Virtu Announces Second Quarter 2020 Results

Friday, 07. August 2020 13:00

NEW YORK, Aug. 07, 2020 (GLOBE NEWSWIRE) -- Virtu Financial, Inc. (NASDAQ: VIRT), a leading provider of financial services and products that leverages cutting edge technology to deliver innovative, transparent trading solutions to its clients and liquidity to the global markets, today reported results for the second quarter ended June 30, 2020.

Second Quarter 2020 Selected Highlights

  • Net income of $335.3 million; Normalized Adjusted Net Income1 of $340.0 million
  • Basic earnings per share of $1.59 and diluted earnings per share of $1.58; Normalized Adjusted EPS1 of $1.73
  • Total revenues of $905.9 million; Trading income, net of $744.0 million; Adjusted Net Trading Income1 of $668.7 million
  • Adjusted EBITDA1 of $485.8 million; Adjusted EBITDA Margin1 of 72.6%

The Virtu Financial, Inc. Board of Directors declared a quarterly cash dividend of $0.24 per share. This dividend is payable on September 15, 2020 to shareholders of record as of September 1, 2020.

“We delivered solid results in the second quarter, with both Market Making and Execution Services performing well, reflecting the strong progress we are making in our organic growth initiatives as well as higher trading volumes across global asset classes and sustained levels of retail engagement,” said Doug Cifu, Chief Executive Officer.  “Our progress to date is a testament to both the commitment and dedication of our teams and the strength of our client relationships. Our results this quarter demonstrate our focus on delivering best-in-class products and services across the entire trade-lifecycle as well as the competitiveness of our global liquidity offerings.”

Note 1: Non-GAAP financial measures. Please see "Non-GAAP Financial Measures and Other Items" for more information.

Financial Results

Second Quarter 2020:

Total revenues increased 141.5% to $905.9 million for this quarter, driven by heightened levels of volatility, bid-ask spreads and trading volumes across global markets and asset classes due to the COVID-19 pandemic, compared to $375.1 million for the same period in 2019. Trading income, net, increased 261.3% to $744.0 million for this quarter, compared to $205.9 million for the same period in 2019. Net income totaled $335.3 million for this quarter, compared to a net loss of $55.5 million in the prior year quarter, which included costs related to the ITG acquisition.

Basic earnings per share for this quarter was $1.59 and diluted earnings per share was $1.58, compared to a basic and diluted loss per share of $0.27 for the same period in 2019.

Adjusted Net Trading Income increased 179.9% to $668.7 million for this quarter, compared to $238.9 million for the same period in 2019. Adjusted EBITDA increased 444.8% to $485.8 million for this quarter, compared to $89.2 million for the same period in 2019.

Normalized Adjusted Net Income, removing one-time integration costs and non-cash items, increased 1,027.7% to $340.0 million for this quarter, compared to $30.1 million for the same period in 2019.

Assuming all non-controlling interests had been exchanged for common stock, and the Company’s Normalized Adjusted Net Income before income taxes was subject to corporation taxes, Normalized Adjusted EPS was $1.73 for this quarter, compared to $0.16 for the same period in 2019.

Operating Segment Information

The Company has two operating segments: Market Making and Execution Services; and one non-operating segment: Corporate.

Market Making principally consists of market making in the cash, futures and options markets across global equities, options, fixed income, currencies and commodities. As a market maker, the Company commits capital on a principal basis by offering to buy securities from, or sell securities to, broker dealers, banks and institutions.

Execution Services comprises agency-based trading and trading venues, offering execution services in global equities, options, futures and fixed income on behalf of institutions, banks and broker dealers. The Company also provides proprietary technology and infrastructure, workflow technology, and trading analytics services to select third parties. Legacy ITG’s operations are included within the Execution Services segment.

Corporate contains the Company's investments, principally in strategic trading-related opportunities, and maintains corporate overhead expenses.

The following tables show the trading income, net, total revenues and Adjusted Net Trading Income by segment for the three and six months ended June 30, 2020 and 2019.

