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Virtu Announces Third Quarter 2015 Results

The following excerpt is from the company's SEC filing.

NEW YORK, NY, November 4, 2015 Virtu Financial, Inc. (NASDAQ: VIRT) a leading technology-enabled market maker and liquidity provider to the global financial markets, which priced its initial public offering on April 15, 2015, today reported results for the third quarter ended September 30, 2015.

Third Quarter Selected Results*

Net Income of $69.5 million; Adjusted Net Income** of $76.2 million, which excludes IPO related adjustments

Adjusted EPS** of $0.40; GAAP Basic EPS of $0.36 and Diluted EPS of $0.35

Adjusted Net Trading Income** of $138.6 million, up 34.3%

Adjusted EBITDA ** of $100.7 million, up 52.3%; Adjusted EBITDA Margin of 71.3%

Quarterly cash dividend of $0.24 per share payable on December 15, 2015

* All comparisons are versus third quarter 2014.

** Non-GAAP financial measures. Please see Non-GAAP Financial Measures and Other Items for more information.

The Virtu Financial, Inc. Board of Directors declared a quarterly cash dividend of $0.24 per share. This dividend is payable on December 15, 2015 to shareholders of record as of December 1, 2015.

Our business recorded $138.6 million in Adjusted Net Trading Income and $0.40 per share in Adjusted EPS in the third quarter of 2015. Favorable operating conditions for Virtu drove our performance in the third quarter; global volumes were up this quarter vs. the third quarter of 2014, as well as quarter-over-quarter and YTD comparisons. In particular, the U.S. equity market volatility in August spurred significant volumes and corresponding increased demand for Virtus liquidity. As a result, our Americas Equities category recorded $45.8 million of Adjusted Net Trading Income and comprised 33.1% of our overall Adjusted Net Trading Income. As I have stated publicly, Virtu has the capacity to thrive in high volume environments with increased volatility. Our overall performance in the third quarter reflects this favorable environment, said Douglas Cifu, Chief Executive Officer of Virtu Financial.

GAAP Financial Results

Total revenues increased 24.6% to $215.8 million for this quarter, compared to $173.2 million for the same period in 2014. Trading income, net, increased 27.5% to $206.8 million for this quarter, compared to $162.3 million for the same period in 2014. Net Income increased 67.9% to $69.5 million for this quarter, compared to $41.4 million for the same period in 2014.

GAAP Basic EPS was $0.36 and Diluted EPS was $0.35.

Historical quarterly results from first quarter 2014 to date are available at http://ir.virtu.com.

Business Performance

Adjusted Net Trading Income increased 34.3% to $138.6 million for this quarter, compared to $103.2 million for the same period in 2014. Adjusted Net Income increased 56.8% to $76.2 million for this quarter, compared to $48.6 million for the same period in 2014. Adjusted EBITDA increased 52.3% to $100.7 million for this quarter, compared to $66.1 million for the same period in 2014.

Assuming all non-controlling interests had been exchanged for common stock, and the Companys Normalized Adjusted Net Income before income taxes was subject to corporation taxation, Adjusted EPS was $0.40 for this quarter.

Since our inception, we have sought to broadly diversify our market making across securities, asset classes and geographies, and as a result, for the quarter ended September 30, 2015, we achieved a diverse mix of Adjusted Net Trading Income results, with no one category constituting more than 33.1% of our total Adjusted Net Trading Income. Daily Adjusted Net Trading Income was approximately $2.166 million for this quarter compared to $1.612 million for the same period in the previous year. For 2015 year to date, no single category constituted more than 26.0% of our total Adjusted Net Trading Income and our Daily Adjusted Net Trading Income was approximately $2.090 million compared to $1.614 million for the same period in the previous year.

The increase in Adjusted Net Trading Income this quarter, in comparison to the same period in the previous year, was primarily driven by strong performances in Americas equities, EMEA equities, APAC equities and Global Commodities, and reflected the overall increased volumes in most of the global markets we serve. As of September 30, 2015, Virtu was connected to more than 225 unique market venues in 35 countries and makes markets in over 11,000 financial instruments.

The following tables show our Adjusted Net Trading Income, average daily Adjusted Net Trading Income and percentage of Adjusted Net Trading Income by category for the three months ended

September 30, 2015 and 2014, and nine months ended September 30, 2015 and 2014, respectively.

Three Months Ended September 30,

Adjusted Net Trading Income:

Total

% Change

(in thousands, except percentages)

Category

45,815

25,982

EMEA Equities

15,087

12,324

APAC Equities

13,144

28,273

18,457

Global Currencies

23,289

25,211

Options, Fixed Income and Other

10,988

10,063

Unallocated(1)

Total Adjusted Net Trading Income

138,616

103,189

Average Daily Adjusted Net Trading Income:

Selected Market Metrics:

US Equities Average Daily Volume, in millions(2)

EU Equities Average Daily Volume, in millions(2)

TSE Equities Average Daily Volume, in millions(3)

CME Average Daily Energy Contracts(4)

1,964,824

1,560,565

CME Average Daily FX Contracts(4)

854,505

795,217

OCC Average Daily Volume, in millions(5)

VIX (Average)(6)

VIX (High)(6)

VIX (Low)(6)

Trading Days (US)(7)

Nine Months Ended September 30,

102,278

78,122

46,013

38,283

33,875

20,450

90,514

67,848

90,147

70,557

24,911

27,831

392,889

303,516

1,949,387

1,572,980

902,461

749,287

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

Source: BATS

Source: Tokyo Stock Exchange

Source: Chicago Mercantile Exchange Group

Source: Options Clearing Corporation

Source: Chicago Board Options Exchange

Based on NYSE/NASDAQ trading calendar

Financial Condition

As of September 30, 2015, Virtu had $161.5 million in cash and cash equivalents, and total long-term debt outstanding in an aggregate principal amount of $501.1 million. The increase in cash and cash equivalents from prior periods is primarily due to the net proceeds contributed to Virtu Financial LLC as a result of the Initial Public Offering.

Virtus headcount was 150 full-time employees as of September 30, 2015.

To supplement our unaudited condensed consolidated financial statements presented in accordance with generally...


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