VIRT Virtu Financial 10-Q 2026-09-30 section summaries

Virtu Financial (VIRT) — Q3 and nine months ended September 30, 2026

Virtu is a technology-driven liquidity provider and trading-solutions firm operating across more than 50,000 instruments, 150 venues and over 50 countries. It reports Market Making and Execution Services segments, plus Corporate. VFI owned approximately 58.3% of Virtu Financial LLC at quarter-end.

Consolidated results

Revenue grew 39.9% in Q3 and 29.2% for 9M; Market Making’s Q3 growth accelerated versus its 9M pace. Other, net includes the $66.988M gain on the 2025 RFQ-hub sale and deconsolidation, which makes that prior-period revenue line less comparable. The effective tax rate was 14.7% in Q3 versus 17.2%, and 15.6% for 9M versus 15.9%.

Segment results

For 9M, Market Making revenue was $2,911.649M versus $2,145.782M and pretax earnings were $995.694M versus $595.089M. Execution Services revenue was $523.622M versus $510.002M, while pretax earnings fell to $88.383M from $152.461M, reflecting expense pressure despite modest revenue growth.

Cash flow and capital allocation

Operating cash flow reflects substantial trading-related working-capital movements, including increases of $3,220.607M in trading assets and $3,087.031M in trading liabilities. Financing included $498.750M of long-term borrowing proceeds and $15.450M of repayments. Dividends and distributions totaled $406.649M, and treasury-stock purchases were $64.563M. Cash, cash equivalents and restricted or segregated cash ended the period at $1,575.383M, versus $755.412M at September 30, 2025.

Balance sheet and funding

Intangibles comprised customer relationships of $115.396M (prior $150.719M), favorable occupancy leases of $0.188M ($0.214M) and exchange memberships of $3.998M (unchanged); other listed categories were nil. Parent-company tangible common equity, after goodwill and other intangibles, was $744.702M. Trading assets and liabilities at fair value were $13,772.164M and $12,192.294M, respectively.

Long-term borrowings were $2.552B of principal and $2.520B net carrying value. The July 2026 issuance of $500.0M of incremental Term B-2 loans drove the increase; the $2.030B Term B-2 balance carries 6.40% interest and matures in 2031. Virtu also had $500.0M principal of 7.50% secured notes and $22.2M of SBI bonds; $2.448B of total debt principal is due in 2031. The $300M revolver was undrawn. Prime-broker facility borrowings were $272.2M against $671.4M available, collateralized for trading-margin needs. Cash paid for interest in 9M was $584.946M, versus $472.179M.

Other developments, risks and capital

Recurring fair-value financial instruments owned rose to $10.071B from $7.343B; instruments sold, not yet purchased, rose to $12.192B from $9.105B. Derivatives generated $128.711M of Q3 trading income versus a $19.939M loss a year earlier. Digital assets had $222.178M fair value ($218.599M cost), including $20.065M of USDC; 25.0M PYTH tokens with $1.9M fair value were restricted until unlocking in 2027. The Level 3 JNX investment was valued at $91.254M; its valuation depends on unobservable assumptions.

Class A shares outstanding increased from 84.919931M at year-end to 88.592399M; total Class A, C and D shares rose from 152.981856M to 155.281508M. Outstanding RSU/RSA awards were 4,408,399 at a $38.97 weighted-average fair value; unrecognized RSU compensation was $116.6M. Cumulative share and unit repurchases were approximately 53.8M for $1.4172B through April 24, 2026.

Virtu Americas held $644.998M regulatory capital against a $2.868M requirement, or $642.130M excess. Legal proceedings and regulatory reviews remain ongoing, including securities, market-manipulation, patent and prediction-market matters; management does not expect them to materially affect the company overall, but says certain outcomes cannot be estimated and a significant judgment could affect a particular period. Market-structure rule changes and evolving digital-asset regulation add uncertainty.

After quarter-end, on November 4, 2026, the Board and the majority voting holder approved a plan to convert the company’s incorporation from Delaware to Texas, subject to conditions. On November 5, the Board declared a $0.24-per-share dividend payable December 15, 2026.

Virtu Financial — Q3 and first nine months of 2026

Virtu’s results strengthened substantially as higher trading activity and market opportunities drove growth, particularly in Market Making. Higher transaction, compensation and financing costs offset part of the revenue increase. The business operates across more than 50 countries, 150+ venues and 50,000+ securities and instruments. Market Making depends on trading volumes, volatility, spreads and order-flow mix; Execution Services earns commissions and fees from execution technology, workflow tools and analytics.

