VIRT - NASDAQ

Good day, and thank you for standing by. Welcome to the Virtu Financial 2024 Fourth Quarter Results Conference Call. [Operator instructions]. Please be advised that today's conference is being recorded. I would now like to hand the call over to Andrew. Please go ahead.

Thank you. Our fourth quarter results were released this morning and are available on our website. With us today on this morning's call, we have Mr. Douglas Cifu, our Chief Executive Officer, Ms. Cindy Lee, our Chief Financial Officer, and Mr. Joseph Molluso, our Co-President and Co-Chief Operating Officer. We'll begin with prepared remarks and then take your questions. First, a few reminders. Today's call may include forward-looking statements, which represent Virtu's current belief regarding future events and are therefore subject to risks, assumptions and uncertainties which may be outside the company's control. Please note that our actual results and financial conditions may differ materially from what is indicated in these forward-looking statements. It's important to note that any forward-looking statements made on this call are based on information presently available to the company, and we do not undertake to update or revise any forward-looking statements as new information becomes available. We refer you to disclaimers in our press release and encourage you to review the description of risk factors contained in our annual report in Form 10-K and other public filings. During today's call, in addition to GAAP measures, we may refer to certain non-GAAP measures, including adjusted net trading income, adjusted net income, adjusted EBITDA, and adjusted EBITDA margin. These non-GAAP measures should be considered as supplemental to, and not as superior to, financial measures as reported in accordance with GAAP. We direct listeners to consult the investor portion of our website where you'll find additional supplemental information referred to on this call, as well as a reconciliation of non-GAAP measures to the equivalent terms in the earnings material with an explanation of why we deem this information to be meaningful, as well as how management uses these measures. And with that, I'd like to turn the call over to Doug.

