Virtu Financial, Inc. Class A Aktie

Hello, everyone. Thank you for joining us, and welcome to the Virtu Financial First Quarter 2026 Earnings Call. [Operator Instructions] I will now hand the conference over to Matthew Sandberg, Head of IR and FP&A. Matthew, please go ahead.

Thank you. Good morning, everyone. Our first quarter 2026 results were released this morning and are available on our website. With us today on this morning's call, we have Aaron Simons, our Chief Executive Officer; Cindy Lee, our Chief Financial Officer; and Joe Molluso, our Co-President and Co-Chief Operating Officer. We will begin with brief prepared remarks and then take your questions.

First, a few reminders. Today's call may include forward-looking statements, which represent Virtu's current belief regarding future events and are, therefore, subject to risks, assumptions and uncertainties, which may be outside the company's control. Please note that our actual results and financial conditions may differ materially from what is indicated in these forward-looking statements.

It is important to note that any forward-looking statements made on this call are based on information presently available to the company, and we do not undertake to update or revise any forward-looking statements as new information becomes available. We refer you to disclaimers in our press release and encourage you to review the description of risk factors contained in our annual report, Form 10-K and other public filings.

During today's call, in addition to GAAP measures, we may refer to certain non-GAAP measures, including adjusted net trading income, adjusted net income, adjusted EBITDA and adjusted EBITDA margin. These non-GAAP measures should be considered as supplemental to and not as superior to financial measures as reported in accordance with GAAP.

We direct listeners to consult the Investor portion of our website, where you'll find additional supplemental information referred to on this call as well as a reconciliation of non-GAAP measures to the equivalent GAAP term in the earnings materials with an explanation of why we deem this information to be meaningful as well as how management uses these measures.

With that, I'd like to turn the call over to Aaron.

Thanks, Matt. Good morning, everyone. Again, just like very brief remarks before Cindy goes over the detailed results, and we move to Q&A. But just wanted to highlight that our first quarter results show that we're executing on our plan to grow through investing in our infrastructure, acquiring top talent and expanding our capital base.

Following that plan in the last 7 months, we have added over $500 million in new trading capital and maintained a return on our total capital in excess of 100%. Our results for the first quarter were among the best in Virtu's history, aided by an operating environment, which was even more favorable than the fourth quarter of last year.

Within the context of that environment, all of our businesses performed well, customer and noncustomer Market Making as well as Execution Services. We've provided additional perspective on the quarter in our detailed financial supplement, and we'll be answering your questions shortly.

First though, Cindy Lee, our Chief Financial Officer, will review the financial results for the quarter.

Thanks, Aaron. Good morning, everyone. For the first quarter of 2026, we generated adjusted net trading income, or ANTI, of $12.9 million per day or a total of $787 million. This was the highest quarter total ever for Virtu. Turning to our segment performance, Market Making reported ANTI of $10.4 million per day for Q1, Execution Services reached $2.5 million per day for the quarter and $2.1 million on a trailing 12-month basis.

This is the eighth consecutive quarter of increased total [ ANTI ], An indication of the substantial progress we have been noting within the VES business. This performance reflects the investments we have made in technology, our focus on client acquisition and the expansion of our product offering.

Both of our operating segments benefited from generally favorable market conditions and strong execution by our team. Our profitability this quarter was robust. We generated $521 million in adjusted EBITDA, representing a 66% margin. Adjusted EPS was $2.24. For the last 12 months, we recorded $1.6 billion in adjusted EBITDA, a 66% margin and the $6.66 in adjusted EPS.

These numbers all represent high since early 2021 and an all-time quarterly high in case of adjusted EPS, underscoring the operating leverage inherent in our business.

On Slide 7 of our supplemental materials will provide a summary of our operating expenses. Our first quarter 2026 cash compensation ratio was at 22%, which was within the historical range. The increase in compensation expense reflects our continued focus on retaining and acquiring top talent across the organization, particularly in trading and technology.

Turning to capital. our invested capital stands at $2.6 billion as of March 31, while generating an average return of 107% on the capital over the past year. We will continue to expand our capital base, strengthening our infrastructure and deploy capital where we see the greatest opportunities, all while maintaining our quarterly dividend of $0.24 per share.

We will now take your questions.

[Operator Instructions] Your first question comes from the line of Patrick Moley from Piper Sandler.

Congrats on the strong quarter. I think the environment across the board was very good, but you guys seem to outperform that. So I was hoping maybe you could just level set with us and talk about where you saw the most opportunity in the quarter. And then maybe with with ANTI up where it is the highest level on record, how should we think about the sustainability of that in this environment?

Patrick, it's Joe. You're right. The environment was very robust, as I think you noted. And I think we did outperform. It's difficult to kind of pinpoint growth since we've had this growth pivot. It's across the board.

And I think for the last couple of quarters, our focus has been on growing the firm. But that means a lot of things across the board in a lot of asset classes and a lot of geographies. And it naturally includes growth and investment in asset classes that maybe we were historically less focused on, but we want to accelerate growth in.

But it's hard to pinpoint, right? So I think in the past, we've talked about crypto we've talked about options, right? But our growth -- we want to make sure that it's understood, the growth plan isn't limited to a handful of narrow areas, it's really broad-based and focused on a lot of different areas. And it includes all the things that we've been talking about, capital includes personnel. It includes investment in technology, et cetera.

Okay. And then I mean, was there -- anything you can share in terms of asset classes, where you maybe saw outsized growth this quarter? I can think of maybe the metals market, we saw a lot of activity, especially among retail in the earlier part of the quarter. So anything there that you can share on asset classes?

We made the point last quarter to remind the world that Virtu's performance is not solely based on retail investor participation, which, by the way, remains strong. So the customer Market Making business has done very well. But I think we saw continued outstanding performance and growth in what we call prop Market Making.

And the headline volatility in the quarter, obviously, from exogenous events contributed, but there's also a lot of underlying growth in trades and investments that have been made over a long period of time. We want to get away from talking about specific areas, but I think it's pretty obvious in the quarter, if you look at just the volatility in the world and what's been going on that, that was a good environment, that was helped by our continued investment and everything else we've been talking about.

Yes, maybe I'll just add one like instead of -- and I guess it's hard like quarter-over-quarter, the environment, as we pointed out last time is the most important variable. But it's not like we found some new trade or something took off.

Really what I tried to highlight in the introductory remarks was you should think of this as what would have happened in the counterfactual world where we didn't add $500 million of new trading capital. Our P&L would not have been what it was in the first quarter, right?

I'm not saying it's a one-for-one difference, right? But it definitely was a huge factor. And so going forward, the idea is that in any environment, we should outperform where we were before with lower capital.

Okay. So maybe just if I could sneak one more in here, just a bigger-picture question. I think it was just a few quarters ago, you said you were looking to target about 10 million a day in ANTI through the cycle, and that was kind of the longer-term goal for the business.

So how should we interpret this quarter? Do you feel like we're kind of at that point where we can -- we're sort of building toward this $10 million a day through the cycle? And if not, what still needs to be done to kind of get us to that, please?

I mean the honest answer is we don't know. I mean, the trailing return on capital was over 100%. I don't think we always achieve that through like a multiyear cycle. So at points in the cycle where it's less than 100%, you can back into how much capital we might need to make 10 million a day. But in environments like this, then we need much less and we make more than 10 million a day.

Yes. But through the cycle, at the point, Patrick, is the key point in that discussion, and it makes it, it is what makes it difficult to say where we are. I think, as Aaron pointed out and I think as I pointed out in earlier calls, when we talk about goals and trading capital of $4 billion, that factors into that goal.

But it's more than that. There have been a number of investments in personnel, in people. Recruiting environment for Virtu, I think is very good. The investments in technology being stepped up, all contribute to that, right?

So you need all of those things together to execute on that. And I think, in the past, we've used terms like the medium term, like a 3-year time horizon kind of being something that when forced to give a view is something we feel comfortable giving to you.

Your next question comes from Dan Fannon at Jefferies. Your line is open.

So I wanted to just talk about what you've been doing. Obviously, you talked about $500 million of incremental capital. Can you also talk about the hiring if there's -- where you've been focused, where you are do you think in terms of the goal of what you're looking to expand and invest in internally?

Yes, sure. So there's definitely a number of areas where we're trying to hire people. So definitely, people that are in the sort of like continuum of trader to quant to researcher type role, we're trying to hire a lot of engineers, software developers. That takes time because we have a very high bar for quality, but we're trying to kind of do that as quickly as possible.

We have made a few key senior hires in the last 6 to 7 months that have started, and they're going to have an impact on the business, hopefully, in short time frame. But it is a longer-term expansion as well. I think this year, we hope to get our headcount close to 1,100.

I don't -- we don't have like an exact number. It's more about just having a sufficient number of people to do a certain level of quality work that we need done. But definitely for the foreseeable future, we're going to be pretty aggressively hiring.

Great. That's helpful. And then just in the context of that, and obviously, the revenue environment that you're operating in, how to think about expense growth would be helpful in the context of way you're thinking about either cash compensation versus previously and/or growth in the kind of more fixed cost base to support new asset classes, new personnel, all the things you're investing in.

Sure. So I think we have given some guidance on the compensation ratios. And the first quarter accrual sort of reflects where we want to be. Obviously, when you have a great quarter, it's much easier and the percentage looks lower. But as we've highlighted last few quarters, like we have been adjusting that up slightly because we are trying to attract the best talent in the business, and part of retention is competitive compensation.

But I think we are at that level. And you can see that it doesn't really affect the ratios or the EBITDA margin all that much, especially when you have a great quarter. As far as like the infrastructure investment, I mean, yes, we are going to do incrementally more of that. But already, our business has a very heavy capital expenditure profile. So I'm not sure it's going to be like so immediately obvious in the expense tables.

I don't know, Joe, if you want to add?

No, I think that's exactly where we are. We you saw the comp accrual is quarter as a nominal number, certainly looks outsized compared to the past. But as Aaron said, we want to hire the best people and pay them best-in-class. So that is -- that reflects it.

So Dan, if we have a comp accrual or if we have a comp ratio that creeps up in the future, even in a a really robust environment or even in a median environment, that will be deliberate and intentional and in our view, will be a good thing, right? If you see that. It will mean that the growth plan is being executed on and we're creating value for shareholders, but -- and we're just paying people market comps or better than market comps.

Your next question comes from Alex Blostein, Goldman Sachs.

Yes, there we go. I'm sorry about that. So a bit of a nuance question, but when we look at the trends in cost of trading sort of like kind of [ DCE ] and and payment for order flow and things like that, in the quarter, it seems to show a pretty meaningful divergence in the Market Making business. Those are down. Obviously, the trading results are up. So maybe just a little bit more granularity of what drove that?

And what I'm trying to get to, I guess, is are we starting to see some incremental benefits of internalization or things like that, that could make sort of the flow more profitable for you guys? Or is this something else went on this quarter that sort of boosted the net trading numbers in from that perspective specifically?

