Q1 2026 Virtu Financial Inc Earnings Call

April 29, 2026

Speaker #1: After today's prepared remarks, we'll host a question-and-answer session. If you would like to ask a question, please press star 1 to raise your hand.

Speaker #1: To withdraw your question, press star 1 again. I will now hand the conference over to Matthew Sandberg, Head of IR and FP&A. Matthew, please go ahead.

Speaker #2: Thank you. Good morning, everyone. our first quarter 2026 results were released this morning and are available on our website. With us today on this morning's call, we have Aaron Simons, our Chief Executive Officer; Cindy Lee, our Chief Financial Officer; and Joe Molluso, our Co-President and Co-Chief Operating Officer.

Speaker #2: We will begin with brief prepared remarks and then take your questions. First, a few reminders. Today's call may include forward-looking statements, which represent Virtu's current belief 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 in 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.

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.

Speaker #2: 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.

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: During 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: 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'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 to be meaningful, as well as how management uses these measures.

Speaker #2: 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 to be meaningful, as well as how management uses these measures.

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

Speaker #3: Thanks, Matt. good morning, everyone. again, just, like, very brief remarks before Cindy goes over the detailed results, and we, we move to Q&A. But just wanted to highlight that our, our first quarter results show that we're executing on our plan to grow through investing in our infrastructure, acquiring top talent, and expanding our capital base.

Speaker #3: Thanks, Matt. good morning, everyone. again, just, like, very brief remarks before Cindy goes over the detailed results. And we, we move to Q&A. But just wanted to highlight that our, our first quarter results show that we're executing on our plan to grow through investing in our infrastructure, acquiring top talent, and expanding our capital base.

Speaker #3: Following that plan in the last seven months, we have added over 500 million dollars in new trading capital and maintained a return on our total capital in excess of 100%.

Speaker #3: Our results for the first quarter were among the best in Virtu's history, aided by an operating and environment which was even more favorable than the fourth quarter of last year, within the context of that environment, all of our businesses performed well.

Speaker #3: Customer and non-customer market making, as well as execution services. We've provided additional perspective on the quarter in our detailed financial supplement, and we'll be answering your questions shortly.

Speaker #3: We've provided additional perspective on the quarter in our detailed financial supplement, and we'll be answering your questions shortly. First, though, Cindy Lee, our Chief Financial Officer, will review the financial results for the quarter.

Speaker #3: First, though, Cindy Lee, our Chief Financial Officer, will review the financial results for the quarter.

Speaker #4: Thanks, Aaron. Good morning, everyone. For the first quarter 2026, we generated adjusted net trading income, or NT, of 12.9 million per day, or a total of 787 million dollars.

Speaker #4: This was the highest quarter total ever for Virtu. Turning to our segment performance, market making reported NT of 10.4 million dollars per day for Q1.

Speaker #4: This was the highest quarter total ever for Virtu. Turning to our segment performance, market making reported NT of 10.4 million dollars per day for Q1, execution services reached 2.5 million dollars per day for the quarter, and 2.1 million dollars on the trailing 12-month basis.

Speaker #4: Execution services reached 2.5 million dollars per day for the quarter, and 2.1 million dollars on the trailing 12-month basis. This is the eighth consecutive quarter of increased total NT for VES.

Speaker #4: This is the eighth consecutive quarter of increased total NT for VES. An indication of the substantial progress we have been noting within the VES business.

Speaker #4: An indication of the substantial progress we have been noting within the VES business. This performance reflects investment we have made in technology, our focus on client acquisition, and the expansion of our product offering.

Speaker #4: This performance reflects the investment we have made in technology, our focus on client acquisition, and the expansion of our product offering. Both of our operating segments benefited from generally favorable market conditions, and strong execution by our team.

Speaker #4: Both of our operating segments benefited from generally favorable market conditions and strong execution by our team. Our profitability this quarter was robust. We generated 521 million dollars in adjusted EBITDA, representing a 66% margin.

Speaker #4: Our profitability this quarter was robust. We generated 521 million dollars in adjusted EBITDA, representing a 66% margin. Adjusted EPS was $2.24. For the last 12 months, we recorded 1.6 billion in adjusted EBITDA, a 66% margin, and the $6.66 in adjusted EPS.

Speaker #4: Adjusted EPS was $2.24. For the last 12 months, we recorded 1.6 billion in adjusted EBITDA, a 66% margin, and the $6.66 in adjusted EPS.

Speaker #4: These numbers all represent high since early 2021, and an all-time quarterly high in case of adjusted EPS. Underscoring the operating leverage inherent in our business.

Speaker #4: These numbers all represent high since early 2021, and an all-time quarterly high in case of adjusted EPS, underscoring the operating leverage inherent in our business.

Speaker #4: On slide 7 of our supplemental materials, we provide a summary of our operating expenses. Our first quarter 2026 cash compensation ratio was at 22%, which was within the historical range.

Speaker #4: On slide 7 of our supplemental materials, we provide a summary of our operating expenses, our first quarter 2026 cash compensation ratio, was at 22%, which was within the historical range.

Speaker #4: The increase in compensation expense reflects our continued focus on retaining and acquiring top talent across the organization, particularly in trading and technology. Turning to capital, our invested capital stands at 2.6 billion as of March 31st, while generating an average return on 107%.

Speaker #4: The increase in compensation expense reflected our continued focus on retaining and acquiring top talent across the organization, particularly in trading and technology. Turning to capital, our invested capital stands at 2.6 billion, as of March 31st, while generating an average return on 107%.

Speaker #4: On the capital over the past year, we will continue to expand our capital base, strengthen our infrastructure, and deploy capital where we see the greatest opportunities.

Speaker #4: All while maintaining our quarterly dividend of 24 cents per share. We will now take your questions.

Speaker #5: We'll now begin the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 to raise your hand.

Speaker #5: We'll now begin the question and answer session. Please limit yourself to one question and one follow-up. If you'd like to ask a question, please press star 1 to raise your hand.

Speaker #5: To withdraw your question, press star 1 again. We ask that you pick your hand setup when asking a question to allow for optimum sound quality.

Speaker #5: To withdraw your question, press star 1 again. We ask that you pick your hand set up when asking a question to allow for optimum sound quality.

Speaker #5: If you're muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Patrick Moley, from Piper Sandlow.

Speaker #1: Virtu Financial, and deploy capital. We see the greatest opportunities. All while maintaining our quarterly dividend of 24 cents per share. We will now take your questions.

Speaker #2: We'll now begin the question-and-answer session. Please limit yourself to one question and one follow-up. If you'd like to ask a question, please press star 1 to raise your hand.

Speaker #5: Your line is open. Go ahead.

Speaker #5: . Your line is open. Go ahead.

Joseph Molluso: Deploy capital where we see the greatest opportunities, all while maintaining our quarterly dividend of $0.24 per share. We will now take your questions.

Cindy Lee: Deploy capital where we see the greatest opportunities, all while maintaining our quarterly dividend of $0.24 per share. We will now take your questions.

Speaker #3: Yes, good morning, and thanks for taking the question. congrats on the strong quarter. You know, I think the environment across the board was very good, but you guys seem to outperform that.

Speaker #2: To withdraw your question, press *1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality.

Speaker #3: So I was hoping maybe you could just level set with us and talk about where you saw the most opportunity in the quarter, and then maybe, you know, with our with, NT up where it is, you know, highest level, on record, how should we think about the sustainability of that in this environment?

Operator: We'll now begin the question and answer session. Please limit yourself to one question and one follow-up. We ask that you pick your hand set up when asking a question to allow for optimum sound quality. If you're muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Patrick Moley from Piper Sandler. Your line is open. Go ahead.

Speaker #2: If you're muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Patrick Moley, from Piper Sandler.

Speaker #3: Thanks.

Speaker #2: Your line is open. Go ahead.

Speaker #6: Hey, Patrick. Good morning. It's Joe. you know, you're right. The environment was very, robust, as I think you wrote in your note. and, you know, I think we, we did outperform, you know, it's, it's difficult to, to kind of pinpoint growth, since we've, we've had this growth pivot.

Speaker #3: So I was hoping maybe you could just level set with us and talk about where you saw the most opportunity in the quarter and then maybe, you know, with, with, Antti up where it is, you know, highest level, on record.

Speaker #6: You know, it, it's, it, it is across the board. and I think, you know, for the last couple of quarters, you know, our focus has been on growing the firm, you know, but that means, a lot of things across the board and a lot of asset classes and a lot of geographies, you know, and it naturally includes growth in, in investment, you know, in asset classes that maybe we were historically less focused on, but, you know, we want to accelerate growth in.

Speaker #6: You know, it, it's, it, it is across the board, and I think, you know, for the last couple of quarters, you know, our focus has been on growing the firm, you know, but that means, you know, a lot of things across the board and a lot of asset classes and a lot of geographies, you know, and it naturally includes growth and, and investment, you know, in asset classes that maybe we were historically less focused on, but, you know, we want to accelerate growth in.

Patrick Moley: Yes, good morning, and thanks for taking the question. Congrats on the strong quarter. You know, I think the environment across the board was very good, but you guys seem to outperformed that. I was hoping maybe you could just level set with us and talk about where you saw the most opportunity in the quarter, and then maybe, you know, with ANTI up where it is, you know, highest level on record, how should we think about the sustainability of that in this environment? Thanks.

Speaker #3: How should we think about the sustainability of that in this environment? Thanks.

Speaker #4: Okay, Patrick. Good morning. It's Joe. you know, you're right. The environment was very, robust, as I think you wrote in your note. and I think we, we did outperform, in, you know, it's, it's difficult to, to kind of pinpoint growth, since we've, we've had this growth pivot.

Speaker #6: but, you know, it's hard to pinpoint, right? So I think in the past, we've talked about, crypto. We've talked about options, right? But our growth we, we want to make sure that it's understood the growth plan isn't limited, you know, to a handful of narrow areas.

Speaker #6: but, you know, it's hard to pinpoint, right? So I think in the past, we've talked about, crypto. We've talked about options, right? But our growth, we, we want to make sure that it's understood the growth plan isn't limited, you know, to a handful of narrow areas.

Speaker #4: You know, it-it's, it is across the board, and I think, you know, for the last couple of quarter and quarters, you know, our focus has been on going firm, you know, but that means, you know, a lot of things across the board and a lot of asset classes and a lot of geographies, you know, and it naturally includes growth and, and investment, you know, in asset classes that maybe we were historically less ess focused on, but, you know, we want to accelerate growth in, but, you know, it's hard to pinpoint, right?

Joseph Molluso: Hey, Patrick. Good morning. It's Joe. You know, you're right, the environment was very robust, as I think you wrote in your note. You know, I think we did outperform. It, you know, it's difficult to kind of pinpoint growth, since we've had this growth pivot. You know, it is across the board. I think, you know, for the last couple of quarters, you know, our focus has been on growing the firm, you know, but that means a lot of things across the board and a lot of asset classes and a lot of geographies. You know, it naturally includes growth and investment, you know, in asset classes that maybe we were historically less focused on, but, you know, we want to accelerate growth in.

Speaker #6: It's, it's, it's really, you know, broad-based and, you know, and focused, on a lot of different areas. And it includes all the things that we've been talking about: capital.

Speaker #6: It includes personnel. it includes investment in technology, etc.

Speaker #4: I think in the past, we've talked about, crypto. We've talked about options, but our growth, we, we want to make sure that it's understood the growth plan isn't limited, you know, to a handful of narrow areas.

Speaker #7: Okay. And then, I mean, was there you know, anything you can share in terms of asset classes where you maybe saw outsized growth this quarter?