Thank you, Andrew. Good morning, everyone. Apologies for the delay. We will check in with the service. We're not sure what happened. Thank you for joining us this morning. In my remarks today, we'll focus on Virtu's fourth quarter 2024 financial and business performance and strategic initiatives. Following my remarks, Cindy and Joe will provide additional details on our results. Looking at our full-year and fourth quarter 2024 results, which are summarized on Slide 2 of the supplemental material, we generated $6.3 million and $7.27 million of adjusted net trading income per day for the full year 2024 and the fourth quarter, respectively. We reported normalized adjusted EPS of $1.14 for the fourth quarter and $3.55 for the full year 2024. In the fourth quarter, we delivered another strong performance in both our customer and non-customer market-making businesses and our Virtu Execution Service business against the mixed opportunity in the quarter. We remain committed to making further technology enhancements and investments in our capabilities to improve our performance in every environment, and there are still significant improvements to make and we'll touch on these further in a moment. Slide 3 highlights that our market-making segment earned an average of $5.5 million per day of adjusted net trading income in the quarter, while Execution Services delivered $1.7 million per day, increases of 23% and 12% per day, respectively, over the quarter. In 2024, we saw firsthand the unique benefits of our scaled operations that allow us to continually invest in our global multi-asset platform to further increase our operating leverage and meet clients' needs with new and innovative offerings. On the Execution Services side, this past quarter’s $1.7 million of ANTI per day represents VES’ best quarter since the first quarter of 2022, with our algo product achieving increased revenue for the fifth consecutive quarter. This was VES’ best quarter since the first quarter of 2022. We continue to see institutions adopt VES’ broad product set, leading to deep integration with our clients' trading workflows. This has resulted in the improved consistency of results you've seen despite a very competitive market segment. We have incremental growth plan for VES and Virtu Technology Solutions, both within and outside the United States, which we discussed at length on our last earnings call. These efforts are beginning to materialize as our teams expands our footprint with existing clients and generates new long-term business from new clients. To this end, in 2024, VES leveraged our investments and enhancements to accomplish key growth milestones. Winning remits include adoption of our Triton Valor execution management system for fixed income by a world-class asset manager in Europe, successfully deployed our Triton Valor EMS trading analytics POSIT Alert, and global equity execution algorithms for one of the largest asset managers in Asia. Most importantly, overall productivity and profitability within our VES business segment has grown significantly since we began the technology rebuild and modernization and streamlining of that business. Needless to say, we remain very excited about the growth opportunities, increasing operating leverage and compounding benefits of our VES expansion in 2025. Now onto market-making. Both our customer and non-customer market-making businesses performed well in the quarter relative to the opportunity set. But even in a strong quarter like this, we know that there's room to improve. Our market-making results were up almost 23% in the fourth quarter, an impressive result considering realized volatility was down across the board. The opportunity was markedly lower in October, but conditions improved in November, and the opportunity so far has been the same or better every month since. Further, quoted spread and executed shares per our 605 reports for the fourth quarter show an increase of 12% and 11%, respectively, versus the third quarter. Our ability to outperform market metrics is a function of many factors, including the success and development of our growth initiatives, as well as internalization enhancements and continuous strategy iteration. For example, in 2024, we saw meaningful contributions to our results from new and redesigned market-making models that did not exist in 2023. We are confident that our growth initiatives, combined with our efforts to enhance spread capture rates through smarter internalization, will yield increased benefits in any environment. Touching on our organic growth initiatives, including our expansion into crypto, ETF block options, and fixed income market-making, continue to expand perform well, and have made meaningful progress throughout the year. We generated $787,000 per day from organic growth in 2024, the highest ANTI per day for any year since we began reporting this four to five years ago. In the fourth quarter and for the full year 2024, ANTI from organic growth initiatives represented 12% of firm-wide ANTI. Our crypto growth initiative performed very well in the fourth quarter, delivering strong results despite market volumes and spot crypto ETFs being down almost 20% compared to the first quarter of 2024 when they were first launched. Our strong results were driven by investments we made in the second and third quarters this year. After the excitement around crypto ETFs tapered off and the market became more efficient, we enhanced our crypto capabilities by expanding our market access and liquidity distribution and improving our operational efficiency. Our decision to invest in building our scaled crypto capabilities paid dividends by enabling us to generate sizable returns in the relatively muted second and third quarters and really set us up to capture a significant opportunity that was presented in the fourth quarter. We aren't done expanding in our global crypto footprint to meet growing institutional demand. We are on the early days of building our 24/7 crypto native offering and continue to build out our connectivity to reputable markets and capital-efficient framework to enhance our market-making and risk management capabilities. Importantly, despite growing our crypto footprint, we remain committed to risk management and capital efficiency. We are excited for the growing opportunity in crypto and digital assets more broadly. We believe that the new regulatory tailwinds will kick off a wave of new products in 2025, which will further expand the addressable market of our market-making and Execution Services, which plays to our core strengths. In addition, we continue to grow our ETF block offering by onboarding more clients and broadening our liquidity distribution. This disciplined work delivered sizable results in the fourth quarter as we saw greater client activity across both new and existing clients. Taking a step back, I look at our full-year 2024 results, and despite the recent strong performance, I believe there is so much more to come. Our strategic focus and areas of growth align us for even greater long-term success as we expand our addressable market by adding more asset classes and offerings to our suite of market-making capabilities and Execution Services solutions. Our focus on enhancing our core businesses and the continuous success of our growth initiatives, positions us well for any macro environment, whether it be reduced volatility or significant spikes in volatility volumes that typically accompany increase in global tensions and the economic uncertainty, changes in monetary policy, or elections. We continue to hire and make investments in our business. For example, it's worth noting that of our current employees, only 34% of them were at Virtu prior to 2019. This means that we continue to make significant multi-year investments in new traders, developers, quants, and other great employees. Notably, about 20% of our new hires since 2023 were to support our organic growth initiatives. And as you’ve come to expect from Virtu, we remain disciplined as ever around costs throughout the year, which enabled us to realize a 58% adjusted EBITDA margin in 2024. Now I will turn the call over to Ms. Cindy Lee, our CFO. Cindy?

Thank you, Doug. Good morning, everyone. On Slide 3 of our supplemental materials, we’ve provided a summary of our quarterly performance. For the fourth quarter of 2024, our adjusted net trading income, or ANTI, which represents our trading gains net of direct trading expenses, totaled $458 million or $7.3 million per day. Market-making adjusted net trading income was $348 million or $5.5 million per day. Execution Services adjusted net trading income was $110 million or $1.7 million per day. Our fourth quarter 2024 normalized adjusted EPS was $1.14. Adjusted EBITDA was $284 million for the fourth quarter 2024, and our adjusted EBITDA margin was 61.9%. On Slide 9, we’ve provided a summary of our operating expense results. For the fourth quarter 2024, we recorded $191 million of adjusted operating expenses. We continue to maintain an efficient cost structure and disciplined expense management, which has helped us to control our operating expenses during the inflationary environment. Financing interest expense was $27 million for the fourth quarter of 2024. With the benefit of our recent refinance and interest rate swap contracts that we entered in the prior years, our blended interest rate was approximately 7.2% for our long-term debt in aggregate. In Q4, we used a portion of our free cash flow to repurchase 1.7 million shares at an average price of $34.18 per share for a total of $57.1 million. To date, we have repurchased almost 51 million shares at an average price of $25.56 per share for a total of $1.3 billion. Quarter end share count was 159.2 million shares outstanding, bringing our buybacks on target to fit within the ranges we have set forth publicly. Since we initiated our share repurchase program, we have repurchased over 19.4% of the fully diluted shares of Virtu, net after new issuance. Our share repurchase program year-to-date is within the guidelines we have published. We remain committed to our $0.24 per quarter dividend, and combined with our shared repurchase program, demonstrates our continued commitment to return capital to our shareholders. Now, I would like to turn the call over to the operator for the Q&A.

