth initiatives, which delivered ANTI per day that was slightly ahead of the prior quarter.

Speaker #4: We noted goal of $2 million per day through the cycle for V's , we're encouraged by these performance and and consistent quarter on quarter growth , regardless of the environment .

Speaker #4: Diaz offer , market leading financial market , market leading financial trading , products globally across the entire life cycle of a trade . Notable V's has a suite of workflow and analytics products led by Triton , which was recently awarded the top spot in trade's 2025 EMS survey for the third year in a row .

Speaker #4: These products represent a strong embedded base of revenue on a trailing 12 month basis . The workflow analytics business generated $137 million of anti in terms of legacy revenue disclosures , we achieved strong results on our existing growth initiatives , which delivered anti per day .

Speaker #4: That was slightly ahead of the prior quarter . While the areas included within the existing growth initiatives are important and represent businesses have grown meaningfully over the years .

Cindy Lee: While the areas included within the existing growth initiatives are important and represent businesses that have grown meaningfully over the years, we will look to grow more rapidly in all areas of our business. While we will, of course, maintain our annual dividend, we will seek to grow our capital base to take advantage of the trading opportunities as they arise. Now, we can turn it over for Q&A.

Speaker #4: We will look to grow more rapidly in all areas of our business . While we will of course maintain our annual dividend , we will seek to grow our capital base to take advantage of the trading opportunities as they arise .

Speaker #4: Now we can turn it over for Q&A .

Speaker #1: Thank you . If you would like to ask a question , please press star followed by one on your telephone keypad . If you would like to withdraw your question , please press star followed by two .

Operator: Thank you. If you would like to ask a question, please press *1 on your telephone keypad. If you would like to withdraw your question, please press *2. When preparing to ask your question, please ensure your device is unmuted locally. First question comes from Patrick Moley with Piper Sandler. Your line is open. Please go ahead.

Speaker #1: When preparing to ask a question , please ensure your device is unmuted locally . First question comes from Patrick Molly with Piper Sandler .

Speaker #1: Your line is open. Please go ahead.

Speaker #5: Yeah . Thanks . Good morning and welcome , Erin . Really looking forward to working with you . So I have a two part question .

[Analyst 1]: Yeah, thanks. Good morning and welcome, Aaron. Really looking forward to working with you. I have a two-part question. First, I appreciate all the disclosure around the focus shifting to growth opportunities. I was hoping you could break that down for us a little bit more and maybe speak to some of the areas where you see the most significant opportunity for growth, how much of that's going to be expanding into existing areas where you already have a presence versus entirely new opportunities. As a second part, you mentioned in the deck that you'll look to dial back share repurchases in order to build more capital. I was hoping you could flesh out for us maybe how much capital you could potentially be looking to build and what that means for your longer-term capital return priorities. Thanks.

Speaker #5: First , appreciate all the disclosure around the focus shifting to growth opportunities . I was hoping you could break that down for us a little bit more and maybe speak to some of the areas where you see the most significant growth .

Speaker #5: How much of that is going to be expanding into existing areas where you already have a presence versus entirely new opportunities ? And then as a second part , you mentioned in the deck that you'll look to dial back , share repurchases in order to build more capital .

Speaker #5: I was hoping you could flesh out for us , maybe how much capital you could potentially be looking to build and what that means for your longer term capital return priorities .

Speaker #5: Thanks .

Speaker #3: Sure . Thanks , Patrick . I think it's hard to predict in advance . We're always been a firm that reacts to the opportunity that's in front of us .

Andrew Smith: Sure. Thanks, Patrick. I think it's hard to predict in advance. We've always been a firm that reacts to the opportunity that's in front of us. Currently, I think there's a pretty good growth opportunity everywhere in the firm. Obviously, the areas that we've highlighted previously, like crypto, options, ETF block, continue to be fast-growing areas, especially given the environment. You'll probably continue to see growth there. In terms of the additional capital, I think we provided in the supplemental materials already in 2025 through retained earnings as well as debt financing. We've raised over $500 million of new trading capital, which has already been immediately deployed. In terms of a long-term plan, we want to significantly grow the P&L. If you look at our return on capital rates, they've always been in the upper 60% to 100% return on capital.

Speaker #3: So , you know , currently , I think there's a pretty good growth opportunity everywhere in the firm . I

Speaker #3: mean , obviously the opportunity for we've highlighted previously , like crypto options , ETF block , continue to be fast growing areas , especially given the environment .

Speaker #3: And so , you know , you'll probably continue to see growth there . In terms of the additional capital , I think we provided in the supplemental materials already in 2025 through retained earnings as well as debt financing .

Speaker #3: We've raised over 500 million of new trading capital , which has already been immediately deployed . I think , you know , in terms of a long term plan , you know , we want to significantly grow the PNL .

Speaker #3: So if you look at our our return on capital rates , they've always been in the upper 60s to 100% return on capital .

Speaker #3: So if we want to double the the PNL of the firm , we're probably going to have to double the capital base . But that's a long term plan .

