OREANDA-NEWS. Virtu Financial, Inc. (NASDAQ:VIRT) a leading technology-enabled market maker and liquidity provider to the global financial markets, today reported results for the second quarter ended June 30, 2016.

Second Quarter Selected Results

  • Net income of $39.3 million; Adjusted Net Income* of $45.8 million
  • Basic and Diluted EPS of $0.21; Normalized Adjusted EPS* of $0.24
  • Total revenues of $174.2 million; Adjusted Net Trading Income* of $102.3 million
  • Adjusted EBITDA* of $65.8 million; Adjusted EBITDA Margin* of 63.0%
  • Quarterly cash dividend of $0.24 per share payable on September 15, 2016

* 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 September 15, 2016 to shareholders of record as of September 1, 2016.

“Overall, I am pleased with our operating performance in Q2.  Our business responded well to the challenge of low volumes and volatility, which characterized most of the quarter as well as the positive impact of Brexit at the tail end of the period.  We also made significant progress in the quarter on a number of key strategic initiatives that will grow our business over time.  I am very pleased to announce that we have partnered with J.P. Morgan on an initiative to marry our proprietary systems and order routing with J.P. Morgan trading experience through a technology and trading partnership in the dealer to dealer U.S. Treasuries market. In addition, as previously announced, we made a key strategic investment in a thriving Japanese Proprietary Trading System venue to advance our market making opportunities in Japan; and we continue to make progress providing execution services to select blue-chip buy-side firms, leveraging Virtu’s superior order routing and analytical technology,” said Douglas Cifu, Chief Executive Officer of Virtu Financial.

Strategic Initiatives Update

Technology Products and Services

We have entered into a strategic partnership with J.P. Morgan Chase whereby Virtu will provide technology and market access to J.P. Morgan.  J.P. Morgan will use Virtu’s technological capabilities to access and trade dealer to dealer markets in U.S. Treasuries.  The agreement is for a three year minimum term. 

Douglas Cifu commented on the agreement with J.P. Morgan:  “We have a longstanding relationship with J.P. Morgan on many fronts.  J.P. Morgan has been a key business partner of Virtu since our founding and has supported our business in many areas.   Our collaboration in trading and technology is a natural progression of this very important relationship.  We believe this agreement will be a win-win for both parties where J.P. Morgan can benefit from applying Virtu’s technology to certain markets and Virtu can benefit from leveraging its existing technological footprint to serve banks like J.P. Morgan.”

Agency Execution Services

During the second quarter, we have begun to provide order routing capabilities and post-trade analysis to institutional investors and the initial feedback has been very positive.  We are onboarding additional buy-side firms in the US and efforts are underway to expand this offering to EU Equities, highlighting the scalability of the Virtu model.

Strategic Minority Investment in SBI Japannext

As announced on July 5, 2016, Virtu is making a strategic minority investment in SBI Japannext, Co., Ltd., a leading Proprietary Trading System ("PTS") based in Tokyo. The investment is part of Virtu’s strategic long-term commitment to the Japanese marketplace. Japannext operates a round-the-clock venue with 29 active members (local and global brokerage houses) and is the oldest thriving PTS venue in Japan.  We expect this investment to enhance our overall APAC Equities franchise by offering Virtu unique market making opportunities and be beneficial in the long term from an investment standpoint. This transaction closed on July 27, 2016.

Business Performance

For the second quarter of 2016, Adjusted Net Trading Income decreased 3.4% to $102.3 million for this quarter, compared to $105.9 million for the same period in 2015. Adjusted Net Income decreased 18.1% to $45.8 million for this quarter, compared to $55.9 million for the same period in 2015. Adjusted EBITDA decreased 10.3% to $65.8 million for this quarter, compared to $73.3 million for the same period in 2015. 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 $0.24 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 June 30, 2016, we achieved a diverse mix of Adjusted Net Trading Income results, with no one category constituting more than 30.1% of our total Adjusted Net Trading Income. Average daily Adjusted Net Trading Income was approximately $1.599 million for this quarter compared to $1.680 million for the same period in the previous year.