Thanks, Alex. The answer is all of the above. when the flow characteristics were attractive this quarter. And in addition, again, I'd go back to the answer on it's not just a retail machine, although the business -- that business had a great quarter. And again, the flow was very attractive, I think, leading to some of the things you're talking about.

But also a reminder that the business is not wholly dependent on retail and is pretty diversified, both globally and by asset class on the Market Making side. So depending on the sources of that noncustomer Market Making P&L, you could get divergence in brokerage clearing exchange as a percentage of the gross number.

I'm not sure I'd read anything permanent or long term into it. I think, over time, we're always looking to lower execution costs, we're always looking to internalize more to the extent we can and optimize. But some of that is environment dependent as opposed to just us getting better and better.

Yes. Understood. It's just the absolute divergence, not so much the percentage, was very notable. One was up a lot, the other one was down a bit. That's it. Okay.

And then, obviously, we don't want to get into a habit of calling every month, but there's been quite significant change in the backdrop this April versus last year's April and obviously, over the last couple of months. So any color you guys have on how the environment is unfolding so far in the second quarter, both on the retail side and just broadly would be super helpful.

Look, and you started your question with the correct answer, which is we really don't do this month-to-month. My only comment to you -- well, I'd say two things. One is key perspective, right? So we had an all-time high here. And that, as Aaron said, is helped by the robust environment.

Just because it's more muted, I think you said in your note, doesn't mean it isn't a very good environment. And we're only 1/3 of the way through it. But you can see the headline numbers, while not in terms of some of the numbers in the first quarter, are still very good from any perspective. So that's point 1.

Point 2 is we haven't talked about Execution Services. But if you look at the momentum in that business over the past 2 years, it has grown through the cycle, truly grown through the cycle in a number of different environments, and there's a tremendous amount of momentum there. There's client wins, there's multiple products kind of being tied together across clients. So we're looking at that as a continued growth engine as well. And that business has a tremendous amount of momentum.

Your next question comes from Kenneth Worthington at JPMorgan.

I want to go back to sort of Patrick's question to get a better sense of how the investments that you've made contribute to the capacity to profit over a cycle. And Aaron, you mentioned invested capital is up 20%. You've added headcount, you've invested in technology. you sort of implied that there's a multiplier on the 20% growth in invested capital.

How do we think about that multiplier? Is it something like 1.1? Is it 1.3? It doesn't seem like it's something like 0.9. How do we think about that multiplier over a cycle?

Ken, I think what Aaron was stating was that the ANTI, the adjusted net trading income we achieved in this quarter would not have been achieved, had we not increased our capital. I'm not sure there was any implication of a multiplier around around capital. If anything, there will be a multiplier in a good environment, but it all comes out in the return. That's it.

We put the returns -- the original purpose of that return slide was to demonstrate that we're a services business and not a kind of risk business. So I'm not sure I'd read anything into any statement about a multiplier.

What I'd say -- I'd just repeat, capital is fungible, right? We're not we can't parse or bifurcate the new capital and the old capital. But I think what we are saying is that we are able to earn more because we had a bigger capital base, because there were greater opportunities. And it's important to remember that our capital is nimble, that we remain flexible and agile with it, and it goes where the opportunities are.

Okay. Okay. Fair enough. And maybe as we think about new asset classes like predictive markets and tokenized markets, sort of what do you see as holding more promise for Virtu? And where are you thinking about focusing investments there?

I mean it's hard to say. I think we're kind of ready to be -- to trade in any market, any exchange. And it's really about where the volume goes. Tokenization might be slightly easier just because to the extent things are linked to an underlier that we already trade, it's very easy for us to value and we know the trade very well. Whereas in prediction markets, like we don't have any expertise predicting like geopolitical events. But it really depends on volume, to be honest.

Your last question comes from Michael Cyprys at Morgan Stanley.

I was hoping to dig in on Execution Services and hoping you could elaborate and unpack some of the drivers of the momentum that you're seeing across the Execution Services business. And if you can just remind us as well the top revenue contributors under the hood there and how that's evolved over the past couple of years, and how you see that mix and contributors evolving as you look out over the next couple of years.

Sure, Michael, this is Joe. I'll take that question. As I said, the business has a tremendous amount of momentum. The business has grown through the cycle. It has been a multiyear process since we acquired ITG around a common technology platform, emphasizing the penetration of these products through the customer base.

I think what we inherited and what we bought was a very siloed organization. And I think Steve Cavoli and the team there have done an amazing job of tying together a global client list that is as blue chip as it gets. There is the same client list that any -- that your firm will have.

We service -- and we service them through products that we consider best-in-class, whether it's the [ Algo ] suite or whether it is the [ analytics ] platform or the EMS Triton, right?

So I think that it's a business that's evolved that is the technology is really paying off, and that is increasing client penetration, right? And the margins have improved. The business has been rationalized. Again, we don't break out down to the EBITDA line for -- by business. When we bought ITG, it had a mid-teens EBITDA margin that is -- think of something that is best-in-class now that is a multiple of that. in terms of how that business has performed.

So I think it's just a lot of work, a lot of blocking and tackling and a great sales effort kind of tying together a diverse product offering across geographies and across different types of products to an incredible blue-chip client list.

Great. And then just a quick follow-up question on AI, clearly, very quickly advancing. I was hoping you could talk about how you see the opportunity for a agentic AI and if you could elaborate on how you're using generative and maybe even a genetic AI today across the organization. How you see that evolving? What are some of the use cases? And if you're able to quantify any sort of the benefits that you're seeing?

Sure. I'll answer that. So I mean, I think like most other companies right now, we're definitely taking a look, doing exploratory things. We do believe that with the right sort of focus and setup, it can really be a productivity enhancement for our software developers.

But at the same time, our company is really built on a code base and we employ excellent engineers to maintain it, and it's something that is really beyond the capability of current tools to think about it at a high-level reason about and design. So in our environment, introducing a bunch of technical [ debt ] of AI-generated slop is really never going to be in our business plan.

But that being said, pairing high-quality engineers with a tool that can just kind of execute it beyond human speed and do sort of like boiler plate [ grunt ] work, assist in explanations, we're definitely trying to use that internally. And I'd say it's a little early yet to determine the productivity impact, but I expect in the coming year or 2, it will have a material impact and maybe we'll have a little bit more to say.

And if I could just sneak in a quick follow-up on that. Just curious, what impact you see across the competitive landscape from these advances in AI and agentic AI?

Well, I mean, as we said in the previous call, I think the term AI is pretty overloaded. And if you just want to talk about statistical modeling, that's been a big part of competitive landscape for trading businesses for 30 years on Wall Street, and this is just like another iteration with novel advancements in models and hardware availability.

I have zero insight as to what other people are doing with "agentic AI". So I don't really feel like I can give any color there.

Your next question comes from Craig Siegenthaler at Bank of America.

Hope you're all doing well. First question on risk management. Given the strong results -- can you guys hear me [Technical Difficulty] Yes. Let me -- changing to the speakers. So can you hear me okay?

Yes, yes.

All right. Good. So given the strong results, we were curious, how do you quantify the changes in risk management that Virtu has been taking in the Market Making business over the last few quarters?

I don't think there's been any change in risk management. I got it. if you're asking the elevated P&L was the result of us taking on more risk and things we weren't doing before, the answer is no.

Okay. And Aaron, any way to quantify that?

In terms of?

Well, in terms of how you guys look at..

Yes. No, I think that's the answer, is that based on how we look at risk, no, the answer is the risk profile of the firm has not changed materially.

Got it. I think that was, Joe. Thank you, Joe. It is -- One follow-up here. Some of your market-making peers operate a hedge fund in parallel to the core business. I'm curious, why Virtu doesn't look at doing that, that could provide a whole new revenue source for the company? So just wondering how you think about that potential strategic initiative.

That is a tough one, Craig. I'm not sure which competitors you're referring to. We're a public company, obviously, and we pay -- maintain a dividend. I think you might be referring to some competitors that have been around a long time, are bigger and maybe have retained personal capital in the firm that they use to make investments or have a side-pocket hedge fund.

We haven't contemplated Virtu asset management lately, but we'll talk a few years from now and see, okay? It's -- I don't want to be misinterpreted, we're not currently contemplating anything around beginning a hedge fund.

I guess like another way to think about it, and this is again something we've highlighted on previous calls, at the moment, our business is very high sharp but capacity constrained. So acquiring a bunch of assets, we wouldn't really have a productive use for them. And in order to deploy them, we probably have to put them in far lower sharp strategies, and we already have difficulty explaining the variance in our earnings quarter-to-quarter. So I think it would just make the problem much worse.

Yes, you asked about risk management, and we don't have an infrastructure in place to really manage a sharp 1, sharp 2 hedge fund setup.

Got it. And listen, I think some of your peers sit at Citadel, Susquehanna, their hedge fund strategies are different than the market-making strategy. So I don't know if capacity is really an issue for them.

Well, Citadel is a great firm, but they began as a hedge fund. So that's a different evolution of the firm.

Well, I think you're right, right? But that's not our expertise. We don't hire a bunch of long-short [ guys ] and give them a risk allocation and say, good luck to you. Like we run highly automated electronic market making strategies backed by statistical research. That is capacity limited at the scale we're talking about.

This concludes our Q&A session. I will now turn the call back to Aaron Simons, CEO, for closing remarks.

Nothing really, but thanks, everyone, for joining, and thanks for the questions, and we'll talk to you next quarter.

This concludes today's call. Thank you for attending. You may now disconnect.

Hello, everybody, and welcome to the Virtu Financial Fourth Quarter 2025 Earnings Call. My name is Elliot, and I'll be coordinating your call today. [Operator Instructions]

I'd now like to hand over to Matt Sandberg at Virtu Financial. Please go ahead.

Thank you, and good morning, everyone. Thank you for joining us. Our fourth quarter 2025 results were released this morning and are available on our website. With us today on this morning's call, we have Aaron Simons, our Chief Executive Officer; Cindy Lee; our Chief Financial Officer; and Joe Molluso, our Co-President and Co-Chief Operating Officer. We will begin with brief prepared remarks and then take your questions.

First, if you remind us, today's call may include forward-looking statements, which represent Virtu's current belief regarding future events and are, therefore, subject to risks, assumptions and uncertainties, which may be outside the company's control. Please note that our actual results and financial conditions may differ materially from what is indicated in these forward-looking statements. It is important to note that any forward-looking statements made on this call are based on information presently available to the company, and we do not undertake to update or revise any forward-looking statements as new information becomes available.

We refer you to disclaimers in our press release and encourage you to review the description of risk factors contained in our annual report, Form 10-K and other public filings. During today's call, in addition to GAAP measures, we may refer to certain non-GAAP measures, including adjusted net trading income, adjusted net income, adjusted EBITDA and adjusted EBITDA margin. These non-GAAP measures should not -- should be considered as supplemental to and not as superior to financial measures as reported in accordance with GAAP.

We direct listeners to consult the Investor portion of our website where you'll find additional supplemental information referred to on this call as well as a reconciliation of non-GAAP measures to the equivalent GAAP term in the earnings materials with an explanation of why we deem this information to be meaningful as well as how management uses these measures.