Andrew Smith: If we want to double the P&L of the firm, we're probably going to have to double the capital base. That's a long-term plan. It may take a few years. If you look at the reports of the free cash flow that the business generates, I think there's pretty significant opportunity to just accumulate that organically over time. We've always been incremental in our approach to growing, and we'll just continue to do that.

Speaker #3: It may take a few years , and , you know , if you look at . The reports of the free cash flow that the business generates , I think there's pretty significant opportunity to just accumulate that organically over time .

Speaker #3: And we've always been incremental in our approach to growing, and we'll just continue to do that.

Speaker #5: Okay . Thank you Aaron . That's it for me .

[Analyst 1]: Okay. Thank you, Aaron Simons. That's it for me.

Speaker #1: We now turn to Alex Blostein with Goldman Sachs. Your line is open. Please go ahead.

Operator: We now turn to Alex Blostein with Goldman Sachs. Your line is open. Please go ahead.

Speaker #6: Hey . Thank you guys . Good morning . And Aaron , welcome to the call . I would love to get just a little bit more meat around those bones .

[Analyst 2]: Hey, thank you, guys. Good morning. Aaron, welcome to the call. I would love to get just a little bit more meat around those bones. Obviously, it sounds like it's a bit of a pivot in the strategy. I guess a multi-part question on this, but first is why now? What prevented Virtu Financial in the past going after these opportunities that you feel like this is the right time to sort of do this today? When you think about the existing asset classes, you spoke about, obviously, the newer things, whether it's digital and crypto or options. We know you guys have been on the path for a while. When you think about the traditional kind of market-making businesses that you're already in, do you see an opportunity to accelerate market share gain within that as well? What would it take, I guess, for you guys to do that?

Speaker #6: Obviously, it sounds like it's a bit of a pivot in the strategy. And I guess a multi-part question on this, but I guess first is: why now?

Speaker #6: What prevented Virtu in the past from going after these opportunities that you feel like this is the right time to sort of do this today?

Speaker #6: And when you think about the existing asset classes , you know , you spoke about obviously the newer things , whether it's digital and crypto or options , we know you guys have been on the path for a while , but when you think about the traditional kind of market making businesses that you're already in , do you see an opportunity to accelerate market share gain within that as well ?

Speaker #6: And what would it take ? I guess , for you guys to do that ?

Speaker #3: Yeah , I can answer some of that . So as to the why now question . Well , there's not like a step change , but there's been a like a confluence of factors .

Andrew Smith: Yeah, I can answer some of that. As to the why now question, there's not a step change, but there's been a confluence of factors. Over the past several years, we've pulled off some pretty large integrations. A lot from a technical standpoint, some from a people cultural standpoint, added significant new business lines. Now that we sort of have a handle on that and things are coming to an end, we're able to refocus some of our talent base on attacking new opportunities. That's certainly part of it. The world hasn't gotten quieter, so there's definitely just been an uptick in overall external opportunity. We just sort of feel it's the right time. I think the employees are excited about refocusing on growth. In terms of the areas, obviously the ones I highlighted, but yes, in our core businesses, there's definitely room to grow.

Speaker #3: So , you know , over the past

Speaker #3: several years , after we've pulled off some pretty large integrations . And , you know , a lot from a technical standpoint , some from a people cultural standpoint , added significant new business lines .

Speaker #3: And now that we sort of have a handle on that and things are coming to an end , we're able to refocus some of our talent base on on attacking new opportunities .

Speaker #3: So that's certainly part of it. You know, the world hasn't gotten quieter, so there's definitely just been an uptick in overall external opportunity.

Speaker #3: And so we just sort of feel it's the right time . And I think the the employees are excited about refocusing on growth in terms of the areas like obviously the ones I highlighted , but yes , in our core businesses , there's definitely room to grow .

Speaker #3: So one of the things that we've always done right is that our platform is scaled . It operates the same way everywhere in the world .

Andrew Smith: One of the things that we've always done right is that our platform is scaled. It operates the same way everywhere in the world. It's sort of easy for us to redeploy to new asset classes with flexibility and compete technologically in any market. When you say our core business, even that encompasses many, many different types of trades in different areas. There's always interesting new corners of the markets. There's always sort of idiosyncratic opportunities in ETF trades or foreign markets or commodities. We're always just going to try to adapt to what's in front of us and just focus on our process.

Speaker #3: It's sort of easy for us to redeploy to new asset classes with , you know , flexibility and compete technologically in any market .

Speaker #3: So , you know , when you say our core business , even that encompasses many , many different types of trades in different areas .

Speaker #3: So, there's always interesting new corners of the markets. There's always sort of idiosyncratic opportunities in ETF trades or foreign markets or commodities.

Speaker #3: And we're always just going to try to adapt to what's in front of us . And , you know , just focus on our process .

Speaker #7: You know , Alex , I would just that , you know , the the areas that we always outlined as growth continue to be growth areas .