As of June 30, 2016, Virtu was connected to more than 235 unique market venues in 36 countries and made markets in over 12,000 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 and six months ended June 30, 2016 and 2015, respectively.

                   
  Three Months Ended June 30,
Adjusted Net Trading Income:   2016     % of
Total		     2015     % of
Total		   % Change
                   
Category (in thousands, except percentages)
Americas Equities $ 30,821       30.1 %   $ 27,331       25.8 %     12.8 %
EMEA Equities   12,913       12.6 %     13,527       12.8 %     -4.5 %
APAC Equities   13,944       13.6 %     9,808       9.3 %     42.2 %
Global Commodities   21,276       20.8 %     27,587       26.1 %     -22.9 %
Global Currencies   16,898       16.5 %     24,691       23.3 %     -31.6 %
Options, Fixed Income and Other   8,257       8.1 %     4,725       4.5 %     74.8 %
Unallocated1   (1,810 )     -1.7 %     (1,804 )     -1.8 %     NM  
                   
Total Adjusted Net Trading Income $    102,299       100.0 %   $    105,865       100.0 %     -3.4 %
                   
                   
  Three Months Ended June 30,
Average Daily Adjusted Net Trading Income:   2016     % of
Total		     2015     % of
Total		   % Change
                                       
Category (in thousands, except percentages)
Americas Equities $ 482       30.1 %   $ 434       25.8 %     11.1 %
EMEA Equities   202       12.6 %     215       12.8 %     -6.0 %
APAC Equities   218       13.6 %     156       9.3 %     39.7 %
Global Commodities   332       20.8 %     438       26.1 %     -24.2 %
Global Currencies   264       16.5 %     392       23.3 %     -32.7 %
Options, Fixed Income and Other   129       8.1 %     75       4.5 %     72.0 %
Unallocated1   (28 )     -1.7 %     (30 )     -1.8 %     NM  
                   
Total Adjusted Net Trading Income $    1,599       100.0 %   $    1,680       100.0 %     -4.8 %
                   
                   
  Three Months Ended June 30,
Selected Market Metrics:   2016           2015         % Change
                   
US Equities Average Daily Volume, in millions2   7,251           6,352           14.2 %
US Equities Average Daily Volume, in $ USD billions2 $ 263.7         $ 260.3           1.3 %
EU Equities Average Daily Volume, in millions2   6,145           5,889           4.3 %
EU Equities Average Daily Volume, in € EUR billions2 € 46.6         € 52.9           -11.9 %
TSE Equities Average Daily Volume, in millions3   2,452           2,741           -10.5 %
TSE Equities Average Daily Volume, in ? JPY billions3 ? 2,458         ? 2,964           -17.1 %
CME Average Daily Energy Contracts4   2,321,388           1,748,412           32.8 %
CME Average Daily FX Contracts4   837,836           902,603           -7.2 %
OCC Average Daily Volume, in millions5   15.8           15.3           3.3 %
VIX (Average)6   15.68           13.74           14.1 %
Trading Days (US)7   64           63          
                   
  Six Months Ended June 30,
Adjusted Net Trading Income:   2016     % of
Total		     2015     % of
Total		   % Change
                   
Category (in thousands, except percentages)
Americas Equities $ 68,099       31.0 %   $ 56,463       22.2 %     20.6 %
EMEA Equities   26,622       12.1 %     30,926       12.2 %     -13.9 %
APAC Equities   26,124       11.9 %     20,731       8.2 %     26.0 %
Global Commodities   51,623       23.5 %     62,241       24.5 %     -17.1 %
Global Currencies   37,399       17.0 %     66,858       26.3 %     -44.1 %
Options, Fixed Income and Other   16,971       7.7 %     13,923       5.5 %     21.9 %
Unallocated1   (7,244 )     -3.2 %     3,131       1.1 %     NM  
                   
Total Adjusted Net Trading Income $    219,594       100.0 %   $    254,273       100.0 %     -13.6 %
                   
