Virtu Financial, Inc. Class A

advise that today's conference is being recorded. I would like now to turn the conference over to Andrew Smith, Head of Investor Relations. Please go ahead.

Thank you, Michelle, and good morning, everyone. Thank you for joining us. Our first quarter results were released this morning and are available on our website. With us today on this morning's call, we have Mr. Douglas Sifu, our Chief Executive Officer, Mr. Joseph Maluso, our Co-President and Co-Chief Operating Officer. and Mr. Sean Galvin, our Chief Financial Officer. We will begin with prepared remarks and then take your questions. First, a few reminders. Today's call may include forward-looking statements which represent Virtue's current belief regarding future events and are therefore subject to risks, assumptions, and uncertainties which may be outside the company's control. Please note that our actual results and financial conditions may differ materially from what is indicated in these forward-looking statements. It is important to note that any forward-looking statements on this call are based on information presently available to the company, and we do not undertake to update or revise any forward-looking statements as new information becomes available. We refer you to disclaimers in our press release and encourage you to review the description of risk factors contained in our annual reports, Form 10-K, and other public filings. During today's call, in addition to GAAP measures, we may refer to certain non-GAAP measures, including adjusted net trading income, adjusted net income, adjusted EBITDA, and adjusted EBITDA margin. These non-GAAP measures should be considered as supplemental to and not as superior to financial measures as reported in accordance with GAAP. 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 reconciliation of non-GAAP measures to the equivalent GAAP term in the earnings material with an explanation of why we deem this information to be meaningful as well as how management uses these measures.