Joseph Molluso: You know, Alex, I would just add to that. Joe, the areas that we always outline as growth continue to be growth areas, right? We've given that number. I think the pivot here is, as you describe it, is really to include options. It includes crypto. It includes ETF block. It includes rates. It doesn't exclude other areas of our business, right? I think we put in the supplement, the capital management priority slide, and this is a little bit to Patrick's question as well, right? We have shown, and this is the management team that's been here, we have shown a long-term track record that demonstrates that we know how to manage capital, right? We have a long-term track record of managing capital. We have a long-term track record of integrating acquisitions. We have a long-term track record of operating a scaled business.

Speaker #7: So we've given that number . But I think the pivot here is , as you describe it , is really to include options .

Speaker #7: It includes crypto . It includes ETF block . It includes rates . But it doesn't exclude other areas of our business . Right .

Speaker #7: And I think we put in the supplement the capital management priority slide . And this is a little bit to Patrick's question as well .

Speaker #7: Right . We have shown and this is the management team that's been here right . We have shown a long term track record that demonstrates that we know how to manage capital .

Speaker #7: Right . So we've we've have a long term track record of managing capital . We have a long term track record of Joe , integrating acquisitions .

Speaker #7: We have a long-term track record of operating a scaled business, and we have a long-term track record of growing in select businesses.

Joseph Molluso: We have a long-term track record of growing in select businesses, right? I think with Aaron at the helm, there's a set of opportunities that we all agree are getting bigger, right? That includes a lot of the things that I'm sure we'll talk about on this call. We didn't want it to sort of look at it as being limited to just a handful of things that we've talked about in the past as growth initiatives.

Speaker #7: Right . So I think , you know , with with Aaron at the helm , I think there's a set of opportunities that are , you know , that that we all agree are getting bigger .

Speaker #7: Right . And that includes a lot of the things that , you know , that that that I'm sure we'll talk about in this call .

Speaker #7: But we didn't want it to sort of look at it as being limited to just a handful of things that we've talked about in the past as growth initiatives .

Speaker #6: Right , right . And as in addition to capital , do you guys anticipate there is a larger opex lift that this will be required , or do you think you can largely leverage the existing footprint ?

[Analyst 2]: Right. As an addition to capital, do you guys anticipate there is a larger OpEx lift that this will be required, or do you think you can largely leverage the existing footprint? The incremental revenues presumably will come in at a fairly high incremental margin?

Speaker #6: So the incremental revenues presumably will come in at a , at a fairly high incremental margin .

Speaker #7: They should be a you should still see very strong positive operating leverage in our business . That doesn't mean that we won't need to attract top talent , retain top talent .

Joseph Molluso: There should be a, you should still see very strong positive operating leverage in our business. That doesn't mean that we won't need to attract top talent, retain top talent. That doesn't mean that we're committed to a particular ratio of comp to net revenue that we've had in the past. I think it'll still be reasonable. It'll look more like the past than not. If it grows, it's going to grow because we're experiencing very high levels of positive operating leverage, good growth. I think there's no big bang here. As Aaron said, we've always been incremental, and we'll continue to be incremental.

Speaker #7: That doesn't mean that we're committed to a particular ratio of comp to net revenue that we've had in the past. But I think it'll still be reasonable.

Speaker #7: It'll look more like the past than than , you know , than than not . But I think if it grows , it's going to grow because we're experiencing a very high levels of of positive operating leverage .

Speaker #7: Good growth , you know , and I think there's no big bang here . There that as Aaron said , right . We've always been incremental and we'll we'll continue to be incremental .

Speaker #6: I gotcha, great. Thank you.

[Analyst 2]: I got you. Great. Thank you.

Speaker #1: We now turn to Eli Abood with Bank of America. Your line is open. Please go ahead.

Operator: We now turn to Eli Abboud with Bank of America. Your line is open. Please go ahead.

Speaker #8: Good morning . Thanks for taking the question . And Aaron , congrats on the new role . Craig and I look forward to working with you .

[Analyst 3]: Good morning. Thanks for taking the question. Aaron, congrats on the new role. Craig and I look forward to working with you. You highlighted options as an area where there will be a larger focus on growth going forward. I was wondering if you have a timeline in mind for when Virtu Financial can start customer market-making in options. Is that a near-term 2026 objective or more of a 5 or even 10-year target? Could M&A be part of your roadmap in options?

Speaker #8: You highlighted options as an area where there will be a larger focus on growth going forward . I was wondering if you have a timeline in mind for for when Vertu can start customer market making and options ?

Speaker #8: Is that a near term 2026 objective or more of a five or even ten year target ? And then could M&A be part of your roadmap and options ?

Speaker #3: Sure . So I don't we're not in the business specifically with the goal of doing customer market making 605 . If if we get to the point where our business is scaled and more profitable than we have , the infrastructure and the relationships where we'd love to get into that business .

Andrew Smith: I don't, we're not in the business specifically with the goal of doing customer market making 605. If we get to the point where our business is scaled and more profitable, then we have the infrastructure and the relationships where we'd love to get into that business. Our focus is on just being, you know, excellent at trading options. We're focused on that, and where it leads is where it leads.

Speaker #3: But really our focus is on just being . You know , excellent at trading options . And we're focused on that . And where it leads is where it leads .

