Virtu Financial, Inc. (VIRT) Q4 2025 Earnings Call Transcript
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Overview
The earnings call summary highlights strong financial performance, with a 65% margin and $1.85 EPS for Q4 2025. The company is expanding its capital base and investing in talent, reflected in a cash compensation ratio of 19%. The Q&A section reveals a favorable operating environment with increased volatility and strong performance across various asset classes. Although management avoided specifics, the overall sentiment is positive, with strategic growth initiatives and strong market-making activities. The lack of market cap information suggests a neutral to positive stock reaction, likely around 2% to 8%.
Key Financial Performance
Adjusted Net Trading Income (ANTI) $9.7 million per day or a total of $613 million for Q4 2025, the highest quarterly total since Q1 2021. For the full year 2025, $8.6 million per day or $2.1 billion in total.
Market Making ANTI $7.8 million per day for Q4 2025 and $6.7 million per day for the full year 2025.
Virtu Execution Services (VES) ANTI $2 million per day for Q4 2025 and $1.9 million per day for the full year 2025. This marks the seventh consecutive quarter of increased ANTI for VES and a high watermark since early 2022.
Adjusted EBITDA $442 million for Q4 2025, representing a 72% margin. For the full year 2025, $1.4 billion, representing a 65% margin.
Adjusted EPS $1.85 for Q4 2025. For the full year 2025, $5.73.
Cash Compensation Ratio 19% for the full year 2025, within the historical range. The increase reflects a focus on retaining and acquiring top talent.
Invested Capital Increased by $625 million in 2025, with $448 million added in the second half of the year, generating an average return of 100% over the year.
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Operating Highlights
Investment in technology: Focus on client acquisition and expansion of product offerings, particularly within Virtu Execution Services (VES).
Expansion of product offerings: Substantial progress noted within the VES business, achieving the highest ANTI since early 2022.
Market Making performance: Reported ANTI of $7.8 million per day for Q4 and $6.7 million per day for the full year 2025, benefiting from favorable market conditions and elevated volumes.
Virtu Execution Services (VES) performance: ANTI reached $2 million per day for Q4 and $1.9 million per day for the full year, marking the seventh consecutive quarter of increased ANTI.
Profitability: Generated $442 million in adjusted EBITDA for Q4, representing a 72% margin. Full year adjusted EBITDA was $1.4 billion with a 65% margin.
Capital deployment: Increased invested capital by $625 million in 2025, with $448 million added in the second half of the year, generating an average return of 100%.
Talent acquisition and retention: Continued focus on acquiring and retaining top talent, particularly in trading and technology, reflected in increased compensation expenses.
Capital base expansion: Efforts to expand the capital base and strengthen infrastructure to dynamically deploy capital for growth opportunities.
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Risk or Challenges
Forward-looking statements: The company acknowledges that forward-looking statements are subject to risks, assumptions, and uncertainties, which may be outside the company's control. Actual results and financial conditions may differ materially from these statements.
Capital accumulation efforts: While incremental capital was added and deployed dynamically, the capital accumulation efforts are still in the early stages, which could pose challenges to achieving growth objectives.
Operating expenses: The increase in compensation expenses due to retaining and acquiring top talent could pressure operating margins if not offset by corresponding revenue growth.
Market conditions: The company's performance benefited from favorable market conditions and elevated volumes, which may not persist in the future, potentially impacting results.
Capital deployment: The company plans to continue expanding its capital base and deploying capital dynamically, which carries risks if opportunities do not yield expected returns.
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Guidance & Outlook
Capital Expansion: Virtu Financial plans to continue expanding its capital base, having already increased invested capital by $625 million in 2025, with $448 million added in the second half of the year. The company aims to deploy this capital dynamically to seize growth opportunities.
Talent Acquisition and Retention: The company remains focused on acquiring and retaining top talent, particularly in trading and technology, as part of its growth strategy.
Dividend Policy: Virtu Financial intends to maintain its quarterly dividend of $0.24 per share.
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Shareholder Return Plan
Quarterly Dividend: Maintained at $0.24 per share
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Key Q&A
Q:The dollar value of your 605 quoted spreads looked like it declined sequentially. Is it fair to conclude that this quarter's strong performance came from areas outside of equities? Can you provide granularity on which asset classes were the largest contributors to your sequential growth?
A:The strong performance was driven by a favorable operating environment with increased volatility, higher equity share volumes, and asset rotation across fixed income, currencies, and commodities. The customer market-making business performed well despite lower quoted spreads, and non-customer businesses also did very well. VES had a record quarter with strong performance across all products and geographies.
Q:ETF fund launches are expected to hit a record in 2026 with the recent ETF share class proposal out to the SEC. Can you refresh us on where Virtu has exposure to the ETF market and the potential materiality to Virtu if this comes to pass?
A:Virtu is a large player in ETFs, acting as an AP for many ETFs. While the ETF market is growing and beneficial for Virtu, management did not provide specific quantification of the impact or statistics, stating that ETFs touch nearly every part of their business.
Q:Can you give updated thoughts on participating in the production markets asset class and whether sports or non-sports contracts would represent a more attractive entry point?