                   
  Six Months Ended June 30,
Average Daily Adjusted Net Trading Income:   2016     % of
Total		     2015     % of
Total		   % Change
                                       
Category (in thousands, except percentages)
Americas Equities $ 545       31.0 %   $ 455       22.2 %     19.8 %
EMEA Equities   213       12.1 %     249       12.2 %     -14.5 %
APAC Equities   209       11.9 %     167       8.2 %     25.1 %
Global Commodities   413       23.5 %     502       24.5 %     -17.7 %
Global Currencies   299       17.0 %     539       26.3 %     -44.5 %
Options, Fixed Income and Other   136       7.7 %     112       5.5 %     21.4 %
Unallocated1   (58 )     -3.2 %     25       1.1 %     NM  
                   
Total Adjusted Net Trading Income $    1,757       100.0 %   $    2,049       100.0 %     -14.3 %
                   
                   
  Six Months Ended June 30,
Selected Market Metrics:   2016           2015         % Change
                   
US Equities Average Daily Volume, in millions2   7,886           6,629           19.0 %
US Equities Average Daily Volume, in $ USD billions2 $ 284.1         $ 272.7           4.2 %
EU Equities Average Daily Volume, in millions2   6,396           6,235           2.6 %
EU Equities Average Daily Volume, in € EUR billions2 € 50.1         € 53.8           -6.9 %
TSE Equities Average Daily Volume, in millions3   2,676           2,723           -1.7 %
TSE Equities Average Daily Volume, in ? JPY billions3 ? 2,680         ? 2,887           -7.2 %
CME Average Daily Energy Contracts4   2,425,885           1,940,258           25.0 %
CME Average Daily FX Contracts4   889,631           926,252           -4.0 %
OCC Average Daily Volume, in millions5   16.4           15.8           3.8 %
VIX (Average)6   18.00           15.13           19.0 %
Trading Days (US)7   125           124          
                   
1 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.
2 Source: BATS
3 Source: Tokyo Stock Exchange
4 Source: Chicago Mercantile Exchange Group
5 Source: Options Clearing Corporation
6 Source: Chicago Board Options Exchange
7 Based on NYSE/NASDAQ trading calendar
 

Financial Condition

As of June 30, 2016, Virtu had $149.4 million in cash and cash equivalents, and total long-term debt outstanding in an aggregate principal amount of $497.3 million.

Non-GAAP Financial Measures and Other Items

To supplement our unaudited condensed consolidated financial statements presented in accordance with generally accepted accounting principles ("GAAP"), we use the following non-GAAP measures of financial performance:

  • "Adjusted Net Trading Income", which is the amount of revenue we generate from our market making activities, or trading income, net, plus interest and dividends income and expense, net, less direct costs associated with those revenues, including brokerage, exchange and clearance fees, net. Management believes that this measurement is useful for comparing general operating performance from period to period. Although we use Adjusted Net Trading Income as a financial measure to assess the performance of our business, the use of Adjusted Net Trading Income is limited because it does not include certain material costs that are necessary to operate our business. Our presentation of Adjusted Net Trading Income should not be construed as an indication that our future results will be unaffected by revenues or expenses that are not directly associated with our market making activities.
  • "Adjusted Net Income", which measures our operating performance by adjusting Net Income to exclude amortization of purchased intangibles and acquired capitalized software, severance, transaction advisory fees and expenses, termination of office leases, equipment write-off, share based compensation, charges related to share based compensation at IPO, 2015 Management Incentive Plan, and charges related to share based compensation awards at IPO.
  • "EBITDA", which measures our operating performance by adjusting Net Income to exclude financing interest expense on our senior secured credit facility, depreciation and amortization, amortization of purchased intangibles and acquired capitalized software, equipment write-off and income tax expense, and "Adjusted EBITDA", which measures our operating performance by further adjusting EBITDA to exclude severance, transaction advisory fees and expenses, termination of office leases, share based compensation, charges related to share based compensation at IPO, 2015 Management Incentive Plan, and charges related to share based compensation at IPO.
  • “Normalized Adjusted Net Income”, “Normalized Adjusted Net Income before income taxes”, “Normalized provision for income taxes”, and “Normalized Adjusted EPS”, which we calculate by adjusting Net Income to exclude certain items including IPO-related adjustments and other non-cash items, assuming that all vested and unvested Virtu Financial LLC units have been exchanged for Class A Common Stock, and applying a corporate tax rate of 35.5%.  