Speaker #7: Yeah , Eli . And in terms of of M&A , it goes back to the answer on capital management priorities . I think if you look at our history , we used leverage and our capital to execute to very highly accretive important acquisitions to what virtue is today .

Joseph Molluso: Yeah. Eli, and in terms of M&A, it goes back to the answer on capital management priorities. I think if you look at our history, we used leverage and our capital to execute two very highly accretive, important acquisitions to what Virtu Financial is today. We used our capital to buy back our shares, and we thought they were undervalued. We're using our capital today to grow. Should an opportunity present itself where the returns that we can get from an M&A deal are superior to what we have looking in front of us, then we'll explore it. I think we've got a track record of doing that prudently and not paying. I think if you look at the acquisitions we've done, we've bought volatility at very low prices. I think the purchase price going in was attractive, and the execution was excellent in terms of value creation and synergies.

Speaker #7: You know , we used our capital to buy back our shares . And we thought they were undervalued . And you know , we're using our capital today to grow and should an opportunity present itself where the returns that we can get from an M&A deal are superior to what we have , looking in front of us , then then we'll explore it .

Speaker #7: I think we've got a track record of doing that prudently and not paying . You know , I think if you look at the acquisitions we've done , we've bought volatility at very low prices and so I think the purchase price going in was was attractive .

Speaker #7: And the execution was excellent in terms of value creation and synergies that there's nothing that we're looking at today that that competes with Aaron's plan to to grow revenue .

Joseph Molluso: There's nothing that we're looking at today that competes with Aaron's plan to grow revenue. Therefore, our incremental capital dollar is going to growing the business. We're always here to create shareholder value and allocate capital to do that.

Speaker #7: And so therefore our capital dollar is is going to growing the business . But we're always we're here to create shareholder value and allocate capital to do that .

Speaker #8: Got it . And and for our follow up can you hit on the revenue capture in the market making segment this quarter . Your 605 quoted spread opportunity declined 3% sequentially .

[Analyst 3]: Got it. For our follow-up, can you hit on the revenue capture in the market making segment this quarter? Your 605 quoted spread opportunity declined 3% sequentially, but your market making revenue fell 26% sequentially. I was like, how should we reconcile that delta there?

Speaker #8: But your market making revenue fell 26% sequentially . I was like how should we reconcile that delta ? There ?

Speaker #7: You know , it is it is always good to to kind of look at that . I think there's there's a great focus on the retail business , you know , some very smart guys in a research report yesterday wrote that we , we sit downstream from a long term secular trend in retail .

Joseph Molluso: It is always good to kind of look at that. I think there's a great focus on the retail business. Some very smart guys in a research report yesterday wrote that we sit downstream from a long-term secular trend in retail, and we agree with that. The way we look at it is we perform well against the opportunity overall. Yes, those indicators were down. The volumes of volatility, as well as the 605 reports, showed declining activity. We're very happy about how we performed. I mentioned that focus on retail because if you look at our performance this quarter overall, there's always this hyper focus on retail, but our business is a lot broader, right? We have a global operation in multiple asset classes around the world. We did very well in crypto. We did very well in our proprietary market-making business in commodities, for example.

Speaker #7: And we agree with that . But the way we look at it is we perform well against the opportunity overall . Yes , those indicators were down .

Speaker #7: The volumes of volatility , as well as the 605 reports showed declining activity , but we're very we're very happy about how we performed .

Speaker #7: And I think , you know , I mentioned that focus on retail . You know , because if you look at our performance this quarter overall , there's always this hyper focus on retail , you know , but our business is a lot broader .

Speaker #7: We have a global operation in multiple asset classes around the world . We did very well in crypto . We did very well in our in our proprietary market , making business in commodities .

Speaker #7: For example . You know , we haven't talked about Vez . So I think if you look at us , I think there's this hyper focus on retail for good reason .

Joseph Molluso: We haven't talked about Virtu Execution Services, right? If you look at us, I think there's this hyper focus on retail for good reason, but there's a lot more there.

Speaker #7: But you know , there's a lot more there . So perfect .

Speaker #8: Thanks guys .

[Analyst 3]: Perfect. Thanks, guys.

Speaker #1: We now turn to Chris Allen with Citi . Your line is open . Please go ahead .

Operator: We now turn to Chris Allen with Citi. Your line is open. Please go ahead.

Speaker #9: Yeah . Morning guys . Thanks for taking the question . I wanted to ask on the third quarter results . I think in general , people the results were up , performed expectations given the environment , realized volatility .

[Analyst 1]: Yeah, morning, guys. Thanks for taking the question. I wanted to ask on the third quarter results. I think in general, people, the results were up or form expectations given the environment and realized volatility. I'm just wondering, obviously, you raised some capital during the quarter. You noted that it's been deployed. What impact that had? A color just on the sequential improvement in the organic growth initiatives or opportunities where there were the best tailwinds this past quarter.

Speaker #9: I'm just wondering, obviously raising capital during the quarter -- you noted that it's been deployed. What impact has that had? And then, could you provide some color on the sequential improvement in the organic growth initiatives? Specifically, where were the best tailwinds this past quarter?