[Operator Instructions] And our first question will come from Patrick Moley of Piper Sandler. Your line is open, Patrick.

Yes, good morning. So, congrats on the quarter. My question is on just the regulatory environment. Obviously, Doug, I don't know if you've heard, but we have a new head of the SEC coming in. So, can you just maybe talk about like what that means for your business and what that means for the areas that you're in, the opportunities that are presented there, and then what it could mean for just the overall total addressable market of those opportunities? Thanks.

One of my New Year's resolutions was not to mention Gary Gensler's name again. So, thank you, Patrick, for having me violate that right away, and that may be the last time I will say anything about him. Look, I mean, obviously, we're thrilled with the changing of the guard in Washington. I mean, it really was a - I'll be polite and say it was a burden that the entire industry had to bear for the last four years. You had a politically-motivated chair and head of trading in markets that was effectively a puppet. And so, they were promulgating proposals that were not intended to make the markets better. And so, for better or worse, we took a leading role in beating a lot of that back, I think, very successfully. And I give a lot of credit to a lot of people within the industry that rallied behind this and recognized the harm they were going to do. The good news is that Paul Atkins is an unbelievably experienced, thoughtful person. Obviously, I think he has views that are contrary to Gensler and his band of merry men around market structure and wholesaling and payment for order flow. So, all of those items will be off the table. I think the most exciting thing in terms of, and I mentioned it in the script around tailwinds, is what's going to happen on digital assets. I mean, it's difficult to predict exactly where it will come out and whether the CFTC will have more authority than the SEC, but you know that there's going to be a bipartisan solution already. The interim chair of the SEC overturned Staff Accounting Bulletin 121, which was this absurdity that Gensler had pushed through around banks custodying digital assets. And Hester Peirce has been appointed the head of crypto subcommittee at the SEC, and she's obviously a very smart person that's very favorable around having sensible regulations rather than regulation by enforcement. So, we're very, very excited about that. And Atkins has a history of wanting to look at Reg NMS, in particular the order protection rule. So, I think there'll be - in 2021, he suggested that there be like a real comprehensive review of equity market structure. And I think that'll be - that will involve the industry. And obviously we've made sensible proposals around sub-dollar stocks and things like that we don't think that make a lot of sense in the marketplace. And so, we're just excited that we're going to have folks in Washington that are willing to engage the industry, that are sensible and that will look at data-driven solutions. That's all we ever asked for, were data-driven solutions. And when presented with the data, the prior regime frankly ignored it because of their political motivations. So, it's a new day in Washington. We're very, very excited about it. I think we'll get clarity, bipartisan clarity around crypto. I know Congressman French Hill is a proponent of clarity around - and he's the new chair of the House Financial Services Committee. I think Senator Tim Scott as well and Senator Lummis are all very excited about a bipartisan solution around digital assets so that the United States can again be the leader of innovation in a very, very important and growing asset class.

Great. That's great color. And then just a follow-up, if we look back over the last several years, 2024, your earnings were surprisingly stable. Could you just talk - maybe you did address this in your comments, we had some overlapping calls, but could you talk about what drove that stability and whether you think you can maintain that level of stability as we head into 2025, understanding that a lot of it's going to be driven by volumes and volatility, but what are those things that could maybe help it remain as stable as it's been?

Yes, that's a great question. I think, look, we've prided ourselves in being a very scale-diverse organization. We've made significant investments in people, and I can't say the word internalization enough. I mean, we really act as a single cohesive firm. So, internalizing both obviously retail order flow, but also within the firm, our non-customer market-making and customer market-making businesses, and indeed our Execution Services business, that's an added value that we can provide to our clients. So, I think that really helps. We've added - obviously the growth initiatives have brought more, to use your word, stability and more consistency around what we're doing. And options and ETF block, and as I mentioned, crypto had a really nice fourth quarter. So, again, it’s the Virtu value proposition, which was be scale, be agnostic to markets, try to be in as many asset classes and geographies as you possibly can, try to be the best bid and the best offer in the market-making. And on the Execution Services side, provide really scaled, efficient, multi-asset products and multiple products to great clients that understand the value proposition. And so, we're going to have our ebbs, we're going to have our flows. Hopefully, we have more flowing than ebbing, and obviously with this change of administration in Washington and regulatory tailwind, we're more confident. And obviously part of that was this buyback program, which we started four years ago and we bought back about 19.4% of our company. And obviously that helps grow EPS. Joe, you wanted to add something?

