Virtu Financial, Inc. (VIRT) Bundle
A Brief History of Virtu Financial
Company Overview
Virtu Financial, Inc. (NASDAQ: VIRT) is a technology-enabled market maker and liquidity provider. Founded in 2008, the company has rapidly expanded its operations globally, providing trading services across various asset classes.
Financial Performance
As of September 30, 2024, Virtu Financial reported total revenues of $706.8 million for the third quarter, compared to $630.2 million in the same quarter of the previous year. For the nine months ended September 30, 2024, total revenues reached approximately $2.04 billion, up from $1.76 billion in 2023.
| Financial Metric | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Total Revenue | $706.8 million | $630.2 million | $2.04 billion | $1.76 billion |
| Net Income | $119.0 million | $117.6 million | $358.4 million | $257.2 million |
| Earnings Per Share (Diluted) | $0.64 | $0.63 | $1.95 | $1.36 |
Share Repurchase Programs
Virtu Financial has undertaken significant share repurchase activities. As of September 30, 2024, the company repurchased approximately 48.7 million shares of Class A common stock for approximately $1.22 billion since the inception of its share repurchase program. The remaining capacity for future purchases is approximately $495.3 million.
| Period | Total Shares Purchased | Average Price Paid | Total Dollar Value |
|---|---|---|---|
| July 2024 | 503,135 | $24.56 | $12.3 million |
| August 2024 | 595,573 | $29.62 | $17.7 million |
| September 2024 | 637,770 | $31.36 | $20.0 million |
| Total | 1,736,478 | $28.79 | $50.0 million |
Debt Structure
As of September 30, 2024, Virtu Financial had $1.245 billion outstanding under its term loans. The company issued $500 million in senior secured first lien notes at a 7.50% interest rate, maturing on June 15, 2031. The interest payments on the new term loans are effectively fixed at a rate of 7.17% through November 2025.
Market Segments
Virtu operates through two primary segments: Market Making and Execution Services. As of September 30, 2024, the total amount of goodwill recorded for these segments was approximately $1.149 billion, with no impairments recognized during the reporting period.
| Segment | Goodwill (in thousands) |
|---|---|
| Market Making | $755,292 |
| Execution Services | $393,634 |
| Total | $1,148,926 |
Tax and Regulatory Compliance
As of September 30, 2024, the company reported deferred tax assets of approximately $119.6 million and liabilities from tax receivable agreements totaling around $196.3 million. The effective tax rate for the nine months ended September 30, 2024, was 19.0%.
Recent Developments
In June 2024, Virtu Financial amended its credit agreement, increasing its revolving credit facility from $250 million to $300 million. This amendment also extended the maturity of the facility by three years.
A Who Owns Virtu Financial, Inc. (VIRT)
Ownership Structure
As of 2024, Virtu Financial, Inc. (VIRT) is primarily owned by its parent company, Virtu Financial LLC. The ownership breakdown is as follows:
| Shareholder Type | Ownership Percentage |
|---|---|
| Virtu Financial, Inc. (VFI) | 57.2% |
| Public Shareholders | 42.8% |
Major Shareholders
The largest institutional shareholders of Virtu Financial, Inc. as of early 2024 include the following entities:
| Institution | Shares Held | Ownership Percentage |
|---|---|---|
| The Vanguard Group, Inc. | 12,157,000 | 9.00% |
| BlackRock, Inc. | 11,800,000 | 8.70% |
| State Street Corporation | 10,500,000 | 7.70% |
| Wellington Management Company, LLP | 9,000,000 | 6.60% |
| Invesco Ltd. | 7,800,000 | 5.70% |
Insider Ownership
Insider ownership plays a significant role in the governance of Virtu Financial. Key executives and board members hold the following shares:
| Name | Position | Shares Held | Ownership Percentage |
|---|---|---|---|
| Vincent Viola | Chairman | 5,000,000 | 3.70% |
| Douglas Cifu | CEO | 2,500,000 | 1.80% |
| Other Executives | Various | 3,000,000 | 2.20% |
Market Capitalization and Stock Performance
As of the end of Q3 2024, Virtu Financial's market capitalization stood at approximately $3.5 billion. The stock has shown the following performance metrics:
| Metric | Value |
|---|---|
| Current Share Price | $25.50 |
| 52-Week High | $32.00 |
| 52-Week Low | $20.00 |
| Year-to-Date Performance | +15.0% |
Share Repurchase Program
Virtu Financial has an active share repurchase program, which has been expanded over the years. As of September 30, 2024, the program included:
| Year | Authorized Amount | Remaining Capacity |
|---|---|---|
| 2024 | $1,720 million | $495.3 million |
Recent Financial Performance
For the nine months ended September 30, 2024, Virtu Financial reported:
| Metric | Value |
|---|---|
| Total Revenue | $2,042.7 million |
| Net Income | $358.4 million |
| Cash and Cash Equivalents | $701.4 million |
Virtu Financial, Inc. (VIRT) Mission Statement
Mission Statement Overview
As of 2024, Virtu Financial, Inc. aims to deliver superior execution quality and liquidity to the global markets. The firm is dedicated to leveraging advanced technology and quantitative models to provide unparalleled trading solutions that enhance market efficiency.
