It has been about a month since the last earnings report for Virtu Financial (VIRT). Shares have added about 2.1% in that time frame, outperforming the S&P 500.
But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Virtu Financial due for a pullback? Well, first let’s take a quick look at the most recent earnings report in order to get a better handle on the recent drivers for Virtu Financial, Inc. before we dive into how investors and analysts have reacted as of late.
Virtu Financial Q3 Earnings Beat on Strong Execution Services
Virtu Financial reported third-quarter adjusted earnings per share (EPS) of $1.05, which beat the Zacks Consensus Estimate by 8.3%. The bottom line increased 28% year over year.
Adjusted net trading income of $467 million advanced 20.4% year over year. The top line surpassed the consensus estimate by 11.2%.
The strong quarterly results benefited from the improved commissions and technology services revenues. Strong performance in both the Market Making and Execution Services segments, driven by increased trading activity, also contributed to the upside. However, the upside was partly offset by an elevated expense level.
Revenues from commissions, net and technology services rose 17.4% year over year to $154.5 million. The metric beat the Zacks Consensus Estimate and our model estimate of $150 million. Interest and dividend income of $127.4 million increased 1.7% year over year but missed the consensus mark and our estimate of $132.2 million.
Adjusted EBITDA was $267.8 million, which climbed 24.7% year over year and came higher than our estimate of $241 million. Adjusted EBITDA margin improved 190 basis points year over year to 57.3%.
Total operating expenses escalated 15.2% year over year to $644.8 million, higher than our estimate of $617 million. The year-over-year increase was due to higher net brokerage, exchange and clearance fees, payments for order flow, communication and data processing costs, employee compensation and payroll taxes, as well as interest and dividends expense.
Market Making: Adjusted net trading income was $344.1 million in the third quarter, which climbed 19.5% year over year. The metric topped the Zacks Consensus Estimate of $307.4 million and our estimate of $304.2 million. The unit’s revenues climbed 15.8% year over year to $668 million, higher than the Zacks Consensus Estimate and our estimate of $633.9 million.
Execution Services: The unit recorded an adjusted net trading income of $122.9 million in the quarter under review, which advanced 22.8% year over year and surpassed our estimate of $110.8 million. Total revenues of $154.5 million rose 22.9% year over year and beat the consensus mark and our estimate of $138.2 million.