No, I was just going to say, I think you touched on it, but Execution Services having a consistent year and having an outstanding fourth quarter, I think the bar has been raised there, I hesitate to say permanently, but I think the original thesis of us getting into Execution Services was that while volatile, it was going to be slightly less volatile than the market-making segment. And I think that - here we are several years later. I think that's proving to be the case, and hopefully will prove to be the case even more going forward.

Awesome. Thanks, guys.

One moment for our next question. Our next question will be coming from Chris Allen of Citi. Your line is open, Chris.

Yes, morning, everyone. Nice quarter. Wanted to just dig in a little bit on the fourth quarter, and maybe if you could help us think about the strong performance in the market-making segment, what was driven by internalization versus the environment. I think you noted earlier on in the call, a mixed opportunity set, but there was an improving environment over the course of the quarter. So, trying to delineate between the two. And then as we start 2025, all the signals in terms of realized volatility, retail trading activity, all seem to be pointing in a kind of positive direction. Wonder if you would agree with that assessment.

Yes, I think, look, it's a great question. I think when you think of Virtu, we've always said this like market volumes and then like what's the bid offer spread? Those are always the best measurement of opportunity for the market-maker. Some of that you can look in, and I mentioned it in the script, Chris, in the 605 reports around quoted spread. And certainly, we've seen a positive trend there. So, we had a very nice quarter in our retail business. We highlighted crypto where we had a really, just a terrific quarter in crypto. Our block ETF business did quite well. And that's an area that really benefits from internalization. Think about your standard desk that's taking down large positions, whether it's through the RFQ regime, or it’s a transition from a big RIA or pension plan, right? The ability to provide attractive pricing in a highly competitive marketplace really hinges on being able to hedge your exposure effectively without broadcasting that to the greater world, and that's what internalization really is. So, I'm very proud of a lot of people around the firm that have worked very, very hard in that area to enable us, frankly to offer a much better product set and a wider product set both in the United States and Europe. We're really functionally able to provide liquidity in equities, commodities, and now fixed income. And then the last thing I'll highlight is don't sleep on our Execution Services business. Really proud of what Steve Cavoli and the crew have done there. We bought a couple of Buicks, let's put it that way, and we changed the tires as they were driving down the highway. And whatever your car of choice is, BMW, Rolls Royce or Mercedes, we have one of those now. We have got a great scaled global business that's a heck of a lot more efficient. And the proof is in the pudding. As I tell people, the only competitive advantage we have, because we don't have research, we don't have prime, we don't have IPO calendar, is performance, and it's very clear that our products perform at or better than industry standard. And that's why we've been able to grow market share, particularly in our algo suite, but also Triton and analytics. So, if you add up all of those things, Chris, and that's kind of been the business plan, it led to a nice quarter in 2024. And I try very hard not to talk about the current quarter because every time I do it has come back to bite me. But yes, it's hard to argue with your thesis, right, that a lot of those trends are continuing in the 15 or so trading days we've seen in 2025.

Cool. And just to follow up on crypto, you noted that you made some investments in the middle of the year 2024, but you're still in early days in building out your 24/7 crypto framework. So, maybe you could give us some color and maybe any answer about the call in the investment you made and what you need to do to kind of build that framework to be fully prepared for what could be a good environment for crypto moving forward.

