Hello, everyone. Thank you for joining us, and welcome to the Virtu Financial First Quarter 2026 Earnings Call. I will now hand the conference over to Matthew Sandberg, Head of IR and FP&A. Matthew, please go ahead.

Thank you. Good morning, everyone. Our first quarter 2026 results were released this morning and are available on our website. With us today on this morning's call, we have Aaron Simons, our Chief Executive Officer; Cindy Lee, our Chief Financial Officer; and Joe Molluso, our Co-President and Co-Chief Operating Officer. We will begin with brief 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 condition may differ materially from what is indicated in these forward-looking statements. It is 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, 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 GAAP term in the earnings materials with an explanation of why we deem this information to be meaningful as well as how management uses these measures. With that, I'd like to turn the call over to Aaron.

Thanks, Matt. Good morning, everyone. Again, just very brief remarks before Cindy goes over the detailed results, and we move to Q&A. I just wanted to highlight that our first quarter results show that we're executing on our plan to grow through investing in our infrastructure, acquiring top talent and expanding our capital base. Following that plan in the last seven months, we have added over $500 million in new trading capital and maintained a return on our total capital in excess of 100%. Our results for the first quarter were among the best in Virtu's history, aided by an operating environment which was even more favorable than the fourth quarter of last year. Within the context of that environment, all of our businesses performed well: customer and non-customer market making as well as execution services. We've provided additional perspective on the quarter in our detailed financial supplement, and we'll be answering your questions shortly. First though, Cindy Lee, our Chief Financial Officer, will review the financial results for the quarter.

Thanks, Aaron. Good morning, everyone. For the first quarter of 2026, we generated adjusted net trading income, or ANT, of $12.9 million per day or a total of $787 million. This was the highest quarter total ever for Virtu. Turning to our segment performance. Market Making reported ANT of $10.4 million per day for Q1. Execution Services reached $2.5 million per day for the quarter and $2.1 million on a trailing 12-month basis. This is the eighth consecutive quarter of increased total ANTs, an indication of the substantial progress we have been noting within the VES business. This performance reflects the investments we have made in technology, our focus on client acquisition and the expansion of our product offering. Both of our operating segments benefited from generally favorable market conditions and strong execution by our team. Our profitability this quarter was robust. We generated $521 million in adjusted EBITDA, representing a 66% margin. Adjusted EPS was $2.24. For the last 12 months, we recorded $1.6 billion in adjusted EBITDA, a 66% margin and $6.66 in adjusted EPS. These numbers all represent highs since early 2021 and an all-time quarterly high in the case of adjusted EPS, underscoring the operating leverage inherent in our business. On Slide 7 of our supplemental materials we provide a summary of our operating expenses. Our first quarter 2026 cash compensation ratio was at 22%, which was within the historical range. The increase in compensation expense reflects our continued focus on retaining and acquiring top talent across the organization, particularly in trading and technology. Turning to capital, our invested capital stands at $2.6 billion as of March 31, while generating an average return of 107% on the capital over the past year. We will continue to expand our capital base, strengthen our infrastructure and deploy capital where we see the greatest opportunities, all while maintaining our quarterly dividend of $0.24 per share. We will now take your questions.

Your first question comes from the line of Patrick Moley.

Congrats on the strong quarter. I think the environment across the board was very good, but you guys seem to outperform that. So I was hoping maybe you could just level set with us and talk about where you saw the most opportunity in the quarter. And then maybe with ANT up where it is, the highest level on record, how should we think about the sustainability of that in this environment?

Patrick, it's Joe. You're right. The environment was very robust, as I think you noted. And I think we did outperform. It's difficult to pinpoint growth since we've had this growth pivot. It's across the board. And I think for the last couple of quarters, our focus has been on growing the firm. But that means a lot of things across the board in a lot of asset classes and a lot of geographies. And it naturally includes growth and investment in asset classes that maybe we were historically less focused on, but we want to accelerate growth in. But it's hard to pinpoint, right? So I think in the past, we've talked about crypto, we've talked about options. But our growth plan isn't limited to a handful of narrow areas, it's really broad-based and focused on a lot of different areas. And it includes all the things that we've been talking about: capital includes personnel, it includes investment in technology, et cetera.