Adjusted Net Trading Income, Adjusted Net Income, EBITDA, Adjusted EBITDA, Normalized Adjusted Net Income, Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes and Normalized Adjusted EPS are non-GAAP financial measures used by management in evaluating operating performance and in making strategic decisions. In addition, these non-GAAP financial measures or similar non-GAAP measures are used by research analysts, investment bankers and lenders to assess our operating performance. Management believes that the presentation of Adjusted Net Trading Income, Adjusted Net Income, EBITDA, Adjusted EBITDA, Normalized Adjusted Net Income, Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes and Normalized Adjusted EPS provide useful information to investors regarding our results of operations because they assist both investors and management in analyzing and benchmarking the performance and value of our business. Adjusted Net Trading Income, Adjusted Net Income, EBITDA, Adjusted EBITDA, Normalized Adjusted Net Income, Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes and Normalized Adjusted EPS provide indicators of general economic performance that are not affected by fluctuations in certain costs or other items. Accordingly, management believes that these measurements are useful for comparing general operating performance from period to period. Furthermore, our credit agreement contains covenants and other tests based on metrics similar to Adjusted EBITDA. Other companies may define Adjusted Net Trading Income, Adjusted Net Income, Adjusted EBITDA, Normalized Adjusted Net Income, Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes and Normalized Adjusted EPS differently, and as a result our measures of Adjusted Net Trading Income, Adjusted Net Income, Adjusted EBITDA, Normalized Adjusted Net Income, Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes and Normalized Adjusted EPS may not be directly comparable to those of other companies. Although we use these non-GAAP financial measures as financial measures to assess the performance of our business, such use is limited because they do not include certain material costs necessary to operate our business.
                   
Adjusted Net Trading Income, Adjusted Net Income, EBITDA, Adjusted EBITDA and Normalized Adjusted Net Income should be considered in addition to, and not as a substitute for, Net Income in accordance with U.S. GAAP as a measure of performance. Our presentation of Adjusted Net Trading Income, Adjusted Net Income, EBITDA, Adjusted EBITDA, Normalized Adjusted Net Income, Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes and Normalized Adjusted EPS should not be construed as an indication that our future results will be unaffected by unusual or nonrecurring items. Adjusted Net Trading Income, Adjusted Net Income, Normalized Adjusted Net Income, Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes, Normalized Adjusted EPS and our EBITDA-based measures have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under U.S. GAAP. Some of these limitations are:

  • they do not reflect every cash expenditure, future requirements for capital expenditures or contractual commitments;
  • our EBITDA-based measures do not reflect the significant interest expense or the cash requirements necessary to service interest or principal payment on our debt;
  • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced or require improvements in the future, and our EBITDA-based measures do not reflect any cash requirement for such replacements or improvements;
  • they are not adjusted for all non-cash income or expense items that are reflected in our statements of cash flows;
  • they do not reflect the impact of earnings or charges resulting from matters we consider not to be indicative of our ongoing operations; and
  • they do not reflect limitations on our costs related to transferring earnings from our subsidiaries to us.

Because of these limitations, Adjusted Net Trading Income, Adjusted Net Income, EBITDA, Adjusted EBITDA and Normalized Adjusted Net Income are not intended as alternatives to Net Income as indicators of our operating performance and should not be considered as measures of discretionary cash available to us to invest in the growth of our business or as measures of cash that will be available to us to meet our obligations. We compensate for these limitations by using Adjusted Net Trading Income, Adjusted Net Income, EBITDA, Adjusted EBITDA and Normalized Adjusted Net Income along with other comparative tools, together with U.S. GAAP measurements, to assist in the evaluation of operating performance. These U.S. GAAP measurements include Net Income (loss), cash flows from operations and cash flow data. See below a reconciliation of each non-GAAP measure to the most directly comparable GAAP measure.