Speaker #3: Okay. And then, I mean, was there you know, anything you can share in terms of asset classes where you maybe saw outsized growth this quarter?

Speaker #7: I can think of, you know, maybe you know, the metals market. We saw a lot of activity, especially among retail, in the earlier part of the quarter.

Speaker #4: It's, it's, it's really, you know, broad-based and, and, you know, and focused, on a lot of different areas and it includes all the things that we've been talking about: capital.

Speaker #3: I can think of, you know, maybe you know, the metals market. We saw a lot of activity, especially among retail, in the earlier part of the quarter.

Speaker #7: So you know, anything there that you can share on asset classes?

Speaker #3: So you know, anything there that you can share on asset classes?

Speaker #4: It includes personnel, it includes investment in technology, etc.

Speaker #6: Hey, we, we made the point last quarter to remind the, world that Virtu's performance is not solely based on retail investor participation, which, by the way, is remains strong.

Speaker #6: we, we made the point last quarter, to remind the, world that Virtu's performance is not solely based on retail, investor participation, which, by the way, is remains strong.

Joseph Molluso: you know, it's hard to pinpoint, right? I think in the past, we've talked about crypto, we've talked about options, right? Our growth, we wanna make sure that it's understood the growth plan isn't limited, you know, to a handful of narrow areas. It's really, you know, broad-based and, you know, and focused on a lot of different areas. It includes all the things that we've been talking about. Capital, it includes personnel, it includes investment in technology, et cetera.

Joseph Molluso: It's hard to pinpoint, right? I think in the past, we've talked about crypto, we've talked about options, right? Our growth, we wanna make sure that it's understood the growth plan isn't limited, you know, to a handful of narrow areas. It's really, you know, broad-based and, you know, and focused on a lot of different areas. It includes all the things that we've been talking about. Capital, it includes personnel, it includes investment in technology, et cetera.

Speaker #3: Okay. And then, I mean, was there, you know, anything you can share in terms of asset classes where you maybe saw outsized growth this quarter?

Speaker #3: I can think of, you know, maybe, you know, the metals market. We saw a lot of activity, especially among retail, in the earlier part of the quarter.

Speaker #6: so you know, the, the customer market-making business has done very well, but I think we saw continued outstanding performance and growth in, you know, what we call prop market-making, and the headline volatility in the quarter obviously from exogenous events contributed, but, you know, there's also, you know, a lot of underlying growth in, in trades and investments that, that have been made, you know, over a long period of time.

Speaker #6: so you know, the, the customer market-making business has done very well, but I think we saw continued outstanding performance and growth in, you know, what we call prop market-making, and the, the headline volatility in the quarter obviously from exogenous events contributed, but you know, there's also, you know, a lot of underlying growth in, in trades and investments that, that have been made, you know, over a long period of time.

Speaker #3: So you know, anything there that you can share on asset classes?

Speaker #4: We made the point last quarter to remind the world that Virtu's performance is not solely based on retail investor participation, which, by the way, remains wrong.

Patrick Moley: Okay. I mean, was there, you know, anything you can share in terms of asset classes where you maybe saw outsized growth this quarter? I can think of, you know, maybe, you know, the metals market. We saw a lot of activity, especially among retail in the earlier part of the quarter. You know, anything there that you can share on asset classes?

Speaker #4: so the, the customer market making business has done very well, but I think we saw continued outstanding performance and growth in, you know, what we call prop market making, and the headline volatility in the quarter obviously from exogenous events contributed, but, you know, there's also a lot of underlying growth in, in trade and investments that, that have been made, you know, over a long period of time.

Speaker #6: We want to get away from talking about, you know, specific areas, but I think it's, it's pretty obvious in the quarter if you look at just the volatility in the world and what's been going on, that that was a good environment, that that was helped by our, you know, continued investment and, and, and everything else we've been talking about.

Speaker #6: We want to get away from talking about, you know, specific areas, but I think it's, it's pretty obvious in the quarter, if you look at just the volatility in the world and what's been going on, that that was a good environment, that, that was helped by our, you know, continued investment and, and, and everything else we've been talking about.

Joseph Molluso: We made the point last quarter to remind the world that Virtu's performance is not solely based on retail investor participation, which by the way, remains strong. You know, the customer market-making business has done very well. I think we saw continued outstanding performance and growth in what we call prop market making. The headline volatility in the quarter, obviously from exogenous events contributed, but, you know, there's also a lot of underlying growth in trades and investments that have been made over a long period of time.

Speaker #3: Yeah, maybe I'll just add one thing. Like, instead of I mean, and I get it's hard. Like, quarter over quarter, the environment, as we pointed out last time, is the most important variable, but it's not like oh, we found some new trade or something took off.

Speaker #3: Yeah. Maybe I'll jump into that one thing.

Speaker #6: Okay.

Speaker #3: Like, instead of I mean, and I get it's hard. Like, quarter over quarter, the environment, as we pointed out last time, is the most important variable, but it's not like oh, we found some new trade or something took off.

Speaker #4: We want to get away from talking about, you know, specific areas, but I think i-it's, it's pretty obvious in the quarter if you look at just the volatility in the world and what's been going on, that that was a good environment, that, that was helped by our, you know, continued investment and, and, and everything else we've been talking about.

Speaker #3: Really, what I tried to highlight in the introductory remarks was you should think of this as what would have happened in the counterfactual world where we didn't add $500 million of new trading capital.

Speaker #3: Really, what I tried to highlight in the introductory remarks was you should be think of this as what would have happened in the counterfactual world where we didn't add 500 million of new trading capital.

Speaker #3: Yeah. Maybe I'll start with that one question. Like, i-i-instead of I mean, and I guess it's hard. The quarter over quarter environment, as we pointed out last time, is the most important variable.

Speaker #3: Our P&L would not have been what it was in the first quarter, right? I'm not saying it's a one-for-one difference, right? But it definitely was a, a huge factor.

Speaker #3: But it's not like oh, we found some new trade or something took off. Really, what I try to highlight in the introductory remarks was you should be thinking of this as what would have happened in a counterfactual world where we didn't add $500 million of new trading capital.

Speaker #3: And so going forward, you know, the idea is that in any environment, we should outperform where we were before with lower capital.

Speaker #3: And so going forward, you know, the idea is that in any environment, we should outperform where we were before with lower capital. Okay. So maybe, maybe just, if I could sneak one more in here, just a bigger picture question.

Joseph Molluso: We wanna get away from talking about, you know, specific areas. I think it's pretty obvious in the quarter if you look at just the volatility in the world and what's been going on, that was a good environment that was helped by our, you know, continued investment and everything else we've been talking about.

Speaker #7: Okay. So maybe, maybe just, if I could sneak one more in here, just a bigger picture question. I think it was just a few quarters ago you said you were you were looking to target about $10 million a day in NT through the cycle, and that was kind of the longer-term goal for the business.

Speaker #3: Our P&L would not have been what it was in the first quarter, right? I'm not saying it's a one-for-one difference, right? But it definitely was a huge factor.

Speaker #3: I think it was just a few quarters ago, you said you were you were looking to target about 10 million a day in NT through the cycle, and that was kind of the longer-term goal for the business.

Speaker #3: And so going forward, you know, the idea is that in any environment, we should outperform where we were before with more capital. Okay. So maybe, maybe just, I'm going to sneak one more in here.

Aaron Simons: Yeah, maybe I'll just add one thing. I mean, and I get it's hard, like quarter-over-quarter, the environment, as we pointed out last time, is the most important variable. It's not like, oh, we found some new trade or something took off. Really, what I tried to highlight in the introductory remarks was you should be think of this as what would have happened in the counterfactual world where we didn't add $500 million of new trading capital. Our P&L would not have been what it was in Q1, right? I'm not saying it's a 1 for 1 difference, right? It definitely was a huge factor. Going forward, you know, the idea is that in any environment, we should outperform where we were before with lower capital.

Aaron Simons: Yeah, maybe I'll just add one thing. I mean, and I get it's hard, like quarter-over-quarter, the environment, as we pointed out last time, is the most important variable. It's not like, oh, we found some new trade or something took off. Really, what I tried to highlight in the introductory remarks was you should be think of this as what would have happened in the counterfactual world where we didn't add $500 million of new trading capital. Our P&L would not have been what it was in the Q1, right? I'm not saying it's a one-for-one difference, right? It definitely was a huge factor. Going forward, you know, the idea is that in any environment, we should outperform where we were before with lower capital.

Speaker #7: So how should we interpret this quarter? Do you feel like we're, we've, we're kind of at that point where we can you know, we're sort of building toward this $10 million a day through the cycle?

Speaker #3: So how should we interpret this quarter? Do you feel like we're we've, we're kind of at that point where we can you know, we're sort of building toward this 10 million dollars a day through the cycle.

Speaker #3: Just a bigger picture question. I think it was just a few quarters ago you said you were looking to target about $10 million a day in NNTI through the cycle, and that was kind of the longer-term goal for the business.

Speaker #7: and if not, what still needs to be done to kind of get us to that place?

Speaker #3: and if not, what still needs to be done to kind of get us to that place?

Speaker #3: I mean, the honest answer is we don't know. I mean, our the trailing return on capital was over 100%. I don't think we always achieve that through, like, a multi-year cycle.

Speaker #6: I mean, the honest answer is we don't know. I mean, our the trailing return on capital was over 100%. I don't think we always achieve that through, like, a multi-year cycle.

Speaker #3: So how should we interpret this quarter? Do you feel like we're kind of at that point where we can, you know, we're sort of building toward this $10 million a day through the cycle?

Speaker #3: So at points in the cycle where it's less than 100%, you can back into how much capital we might need to, to make $10 million a day.

Speaker #6: So at points in the cycle where it's less than 100%, you can back into how much capital we might need to, to make 10 million a day.

Speaker #3: And if not, what still needs to be done to kind of get us to that place?

Speaker #4: I mean, the honest answer is we don't know. I mean, our the trailing return on capital was over 100%. I don't think we always achieve that through, like, a multi-year cycle.

Speaker #3: but in environments like this, then, then we need much less. And, and we make more than $10 million a day.

Speaker #6: but in an environment like this, then, then we need much less. And, and we make more than 10 million a day.

Patrick Moley: Okay. Maybe just, if I could sneak one more in here, just a bigger picture question. I think it was just a few quarters ago, you said you were looking to target about $10 million a day in ANTI through the cycle, and that was kind of the longer-term goal for the business. How should we interpret this quarter? Do you feel like we're kinda at that point where we can, you know, we're sort of building toward this $10 million a day through the cycle? If not, what still needs to be done to kinda get us to that place?

Speaker #6: Yeah, the through the cycle, point, Patrick, is the key point in that discussion, and it and it makes it it, it is what makes it, difficult to, to say, where we are.

Speaker #3: Yeah. The through the cycle, point, Patrick, is the key point in that discussion, and it, and it makes it it, it is what makes it, difficult to, to say, where we are.

Speaker #4: So at points in the cycle, it's less than 100%. You can back into how much capital we might need to, to make $10 million a day.

Speaker #4: but in environments like this, then, then we need much less than and we make more than $10 million a day.

Speaker #6: I think, a-as Aaron pointed out, and I think as I pointed out in earlier calls, you know, when we talk about goals and trading capital, of $4 billion, that factors into that goal.

Speaker #3: I think, a-as Aaron pointed out, and I think as I've pointed out in earlier calls, you know, when we talk about goals and trading capital, of $4 billion, that factors into that goal.

