• Adjusted Net Trading Income (NT): $458 million for Q4 2024, or $7.3 million per day.
• Market Making Adjusted NT: $348 million, or $5.5 million per day for Q4 2024.
• Execution Services Adjusted NT: $110 million, or $1.7 million per day for Q4 2024.
• Normalized Adjusted EPS: $1.14 for Q4 2024.
• Adjusted EBITDA: $284 million for Q4 2024.
• Adjusted EBITDA Margin: 61.9% for Q4 2024.
• Adjusted Operating Expenses: $191 million for Q4 2024.
• Financing Interest Expense: $27 million for Q4 2024.
• Share Repurchase: 1.7 million shares at an average price of $34.18 per share, totaling $57.1 million in Q4 2024.
• Quarter-End Share Count: 159.2 million shares outstanding.
• Dividend: $0.24 per quarter.

• Warning! GuruFocus has detected 9 Warning Signs with VIRT.

Release Date: January 29, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Virtu Financial Inc (NASDAQ:VIRT) reported strong fourth-quarter results with adjusted net trading income of $7.27 million per day, showcasing robust performance in both customer and noncustomer market-making businesses.
• The Execution Services segment achieved its best quarter since the first quarter of 2022, with $1.7 million of net trading income per day, driven by increased adoption of their algorithmic products.
• The company has made significant investments in technology enhancements and capabilities, which have contributed to improved performance and increased operating leverage.
• Virtu Financial Inc (NASDAQ:VIRT) has successfully expanded its market-making capabilities into new areas such as crypto, ETF block options, and fixed income, generating $787,000 per day from organic growth initiatives in 2024.
• The company maintained a disciplined cost structure, achieving a 58% adjusted EBITDA margin for 2024, and continued its commitment to returning capital to shareholders through share repurchases and dividends.

Negative Points

• Despite strong performance, the company acknowledges there is still room for improvement in its market-making operations, particularly in capturing spread rates.
• The regulatory environment remains a concern, with past challenges from the SEC impacting the crypto industry and other areas of the business.
• The company faces competition from new entrants in the market-making space, which could impact market share and profitability.
• Virtu Financial Inc (NASDAQ:VIRT) continues to navigate operational complexities and regulatory uncertainties in the crypto market, which require ongoing investment and adaptation.
• The company's growth initiatives, while promising, require significant investment in technology and personnel, which could impact short-term financial performance.

Q & A Highlights

Q: With a new Head of the SEC, what does this mean for Virtu's business and the opportunities in the regulatory environment? A: Douglas Cifu, CEO, expressed optimism about the change, noting that the previous administration was burdensome and politically motivated. The new leadership is expected to be more favorable towards market structure and digital assets, potentially leading to regulatory clarity and growth opportunities in crypto and other areas.

Q: How did Virtu maintain earnings stability in 2024, and can this stability continue into 2025? A: Cifu highlighted Virtu's scaled and diverse operations, significant investments in people, and internalization strategies as key factors. The firm's growth initiatives, such as options and ETF block trading, have contributed to stability. Execution Services also had a consistent year, supporting overall stability.

Q: What drove the strong performance in the Market Making segment in Q4, and how does the start of 2025 look? A: Cifu attributed the strong performance to internalization, a positive trend in quoted spreads, and successful crypto and block ETF businesses. He noted that the positive trends have continued into early 2025, with favorable signals in realized volatility and retail trading activity.

Q: Can you provide an update on Virtu's crypto initiatives and the investments made in 2024? A: Cifu explained that Virtu has expanded its crypto capabilities, focusing on market access, liquidity distribution, and operational efficiency. The firm is building a 24/7 crypto-native offering and enhancing connectivity to reputable markets, positioning itself for institutional adoption and growth in the crypto space.

Q: How is Virtu approaching the potential market for listed betting markets? A: Cifu stated that Virtu is open to exploring opportunities in listed betting markets, provided there are credible venues and sufficient volume. The firm is interested in broader indices and futures products, which align with its market-making capabilities.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.