Virtu Financial, Inc. Q2 FY2026 earnings call

• Strategic Growth Pivot Progress

• Substantial progress achieved on the 1-year-old growth pivot plan, with investments in power/compute infrastructure, selective partnership investments, and ongoing talent acquisition
• Attrition rates are at multi-year lows, and the firm has re-established its reputation as a technologist and trader-led organization
• Total trading capital now stands at $3.4 billion, up from $2 billion one year prior, following an opportunistic term loan increase and 12 months of retained earnings; the firm will continue accumulating capital via free cash flow for future growth

• Financial Performance

• Q2 2026 adjusted EBITDA reached $437 million, with a 61% adjusted EBITDA margin; adjusted EPS was $1.82
• Trailing 12-month metrics are all-time highs: $10.4 million per day NT, $1.7 billion adjusted EBITDA, and $6.96 adjusted EPS
• As of Q2 end, cash compensation ratio is 23% and total compensation ratio is 28%, in line with management's stated near-term appropriate levels
• Invested capital was $2.9 billion as of June 30, with a 106% average annual return over the past year
• The firm maintains a quarterly dividend of $0.24 per share

• Capital Structure

• An incremental $500 million in debt was raised via a term loan increase in early July; trailing debt to EBITDA ratio is 1.5x, leaving the firm modestly leveraged
• Capital base will continue to grow organically, with deployment targeted to the highest-opportunity areas

Virtue Financial operates two core product segments: Market Making and Execution Services. For Q2 2026, total adjusted net trading income (NT) hit $718 million, or $11.6 million per day. The Market Making segment generated $9.4 million per day in adjusted NT, accounting for approximately 81% of total daily adjusted net trading income. The Execution Services segment generated $2.2 million per day in adjusted NT, accounting for approximately 19% of total daily adjusted net trading income. Both segments benefited from favorable market conditions and strong team execution.

Management did not revise full-year or medium-term financial guidance in this call. Key forward-looking statements include:

• The firm will continue aggressive hiring of quants, researchers, traders, and engineering/developer talent for at least the next two years, as there is ongoing demand for additional capacity to pursue new initiatives
• Cash compensation ratio is expected to remain in the low to mid-20% range over the medium term
• Longer term, trading capital growth will come from two primary sources: appropriate leverage (management noted the firm is set on leverage in the near to medium term after the recent term loan increase) and organic growth via free cash flow generation

Management noted that forward-looking statements are inherently subject to risks, assumptions, and uncertainties outside the company's control, and actual results may differ materially from forward-looking projections. No additional specific operational or financial risks were discussed in the prepared remarks or Q&A section of this call.

Q: Analyst asks how aggressive future trading capital growth will be after the recent $500 million term loan and quarterly capital increase, and when the new loan proceeds will be deployed and reflected in financial results. / A: Management notes the firm took advantage of attractive market conditions to raise debt when possible, rather than when forced, and the oversubscribed offering was priced favorably. Management states the firm is currently set on leverage levels for the near to medium term, with all future capital growth coming primarily from organic free cash flow generation. The proceeds have already been deployed to capture existing market opportunities, returning the firm's liquidity position to normal levels after using short-term liquidity for opportunities prior to the raise.

Q: Analyst asks what asset classes or markets are currently delivering the highest returns and attracting the most capital from the firm. / A: Management notes that previously identified growth markets including crypto, options, and block ETF have continued growing, with growth broadly spread across geographies and asset classes. Global equities (both retail and proprietary trading) were a standout performer in Q2. The firm's Virtue Execution Services (VES) business has consistently posted over $2 million per day for three consecutive quarters, delivering steady, growing contribution to results.

Q: Analyst asks how far along the firm is in its current talent hiring cycle, and for context on the multi-year low attrition rate. / A: Management states the firm does not have a fixed headcount target, and will continue hiring aggressively for key roles (quants, researchers, traders, engineers) for at least the next two years, as new opportunities and projects consistently emerge. The low attrition rate reflects a successful company culture shift that has improved employee satisfaction and increased interest from external talent, rather than meeting a specific numerical target.

Q: Analyst asks what opportunity the potential introduction of regulated perpetual futures in the US presents for Virtue, and what customer demand exists for these products. / A: Management notes that new fragmented trading products generally increase overall market volume historically, and the firm's strategy is to support all electronically traded assets wherever possible to provide liquidity. The firm currently sees limited direct institutional demand, and serves retail indirectly via wholesale brokerage partnerships, but will continue to support and trade the product as it evolves regardless of market direction.