Total revenues by segment
(in thousands, unaudited)

  Three Months Ended June 30, 2020 Three Months Ended June 30, 2019
  Market
Making
 Execution Services Corporate Total Market Making Execution Services Corporate Total
Trading income, net $744,685  $(689) $  $743,996  $205,568  $355  $  $205,923 
Commissions, net and technology services (634) 148,370    147,736  4,961  140,159    145,120 
Interest and dividends income 9,020  320    9,340  23,284  878    24,162 
Other, net 6,046  75  (1,290) 4,831  216  78  (398) (104)
Total Revenues $759,117   $148,076   $(1,290) $905,903   $234,029   $141,470   $(398) $375,101  


                 
  Six Months Ended June 30, 2020 Six Months Ended June 30, 2019
  Market
Making
 Execution
Services
 Corporate Total Market
Making
 Execution
Services
 Corporate Total
Trading income, net $1,547,347  $(886) $  $1,546,461  $460,689  $2,774  $  $463,463 
Commissions, net and technology services 136  318,345    318,481  9,961  210,306    220,267 
Interest and dividends income 35,453  403    35,856  41,787  11,506    53,293 
Other, net 6,767  79  (1,120) 5,726  (163) (66) (1,261) (1,490)
Total Revenues $1,589,703   $317,941   $(1,120) $1,906,524   $512,274   $224,520   $(1,261) $735,533  


Reconciliation of trading income, net to Adjusted Net Trading Income by operating segment

(in thousands, unaudited)

  Three Months Ended June 30, 2020 Three Months Ended June 30, 2019
  Market
Making
 Execution Services Corporate Total Market Making Execution Services Corporate Total
Trading income, net $744,685  $(689) $  $743,996  $205,568  $355  $  $205,923 
Commissions, net and technology services (634) 148,370    147,736  4,961  140,159    145,120 
Interest and dividends income 9,020  320    9,340  23,284  878    24,162 
Brokerage, exchange, clearance fees and payments for order flow, net (172,872) (30,631)   (203,503) (63,630) (35,857)   (99,487)
Interest and dividends expense (28,085) (756)   (28,841) (36,395) (429)   (36,824)
Adjusted Net Trading Income $552,114   $116,614   $—   $668,728   $133,788   $105,106   $—   $238,894  
                 
                 
  Six Months Ended June 30, 2020 Six Months Ended June 30, 2019
  Market
Making
 Execution Services Corporate Total Market Making Execution Services Corporate Total
Trading income, net $1,547,347  $(886) $  $1,546,461  $460,689  $2,774  $  $463,463 
Commissions, net and technology services 136  318,345    318,481  9,961  210,306    220,267 
Interest and dividends income 35,453  403    35,856  41,787  11,506    53,293 
Brokerage, exchange, clearance fees and payments for order flow, net (309,476) (67,845)   (377,321) (130,197) (56,904)   (187,101)
Interest and dividends expense (69,071) (1,210)   (70,281) (70,655) (11,538)   (82,193)
Adjusted Net Trading Income $1,204,389   $248,807   $—   $1,453,196   $311,585   $156,144   $—   $467,729  


Reconciliation of trading income, net to Adjusted Net Trading Income by category – Market Making segment
(in thousands, unaudited)

  Three Months Ended June 30, 2020 Three Months Ended June 30, 2019
  Global Equities Global
FICC,
Options
and Other
 Unallocated
(1)
 Total Market Making Global Equities Global
FICC,
Options
and Other
 Unallocated
(1)
 Total
Market Making
Trading income, net $660,390  $84,295  $  $744,685  $163,044  $41,126  $1,398  $205,568 
Commissions, net and technology services (634)     (634) 4,961      4,961 
Brokerage, exchange, clearance fees and payments for order flow, net (168,683) (4,189)   (172,872) (50,070) (10,024) (3,536) (63,630)
Interest and dividends, net (17,055) (2,010)   (19,065) (10,395) (2,754) 38  (13,111)
Adjusted Net Trading Income $474,018   $78,096   $—   $552,114   $107,540   $28,348   $(2,100) $133,788  
                 
                 
  Six Months Ended June 30, 2020 Six Months Ended June 30, 2019
  Global Equities Global
FICC,
Options
and Other
 Unallocated
(1)
 Total Market Making Global Equities Global
FICC,
Options
and Other
 Unallocated
(1)
 Total
Market Making
Trading income, net $1,368,715  $178,632  $  $1,547,347  $371,677  $90,916  $(1,904) $460,689 
Commissions, net and technology services 136      136  9,989  (28)   9,961 
Brokerage, exchange, clearance fees and payments for order flow, net (292,922) (16,554)   (309,476) (111,591) (20,712) 2,106  (130,197)
Interest and dividends, net (30,149) (3,469)   (33,618) (22,927) (5,743) (198) (28,868)
Adjusted Net Trading Income $1,045,780   $158,609   $—   $1,204,389   $247,148   $64,433   $  $311,585  