Consolidated results

Revenue grew 39.9% in Q3 and 29.2% in 9M. Trading income grew 55.0% in Q3 and 39.2% in 9M; it represented 72% of 9M revenue, compared with 67% a year earlier. The sharp 9M decline in other revenue primarily reflects gains from the RFQ-hub sale and deconsolidation included in 2025, along with larger prior-year settlement-fund recovery gains; digital-asset remeasurement losses were a partial offset.

Segment performance

Market Making drove most of the improvement. Execution Services revenue increased modestly, but segment pre-tax income declined. Adjusted Net Trading Income (a non-GAAP measure) was $703.967 million in Q3 versus $467.015 million; for 9M it was $2,208.371 million versus $1,531.878 million. Average daily Adjusted Net Trading Income was $11.000 million versus $7.354 million in Q3 and $11.810 million versus $8.258 million in 9M. Growth reflected stronger volumes and opportunities across markets, securities-borrowing activity, dividends on trading assets and institutional engagement.

Costs, adjusted earnings and taxes

Higher trading activity and mix contributed to brokerage costs. Compensation increased mainly because of higher incentive accruals tied to profitability; compensation capitalized for software development was $15.1 million in Q3 and $47.2 million in 9M, versus $9.3 million and $30.5 million, respectively. Interest and dividends expense rose with greater securities-lending collateral and dividends on securities sold short. Financing interest increased primarily with higher Term B-2 principal.

Q3 EBITDA was $409.354 million versus $241.988 million, and Adjusted EBITDA was $437.883 million versus $267.813 million; the adjusted margin was 62.2% versus 57.3%. For 9M, EBITDA was $1,292.663 million versus $933.665 million and Adjusted EBITDA was $1,395.234 million versus $957.201 million, with an adjusted margin of 63.2% versus 62.5%. Normalized Adjusted Net Income was $283.459 million in Q3 and $931.638 million in 9M, versus $166.526 million and $619.028 million. Normalized Adjusted EPS was $1.77 versus $1.05 in Q3 and $5.83 versus $3.88 in 9M. These non-GAAP measures make adjustments including share-based compensation ($33.804 million in Q3; $101.625 million in 9M) and specified amortization, severance and refinancing items. Adjusted measures should not be treated as discretionary cash flow.

The Q3 income-tax provision was $48.557 million (14.7% effective rate), versus $30.939 million (17.2%); the 9M provision was $169.2 million versus $119.1 million (15.6% versus 15.9%). Tax rates depend on income mix, jurisdictions and noncontrolling interests. Weighted-average diluted shares were 88.465 million in Q3 versus 84.797 million and 87.396 million in 9M versus 85.461 million. Normalized adjusted EPS uses a broader assumed exchange/conversion share count, including dilutive awards: 159.775 million in Q3 versus 158.818 million and 159.726 million in 9M versus 159.693 million.

Cash flow, liquidity and financing

Operating cash flow rose mainly with net income and noncash adjustments. Investing outflow increased primarily due to property and equipment acquisitions; investing activity also includes capitalized software. Financing in 2026 included $498.8 million net proceeds from long-term borrowings and $172.6 million from short-term borrowings, partly offset by $406.6 million of dividends and distributions to noncontrolling interests and $64.6 million of treasury-stock purchases.

At September 30, 2026, consolidated cash and cash equivalents were $1,516.6 million and long-term debt was approximately $2,551.8 million in aggregate principal. Term B-2 Loans totaled $2,029.6 million in principal after a July 2026 amendment issued $500.0 million of incremental loans for general corporate purposes; Virtu repaid $15.5 million in February. The loans mature June 21, 2031, amortize at approximately 1% of original principal annually and may require excess-cash-flow or other contingent prepayments. They bear either term SOFR plus 2.50% (0% floor) or the specified base rate plus 1.50%. Virtu also has $500.0 million principal of 7.50% senior secured first-lien notes due June 15, 2031. The $300.0 million revolving facility matures three years after its June 2024 effective date and includes a springing leverage test under specified usage conditions. The company reported compliance with Credit Agreement covenants. Term loans remain exposed to floating rates; the swap that had fixed interest on $1,075.0 million of principal expired in November 2025.