Okay. And then, was there anything you can share in terms of asset classes where you maybe saw outsized growth this quarter? I can think of maybe the metals market, we saw a lot of activity, especially among retail in the earlier part of the quarter. So anything there that you can share on asset classes?

We made the point last quarter to remind the world that Virtu's performance is not solely based on retail investor participation, which, by the way, remains strong. So the customer Market Making business has done very well. But I think we saw continued outstanding performance and growth in what we call prop Market Making. The headline volatility in the quarter, obviously from exogenous events, contributed, but there's also a lot of underlying growth in trades and investments that have been made over a long period of time. We want to get away from talking about specific areas, but I think it's pretty obvious in the quarter, if you look at just the volatility in the world and what's been going on, that was a good environment that was helped by our continued investment and everything else we've been talking about.

Yes, maybe I'll just add one thing: instead of trying to call out a single area, and I guess it's hard quarter-over-quarter because the environment, as we pointed out last time, is the most important variable. But it's not like we found some new trade or something took off. Really what I tried to highlight in the introductory remarks was you should think of this as what would have happened in the counterfactual world where we didn't add $500 million of new trading capital. Our P&L would not have been what it was in the first quarter. I'm not saying it's a one-for-one difference, but it definitely was a huge factor. And so going forward, the idea is that in any environment, we should outperform where we were before with lower capital.

Okay. So maybe just if I could sneak one more in here, just a bigger-picture question. I think it was just a few quarters ago you said you were looking to target about $10 million a day in ANT through the cycle, and that was kind of the longer-term goal for the business. So how should we interpret this quarter? Do you feel like we're kind of at that point where we are building toward this $10 million a day through the cycle? And if not, what still needs to be done to get us to that point?

I mean the honest answer is we don't know. The trailing return on capital was over 100%. I don't think we always achieve that through a multi-year cycle. So at points in the cycle where it's less than 100%, you can back into how much capital we might need to make $10 million a day. But in environments like this, then we need much less and we make more than $10 million a day.

Yes. But through the cycle is the key point in that discussion, and it makes it difficult to say where we are. I think, as Aaron pointed out and as I pointed out in earlier calls, when we talk about goals and trading capital of $4 billion, that factors into that goal. But it's more than that. There have been a number of investments in personnel. Recruiting for Virtu, I think, is very good. The investments in technology being stepped up all contribute to that. So you need all of those things together to execute on that. And I think in the past, we've used terms like the medium term, like a three-year time horizon being something that when forced to give a view is something we feel comfortable giving to you.

Your next question comes from Dan Fannon at Jefferies. Your line is open.

So I wanted to just talk about what you've been doing. Obviously, you talked about $500 million of incremental capital. Can you also talk about the hiring, where you've been focused, and where you are in terms of the goal of what you're looking to expand and invest in internally?

Yes, sure. There are definitely a number of areas where we're trying to hire people. We are hiring across the continuum of trader to quant to researcher roles; we're trying to hire a lot of engineers and software developers. That takes time because we have a very high bar for quality, but we're trying to do that as quickly as possible. We have made a few key senior hires in the last six to seven months that have started, and they're going to have an impact on the business, hopefully in a short time frame. But it is a longer-term expansion as well. I think this year, we hope to get our headcount close to 1,100. We don't have an exact number; it's more about having a sufficient number of people to do a certain level of quality work that we need done. But definitely for the foreseeable future, we're going to be pretty aggressively hiring.

Great. That's helpful. And then just in the context of that, and obviously the revenue environment that you're operating in, how should we think about expense growth? It would be helpful in the context of how you're thinking about either cash compensation versus previously and/or growth in the more fixed cost base to support new asset classes, new personnel, all the things you're investing in.

Sure. We have given some guidance on the compensation ratios. And the first quarter accrual reflects where we want to be. Obviously, when you have a great quarter, it's much easier and the percentage looks lower. But as we've highlighted the last few quarters, we have been adjusting that up slightly because we are trying to attract the best talent in the business, and part of retention is competitive compensation. But I think we are at that level. You can see that it doesn't really affect the ratios or the EBITDA margin all that much, especially when you have a great quarter. As far as the infrastructure investment, we are going to do incrementally more of that. But already, our business has a very heavy capital expenditure profile, so I'm not sure it's going to be immediately obvious in the expense tables.