(1) Under our methodology for recording ‘Trading Income, Net’ in our condensed consolidated statements of comprehensive income, we recognize revenues based on the exit price of assets in accordance with applicable U.S. GAAP rules, and when we calculate Adjusted Net Trading Income for corresponding reporting periods, we start with trading income, net. By contrast, when we calculate Adjusted Net Trading Income by category, we recognize revenues on a daily basis, and as a result prices used in recognizing revenues may differ. Because we provide liquidity on a global basis, across asset classes and time zones, the timing of any particular Adjusted Net Trading Income calculation can defer or accelerate the amount in a particular asset class from one day to another, and, at the end of a reporting period, from one reporting period to another. The purpose of the Unallocated category is to ensure that Adjusted Net Trading Income by category sums to total Adjusted Net Trading Income, which can be reconciled to Trading Income, Net, calculated in accordance with GAAP. We do not allocate any resulting differences based on the timing of revenue recognition.

Financial Condition

As of June 30, 2020, Virtu had $748.0 million in cash, cash equivalents and restricted cash, and total long-term debt outstanding in an aggregate principal amount of $1,768.9 million.

Earnings Conference Call Information

Virtu Financial will host a conference call to review its second quarter 2020 financial performance today, August 7th, at 8:30 a.m. ET. Members of the public may listen to the conference call through an audio webcast through the Investor Relations section of the firm’s website ir.virtu.com/investor-relations.

Website Information

We routinely post important information for investors on the Investor Relations section of our website, ir.virtu.com/investor-relations and also from time to time may use social media channels, including our Twitter account (twitter.com/virtufinancial) and our LinkedIn account (linkedin.com/company/virtu-financial), as an additional means of disclosing public information to investors, the media and others interested in us. It is possible that certain information we post on our website and on social media could be deemed to be material information, and we encourage investors, the media and others interested in us to review the business and financial information we post on our website and on the social media channels identified above, in addition to following our press releases, SEC filings, public conference calls, presentations and webcasts. The information contained on, or that may be accessed through, our website and our social media channels is not incorporated by reference into, and is not a part of, this document.

Non-GAAP Financial Measures and Other Items

To supplement our unaudited condensed consolidated financial statements presented in accordance with generally accepted accounting principles ("GAAP"), we use the following non-GAAP measures of financial performance:

  • "Adjusted Net Trading Income", which is the amount of revenue we generate from our market making activities, or trading income, net, plus commissions, net and technology services, plus interest and dividends income and expense, net, less direct costs associated with those revenues, including brokerage, exchange, clearance fees and payments for order flow, net. Management believes that this measurement is useful for comparing general operating performance from period to period. Although we use Adjusted Net Trading Income as a financial measure to assess the performance of our business, the use of Adjusted Net Trading Income is limited because it does not include certain material costs that are necessary to operate our business. Our presentation of Adjusted Net Trading Income should not be construed as an indication that our future results will be unaffected by revenues or expenses that are not directly associated with our market making activities.
     
  • "EBITDA", which measures our operating performance by adjusting Net Income to exclude financing interest expense on our long-term borrowings, debt issue cost related to debt refinancing, prepayment, and commitment fees, depreciation and amortization, amortization of purchased intangibles and acquired capitalized software, and income tax expense, and "Adjusted EBITDA", which measures our operating performance by further adjusting EBITDA to exclude severance, transaction advisory fees and expenses, termination of office leases, charges related to share based compensation and other expenses, which includes reserves for legal matters, COVID-19 one-time costs and donations and Other net, and “Adjusted EBITDA Margin”, which compares Adjusted EBITDA to Adjusted Net Trading Income.
     
  • “Normalized Adjusted Net Income”, “Normalized Adjusted Net Income before income taxes”, “Normalized provision for income taxes”, and “Normalized Adjusted EPS”, which we calculate by adjusting Net Income to exclude certain items and other non-cash items, assuming that all vested and unvested non-voting common interest units in Virtu Financial LLC have been exchanged for shares of our Class A common stock, and applying an effective tax rate, which was approximately 24%.
     