With that, I will turn the call over to Aaron.

Thanks, Matt. Good morning, everyone. As a reminder, the prepared remarks for earnings calls moving forward, will focus predominantly on our financial results, allowing us to get to Q&A more quickly. Last call, we spoke about our plans to grow our trading by investing in our infrastructure, acquiring talent and expanding our capital base. We also emphasize that this growth would be a broad effort across the firm not limited to a handful of initiatives. The fourth quarter was a preview of the impact of this renewed focus on growth. Our results for the fourth quarter were impacted positively by a favorable operating environment, and while our capital accumulation efforts are just underway, the incremental capital we added and our ability to dynamically deploy it had a meaningful impact on our results.

I'll hand it over to our Chief Financial Officer, Cindy Lee, who will review the financial results. As always, you can find additional perspective on the quarter in our detailed supplement. After her statement, we will move on to Q&A.

Thank you, Aaron, and good morning, everyone. For the fourth quarter of 2025, we generated adjusted net trading income or ANTI of $9.7 million per day or a total of $613 million. This was the highest quarterly total since Q1 2021. For the full year 2025, we generated $8.6 million per day or $2.1 billion in total.

Turning to our segment performance. Market Making reported ANTI of $7.8 million per day for Q4 and $6.7 million per day for the full year 2025. Virtu Execution Services reached $2 million per day for the quarter and $1.9 million per day for the full year. This is the seventh consecutive quarter of increased ANTI for VES and high watermark since early 2022. An indication of substantial progress we have been noting within the VES business. This performance reflects the investment we have made in technology, our focus on client acquisition and the expansion of our product offering. Both of our operating segments benefited from generally favorable market conditions, elevated volumes and strong execution by our team.

Our profitability this quarter was robust. We generated $442 million in adjusted EBITDA, representing a 72% margin. Adjusted EPS was $1.85. For the full year 2025, we recorded $1.4 billion in adjusted EBITDA, 65% margin and $5.73 in adjusted EPS. These numbers all represent high since 2021 and underscores the operating leverage inherent in our business.

On Slide 6 of our supplemental materials, we provided a summary of our operating expenses. Our full year 2025 cash compensation ratio was at 19%, which was within the historical range. The increase in compensation expense reflects our continued focus on retaining and acquiring top talent across the organization, particularly in trading and technology.

Turning to capital. We increased our invested capital by $625 million in 2025, $448 million of which came in the second half of the year while generating an average return of 100% over the year. We will continue to expand our capital base, strengthen our infrastructure and deploy capital where we see the greatest opportunities, all while maintaining our quarterly dividend of $0.24 per share.

This completes our prepared remarks. We will now take your questions.

[Operator Instructions] First question comes from Eli Abboud from Bank of America.

The dollar value of your 605 quoted spreads looked like it declined sequentially. So is it fair for us to conclude that this quarter's strong performance came from areas outside of equities, and if so, can you provide some granularity on which asset classes were the largest contributors to your sequential growth?

Eli, It's Joe. I think when you look at our performance this quarter, you've got to begin with the favorable operating environment, realized the volatility was up. The VIX was up. Equity share volumes were up, and there's a number of underlying drivers in the environment that should hopefully allow that to continue around asset rotation, around dollars, fixed income, currencies, commodities. We're a scaled globally connected firm, and we are more than just the retail flow business that shows up in the 605 reports.

So I think that's the takeaway that we would want to leave with you. I think the growth in the trading capital base had an impact. We had a 100% return on incremental capital in the quarter. I don't expect that to always be the case, but obviously, when you make that kind of return and you have incrementally more capital, then it has an impact.

And as Cindy mentioned, VES had a record quarter. All of its businesses are performing well. There's accelerating client engagement. There's new clients doing business. They're onboarding a lot of clients, there's existing clients doing more business. And that performance has been across all products, brokerage, algos, venues, workflow analytics and all geographies.

So yes, that's the long answer. The short answer to your question is yes. the customer market making business, even though the quoted spreads have been down in the beginning of the quarter, as you can see from the public information, it's still elevated, I think, over a long period of time. But the noncustomer businesses, it did well, very well.

Got it. And for a follow-up, ETF fund launches are expected to hit a record in 2026 with the recent ETF share class proposal out to the SEC. So I was wondering if you could refresh us on where Virtu has exposure to the ETF market and help us understand the potential -- the materiality to Virtu, if that does, in fact, come to pass? And in particular, I was hoping maybe you could help us size up the contribution of your create-redeem business for the overall Virtu P&L?

Again, Eli, I think it's difficult right now to give you something that would quantify the impact. But in general, we are a very large player across all of our businesses. In ETFs, we're an AP, and I don't know how many, but a large number of ETFs. There are -- it's a growing share class. It's continued to be a growing share clastic which you may be referring to some of the electronification around and tokenization, which, again, more, more product, more structure is generally a good thing for us. So I can't quantify for you a specific ETF statistic. It's just -- it touches just about every part of our business.

We now turn to Patrick Moley with Piper Sandler.

This is Will Katz on for Patrick. Production markets, obviously, it seems like hey take an even larger role in the headlines every day. Can you give us your updated thoughts on participating in the asset class and whether sports or non-sports contracts would represent a more attractive entry point in the space?

Sure. So we're generally optimistic anytime there's a new market or a new asset class to trade. So we're definitely in the process of connecting, understanding how the venues work, establishing relationships. That being said, in these markets, there's not like perfect regulatory or legal certainty. So we're definitely being very careful and evaluating how those things are going to shake out.

With regards to the actual markets, I mean, obviously, there are certain markets that are much more similar to our current trading than, for example, like outright sports bets. But even within that context, there are market making like activities, cross-exchange, arbitrage and things of the like that will certainly investigate.

We now turn to Dan Fannon with Jefferies.

This is actually Rick Roy on for Dan. And just my formal welcome to the new management. And regard from that, aside from that, are you able to quantify or perhaps describe how impactful the non-equity side of the business was in terms of the market-making metrics that you posted this quarter and perhaps even layering that on to VES and things like cross-asset workflows. And specifically with regards to some of the volatility that we saw with digital assets, precious metals and commodities and I know you don't give sort of that breakout anymore, but any sort of incremental color around that would be helpful.

Sure. Again, this is Joe. I think I would repeat a little bit the answer to the first question. And oftentimes, when we get an equities versus non-equities question, there's an underlying assumption there that equities represents the 605 business and everything else is non-equities, and that's not true. So the 605 retail flow business is what it is. It was as I said, it was a very good quarter. It was elevated relative to the past, and it was just the public metrics anyway, indicated as someone pointed out that it was down quarter-over-quarter.

But in the non-customer Market Making business, we have a very large equities presence. We have a fixed income currencies and commodities presence. We have an options presence. We have a crypto presence. And as I said, we're global. So in the quarter where you have these kind of asset flows and these kind of movements in asset prices between fixed income and commodities and currencies and equities in Europe and in Asia and in the U.S., a firm like ours can thrive. So we don't break that out. We have no intention of breaking it out. But it's important, I think, to understand that outside of the retail flow business, we have a broad market making business that includes global equities, which did very well.

Understood. And then maybe just a follow-up then on sort of the non-retail more so client side of the business. Just wondering where are you sort of seeing the greatest level of incremental demand? Is it -- would it be incremental customer adds or greater utilization of some of those services, whether on the Market Making side or on the execution side?

That's more of a VES question, I think. And as I said, VES is firing on all cylinders. There's been a great deal of product improvement over the past year, 2 years, 3 years in terms of the algos in terms of venue -- the venues and in terms of workflow and analytics. There is retooling going on to accommodate non-equity asset classes in the workflow and analytics products and that's continuing. So VES had a very good quarter. And we had stated a goal of [ $2 million ] a day through the cycle for VES. Obviously, this is a favorable environment, and they were just short of it. So I think we're well on our way to getting to that goal on a through-the-cycle basis.

Understood, that's helpful. But I guess, any commentary on maybe the forward pipeline of adding customers or product innovation on that side?

Yes. All of the above.

We now turn to Alex Blostein with Goldman Sachs.

This is actually [ Aditya ] filling in for Alex. Just zooming out and looking at the bigger picture, can you discuss your top 3 strategic priorities for 2026 in terms of either new initiatives or existing markets?

Yes. So I mean as we sort of said in the last 2 statements, we're not focusing on a very small number of growth initiatives. We're really just focusing on growing everywhere in the firm and responding dynamically to the market opportunities that are available. But it's a very broad effort to increase the total firm's trading capital, which we move around relative to opportunity, investing in our infrastructure and acquiring excellent people.

[Operator Instructions] We now turn to Ken Worthington with JPMorgan.

You mentioned you deployed incremental capital during the quarter. Can you give us a sense of the magnitude of the incremental capital that you did deploy. And as we look to the coming quarters, if market conditions are accommodative, what is the magnitude of incremental capital that you could deploy if you so choose -- you so chose?

Yes, Ken. I think if you look at the 2024 year-end trading capital that we published and then if you look at the 2025 year-end trading capital that we publish, the total increase was over $600 million -- $628 million, $450 million of that was in the second half. And as you know, as your firm helped us increase our total debt by $300 million. So the debt increase was a portion of that.

It is -- the answer in terms of how much we deployed is sort of easy in that we've deployed pretty much all of it. And that doesn't mean that we don't maintain substantial buffers and substantial excess capital in our U.S. broker-dealer and our other regulated entities. It just means that we've reduced the cost of capital because we relied less on contingent liquidity like revolvers to fund our operations.

But I think overall and long term, when you have a quarter like this, you're going to have opportunities to deploy the capital. There will possibly be quarters when you're not deploying all of it or your buffers are greater just because the opportunity isn't there. Again, I think the underlying drivers of the environment are in place that hopefully we're not in that position. I think on the prior call, last quarter, we stated a long-term goal of being through the cycle, [ $10 million ] a day.

And if you look at historical returns on capital, I don't expect them to be 100%. But if they're in the 50%, 60%, 70% range, you can do the math and figure out that we would expect to be able to deploy more capital than we have today, and we will achieve that through organic growth, and we'll achieve it through incremental borrowings to the extent they make sense and they're prudent, right. So it's a nuanced answer because it's really going to depend quarter-to-quarter. But in order to achieve our long-term goals, we're going to use the amount of capital we have today and even more.

Okay. Great. I'll take a shot on this question. ICE bought its way into poly market in part because of innovations around clearing, settlement and collateral. Do you see the potential for these types of efficiencies to be big enough to make a difference to the Virtu P&L. And if so, does -- do these sort of changes widen the advantage that the Virtu citadels and jumps have over the rest of the market? Or do they level the playing field?

I can take that. I think it's like a little early to say what the exact economic impact is going to be. Like I don't really view it as something that's going to be a step change in sort of all-in profitability on these sorts of trades. But I do think, in general, when there is added complexity in the market space of just different ways of trading the same thing, more connectivity, more different protocols, that's a relative competitive advantage for us because we're in everything, everywhere and connecting to another venue and understanding another clearing settlement cycle is just something that we've done over and over and over again. So any time they're sort of like multiple products with the same underlayer, that's a relative tailwind for us. So we're happy for the increased product space.