Yes, I mean, it’s a great question. I mean, in some ways it's a traditional Virtu style business, right? You’ve got spot. You’ve got ETT and you’ve got futures, right? And that's kind of right in our wheelhouse. Think of FX, think of commodities, but in many ways it's different. You have non-traditional venues, I'll be nice and say that. Some of them are regulatorily questionable. So, you’ve got to avoid those. The capital efficiencies are not there. You don't have centralized clearing. You don't have traditional prime brokerage largely because of reputational issues and Staff Accounting Bulletin 121 didn't help, right? So, and then also in the ETF world, czar Gensler wouldn't allow for in-kind creation redemption. You had to do cash creation redemptions. So, that meant that operationally it was a lot more of a hassle to be an efficient market-maker in the cash Bitcoin ETF products. So, we spent a lot of time and a lot of money investing in that. And in addition, for the first time the marketplace demands 24/7 pricing, right? So, typically Saturdays and Sundays up to whenever the CME would open at 6:00 p.m. Eastern, our machines and our staff was off. And that's changed, right? So, now we're a 24/7 provider, and that's what the industry demands. I mean, obviously we're a big market-maker on EDX, the best solution out there because we own a piece of it. We started with our friends at Citadel and Schwab and Fidelity and Sequoia and Pantera, and it's a great venue for us, right? But they demand 24/7 execution. And so, to build all that took a lot of time. What do we continue to work on? It's distribution. We firmly believe that these products, they've migrated to the wealth divisions of meaningful institutions, and they're going to continue to go up the ladder, if you will. And there'll be institutional adoption on a significant scale of these products, we believe. So, like our other distribution capabilities, whether it's block ETF or FX, we need to be able to provide attractive two-sided pricing in size in a multitude of coins to institutions. And so, you'll see a VF crypto, just like we have VF fixed income. We've got VFX, et cetera. So, it'll be an institutional offering where we stream prices directly to end users. So, again, classic Virtu, but with a lot of operational complexities managed and run by legacy long-term Virtu institutional traders and operations people, but just a lot more of - a lot more complexity and a lot more hassle, frankly, because of some of the regulatory uncertainties.

Great color. Thanks, guys.

And one moment for our next question. Our next question will be coming from Ken Worthington of J.P. Morgan. Ken, your line is open.

Hi, good morning. Thanks for taking the questions. First, one of the takeaways from the election was that betting via listed contracts is a viable market. And I know betting is a bit different than the financial markets that Virtu is currently in today, but do you see potential for Virtu to participate in listed betting markets? And how big or established would they need to be for Virtu to really be interested here?

Yes, I have to be a little careful of what I say because of our involvement with the NHL obviously, but putting the NHL aside, Ken look, and we look at every opportunity. We know that some of our competitors - great competitors are already involved in this. I think here's what I would say. Obviously, we look for credible venues, and to your point, there are. Then we look at like, are there index products where there's enough volume that it makes sense in terms of our involvement? I mean, it's a little difficult to make a market in whether the Rangers are going to win or lose against the Carolina Hurricanes. They lost last night, for example, right? Like, that's not something that a market-maker gets involved in. If you had broader indices, it definitely is something we would look at. We're always excited about new markets. If you had asked me four years ago about Bitcoin, I wouldn't have known it from a BLT, right? Like, it's just not what we do. I don't know or focus on the underlying products. But if it’s a widget that people like to trade in a viable market with significant enough volume where somebody needs two-sided pricing, we'll be there. And so, we like what people are doing in terms of coming up with like DCMs and having futures products and things like that. That's kind of right in our wheelhouse. So, I think, Ken, the market will evolve in that manner, because to your point, it's something that has meaningful retail, to put it mildly, interest. I like very, very much that these entities, I forgot some of the names, it's like I don't even know how to pronounce it, Kalshi and Nadex and some of these other venues are trying to launch DCM products, and that's certainly something that's attractive to us.

Perfect. Thank you. And then clearly you had a great quarter. Historically, Virtu has generated sort of disproportional opportunity to profit around events. Can you help us gauge the magnitude of the election and how big the impact the days around the election were on the results you had this quarter?

Yes, it's a great question, and it I'll answer it this way. I mean, obviously, and I said it in the script, the October quoted spread was meaningfully smaller than quoted spread in the 605 reports in November, and I think December is going to be released or has been released. And so, it wasn't like on whatever election day was November, whatever, we had this crazy outside like eight, nine figure day. But it’s been a buildup since then, right, and it hasn't really dissipated. So, question is, how sustainable is that? I think it's pretty sustainable. I think there's a keen interest again in markets. I think - I'm not going to quote the new president and say it's the golden age of this, that, or the other thing, but I do think that there's more exuberance and confidence in the market. I think having the Republicans control both houses of Congress means that maybe things are going to get done, and there's just a growing participation and enthusiasm in markets that we see here in the United States and in Asia and in, frankly, in Europe. I mean, Europe had a couple of $40 billion notional days again, which was something that we hadn't seen in a while. And I do think that there's going to be more innovation, a lot new products. You can't swing a dead cat these days without hitting a new crypto product, a new crypto ETF. I, frankly lost track of how many issuers are putting out new products around coins and leveraged products and things like that. So, all of that, that cornucopia of interest and new products is just a positive for a market-making firm.

Great. Thanks for your comments.

And one moment for our next question. Our next question will be coming from Alex Blostein of Goldman Sachs. Your line is open, Alex.