Speaker #3: Yeah, through the cycle, at the point, Patrick, is a key point in that discussion, and it makes it difficult to say where we are.

Speaker #6: but it's more than that. There have been a number of investments in personnel and people, the recruiting environment, you know, for Virtu, I think, is very good.

Speaker #3: but it's more than that. There have been a number of investments in personnel and people. the recruiting environment, you know, for Virtu, I think, is very good.

Speaker #3: I think, as you pointed out, and I, I pointed out in an earlier call, you know, we talked about goals and trading capital of $4 billion.

Aaron Simons: I mean, the honest answer is we don't know. I mean, the trailing return on capital is over 100%. I don't think we always achieve that through like a multi-year cycle. At points in the cycle where it's less than 100%, you can back into how much capital we might need to make $10 million a day. In environments like this, then we need much less and we make more than $10 million a day.

Speaker #6: the, investments in technology being stepped up, you know, all contribute to that, right? So you need all of those things together, you know, to execute on that.

Speaker #3: the, investments in technology being stepped up, you know, all contribute to that, right? So you need all of those things together, you know, to execute on that.

Speaker #3: That factors into that goal. but it's more than that. There have been a number of investments in personnel and people, the recruiting environment for virtu has been very good.

Speaker #6: and I think in the past, we've, we've used terms like the medium term, like, like, you know, a three-year time horizon, kind of being, you know, something that, you know, w-went forced to give a, a view is, is something we'd feel comfortable giving to you.

Speaker #3: and I think in the past, we've, we've used terms like the medium term, like, like you know, a three-year time horizon, kind of being, you know, something that, you know, w-went forced to give a, a view is, is something we'd feel comfortable giving to you.

Speaker #3: the, investments in technology being stepped up, you know, all contribute to that, right? So you need all of those things together to execute on that.

Joseph Molluso: Yeah. The through the cycle point, Patrick, is the key point in that discussion, it, and it is what makes it difficult to say where we are. I think, as Aaron pointed out, I think as I've pointed out in earlier calls, you know, when we talk about goals and trading capital of $4 billion, that factors into that goal. It's more than that. There have been a number of investments in personnel and people. The recruiting environment, you know, for Virtu, I think is very good. The investments in technology being stepped up, you know, all contribute to that, right? You need all of those things together, you know, to execute on that.

Speaker #3: I think in the past, we, we've used terms like the medium term, like you know, a three-year time horizon, kind of being you know, something that, you know, w-went force to give a, a view is something we feel comfortable giving to you.

Speaker #7: Okay. Thanks for the call, you guys. That's it from me.

Speaker #3: Okay. Thanks for the call, you guys. That's it for me.

Speaker #8: Your next question comes from Dan Fannon at Jefferies. Your line is open.

Speaker #1: Your next question comes from Dan Fannon at Jefferies. Your line is open.

Speaker #3: Oh, thanks. Good morning.

Speaker #3: Oh, thanks. Good morning. Thanks. Good morning. so I wanted to just talk about what's what you've been doing. Obviously, you talked about 500 million of incremental capital.

Speaker #9: Thanks. Good morning. so I wanted to just talk about what's what you've been doing. Obviously, you talked about $500 million of incremental capital. Can you also talk about the hiring?

Speaker #2: Okay. Thanks for the call, you guys. That's it for me.

Speaker #1: Your next question comes from Dan Fallon at Jefferies. Your line is open.

Speaker #3: Can you also talk about the hiring? If there's w-where you've been focused, where you are? Do you think in terms of the goal of what you're looking to expand and, and invest in internally?

Speaker #9: If there's where you've been focused, where you are do you think in terms of the goal of what you're looking to expand and, and invest in internally?

Speaker #3: thanks. Good morning. Thanks. Good morning. so I wanted to just talk about what's what you've been doing. Obviously, you talked about $500 million of incremental capital.

Speaker #3: Can you also talk about hiring? If that's where you've been focused, where you are, do you think in terms of the goal of what you're looking to expand and invest in internally?

Speaker #3: yeah, sure. So you know, there's definitely a number of areas where we're, we're trying to, to hire people. So definitely, people that are in the sort of, like, you know, continuum of trader to quant to researcher-type role, we're ti-trying to hire a lot of engineers, software developers.

Speaker #5: yeah. Sure. So you know, there's definitely a number of areas where we're, we're trying to, to hire people. So definitely, people that are in the sort of, like, you know, continuum of trader to quant to researcher-type role, we're ti-trying to hire a lot of engineers, software developers.

Joseph Molluso: I think in the past, we've used terms like the medium term, like, you know, a 3-year time horizon kind of being, you know, something that, you know, when forced to give a view is something we'd feel comfortable giving to you.

Speaker #3: that takes time because, you know, we have a very high bar for quality. but, you know, we're trying to, to kind of do that as quickly as possible.

Speaker #5: that takes time because, you know, we have a very high bar for quality. but, you know, we're trying to, to kind of do that as quickly as possible.

Patrick Moley: Okay. Thanks for the color, guys. That's it for me.

Operator: Your next question comes from Dan Fannon at Jefferies. Your line is open.

Speaker #5: we're ti-trying to hire a lot of engineers, software developers, that takes time because, you know, we have a very high bar for quality. but, you know, we're trying to, to kind of do that as quickly as possible.

Speaker #3: we have made a few key senior hires, in the last six to seven months that have started and they're gonna have an impact on the business, hopefully, in, in a short timeframe.

Speaker #5: we have made a few key senior hires, in the last six to seven months that have started and they're gonna have an impact on the business, hopefully, in, in a short timeframe.

Dan Fannon: Thanks. Good morning. Thanks. Good morning. wanted to just talk about what you've been doing. Obviously, you talked about $500 million of incremental capital. Can you also talk about the hiring, if there's where you've been focused, where you are, do you think, in terms of the goal of what you're looking to expand and invest in internally?

Speaker #5: We have made a few key senior hires in the last six to seven months that have started, and they're going to have an impact on the business, hopefully in a short time frame.

Speaker #3: but it is a l a longer-term expansion as well. I think this year, we hope to get our headcount close to 1,100. you know, I don't we don't have, like, an exact number.

Speaker #5: but it is a l a longer-term expansion as well. I think this year, we hope to get our headcount close to 1,100. you know, I don't we don't have, like, an exact number.

Speaker #5: but it is a l a longer-term expansion as well. I think this year we hope to get our headcount close to 1,100. you know, I don't we don't have, like, an exact number.

Speaker #3: It's more about just having sufficient number of people to do a certain level of quality work that we need done. But, definitely, for the foreseeable future, we're gonna be pretty aggressively hiring.

Speaker #5: It's more about just having sufficient number of people to do a certain level of quality work that we need done. But, definitely, for the foreseeable future, we're gonna be pretty aggressively hiring.

Aaron Simons: Yeah. Sure. You know, there's definitely a number of areas where we're trying to hire people. Definitely people that are in the sort of like, you know, continuum of trader to quant to researcher type role. We're trying to hire a lot of engineers, software developers. That takes time because, you know, we have a very high bar for quality. But, you know, we're trying to kind of do that as quickly as possible. We have made a few key senior hires in the last 6 to 7 months that have started, and they're gonna have an impact on the business, hopefully in short timeframe. But it is a longer term expansion as well. I think this year we hope to get our head count close to 1,100.

Speaker #5: It's more about just having sufficient number of people to do a certain level of quality work that we need done, but, definitely for the foreseeable future, we're going to be pretty aggressively hiring.

Speaker #9: Great. That, that's helpful. And then just in the context of that and obviously the revenue environment that you're operating in, how to think about expense growth, would be helpful in the in the context of where you're thinking about either cash compensation, v-versus previously, and/or growth in the, the kind of more fixed cost-based to support, new asset classes, new personnel a-all the things you're investing in.

Speaker #3: Great. That, that's helpful. And then just in the context of that, and obviously, the revenue environment that you're operating in, how to think about expense growth, would be helpful in the in the context of where you're thinking about either cash compensation, v-versus previously, and/or growth in the, the kind of more fixed cost-based to support, new asset classes, new personnel, a-all the things you're investing in.

Speaker #3: Great. That-that's helpful. And then just in the context of that, and obviously the revenue environment that you're offering in, how to think about expense growth, would be helpful in the in the context of the way you're thinking about either cash compensation versus previously and/or growth in the, the kind of more fixed cost-based to support, new asset classes, new personnel all the things you're investing in.

Speaker #3: Sure. So I think, you know, we have given some guidance on the compensation ratios and, you know, the first quarter, accrual sort of reflects where, where we wanna be.

Speaker #5: Sure. So I think, you know, we have given some guidance on the compensation ratios and, you know, the first quarter, accrual sort of reflects, where, where we wanna be.

Speaker #5: Sure. So I think, you know, we have given some guidance on the compensation ratios and, you know, the first quarter, accrual sort of reflects where, where we want to be.

Speaker #3: obviously, when you have a great quarter, it's, it's much easier. And the percentage looks lower. But, you know, as we've highlighted the last few quarters, like, we have been adjusting that up slightly because we are trying to attract the best talent in the business.

Speaker #5: obviously, when you have a great quarter, it's, it's much easier. And the percentage looks lower. But, you know, as we've highlighted the last few quarters, like, we have been adjusting that up slightly because we are trying to attract the best talent in the business.

Aaron Simons: You know, we don't have like an exact number. It's more about just having a sufficient number of people to do a certain level of quality work that we need done. Definitely for the foreseeable future, we're gonna be pretty aggressively hiring.

Speaker #5: obviously, when you have a great quarter, it's, it's much easier and the percentage looks lower. But, you know, as we've highlighted the last few quarters, like, we have been adjusting that up slightly because we are trying to attract the best talent in the business and, you know, part of our intention is competitive compensation.

Speaker #3: And, you know, part of our tension is competitive compensation. but I think we are you know, at that level, and you can see that it doesn't really affect the, the ratios or the EBITDA margin, all that much, especially when you have a have a great quarter.

Speaker #5: And, you know, part of our tension is competitive compensation. but I think we are you know, at that level. And you can see that it doesn't really affect the, the ratios or the EBITDA margin, all that much, especially when you have a have a great quarter.

Dan Fannon: Great. That's helpful. Then just in the context of that and obviously the revenue environment that you're operating in, how to think about expense growth would be helpful in the context of what you're thinking about either cash compensation versus previously and/or growth in the kinda more fixed cost base to support new asset classes, new personnel, all the things you're investing in.

Speaker #5: but I think we are you know, at that level, and you can see that it doesn't really affect the, the ratios or the EBITDA margin all that much, especially when you have a have a great quarter.

Speaker #3: as far as, like, the infrastructure investment, I mean, yes, we are gonna do incrementally more of that, but already, our business has a very heavy, you know, capital expenditure profile.

Speaker #5: as far as, like, the infrastructure investment, I mean, yes, we are gonna do incrementally more of that. But already, our business has a very heavy, you know, capital expenditure profile.

Speaker #5: as far as, like, the infrastructure investment, I mean, yes, we are going to do incrementally more of that, but already our business has a very heavy you know, capital expenditure profile.

Speaker #3: So I'm not sure it's gonna be, like, so immediately obvious in the in the expense tables. I don't know, Joe, if you wanna add anything.

Speaker #5: So I'm not sure it's gonna be, like, so immediately obvious in the in the expense tables. I don't know, Joe, if you wanna add anything.

Speaker #5: So, I'm not sure it's going to be like so immediately obvious in the expense tables. I don't know, Joe, if you want to add.

