Virtu Financial, Inc. Class A

Ladies and gentlemen, thank you for standing by and welcome to Virtu Financial 2025 first quarter results. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised 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 2025 results were released this morning and are available on our website. With us today on this morning's call, we have Mr. Douglas Siku, our Chief Executive Officer, Mr. Joseph Meluso, our Co-President and Co-Chief Operating Officer, and Ms. Cindy Lee, our Chief Financial Officer. We'll 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 made on this call are based on information presently available to the company, and we do not undertake to update or revise any forward-looking statements as new information becomes available. We refer you to disclaimers in our press release and encourage you to review the description of risk factors contained in our annual report, Form 10-K, and other public filings. During today's call, in addition to GAAP measures, we may refer to certain non-GAAP measures, including adjusted net trading income, adjusted net income, and adjusted EBITDA margins. 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 materials with an explanation of why we gave this information meaningful as well as how management uses these measures. And with that, I'd like to turn this all over to Dr.

Thank you, Andrew, and good morning, everyone. Thank you for joining us this morning. In my remarks today, I will focus on Virtue's first quarter 2025 financial and business performance and strategic initiatives. Following my remarks, Joe and Cindy will provide additional details on our results. This morning, we reported $1.30 of normalized DPS on total adjusted net trading income per day of $8.3 million. Quarterly EBITDA was $320 million, and our even down margin was a healthy 64%. This represents our highest net trading income per day since 2021 and reflects the continued long-term improvement of our core business as well as our expansion into new markets. Market making had its best quarter since the first quarter of 2021. Thanks to our continued enhancements, our retail wholesale business was strong and our global non-customer market making businesses continue to outperform our opportunity metrics. In particular, our non-customer global equities, digital asset, and ETF block market-making franchises delivered outsized performances. This quarter demonstrates the benefits of our global diversified market-making operations and highlights its ability to outperform separate and apart from the U.S. retail wholesale business. In addition to our non-customer market-making businesses in the U.S., Europe, and Asia Pacific equities and options, we make markets in energy products like crude, oil, and natural gas, currencies, digital assets, fixed income instruments, and a range of other commodities, including precious and non-precious metals, all of which perform well during the quarter. We continue to extend our listed options business in Asia, India, and Japan, have expanded our coverage of tokens and our ETS block business in Europe. In addition, we had an outstanding quarter in metals given the tumult around tariffs, which has now been implemented. I point this out to underline the fact that while our business does benefit from increased retail activity in the United States, we're also broadly diversified and levered to increase volumes and volatility to execution services' seventh straight quarter of the increasing net trading income, a trend which has persisted through a range of both favorable and less favorable operating conditions. The VES suite of scalable, highly performing products has begun to resonate with our growing and impressive global buy-side and sell-side client list as we continue to make significant inroads through product penetration and cross-selling. We believe our VES business has significant room to grow. Our product line is best in class and our position is rising on broker wheels. We've successfully rolled out Virtu Technology Services, or VTS, with more in the queue. We've deployed an agency fixed income RFQ platform to a handful of clients, building a dealer network of almost 20 brokers on top of our client connectivity. In 2024, we delivered on our plan to significantly increase our sales prowess with a number of key hires, further accelerating our growth in this space, and the results have been noticeable. In addition, Virtue Capital Markets, which has been a pioneer in implementing the market offerings for corporate issuers, What we call VES today is a combination of the Knight Execution Services business we acquired when we bought Knight and ITG's global execution, workflow, analytics, and connectivity franchises. Since acquiring those businesses, we've completely overhauled their respective technology platforms and upgraded the entire suite of products from our outhouse, deposit alert, and our extremely valuable and now multi-asset class workflow and analytics product. The market penetration and adoption levels that VES is realizing today are the culmination of this hard work and our continued investments. Our VES products allow us to achieve deep integration into client workflows, resulting in growth of recurring and reoccurring revenue streams. In addition to these technological and product enhancements, we have also streamlined their operations. We do not break out bottom line results in our segment reporting, however, Suffice to say, our EBITDA margin on these businesses are substantially higher, and depending on the quarters, as much as two times or more than when we acquired them. Given the outline improvements in this business and the outlook and recent performance, we do not see any reason why in the median term we cannot achieve a $2 million per day run rate for VES. Now let me comment on recent market activity. As you know, after the tariff announcements on April 2nd, global markets became extremely volatile. I want to make a handful of comments about the state of the market and our experience in the last few weeks. First, and very importantly, despite some stresses, the market infrastructure performed exceedingly well. We saw no interruptions in our flows, no significant additives or liquidity concerns among any of our counterparties, which include the most important clearinghouses, prime brokers, retail brokers, banks, and trading venues around the world. This performance is the culmination of years of shoring out the financial market infrastructure and sensible and prudent regulation for which we have always been an advocate. This reflects the lessons learned from prior market events and pilots how competition makes markets better by driving brokers, ATSs, and exchanges to innovate and invest in their systems. Our operational performance was outstanding. The past several weeks included the highest volume in volatility days in Virtu's history. I'm proud to say that we had no counterparty issues from a risk standpoint or operational issues that prevented us from servicing clients. While naturally we had increased margin requirements as we anticipated, our liquidity was more than sufficient to meet all associated obligations. Looking at retail participation, As measured by retail shares and quoted spread, the first few weeks of the second quarter were well ahead of 2024 and the first quarter of 2025. Indeed, the last time we saw retail participation at these levels were the pandemic days of 2020. We remain as we have been since 2020, very bullish on long-term retail engagement. Of course, broader market volumes will come down for the most recent elevated levels as one would naturally anticipate. However, If you look at the long-term trend of retail participation, we believe that the data shows a secular uptrend in retail engagement. In fact, if you look at the 605 share volume in quoted spreads over the last six years, you will notice that even after the heightened activity in 2020 and in 2021, the market settled well above its pre-pandemic highs. We also know several market trends, including the strong strong new account opening figures from retail brokers that are indicative of the retail participation continuing apace at the new baseline levels. Finally, I cannot conclude without commenting on our outlook, both near-term and long-term, without reiterating what I just said a few minutes ago. Virtu was built as a highly diversified market-making business and further diversified its business with the growth of its execution services businesses. The current environment is favorable for both our customer and non-customer market-making businesses and our execution services business as well. This has also been an excellent environment for our growing options business, digital asset business, as well as our ETF block business, which in recent days has handled a record number of requests for quotes and working orders from clients. In broad strokes, our growth is driven by three key forces. First, sharpening our edge to better capture opportunities within our existing businesses. Second, extending our edge into new products and markets which themselves are expanding, such as the electronification of fixed income and the growing adoption of digital assets and ETFs abroad. And third, we benefit from the broader tailwinds as market volumes and volatilities rise, thanks to our diverse, global, multi-active class market-making and execution services platform. which enables us to participate in both short- and long-term trends wherever and whenever they emerge. Importantly, the first two drivers are within our control, powered by our execution, innovation, and strategic investment, regardless of how favorable or challenging the external environment may be. I think especially in times like these for our business, it's important to put these things into perspective and know how expansive Virtue's business has become over the years. With more on this point, I'd like to turn the conversation over to Joe Maluso for more commentary. Joseph?