No, I think that's exactly where we are. You saw the comp accrual this quarter as a nominal number; it certainly looks outsized compared to the past. But as Aaron said, we want to hire the best people and pay them best-in-class. So that is what it reflects. Dan, if we have a comp accrual or a comp ratio that creeps up in the future, even in a really robust environment or in a median environment, that will be deliberate and intentional and in our view will be a good thing. If you see that, it will mean that the growth plan is being executed on and we're creating value for shareholders, and we're just paying people market comps or better than market comps.

Your next question comes from Alex Blostein at Goldman Sachs. Your line is open.

Yes, thanks. So a bit of a nuanced question, but when we look at the trends in cost of trading, like clearing and payment for order flow, in the quarter it seems to show a meaningful divergence in the market making business. Those costs are down while trading results are up. Maybe a little more granularity on what drove that. I'm trying to get to whether we're starting to see some incremental benefits of internalization or things that could make the flow more profitable for you specifically, or is this something else that went on this quarter that boosted the net trading numbers from that perspective?

Thanks, Alex. The answer is all of the above. When the flow characteristics were attractive this quarter, that helped. And again, I'd go back to the point that it's not just a retail machine, although that business had a great quarter. The flow was very attractive, and that led to some of the things you're talking about. But also a reminder that the business is not wholly dependent on retail and is pretty diversified, both globally and by asset class on the market-making side. Depending on the sources of the non-customer market-making P&L, you could get divergence in brokerage, clearing and exchange as a percentage of the gross number. I'm not sure I'd read anything permanent or long term into it. Over time, we're always looking to lower execution costs, to internalize more to the extent we can, and to optimize. But some of that is environment dependent as opposed to just us getting steadily better.

Understood. It's just the absolute divergence, not so much the percentage, was very notable. One was up a lot and the other down. Okay. And then, obviously, we don't want to get into a habit of calling every month, but there's been quite significant change in the backdrop this April versus last year's April and over the last couple of months. Any color on how the environment is unfolding so far in the second quarter, both on the retail side and broadly, would be helpful.

You started your question with the correct answer, which is we really don't do this month-to-month. I'll say two things. One is perspective: we had an all-time high here, and that, as Aaron said, is helped by the robust environment. Just because it's more muted doesn't mean it isn't a very good environment. We're only a third of the way through the quarter. The headline numbers, while not matching some of the first quarter numbers, are still very good from any perspective. Two, we haven't talked much about Execution Services. If you look at the momentum in that business over the past two years, it has grown through the cycle in a number of different environments, and there's a tremendous amount of momentum there. There are client wins, multiple products being tied together across clients. We see that as a continued growth engine as well, and that business has strong momentum.

Your next question comes from Kenneth Worthington at JPMorgan. Your line is open.

I want to go back to Patrick's question to get a better sense of how the investments you've made contribute to capacity to profit over a cycle. Aaron, you mentioned invested capital is up 20%. You've added headcount and invested in technology. You sort of implied there's a multiplier on the 20% growth in invested capital. How do we think about that multiplier? Is it something like 1.1? 1.3? It doesn't seem like it's something like 0.9. How should we think about that multiplier over a cycle?

Ken, I think what Aaron was stating was that the ANT we achieved this quarter would not have been achieved had we not increased our capital. I'm not sure there was any implication of a multiplier around capital. If anything, there will be a multiplier in a good environment, but it all comes out in the return. That's it. We put the returns slide up to demonstrate that we're a services business and not a risk business. I'm not sure I'd read anything into a statement about a multiplier. Capital is fungible; we can't parse or bifurcate new capital and old capital. But I think what we are saying is that we are able to earn more because we had a bigger capital base and greater opportunities. It's important to remember our capital is nimble, we remain flexible and it goes where the opportunities are.

Okay. And maybe as we think about new asset classes like prediction markets and tokenized markets, what do you see as holding more promise for Virtu, and where are you thinking about focusing investments there?