Aaron Simons: Sure. I think, you know, we have given some guidance on the compensation ratios and, you know, the Q1 accrual sort of reflects where we wanna be. Obviously, when you have a great quarter, it's much easier and the percentage looks lower. You know, as we've highlighted the last few quarters, like we have been adjusting that up slightly because we are trying to attract the best talent in the business. You know, part of retention is competitive compensation. I think we are, you know, at that level, and you can see that it doesn't really affect the ratios or the EBITDA margin all that much, especially when you have a great quarter.

Speaker #6: No, I think that's, that's exactly, you know, where we are. We, we you know, you saw the comp accrual this quarter. as a nominal number, certainly looks outsized compared to the past.

Speaker #3: No. I think that's, that's exactly, you know, where we are. We, we you know, you saw the comp accrual this quarter. as a nominal number, certainly looks outsized compared to the past.

Speaker #3: No, I think that's, that's exactly you know, where we are. We, we you know, you saw the comp accrual this quarter. as a nominal number, certainly looks outsized compared to past, but as Aaron said, we want to, you know, hire the best people and pay them best in class.

Speaker #6: But as Aaron said, we wanna you know, hire the best people and pay them best in class. So that is that reflects it. So yeah, you know, Dan, if we have a, comp accrual or if we have a comp ratio that, that creeps up, in the future, even in a even in a, a, a really robust environment or even in a median environment, that'll be deliberate and intentional.

Speaker #3: But as Aaron said, we wanna you know, hire the best people and pay them best in class. So that is that reflects it. So, you know, Dan, if we have a, comp accrual or if we have a comp ratio that, that creeps up, in the future, even in a even in a, a, a really robust environment or even in a median environment, that'll be deliberate and intentional.

Speaker #3: So that is that reflects it. So yeah, you know, Dan, if we have a, comp accrual or if we have a comp ratio that, that creeps up, in the future, even in a even in a, a really robust environment or even in a media environment, that'll be deliberate and intentional, and in our view will be a good thing.

Aaron Simons: As far as like the infrastructure investment, I mean, yes, we are gonna do incrementally more of that. Already our business has a very heavy, you know, capital expenditure profile, I'm not sure it's gonna be like so immediately obvious in the, in the expense tables. I don't know, Joe, if you wanna add anything.

Speaker #6: and in our view, will be a good thing. Right? I-if, if you see that. It'll be it'll mean that the growth, plan is being executed on and, and we are we're creating value for shareholders, but and we're and we're just paying paying people, market, market comp or better than market comp.

Speaker #3: and in our view, will be a good thing. Right? If, if you see that. It'll be it'll mean that the growth, plan is being executed on and, and we are we're creating value for shareholders.

Speaker #3: If, if you see that, it'll be it'll mean that the growth, plan is being executed on and, and we're, we're creating value for shareholders, but and we're and we're just paying, paying people, market, market comp.

Speaker #3: But and we're and we're just paying, paying people, market, market comp or better than market comp. Understood. Thank you.

Joseph Molluso: I think that's exactly, you know, where we are. We, you know, you saw the comp accrual this quarter, as a nominal number, certainly looks outsized compared to the past. As Aaron said, we wanna, you know, hire the best people and pay them, best in class. That reflects it. You know, Dan, if we have a comp accrual or if we have a comp ratio that creeps up, in the future, even in a really robust environment or even in a median environment, that'll be deliberate and intentional, and in our view, will be a good thing, right? If you see that.

Speaker #3: We're better than market comp.

Speaker #9: Understood. Thank you.

Speaker #2: Understood. Thank you.

Speaker #8: Your next question comes from Alex Blostein, Goldman Sachs. Your line is open. Please go ahead. Just a reminder to unmute locally.

Speaker #1: Your next question comes from Alex Blostein, Goldman Sachs. Your line is open. Please go ahead. Just a reminder to unmute locally.

Speaker #1: Your next question comes from Alex Christine at Goldman Sachs. Your line is open. Please go ahead. Just a reminder to unmute locally.

Speaker #3: You guys hear me?

Speaker #9: You guys hear me?

Speaker #3: You guys hear me?

Speaker #4: Yep. Yep. Now we do.

Speaker #3: Yep. Yep. Now we do.

Speaker #5: Yep. Yep. Now we do.

Speaker #3: Yep, there we go. Sorry about that. So, a bit of a nuanced question, but when we look at the trends in cost operating—so kind of BCE and forward of loan, things like that—in the quarter, it seems to show a pretty meaningful divergence in the market-making business.

Speaker #3: Oh, yep. There we go. Sorry about that. so a b a bit of a nuanced question. But when we look at the trends in cost of trading, so like on a BCME and payment forward of loan, things like that, in the quarter, i-it seems to show a pretty meaningful divergence in the market-making business.

Speaker #9: yep. There we go. Sorry about that. so a b a bit of a nuanced question, but when we look at the trends in cost of trading, so like on a BCME and payment forward of loan, things like that, in the quarter, i-it seems to show a pretty meaningful divergence in the market-making business.

Joseph Molluso: It'll mean that the growth plan is being executed on and we're creating value for shareholders, but we're just paying people market comp or better than market comp.

Speaker #3: Those are down. Obviously, the trading results are up. So maybe just a little bit more granularity, you know, what drove that and what I'm trying to get to, I guess, is, are we starting to see, some incremental benefits of internalization or things like that that could make sort of the, the flow more profitable for you guys or that something else went on this quarter that sort of boosted the net trading numbers and from, from that perspective specifically?

Speaker #9: Those are down, obviously, the trading results are up. So maybe just a little bit more granularity on what drove that and what I'm trying to get to, I guess, is, are we starting to see, some incremental benefits of internalization or things like that that could make sort of the, the flow more profitable for you guys or there's something else went on this quarter that sort of boosted the net trading numbers within from, from that perspective specifically?

Speaker #3: Those are down, obviously, the trading results are up. So maybe just a little bit more granularity on what drove that and what I'm trying to get to, I guess, is, are we starting to see, some incremental benefits of internalization or things like that that could make sort of the, the flow more profitable for you guys or this something else went on this quarter that sort of boosted the net trading numbers within from, from that perspective specifically?

Dan Fannon: Understood. Thank you.

Operator: Your next question comes from Alexander Blostein at Goldman Sachs. Your line is open. Please go ahead. Just a reminder to unmute locally.

Speaker #4: thanks, Alex. The answer is all of the the above. When you know, the, the flow characteristics were attractive this quarter, and in addition, you know, again, I, I go back to the answer on, you know, it's not just, a, a retail machine, although the, you know, the, the business that business had a great quarter and, again, the flow was very attractive and leading to some of the things you're talking about.

Speaker #3: thanks, Alex. The answer is all the above. When y-you know, the, the flow characteristics were attractive this quarter. and in addition, you know, again, I'd, I'd go back to the answer on, you know, it's not just, a, a retail machine.

Speaker #5: thanks, Alex. The answer is all the above. When y-you know, the, the flow characteristics were attractive this quarter. and in addition, you know, again, I'd, I'd go back to the answer on, you know, it's not just, a, a retail machine.

Alexander Blostein: You guys hear me?

Alex Blostein: You guys hear me?

Joseph Molluso: Yep. Now we do.

Alexander Blostein: Yep, there we go. Sorry about that. A bit of a nuanced question, but when we look at the trends in cost of trading, like kind of BCE and payment for order flow and things like that, in the quarter, it seems to show a pretty meaningful divergence in the market making business. Those are down, obviously the trading results are up. Maybe just a little bit more granularity on what drove that. What I am trying to get to, I guess, is, are we starting to see some incremental benefits of internalization or things like that? That could make sort of the flow more profitable for you guys, or there is something else went on this quarter that sort of boosted the net trading numbers from that perspective specifically.

Alex Blostein: Yep, there we go. Sorry about that. A bit of a nuanced question, but when we look at the trends in cost of trading, like kind of BCE and payment for order flow and things like that, in the quarter, it seems to show a pretty meaningful divergence in the market making business. Those are down, obviously the trading results are up. Maybe just a little bit more granularity on what drove that. What I am trying to get to, I guess, is, are we starting to see some incremental benefits of internalization or things like that? That could make sort of the flow more profitable for you guys, or there is something else went on this quarter that sort of boosted the net trading numbers from that perspective specifically.

Speaker #3: although the, you know, the, the business that business had a great quarter and, again, the flow was very attractive. I think leading to some of the things you're talking about.

Speaker #5: although the, you know, the, the business that business had a great quarter. And, again, the flow was very attractive. I think leading to some of the things you're talking about.

Speaker #4: but also a reminder that, you know, the business is, is not totally dependent on retail and is pretty diversified, you know, both globally and by asset class on the market-making side.

Speaker #3: but also a reminder that, you know, the business is, is not wholly dependent on retail and is pretty diversified, you know, both globally and by asset class on the market-making side.

Speaker #5: but also a reminder that, you know, the business is, is not wholly dependent on retail and is pretty diversified, you know, both globally and by asset class on the market-making side.

Speaker #4: So depending on, you know, the sources of that in non-customer market-making, P&L, you, you could get, you know, divergence in, you know, brokers clearing exchanges or percentage of, of the gross number.

Speaker #3: So depending on, you know, the sources of that, you know, non-customer market-making, P&L, you, you could get, you know, divergence in, you know, brokers clearing exchanges or percentage of, of the gross number.

Speaker #5: So depending on, you know, the sources of that, you know, non-customer market-making, P&L, you, you could get, you know, divergence in, you know, brokerage clear and exchange as a percentage of, of the gross number.

Speaker #4: I'm not sure I'd, I'd read anything, you know, permanent or long-term into it. I think, you know, over time, we're always looking to lower execution costs.

Joseph Molluso: Thanks, Alex. The answer is all the above. When you know, the flow characteristics were attractive this quarter. In addition, you know, again, I go back to the answer on, you know, it's not just a retail machine, although, you know, that business had a great quarter. Again, the flow was very attractive, I think leading to some of the things you're talking about. Also a reminder that, you know, the business is not wholly dependent on retail and is pretty diversified, both globally and by asset class on the market making side. Depending on, you know, the sources of that, you know, non-customer market making P&L, you could get, you know, divergence in, you know, brokers clearing exchange as a percentage of the gross number.

Speaker #3: I'm not sure I'd, I'd read anything, you know, permanent or long-term into it. I think, you know, over time, we're always looking to lower execution costs.

Speaker #5: I'm not sure I'd, I'd read anything, you know, permanent or long-term into it. I think, you know, over time, we're always looking to lower execution costs.

Speaker #4: We're always looking to, internalize more, to the extent we can, and, and optimize. But, you know, some of that is, is environment-dependent as opposed to just, you know, us getting better and better.

Speaker #3: We're always looking to, internalize more, to the extent we can. and, and optimize. But, you know, some of that is, is environment-dependent as opposed to just, you know, us getting better and better.

Speaker #5: We're always looking to, internalize more, to the extent we can. and, and optimize. But, you know, some of that is, is environment-dependent as opposed to just, you know, us getting better and better.

Speaker #2: Yep, understood. It's just the absolute divergence—not so much the percentage of very notable ones up, but the other ones down a lot.

Speaker #2: That's what I thought. Okay. And then, obviously, we don't want to get into a habit of, you know, calling every month, but there's been quite significant change in the backdrop, you know, this April versus last year's April, and obviously over the last couple of months.

Speaker #9: Yep. Understood. It's just the, the absolute divergence, not so much the percentage was very notable. One was up a lot. The other one was down a lot.

Speaker #3: Yep. Understood. It's just the, the absolute divergence, not so much the percentage was very notable. One was up a lot. The other one was down a lot.

Speaker #9: But that's why I thought.