And with that, I'd like to turn the call over to Doug. Good morning and thank you, Andrew. This morning, we reported our first quarter results. For the quarter ended March 31st, Virtu earned 76 cents of adjusted EPS on $6 million per day of adjusted net trading income. We generated a 55% EBITDA margin and $203 million of EBITDA, both on an adjusted basis. We outperformed headline volume and volatility statistics in the quarter as a result of our organic growth initiatives, as well as the solid performance in both our customer and non-customer market-making businesses. In particular, we had record performance in both our crypto and ETF block market-making operations, which I will discuss further in a moment. Overall, the environment was mixed compared to the prior quarter. Realized volatility was down about 10%, but volumes were elevated across global equities and commodities, while options volumes were flat and retail volumes were up modestly. Our core business generally performed well against this backdrop. Our customer market making operations saw a modest uptick in retail volumes and an increase in the attractiveness of the flow we received offset by reduced volatility. Our market share of Rule 605 volumes remained within historical ranges, and we saw increases in executed shares and quoted spread values compared to the fourth quarter of 2023. Growth initiatives generated $1 million per day in adjusted net trading income, contributing 17% of our ante. I will highlight our performance in digital assets as well as ETF block, which were the standout performers this quarter. In crypto, as I just mentioned, we had a record quarter. The principal catalyst was the launch of 11 spot Bitcoin ETFs in the United States, which were approved by the SEC on January 10th. If you recall, for several years we have discussed how our disciplined approach to counterparty risk management and commitment to capital efficiency has intentionally limited our presence in crypto. In fact, it was only a year ago when we announced that we had resumed limited market-making in crypto, which we had paused around the collapse of FTX. Since then and until January, our crypto initiatives were focused on market-making in top cryptocurrencies on a limited basis. The introduction of spot crypto ETFs has transformed Virtu's role in the crypto ecosystem. The introduction of the ETF has played to Virtu's strengths and enabled us to leverage our scaled capabilities to service clients and the market. In advance of the ETF launch, Virtu was approved as an ETF authorized participant, and we were there on day one of trading, making markets, and facilitating flows. After normalizing for the appreciation of Bitcoin this year, the flows into these securities have been meaningful. Over $14 billion of net new inflows into spot Bitcoin ETFs and the growth flows have been over $56 billion. Our ability to create tight prices in like instruments, in this case the ETF for spot Bitcoin, is very similar to how we make markets in a plethora of equity and multi-asset class ETF products across the globe. We are very encouraged by the persistent opportunities in these products, which has continued into the second quarter. Further, we remain confident that the inherent underlying volatility of crypto as an asset class will drive sustained, elevated opportunities in crypto ETFs and contributes to heightened levels of broader investor engagement and awareness across equities and options. The market is anticipating the launch of new crypto products across ETF options and futures, both in the U.S. and abroad, which will further expand the addressable market for Virtu. We look forward to more products coming online and for the market's continued evolution, bringing greater transparency and the efficiency that comes with centralized clearing and settlement. Turning now to ETF Block. Our global ETF Block initiatives also contributed meaningfully to our results and had one of its best quarters since 2020. While global ETF volumes were up across the board, our robust performance was further enabled by our efforts to broaden our distribution and our increased competitive capabilities in both equity ETFs and fixed income ETFs, combined with the depth and breadth of our global client franchises. Finally, our options market making expansion continues apace. Despite total OCC volumes up only 2%, Compared to the prior quarter and muted volatility, our performance was solid, improving quarter over quarter. Over the last year, our market share in index options has more than doubled, and our share of ETF options remains strong despite fluctuations in market volumes. We expect our options business to continue to grow as we incrementally expand our symbol universe and look forward to another record year building on what we have achieved since beginning this business from scratch. in 2019. To summarize our market-making performance, we believe that our established businesses executed well against our internal benchmarks, yet we remain focused on our efforts to improve our yields on every opportunity and to address more of the significant opportunities available in both new and existing markets, including the ones I just mentioned. We are very excited about the continued real progress in these areas which we had no presence in only a few years ago. Execution services was up 3% over the fourth quarter, delivering $93 million of ante, or $1.53 million per day. While institutional activity remains muted, there were pockets of increased activity as clients adjusted their portfolios in light of evolving global monetary policy expectations. Our ongoing efforts globally and across BES products have continued to bear fruit. We saw outsized trading volumes in Japan and in Asia overall this quarter as we invested resources in those regions, and we reached a high watermark in EMEA equity market share. An uptick in adoption of our EMS Triton has led to further cross-selling opportunities in our brokerage and analytics businesses as well. We are nearing the end of a multi-year technological transformation to create a platform focused on providing clients seamless automation of their multi-asset workflows through the lifecycle of a trade in all regions globally, making us a one-stop shop for all clients' market activities. We believe these investments focused on technology and infrastructure are producing a uniquely valuable platform which reduces many of the frictions traders encounter on a daily basis. Our clients, in search of efficiencies, have asked for multi-asset class, full lifecycle capabilities, and because of our extensive technology re-platform, we will be able to deliver new products quickly. In addition, we continue to enhance our existing flagship equity products. Our new ALGO of ALGOs provides smart automation where where, based on current market conditions for a given stock, we help the client choose the best algorithm to execute its objectives. Our new alert block crossing client interface streamlines clients' ability to cross blocks of stock, saving time and money. Our data analytics platform, API, provides clients more choices with pre-trade decision making and post-trade review of those decisions. In addition to adding multi-asset class capabilities to existing products, We're expanding our potential client base by offering our products to new client segments through redistribution partnerships, or what we call Virtu technology services. Offering our technology via new additional strategic channels allows us to accelerate the distribution of our global multi-asset class offerings in a scalable manner. To help us realize these important opportunities in VES, We have made a number of senior hires who are attracted to Virtu by our broad suite of cutting-edge projects. We are excited about the future of this business as ever. As always, our offerings are based on client demand and built around long-term partnerships. Overall, our businesses continue to grow and demonstrate an impressive yield this quarter in a market environment that was mixed in terms of the opportunity set afforded by the market. Finally, You will note in our press release that effective August 1st, Cindy Lee, a long-time Virtuian, will become the chief financial officer of Virtu, succeeding my friend Sean Galvin in that position. Cindy joined Virtu in 2011, and she will be an extraordinary CFO given her knowledge of Virtu and has been instrumental in our success over the years. I am very happy and pleased to report that Sean is remaining with Virtu in his senior capacity. Sean's contributions to Virtu and Knight KCG over his 22 years here have been very meaningful and we expect to continue to benefit from Sean's professionalism and experience. Thank you, Sean and Cindy. Now we'll turn the call over to Joe Malusa.