Speaker #7: Yeah , look , again , I think if you it's a difficult question to answer , what what impact did the new capital have in terms of the debt raising the debt raise ?

Joseph Molluso: Yeah, look, again, I think if you, it's a difficult question to answer. What impact did the new capital have? In terms of the debt raise, I think the debt raise was September 23rd. That was pretty much towards the end of the quarter. On slide four of the supplement, you see we earned a 95% incremental return on our capital. My answer would be, any incremental dollar that we deployed this quarter, we earned a 95% return on. That includes the capital from the beginning of the year. In terms of the performance and what to highlight, I think we mentioned already, I think crypto was standout, and we expect that to continue. We had a strong performance in options. We had a strong quarter in ETF block.

Speaker #7: Was September 23rd . So that was pretty much towards the end of the quarter . Are on slide four of the supplement . You see , we earned a 95% incremental return on our capital .

Speaker #7: So my answer would be, you know, any incremental dollar that we deployed this quarter, we earned a 95% return on.

Speaker #7: And that includes the capital from the beginning of the from the beginning of the year . In terms of in terms of of the performance and what to highlight , I think we mentioned already , I think crypto was was stand out and and we expect that to continue .

Speaker #7: We had a strong performance in options . We had a strong quarter in ETF block . I think all of the things that we've included , you know , as , as , as growth initiatives were , were above where we were in the second quarter , just a little bit , you know , so it was all of the above .

Joseph Molluso: I think all of the things that we've included as growth initiatives were above where we were in the second quarter, just a little bit. It was all the above, Chris. Again, I'll mention VES, right? VES is showing growth through different environments. Steve Covoli has done an amazing job there. That business is set up for success.

Speaker #7: Chris , you know , and , you know , again , again , I'll mention vs right VS is showing growth through different environments .

Speaker #7: And Steve has done an amazing job there . And and you know that that business is set up for success .

Speaker #9: Just as a follow up , when we think about capital increasing capital deployment , moving forward is are you thinking about developing new strategies for attacking some of the existing businesses , or is this just putting capital to work with your existing strategies ?

[Analyst 1]: Yeah, just as a follow-up, when we think about capital, increasing capital deployment moving forward, are you thinking about developing new strategies for attacking some of the existing businesses, or is this just putting capital to work with your existing strategies?

Speaker #7: You know , it . It's all of the above . I'll I'll be make sure I want to point out and say that we're not looking at taking on more risk .

Joseph Molluso: It's all the above. I want to point out that we're not looking at taking on more risk. I think everything is within the risk parameters that we've historically been comfortable with in terms of Virtu Financial as a market participant, as a liquidity provider, as a service provider. It's mainly leveraging our existing infrastructure and connectivity. We will have more capital to deploy and incremental talent to develop strategies. That's really how I describe it.

Speaker #7: I think everything is within the risk parameters that we've historically been comfortable with in terms of virtue , as a as a market participant , as a , as a liquidity provider , as a service provider , you can you may it's mainly leveraging our existing infrastructure and connectivity .

Speaker #7: You know , but we will have we'll have more capital to deploy it . We'll have incremental , you know , talent to develop strategies .

Speaker #7: And , you that's that's really that's really how I describe it know , .

Speaker #9: Thanks .

Operator: Thanks. We now turn to Dan Fannon with Jefferies. Your line is open. Please go ahead.

Speaker #1: We now turn to Dan Fannon with Jefferies . Your line is open . Please go ahead .

Speaker #10: Thanks . Good morning . So just wanted to clarify a few things as we think about virtue strategy over the last couple of years , we've seen more consistent results and less kind of peak and trough .

[Analyst 2]: Thanks. Good morning. I just wanted to clarify a few things. As we think about Virtu Financial's strategy over the last couple of years, we've seen more consistent results and less kind of peak and trough. Given this change in putting more capital to work, do you expect to see more variability in the quarter-to-quarter revenue and/or ANTI, EBITDA, however you want to think about it, given as the opportunity set changes, or is this going to drive more consistent results? I guess, what's the goal here?

Speaker #10: And given this change in putting more capital to work for you, we expect to see more variability in the quarter-to-quarter revenue and/or ANC EBITDA.

Speaker #10: However , you want to think about it , given as the opportunity set , changes , or is this going to drive more consistent results , I guess what's the goal here ?

Speaker #11: Well , the goal is .

Joseph Molluso: The goal is, as Aaron Simons stated, to move to the higher end of the range that we published in the past of different levels of net trading income, right? That's always been a difficult question to answer for Virtu Financial because you've got to give me a time parameter, right? If you're talking about daily or weekly, maybe. If you're talking about, you know, monthly, maybe. If you're talking about quarterly, it really depends, Dan. I think Aaron stated it clearly, right? The goal is to move towards the high end, you know, of that range. It's a trend toward it as a base case, right? There could be more variability, you know, but I don't consider that being sort of less predictable or less volatile even, right? We're a volatile business, and we're going to remain a volatile business.

Speaker #7: , as Aaron stated , to move to the higher end of the range that we published in the past of different levels of of net trading income .