Speaker #3: That-that's what I had in mind.

Speaker #3: Yeah.

Speaker #5: Right.

Speaker #9: okay. And then, obviously, we don't wanna get into a habit of, you know, calling every month, but, there's been quite significant change in the backdrop, you know, this April versus last year's April.

Speaker #3: okay. And then, obviously, we don't wanna get into habit of, you know, calling every month. But, there's been quite significant change in the backdrop, you know, this April versus last year's April.

Speaker #2: So any color you guys have on how the environment's unfolding so far in this second quarter, both on the retail side and just broadly, we'll be super helpful.

Speaker #9: And obviously, over the last couple of months. So a-any color you guys have on how the environment is unfolding so far in the second quarter, both on the retail side and just broadly would be super helpful.

Speaker #3: And obviously, over the last couple of months. So a-any color you guys have on how the environment is unfolding so far in the second quarter, both on the retail side and just broadly would be super helpful.

Speaker #4: Look, a-and you started your question, with the correct answer, which is we really don't, do this month to month. my only comment to you well, I'd say two things.

Speaker #3: Look, y a-and y-you started your question, with the correct answer, which is we really don't, do this month to month. my only comment to you well, I'd say two things.

Speaker #5: Look, y a-and y-you started your question, with the correct answer, which is we really don't, do this month to month. my only comment to you well, I'd say two things.

Joseph Molluso: I'm not sure I'd read anything, you know, permanent or long-term into it. I think, you know, over time, we're always looking to lower execution costs. We're always looking to internalize more to the extent we can and optimize. You know, some of that is environment dependent as opposed to just, you know, us getting better and better.

Speaker #4: One is, keep perspective. We had an all-time high here, and that, as Aaron said, is helped by the robust environment, just because it's more muted.

Speaker #3: One is, keep perspective. Right? So we had an all-time high here. And, the that, as Aaron said, is helped by the robust environment. just because it's, it's more muted, I think you said in your note, doesn't mean it isn't a very good environment.

Speaker #5: One is, keep perspective. Right? So we had an all-time high here. And, the that, as Aaron said, is helped by the robust environment. just because it's, it's more muted, I think you said in your note, doesn't mean it isn't a very good environment.

Speaker #4: I think you said in your note, it doesn't mean it isn't a very good environment. And, you know, we're only a third of the way through it, but you can see, you know, the headline numbers. You know, while not, you know, in terms of some of the numbers in the first quarter, you know, they're still very good from any perspective.

Alexander Blostein: Yeah, understood. It's just the absolute divergence, not so much the percentage was very notable. One was up a lot-

Alex Blostein: Yeah, understood. It's just the absolute divergence, not so much the percentage was very notable. One was up a lot-

Alexander Blostein: the other one was down a lot. That's why I thought. Okay. Obviously, we don't wanna get into habit of, you know, calling every month, but there's been quite significant change in the backdrop, you know, this April versus last year's April and obviously over the last couple of months. Any color you guys have on how the environment is unfolding so far in Q2, both on the retail side and just broadly would be super helpful.

Joseph Molluso: Yeah.

Alex Blostein: the other one was down a lot. That's why I thought. Okay. Obviously, we don't wanna get into habit of, you know, calling every month, but there's been quite significant change in the backdrop, you know, this April versus last year's April and obviously over the last couple of months. Any color you guys have on how the environment is unfolding so far in Q2, both on the retail side and just broadly would be super helpful.

Joseph Molluso: Yeah.

Speaker #3: and, you know, we're only a third of the way through it. but you can see, you know, the headline numbers, you know, while not, you know, in, in, in terms of, of some of the numbers in the first quarter, you know, are still very good, from any perspective.

Speaker #5: and, you know, we're only a third of the way through it. but you can see, you know, the headline numbers, you know, while not, you know, in, in, in terms of, of some of the numbers in the first quarter, you know, are still very good, from any perspective.

Speaker #4: So that's point one. Point two is we haven't talked about execution services. But if you look at the momentum in that business over the past two years, it has grown through the cycle.

Speaker #4: truly grown through the cycle. in a number of different environments, and there's a tremendous amount of momentum there. there's, there's client wins. There's, multiple products kind of being tied together across clients.

Speaker #3: So that's point one. Point two is we haven't talked about execution services. But if you look at the momentum in that business over the past two years, it has grown through the cycle.

Speaker #5: So that's point one. Point two is we haven't talked about execution services. But if you look at the momentum in that business over the past two years, it has grown through the cycle.

Joseph Molluso: Look, you started your question with the correct answer, which is we really don't do this month to month. Well, I'd say two things. One is, keep perspective, right? We had an all-time high here, and that, as Aaron said, is helped by the robust environment. Just because it's more muted, I think you said in your note, doesn't mean it isn't a very good environment. You know, we're only a third of the way through it. You can see, you know, the headline numbers, you know, while not, you know, in terms of some of the numbers in Q1, you know, are still very good from any perspective. That's point one. Point two is we haven't talked about execution services.

Speaker #4: So, you know, we're, we're looking at that as, as a as a continued growth engine as well. And, and that, that has a tremendous amount of momentum.

Speaker #3: truly grown through the cycle. in a number of different environments. and there's a tremendous amount of m-momentum there. there's, there's client wins. There's, multiple products kind of being tied together across clients.

Speaker #5: truly grown through the cycle. in a number of different environments. and there's a tremendous amount of m-momentum there. there's, there's client wins. There's, multiple products kind of being tied together across clients.

Speaker #2: Good. Great. Thank you guys so much.

Speaker #1: Your next question comes from Kenneth Worthington at JP Morgan. Your line is open. Please feel free to speak.

Speaker #3: So, you know, we're, we're looking at that as, as a, you know, as a continued growth engine as well. And, and that business has a tremendous amount of momentum.

Speaker #5: So, you know, we're, we're looking at that as, as a, you know, as a continued growth engine as well. And, and that business has a tremendous amount of momentum.

Speaker #5: hi. good morning. I wanted to go back to sort of Patrick's question. Get a better sense of how the investments that you've made, contribute to the capacity to profit over a cycle.

Speaker #9: Got it. Great. Thank you guys very much.

Speaker #3: Got it. Great. Thank you guys very much.

Speaker #8: Your next question comes from Kenneth Worthington at JP Morgan. Your line is open. Please feel free to speak.

Speaker #1: Your next question comes from Kenneth Worthington at JP Morgan. Your line is open. Please feel free to speak.

Speaker #5: and Aaron, you mentioned, you know, investment capital is 20%. you've added headcount. You've invested in technology. you sort of implied that there's a multiplier on the 20% growth in invested capital.

Speaker #10: hi. good morning. I, I wanted to go back to sort of Patrick's question. To get a better sense of how the investments that you've made, contribute to the capacity to profit over a cycle, and Aaron, you mentioned, you know, investment capital's up 20%.

Speaker #6: Hi. good morning. I, I wanted to go back to sort of Patrick's question. To get a better sense of how the investments that you've made, contribute to the capacity to profit over a cycle, and Aaron, you mentioned, you know, investment capital's up 20%.

Joseph Molluso: If you look at the momentum in that business over the past two years, it has grown through the cycle, truly grown through the cycle, in a number of different environments. There's a tremendous amount of momentum there. There's client wins, there's multiple products kind of being tied together across clients. You know, we're looking at that as a, you know, as a continued growth engine as well. That business has a tremendous amount of momentum.

Speaker #5: how do we think about that multiplier? i-is it something like 1.1? Is it 1.3? It, it doesn't seem like it's something like a 0.9.

Speaker #10: you've added headcount. You've invested in technology. you sort of implied that there's a multiplier on the 20% growth in invested capital. how do we think about that multiplier?

Speaker #6: you've added headcount. You've invested in technology. you sort of implied that there's a multiplier on the 20% growth in invested capital. how do we think about that multiplier?

Speaker #5: How do we think about that multiplier over a cycle?

Speaker #4: Again, I, I think what Aaron was stating was that the anti the just in the trading income we achieved in this quarter, w-would not have achieved had we not increased our capital.

Speaker #10: i-is it something like 1.1? Is it 1.3? It, it doesn't seem like it's something like a 0.9. How do we think about that multiplier over a cycle?

Speaker #6: i-is it something like 1.1? Is it 1.3? It, it doesn't seem like it's something like a 0.9. How do we think about that multiplier over a cycle?

Alexander Blostein: Got it. Great. Thank you guys very much.

Alex Blostein: Got it. Great. Thank you guys very much.

Speaker #4: I'm not sure there was any implication of a multiplier around capital. You know, if anything, there will be a multiplier in a good environment.

Operator: Your next question comes from Kenneth Worthington at J.P. Morgan. Your line is open. Please feel free to speak.

Speaker #3: H-hey, Ken. I, I think what Aaron was stating was that the anti the just in the trading income, we achieved in this quarter, w-would not have been achieved, you know, had we not increased our capital gains.

Speaker #5: H-hey, Ken. I, I think what Aaron was stating, was that the anti the adjustment of trading income we achieved in this quarter w-would not have been achieved, you know, had we not increased our capital base.

Speaker #4: But it, it all comes out in the, in the return. That's it. We put the returns—the original purpose of that return slide was to demonstrate that we're a services business.

Kenneth Worthington: Hi. Good morning. I wanted to go back to sort of Patrick's question to get a better sense of how the investments that you've made contribute to the capacity to profit over a cycle. Aaron, you mentioned, you know, invested capital is up 20%. You've added headcount, you've invested in technology. You sort of implied that there's a multiplier on the 20% growth in invested capital. How do we think about that multiplier? Is it something like 1.1? Is it 1.3? It doesn't seem like it's something like 0.9. How do we think about that multiplier over a cycle?

Speaker #3: I'm not sure there was any implication of a multiplier around, around capital. you know, if anything, there'll be a multiplier in a in a good environment.

Speaker #5: I'm not sure there was any implication of a multiplier around, around capital. you know, if anything, there'll be a multiplier in a in a good environment.

Speaker #4: and not a, you know, a, a, a, you know, kind of, risk business. So I'm, I'm not sure I'd read anything into any statement about multipliers.

Speaker #3: But I, i-it all comes out in the in the return. That's it. we put the returns the original purpose of that return slide was to demonstrate that we're a services business, and not a, you know, a, a, a, you know, kind of, risk business.

Speaker #5: But I, it, it all comes out in the in the return. That's it. we put the returns the original purpose of that return slide was to demonstrate that we're a services business, and not a, you know, a, a, a, you know, kind of, risk business.

Speaker #4: What I'd say I, I just repeat capital is fundable. we're not you know, it, it we, we can't parse or bifurcate the, the, you know, new capital and the old capital.

Speaker #4: But I think what Aaron was stating is that we are able to earn more, you know, because we had a bigger capital base, because there were greater opportunities.

Speaker #3: So I'm, I'm not sure I'd read anything into, any statement about a multiplier. What I'd say I, I just repeat, capital is fungible. Right?

Speaker #5: So I'm, I'm not sure I'd read anything into, any statement about a multiplier. What I'd say I, I just repeat, capital is fungible. Right?

Speaker #4: And, you know, it's important to remember that our capital is nimble. I think that we remain flexible and agile with it, and, you know, it knows where the opportunities are.

Speaker #3: We're not you know, there's it we, we, we can't parse or bifurcate the, the, you know, new capital and the old capital. but I think what, what Aaron was stating is that we are able to, you know, earn more, you know, because we had a bigger capital base, because there were greater opportunities.

