Virtu Financial : Announces Fourth Quarter 2020 Results

Virtu Announces Fourth Quarter and Full Year 2020 Results

Authorizes Additional $70 Million Share Repurchase

NEW YORK, NY, February 11, 2021 - 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 fourth quarter ended and full year ended December 31, 2020.

Fourth Quarter 2020:

• • Net income of $197.7 million; Normalized Adjusted Net Income1 of $234.0 million

• • Basic earnings per share of $0.89 and diluted earnings per share of $0.88; Normalized Adjusted EPS1 of $1.18

• • Total revenues of $676.7 million; Trading income, net, of $505.5 million; Adjusted Net Trading Income1 of $455.9 million

• • Adjusted EBITDA1 of $343.9 million; Adjusted EBITDA Margin1 of 75.4%

• • Additional $70 million share repurchase authorized, bringing total to $170 million authorized; $50 million executed to date

Full Year 2020:

• • Net income of $1,120.9 million; Normalized Adjusted Net Income1 of $1,135.1 million

• • Basic earnings per share of $5.19 and diluted earnings per share of $5.16; Normalized Adjusted EPS1 of $5.76

• • Total revenues of $3,239.3 million; Trading income, net, of $2,493.2 million; Adjusted Net Trading Income1 of $2,271.4 million

• • Adjusted EBITDA1 of $1,648.0 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 March 15, 2021 to shareholders of record as of March 1, 2021.

"Capping off a record breaking 2020, we delivered exceptional performance globally in the fourth quarter. I'm extremely proud of the team for their dedication in executing amidst a challenging global situation", said Douglas Cifu, CEO of Virtu Financial. "Our market making segment played a critical role in the markets by seamlessly executing trades, and ultimately delivering $1.3 billion of price improvement to individual investors. Our Execution Services segment had a record quarter, delivering outstanding service and further enhancements to our best-in-class products that drive value across the entire trade lifecycle and assist our clients in navigating our ever changing market landscape."

Mr. Cifu continued: "Turning the page on 2020, we enter our next chapter of growth in 2021 stronger than ever with a clear trajectory that includes an optimized expense base and reduced levels of debt, thanks to the meaningful progress we've made in integrating our acquisitions and returning excess cash flow to shareholders."

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

Financial Results

Fourth Quarter 2020:

Total revenues increased 69.3% to $676.7 million for this quarter, driven by the heightened levels of volatility, bid-ask spreads and trading volumes across global markets and asset classes due to the COVID-19 pandemic, compared to $399.6 million for the same period in 2019. Trading income, net, increased 121.0% to $505.5 million for this quarter, compared to $228.7 million for the same period in 2019. Net income totaled $197.7 million for this quarter, compared to a net loss of $29.4 million in the prior year quarter, which included costs related to the ITG acquisition.

Basic earnings per share for this quarter was $0.89 and diluted earnings per share was $0.88, compared to a basic and diluted loss per share of $0.16 for the same period in 2019.

Adjusted Net Trading Income increased 77.3% to $455.9 million for this quarter, compared to $257.2 million for the same period in 2019. Adjusted EBITDA increased 200.1% to $343.9 million for this quarter, compared to $114.6 million for the same period in 2019.

Normalized Adjusted Net Income, removing one-time integration costs and non-cash items, increased 355.4% to $234.0 million for this quarter, compared to $51.4 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 $1.18 for this quarter, compared to $0.27 for the same period in 2019.

Full Year 2020:

Total revenues increased 113.5% to $3,239.3 million for this year, also impacted by the heightened levels of volatility, bid-ask spreads and trading volumes across global markets and asset classes due to the COVID-19 pandemic, compared to $1,517.5 million for 2019. Trading income, net, increased 173.3% to $2,493.2 million for this year, compared to $912.3 million for 2019. Net income was $1,120.9 million for this year compared to a net loss of $103.7 million for 2019, which included costs related to the ITG acquisition.

Basic earnings per share for this year was $5.19 and diluted earnings per share was $5.16, compared to a basic and diluted loss per share of $0.53 for 2019.

Adjusted Net Trading Income increased 133.0% to $2,271.4 million for this year, compared to $974.7 million for 2019.

Adjusted EBITDA increased 281.6% to $1,648.0 million for this year, compared to $431.9 million for 2019.

Normalized Adjusted Net Income, removing one-time integration costs and non-cash items, increased 511.2% to $1,135.1 million for this year, compared to $185.7 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 $5.76 for 2020, compared to $0.96 for 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 months and years ended December 31, 2020 and 2019.