Hey good morning. Hey, Doug. Hey, everybody. So, I want to go back to the regulatory discussion for a second. So, pretty clear the benefits that your business and many others would see from a different approach and a different framework when it comes to crypto and digital assets. But are there any other aspects of your business that you felt were particularly sort of suppressed by the regulatory regime over the last several years that could also see a bit more of a bounce back aside from crypto?

Yes, it's a great question. I think the new SEC is really good for us in two ways. I think it’s going to stop new role rules that were disrupting competition and harming capital formation. So, if you think of initial public offerings in this country, again, I don't have the statistics, but I know folks at all of the big investment banks, and when I talked to Adina and Lynn about like listings, they're all excited about companies coming public in 2025, less concern around enhanced disclosures around things like ESG and expenses around that, and all that kind of stuff. So, I think that clarity actually by not proposing new rules and making it easier to be a public company, will mean that there'll be more listed companies, I hope, in the United States in 2025 and beyond. That's all new product for us. And obviously the bigger the better and the more the merrier. I think secondly, and I said this before, I think really just clarity. I mean, what Gensler and his crew did to the crypto industry in the last two or three years, I'm going to say was just patently un-American. It really was. It was disgusting to watch how they were on this jihad of regulation by enforcement, intimidating small companies, going after large companies, with no basis in fact or law. It was really an awful, awful thing to be involved with and to see. So, having that clarity I think is a good thing. And the last thing I'll say, just to shit on the administrative state, and yes, I used the word shit, is not having Lina Khan at the FTC, is a godsend. I mean, in the realm of horrible administrative officials, she and Gensler tied for the gold medal. So, I think there'll be a lot more clarity around M&A and not this, again, I'll use the word jihad, and I'll use that lightly around competition and combination and just people being more confident about investing and growth. And that's really what this country needs, not overbearing political enforcement.

Loud and clear. Second question for you guys just around capital management priorities. If the firm, which what it feels like is setting up to be in a more robust kind of trading backdrop, again, I don't want to extrapolate Q4, which obviously was very strong, but it feels like given everything we just talked about, you guys are on a stronger footing from a revenue perspective. You have a framework on kind of how that translates into buybacks. That's pretty straightforward. Any room within that to reduce debt as well, or should we be thinking about the buybacks still being the main priority when it comes to capital return?

Yes, I mean, Alex, it's Joe. I think you should still think about the buybacks as being the main source of capital return. I think our capital structure right now, we took advantage of some opportunities. There's always - seems like there's always opportunities to get the debt stack cheaper, which we'll continue to do. But I think we're excited about the future and we're really happy with how the buyback program has worked. It’s tailor-made for a company like us terms of the volatility of our earnings and the volatility of our cash flows. So, it's worked out extremely well. We look at it all the time, right? So, we don't just set it and forget it. We look at it on a rolling basis. And then we also look at how much capital we need to run the firm and invest in the areas we've been talking about today. And so, taking all those things into account, I say that the buyback is still the front priority in terms of capital management.

Great. All right, thank you, guys.

And one moment for our next question. Our next question will be coming from Dan Fannon of Jefferies. Your line is open, Dan.

Great. Thanks. Good morning. I wanted to follow up on Execution Services, another good quarter, good year. I guess, and you've talked a bit about this, but is there - is it just time in terms of since the ITG stuff, that acquisition integration, that this is now gaining momentum? Are there things that you're doing externally, sales force investment, like kind of more front-footed in terms of that to think about the perspective kind of continued solid growth in that business?