Speaker #5: We're not you know, there's it we, we, we can't parse or bifurcate the, the, you know, new capital and the old capital. but I think what, what Aaron was stating is that we are able to, you know, earn more, you know, because we had a bigger capital base, because there were greater opportunities.

Joseph Molluso: Hey, Ken, I think what Aaron was stating was that the Adjusted Net Trading Income we achieved in this quarter would not have been achieved, you know, had we not increased our capital base. I'm not sure there was any implication of a multiplier around capital. You know, if anything, there will be a multiplier in a good environment, but it all comes out in the return. That's it. We put the returns. The original purpose of that return slide was to demonstrate that we're a services business, and not a, you know, a, you know, kind of a risk business. I'm not sure I'd read anything into any statement about a multiplier. What I'd say, I just repeat, capital is fungible, right?

Speaker #5: Okay. Okay. Fair enough. and maybe as we think about new asset classes like predictive markets and tokenized markets, so what do you see as holding, you know, more promise over to, and, and where are you thinking about, focusing investments there?

Speaker #3: And, you know, it's important to remember, that, our capital is nimble. Right? That we remain flexible and agile with it. And, and, you know, it goes where the opportunities are.

Speaker #5: And, you know, it's important to remember, that, our capital is with it. And, and, you know, it goes where the opportunities are.

Speaker #4: I mean, it's hard to say. I think we, you know, we, we're kind of ready to be trading in any a new market, any exchange.

Speaker #10: Okay. Okay. Fair enough. and maybe as we think about new asset classes like predictive markets and tokenized markets, so what do you see as holding, you know, more promise for virtu?

Speaker #6: Okay. Okay. Fair enough. and maybe as we think about new asset classes like predictive markets and tokenized markets, so what do you see as holding you know, more promise for Vertu?

Speaker #4: and it's really about where the where the volume goes. you know, tokenization might, might be slightly easier just because to the extent things are linked to an underlier that we already trade, it's very easy for us to value.

Speaker #10: and, and where are you thinking about, focusing investments there?

Speaker #6: and, and where are you thinking about, focusing investments there?

Speaker #4: And we, we know the trade very well. Whereas in prediction markets, you know, we don't have any expertise predicting, predicting, like, geopolitical events. but, you know, it, it really depends on volume, to be honest.

Speaker #3: I mean, it's hard to say. I think we, you know, we, we're kind of ready to be to trade in any, any market, any exchange.

Speaker #5: I mean, it's hard to say. I think we, you know, we, we're kind of ready to be to trade in any, any market, any exchange.

Joseph Molluso: We're not, you know, we can't parse or bifurcate the, you know, new capital and the old capital. I think what Aaron was stating is that we are able to earn more, you know, because we had a bigger capital base, because there were greater opportunities. You know, it's important to remember that our capital is nimble, right? That we remain flexible and agile with it and, you know, it goes where the opportunities are.

Speaker #3: and it's really about where, where the volume goes. you know, tokenization might, might be slightly easier just because to the extent things are linked to an underlier that we already trade, it's very easy for us to value.

Speaker #5: and it's really about where, where the volume goes. you know, tokenization might, might be slightly easier just because to the extent things are linked to an underlier that we already trade, it's very easy for us to value.

Speaker #5: Okay. Great. Thank you.

Speaker #1: The last question comes from Michael Cyprus at Morgan Stanley. Your line's open. Please go ahead.

Speaker #3: And we, and we know the trade very well. Whereas in prediction markets, like, you know, we don't have any expertise predicting, predicting, like, geopolitical events.

Speaker #5: And we, and we know the trade very well. Whereas in prediction markets, like, you know, we don't have any expertise predicting, predicting, like, geopolitical events.

Speaker #6: Good morning. Great, thanks for taking the question. I was hoping to dig in on execution services, and I was hoping you could elaborate and unpack some of the drivers of the momentum that you're seeing across the execution services business.

Speaker #3: but, you know, i-it really depends on volume, to be honest.

Speaker #5: but, you know, it, it really depends on volume, to be honest.

Speaker #6: And if you could just remind us of all of the top revenue contributors under the hood there and how that's evolved over the past couple of years.

Speaker #10: Okay. Great. Thank you.

Speaker #6: Okay. Great. Thank you.

Kenneth Worthington: Okay. Okay, fair enough. Maybe as we think about new asset classes like predictive markets and tokenized markets, what do you see as holding, you know, more promise for Virtu, and where are you thinking about focusing investments there?

Speaker #8: Your last question comes from Michael Cyprus at Morgan Stanley. Your line is open. Please go ahead.

Speaker #1: Your last question comes from Michael Cyprus at Morgan Stanley. Your line is open. Please go ahead.

Speaker #6: And how you see that mix and contributors evolving as you look out in the next couple of years.

Speaker #4: Sure, Michael. This is Joe. I'll take that question. As I said, the business has a tremendous amount of momentum. The business has grown through the cycle.

Speaker #9: Good morning. Great. Thanks for taking the question. I was hoping to dig in on execution services and, the hoping you could elaborate and unpack some of the drivers of the momentum that you're seeing across the execution services business.

Speaker #7: Good morning. Great. Thanks for taking the question. I was hoping to dig in on execution services and, the hoping you could elaborate and unpack some of the drivers of the momentum that you're seeing across the execution services business.

Speaker #4: It has been a multi-year process, since we acquired ITG around, a common technology platform, you know, emphasizing and the penetration of these products. through the customer base, I think, you know, what we what we inherited and what we bought was very siloed.

Aaron Simons: I mean, it's hard to say. I think we, you know, we're kind of ready to trade in any market, any exchange. It's really about where the, where the volume goes. You know, tokenization might be slightly easier just because to the extent things are linked to an underlier that we already trade, it's very easy for us to value, and we know the trade very well. Whereas in prediction markets, like, you know, we don't have any expertise predicting like geopolitical events. You know, it really depends on volume, to be honest.

Speaker #9: And if you can just remind us as well of the top revenue contributors under the hood there and how that's evolved over the past couple of years, and how you see that mix and contributors evolving as you look out over the next couple of years.

Speaker #7: And if you can just remind us as well of the top revenue contributors under the hood there and how that's evolved over the past couple of years, and how you see that mix and contributors evolving as you look out over the next couple of years.

Speaker #4: organization. And I think Steve Cavoli and the team there have done an amazing tying together, you know, a global client list that is blue chip as it gets.

Speaker #3: Sure, Michael. This is, Joe. I'll take that question. Y as I said, the business has a tremendous amount of momentum. The business has grown through the cycle.

Speaker #5: Sure, Michael. This is, Joe. I'll take that question. Y as I said, the business has a tremendous amount of momentum. The business been a multi-year process, since we acquired ITG around, common technology platform, you know, emphasizing and the penetration of these products.

Speaker #4: There is, you know, the same client list, that any, you know, that your firm will have. you know, we, we service, you know, and we service them through, you know, products that we consider best in class, whether it's the Algo Suite, or whether it is, you know, the analytics platform or, or the EMS Triton, right?

Speaker #3: It has been a multi-year process, since we acquired ITG around, a common technology platform, you know, emphasizing and the penetration of these products. through the customer base, I think, you know, what we what we inherited and what we bought was a very siloed, organization.

Kenneth Worthington: Okay, great. Thank you.

Operator: Your last question comes from Michael Cyprys at Morgan Stanley. Your line is open. Please go ahead.

Speaker #5: through the customer base, I think, you know, what we what we inherited and what we bought was a very siloed, organization, and I think Steve Cavoli and the team there have done an amazing job, you know, of, of tying together, you know, a global client list that is as blue chip as it gets.

Speaker #4: So, I think that it's a business that's evolved, that is, you know, the technology's really paying off. And that, you know, is increasing client penetration, right?

Speaker #3: and I think Steve Cavoli and the team there have done an amazing job, you know, of, of tying together, you know, a global client list that is as blue chip as it gets.

Michael Cyprys: Good morning. Great, thanks for taking the question. I was hoping to dig in on execution services and hoping you could elaborate and unpack some of the drivers of the momentum that you're seeing across the execution services business. If you can just remind us as well the top revenue contributors under the hood there and how that's evolved over the past couple years, and how you see that mix and contributors evolving as you look out over the next couple years.

Speaker #3: There is, you know, the same client list, that a-any, you know, that your firm will have. you know, we, we service, you know, and we service them through, you know, products that we consider best in class, whether it's the Algo Suite, or whether it is, you know, the analytics platform or, or the EMS Triton, right?

Speaker #5: There is, you know, the same client list, that a-any you know, that your firm will have. you know, we, we service, you know, and we service them through, you know, products that we consider best in class, whether it's the Algo Suite, or whether it is, you know, the analytics platform or, or the EMS Triton, right?

Speaker #4: And the and the margins have improved. The business has been rationalized. again, we don't we don't break out, you know, down to, the EBITDA line for, you know, by business.

Speaker #4: you know, when we bought, ITG, it had a routine EBITDA margin, that is, you know, think, think of something that is best in class now that is, you know, a multiple of that, you know, in terms of, you know, in terms of how that business has performed.

Joseph Molluso: Sure, Michael. This is Joe. I'll take that question. As I said, the business has a tremendous amount of momentum. The business has grown through the cycle. It has been a multi-year process since we acquired ITG around a common technology platform, you know, emphasizing and the penetration of these products through the customer base. I think, you know, what we, what we inherited and what we bought was a very siloed organization. I think Steve Cavoli and the team there have done an amazing job, you know, of tying together, you know, a global client list that is as blue chip as it gets. There is, you know, the same client list that any, you know, that your firm will have.

Speaker #3: So I think that i-i-it's a is, you know, the technology's really paying off. and that, you know, is, is increasing client penetration, right? And the and the margins have improved.

Speaker #5: So I think that i-i-it's a business that's evolved, that is, you know, the technology's really paying off. and that, you know, is, is increasing client penetration, right?

Speaker #4: so I think it's just a lot of w a lot of work, a lot of blocking and tackling, and a great sales effort of tying together, you know, a diverse product offering across geographies, you know, and, and, and across different, you know, types of products.

Speaker #5: And the and the margins have improved. The business has been rationalized. again, we don't we don't break out, you know, down to, the EBITDA line for, you know, by business.

Speaker #3: The business has been rationalized. again, we don't we don't break out, you know, down to, the EBITDA line for, you know, by business. you know, when we bought, ITG, it had a mid-teens EBITDA margin, that is, you know, think, think of something that is best in class now that is, you know, a multiple of that, you know, in terms of, you know, in terms of how that business has performed.

Speaker #4: You know, to a to an incredible, blue chip client list.

Speaker #5: you know, when we bought, ITG, it had a mid-teens EBITDA margin, that is, you know, think, think of something that is best in class now that is, you know, a multiple of that, you know, in terms of, you know, in terms of how that business has performed.

Speaker #1: Great. Thanks. And then just a quick follow-up question on AI, clearly very quickly advancing. I was hoping you could talk about how you see the opportunity for agentic AI as you could elaborate on how you're using generative and, and maybe even agentic AI today across the organization, how you see that evolving.

Joseph Molluso: You know, we service, you know, and we service them through, you know, products that we consider best in class, whether it's the Algo Suite, or whether it is, you know, the analytics platform or the EMS Triton. Right? I think that it's a business that's evolved, that is, you know, the technology is really paying off, and that, you know, is increasing client penetration, right? The margins have improved. The business has been rationalized. Again, we don't break out, you know, down to the EBITDA line for, you know, by business. You know, when we bought ITG, it had a mid-teens EBITDA margin.