It's hard to say. I think we're ready to trade in any market or exchange, and it's really about where the volume goes. Tokenization might be slightly easier because to the extent things are linked to an underlier that we already trade, it's very easy for us to value and we know the trade well. Prediction markets are different; we don't have expertise predicting geopolitical events for example. It really depends on volume.

Your next question comes from Michael Cyprys at Morgan Stanley. Your line is open.

I was hoping to dig into Execution Services and unpack some of the drivers of the momentum you're seeing across that business. Can you remind us the top revenue contributors under the hood there and how that's evolved over the past couple of years, and how you see that mix evolving over the next couple of years?

Sure, Michael. The business has a tremendous amount of momentum and has grown through the cycle. It has been a multiyear process since we acquired ITG, around a common technology platform and emphasizing penetration of products through the customer base. What we inherited was a very siloed organization. Steve Cavoli and the team have done an amazing job of tying together a global client list that is as blue-chip as it gets. We service that blue-chip client list through products we consider best-in-class, whether it's the algo suite, our analytics platform or the EMS Triton. The technology is really paying off, increasing client penetration, and the margins have improved. The business has been rationalized. When we bought ITG, it had a mid-teens EBITDA margin; think of it now as a multiple of that. It's a lot of work, blocking and tackling and a great sales effort tying together a diverse product offering across geographies and products to an incredible client base.

Great. And then just a quick follow-up on AI. I was hoping you could talk about the opportunity for agentic AI and elaborate on how you're using generative AI or other AI across the organization, use cases, and whether you can quantify any benefits you're already seeing.

Sure. Like most other companies, we're doing exploratory work. We do believe that with the right focus and setup, AI can be a productivity enhancement for our software developers. Our company is built on a code base and we employ excellent engineers to maintain it, and designing at a high level is beyond the capability of current tools. Introducing technical debt from AI-generated low-quality code is not in our plan. That being said, pairing high-quality engineers with tools that can execute boilerplate work faster, assist with explanations and reduce routine toil is attractive. We're definitely trying to use those tools internally. It's a little early to determine the productivity impact, but I expect in the coming year or two it will have a material impact and maybe we'll have more to say.

If I could sneak in one more, curious what impact you see across the competitive landscape from advances in AI and agentic AI?

The term AI is overloaded. If you want to talk about statistical modeling, that's been a big part of competitive landscape for trading businesses for decades, and this is another iteration with novel models and hardware availability. I don't have insight into what other firms are doing with agentic AI, so I can't give color there.

Your next question comes from Craig Siegenthaler at Bank of America. Your line is open.

Hope you're all doing well. First question on risk management. Given the strong results, can you quantify the changes in risk management that Virtu has been taking in the market making business over the last few quarters?

I don't think there's been any change in risk management. If you're asking whether the elevated P&L was the result of us taking on more risk and doing things we weren't doing before, the answer is no.

Okay. And Aaron, any way to quantify that?

In terms of?

No, I think that's the answer: based on how we look at risk, the risk profile of the firm has not changed materially.

Got it. One follow-up: some of your market-making peers operate a hedge fund in parallel to the core business. I'm curious why Virtu doesn't consider doing that. It could provide a new revenue source for the company. How do you think about that potential strategic initiative?

That's a tough one. I'm not sure which competitors you're referring to. We're a public company and we pay and maintain a dividend. Some competitors have retained personal capital they use to make investments or have side strategies. We haven't contemplated Virtu asset management lately. We're not currently contemplating anything around beginning a hedge fund.

Another way to think about it: our business is currently high-sharp but capacity constrained. Acquiring a bunch of assets wouldn't be a productive use for them at present. To deploy them, we'd likely have to put them into lower-sharp strategies, and we already have difficulty explaining variance in our earnings quarter-to-quarter. It would make that problem worse.

We don't have an infrastructure in place to manage a hedge fund-style setup, and it's not our expertise to hire a bunch of long-short portfolio managers and just give them a risk allocation. We run highly automated electronic market-making strategies backed by statistical research, and that is capacity limited at the scale we're talking about.

This concludes our Q&A session. I will now turn the call back to Aaron Simons, CEO, for closing remarks.

Nothing more from me, but thanks, everyone, for joining, and thanks for the questions. We'll talk to you next quarter.

This concludes today's call. Thank you for attending. You may now disconnect.