  • “Adjusted Operating Expenses”, which we calculate by adjusting total operating expenses to exclude severance, share based compensation, reserves for legal matters, termination of office leases, connectivity early termination and write-down of assets.

Adjusted Net Trading Income, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Normalized Adjusted Net Income, Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes, and Normalized Adjusted EPS and Adjusted Operating Expenses are non-GAAP financial measures used by management in evaluating operating performance and in making strategic decisions. Additional information provided regarding the breakdown of Total Adjusted Net Trading Income by category is also a non-GAAP financial measure but is not used by the Company in evaluating operating performance and in making strategic decisions. In addition, these non-GAAP financial measures or similar non-GAAP measures are used by research analysts, investment bankers and lenders to assess our operating performance. Management believes that the presentation of Adjusted Net Trading Income, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Normalized Adjusted Net Income, Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes and Normalized Adjusted EPS provide useful information to investors regarding our results of operations because they assist both investors and management in analyzing and benchmarking the performance and value of our business. Adjusted Net Trading Income, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Normalized Adjusted Net Income, Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes and Normalized Adjusted EPS provide indicators of general economic performance that are not affected by fluctuations in certain costs or other items. Accordingly, management believes that these measurements are useful for comparing general operating performance from period to period. Furthermore, our credit agreement contains tests based on metrics similar to Adjusted EBITDA. Other companies may define Adjusted Net Trading Income, Adjusted EBITDA, Adjusted EBITDA Margin, Normalized Adjusted Net Income, Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes and Normalized Adjusted EPS differently, and as a result our measures of Adjusted Net Trading Income, Adjusted EBITDA, Adjusted EBITDA Margin, Normalized Adjusted Net Income, Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes and Normalized Adjusted EPS may not be directly comparable to those of other companies. Although we use these non-GAAP financial measures as financial measures to assess the performance of our business, such use is limited because they do not include certain material costs necessary to operate our business.

Adjusted Net Trading Income, EBITDA, Adjusted EBITDA, Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes, Normalized Adjusted Net Income and Normalized Adjusted EPS should be considered in addition to, and not as a substitute for, Net Income in accordance with U.S. GAAP as a measure of performance. Our presentation of Adjusted Net Trading Income, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Normalized Adjusted Net Income, Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes and Normalized Adjusted EPS should not be construed as an indication that our future results will be unaffected by unusual or nonrecurring items. Adjusted Net Trading Income, Normalized Adjusted Net Income, Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes, Normalized Adjusted EPS and our EBITDA-based measures have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under U.S. GAAP. Some of these limitations are:

  • they do not reflect every cash expenditure, future requirements for capital expenditures or contractual commitments;
  • our EBITDA-based measures do not reflect the significant interest expense or the cash requirements necessary to service interest or principal payment on our debt;
  • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced or require improvements in the future, and our EBITDA-based measures do not reflect any cash requirement for such replacements or improvements;
  • they are not adjusted for all non-cash income or expense items that are reflected in our statements of cash flows;
  • they do not reflect the impact of earnings or charges resulting from matters we consider not to be indicative of our ongoing operations; and
  • they do not reflect limitations on our costs related to transferring earnings from our subsidiaries to us.

Because of these limitations, Adjusted Net Trading Income, EBITDA, Adjusted EBITDA, Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes, Normalized Adjusted Net Income and Normalized Adjusted EPS are not intended as alternatives to Net Income as indicators of our operating performance and should not be considered as measures of discretionary cash available to us to invest in the growth of our business or as measures of cash that will be available to us to meet our obligations. We compensate for these limitations by using Adjusted Net Trading Income, EBITDA, Adjusted EBITDA, Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes, Normalized Adjusted Net Income and Normalized Adjusted EPS along with other comparative tools, together with U.S. GAAP measurements, to assist in the evaluation of operating performance. These U.S. GAAP measurements include Net Income, cash flows from operations and cash flow data. See below a reconciliation of each non-GAAP measure to the most directly comparable GAAP measure.