Speaker #3: so I think it's just a lot of wo a lot of work, a lot of blocking and tackling, and a great sales effort, kind of tying together, you know, a diverse product offering across geographies, you know, and, and, and across different, you know, types of products, you know, to a to an incredible, blue chip client list.

Speaker #5: so I think it's just a lot of wo a lot of work, a lot of blocking and tackling, and a great sales effort, kind of tying together, you know, a diverse product offering across geographies, you know, and, and, and across different, you know, types of products, you know, to a to an incredible, blue chip client list.

Speaker #1: What are some of the use cases and are you able to quantify any sort of the, the benefits that, that you're seeing? Thank you.

Speaker #4: Sure. I'll, I'll answer that. So, I mean, I think, like, most other, companies right now were definitely, you know, taking a look. Doing exploratory things.

Speaker #8: Great. Thanks. And then just, quick follow-up question on AI, clearly very quickly advancing. I was hoping you could talk about how you see the opportunities for agentic AI, and if you could elaborate on how you're using generative and, and maybe even agentic AI today across the organization, how you see that evolving.

Speaker #1: Great. Thanks. And then just a quick follow-up question on AI, clearly very quickly advancing. I was hoping you could talk about how you see the opportunities for agentic AI, and if you could elaborate on how you're using generative and, and maybe even agentic AI today across the organization, how you see that evolving.

Speaker #4: you know, we do believe that with the right sort of focus and setup, it can really be a productivity enhancement for, for our software developers.

Speaker #4: But at the same time, you know, our company is really built on a code base. And we employ excellent engineers to maintain it, and it's something that is really beyond the capability of current tools to, or think out of—think about at a high level, reason about, design.

Speaker #8: What are some of the use cases? And if you're able to quantify any sort of the, the benefits that, that you're seeing. Thank you.

Speaker #1: What are some of the use cases? And if you're able to quantify any sort of the, the benefits that, that you're seeing. Thank you.

Joseph Molluso: Think of something that is best in class now that is, you know, a multiple of that, you know, in terms of, you know, in terms of how that business has performed. I think it's just a lot of work, a lot of blocking and tackling, and a great sales effort kind of tying together, you know, a diverse product offering across geographies, you know, and across different, you know, types of products, you know, to an incredible blue chip client list.

Speaker #3: Sure. I'll, I'll answer that. So, I mean, I think, like, most other, companies right now, we're definitely, you know, taking a look. Doing exploratory things.

Speaker #5: Sure. I'll, I'll answer that. So I mean, I think, like, most other, companies right now were definitely, you know, taking a look, doing exploratory things.

Speaker #4: So you know, in our environment, you know, introducing a bunch of technical set of AI-generated slops is really never gonna be in our business plan.

Speaker #4: But that being said, you know, pairing high, high-quality engineers with a tool that can, you know, just kind of execute it beyond human speed and do sort of, like, boilerplate grudge work, assist in explanations, we're definitely trying to, to use that internally.

Speaker #3: you know, we do believe that with the right sort of focus and setup, it can really be a productivity enhancement for, for our software developers.

Speaker #5: you know, we do believe that with the right sort of focus and setup, it can really be a productivity enhancement for, for our software developers.

Speaker #3: But at the same time, you know, our company is really built on a code base. And we employ excellent engineers to maintain it and it's something that is really beyond the capability of current tools to, you know, think out of think about it at a high level, reason about, and design.

Speaker #5: But at the same time, you know, our company is really built on a code base and we employ excellent engineers to maintain it and it's something that is really beyond the capability of current tools to clear think out of think about at a high level, reason about, and design.

Michael Cyprys: Great. Thanks. Just a quick follow-up question on AI, clearly very quickly advancing. I was hoping you could talk about how you see the opportunities for Agentic AI, and if you could elaborate on how you're using generative and maybe even Agentic AI today across the organization, how you see that evolving, what are some of the use cases, and if you're able to quantify any sort of the benefits that you're seeing. Thank you.

Speaker #4: And, you know, I'd say it's a little early yet to determine a productivity impact, but I expect in the coming year or two, you know, it will have a material impact.

Speaker #4: And, and maybe we'll have a little bit more to say.

Speaker #3: So you know, if in our environment, you know, introducing a bunch of technical debt of AI-generated slop is really never gonna be in our business plan.

Speaker #5: So you know, if in our environment, you know, introducing a bunch of technical debt of AI-generated slop is really never gonna be in our business plan.

Speaker #1: And if I could just take a quick follow-up on that, just curious what impact you see across the competitive landscape from these advances and, and, and AI and, and agentic AI.

Speaker #3: But that being said, you know, pairing high, high-quality engineers with a tool that can, you know, just kind of execute it beyond human speed and do sort of, like, boilerplate grudge work, assist in explanations, we're definitely trying to, to use that internally.

Speaker #5: But that being said, you know, pairing high, high-quality engineers with a tool that can, you know, just kind of execute it beyond human speed and do sort of like boilerplate grudge work, assist in explanations, we're definitely trying to, to use that internally.

Speaker #4: Well, I mean, as I said in a previous call, I think the term AI is pretty overloaded. and if you just wanna talk about statistical modeling, that's been a big part of competitive landscape for trading businesses for 30 years on Wall Street.

Aaron Simons: Sure. I'll answer that. I mean, I think like most other companies right now, we're definitely, you know, taking a look, doing exploratory things. You know, we do believe that with the right sort of focus and setup, it can really be a productivity enhancement for our software developers. At the same time, you know, our company is really built on a code base, and we employ excellent engineers to maintain it, and it's something that is really beyond the capability of current tools to sort of think about at a high level, reason about, and design. You know, if in our environment, you know, introducing a bunch of technical debt of AI-generated slop is really never gonna be in our business plan.

Speaker #4: And this is just, like, another iteration with, novel advancements in, in models and, and hardware availability. I have zero insight as to what other people are doing with, quote-unquote, "agentic AI." So I, I don't really feel like I can give any color there.

Speaker #3: and you know, I'd say it's a little early yet to determine, productivity impact, but I expect in the coming, year or two, you know, i-it will have a material impact and, and maybe we'll have a little bit more to say.

Speaker #5: and you know, I'd say it's a little early yet to determine, productivity impact, but I expect in the coming year or two, you know, i-it will have a material impact and, and maybe we'll have a little bit more to say.

Speaker #1: Okay. Thank you. Your next question comes from Craig Siegenthaler at Bank of America. Your line is open. Please go ahead.

Speaker #8: And if I could just take a quick follow-up on that, just curious what impact you see across the competitive landscape from these advances and, and, and AI and, and agentic AI.

Speaker #1: And if I could just sneak in a quick follow-up on that, just curious what impact you see across the competitive landscape from these advances and, and, and AI and, and agentic AI.

Speaker #3: Well, I mean, I as I said in a previous call, I think the term AI is pretty overloaded. and if you just wanna talk about statistical modeling, that's been a big part of competitive landscape for trading businesses for 30 years on Wall Street.

Speaker #5: Well, I mean, I as we said in a previous call, I think the term AI is pretty overloaded. and if you would just wanna talk about statistical modeling, that's been a big part of competitive landscape for trading businesses for 30 years on Wall Street, and this is just like another iteration with, novel advancements in, in models and, and hardware availability.

Speaker #5: Thanks. Good morning, everyone. Hope you're all doing well. first question on risk management. Given the strong results can you guys hear me okay? It's echoing a little bit.

Aaron Simons: That being said, you know, pairing high, high quality engineers with a tool that can, you know, just kind of execute at beyond human speed and do sort of like boilerplate grudge work, assist in explanations, we're definitely trying to use that internally. You know, I'd say it's a little early yet to determine a productivity impact, but I expect in the coming year or two, you know, it will have a material impact and maybe we'll have a little bit more to say.

Speaker #6: you got an echo, Craig.

Speaker #5: Yeah. Let me, change you to speaker. So can you hear me okay?

Speaker #3: And this is just, like, another iteration with, novel advancements in, in models and, and hardware availability. I have zero insight as to what other people are doing with, quote-unquote, "agentic AI," so I, I don't really feel like I can give any color there.

Speaker #6: Yeah. Yes.

Speaker #5: All right. So given the strong results, we were curious—how do you quantify the changes in risk management that Virtu has been taking in the market-making business over the last few quarters?

Speaker #5: I have zero insight as to what other people are doing with, quote-unquote, "agentic AI," so I, I don't really feel like I can give any color there.

Speaker #8: Okay. Thank you.

Speaker #1: Okay. Thank you.

Speaker #6: I don't I don't think there's been any change in risk management. Like, I didn't like, if you're if you're asking the elevated P&L was the result of us taking on more risk and things we weren't doing before, the answer's no.

Speaker #2: Your next question comes from Craig Siegenthaler at Bank of America. Your line is open. Please go ahead.

Michael Cyprys: If I could just sneak in a quick follow-up on that. Just curious what impact you see across the competitive landscape from these advances in AI and Agentic AI.

Speaker #9: Thanks. Good morning, everyone. Hope you're all doing well. first question on risk management. Given the strong results can you guys hear me okay? It's echoing a little bit.

Speaker #6: Thanks. Good morning, everyone. Hope you're all doing well. first question on risk management. Given the strong results can you guys hear me okay? It's echoing a little bit.

Speaker #5: Okay. Aaron, any way to quantify that?

Speaker #6: In terms of?

Aaron Simons: Well, I mean, as we said in a previous call, I think the term AI is pretty overloaded. If you just wanna talk about statistical modeling, that's been a big part of competitive landscape for trading businesses for 30 years on Wall Street, and this is just like another iteration with novel advancements in models and hardware availability. I have zero insight as to what other people are doing with quote-unquote Agentic AI, so I don't really feel like I can give any color there.

Speaker #3: you got an echo break.

Speaker #5: you got an echo, Craig.

Speaker #9: Yeah. Let me I'm changing to speaker. So can you hear me okay?

Speaker #6: Yeah. Let me I'm changing to speaker. So can you hear me okay?

Speaker #5: Well, in terms of how you guys look at risk. Yeah. I yeah. No. There I, I I think that that's, that's the answer, is that based on how we look at risk.

Speaker #3: Yeah.

Speaker #9: Yes.

Speaker #5: Yeah. Yes.

Speaker #3: All right. Good. So given the strong results, we were curious how do you quantify the changes in risk management that Vertu has been taking in the market-making business over the last few quarters?

Speaker #6: All right. Good. So given the strong results, we were curious how do you quantify the changes in risk management that Vertu has been taking in the market-making business over the last few quarters?

Speaker #5: no. The, the, the answer is, you know, the risk profile of the firm has not has not changed materially. so. Got it. I think it was Joe.

Speaker #9: I don't I don't think there's been any change in risk management. Like, I didn't like, if you're. If you're asking for the elevated P&L was the result of us taking on more risk and things we weren't doing before, the answer is no.

Speaker #5: I don't I don't think there's been any change in risk management. I got it like if you're. If you're asking for the elevated P&L was the result of us taking on more risk and things we weren't doing before, the answer is no.

Speaker #5: Thank you, Joe.

Speaker #6: It is once.

Speaker #5: Yeah, one small peer. Some of your market-making peers operate a hedge fund in parallel to the core business. I'm curious why Virtu doesn't look at doing that.

Michael Cyprys: Okay. Thank you.

Operator: Your next question comes from Craig Siegenthaler at Bank of America. Your line is open. Please go ahead.

Speaker #3: Okay. And, Aaron, any way to quantify that?

Speaker #6: Okay. And, Aaron, any way to quantify that?

Speaker #5: That could provide a whole new revenue source for the company. so just, so just wondering how you how you think about that. potential strategic initiative.

Speaker #9: In terms of?