Yes, thank you. It's a great question. I would say a couple of things. One is our mantra from day one of acquiring ITG, and then the part of KCG that was institutional services, was multi-asset. Those firms, particularly ITG talked it, but in reality, they didn't really have the offerings. And so, making our Triton EMS product truly multi-asset, making our analytics offering truly multi-asset, having algos and expertise that is truly multi-asset, is a huge advantage because what we are seeing, particularly in the large global asset managers and pension funds, is they want a single holistic, multi-asset class solution that works really well. It helps that Execution Services is tied to a firm that is a multi-asset class market-maker, so that they know these clients and users know that they're getting the same functionality and understanding of markets that the market-maker has. So, it's a really attractive scaled offering. That's the first thing I'll say. The second thing is the products, the equities products, we had our algo products, we made those truly global products for the first time. And if you're running a trading firm and you've got a trading office in Hong Kong, one in London and one in New York, let's say, you know that the algo product you're using, obviously with regulatory and marketplace differences, is essentially the same product. So, that's very interesting. We also for the first time integrated all those products together. So, analytics, EMS really are truly integrated into a single holistic solution. So, the mantra around here has been, be multi-asset class, sell clients multiple products, right, because you get a better return and a better yield in both broker-neutral and our broker products. And then the last thing, and you nailed it, which is it really was a culture shift. Changing the firms that we acquired, particularly ITG from a Balkanized regional, me, me, me culture to a single unitary firm was not the easiest thing to do as we were upgrading the technology. So, I give Steve Cavoli a lot of credit. We've added some very talented senior hires in the last year, year and a half, that have really buttressed the group there. There's a lot of great people that hung in there from ITG that as we say, were Virtu-ized and really get it. And so, I'm really excited about the team that we have. We're going to continue to hire there more relationship managers, more people that are technologically savvy and can speak to clients about their needs very, very effectively. So, I think it’s just all of that, Dan, has really led to our ability to generate revenue. The last thing I should say is our Virtu capital markets group, the at the money offering folks are a terrific group. They had a really nice quarter and continue to grow. That's like the little engine that could - that delivers really good outsized results. Again, as I said in response to an earlier question, the only competitive advantage we have is execution quality and superior customer service. We don't have - like your bank, we don't have prime, we don't have research great guys like you. We don't have IPO calendar. We don't have any of that. We have a bunch of really talented people. We can offer scale. We can offer efficiency. We can offer demonstrable performance, and we can give very, very attentive customer service. And that's what we're all about.

Great. Thanks. And just as a follow up, Joe, just as you look at 2025, 2024 actually was another good year of expenses and margin expansion. As you think about areas of investment and also expense growth, is there much difference in terms of the growth rates we've seen historically as we look to 2025?

No. I would say the operating expenses, I think we've always guided some low single-digit, low to mid-single digit growth. I think over time, that's proven that out, it’s a daily battle. I think in the chart, we put in the supplement that looks at different levels of net trading income and different levels of EPS and buyback. I think we've incorporated some slightly higher comp expenses, nothing too dramatic. But just taking into account that we continue to hire, and that we continue to hire very high quality individuals. We modeled in slightly higher interest expense just given we had some old swaps roll off. But there's continued opportunity to always reprice. So, we're being a little conservative there. But no, nothing dramatic. I think on the capital side, as I mentioned, buybacks continue. And then the investments required, there'll be some incremental capital investments needed in crypto perhaps in Europe as we build out our European ETF block business to compete over there. So, I think we've got a couple of priorities, but it's all captured in that slide, the guidance.

Got it. Thank you.

One moment for our next question. And our next question will be coming from Craig Siegenthaler of Bank of America. Your line is open.

Good morning, Doug. Hope everyone's doing well. We wanted to circle back on your market share comments, to Chris's earlier question, and we can definitely keep the discussion more long term, but how has market share been trending in cash equities relative to your larger established competitors and also several newer entrants that look to be taking share?

Yes, look, it's a great question. Obviously, the statistics are public in some lag time. I mean, again, I've said this for the last 10 years since we've been public, we look at market share, but we try to optimize P&L against market share. We very easily could ratchet up a couple hundred basis points market share, particularly from some of the larger retail participants, but that would cost us money. And so, doesn't seem to be a great reason to do that. I mean, look, it's no secret that like Jane Street and Hudson River, two fantastic firms, great competitors, have joined the fray of wholesaling. I think you'll see from the chart, we've maintained our relative share within the group. And they've taken it from other competitors, and Citadel's given up a little bit. So, there's going to be ebbs and flows there. Again, we had a terrific quarter in retail. So, I'm very, very confident with what we're doing. The other thing I'll just note is that the volumes, particularly in the fourth quarter in US equities have been, I'll use the strong word, a little distorted by some of the gigantic volumes you'll see in low price names. And so, the sub-dollar stocks. And I'm not suggesting that every company that trades under a dollar is a company that shouldn't be a public company, but indeed many of them are. I mean, there's been some obvious fraud from Chinese companies, companies that do 1, 2, 3, 5, 7 reverse splits. And we submitted a rulemaking request to effectively force New York and NASDAQ to delist a lot of those companies. In the meantime - and those are pretty unattractive companies for us. Spreads are a lot narrower because they trade sub-dollar. It's a huge burden because the volume's significant. We have to take the flow from our clients. And so, that will distort market share to some regard. So, frankly, if we could just ignore all of that dreg and not have to take any of it and just allow it to go to an exchange, we would, but that's not the deal that we have with our retail parties. So, again, I'm not suggesting the market share is completely unimportant. I recognize that there's competition out there. We continue to do quite well and continue to be the number two provider, as we have been since we acquired Knight, marketable orders, which is kind of where we focus our time and energy.