Speaker #7: Right? So that's always been a difficult question to answer for Virtu, because you've got to give me a time parameter, right?

Speaker #7: If it's if you're talking about daily or weekly , maybe if you're talking about monthly , maybe if you're talking about quarterly , it really depends .

Speaker #7: Dan So Aaron stated it clearly . The goal is to move towards the high end , you know , of that range . It's a trend toward it as a base case , right .

Speaker #7: And there could be more variability , you know . But I don't consider that being sort of less less predictable or less less less volatile even .

Speaker #7: Right . We're a volatile business and we're going to remain a volatile business . And I don't I don't think I really don't think of us in the past .

Joseph Molluso: I don't think, I really don't think of us in the past. It's interesting to hear you say that. I don't think of us in the past year or two as being less volatile. I think we've just done a good job growing the business, and now we're going to accelerate that growth.

Speaker #7: It's interesting to hear you say that . I don't think of us in the past year or two as being less volatile . I think we've just done a good job growing the business , and now we're going to we're going to accelerate that growth .

Speaker #10: Okay . And then just to clarify some of the other questions , as we think about now , you're deploying more capital today you're going to obviously accrue more capital .

[Analyst 2]: Okay. Just to clarify some of the other questions, as we think about now you're deploying more capital today, you're going to, you know, obviously accrue more capital. Where do we think about the level of investment? The level of investment will go with the revenue opportunity. We don't need to invest today more based upon having more capital, wanting to do more. I just want to understand the timing of new investment in terms of people's strategies, all these things versus the revenue opportunity. Are those in line with each other, or does one come before the other?

Speaker #10: Where do we think about the level of investment . So level investment will go with the revenue opportunity . We don't need to invest today more based upon having more capital , wanting to do more .

Speaker #10: So just want to understand the timing of new investment in terms of people's strategies . All these things versus the revenue opportunity . Those in line with each other or one comes before the other .

Speaker #7: Mostly in line . Dan , there's no long term lag here . I would say now that all being said , we are , as I just answered , your previous question , we're still a volatile business and the environment is still going to have a big impact on our performance .

Joseph Molluso: Mostly in line, Dan. There's no long-term lag here, I would say. That all being said, as I just answered your previous question, we're still a volatile business, and the environment is still going to have a big impact on our performance. It's going to be hard to separate the noise there in terms of the environment versus the impact of incremental talent, incremental capital. It's the age-old question for us. I think, long-term, up and to the right, moving towards the high end of that range. There'll be noise quarter to quarter for sure. None of it, as a plan, requires a multi-year sort of investment before you start seeing results. It's not instant, but it should largely be in line.

Speaker #7: So it's going to be , you know , hard to separate , you know , the the noise there in terms of the environment versus the impact of of incremental talent , incremental capital .

Speaker #7: But it gets the age old question for us . I think , you know , long term , up until the right , you know , moving towards the high end of that , of that range and there'll be there'll be noise , there'll be noise quarter to quarter for sure , but none of it as a plan .

Speaker #7: Requires a multi-year sort of investment before you start seeing , before you start seeing . Results is not instant , but it should largely be in line .

Speaker #10: Understood . Okay . Thank you .

[Analyst 2]: Understood. Okay, thank you.

Speaker #1: As another reminder , if you'd like to ask a question , please press Star One on your telephone keypad . Now , we now turn to Ken Worthington with JP Morgan .

Operator: As another reminder, if you'd like to ask a question, please press *1 on your telephone keypad now. We now turn to Ken Worthington with J.P. Morgan. Your line is open. Please go ahead.

Speaker #1: Your line is open . Please go ahead .

Speaker #12: Hi . Good morning . Thanks for taking the question . So the stock price has dropped a lot more recently . You've clearly highlighted retained earnings growth strategies .

[Analyst 2]: Hi. Good morning. Thanks for taking the question. The stock price has dropped a lot more recently. You've clearly highlighted routine earning growth strategies are the priority. How do opportunistic buybacks play into capital management when you see big declines in the stock price like we've seen more recently?

Speaker #12: Are the priority . How do opportunistic buybacks play into capital management . When you see big declines in stock price like we've seen more recently .

Speaker #7: You can I think we have stated that the opportunity in front of us allows for the highest and best use of our incremental capital dollar and the best way our jobs every day , you know , as , as manager of the business , is to increase the stock price and maximize the value and putting dollars to work in in the business , you know , and we all determine is the best way to , to to get the stock price to where we think it should be .

Joseph Molluso: Ken, I think we have stated that the opportunity in front of us allows for the highest invested use of our incremental capital dollar. The best way, you know, our jobs every day as managers of the business, is to increase the stock price and maximize the value. You know, putting dollars to work in the business, you know, Aaron and we all have determined is the best way to, you know, to get the stock price to where we think it should be. You know, we, for a very long time, we were trading at levels that we thought, you know, the incremental dollar was best spent on our stock. We're not ruling anything out publicly in terms of we still have dry powder under the buyback authorization.

Speaker #7: We for a very long time , we were trading , you know , at at levels that we thought the , the incremental dollar was , was best spent on our stock .