 Virtu Financial, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income (Unaudited)

  Three Months Ended
June 30,
 Six Months Ended
June 30,
(in thousands, except share and per share data) 2020 2019 2020 2019
         
Revenues:        
Trading income, net $743,996  $205,923  $1,546,461  $463,463 
Interest and dividends income 9,340  24,162  35,856  53,293 
Commissions, net and technology services 147,736  145,120  318,481  220,267 
Other, net 4,831  (104) 5,726  (1,490)
Total revenues 905,903  375,101  1,906,524  735,533 
         
Operating Expenses:        
Brokerage, exchange, clearance fees and payments for order flow, net 203,503  99,487  377,321  187,101 
Communication and data processing 55,662  54,423  110,689  96,237 
Employee compensation and payroll taxes 120,934  83,702  291,292  191,540 
Interest and dividends expense 28,841  36,824  70,281  82,193 
Operations and administrative 21,737  31,453  48,867  50,970 
Depreciation and amortization 16,713  14,810  34,073  31,260 
Amortization of purchased intangibles and acquired capitalized software 18,954  20,606  37,912  31,528 
Termination of office leases 7  65,207  283  65,208 
Debt issue cost related to debt refinancing, prepayment and commitment fees 13,195  (1,319) 17,366  7,894 
Transaction advisory fees and expenses 86  1,798  274  16,907 
Financing interest expense on long-term borrowings 21,736  34,689  47,406  57,478 
Total operating expenses 501,368  441,680  1,035,764  818,316 
         
Income (loss) before income taxes and noncontrolling interest 404,535  (66,579) 870,760  (82,783)
Provision for (benefit from) income taxes 69,250  (11,094) 147,237  (13,679)
Net income (loss) $335,285  $(55,485) $723,523  $(69,104)
         
Noncontrolling interest (136,143) 25,594  (303,312) 32,540 
         
Net income (loss) available for common stockholders $199,142  $(29,891) $420,211  $(36,564)
         
Earnings (loss) per share:        
Basic $1.59  $(0.27) $3.39  $(0.34)
Diluted $1.58  $(0.27) $3.38  $(0.34)
         
Weighted average common shares outstanding        
Basic 121,527,673  112,828,240  120,642,415  110,076,375 
Diluted 122,238,904  112,828,240  121,013,690  110,076,375 
         
Comprehensive income:        
Net income (loss) $335,285  $(55,485) $723,523  $(69,104)
Other comprehensive income (loss)        
Foreign exchange translation adjustment, net of taxes 6,444  884  (3,952) (2,860)
Net change in unrealized cash flow hedges gains (losses), net of taxes (9,137)   (64,739)  
Comprehensive income (loss) $332,592  $(54,601) $654,832  $(71,964)
Less: Comprehensive income (loss) attributable to noncontrolling interest (135,018) 25,258  (273,541) 33,812 
Comprehensive income (loss) available for common stockholders $197,574  $(29,343) $381,291  $(38,152)
 
 

Virtu Financial, Inc. and Subsidiaries
Reconciliation to Non-GAAP Operating Data (Unaudited)

The following tables reconcile Condensed Consolidated Statements of Comprehensive Income to arrive at Adjusted Net Trading Income, EBITDA, Adjusted EBITDA, and selected Operating Margins.

  Three Months Ended
June 30,
 Six Months Ended
June 30,
(in thousands, except percentages) 2020 2019 2020 2019
         
Reconciliation of Trading income, net to Adjusted Net Trading Income        
Trading income, net $743,996  $205,923  $1,546,461  $463,463 
Commissions, net and technology services 147,736  145,120  318,481  220,267 
Interest and dividends income 9,340  24,162  35,856  53,293 
Brokerage, exchange, clearance fees and payments for order flow, net (203,503) (99,487) (377,321) (187,101)
Interest and dividends expense (28,841) (36,824) (70,281) (82,193)
Adjusted Net Trading Income $668,728  $238,894  $1,453,196  $467,729 
         
Reconciliation of Net Income to EBITDA and Adjusted EBITDA        
Net income (loss) 335,285  (55,485) 723,523  (69,104)
Financing interest expense on long-term borrowings 21,736  34,689  47,406  57,478 
Debt issue cost related to debt refinancing, prepayment and commitment fees 13,195  (1,319) 17,366  7,894 
Depreciation and amortization 16,713  14,810  34,073  31,260 
Amortization of purchased intangibles and acquired capitalized software 18,954  20,606  37,912  31,528 
Provision for income taxes 69,250  (11,094) 147,237  (13,679)
EBITDA $475,133  $2,207  $1,007,517  $45,377 
         