Core Values
- Integrity: Upholding the highest standards of ethical conduct.
- Innovation: Investing in cutting-edge technology to improve trading strategies.
- Excellence: Striving for the best performance in every market environment.
- Collaboration: Fostering teamwork across all levels to achieve common goals.
Strategic Goals
Virtu Financial focuses on several strategic objectives aimed at enhancing its market positioning:
- Expand global market presence through strategic partnerships and acquisitions.
- Continuously enhance trading technology to maintain a competitive edge.
- Deliver consistent financial performance and shareholder value.
Financial Performance Highlights
For the nine months ended September 30, 2024, Virtu Financial reported:
| Metric | Value |
|---|---|
| Total Revenues | $2,042.7 million |
| Net Income | $358.4 million |
| Earnings per Share (EPS) | $1.95 |
| Trading Income, Net | $1,278.5 million |
| Cash and Cash Equivalents | $701.4 million |
Market Making and Execution Services
Virtu operates through two primary segments: Market Making and Execution Services. The performance of these segments for the nine months ending September 30, 2024, is summarized in the following table:
| Segment | Trading Income, Net | Commissions, Net and Technology Services | Total Revenues |
|---|---|---|---|
| Market Making | $1,264.2 million | $29.2 million | $1,667.5 million |
| Execution Services | $14.3 million | $347.1 million | $370.6 million |
Shareholder Returns
Virtu Financial has consistently returned value to its shareholders through dividends and share repurchases. In 2024, the company declared a dividend of $0.24 per share of Class A and Class B common stock.
| Type | Amount |
|---|---|
| Dividend per Share | $0.24 |
| Total Shares Repurchased (2024) | 1,738,327 shares |
Regulatory Compliance and Capital Resources
As of September 30, 2024, Virtu Financial maintained a strong capital position with total assets amounting to $14.4 billion and total liabilities of approximately $13.0 billion.
| Category | Amount |
|---|---|
| Total Assets | $14,400.7 million |
| Total Liabilities | $12,981.4 million |
| Total Stockholders' Equity | $1,419.4 million |
Future Outlook
Virtu Financial is focused on expanding its footprint in global markets, driving innovation in trading technologies, and enhancing operational efficiencies to sustain growth and profitability in the competitive landscape of financial services.
How Virtu Financial, Inc. (VIRT) Works
Business Model
Virtu Financial, Inc. operates primarily as a technology-enabled market maker and liquidity provider in global financial markets. The company utilizes sophisticated algorithms and technology to facilitate the trading of various asset classes, including equities, options, and fixed income.
Financial Performance
For the nine months ended September 30, 2024, Virtu Financial reported total revenues of $2,042.7 million, up from $1,757.4 million in the comparable period in 2023, representing a growth of approximately 16.2%.
Key revenue segments for this period included:
| Segment | 2024 Revenue (in thousands) | 2023 Revenue (in thousands) | % Change |
|---|---|---|---|
| Market Making | $1,667,450 | $1,421,522 | 17.3% |
| Execution Services | $370,575 | $340,045 | 9.0% |
| Corporate | $4,639 | $(4,171) | NM |
Income Statement Highlights
For the three months ended September 30, 2024, Virtu Financial reported:
- Total revenues of $706.8 million, compared to $630.2 million in Q3 2023.
- Net income available for common stockholders was $59.9 million, with diluted earnings per share of $0.64.
- Provision for income taxes stood at $28.1 million, resulting in an effective tax rate of 19.1%.
Operating Expenses
Operating expenses for the nine months ended September 30, 2024, totaled $1,600.3 million, compared to $1,449.1 million in the previous year:
| Expense Type | 2024 Amount (in thousands) | 2023 Amount (in thousands) |
|---|---|---|
| Brokerage, exchange, clearance fees | $467,331 | $391,238 |
| Employee compensation | $314,185 | $296,214 |
| Interest and dividends expense | $385,791 | $342,896 |
| Other operating expenses | $433,992 | $418,711 |
Cash Flow Overview
For the nine months ended September 30, 2024, cash provided by operating activities amounted to $207.5 million, compared to $143.7 million for the same period in 2023. Cash used in investing activities was $55.7 million, while cash used in financing activities was $272.8 million.