This concludes our question-and-answer session. I'll hand back to the management team for any final remarks.

I think that's it. Thanks, everyone, for joining.

Ladies and gentlemen, today's call has now concluded. We'd like to thank you for your participation. You may now disconnect your lines.

Hello, everybody, and welcome to the Virtu Financial Third Quarter 2025 Earnings Call. My name is Elliot, and I'll be coordinating your call today. [Operator Instructions]

I'd now like to hand over to Andrew Smith, Head of Investor Relations. Please go ahead.

Thank you, Elliot, and good morning, everyone. Thank you for joining us. Our third quarter 2025 results were released this morning and are available on our website. With us today this morning, we have Mr. Aaron Simons, our Chief Executive Officer; Mr. Joseph Molluso, our Co-President and Co-Chief Operating Officer; and Ms. Cindy Lee, our Chief Financial Officer. We will begin with prepared remarks and then take your questions.

First, a few reminders. Today's call may include forward-looking statements, which represent Virtu's current belief regarding future events and are, therefore, subject to risks, assumptions and uncertainties, which may be outside the company's control.

Please note that our actual results and financial conditions may differ materially from what is indicated in these forward-looking statements. It is important to note that any forward-looking statements made on this call are based on information presently available to the company, and we do not undertake to update or revise any forward-looking statements as new information becomes available.

We refer you to disclaimers in our press release discourage you -- and encourage you to review the description of risk factors contained in our annual report, Form 10-K and other public filings. During today's call, in addition to GAAP measures, we may refer to certain non-GAAP measures, including adjusted net trading income, adjusted net income, adjusted EBITDA and adjusted EBITDA margin. These non-GAAP measures should be considered as supplemental to and not as superior to financial measures as reported in accordance with GAAP.

We direct listeners to consult the Investor portion of our website, where you'll find additional supplemental information referred to on this call as well as a reconciliation of non-GAAP measures to the equivalent GAAP term in the earnings materials with an explanation of why we deem this information meaningful as well as how management uses these measures.

And with that, I'd like to turn the call over to Aaron.

Thanks, Andrew. Good morning. Let me begin by noting this quarter's prepared remarks are brief in order to leave more time for questions. As usual, all relevant performance data are included in our earnings release and supplemental material.

Before I turn it over to Cindy to discuss our results, I just wanted to make a few high-level remarks to orient everyone as the company's direction moving forward. Over the past several years, we have completed major integrations, established trading in new asset classes and returned significant capital to shareholders. Our edge in the market is created by our technology, our risk management and our operational efficiency.

Additionally, as a business, we carry over our attention to detail to expense management as well as our client relationships. None of that is changing. However, now we feel ready to focus on growing our trading results through investing in our infrastructure, acquiring talent and expanding our capital base. Importantly, this will not be limited to a small number of previously highlighted growth initiatives, rather an overall focus on growth everywhere in the firm.

You may recall in the past, we have provided earnings scenarios at different levels of adjusted net trading income in the range of $6 million to $10 million per day, and our goal is to grow our business to trend toward the higher end of this range as a base case. Just on a personal note, I took over the role of CEO on August 1, almost exactly 17 years after first starting at Virtu. An unbelievable amount has changed since then and somehow now is always the most exciting time to be a part of this company.

With that, I'd like to turn it over to Cindy for details on this quarter's performance.

Thank you, Aaron. Good morning, everyone. Turning to this quarter's results. The firm reported normalized adjusted EPS of $1.05, adjusted net trading income or ANTI was $467 million or $7.4 million per day, predominantly driven by a positive operating environment, which has persisted for most of the year as well as a renewed focus on growth.

Market Making reported ANTI of $344 million, were $5.1 million per day, driven by strong performance across all businesses, particularly global equities, cryptos and currencies and commodities. We're also seeing continued momentum in Virtu execution services and are excited about our work expanding the VES product set to include multi-asset class capabilities.

VES reported ANTI of $123 million or $1.9 million per day, marking its best quarter since early 2021 and a sixth consecutive quarter of increased ANTI. Earlier this year, we noted goal of $2 million per day through the cycle for VES. We're encouraged by VES performance and consistent quarter-on-quarter growth regardless of the environment.

VES offer market-leading financial -- market-leading financial trading products globally across the entire life cycle of a trade. Notable, VES has a suite of workflow and analytics products led by Triton which was recently awarded the top spot in Trade 2025 EMS survey for the third year in a row. These products represent a strong embedded base of revenue. On a trailing 12-month basis, the workflow and analytics business generated $137 million of ANTI.

In terms of legacy revenue disclosures, we achieved strong results on our existing growth initiatives, which delivered ANTI per day that was slightly ahead of the prior quarter. Well, the areas included within the existing growth initiatives are important and represent businesses have grown meaningfully over the years. We will look to grow more rapidly in all areas of our business. While we will, of course, maintain our annual dividend, we will seek to grow our capital base to take advantage of the trading opportunities as they arrive.

Now we can turn it over for Q&A.

[Operator Instructions] First question comes from Patrick Moley with Piper Sandler.

Welcome, Aaron. I'm really looking forward to working with you. So I have a 2-part question. First, I appreciate all the disclosure around the focus shifting to growth opportunities. I was hoping you could break that down for us a little bit more and maybe speak to some of the areas where you see the most significant opportunity for growth. How much of that is going to be expanding into existing areas where you already have a presence versus entirely new opportunities?

And then as a second part, you mentioned in the deck that you'll look to dial back share repurchases in order to build more capital. I was hoping you could flesh out for us maybe how much capital you could potentially be looking to build and what that means for your longer-term capital return priorities?

Sure. Thanks, Patrick. I think it's hard to predict in advance. We've always been a firm that reacts to the opportunity that's in front of us. So currently, I think there's a pretty good growth opportunity everywhere in the firm. I mean, obviously, the areas that we've highlighted previously, like crypto, options, ETF block continue to be fast-growing areas, especially given the environment. And so you'll probably continue to see growth there.

In terms of the additional capital, I think we provided in the supplemental materials already in 2025 through retained earnings as well as debt financing, we've raised over $500 million of new trading capital, which has already been immediately deployed.

I think in terms of a long-term plan, we want to significantly grow the P&L. So if you look at our return on capital rates, they've always been in the upper 60s to 100% return on capital. So if we want to double the P&L of the firm, we're probably going to have to double the capital base. But that's a long-term plan. It may take a few years. And if you look at the reports of the free cash flow that the business generates, I think there's pretty significant opportunity to just accumulate that organically over time. And we've always been incremental in our approach to growing, and we'll just continue to do that.

We now turn to Alex Blostein with Goldman Sachs.

Aaron, a warm welcome to the call. I would love to get just a little bit more meat around those bones. Obviously, it sounds like it's a bit of a pivot in the strategy. And I guess a multipart question on this. But I guess first is why now what prevented Virtu in the past going after these opportunities that you feel like this is the right time to sort of do this today?

And when you think about the existing asset classes, you spoke about, obviously, the newer things, whether it's digital and crypto or options, we know you guys have been on the past for a while. But when you think about the traditional kind of market-making businesses that you're already in, do you see an opportunity to accelerate market share gain within that as well? And what would it take, I guess, for you guys to do that?

Yes, I can answer some of that. So as to the why now question, well, there's not like a step change, but there's been like a confluence of factors. So over the past several years, we've pulled off some pretty large integrations and a lot from a technical standpoint, some from a people, cultural standpoint, added significant new business lines. And now that we sort of have a handle on that and things are coming to an end, we're able to refocus some of our talent base on attacking new opportunities. So that's certainly part of it. The world hasn't gotten quieter. So there's definitely just been an uptick in overall external opportunity. And so we just sort of feel it's the right time. And I think the employees are excited about refocusing on growth.

In terms of the areas, like obviously, the ones I highlighted, but yes, in our core businesses, there's definitely room to grow. So one of the things that we've always done, right, is that our platform is scaled. It operates the same way everywhere in the world. It's sort of easy for us to redeploy to new asset classes with flexibility. and compete technologically in any market. So when you say our core business, even that encompasses many, many different types of trades in different areas. So there's always like interesting new corners of the markets. There's always like sort of idiosyncratic opportunities in ETF trades or foreign markets or commodities. And we're always just going to try to adapt to what's in front of us and just focus on our processes.

Alex, I would just add to that. This is Joe. The areas that we always outlined is growth continue to be growth areas, right? So we've given that number but I think the pivot here as you describe it, is really to include options. It includes crypto, it includes ETF block, it includes rates. But it doesn't exclude other areas of our business, right? And I think we put in the supplement the capital management priority slide, and this is a little bit to Patrick's question as well, right? We have shown -- and this is the management team that's in here, right? We have shown a long-term track record that demonstrates that we know how to manage capital, right?

So we've have a long-term track record of managing capital. We have a long-term track record of integrating acquisitions. We have a long-term track record of operating a scaled business. And we have a long-term track record of growing in select businesses, right? So I think with Aaron at the helm, there's a set of opportunities that are -- that we all agree are getting bigger, right? And that includes a lot of the things that I'm sure we'll talk about on this call. But we didn't want it to sort of look at it as being limited to just a handful of things that we've talked about in the past as growth initiatives.

Right. Right. And then as in addition to capital, do you guys anticipate there is a larger OpEx lift that this will be required? Or do you think you can largely leverage the existing footprint so the incremental revenues presumably will come in at a fairly high incremental margin?%

There should be -- you should still see very strong positive operating leverage in our business. That doesn't mean that we won't need to attract top talent, retain top talent. That doesn't mean that we're committed to a particular ratio of comp to net revenue that we've had in the past, but I think it will still be reasonable. It will look more like the past than not. But I think if it grows, it's going to grow because we're experiencing very high levels of positive operating leverage, good growth. And I think there's no big bang here. As Aaron said, right, we've always been incremental, and we'll continue to be incremental.

We now turn to [ Elia Bud ] with Bank of America.

Aaron, congrats on the new role, Craig and I look forward to working with you. You highlighted options as an area where there will be a larger focus on growth going forward. I was wondering if you have a time line in mind for when Virtu can start customer market making in options. Is that a near-term 2026 objective or more of a 5- or even 10-year target? And then could M&A be part of your road map in options?

Sure. So I don't -- we're not in the business specifically with the goal of doing customer market making 605. If we get to the point where our business is scaled and more profitable, then we have the infrastructure and the relationships where we'd love to get into that business. But really, our focus is on just being excellent at trading options, and we're focused on that and where it leads is where it leads.

Yes, [ Eli ] in terms of M&A, it goes back to the answer on capital management priorities. I think if you look at our history, we used leverage and our capital to execute 2 very highly accretive, important acquisitions to what Virtu is today. We used our capital to buy back our shares when we thought they were undervalued. And we're using our capital today to grow. And should an opportunity present itself where the returns that we can get from an M&A deal are superior to what we have looking in front of us, then we'll explore it.