Severance (38) 7,873  4,161  61,224 
Transaction advisory fees and expenses 86  1,798  274  16,907 
Termination of office leases 7  65,208  283  65,208 
Other (5,935) 104  980  1,491 
Share based compensation 16,505  11,983  42,249  21,796 
Charges related to share based compensation at IPO, Amended and Restated 2015 Management Incentive Plan   (9)   1,385 
Adjusted EBITDA $485,758  $89,164  $1,055,464  $213,388 
         
Selected Operating Margins        
Net Income Margin (1) 50.1% (23.2)% 49.8% (14.8)%
EBITDA Margin (2) 71.1% 0.9% 69.3% 9.7%
Adjusted EBITDA Margin (3) 72.6% 37.3% 72.6% 45.6%
         
1 Calculated by dividing net income by Adjusted Net Trading Income.        
2 Calculated by dividing EBITDA by Adjusted Net Trading Income.        
3 Calculated by dividing Adjusted EBITDA by Adjusted Net Trading Income.        
         
         

Virtu Financial, Inc. and Subsidiaries
Reconciliation to Non-GAAP Operating Data (Unaudited)
(Continued)

The following tables reconcile Condensed Consolidated Statements of Comprehensive Income to arrive at Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes, Normalized Adjusted Net Income and Normalized Adjusted EPS.

  Three Months Ended
June 30,
 Six Months Ended
June 30,
(in thousands, except share and per share data) 2020 2019 2020 2019
         
Reconciliation of Net Income to Normalized Adjusted Net Income        
Net income (loss) $335,285   $(55,485) $723,523   $(69,104)
Provision for (benefit from) income taxes 69,250   (11,094) 147,237   (13,679)
Income (loss) before income taxes and noncontrolling interest $404,535   $(66,579) $870,760   $(82,783)
Amortization of purchased intangibles and acquired capitalized software 18,954   20,606   37,912   31,528  
Debt issue cost related to debt refinancing, prepayment and commitment fees 13,195   (1,319) 17,366   7,894  
Severance (38) 7,873   4,161   61,224  
Transaction advisory fees and expenses 86   1,798   274   16,907  
Termination of office leases   65,208   283   65,208  
Other (5,935) 104   980   1,491  
Share based compensation 16,505   11,983   42,249   21,796  
Charges related to share based compensation at IPO, Amended and Restated 2015 Management Incentive Plan —   (9) —   1,385  
Normalized Adjusted Net Income before income taxes $447,309   $39,665   $973,985   $124,650  
Normalized provision for income taxes (1) 107,354   9,520   233,757   29,916  
Normalized Adjusted Net Income $339,955   $30,145   $740,228   $94,734  
         
Weighted Average Adjusted shares outstanding (2) 197,050,236   194,217,318   196,049,119   192,959,477  
         
Normalized Adjusted EPS $1.73   $0.16   $3.78   $0.49  
         
(1) Reflects U.S. federal, state, and local income tax rate applicable to corporations of approximately 24% for 2020 and 24% for 2019.
(2) Assumes that (1) holders of all vested and unvested Virtu Financial LLC Units (together with corresponding shares of Class C common stock), have exercised their right to exchange such Virtu Financial LLC Units for shares of Class A common stock on a one-for-one basis, and (2) holders of all Virtu Financial LLC Units (together with corresponding shares of Class D common stock), have exercised their right to exchange such Virtu Financial LLC Units for shares of Class B common stock on a one-for-one basis, and subsequently exercised their right to convert the shares of Class B common stock into shares of Class A common stock on a one-for-one basis.
 
 

Virtu Financial, Inc. and Subsidiaries
Condensed Consolidated Statements of Financial Condition (Unaudited)

(in thousands, except share data) June 30,
2020
 December 31,
2019
     
Assets    
Cash and cash equivalents $670,770  $732,164 
Cash and securities segregated under regulations and other 77,245  41,116 
Securities borrowed 1,435,777  1,928,763 
Securities purchased under agreements to resell 244,242  143,032 
Receivables from broker-dealers and clearing organizations 2,441,283  1,318,584 
Receivables from customers 275,506  103,531 
Trading assets, at fair value 2,641,593  2,765,690 
Property, equipment and capitalized software, net 114,080  116,089 
Operating lease right-of-use assets 294,531  314,526 
Goodwill 1,148,926  1,148,926 
Intangibles (net of accumulated amortization) 491,726  529,638 
Deferred taxes 195,844  214,671 
Other assets 257,352  252,640 
Total assets 10,288,875  9,609,370 
     