Total revenues by segment

(in thousands, unaudited)

Three Months Ended December 31, 2020

Three Months Ended December 31, 2019

Market Making

Execution ServicesCorporateTotalMarket Making

Execution ServicesCorporateTotal

Trading income, net

$ 466,006

$ 39,486

$

• - $ 505,492

$ 228,104

$

601

$

- $ 228,705

Commissions, net and technology services

• 42,926 105,250

Interest and dividends income

Other, net

15,269 4,841

62 4,725

- -

(1,869)

148,176 15,331 7,697

6,312 132,340 - 138,652

31,792

341 - 32,133

(192)

133

190 131

Total Revenues

$ 529,042

$ 149,523

• $ (1,869)

$ 676,696

$ 266,016

$ 133,415

• $ 190

$ 399,621

Year Ended December 31, 2020

Year Ended December 31, 2019

Market Making

Execution ServicesCorporateTotalMarket Making

Execution ServicesCorporateTotal

Trading income, net

$ 2,455,182

$ 38,066

$

• - $ 2,493,248

$

• 908,328 $ 3,988

$

- $ 912,316

Commissions, net and technology services

• 52,453 548,057

  Interest and dividends income

  61,485

  634

  - -

  Other, net

• 24,222 63,386

(4,154)

600,510 62,119 83,454

23,526 96,197

475,018 - 498,544

12,581 - 108,778

43

149

(2,338)

(2,146)

Total Revenues

$ 2,593,342

$ 650,143

• $ (4,154)

$ 3,239,331

$ 1,028,094

$ 491,736

• $ (2,338)

$ 1,517,492

Reconciliation of trading income, net to Adjusted Net Trading Income by operating segment (in thousands, unaudited)

Three Months Ended December 31, 2020

Market Making

Execution Services

Trading income, net

Commissions, net and technology services

Interest and dividends income

Brokerage, exchange, clearance fees and payments for order flow, net

Interest and dividends expense

Adjusted Net Trading Income

$ 466,006

$ 39,486

• 42,926 105,250

15,269

62

• (175,760) (9,314)

Corporate

$

Total

• - $ 505,492

Three Months Ended December 31, 2019

Market Making

Execution ServicesCorporateTotal

$ 228,104

$

601

$

- $ 228,705

- - - -

148,176 15,331

6,312 132,340 - 138,652

31,792

341 - 32,133

(185,074)

• (74,007) (26,991)

(27,653)

- (100,998)

(340)

(27,993)

(40,905)

(395) - (41,300)

$ 320,788

$ 135,144

$

-

$ 455,932

$ 151,296

$ 105,896

$

-

$ 257,192

Year Ended December 31, 2020

Market Making

Execution Services

Trading income, net

Commissions, net and technology services

Interest and dividends income

Brokerage, exchange, clearance fees and payments for order flow, net

Interest and dividends expense

Adjusted Net Trading Income

$ 2,455,182

$ 38,066

• 52,453 548,057

Corporate

$

Total

• - $ 2,493,248

Year Ended December 31, 2019

Market Making

Execution ServicesCorporate

$ 908,328

$ 3,988

$

• - $ 912,316

  - -

  600,510 62,119

  23,526 96,197

  475,018 12,581

• - 498,544

  61,485

  634

• - 108,778

  (662,994)

  (95,849)

  - -

  (758,843)

  (277,668)

  (109,220)

• - (386,888)

  (123,715)

  (1,934)

  (125,649)

  (145,782)

  (12,257)

• - (158,039)

$ 1,782,411

$ 488,974

$

-

$ 2,271,385

$ 604,601

$ 370,110

$

-

$ 974,711

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

Three Months Ended December 31, 2020

Global EquitiesTotalThree Months Ended December 31, 2019

Global FICC, Options and OtherUnallocated

(1)Total Market MakingGlobal Equities

Global FICC, Options and OtherUnallocated

(1)Total Market Making

Trading income, net

Commissions, net and technology services

Brokerage, exchange, clearance fees and payments for order flow, net

Interest and dividends, net

Adjusted Net Trading Income

$ 427,925

• $ 38,081

  $

  • - $ 466,006

  $ 192,507

  • $ 35,597

    $

    - $ 228,104

    42,926

• -

  - - -

  42,926

  6,312

  • -

    -

    6,312

    (169,153)

• (6,607)

  (175,760)

  (65,095)

  (8,912) - (74,007)

  (10,293) $ 291,405

  (2,091)

  (12,384)

  (7,519) $ 126,205

  (1,594) - (9,113)

• $ 29,383

$

-

$ 320,788

• $ 25,091

$

-

$ 151,296

Year Ended December 31, 2020

Global

Global Equities

FICC, Options and Other

Trading income, net

Commissions, net and technology services

Brokerage, exchange, clearance fees and payments for order flow, net

Interest and dividends, net

Adjusted Net Trading IncomeUnallocated

(1)Year Ended December 31, 2019

Total Market Making

$ 2,182,234

$ 272,948

$

• - $ 2,455,182

(631,354)

Global

Global Equities

FICC, Options and Other

(31,640)

Unallocated

(1)Total Market Making

$ 730,215

$ 178,639

• $ (526)

  $ 908,328

  52,453

  -

  - - -

  52,453

  23,554

  (28)

  -

  23,526

  (662,994)

  (238,590)

  (39,648)

  570 (277,668)

  (54,557)

  (7,673)

  (62,230)

  (39,335)

  (10,090)

  (160) (49,585)

  $ 1,548,776

  $ 233,635

  $

  -

  $ 1,782,411

  $ 475,844

  $ 128,873

• $ (116)

$ 604,601