And I think we've got a track record of doing that prudently and not paying -- I think if you look at the acquisitions we've done, we've bought volatility at very low prices. And so I think the purchase price going in was attractive and the execution was excellent in terms of value creation and synergies. There's nothing that we're looking at today that competes with Aaron's plan to grow revenue. And so therefore, our incremental capital dollar is going to grow in the business, but we're always -- we're here to create shareholder value and allocate capital to do that.

Got it. And for a follow-up, can you hit on the revenue capture in the Market Making segment this quarter? Your 605 quoted spread opportunity declined 3% sequentially, but your Market Making revenue fell 26% sequentially. Like how should we reconcile that delta there?

It is always good to kind of look at that. I think there's a great focus on the retail business. Some very smart guys in a research report yesterday wrote that we sit downstream from a long-term secular trend in retail, and we agree with that. But the way we look at it is we performed well against the opportunity overall. Yes, those indicators were down, the volumes and volatility as well as the 605 reports showed declining activity, but we're very happy about how we performed.

And I think I mentioned that focus on retail because if you look at our performance this quarter overall, there's always this hyper focus on retail, but our business is a lot broader, right? We have a global operation in multiple asset classes around the world. We did very well in crypto. We did very well in our proprietary Market-Making business in commodities, for example. We haven't talked about VES, right? So I think if you look at us, I think there's this hyper focus on retail for good reason, but there's a lot more there.

We now turn to Chris Allen with Citi.

I wanted to ask on the third quarter results. I think in general, people, the results were outperformed expectations given the environment realized volatility. I'm just wondering, obviously, you raised some capital during the quarter. You noted that it's been deployed, what impact that had? And then any color just on the sequential improvement in the organic growth initiatives or opportunities where there were the best tailwinds this past quarter.

Yes. Look, again, I think if you -- it's a difficult question to answer what impact did the new capital have. In terms of the debt raise, the debt raise was September 23. So that was pretty much towards the end of the quarter. Our -- on Slide 4 of the supplement, you see we earned a 95% incremental return on our capital. So my answer would be any incremental dollar that we deployed this quarter, we earned a 95% return on. And that includes the capital from the beginning of the year.

In terms of the performance and what to highlight, I think we mentioned already, I think crypto was a standout, and we expect that to continue. We had a strong performance in options. We had a strong quarter in ETF block. I think all of the things that we've included as growth initiatives were above where we were in the second quarter, just a little bit. So it was all of the above, Chris. And again, I'll mention VES, right? VES is showing growth through different environments. And Steve Cavoli has done an amazing job there, and that business is set up for success.

Got it. Just as a follow-up, when we think about capital -- increased capital deployment moving forward, are you thinking about developing new strategies for attacking some of the existing businesses? Or is this just putting capital to work with your existing strategies?

It's all of the above. I'll be make sure I want to point out and say that we're not looking at taking on more risk. I think everything is within the risk parameters that we've historically been comfortable with in terms of Virtu as a market participant, as a liquidity provider, as a service provider. You may -- it's mainly leveraging our existing infrastructure and connectivity. But we'll have more capital to deploy. We'll have incremental talent to develop strategies. And that's really how I'd describe it.

We now turn to Dan Fannon with Jefferies.

So just wanted to clarify a few things. So as we think about Virtu's strategy over the last kind of couple of years, we've seen more consistent results and less kind of peak and trough. And given this change in putting more capital work, do you expect to see more variability in the quarter-to-quarter revenue and/or ANTI EBITDA, however you want to think about it, given -- as the opportunity set changes? Or is this going to drive more consistent results? I guess what's the goal here?

Well, the goal is, as Aaron stated, to move to the higher end of the range that we published in the past of different levels of net trading income, right? So that's always been a difficult question to answer for Virtu because you've got to give me a time parameter, right? If it's -- if you're talking about daily or weekly, maybe. If you're talking about monthly, maybe if you're talking about quarterly, it really depends, Dan.

So I think Aaron stated it clearly, right? The goal is to move towards the high end of that range. It's a trend toward it as a base case, right? And there could be more variability, but I don't consider that being sort of less predictable or less volatile even, right? We're a volatile business, and we're going to remain a volatile business. And I don't think -- I really don't think of us in the past -- it's interesting to hear you say that. I don't think of us in the past year or 2 as being less volatile. I think we've just done good job growing the business, and now we're going to accelerate that growth.

Okay. And then just to clarify some of the other questions. So as we think about now you're deploying more capital today, you're going to obviously accrue more capital. Where do we think about the level of investment? So level of investment will go with the revenue opportunity. We don't need to invest today more based upon having more capital wanting to do more. So I just want to understand the timing of new investment in terms of people, strategies, all these things versus the revenue opportunity. Are those in line with each other or one comes before the other?

Mostly in line, Dan. There's no long-term lag here, I would say. Now that all being said, we are -- as I just answered your previous question, we're still a volatile business, and the environment is still going to have a big impact on our performance. So it's going to be hard to separate the noise there in terms of the environment versus the impact of incremental talent, incremental capital. But it's the age-old question for us, I think, long term, up to the right, moving towards the high end of that range. And there'll be noise quarter-to-quarter for sure. But none of it as a plan requires a multiyear sort of investment before you start seeing results. It's not instant, but it should largely be in line.

[Operator Instructions] We now turn to Ken Worthington with JPMorgan.

So the stock price has dropped a lot more recently. You've clearly highlighted routine earning growth strategies are the priority. How do opportunistic buybacks play into capital management when you see big declines in the stock price like we've seen more recently?

Ken, I think we have stated that the opportunity in front of us allows for the highest and best use of our incremental capital dollar. And the best way -- our jobs every day as managers of the business is to increase the stock price and maximize the value and putting dollars to work in the business, Aaron, and we all determined is the best way to get the stock price to where we think it should be.

We -- for a very long time, we were trading at levels that we thought the incremental dollar was best spent on our stock. We're not ruling anything out publicly in terms of we still have dry powder under the buyback authorization and perhaps as we have vesting shares from compensation plans, we may look to just sort of neutralize the impact of that so that we don't have share creep. But the direction is clear that our incremental dollars are going to be spent growing the business and in our trading capital base.

Okay. Perfect. made it crystal clear. The other narrative that was sort of going around was tokenization. So maybe how is Virtu positioned for an increase in tokenized assets moving on chain? Sort of what is your right to win? Will the infrastructure that you have need to change to support this sort of transition to tokenization? And if so, maybe to the prior question, what sort of incremental investment is required if the world moves to more tokenized on-chain assets?

Yes, I can answer that. I mean I think it fits with our current business. So we're very active in many crypto markets around the world. A lot of them obviously are the centralized exchange model, but we do participate in some direct on-chain interactions. We're partnering with people in terms of various interesting initiatives like we're part of the [ PIT ] foundation, more part of the Canton network. So we're always active in developing new interesting trading infrastructure.

And I think with regards to this and other sort of new opportunities, like everyone is talking about prediction markets, anything that is trading electronically and has sufficient depth of liquidity, we stand ready to make markets and our technology is adaptable to all of those opportunities. So we're excited about it.

We now turn to Michael Cyprys with Morgan Stanley.

I recall in the past that we heard that doubling the capital base wouldn't necessarily double earnings. So curious what's changed in that regard? And what areas or what would be the top few areas that you anticipate allocating more capital toward? Like how might you rank order or prioritize that? And maybe you could touch upon some of the areas where you're looking to hire?

Yes. Again, Michael, I think we put a slide in the supplement. I think we have proven that we know how to allocate capital. We've proven that we're going to devote it to the highest and best use, whether it was acquisitions, integrating acquisitions, buying back our stock. And I think we -- in the past, we identified areas where we needed to grow and grew businesses that were 0 to $100 million-plus businesses and increased our capital base. So I think the markets evolved. And I think we're ready now. I think we probably weren't ready in the past, and we have the ability to do it given our infrastructure, our scaled infrastructure. And we've got the team in place, and we have a new CEO who wants us to pivot to growth, and that's what we're doing.

And just in terms of the question around prioritizing areas that you're hiring?

I mean there's a lot of them, but yes, we're aggressively hiring what you would call broadly developers that's very important for our business. It's a vague term, which I hate, but we're probably hiring a lot of quants. We're hiring traders. So basically, any aspect of the business.

I think just going back to the question, which I think Joe answered very well, but the previous comments, I think you have to take in the context. So it's not the case that we could just -- if someone gifted us double the amount of capital tomorrow that we could just turn it on and make twice the money. The comment is that yes, we can grow the earnings with more capital, but it requires a lot of hard work to do that. So it requires more people. It requires working on our strategies. It requires revamping and expanding our infrastructure. So it's not like a magic machine where we can just dump more money in and get more money out, but we're excited about doing the work and growing the business.

And what areas do you expect to allocate that capital to more meaningfully than others? How do you think about prioritizing that? And when you think about doubling the earnings, what areas you think will be meaningfully contributing towards that?

It will be flexible. It will be based in part on what is going on in the market. I think if you look at an area like crypto where we've done very well, crypto was a fragmented market, which necessitates the need for more capital intensity because there's no settlement utility, and there's multiple venues. ETF block is a big business that we've grown quite well, that by its nature is more capital intensive. So it really depends on the end market. It depends on the characteristics of the end market. It depends on the prime brokers. It depends on the venues. It depends on the participants, depends on the trading format.

U.S. equities, 605 business is a very capital efficient business, right? So we think we're going to grow everywhere. But the capital usage is going to go to areas where we think we can -- where we need it -- where we needed to grow, right? So areas like commodities, areas like foreign exchange, they're all different, depending on the end market, depending on the market structure. So really, it just really depends on what is going on in the market and the sort of the nature of the end market.

That's all the time we have for questions. I'll hand back to Aaron Simons for any final remarks.

Thanks, everyone, for joining. Hopefully, this is informative, and we look forward to seeing you next quarter.

Ladies and gentlemen, today's call has now concluded. We'd like to thank you for your participation. You may now disconnect your lines.

Hello, everybody, and welcome to the Virtu Financial 2025 Second Quarter Results. My name is Elliot, and I'll be your coordinator for today. [Operator Instructions]

I would now like to hand over to Andrew Smith, Head of Investor Relations. Please go ahead.

Thank you, Elliot. Good morning, everyone. Thank you for joining us. Our second quarter 2025 results were released this morning and are available on our website. With us today on this morning's call, we have Mr. Douglas Cifu, our Chief Executive Officer; Mr. Joseph Molluso, our Co-President and Co-Chief Operating Officer; and Ms. Cindy Lee, our Chief Financial Officer. We will begin with prepared remarks and then take your questions.

First, a few reminders. Today's call may include forward-looking statements, which represent Virtu's current belief regarding future events and are, therefore subject to risks, assumptions and uncertainties, which may be outside the company's control. Please note that our actual results and financial conditions may differ materially from what is indicated in these forward-looking statements. It is important to note that any forward-looking statements made on this call are based on information presently available to the company, and we do not undertake to update or revise any forward-looking statements as new information becomes available.