Thanks, Doug. Just for my follow up, I wanted to get a state of the union on the fixed income ramp. I think it's roughly 12 months now since you broke into Market Access's leaderboard for the first time. although you weren't a first mover in this business. So, where are you in the build-out and also ability to move up into larger trades?

Yes, it's a great question. I'm very happy with the progress we've made particularly in rates as much credit - I mean, rates is an exciting opportunity for us. There's fewer CUSIPs. Kind of feels more like a legacy Virtu business. A lot of it’s electronic. It continues to be a significant opportunity for us. We're now profitable in both of those businesses after fees and expenses, which is a huge thing. I mean, it’s not a cheap business to be in. We've ramped up hiring. We've got significant distribution. You do make the right point though, which is, we have an opportunity to kind of move upstream and take more risk and take on bigger positions, which we're doing slowly. I mean, we're an aggressive firm, but we're an incrementalizing firm in the same way. It's kind of how we built the firm. So, I'm not going to go crazy and ramp up beyond our capabilities. Don't forget also that those businesses tie into our ETF capabilities and leveraged ETF capabilities, which are significant. So, I would highlight a lot of the progress that we made in Europe in fixed income. A lot of that's driven by our ETF business over there. But I'm very, very happy with the progress we have made. It’s been overshadowed in a very, very great way by crypto and ETF block in terms of our growth initiatives, but I wouldn't sleep on it. It's something that we continue to be excited about and I see a lot of runway for it. There's been a lot of interest in private credit and the growth of this, and you look at these gigantic asset managers that effectively have turned into global credit houses. We're excited about partnering with those folks going forward.

Thank you.

One moment for our next question. Our next question will be coming from Michael Cyprys of Morgan Stanley. Your line is open.

Hey, good morning. Thanks for taking the question. I just want to ask about single name options, just hoping you can maybe update us on the buildout there, how many symbols you guys are active in making markets today across single names, and how do you think about that expanding as you look out over the next year or two?

Yes, it’s a great question. I don't know exactly how many names we're in, and I'm looking at Andrew. I mean, it’s in the dozens. And again, some of it's opportunistic, like when NVIDIA is going crazy, obviously you're going to focus on that. It's a little bit of a challenge, right, because every time you add more single names, you need more cores and more gear because there's a lot of throughput and a lot of names. So, we continue to grow that. Again, in the same way I answered the last question that Craig made around credit and rates, which is we're in the business. We've invested. We need to make meaningful additional investment in hires in terms of technology. We're in the process of doing that. We make money from single names. Are we at the end state? Not even close. We've made a lot of progress in India this year, I'm sorry, in 2024. And we continue to do that in 2025. So, I'm happy where we are today. Could we have gone faster and done more? I don't know. We're balancing all these different - and juggling and all these different priorities we have. So, again, we're the little engine that could and we continue to perform well.

Great. And then just a follow up question on private credit, just curious how you're thinking about the opportunity set across potentially market-making in that asset class over time as the end market continues to grow, money managers looking to bring some liquidity into the private market space to help expand and broaden investor access to the asset class. Just curious how you're thinking about that. What steps are you taking, may or may not take? How are you sort of assessing some of the hurdles? How might that be overcome? Just curious your thoughts there.

Yes, look, I mean, it’s obviously gotten a lot of press and a lot of people are interested, and we're talking with the big issuers and the BlackRocks, the State Streets. We'll talk to anybody about it. I mean, look, it’s a growing, exciting area where you have non-traditional lenders, the KKRs, the Apollos, the Blackstones, all these firms that have massive private credit businesses, Aries, et cetera, all these firms that we know reasonably well. At some point, that all of those assets need to be velocitized or tradable. I saw that they're going to start getting CUSIPs. Obviously, there's operational issues when you have private credit and how they can be transferred and things like that. So, again, you'll probably see more indexy kind of products first as opposed to kind of single names, which again, is right in our wheelhouse. So, I think that probably develops first. No surprise, we're working with the big issuers who are working with the aforementioned large private credit houses. So, is it something that we're going to see in the first, second, third quarter of this year? Probably not, but there's a lot of really smart people that are looking at that asset class. I don't know how many trillions of dollars it is, but I know it's meaningful and they're looking at ways to, how can they velocitize that, and we're going to be in that discussion. So, again, growth area for us. Can't put a pin on exactly when that's going to happen.

Great. Thank you. Thank you.

And I'm showing no further questions. I would now like to turn the call back to management for closing remarks. Doug Cifu: Thank you, everybody, for joining today. We apologize for the delayed start, and we look forward to speaking with you in April. Thank you.