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Virtu Financial (VIRT) Rises 4.2% Since Q3 Earnings Beat
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Virtu Financial, Inc.’s (VIRT - Free Report) shares rose 4.2% since it reported better-than-expected third-quarter results on Nov 3, 2022. Its results were supported by a huge jump in interest and dividends income. Also, improved performance in the Market Making unit benefited the results. However, the positives were partially offset by increased operating expenses.
Virtu Financial reported third-quarter 2022 adjusted earnings per share (EPS) of 61 cents, which beat the Zacks Consensus Estimate of 54 cents. However, the EPS fell from 70 cents a year ago.
VIRT’s adjusted net trading income of $331.1 million in the third quarter fell from $354.4 million a year ago. However, the metric beat the consensus mark by 7.8%.
Virtu Financial, Inc. Price, Consensus and EPS Surprise
Revenues from commissions, net and technology services declined to $121 million from $135.9 million a year ago. It also missed the Zacks Consensus Estimate of $143.8 million. Interest and dividends income rose to $43.6 million in the third quarter from $9.7 million a year ago.
Adjusted EBITDA amounted to $180.6 million, which fell from $210.7 million in the prior-year quarter. Adjusted EBITDA margin decreased to 54.6% from 59.5% a year ago.
Total operating expenses of $459.4 million increased from the year-ago level of $399.2 million. VIRT recorded increases in costs related to interest and dividends expense, employee compensation and payroll taxes and brokerage, exchange and clearance fees, and payments for order flow. This was partially offset by lower operations and administrative, communication and data processing expenses.
Segmental Update
Market Making: The segment reported a net trading income of $392.5 million, which improved from $389.4 million in the prior-year period. Segmental total revenues rose to $447.9 million from $409.3 million in third-quarter 2021.
Execution Services: The net trading income of the segment increased to $4.9 million from $4.8 million a year ago. However, revenues fell to $119.6 million in the quarter under review from $132.5 million due to lower revenues from commissions, net, and technology services.
Financial Update (as of Sep 30, 2022)
Virtu Financial exited the third quarter with cash and cash equivalents of $836.3 million, which declined from the 2021-end level of $1,071.5 million. Total assets of $10,972.3 million increased from $10,320 million at 2021-end.
Long-term borrowings, net, amounted to $1,792.1 million, up from the 2021-end figure of $1,605.1 million. Short-term borrowings, net, at the third-quarter end were $167.5 million.
Total equity slipped from $1,863.6 million at 2021-end to $1,672.9 million.
Net operating cash flow in the first nine months of 2022 was $290.5 million, down from $374.5 million a year ago.
Share Repurchase and Dividend Update
In the quarter under review, Virtu Financial (as part of its share repurchase program) bought back shares worth $80.6 million. It has around $348.3 million remaining under its share buyback authorization for future purchase of the shares of Class A Common Stock and Virtu Financial Units.
Concurrently, VIRT’s board of directors approved a quarterly cash dividend of 24 cents per share. The dividend will be paid out on Dec 15, 2022, to its shareholders of record as of Dec 1.
Guidance
For the fourth quarter, VIRT is expected to make share repurchases worth $17 million.
Headquartered in Cincinnati, OH, American Financial is a major insurance holding company. The Zacks Consensus Estimate for AFG’s 2022 bottom line is pegged at $11.66 per share, which witnessed two upward estimate revisions in the past 60 days against none in the opposite direction.
New York-based StoneX Group works as a global financial services network. The Zacks Consensus Estimate for SNEX’s 2022 bottom line indicates 54.8% year-over-year growth.
Based in Lincoln, NE, Midwest Holding is a financial services company. The Zacks Consensus Estimate for MDWT’s 2022 earnings is pegged at 65 cents per share, signaling a 185.5% surge from a year ago.
