Virtu Financial, Inc. VIRT reported third-quarter 2024 adjusted earnings per share (EPS) of 82 cents, which outpaced the Zacks Consensus Estimate by 5.1%. The bottom line jumped 82.2% year over year.
Adjusted net trading income improved more than 30% year over year to $388 million in the quarter under review. It beat the consensus estimate by 4%.
The strong third-quarter results were aided by a strong revenue contribution from the Market Making segment and higher revenues from commissions. Organic growth due to options market making, ETF block, and digital assets benefited the Market Making segment. However, the upside was partly offset by an elevated overall expense level. VIRT’s shares inched up marginally since it reported quarterly results on Oct. 24.
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Virtu Financial, Inc. Price, Consensus and EPS Surprise
Virtu Financial, Inc. price-consensus-eps-surprise-chart | Virtu Financial, Inc. Quote
Q3 Performance Details
Revenues from commissions, net and technology services amounted to $131.6 million, which rose 19.4% year over year. The metric beat the consensus mark and our model estimate of $120 million. Interest and dividend income of $125.2 million fell from $127.7 million a year ago and fell short of the consensus mark and our estimate of $132 million.
Adjusted EBITDA jumped to $214.8 million in the quarter under review from $139.5 million a year ago and surpassed our model estimate of $165.6 million. Adjusted EBITDA margin of 55.4% improved 860 basis points year over year.
Total operating expenses increased to $559.7 million from $492.1 million in the year-ago quarter, higher than our estimate of $506.6 million. The year-over-year rise was due to higher net brokerage, exchange, clearance fees and payments for order flow, communication and data processing costs, employee compensation and payroll taxes, interest and dividend expenses, and transaction advisory fees and expenses.
Q3 Segmental Update
Market Making: Adjusted net trading income was $288 million in the third quarter, up 38.4% year over year and surpassed our estimate of $223 million. The segment’s revenues rose 11.5% year over year to $576.7 million, higher than the Zacks Consensus Estimate and our estimate of $479 million.
Execution Services: The unit recorded an adjusted net trading income of $100 million in the quarter under review, which grew 11.2% year over year. Also, the metric beat our estimate of $97.6 million. Total revenues of $125.7 million grew 11.8% year over year and surpassed the consensus mark and our estimate of $123 million.
Financial Update (as of Sept. 30, 2024)
Virtu Financial exited the third quarter with cash and cash equivalents of $701.4 million, which plunged from the 2023-end level of $820.4 million. Total assets of $14.4 billion decreased from the $14.5 billion figure at 2023-end.
Long-term borrowings, net, amounted to $1.74 billion, up marginally from the 2023-end level of $1.73 billion. Short-term borrowings totaled $128.8 million.
Total equity of $1.42 billion inched up from the $1.41 billion level at 2023-end.
Share Repurchase and Dividend Update
As part of the share repurchase program, Virtu Financial bought back 1.7 million shares worth $48 million in the third quarter of 2024. It had a leftover capacity of $479.3 million under its buyback authorization for future purchases.
VIRT announced a cash dividend of 24 cents per share. The dividend will be paid out on Dec. 15, 2024, to shareholders of record as of Dec. 1.
VIRT’s Zacks Rank
VIRT currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Performance of Other Finance Sector Players
Here are some other Finance sector players that have reported third-quarter results so far. The bottom-line results of Morgan Stanley MS, American Express Company AXP and The Goldman Sachs Group, Inc. GS beat the respective Zacks Consensus Estimate.
Morgan Stanley reported third-quarter 2024 earnings of $1.88 per share handily outpaced the Zacks Consensus Estimate of $1.57. The bottom line also compared favorably with $1.38 in the prior-year quarter. Quarterly net revenues were $15.38 billion, up 16% from the prior-year quarter. The top line beat the Zacks Consensus Estimate of $14.27 billion.
American Express reported third-quarter 2024 EPS of $3.49, which beat the Zacks Consensus Estimate by 6.7%. The bottom line climbed 6% year over year. Total revenues net of interest expense amounted to $16.6 billion, which marginally missed the Zacks Consensus Estimate. However, the top line improved 8.2% year over year in the quarter under review.
Goldman Sachs reported third-quarter 2024 adjusted EPS of $8.40 surpassed the Zacks Consensus Estimate of $6.85. This compares favorably with $5.47 reported in the year-ago quarter. Net revenues for the quarter were $12.7 billion, which increased 7.5% from the year-ago quarter. Also, the top line surpassed the Zacks Consensus Estimate of $11.63 billion.
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