Craig Siegenthaler: Thanks. Good morning, everyone. Hope you're all doing well. First question on risk management. Given the strong results. Can you guys hear me okay? It's echoing a little bit.

Speaker #5: In terms of?

Speaker #3: Well, in terms of how you guys look at risk. Yeah. I yeah. No. There i-i-I I think I that's, that's the answer is that based on how we look at risk, no.

Speaker #6: Well, in terms of how you guys look at risk. Yeah. I yeah. No. There I, I, I think I that's, that's the answer is that based on how we look at risk, no.

Joseph Molluso: You've got an echo, Craig.

Speaker #4: That is a tough one, Craig. I'm not sure which competitors you're referring to. we're a public company, obviously. And we pay, maintain a dividend.

Craig Siegenthaler: Yeah, let me. I'm changing to speaker. Can you hear me okay?

Speaker #3: The, the, the answer is, you know, the risk profile of the firm has not has not changed materially. so.

Speaker #6: The, the, the answer is, you know, the risk profile, of the firm, has not has not changed materially. so. Got it. I think that was Joe.

Joseph Molluso: Yeah.

Aaron Simons: Yes.

Craig Siegenthaler: All right. Good. Given the strong results, we were curious, how do you quantify the changes in risk management that Virtu has been taking in the market making business over the last few quarters?

Speaker #4: You know, I think you might be referring to some competitors that have been around a long time, are, are bigger and maybe have retained personal capital in the firm that they, use to make investments or, you know, or have a side pocket, hedge fund.

Speaker #9: Got it. I think that was Joe. Thank you, Joe. One.

Speaker #6: Thank you, Joe.

Speaker #5: It is Joe.

Speaker #6: One.

Speaker #3: Yeah.

Speaker #5: Yeah.

Speaker #9: one follow-up here. some of your market-making peers operate a hedge fund in parallel to the core business. I'm curious why Vertu doesn't look at doing that.

Aaron Simons: I don't think there's been any change in risk management.

Speaker #6: one follow-up here. some of your market-making peers operate a hedge fund in parallel to the core business. I'm curious why Vertu doesn't look at doing that, that could provide a whole new revenue source, for the company, so to so just wondering how you how you think about that, potential strategic initiative.

Aaron Simons: I don't think there's been any change in risk management.

Speaker #4: We haven't we haven't contemplated, Virtu asset management lately, but, you know, we'll, we'll talk a few years from now and see. Okay? I, I it's, it's I don't wanna be misinterpreted.

Craig Siegenthaler: Got it.

Aaron Simons: If you're asking if that elevated P&L was the result of us taking on more risk and things we weren't doing before, the answer is no.

Speaker #9: That could provide a whole new revenue source for the company. so to so just wondering how you how you think about that. potential strategic initiative.

Craig Siegenthaler: Okay. Aaron, any way to quantify that?

Speaker #4: We're, we're not we're not currently contemplating anything around beginning a hedge fund.

Speaker #5: I guess, like, another way to think about it—and this is, again, something we've highlighted on previous calls—at the moment, you know, our business is very high-sharp, but capacity-constrained.

Joseph Molluso: In terms of?

Craig Siegenthaler: Well, in terms of how you guys look at risk. Yeah.

Speaker #3: That is a tough one, Craig. I'm not sure which competitors you're referring to. we're a public company, obviously. And we pay, maintain a dividend.

Speaker #5: That is a tough one, Craig. I'm not sure which competitors you're referring to. we're a public company, obviously. And we pay, maintain a dividend.

Aaron Simons: Yeah, no. There, I think that's the answer. Is that based on how we look at risk, no. The answer is, you know, the risk profile of the firm has not changed materially.

Joseph Molluso: Yeah, no. There, I think that's the answer. Is that based on how we look at risk, no. The answer is, you know, the risk profile of the firm has not changed materially.

Speaker #5: So acquiring a bunch of assets, we wouldn't really have a productive use for them. And in order to deploy them, we'd probably have to put them in far lower-sharp strategies.

Speaker #3: You know, I think you might be referring to some competitors that have been around a long time, are, are bigger and maybe have retained, personal capital in the firm that they, use to make investments or, you know, or have a side pocket.

Speaker #5: You know, I think you might be referring to some competitors that have been around a long time, are, are bigger and maybe have retained personal capital in the firm that they, use to make investments or, you know, or have a side pocket, hedge fund.

Speaker #5: And we already have difficulty explaining the variance in our earnings quarter to quarter. So I think it would just make the problem much worse.

Speaker #4: Yeah. You asked about risk management. We don't have an infrastructure in place to really manage, you know, sharp one, you know, type or sharp two hedge fund setup.

Craig Siegenthaler: Got it. I think that was Joe. Thank you, Joe.

Joseph Molluso: It is Joe.

Craig Siegenthaler: One-

Aaron Simons: Yeah.

Craig Siegenthaler: One follow-up here. Some of your market making peers operate a hedge fund in parallel to the core business. I'm curious why Virtu doesn't look at doing that. That could provide a whole new revenue source for the company. Just wondering how you, how you think about that potential strategic initiative.

Speaker #3: hedge fund, we haven't we haven't contemplated, Vertu Asset Management lately, but, you know, we'll, we'll talk a few years from now and see. Okay?

Speaker #5: We haven't we haven't contemplated, Vertu Asset Management lately, but, you know, we'll, we'll talk a few years from now and see. Okay? I, I, I it's, it's I, I don't wanna be misinterpreted.

Speaker #5: Got it. And listen, I think some of your peers said it else also kinda, their hedge fund strategies are different than the market-making strategies.

Speaker #5: So I don't know what capacity is really an issue for them.

Speaker #3: I, I, I it's, it's i I, I don't wanna be misinterpreted. We're, we're not we're not currently contemplating anything around beginning a hedge fund.

Speaker #5: We're, we're not we're not currently contemplating anything, around beginning a hedge fund. I guess, like, another way to think about it, and this is, again, something we've highlighted on previous calls, at the moment, you know, our, our business is very high-sharp but capacity-constrained.

Speaker #4: Well, Citidel is is a great firm, but they began as a hedge fund. So that's a different evolution of the firm. Well, but I, I think you're right.

Speaker #9: I guess, like, another way to think about it and this is, again, something we've highlighted on previous calls. at the moment, you know, our, our business is very high sharp, but capacity constrained.

Speaker #4: Right? But that's not our expertise. We don't hire a bunch of long-short guys and give them a risk allocation and say, "Good luck to you.

Joseph Molluso: That is a tough one, Craig. I'm not sure which competitors you're referring to. We're a public company, obviously, and we pay, maintain a dividend. You know, I think you might be referring to some competitors that have been around a long time, are bigger and maybe have retained personal capital in the firm that they use to make investments or, you know, or have a side pocket hedge fund. We haven't contemplated Virtu asset management lately, you know, we'll talk a few years from now and see, okay? I don't wanna be misinterpreted. We're not currently contemplating anything around beginning a hedge fund.

Speaker #9: So acquiring a bunch of assets, we wouldn't really have a productive use for them. And in order to deploy them, we'd probably have to put them in far lower sharp strategies.

Speaker #5: So acquiring a bunch of assets, we wouldn't really have a productive use for them. And in order to deploy them, we'd probably have to put them in far lower-sharp strategies and we already have difficulty explaining the variance in our earnings quarter to quarter.

Speaker #4: Look, we run highly automated electronic market-making strategies backed by statistical research." That is capacity-limited at the scale we're talking about.

Speaker #9: And we already have difficulty explaining the variance in our earnings quarter to quarter. So I think it would just make the problem much worse.

Speaker #5: So I think it would just make the problem much worse.

Speaker #5: Got it. Guys, thank you for taking my questions.

Speaker #3: Yeah. You asked about risk management, and we don't have an infrastructure in place to really manage, you know, a sharp one, you know, type or sharp two hedge fund setup.

Speaker #6: Yeah. You asked about risk management and we don't have an infrastructure in place to really manage, you know, a sharp one, you know, type or sharp two hedge fund setup.

Speaker #1: This concludes our Q&A session. I will now turn the call back to Aaron Simmons, Simons, CEO for closing remarks.

Speaker #9: Got it. And listen, I think some of your peers Citadel, Susquehanna, their hedge fund strategies are different than the market-making strategies. So I don't know if capacity is really an issue for them.

Speaker #6: Got it. And listen, I think some of your peers sit at Alex Cifu, Hannah, their hedge fund strategies are different than the market-making strategy.

Speaker #5: nothing really, but thanks, everyone, for joining. And thanks for the questions. And we'll talk to you next quarter.

Speaker #6: So I don't know if capacity is really an issue for them.

Speaker #3: Well, Citadel is, is a great firm, but they began as a hedge fund. So that's a different evolution of the firm.

Speaker #5: Well, Citadel is, is a great firm, but they began as a hedge fund. So that's a different evolution of the firm.

Aaron Simons: I guess, like, another way to think about it, and this is again something we've highlighted on previous calls. At the moment, you know, our business is very high sharp, but capacity constrained. Acquiring a bunch of assets, we wouldn't really have a productive use for them. In order to deploy them, we probably have to put them in far lower sharp strategies, and we already have difficulty explaining the variance in our earnings quarter to quarter. I think it would just make the problem much worse.

Speaker #9: Well, but I, I think you're right, right? But that's not our expertise. We don't hire a bunch of long, short guys and give them a risk allocation and say, "Good luck to you."

Speaker #6: Well, but I, I think you're right, right? But that's not our expertise. We don't hire a bunch of long, short guys and give them a risk allocation and say, "Good luck to you." Like, we run highly automated electronic market-making strategies backed by statistical research.

Speaker #3: Yeah.

Speaker #9: Like, we run highly automated electronic market-making strategies backed by statistical research. That is capacity-limited at the scale we're talking about. Got it. Guys, thank you for taking my questions.

Speaker #6: That is capacity-limited at the scale we're talking about. Got it. Guys, thank you for taking my questions.

Joseph Molluso: Yeah. You asked about risk management, we don't have an infrastructure in place to really manage, you know, a Sharpe 1, you know, type or Sharpe 2 hedge fund setup.

Speaker #2: This concludes our Q&A session. I will now turn the call back to Aaron Simmons Simons, CEO for Closing Remarks.

Speaker #2: This concludes our Q&A session. I will now turn the call back to Aaron Simmons, Simons, CEO for Closing Remarks.

Craig Siegenthaler: Got it. Listen, I think some of your peers, Citadel, Susquehanna, their hedge fund strategies are different than the market making strategies. I don't know if capacity is really an issue for them.

Speaker #9: nothing really, but thanks, everyone, for joining, and thanks for the questions. And we'll talk to you next quarter.

Speaker #5: nothing really, but thanks, everyone, for joining and thanks for the questions. And we'll talk to you next quarter.

Joseph Molluso: Well, Citadel is a great firm. They began as a hedge fund. That's a different evolution of the firm.

Aaron Simons: Well, I think you're right? That's not our expertise. We don't hire a bunch of long short guys and give them a risk allocation and say, Good luck to you. Like, we run highly automated electronic market making strategies backed by statistical research. That is capacity limited at the scale we're talking about.

Craig Siegenthaler: Got it. Guys, thank you for taking my questions.

Operator: This concludes our Q&A session. I will now turn the call back to Aaron Simons, CEO for closing remarks.

Aaron Simons: Nothing really, but thanks everyone for joining and thanks for the questions, and we'll talk to you next Q.

Operator: This concludes today's call. Thank you for attending. You may now disconnect.

Q1 2026 Virtu Financial Inc Earnings Call

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