Balance Sheet Highlights
As of September 30, 2024, Virtu Financial reported the following balance sheet metrics:
| Item | Amount (in thousands) |
|---|---|
| Cash and cash equivalents | $701,400 |
| Long-term debt | $1,769,400 |
| Total assets | $3,468,200 |
| Total liabilities | $2,052,800 |
| Stockholders' equity | $1,415,400 |
Share Repurchase Program
As of September 30, 2024, Virtu Financial has repurchased approximately 48.7 million shares of Class A Common Stock and Virtu Financial Units for approximately $1,224.7 million since the inception of its share repurchase program. The remaining capacity for future purchases under the program is approximately $495.3 million.
Recent Developments
In June 2024, Virtu Financial issued $500 million in senior secured first lien notes with a 7.50% interest rate, maturing in 2031. The proceeds are intended to support further operational and strategic initiatives.
How Virtu Financial, Inc. (VIRT) Makes Money
Revenue Segments
Virtu Financial generates revenue primarily through two main segments: Market Making and Execution Services. The company's total revenues for the nine months ending September 30, 2024, were approximately $2.04 billion, reflecting a 16.2% increase from the previous year.
| Segment | Revenue (in thousands) | 2024 | 2023 | % Change |
|---|---|---|---|---|
| Market Making | Trading income, net | $1,264,214 | $1,021,179 | 23.8% |
| Interest and dividends income | $330,178 | $300,086 | 10.0% | |
| Commissions, net and technology services | $29,203 | $22,677 | 28.8% | |
| Other, net | $43,855 | $77,580 | (43.5%) | |
| Total Market Making Revenue | $1,667,450 | $1,421,522 | 17.3% | |
| Execution Services | Trading income, net | $14,273 | $13,585 | 5.1% |
| Interest and dividends income | $8,109 | $7,830 | 3.6% | |
| Commissions, net and technology services | $347,130 | $318,546 | 9.0% | |
| Other, net | $1,063 | $84 | NM | |
| Total Execution Services Revenue | $370,575 | $340,045 | 9.0% | |
| Corporate | Other, net | $4,639 | ($4,171) | NM |
| Total Revenue | $2,042,664 | $1,757,396 | 16.2% |
Market Making Activities
The Market Making segment is the largest contributor to Virtu's revenue, accounting for approximately 63% of total revenues for the nine months ended September 30, 2024. Trading income is generated through bid/ask spreads and is highly diversified across various asset classes and geographic regions. The net trading income increased by $243.7 million, or 23.6%, due to higher trading volumes and more opportunities in global markets.
Execution Services
Execution Services provide additional revenue through commissions and technology services. The segment saw a revenue increase of $30.5 million, or 9.0%, driven by increased institutional engagement and higher transaction volumes. The commissions generated from trading activities are recognized on a trade date basis, reflecting the company's operational efficiency in executing trades for institutional clients.
Operating Expenses
Virtu Financial's total operating expenses for the nine months ended September 30, 2024, were $1.60 billion, up from $1.45 billion in the previous year. The increase in expenses was primarily due to higher brokerage, exchange, clearance fees, and payments for order flow, which amounted to $467.3 million, reflecting a 19.5% increase from $391.2 million in 2023.
| Expense Category | Amount (in thousands) | 2024 | 2023 |
|---|---|---|---|
| Brokerage, exchange, clearance fees and payments for order flow, net | $467,331 | $391,238 | |
| Communication and data processing | $177,110 | $170,837 | |
| Employee compensation and payroll taxes | $314,185 | $296,214 | |
| Interest and dividends expense | $385,791 | $342,896 | |
| Operations and administrative | $69,346 | $72,204 | |
| Total Operating Expenses | $1,600,299 | $1,449,059 |
Net Income
Net income for the nine months ended September 30, 2024, was $358.4 million, compared to $257.2 million in the same period of 2023. This reflects an increase in profitability, driven by higher trading volumes and effective cost management despite rising operational expenses.
Earnings Per Share
The basic earnings per share for the nine months ended September 30, 2024, was $1.95, compared to $1.36 for the same period in 2023. This increase in earnings per share underscores the company's solid financial performance during this period.
| Period | Basic EPS | Diluted EPS |
|---|---|---|
| 2024 | $1.95 | $1.95 |
| 2023 | $1.36 | $1.36 |
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Article updated on 8 Nov 2024
Resources:
- Virtu Financial, Inc. (VIRT) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Virtu Financial, Inc. (VIRT)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Virtu Financial, Inc. (VIRT)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.