Speaker #7: You know , we're not ruling anything out publicly in terms of we still have dry powder under the buyback authorization . And perhaps , you know , as we as we have , you know , vesting shares from from compensation plans , we may look to just sort of neutralize the impact of that .

Joseph Molluso: Perhaps, you know, as we have vesting shares from compensation plans, you know, we may look to just sort of neutralize the impact of that so that we don't have share creep. The direction is clear that our incremental dollars are going to be spent growing the business and in our trading capital base.

Speaker #7: So that we don't have share creep. But the direction is clear that our incremental dollars are going to be spent growing the business.

Speaker #7: And, you know, in our trading capital base.

Speaker #12: Okay , perfect . Made it crystal clear . Thank you . The other narrative that was sort of , you know , going around was tokenization .

[Analyst 2]: Okay. Perfect. Made it crystal clear. Thank you. The other narrative that was sort of, you know, going around was tokenization. Maybe how is Virtu Financial positioned for an increase in tokenized assets moving on chain? What is your right to win? Will the infrastructure that you have need to change to support this transition to tokenization? If so, to the prior question, what sort of incremental investment is required if the world moves to more tokenized on-chain assets?

Speaker #12: So maybe how is Vertu positioned for an increase in tokenized assets ? Moving on chain sort of what is your right to win ?

Speaker #12: Will the infrastructure that you have need to change to support this sort of transition to tokenization ? And if so , you know , maybe to the prior question , what sort of incremental investment is required if the world moves to more tokenized on chain assets ?

Speaker #3: Yeah , I can answer that . I mean , I think it fits with our current business . So we're very active in many crypto markets around the world .

Andrew Smith: Yeah, I can answer that. I mean, I think it fits with our current business. We're very active in many crypto markets around the world. A lot of them, obviously, are the centralized exchange model, but we do participate in some direct on-chain interactions. We're partnering with people in terms of various interesting initiatives. We're part of the Pitt Foundation. We're part of the Canton Network. We're always active in developing new interesting trading infrastructure. I think with regards to this and other sort of new opportunities, like everyone's talking about prediction markets, anything that is trading electronically and has sufficient depth of liquidity, we stand ready to make markets, and our technology is adaptable to all of those opportunities. We're excited about it.

Speaker #3: You know , a lot of them obviously are the centralized exchange model . But we do participate some direct on chain on chain interactions .

Speaker #3: You know , we're partnering with people in terms of various interesting initiatives , like we're part of the foundation , we're part of the canton network .

Speaker #3: So we're always active in developing new interesting trading infrastructure . And , you know , I think with regards to this and other sort of new opportunities , like in everyone's talking about prediction markets , anything that is trading electronically and has sufficient depth of liquidity .

Speaker #3: We stand ready to make markets and our technology is adaptable to all of those opportunities . So we're we're excited about it .

Speaker #12: Great . Thank you .

[Analyst 2]: Great. Thank you.

Speaker #1: We have Michael Cypress with Morgan Stanley. Your line is open. Please go ahead.

Operator: We now turn to Michael Cypress with Morgan Stanley. Your line is open. Please go ahead.

Speaker #13: Hey . Good morning . Thanks for taking the question . I recall in the past that we heard that doubling the capital base wouldn't necessarily double earnings .

[Analyst 4]: Hey, good morning. Thanks for taking the question. I recall in the past that we heard that doubling the capital base wouldn't necessarily double earnings. Curious what's changed in that regard and what areas or what would be the top few areas that you anticipate allocating more capital toward? How might you rank, order, prioritize that? Maybe you could touch upon some of the areas where you're looking to hire.

Speaker #13: So, I'm curious: what's changed in that regard? And what areas, or what would be the top few areas that you anticipate allocating more capital toward?

Speaker #13: Like how might you rank order , prioritize that , and maybe you could touch upon some of the areas where you're looking to hire .

Speaker #7: Yeah . Again . Again , Michael , I think , you know , we we put a slide in the supplement . I think we have proven that we know how to allocate capital .

Joseph Molluso: Yeah. Michael, I think, you know, we put a slide in the supplement. I think we have proven that we know how to allocate capital. We've proven that we're going to devote it to the highest and best use, whether it was acquisitions, integrating acquisitions, buying back our stock. I think we, in the past, identified areas where we needed to grow and grew businesses that were zero to $100 million plus businesses and increased our capital base. I think the markets evolve. I think we're ready now. I mean, I think we probably weren't ready in the past. We have the ability to do it given our infrastructure, our scaled infrastructure. We've got the team in place, and we have a new CEO who wants us to pivot to growth. That's what we're doing.

Speaker #7: We've proven that we're going to devote it to the highest and best use , whether it was acquisitions , integrating acquisitions , buying back our stock .

Speaker #7: And I think we in the past , we identified areas where we needed to grow and grew , businesses that were zero to to hundred million dollar plus businesses and increased our capital base .

Speaker #7: So I think , you know , the markets evolved and , you know , I think we're we're ready now . And I think we we probably weren't ready in the past .