We refer you to disclaimers in our press release and encourage you to review the description of risk factors contained in our annual report, Form 10-K and other public filings.

During today's call, in addition to GAAP measures, we may refer to certain non-GAAP measures, including adjusted net trading income, adjusted net income, adjusted EBITDA and adjusted EBITDA margin. These non-GAAP measures should be considered as supplemental to and not as superior to financial measures as reported in accordance with GAAP.

We direct listeners to consult the Investor portion of our website, where you'll find additional supplemental information referred to on this call as well as a reconciliation of non-GAAP measures to the equivalent GAAP term in the earnings materials with an explanation of why we deem this information to be meaningful as well as how management uses these measures.

And with all that, I'd like to turn the call over to our CEO, Doug Cifu.

Thank you very much, Andrew, and good morning, everyone. Thank you for joining us this morning. In my remarks today, I will focus on Virtu's second quarter 2025 performance and strategic initiatives. Following my remarks, Joe and Cindy will provide additional details on our results.

We realized outstanding results across our businesses in the second quarter, fueled by market turmoil around tariffs, economic policy and general volatility we recorded $568 million in adjusted net trading income, which is $9.2 million per day and $1.53 in adjusted EPS, both numbers recent highs and are reflective of our ongoing investments, growth initiatives across the firm and the macro environment.

Market Making contributed $451 million and Execution Services contributed $116 million. While we believe significant opportunities remain in both cases, we believe that our core business and growth initiatives performed well against the opportunity set that we addressed. It was our sixth straight quarter of increasing adjusted net trading income overall. Our growth initiatives were particularly strong this quarter, reaching an all-time high of $1.3 million per day or 15% of our total adjusted net trading income per day of $9.2 million. Our growing ETF block franchise and global digital asset desk led the group with strong performances from our options market making as well.

In ETF block, the volumes and volatility surrounding Liberation Day and the ongoing tariff news drove elevated client demand for our ETF desk, we continue to grow our market share and client list globally for ETFs, and we remain focused on the build-out of our Europe ETF block offering.

In digital assets, our expanding capabilities continue to yield attractive results as we extended our Market Making to additional tokens and asset classes. We remain excited about this space for many reasons, including ones we will discuss further in a moment. Our customer Market Making business was strong given the market conditions, especially at the start of the quarter. Retail engagement remains strong at or above the elevated post-pandemic baseline and our 605 executed shares and dollar value of quoted spreads reflect recent highs.

As you know, mean realized volatility was 30 and the VIX average 24. However, median daily realized volatility and intraday volatility were up low single digits quarter-over-quarter illustrating a favorable environment that was closer to the first quarter. Equity TCV was up 17% against the already healthy first quarter levels or about 12% if you exclude sub-dollar share volumes and notional U.S. equity volumes were up 9% quarter-to-quarter.

Our noncustomer Market Making business continued to deliver growth and a strong performance against the growing dynamic opportunity in the quarter. Our global equities franchise and noncustomer market making delivered excellent performance as did our ETF block business, which had another record quarter.

Crypto and options also performed exceedingly well thanks to both enhancements and extensions of our capabilities and the elevated opportunity set in the quarter. In crypto, in particular, our capabilities have grown to cover more markets and more symbols than ever across futures, spot, perpetual futures and ETFs globally.

Our institutional business, Virtu Execution Services or VES, recorded $116 million in adjusted net trading income, a recent high. As we have mentioned on prior calls, we believe that the VES business could grow to a consistent $2 million per day through the cycle, and we are well on our way to achieving this goal. We recorded 2 straight quarters of around $1.9 million per day, and we believe this has room to grow. Since taking on the Execution Services business as a strategic imperative before we made any acquisitions, we have relied on our ability to develop best-in-class technology and products. Today, we are proud to serve approximately 2,000 global buy-side and sell-side clients.

A key avenue of growth within VES comes from converting our products like Triton, our market-leading EMS into multi-asset class products to serve our clients' fixed income, FX and option needs.

Virtu Capital Markets, which has been a pioneer in implementing at-the-market offerings for corporate issuers, produced an outstanding quarter in the second quarter of 2025, its best on record. We believe more growth will come from cross-selling within our broad network of VES clients and strategic partners, penetrating new and growing client categories, rolling out offerings like VTS, Virtu technology services and continued enhancements to monetizing our flow and technology. Since growing this business substantially by acquiring ITG, Virtu has solidified the revenue base cut costs dramatically and made strategic hires to expand our addressable market across multiple dimensions.

We continue to see strong tailwinds for Virtu, sustained retail engagement post-pandemic remains a positive backdrop and several structural trends should help compound our growth in the coming quarters.

First, we're encouraged by the emerging interest in overnight equity trading. While still early, we're working with clients, regulators and market participants to help shape a robust framework that gives global investors easier access to U.S. capital markets.

Second, digital assets are becoming a meaningful growth opportunity. Institutional demand continues to build, and we're expanding our capabilities, adding more coins, tokens and protocols across a growing network of venues and brokers. We see broader crypto adoption as a significant driver of future volume and activity for Virtu as we scale our capabilities and offerings.

Third, the regulatory landscape is moving in a constructive direction. The GENIUS stablecoin legislation and the pending CLARITY crypto market structure act and innovations in tokenization are all positive developments for Virtu.

Tokenization, in particular, creates new products that need liquidity and order routing playing directly to our 24/7 market-making strengths. As participation in crypto markets grows, so does the need for liquidity and price discovery. Virtu is well positioned to meet that demand, and we expect to remain a key partner to banks, venues, brokers and institutional clients as this ecosystem develops.

I want to end on a personal note and share some news about our leadership transition. After 18 wonderful years I've decided to retire at the end of this year to spend more time with my family. It has been a tremendous privilege to work for so long with an enormously talented group of individuals. This has been the defining chapter of my career and I couldn't be more proud and grateful for what we've accomplished together.

When we started Virtu in 2008, we had a bold vision to transform electronic market making by building a technologically enabled scaled global firm that could consistently deliver the best bid and best offering. We set out to revolutionize how markets operate through cutting-edge technology and relentless innovation. We have built one of the industry's leading trading platforms, serving clients across multiple asset classes and geographies. Along the way, we strategically acquired KCG and ITG which strengthened our technology foundation and expanded our market reach and most importantly, created tremendous value for our shareholders and client.

What I am the most proud of is the incredible team we've built, the innovation, dedication and client focus I see every day from our employees gives me complete confidence in the future. I can't thank my life partner and friend, Vinnie Viola, enough for allowing me this opportunity.

Virtu's businesses are stronger than ever and our scope, reach and scale leaves us poised to continue to thrive and prosper and has been left in extremely competent hands. I am thrilled to announce that my friend and protégé, if you will, Aaron Simons, our Chief Technology Officer, who has been with Virtu basically from the beginning for 2 decades, will be stepping into the CEO role. Aaron has been instrumental in building our technology backbone and has the strategic vision to take us to the next level.

This transition represents continuity of our core values and culture, combined with a fresh perspective on our growth opportunities. I'll be staying on as an adviser to ensure a seamless handover and will remain deeply invested in our success. I couldn't be more optimistic about our future, and I'm excited to watch and continue and thrive under Aaron's great leadership.

With that, I will turn it over to my friend, Joe Molluso. Joe?

Thank you, Doug. I'll just underline a few points that you went through and add some additional color. Look, our adjusted EBITDA margin of 65% was the highest since the first quarter of '22. We achieved this margin by holding expenses in line as we've done over the long term. Adjusted cash operating expenses were $198 million in the quarter, and our compensation ratio was 19%, including cash and 23%, including stock. Notably, we've grown and built out significant new businesses and continue to attract top-notch talent while holding headcount relatively steady and our compensation ratio within historical norms.

And as I mentioned in my remarks last quarter, despite significant volatility in our quarter-to-quarter results, which we expect to continue over time, there is a long term up and to the right skew to our results and our growth.

As you can see on Slide 12 in the supplemental materials, we ended the quarter with over $2 billion of trading capital, which is buffered by significant additional liquidity sources. We bought back $66 million of our shares in the quarter and year-to-date have bought back $135 million. And then since the inception of our share repurchase program, we've repurchased $1.4 billion worth of shares at an average cost of a little over $26. We view this deployment of capital as strategic, and we continue to evaluate our repurchase program going forward and expect to be within the ranges that we have published publicly.

And with that, I'm going to turn it over to Cindy to complete the prepared remarks.

Thank you, Joe. Good morning, everyone.

On Slide 3 of our supplemental materials, we provided a summary of our quarterly performance. Looking at our performance trajectory. Our second quarter 2025 adjusted net trading income of $568 million or $9.2 million per day, a 50% increase from the $6.1 million per day in Q2 2024. Our normalized adjusted EPS of $1.53 for the second quarter 2025 increased 83% compared to Q2 2024. Our adjusted EBITDA margin of 65% demonstrated our disciplined expense management approach and operational efficiency. In Q2 2025, we repurchased 1.7 million shares for a total of $66 million. To date, we have repurchased almost 54 million shares at an average price of $26.35 per share for a total of $1.4 billion, representing close to 20% of our fully diluted shares outstanding, net of issuance.

Our balance sheet remains well positioned with the debt to LTM adjusted EBITDA ratio of 1.5x, providing us with financial flexibility while maintaining our commitment to returning capital to our shareholders through our dividend and share repurchase program.

Now I would like to turn the call over to the operator for the Q&A.

[Operator Instructions] First question comes from Ken Worthington with JPMorgan.

Doug, congratulations on all you've built and accomplished. It's been a pleasure working with you. Can you give us an introduction to Aaron, give us maybe some more color on his responsibilities and accomplishments at Virtu and what the transition from you to Aaron will look like over the next 6 months or 5 months?

Sure, sure. That's a great question. Thank you very much for your kind words. So just some background on Aaron, which you can read his CV. I mean, he's a very intellectually powerful man. As I have always told people, he is, in my view, the smartest guy at Virtu. I first met Aaron in May of 2008, maybe a month after we had started Virtu when he interviewed. I distinctly remember the interview because I understood very little of what he was trying to describe to, was his dissertation and string theory. But I remember thinking this is maybe the smartest, most articulate decent person I've ever met in my life, and I wouldn't let him leave the office, which was a very small start-up office, until he had agreed to work at Virtu and thankfully, he did.

And he began his career at Virtu in August of 2008. And Ken, you may remember the firm back then, it was 10 folks in a temporary office on Park Avenue. So Aaron was a developer and a trader and probably made some coffee, if you will, at the time and put together some furniture. So he knows the spirit, the culture, and if you will, the zeitgeist to Virtu from the beginning. He's always been, I will immodestly say, my friend and my mentee. And through the years, we're not big on titles until more recently, but he's always been in the inner sanctum of Virtu and somebody that I relied on for advice about the firm. And frankly, when I didn't understand something, including my math, my kids geometry homework. Aaron would do that for me, and for the firm, he's well like within the firm.

