Virtu Financial, Inc. (NASDAQ: VIRT), a technology-enabled market maker and liquidity provider to the global financial markets, has today reported results for the fourth quarter and the full year ended December 31, 2017.
Fourth Quarter and Full Year Selected Highlights
Fourth Quarter 2017:
- Net income of $47.8 million, Normalized Adjusted Net Income* of $41.4 million
- Basic and Diluted earnings per share of $0.28; Normalized Adjusted EPS* of $0.22
- Total revenues of $460.4 million; Adjusted Net Trading Income* of $237.3 million
- Adjusted EBITDA* of $107.8 million; Adjusted EBITDA Margin* of 45.4%
- Expense and capital synergies on track with forecast as integration progresses
- Made total to-date pre-payments of $526 million on the $1.15 billion term loan debt incurred in connection with KCG acquisition
- Quarterly cash dividend of $0.24 per share payable on March 15, 2018
- Board authorized $50 million for future repurchases of common stock and units Full Year 2017:
- Net income of $33.3 million, Normalized Adjusted Net Income* of $92.1 million
- Basic and Diluted earnings per share of $0.26; Normalized Adjusted EPS* of $0.57
- Total revenues of $1,024 million; Adjusted Net Trading Income* of $556.3 million
- Adjusted EBITDA* of $251.4 million; Adjusted EBITDA Margin* of 45.2%
* Non-GAAP financial measures.
The Virtu Financial, Inc. Board of Directors declared a quarterly cash dividend of $0.24 per share. This dividend is payable on March 15, 2018 to shareholders of record as of March 1, 2018.
The Virtu Financial, Inc. Board of Directors also approved a new share repurchase program of up to $50 million in Class A common stock and common units of Virtu Financial LLC by March 31, 2019.
In our first complete quarter after the acquisition of KCG, the combined Virtu franchise continues to outperform. The $3.8 million per day we earned in Adjusted Net Trading Income in the fourth quarter demonstrates that this combined entity can generate profitable results in a variety of market operating environments. We also remain confident that the expense and efficiency discipline that is a hallmark of Virtu is being applied to the legacy KCG businesses, and the synergy results reported today and expense guidance we have provided demonstrate this discipline,” said Douglas Cifu, Chief Executive Officer of Virtu Financial.
Financial Results
Fourth Quarter 2017:
Total revenues increased 169.8% to $460.4 million for this quarter, compared to $170.6 million for the same period in 2016. Trading income, net, increased 83.7% to $286.4 million for this quarter, compared to $155.9 million for the same period in 2016. Net income increased 37.1% to $47.8 million for this quarter, compared to $34.9 million for the same period in 2016.
Basic and Diluted earnings per share for this quarter were both $0.28, compared to $0.22 each for the same period in 2016.
Adjusted Net Trading Income increased 129.5% to $237.3 million for this quarter, compared to $103.4 million for the same period in 2016. Adjusted EBITDA increased 66.4% to $107.8 million for this quarter, compared to $64.8 million for the same period in 2016. Normalized Adjusted Net Income increased 25.8% to $41.4 million for this quarter, compared to $32.9 million for the same period in 2016.
Assuming all non-controlling interests had been exchanged for common stock, and the Company’s Normalized Adjusted Net Income before income taxes was subject to corporation taxation, Normalized Adjusted EPS was $0.22 for this quarter and $0.24 for the same period in 2016.
Full Year 2017:
Total revenues increased 45.8% to $1,024 million, compared to $702.3 million in 2016. Trading income, net, increased 15.1% to $766.0 million, compared to $665.5 million in 2016. Net income decreased 79.0% to $33.3 million, compared to $158.5 million in 2016.
Basic and Diluted earnings per share for this year were both $0.26, compared to $0.83 each in 2016.
Adjusted Net Trading Income increased 31.0% to $556.3 million, compared to $424.5 million in 2016. Normalized Adjusted Net Income decreased 32.1% to $92.1 million, compared to $135.6 million in 2016. Adjusted EBITDA decreased 6.3% to $251.4 million, compared to $268.3 million in 2016.
Assuming all non-controlling interests had been exchanged for common stock, and the Company’s Normalized Adjusted Net Income before income taxes was subject to corporation taxation, Normalized Adjusted EPS was $0.57 for the full year 2017 and $0.97 for the full year 2016.
Operating Segment Information
Prior to the acquisition of KCG Holdings, Inc. in July 2017, the Company was managed and operated as one business, and, accordingly, operated under one reportable segment. As a result of the acquisition of KCG, beginning in the third quarter of 2017 the Company has three operating segments: (i) Market Making; (ii) Execution Services; and (iii) Corporate.
Market Making principally consists of market making in the cash, futures and options markets across global equities, options, fixed income, currencies and commodities. As a market maker, the Company commits capital on a principal basis by offering to buy securities from, or sell securities to, broker dealers, banks and institutions.
Execution Services comprises agency-based trading and trading venues, offering execution services in global equities, options, futures and fixed income on behalf of institutions, banks and broker dealers. Corporate contains the Company’s investments, principally in strategic trading-related opportunities, and maintains corporate overhead expenses.
The complete report can be seen here.