Management expects operating cash flow, available cash and broker-dealer facilities to cover the next 12 months, while anticipating higher margin and liquidity needs as activity grows and the company enters new markets. Short-term prime-broker and other credit borrowings were approximately $272.2 million; broker-dealer facilities had $185.0 million outstanding principal. The repurchase authorization was expanded to $1,720 million and extended through April 24, 2026; cumulative repurchases through that date were approximately 53.8 million Class A shares and Virtu Financial Units for approximately $1,417.2 million.

Other obligations, accounting and risks

Virtu generally owes tax receivable agreement parties 85% of qualifying realized cash tax savings. Payments totaled $155.8 million from February 2017 through September 2026; expected payments are approximately $0.7–$23.2 million annually over the next 15 years. Certain events, including a change of control, could accelerate obligations. At the parent-company level, cash and cash equivalents were $376.0 million, deferred tax assets were $74.9 million and the tax receivable agreement obligation was $173.1 million.

The July 1, 2026 qualitative goodwill assessment found no impairment. Customer relationships are the largest finite-lived intangible and are amortized over an estimated 10–12 years; using a seven-year life instead would have reduced amortization by $11.8 million in Q3 2026 and $25.1 million in 9M 2026 (increased it by $3.6 million and $10.8 million in the respective 2025 periods).

Key risks include dependence on trading volumes, volatility and client order flow; counterparty, clearing and liquidity access; platform outages, cyber threats and third-party infrastructure; regulatory-capital requirements and market-structure changes; and competition, legal exposure and uncertainty in newer markets such as digital assets and event contracts. Tax estimates and intangible valuations also depend on judgments and assumptions.

Market risk management

VIRT manages market risk through position-size limits, continuous intraday monitoring, internal risk models, daily stress testing, and automated strategy lockdowns when preset revenue limits are breached. On-exchange market making seeks to limit capital at risk through two-sided quotes and by exiting or hedging positions. Customer market making entails position risk monitored by trading, risk, and senior management. Stress tests apply historical and hypothetical single- and multi-factor shocks and fully revalue options, nonlinear positions, and leveraged exposures.

Inventory and foreign-exchange exposure

Inventory primarily consists of listed and other equity securities, with smaller holdings of fixed-income securities, listed equity options, and digital assets. VIRT describes most instruments as liquid and generally quickly liquidatable at low cost. Working-capital balances are short-term; foreign-currency cash is monitored and hedged or reduced where appropriate, and management considers its exposure immaterial to overall cash.

Foreign-exchange exposure increased. Because most operating expenses are denominated in U.S. dollars, depreciation of other currencies against the dollar can reduce translated revenue; daily hedging helps mitigate this risk. Translation exposure primarily arises from net investments in subsidiaries whose functional currencies are the euro, pound sterling, and Canadian dollar.

Derivatives and counterparty exposure

VIRT uses derivatives for proprietary trading and may use them for risk management, including floating-to-fixed interest-rate swaps for long-term debt and foreign-currency forwards to hedge net investments. Trading derivatives are carried at fair value, with gains and losses included in net trading income. For qualifying designated hedges, effective gains and losses are recorded in OCI/AOCI, while any ineffective portion is recorded in “Other, net.”

Futures require initial margin and daily variation-margin settlement. They are generally not exposed to counterparty credit risk because they are exchange-traded and typically centrally cleared; however, if a futures commission merchant (FCM) becomes insolvent, VIRT’s recovery could be limited to its pro-rata share of available segregated customer funds and could be less than the amount deposited. Management periodically evaluates exposures to brokers and clearing organizations. For forwards, options, and swaps, stated credit exposure is limited to recorded unrealized gains; contractual or notional amounts indicate activity and do not necessarily represent amounts at risk. Market exposure remains dependent on underlying values, volatility, interest rates, and exchange rates.

Disclosure Controls and Internal Control

As of September 30, 2026, the CEO and CFO concluded that disclosure controls and procedures were effective. No change during Q3 2026 materially affected, or was reasonably likely to materially affect, internal control over financial reporting. The controls provide reasonable, not absolute, assurance and may not prevent or detect all errors or fraud.

The company reported no material changes to the risk factors described in Part I, Item 1A of its 2025 Form 10-K.

For the three and nine months ended September 30, 2026, no director or officer adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement. The section reports no other material business developments.