About 5 or 6 years ago, and it really was triggered by the growth of the firm and the pandemic and with the advice and counsel of my Board and Vinnie, we put together a senior leadership team at this firm. Some of it is obviously described in the public filings, but we have Joe and Brett, Steve Cavoli and Aaron Simons, and they were the kind of the 4 horsemen, if you will, that really began to guide and lead the firm. And not that I was actively transitioning, but I definitely took a step back in the micro managing day-to-day of a start-up and gave them significant responsibilities.

And with that, they began to interact on a daily basis, on a monthly basis and a quarterly basis with our board and with Vinnie and others and Vinnie obviously has known Aaron for years. And so the transition really began in earnest 5 or 6 years ago with that structure, if you will. And obviously, the Board has gotten to know Aaron over the years. He's presented been at every Board meeting and clearly a generationally talented young man when it comes to technology and building out large technology systems. He's been great with our clients and great with significant investors that have come into the firm and whatnot. And just a real amiable person that is well liked and well regarded around the firm.

In terms of how that will work and what he will continue to do, I mean, the culture and the business purpose of Virtu will not be changed. Clearly, he's got a different, thankfully, personality than I do, maybe not as brash and outspoken, but certainly a lot smarter and careful about the word he uses. So I'm extremely excited for him and for the firm and for his family and for my family and for everything that he has meant and will continue to mean to the firm. I'm going to ask Joe to say a few words from his perspective about the transition and whatnot, Joe?

Sure. Thank you. Now look, Ken, of course, Doug and I have worked together for many years, and we're naturally sorry to see him retire, but I've worked with Aaron and know him for many years as well and endorse completely his appointment as CEO. And I know Brett and Steve, I won't speak for them, but I know I think we're all in unison and in sync with this development, and it's the best thing for Virtu at this point and very much look forward to the future.

We now turn to Craig Siegenthaler with Bank of America.

Doug, we wanted to wish you the best in your retirement. And Aaron, we look forward to meeting you soon.

Our first question is on the potential repeal of the Order Protection Rule. I'm wondering what do you see as the major impact on the ecosystem if this goes through and more specifically to Virtu and the market makers?

Yes. I mean it's a great question. Obviously, we've been in the public debate, and we knew Atkins position from, frankly, 2005. He's never been a fan of Rule 611. I think as a firm, we're sort of agnostic. I think -- where I think this will probably shake out is similar, and where it probably should shake out is similar to what you see up in Canada, which is in order to have a protected quote, a venue has to have a certain market share, right? So I think in Canada, it's like 2.5%, and I'm not suggesting that number. But I think a reasonable number, a minimum market threshold in order to be viewed as a protected quote. I think that will answer some of the critics that talk about excessive fragmentation and lack of liquidity gathering, if you will, on the displayed markets.

I should know, but I think we have 15 medallions these days and going to soon to 20. And that may be a few too many. So from a liquidity gathering efficiency of the market, it probably does make some sense. Obviously, we own an interest in the Members Exchange, which we think is a great exchange and we continue to wish them well, and that's a very significant investment for us. But we do think that, that makes sense.

From a market making perspective, the pros are that we spend a lot of time, money and technology, if you will, connecting to venues that frankly don't have significant market share, and that -- there's a cost to that. You will continue to have best execution, right? And we have always been a firm through technology and transparency that has demonstrated best execution to our clients and to the regulators. So we don't need the, if you will, the protections of the Order Protection Rule in order to do the right thing for the market.

So I think on balance, it's neutral to slightly positive for Virtu in the sense that it probably will lead to a reduction of like overhead fixed costs, if you will, with regard to connecting to these venues. And to the extent there's inefficiencies and trade-throughs in the market, that's what market makers do. We keep markets in equilibrium and make sure that they are efficient, fair and transparent.

Just for my follow-up, I wanted to see if you had any thoughts on the strategic merits of operating a hedge fund in parallel to the Market Making and Execution businesses. And the reason we're asking is that Tower is launching a hedge fund and then some of your other competitors like Citadel, Susquehanna, Two Sigma, they also run hedge funds side by side. So why doesn't Virtu launch a hedge fund? It could expand your revenue base. It shouldn't be dilutive to your stock valuation and also not require that much capital.

Yes. It's a great question. I mean we have, over the years, considered it. There's obviously a lot of infrastructure and conflict management, if you will, that you have to deal with, with regard to a hedge fund. Certainly, those are all manageable. And you do mention that there are firms like Citadel that have managed them quite well. And I guess they had the hedge fund before they had the market maker. And so it is certainly possible.

This firm has always prided itself in being as risk averse, if you will, as possible and capital-light and providing a service to the marketplace. And in terms of like holding positions, we measure things in nano, micro and milliseconds here. Certainly, some of our strategies are longer than that. And so just culturally, it might be a bit of a shift, but it is definitely something that I think Aaron, who's, as I said in response to Ken's question, is a heck of a lot smarter than I am and younger and more vivacious, I would imagine he will consider. Joe, any thoughts?

No. Craig, we've looked at it as we've looked at everything, right? We've looked at what that looks like side by side over the years. It's just been a matter of what do you prioritize. And here we sit today with a couple of thousand like real buy-side clients as well as the Market Making business. So it's something that's out there that we revisit from time to time.

We now turn to Alex Blostein with Goldman Sachs. Your line is open.

Doug, just to again echo everybody else's comments, congrats, definitely a bit of end of an era. We'll miss your passion on these earnings calls, but I'm sure the content will remain quite rich. So it's been great, great working with you.

Question maybe strategically, and I'm not sure if that's better for next call when Aaron is on. But just thinking through the M&A opportunities for Virtu. And the reason I ask is because the balance sheet continues to get stronger and stronger. The leverage ratios continue to come down. You guys have done successful deals in the past. With the way the ecosystem evolving, particularly around crypto, are there things that might be interesting that could accelerate you guys' growth? And where does M&A stack up on your priority list right now?

Alex, it's Joe. I'll address that. It's really -- you've got to look at cycles and how cycles develop. And I think there was a time period when if you look at the acquisitions we've done, I think we're very astute in our timing and effectively bought volatility at low points. And in the instances of ITG and Knight Capital, they were different, but there was a common theme around technology, leverage and timing.

In the past 5 years, we look and our Board expects us to look and we look at every opportunity that's out there, and we measure it against our internal opportunities, and we measure it against buying back our own stock. I think -- so in the past 5 years, we've effectively bought -- made an acquisition, right? We made a $1.4 billion acquisition of 20-ish percent of our own company at $26 a share. And I think that was probably the most accretive and shareholder value-creating allocation of capital that we could have deployed.

And what does that mean for the future? I think maybe there's a premise to your question, which is that things may be changing, and there may be opportunities where the deployment of capital to an acquisition beats buying back our own stock, and we're open to it. We continue to look at everything. And I wouldn't -- we won't rule it out. We've never ruled it out really. It's -- but I get your point, and I think there may very well be opportunities in the future, but we're going to treat it the same way we did in 2017, 2019 and over the past 5 years, we're going to look at what's the best return on our capital.

Our next question comes from Patrick Moley with Piper Sandler.

And Doug, congrats on your retirement and look forward to working with Aaron as well.

So first off, Doug, you spoke about it in your prepared remarks, but with the recent passage of the GENIUS Act, what sort of new opportunities do you think a proliferation of stablecoin adoption would open up for Virtu? And then just in terms of the overall crypto opportunity, where do you think you are in your journey? Is there more that you can be doing? Or are you just sort of watching the ecosystem evolve and kind of picking your spots there? Any color would be great.

Yes. Thank you very much for the kind words, and it's a really good question. I mean I couldn't be more excited, if you will, from the tailwinds within the digital asset space. I mean I think stablecoins just provides for more adoption of digital assets and more need, frankly, for providers like Virtu to provide that on off-ramp. I mean the analogy I used yesterday with our Board was think of the ADR market, which we're super good at and where we're providing a service, someone is going to need to harmonize and handle the off-ramp between fiat and stablecoin and stablecoin and fiat. And then there's going to be variants of that.

And no firm better than Virtu to handle that type of transaction. So I think there's going to be a lot of opportunities to facilitate those conversions and USD to Ethereum and USD to Solana and back and forth and blah, blah, blah, you kind of get it. I think what we have thought of strategically and are very proud of what we envisioned post FTX, I guess it was 3 years ago, we said, okay, there's a lot of interest in this asset class. Right now, it's a little bit all over the place regulatorily. And obviously, the prior administration had a different view about digital assets than this administration does. But still, let's invest in a Virtu style business where we can be a value-added participant between spot, ETF, future, perpetuals, you name the instrument, CFD, multicurrency, let's be prepared to do that as a first step.

And then as a second step, let's do that 24 hours a day, 7 days a week. And now as a third step, let's be prepared to do that bilaterally in the same way that we do with our vEQ Link product and our vFX product and our vFI product. I think we're going to call this VF crypto because we're not great about marketing. But it will be a 24 -- it is a 24/7 global service that's on exchange, if you will, with institutions, directly to institutions and so be agnostic as a liquidity provider and be that one of the folks in the middle of this ecosystem. We've made a strategic hire of a young man that will start on Monday to help facilitate and grow that business. We've got the relationships already. There's nobody better than Joe about managing capital and risk.

And so it's -- as you can hopefully tell by my voice, it's a business that we are extremely excited about. Joe, any other color?

No, I think, that's it.

Okay. That's great. And then maybe just as a follow-up on the topic of tokenization. We heard Robinhood earlier this month announced that they were going to launch tokenized equity trading for their customers in Europe. You spoke about it a little in your prepared remarks as well. But could you just elaborate on that opportunity and how you maybe see the tokenization landscape evolving as it relates to equities? Is it going to make more sense in Europe? Do you think it makes sense in the U.S.? How do you think about that kind of evolving from here?

Yes. What I would say is, again, I want to be a little careful what I say because of some of the regulatory implications of tokenization. I mean our great friends at Citadel sent a very, very thoughtful constructive letter to the SEC about let's make sure we understand the rules of the road here because it shouldn't be the Wild West and replace, if you will, regulated environments that function very well. But we do think that there is something to this and probably not for U.S. persons, right? So you're right, it probably is more geared towards folks that exist overseas that want to have access to U.S. markets.

And that really then relies on our core skills, much like an ETF issuers, tokenized stocks really are just wrappers, if you will, of existing underlying assets. We're quite good at understanding the mechanics of how that works of providing attractive 2-sided liquidity and then ultimately, being one of the firms that can "create redeem," if you will. And we can do that, as I said before, globally and now 24/7.

So if it engenders incremental interest in U.S. assets and in U.S. equity assets in particular, it's a strong tailwind and positive. And so we're going to work hand-in-hand as we always do with our partners at Robinhood and Schwab and Fidelity and Webull and E*TRADE and I don't want to -- and everybody else that we consider good trustworthy counterparties and clients to address this addressable market.