 
Virtu Financial, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
 
  Three Months Ended June 30,   Six Months Ended June 30,
    2016       2015       2016       2015  
               
(in thousands, except share and per share data)              
Revenues:              
Trading income, net $   166,547     $   169,792     $   352,836     $   383,722  
Interest and dividends income     5,422         9,415         9,690         14,597  
Technology services     2,212         2,772         4,293         5,188  
               
Total revenues     174,181         181,979         366,819         403,507  
               
Operating Expenses:              
Brokerage, exchange and clearance fees, net     55,573         56,501         115,298         117,639  
Communication and data processing     17,953         17,549         35,676         35,492  
Employee compensation and payroll taxes     20,809         15,165         43,365         42,065  
Interest and dividends expense     14,097         16,841         27,634         26,407  
Operations and administrative     5,736         6,669         10,546         12,431  
Depreciation and amortization     7,800         8,186         15,527         17,849  
Amortization of purchased intangibles and              
 acquired capitalized software     53         53         106         106  
Termination of office leases     -          -          (319 )       2,729  
Transaction advisory fees and expenses     155         -          155         -   
Equipment write-off     -          -          428         -   
Charges related to share based compensation at IPO     516         44,194         1,111         44,194  
Financing interest expense on senior secured credit facility     7,075         7,259         14,176         14,861  
               
Total operating expenses     129,767         172,417         263,703         313,773  
               
               
Income before income taxes and noncontrolling interest     44,414         9,562         103,116         89,734  
Provision for income taxes     5,128         1,997         12,474         4,725  
               
Net income $   39,286     $   7,565     $   90,642     $   85,009  
               
Noncontrolling interest     (30,908 )       (7,091 )       (71,916 )       (84,535 )
               
               
Net income available for common stockholders $   8,378     $   474     $   18,726     $   474  
               
Earnings per share:              
Basic $   0.21     $   0.01     $   0.49     $   0.01  
Diluted $   0.21     $   0.01     $   0.49     $   0.01  
               
               
Weighted average common shares outstanding              
Basic   38,230,684       34,305,052       38,220,390       34,305,052  
Diluted   38,230,684       34,529,349       38,220,390       34,529,349  
               
Comprehensive income:              
Net income $   39,286     $   7,565     $   90,642     $   85,009  
Other comprehensive income (loss)              
Foreign exchange translation adjustment, net of taxes     (1,230 )       1,632         1,264         (3,001 )
               
Comprehensive income $   38,056     $   9,197     $   91,906     $   82,008  
Less: Comprehensive income attributable to noncontrolling interest     (30,024 )       (8,311 )       (72,825 )       (81,122 )
               
Comprehensive income available for common stockholders $   8,032     $   886     $   19,081     $   886  
               

Virtu Financial, Inc. and Subsidiaries 
Reconciliation to Non-GAAP Operating Data (Unaudited)

The following tables reconcile Condensed Consolidated Statements of Comprehensive Income to arrive at Adjusted Net Trading Income, Adjusted Net Income, EBITDA, Adjusted EBITDA, and selected Operating Margins.

               
  Three Months Ended June 30,   Six Months Ended June 30,
    2016       2015       2016       2015  
               
  (in thousands, except percentages)
Reconciliation of Trading income, net to Adjusted Net Trading Income                  
Trading income, net $   166,547     $   169,792     $   352,836     $   383,722  
Interest and dividends income     5,422         9,415         9,690         14,597  
Brokerage, exchange and clearance fees, net     (55,573 )       (56,501 )       (115,298 )       (117,639 )
Interest and dividends expense     (14,097 )       (16,841 )       (27,634 )       (26,407 )
               
Adjusted Net Trading Income $   102,299     $   105,865     $   219,594     $   254,273  
               