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Virtu Financial (VIRT) Rises 4.2% Since Q3 Earnings Beat
Virtu Financial, Inc.’s (VIRT - Free Report) shares rose 4.2% since it reported better-than-expected third-quarter results on Nov 3, 2022. Its results were supported by a huge jump in interest and dividends income. Also, improved performance in the Market Making unit benefited the results. However, the positives were partially offset by increased operating expenses.
Virtu Financial reported third-quarter 2022 adjusted earnings per share (EPS) of 61 cents, which beat the Zacks Consensus Estimate of 54 cents. However, the EPS fell from 70 cents a year ago.
VIRT’s adjusted net trading income of $331.1 million in the third quarter fell from $354.4 million a year ago. However, the metric beat the consensus mark by 7.8%.
Virtu Financial, Inc. Price, Consensus and EPS Surprise
Virtu Financial, Inc. price-consensus-eps-surprise-chart | Virtu Financial, Inc. Quote
Q3 Performance
Revenues from commissions, net and technology services declined to $121 million from $135.9 million a year ago. It also missed the Zacks Consensus Estimate of $143.8 million. Interest and dividends income rose to $43.6 million in the third quarter from $9.7 million a year ago.
Adjusted EBITDA amounted to $180.6 million, which fell from $210.7 million in the prior-year quarter. Adjusted EBITDA margin decreased to 54.6% from 59.5% a year ago.
Total operating expenses of $459.4 million increased from the year-ago level of $399.2 million. VIRT recorded increases in costs related to interest and dividends expense, employee compensation and payroll taxes and brokerage, exchange and clearance fees, and payments for order flow. This was partially offset by lower operations and administrative, communication and data processing expenses.
Segmental Update
Market Making: The segment reported a net trading income of $392.5 million, which improved from $389.4 million in the prior-year period. Segmental total revenues rose to $447.9 million from $409.3 million in third-quarter 2021.
Execution Services: The net trading income of the segment increased to $4.9 million from $4.8 million a year ago. However, revenues fell to $119.6 million in the quarter under review from $132.5 million due to lower revenues from commissions, net, and technology services.
Financial Update (as of Sep 30, 2022)
Virtu Financial exited the third quarter with cash and cash equivalents of $836.3 million, which declined from the 2021-end level of $1,071.5 million. Total assets of $10,972.3 million increased from $10,320 million at 2021-end.
Long-term borrowings, net, amounted to $1,792.1 million, up from the 2021-end figure of $1,605.1 million. Short-term borrowings, net, at the third-quarter end were $167.5 million.
Total equity slipped from $1,863.6 million at 2021-end to $1,672.9 million.
Net operating cash flow in the first nine months of 2022 was $290.5 million, down from $374.5 million a year ago.
Share Repurchase and Dividend Update
In the quarter under review, Virtu Financial (as part of its share repurchase program) bought back shares worth $80.6 million. It has around $348.3 million remaining under its share buyback authorization for future purchase of the shares of Class A Common Stock and Virtu Financial Units.
Concurrently, VIRT’s board of directors approved a quarterly cash dividend of 24 cents per share. The dividend will be paid out on Dec 15, 2022, to its shareholders of record as of Dec 1.
Guidance
For the fourth quarter, VIRT is expected to make share repurchases worth $17 million.
Zacks Rank & Key Picks
Virtu Financial currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader finance space are American Financial Group, Inc. (AFG - Free Report) , StoneX Group Inc. (SNEX - Free Report) and Midwest Holding Inc. , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Headquartered in Cincinnati, OH, American Financial is a major insurance holding company. The Zacks Consensus Estimate for AFG’s 2022 bottom line is pegged at $11.66 per share, which witnessed two upward estimate revisions in the past 60 days against none in the opposite direction.
New York-based StoneX Group works as a global financial services network. The Zacks Consensus Estimate for SNEX’s 2022 bottom line indicates 54.8% year-over-year growth.
Based in Lincoln, NE, Midwest Holding is a financial services company. The Zacks Consensus Estimate for MDWT’s 2022 earnings is pegged at 65 cents per share, signaling a 185.5% surge from a year ago.