Speaker #7: And you know , and we have a , you know , the ability to do it given our infrastructure , our scaled infrastructure .

Speaker #7: And you know , we've got we've got the team in place and we have , you know , a new CEO who wants us to pivot to growth .

Speaker #7: And that's what we're doing.

Speaker #13: And just in terms of the question around prioritizing areas that you're hiring .

[Analyst 4]: In terms of the question around prioritizing areas that you're hiring.

Speaker #3: I mean , there's a lot of them . But yeah , we're aggressively hiring . You know , what you would call , you know , broadly developers , that's very important for our business .

Andrew Smith: I mean, there's a lot of them, but yeah, we're aggressively hiring, you know, what you would call broadly developers. That's very important for our business. It's a vague term, which I hate, but we're probably hiring a lot of quants. We're hiring, you know, traders. Basically, any aspect of the business. I think, just going back to the question, which I think Joan said very well, the previous comments, I think you have to take in the context. It's not the case that we could just, you know, if someone gifted us double the amount of capital tomorrow, that we could just, you know, turn it on and make twice the money. The comment is that, yes, we can grow the earnings with more capital, but it requires a lot of hard work to do that. It requires more people. It requires working on our strategies.

Speaker #3: You know , it's a vague term , which I hate , but we're hiring a lot of plants . We're hiring , you know , traders .

Speaker #3: So basically any aspect of the business , I think , you know , just going back to the question , which I think John said very well , but the previous comments , I think you have to take in the context of it's not the case that we could just , you know , if someone gifted us a double the amount of capital tomorrow that we could just , you know , turn it on and make twice the money that comment is that , you know , yes , can grow the earnings with more capital , but it requires a lot of hard work to do that .

Speaker #3: So it requires more people . It requires working on our strategies . It requires , you know , revamping , expanding our infrastructure .

Andrew Smith: It requires revamping, expanding our infrastructure. It's not like a magic machine where we can just dump more money in and get more money out. We're excited about doing the work and growing the business.

Speaker #3: So it's not like a magic machine where we can just dump more money in and get more money out . But we're , you know , we're excited about doing the work and growing the business .

Speaker #13: And what areas do you expect to allocate that capital to more meaningfully than than others ? How do you think about prioritizing that ?

[Analyst 4]: What areas do you expect to allocate that capital to more meaningfully than others? How do you think about prioritizing that? When you think about doubling the earnings, what areas do you think would be meaningfully contributing towards that?

Speaker #13: And when you think about doubling the earnings , what areas do you think would be meaningfully contributing towards that ?

Speaker #7: And I look , it will be flexible . It will it will be based in part on on what is going on in the market .

Joseph Molluso: It will be flexible. It will be based in part on what is going on in the market. I think if you look at an area like crypto, where we've done very well, crypto is a fragmented market, which necessitates the need for more capital intensity because there's no settlement utility, and there's multiple venues. ETF block is a big business that we've grown quite well. That, by its nature, is more capital intensive. It really depends on the end market. It depends on the characteristics of the end market. It depends on the prime brokers. It depends on the venues. It depends on the participants. It depends on the trading format. U.S. equities, the 605 business, is a very capital-efficient business, right?

Speaker #7: I think if you look at an area

Speaker #7: crypto , where we've done very well , crypto is a fragmented market which necessitates the need for more capital intensity we because there's no settlement utility and there's there's there's multiple venues .

Speaker #7: ETF block is a big business that we've grown quite well . That by its nature is more capital intensive . So it really depends on the end market , depends on the characteristics of the end market .

Speaker #7: It depends on on prime brokers . It depends on the venues . It depends on the participants . It depends on the trading format .

Speaker #7: You know , US equities 605 business is a very capital efficient business . Right . So so we think we're going to grow everywhere .

Joseph Molluso: We think we're going to grow everywhere, but the capital usage is going to go to areas where we think we can, where we need it, where we need it to grow, right? Areas like commodities, areas like foreign exchange, they're all different, depending on the end market, depending on the market structure. It just really depends on what is going on in the market and the nature of the end market.

Speaker #7: But the capital usage is going to go to areas where we think we can , where we need it . Where we need it to grow .

Speaker #7: Right . So areas like commodities , areas like foreign exchange , they're all different depending on the end market , depending on the market structure .

Speaker #7: So , so really it it just really depends on what's what is going on in the market . And the sort of the nature of the end market .

Speaker #13: Great . Thank you .

[Analyst 4]: Great. Thank you.

Speaker #1: That's all the time we have for questions . And I'll hand back to Aaron Simmons for any final remarks .

Operator: That's all the time we have for questions. I'll now hand back to Aaron Simons for any final remarks.

Speaker #3: Thanks everyone for joining . Hopefully this informative and look forward to seeing you next quarter .

Andrew Smith: Thanks, everyone, for joining. Hopefully, this was informative and look forward to seeing you next quarter.

Speaker #1: Ladies and gentlemen , today's call is now concluded . We'd like to thank you for your participation . You may now disconnect your lines .

Operator: Ladies and gentlemen, today's call is now concluded. We'd like to thank you for your participation. You may now disconnect your lines.