Reconciliation of Net Income to Adjusted Net Income              
Net income $   39,286     $   7,565     $   90,642     $   85,009  
Amortization of purchased intangibles and acquired capitalized software     53         53         106         106  
Severance     -          -          193         303  
Transaction advisory fees and expenses     155         -          155         -   
Termination of office leases     -          -          (319 )       2,729  
Equipment write-off     -          -          428         1,468  
Share based compensation     4,301         2,799         9,696         8,653  
Charges related to share based compensation at IPO, 2015 Management Incentive Plan     1,505         1,259         2,701         1,259  
Charges related to share based compensation awards at IPO     516         44,194         1,111         44,194  
               
Adjusted Net Income $   45,816     $   55,870     $   104,713     $   143,721  
               
Reconciliation of Net Income to EBITDA and Adjusted EBITDA            
Net income $   39,286     $   7,565     $   90,642     $   85,009  
Financing interest expense on senior secured credit facility     7,075         7,259         14,176         14,861  
Depreciation and amortization     7,800         8,186         15,527         16,381  
Amortization of purchased intangibles and acquired capitalized software     53         53         106         106  
Equipment write-off     -          -          428         1,468  
Provision for income taxes     5,128         1,997         12,474         4,725  
               
EBITDA $   59,342     $   25,060     $   133,353     $   122,550  
               
Severance     -          -          193         303  
Transaction advisory fees and expenses     155         -          155         -   
Termination of office leases     -          -          (319 )       2,729  
Share based compensation     4,301         2,799         9,696         8,653  
Charges related to share based compensation at IPO, 2015 Management Incentive Plan     1,505         1,259         2,701         1,259  
Charges related to share based compensation awards at IPO     516         44,194         1,111         44,194  
               
Adjusted EBITDA $   65,819     $   73,312     $   146,890     $   179,688  
               
               
Selected Operating Margins              
Net Income Margin1   37.6 %     7.0 %     40.5 %     32.8 %
Adjusted Net Income Margin2   43.8 %     51.4 %     46.8 %     55.4 %
EBITDA Margin3   56.8 %     23.1 %     59.6 %     47.2 %
Adjusted EBITDA Margin4   63.0 %     67.5 %     65.6 %     69.3 %
               
1 Calculated by dividing net income by the sum of Adjusted Net Trading Income and technology services revenue.
2 Calculated by dividing Adjusted Net Income by the sum of Adjusted Net Trading Income and technology services revenue.
3 Calculated by dividing EBITDA by the sum of Adjusted Net Trading Income and technology services revenue.
4 Calculated by dividing Adjusted EBITDA by the sum of Adjusted Net Trading Income and technology services revenue.
 

Virtu Financial, Inc. and Subsidiaries 
Reconciliation to Non-GAAP Operating Data (Unaudited)  
(Continued)

The following tables reconcile Condensed Consolidated Statements of Comprehensive Income to arrive at Normalized Adjusted Net Income before income taxes, Normalized provision for income taxes, Normalized Adjusted Net Income and Normalized Adjusted EPS.

               
  Three Months Ended June 30,   Six Months Ended June 30,
    2016       2015       2016       2015  
               
(in thousands, except share and per share data)              
Reconciliation of Net Income to Normalized Adjusted Net Income              
Net income $ 39,286     $ 7,565     $ 90,642     $ 85,009  
Provision for income taxes   5,128       1,997       12,474       4,725  
               
Income before income taxes $ 44,414     $ 9,562     $ 103,116     $ 89,734  
               
Amortization of purchased intangibles and acquired capitalized software   53       53       106       106  
Severance   -       -       193       303  
Transaction advisory fees and expenses   155       -       155       -  
Termination of office leases   -       -       (319 )     2,729  
Equipment write-off   -       -       428       1,468  
Share based compensation   4,301       2,799       9,696       8,653  
Charges related to share based compensation at IPO, 2015 Management Incentive Plan   1,505       1,259       2,701       1,259  
Charges related to share based compensation awards at IPO   516       44,194       1,111       44,194  
               