I mean, Vinnie taught me a long time ago that marketplaces are like pies. We're both Italian, Americans. So we always talk about Italian-American things. And our job is not necessarily to have a bigger slice of the pie, but to maintain our slice, but to grow the pie, to grow the pie. And this is a pie growing exercise, if you will. So it's a strong positive for the firm.

[Operator Instructions] We now turn to Chris Allen with Citi.

Doug, congrats on the retirement. It's been a fun run with you. I wanted to ask a little bit about Execution Services, up really nice year-over-year, continue to see strong trends there. I was kind of a little bit surprised we didn't see better sequential growth just given the overall volume trends. Maybe give us some color just in terms of what's going on underneath there? And what are the growth drivers, moving forward?

Yes. Again, it's -- I mean, it's been a labor of love. I give all the credit in the world to Steve Cavoli, who is just a fabulous leader person. No one could have cobbled together really 3 franchises, the small legacy Virtu, the very substantial Knight institutional business that has been around for a long time and then this giant global franchise and product company we bought, called ITG. And it was -- I mean, frankly, I think I underestimated how challenging that was going to be with 2,000 clients. And frankly, the analogy I've always used is we're trying to change the tires on the car as it's speeding down the highway at 60 miles an hour. So demanding revenue at the same time, changing the underside, if you will, of what clients were interacting with.

So I think we have built a first best-in-class offering that is truly cross-asset, that is cross product. I think it is -- the only advantage we have is excellence transparency and performance. We don't have calendar balance sheet. We don't have prime. We don't have research, right? So we have to -- in the knife fight, if you will, of execution services, we have to be really, really acute.

And so that's what we have done. Steve has emphasized cross-product selling. That has worked. Steve and the guys have emphasized cross-asset development. Mike Loggia and the team around Triton have truly developed a cross-asset EMS product that global asset managers are now looking at for credit, rates, options and equities, right? So we're not losing those jump balls to firms that had a cross-asset product. We're winning those jump balls.

And the same thing with regard to our analytics business. We used to be more viewed as like, I don't want to say niche because the global equities market is a large niche, but a global equities firm exclusively, and we're not anymore. We're not anymore. We're viewed as a really leading cross-asset firm. So that's the strategy going forward. There obviously are behemoths in the market that you want to sell, you want to be very cross asset to.

And then the last thing I would say is the benefits of the market maker and offering that as a product in a very transparent virtuous way, if you will, that liquidity, which is really bespoke and can be measured and is a differentiator from other -- frankly, just about any other offering out there. We've seen that both the impact, if you will, of orders and the size of orders have dramatically improved in the last 4 or 5 years as we have integrated that offering, Chris, with our market maker and clients have been extremely, extremely happy and responded to that.

Just a quick follow-up. I mean how are you thinking about the opportunity set or environment moving forward? Obviously, coming out of somewhat of a unique second quarter?

Yes. I mean I think, obviously, look, I mean, it's all about like wallet market share, cross-selling, creating new products, Virtu technology services, right, broker in a box going to sell-side firms that have real institutional pressures to be excellent and save costs, and it's a balancing act. They have a hard time balancing. But at the end of the day, obviously, you're beholden to what the universe of the marketplace will give you. So you're going to have the ebbs and flows with volumes, in global volumes. But the key is obviously to grow that wallet and grow that market share. Joe, any other thoughts?

No. I think, look, Chris, it was -- just from a more macro standpoint, it was obviously an extraordinary environment. And I think with the underpinnings of some of it continuing are in place. But obviously, the activity around Liberation Day coming out of that time was fairly unique.

We now turn to Dan Fannon with Jefferies.

Congrats, Doug, on your retirement. You will certainly be missed on these calls. I was hoping you could just talk a bit about overnight trading. That's been a growing, I think, part of the market, but really not sure how big of a contributor that is for you and how to think about that opportunity. So hoping you could put a little more context around that.

Yes. It's a great question. Thank you for the kind words. I think it's very early days. We were a pioneer. I distinctly remember, oh gosh, maybe it was 2018. I'm getting old, Dan, so I can't remember exactly when, but when my friend, Steve Quirk, then at TD Ameritrade said, "We want to trade 24 hours, and we want you guys to do it for us." And people in the firm kind of looked around and we were like, okay, because that's what you do when you're in the client business. And so we figured it out in a Virtuian way. We were the first firm to provide that service. I know other firms do now, and we're working with Blue Ocean and blah, blah, blah.

So it's been on for a while. And obviously, you look at -- if you watch CNBC, which we all do or Fox Business, you see the All Night Long, whatever it is, commercials with, I guess, Lionel Ritchie, right? Wasn't it the Commodores? Was that Lionel? But anyhow. And so it's something that our clients think is very significant. Obviously, crypto ties into that because it's a global asset class, a little bit futures, right? You're seeing the ES become more of a retail product, and that's kind of 24 hours and maybe it becomes 7 days a week.

So I think over the next fill in the blank, 6, 12, 18, 36 months, you're going to continue to see market share and a need for that trading skill and that liquidity provision. And frankly, not every firm can or will be able to do that. It's not that easy. We're truly a global firm. We don't have pockets of traders. We have a global -- thanks to Aaron Simons, a global integrated infrastructure that hands off "the book" very well. And we've been really, really good about managing expenses.

So I think it's going to be really hard for investors ultimately to ignore it. Right now, I would say it's probably 99% retail driven, if you will, an individual trading driven. But I could see a moment in time, Dan, where there's more liquidity that institutional investors come into the fray. Again, it's the Virtu model, right? We are the -- as I used to say, we're the Switzerland of liquidity provisioning, and this is where the world is going. We want to be at the center of it.

So it is definitely a tailwind. Again, whether it reaches 5% of the market in 2 years or it's going to take longer, I don't know, but it's a great incremental revenue opportunity for the firm.

Got it. And then just as a follow-up, Doug, as you take a step back, I was hoping to get a little perspective on what you think if you look out a couple of years, let's say, 3 years, what do you think of your organic growth initiatives will be the biggest contributor in 3 years' time?

I'm going to ask Joe to answer that one.

It's hard to say. I would -- you look at the end markets that are in those. Obviously, crypto is an enormous opportunity. Our ETF block franchise has been having a stellar year so far. Options is a big opportunity as well, right? So I think some of the things we just talked about on this call kind of overlay those, whether it's tokenization or whether it's stablecoin and crypto. But I think you see kind of a convergence among some of those opportunities as end markets grow, as overnight trading grows, as sort of the scope of what we do expands. And we just talked about overnight trading, that opens up international markets in a way that hadn't existed before.

So it's hard to say. I mean if you push me, I'd say crypto and options. But again, the ETF block franchise has been having a record year.

Our final question today comes from Michael Cyprys with Morgan Stanley.

And Doug, congratulations on your retirement. I would like to dig in a little bit further on the overnight trading opportunity. It sounds interesting. I was hoping you could elaborate on your views around the institutional use case, how you see that? What does it take for liquidity to build in that overnight session? How you see that evolving? And then understand retail is driving the meaningful portion of that activity today in the overnight trading. But just curious if you could maybe help quantify the magnitude of what you're seeing in terms of that retail activity in the overnight session.

Yes. Yes, it's a great question. Thank you for the kind words. I mean, as I indicated, it's 99.9 probably percent retail today. I think there's a couple of issues. One is, obviously, institutional investors will trade in significantly more size, right? So it's hard to go to a party and be the only person there. You need a dance partner. And obviously, we would provide the liquidity, but they don't want to just trade with 1 or 2 market makers. So you need some forces to encourage institutions, if you will, to do that.

I think it's probably -- the second thing is you need more regularization. In other words, you need demonstrable levels of best execution and frankly, execution that fits within the parameters of the institutions that would be sending orders there.

So I could see it first being like a risk mitigant, like there's going to be news. I want to put on a hedge, I want to do this, I want to do that, and it's in the aftermarket because I'm hedging a portfolio or God forbid, I had an outtrade and I want to hedge that risk and et cetera, et cetera. That used to be a call around market, maybe that becomes more of an electronic all-to-all marketplace.

But I think more broadly, it's going to be very difficult ultimately as the liquidity builds there for institutions to ignore it as an opportunity for them to put risk on and take risk off. But as with building any marketplace, you need those first people to leap and maybe put a toe in the water and then you get multiple toes in the water, and that's how marketplaces grow. So it seems inevitable it's going to happen. Again, as I said in answer to the prior question, whether that's 6, 12, 18 or 36 months, impossible to know. But I see it as a real use case and a real opportunity for this firm and for firms like us to provide that unique liquidity.

Great. And just as a follow-up question, I wanted to dig in a little further on the tokenized U.S. equity trading for overseas clients that we're seeing some firms already begin to announce and launch. Just curious how you see that ramping? How much in terms of volumes are you seeing so far from these platforms that have brought this to the marketplace? What challenges do you see the development of the sort of market overseas when you think about implications for liquidity back in the U.S. markets, particularly if there's no SIP or market data repository for capturing the sort of data? Just curious how you see all that developing and the risks and opportunities there.

Yes. Great question. I think, look, I mean, the most important thing is like the firms that are doing this, the Robinhood, the Fidelity, the Schwab, et cetera, like they care and we will obviously manage expectations and frankly, best execution for their clients. So they're still going to route this flow tokenized or not to the market makers where they receive the best execution. So you're going to have a competitive ecosystem where non-U.S. persons who want to access the market and the rails and getting on and off and the simplicity, if you will, of the tokenization of that equity security is attractive to those investors. And frankly, it's an important product offering as our friends at Robinhood have been very, very public about.

I think, again, to echo what I said earlier, the comments from Citadel around making sure that this isn't a way to do an end run, if you will, around the very trued and tried principles of the U.S. regulated ecosystem is very important.

So again, I look at it as an opportunity to expand the pie to non-U.S. persons. I think it fits right into our wheelhouse of instrument A, instrument B, we need someone to provide that liquidity, if you will, to the switch market. We know the marketplace very well. We're a trusted business partner of these firms. We have demonstrable and certifiable and frankly, public best execution statistics with regard to U.S. equities. And so we could promulgate those very easily to a tokenized environment and are doing that.

So it's very, very early days. It's something that these firms are excited about. I think it's a way for them to expand their footprint outside the United States and into the United States, which is the largest capital markets by far in the world. And so it's an opportunity for them. And as trusted business partners of all of the aforementioned, it's an opportunity for us to be a good partner and to grow our revenue base. So exciting tailwind.

We have no further questions. So I'll now hand back to the management team for any final remarks.

Well, thank you, everybody, very much for participating today and for the last 10 years in these calls. I greatly appreciate everybody putting a lot of work and effort and answering most and asking -- excuse me, mostly really interesting great questions that have forced me to think and respond. And thank you for being gracious always to the firm that I truly love. And I am excited to listen to Aaron and Joe and Cindy on the next earnings call. I'll probably be on a golf course somewhere, but I will listen very, very acutely. And thank you, everybody, for your interest in Virtu, and have a wonderful day. Thank you.

Ladies and gentlemen, today's call has now concluded. We'd like to thank you for your participation. You may now disconnect your lines.