Operator: 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.

Matthew Sandberg: 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.

Aaron Simons: 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.

Cindy Lee: Thanks, Aaron. Good morning, everyone. For the first quarter of 2026, we generated adjusted net trading income, or NT, 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 ANT 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 [ NTS], 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.

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Operator: [Operator Instructions] Your first question comes from the line of Patrick Moly from [indiscernible].

Patrick Moley: 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?

Joseph Molluso: 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.

Patrick Moley: 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?

Unknown Executive: 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.

Joseph Molluso: 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.

Patrick Moley: Okay. So maybe just if I could sneak 1 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?

Aaron Simons: 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.

Joseph Molluso: 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.

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

Daniel Fannon: 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?

Aaron Simons: 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.

Daniel Fannon: 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.

Unknown Executive: 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?

Joseph Molluso: 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.

Operator: Your next question comes from Alex BeGoldman Sachs. Your line is open.

Alexander Blostein: 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 [ BC and payment Florida 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?

Aaron Simons: 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.

Alexander Blostein: Yes. Understood. It’s just the absolute divergence, not so much the percentage, was very notable. [ One was up a lot the other down ]. 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.

Unknown Executive: 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.

Operator: Your next question comes from Kenneth Worthington at JPMorgan.

Kenneth Worthington: 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?

Joseph Molluso: 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.

Kenneth Worthington: 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?

Aaron Simons: 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.

Operator: Your last question comes from Michael Cypress at Morgan Stanley.

Michael Cyprys: 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.

Joseph Molluso: 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.

Michael Cyprys: 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?

Aaron Simons: 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 [ grudge ] work, assist and 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.

Michael Cyprys: 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?

Aaron Simons: 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 “agenetic AI”. So I don’t really feel like I can give any color there.

Operator: Your next question comes from Craig Siegenthaler at Bank of America is open.

Craig Siegenthaler: Hope you’re all doing well. First question on risk management. Given the strong results, can you guys hear me okay at that going a little bit [Technical Difficulty ] Yes. Let me changing to the speakers. So can you hear me okay?

Aaron Simons: Yes, yes. .

Craig Siegenthaler: 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?

Aaron Simons: 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.

Craig Siegenthaler: Okay. And Aaron, any way to quantify that?

Aaron Simons: In terms of?

Craig Siegenthaler: Well, in terms of how you guys look at..

Joseph Molluso: 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.

Craig Siegenthaler: 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.

Joseph Molluso: 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.

Aaron Simons: 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.

Joseph Molluso: Yes, you asked about risk management, and we don’t have an infrastructure in place to really manage a [ Sharp 1 type 2 ] hedge fund setup.

Craig Siegenthaler: Got it. And listen, I think some of your peers sit at [ Ellis 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.

Aaron Simons: Well, [ Citadel ] is a great firm, but they began as a hedge fund. So that’s a different evolution of the firm. .

Joseph Molluso: 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. .

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

Aaron Simons: Nothing really, but thanks, everyone, for joining, and thanks for the questions, and we’ll talk to you next quarter.

Operator: This concludes today’s call. Thank you for attending. You may now disconnect.

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Q1 2026

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