Normalized Adjusted Net Income before income taxes $ 50,944     $ 57,867     $ 117,187     $ 148,446  
               
Normalized provision for income taxes1   18,085       20,543       41,601       52,698  
               
Normalized Adjusted Net Income $ 32,859     $ 37,324     $ 75,586     $ 95,748  
               
Weighted Average Adjusted shares outstanding2   139,652,286       138,671,656       139,687,755       138,671,656  
               
Normalized Adjusted EPS $ 0.24     $ 0.27     $ 0.54     $ 0.69  
               
1 Reflects U.S. federal, state, and local income tax rate applicable to corporations of approximately 35.5%.
2 Assumes that (1) holders of all vested and unvested Virtu Financial LLC Units (together with corresponding shares of Class C common stock),
have exercised their right to exchange such Virtu Financial LLC Units for shares of Class A common stock on a one-for-one basis,  (2) holders
of all Virtu Financial LLC Units (together with corresponding shares of Class D common stock), have exercised their right to exchange such
Virtu Financial LLC Units for shares of Class B common stock on a one-for-one basis, and subsequently exercised their right to convert
the shares of Class B common stock into shares of Class A common stock on a one-for-one basis.
Includes  additional shares from dilutive impact of options and restricted stock units outstanding under the 2015 Management Incentive Plan
during the three and six months ended June 30, 2016 and 2015.
 
Virtu Financial, Inc. and Subsidiaries
Condensed Consolidated Statements of Financial Condition (Unaudited)
  June 30,   December 31,
    2016       2015  
       
  (in thousands, except share data)
Assets      
Cash and cash equivalents $ 149,355     $ 163,235  
Due from affiliates       -  
Securities borrowed   550,210       453,296  
Securities purchased under agreements to resell   5,031       14,981  
Receivables from broker-dealers and clearing organizations   1,349,364       476,536  
Trading assets, at fair value   1,675,522       1,297,214  
Property, equipment and capitalized software, net   32,166       37,501  
Goodwill   715,379       715,379  
Intangibles (net of accumulated amortization)   1,097       1,203  
Deferred taxes   188,492       193,740  
Other assets   38,659       38,845  
       
Total assets $ 4,705,275     $ 3,391,930  
       
Liabilities and equity      
Liabilities      
Short-term borrowings $ 68,000     $ 45,000  
Securities loaned   955,662       524,603  
Payables to broker-dealers and clearing organizations   408,063       486,604  
Trading liabilities, at fair value   1,924,024       979,090  
Tax receivable agreement obligations   218,399       218,399  
Accounts payable and accrued expenses and other liabilities   92,637       86,775  
Senior secured credit facility, net   491,917       493,589  
       
Total liabilities $ 4,158,702     $ 2,834,060  
       
       
Total equity   546,573       557,870  
       
       
Total liabilities and equity $ 4,705,275     $ 3,391,930  
       
       
  As of June 30, 2016
Ownership of Virtu Financial LLC Interests: Interests   %
       
Virtu Financial, Inc. - Class A Common Stock   39,078,806       28.0 %
Non-controlling Interests (Virtu Financial LLC)   100,533,345       72.0 %
       
Total Virtu Financial LLC Interests   139,612,151       100.0 %
       

 

About Virtu Financial, Inc.

Virtu is a leading technology-enabled market maker and liquidity provider to the global financial markets. We stand ready, at any time, to buy or sell a broad range of securities and other financial instruments, and we generate revenue by buying and selling securities and other financial instruments and earning small amounts of money on individual transactions based on the difference between what buyers are willing to pay and what sellers are willing to accept, which we refer to as "bid/ask spreads," across a large volume of transactions. We make markets by providing quotations to buyers and sellers in more than 12,000 securities and other financial instruments on more than 235 unique exchanges, markets and liquidity pools in 36 countries around the world. We believe that our broad diversification, in combination with our proprietary technology platform and low-cost structure, enables us to facilitate risk transfer between global capital markets participants by supplying liquidity and competitive pricing while at the same time earning attractive margins and returns.