Liabilities and equity    
Liabilities    
Short-term borrowings, net 26,274  73,486 
Securities loaned 1,204,114  1,600,099 
Securities sold under agreements to repurchase 312,568  340,742 
Payables to broker-dealers and clearing organizations 1,200,212  826,750 
Payables to customers 148,519  89,719 
Trading liabilities, at fair value 2,753,847  2,497,958 
Tax receivable agreement obligations 255,996  269,282 
Accounts payable and accrued expenses and other liabilities 614,220  399,168 
Operating lease liabilities 339,602  365,364 
Long-term borrowings, net 1,732,516  1,917,866 
Total liabilities 8,587,868  8,380,434 
     
Total equity 1,701,007  1,228,936 
     
Total liabilities and equity $10,288,875  $9,609,370 
     
  As of June 30, 2020
Ownership of Virtu Financial LLC Interests: Interests %
Virtu Financial, Inc. - Class A Common Stock and Restricted Stock Units 126,293,142  64.1%
Non-controlling Interests (Virtu Financial LLC) 70,618,679  35.9%
Total Virtu Financial LLC Interests 196,911,821  100.0%
 

About Virtu Financial, Inc.

Virtu is a leading financial services firm that leverages cutting-edge technology to provide execution services and data, analytics and connectivity products to its clients and deliver liquidity to the global markets. Leveraging its global market making expertise and infrastructure, Virtu provides a robust product suite including offerings in execution, liquidity sourcing, analytics and broker-neutral, multi-dealer platforms in workflow technology. Virtu’s product offerings allow clients to trade on hundreds of venues across 50+ countries and in multiple asset classes, including global equities, ETFs, foreign exchange, futures, fixed income and myriad other commodities. In addition, Virtu’s integrated, multi-asset analytics platform provides a range of pre and post-trade services, data products and compliance tools that clients rely upon to invest, trade and manage risk across global markets.

Cautionary Note Regarding Forward-Looking Statements

This press release may contain “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements regarding Virtu Financial, Inc.’s (“Virtu’s”, the “Company’s” or “our”) business that are not historical facts are forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by which, such performance or results will be achieved. The Company assumes no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, and if the Company does update one or more forward-looking statements, no inference should be drawn that the Company will make additional updates with respect thereto or with respect to other forward-looking statements. Forward-looking statements are based on information available at the time and/or management’s good faith belief with respect to future events, and is subject to risks and uncertainties, some or all of which are not predictable or within Virtu’s control, that could cause actual performance or results to differ materially from those expressed in the statements. Those risks and uncertainties include, without limitation: risks relating to the COVID-19 pandemic, including the possible effects of the economic conditions worldwide resulting from the COVID-19 pandemic and governmental and other responses thereto; fluctuations in trading volume and volatilities in the markets in which we operate; the ability of our trading counterparties and various clearing houses to perform their obligations to us; the performance and reliability of our customized trading platform; the risk of material trading losses from our market making activities; swings in valuations in securities or other instruments in which we hold positions; increasing competition and consolidation in our industry; the effect of the acquisition of Investment Technology Group, Inc. (“ITG”) on existing business relationships, operating results, and ongoing business operations generally; the significant costs and significant indebtedness that we have incurred in connection with the acquisition of ITG; the risk that we may encounter significant difficulties or delays in integrating the two businesses and the anticipated benefits, cost savings and synergies or capital release may not be achieved; the assumption of potential liabilities relating to ITG's business; the risk that cash flow from our operations and other available sources of liquidity will not be sufficient to fund our various ongoing obligations, including operating expenses, capital expenditures, debt service and dividend payments; regulatory and legal uncertainties and potential changes associated with our industry, particularly in light of increased attention from media, regulators and lawmakers to market structure and related issues; potential adverse results from legal or regulatory proceedings; our ability to remain technologically competitive and to ensure that the technology we utilize is not vulnerable to security risks, hacking and cyber-attacks; risks associated with third party software and technology infrastructure. For a discussion of the risks and uncertainties which could cause actual results to differ from those contained in forward-looking statements, see Virtu’s Securities and Exchange Commission filings, including but not limited to Virtu’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the SEC.

CONTACT
   
  Investor Relations
  Deborah Belevan, CPA, IRC
  Virtu Financial, Inc.
  investor_relations@virtu.com
   
  Media Relations
  Andrew Smith
  media@virtu.com

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