A:Virtu is optimistic about new markets and is in the process of connecting and understanding venues. However, due to regulatory and legal uncertainties, they are cautious. They are exploring market-making activities like cross-exchange arbitrage but are more inclined towards markets similar to their current trading activities.
Q:Can you quantify or describe how impactful the non-equity side of the business was in terms of market-making metrics this quarter, especially with regards to volatility in digital assets, precious metals, and commodities?
A:Management reiterated that their non-customer market-making business includes a broad presence in equities, fixed income, currencies, commodities, options, and crypto. They emphasized their global operations and strong performance across asset classes but did not provide a specific breakout of non-equity metrics.
Q:Where are you seeing the greatest level of incremental demand in the non-retail client side of the business? Is it from incremental customer adds or greater utilization of services?
A:VES is seeing strong performance with product improvements in algos, venues, and workflow analytics. There is ongoing retooling to accommodate non-equity asset classes. Management highlighted both incremental customer additions and greater utilization of services as drivers of demand.
Q:What are your top 3 strategic priorities for 2026 in terms of new initiatives or existing markets?
A:Virtu is focusing broadly on growing across the firm, dynamically responding to market opportunities, increasing trading capital, investing in infrastructure, and acquiring talent. They are not focusing on a small number of growth initiatives but rather a broad effort.
Q:Can you provide a sense of the magnitude of incremental capital deployed during the quarter and the potential for deploying more capital in the future?
A:Virtu deployed over $600 million in incremental capital, with $450 million in the second half of the year. They aim to deploy more capital through organic growth and incremental borrowings, depending on market opportunities. Management emphasized maintaining substantial buffers and adapting to quarter-to-quarter conditions.
Q:Do innovations around clearing, settlement, and collateral have the potential to significantly impact Virtu's P&L? Do these changes widen the advantage for firms like Virtu or level the playing field?
A:Management believes it is too early to determine the economic impact of these innovations. However, they see added complexity in market space as a competitive advantage for Virtu due to their broad connectivity and experience in handling diverse trading protocols and clearing cycles.
Q:Review of Unclear Management Responses
A:Management avoided providing specific quantifications or detailed breakdowns for several questions, including the impact of ETFs on Virtu's P&L, the exact contribution of non-equity businesses, and the economic impact of innovations in clearing and settlement. Responses often lacked precise data and relied on general statements about broad performance and strategic advantages.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Financial disclaimer
Financial name
Instructions Virtu
Investor portion
Officer Chief
Officer Co
Officer result
QA plan
Simons Chief
ability result
accumulation effort
base effort
call result
capital ability
capital accumulation
capital base
effort capital
effort firm
environment capital
firm handful
focus result
handful preview
income result
information margin
infrastructure talent
measure reminder
name today
perspective supplement
plan trading
preview focus
question today
remark call
reminder remark
result Chief
result QA
result environment
result perspective
statement QA
supplement statement
talent capital
today Simons
today statement
trading infrastructure
VIRT Transcript
Virtu Financial, Inc. (VIRT) Q4 2025 Earnings Call Transcript
Positive1-29
The earnings call summary highlights strong financial performance, with a 65% margin and $1.85 EPS for Q4 2025. The company is expanding its capital base and investing in talent, reflected in a cash compensation ratio of 19%. The Q&A section reveals a favorable operating environment with increased volatility and strong performance across various asset classes. Although management avoided specifics, the overall sentiment is positive, with strategic growth initiatives and strong market-making activities. The lack of market cap information suggests a neutral to positive stock reaction, likely around 2% to 8%.
Virtu Financial, Inc. (VIRT) Q3 2025 Earnings Call Transcript
Positive10-29
The earnings call reflects a positive outlook, with growth opportunities in crypto, options, and ETF blocks. The company is expanding in digital assets and has raised significant capital for growth. Management's focus on leveraging existing infrastructure and maintaining cost efficiency suggests optimism. However, unclear timelines and lack of specific guidance may temper enthusiasm slightly. Overall, the strategic focus on high-growth areas and strong operating leverage indicate a positive sentiment, likely leading to a stock price increase.
Virtu Financial, Inc. (VIRT) Q2 2025 Earnings Call Transcript
Positive7-30
The earnings call summary shows strong financial performance, with EPS exceeding expectations, and a robust share buyback program. The Q&A session provides positive insights into leadership transition, market opportunities, and strategic investments, particularly in crypto and digital assets. However, some responses lacked clarity. Given the strong financial metrics and optimistic guidance, the stock is likely to see a positive reaction, despite the absence of specific market cap data.
Virtu Financial, Inc. (NASDAQ:VIRT) Q1 2025 Earnings Call Transcript
Positive4-24
The earnings call summary indicates strong financial performance with increased EPS, net trading income, and a high EBITDA margin. The company maintains a robust dividend and share repurchase program, which is favorable for shareholder returns. Despite some operational and market risks, the Q&A section reveals confidence in future growth, especially in the crypto segment. The positive sentiment is further supported by optimistic guidance and strategic initiatives, suggesting a likely stock price increase in the range of 2% to 8% over the next two weeks.
VIRT Slides
VIRT Report
Frequently Asked Questions
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