Thank you. Good morning, everyone. Volume and volatility this quarter were somewhat lower than the first half of the year, although they remained elevated relative to historical averages. Despite the moderation in the operating environment, our diversified set of trading strategies allowed us to perform at a high level. We are continuing our plans to grow capital in all forms. At the beginning of the quarter, we raised $500 million in the form of new debt, helping to bring our overall trading capital base to $3.4 billion. On the human capital side, hiring is continuing according to plan, and turnover remains low. Our focus is on adding to our trading, research, and development teams while maintaining a high bar for quality and preserving our open, collaborative culture. Lastly, we are continuing to invest in our physical infrastructure in order to stay at the forefront of technological competition. We have provided additional perspective on the quarter in our detailed financial supplement and will be answering your questions shortly. First, Cindy Lee, our Chief Financial Officer, will review the financial results for this quarter.
Thanks, Aaron. Good morning, everyone. For the third quarter of 2026, we generated adjusted net trading income, or ANTI, of $11 million per day, or a total of $704 million. Market making recorded ANTI of $9 million per day, while execution services recorded ANTI of $2 million per day. As Aaron mentioned earlier, despite a notable decrease in market activity quarter-over-quarter, volumes and volatilities remain above historical averages, and both of our operating segments continue to execute and capitalize on their respective opportunities. Our profitability this quarter was strong. We generated $438 million per day in adjusted EBITDA, representing a 62% margin. Adjusted EPS was $1.77. Over the last 12 months, we have reported the ANTI per day of $11.3 million per day, adjusted EBITDA of $1.8 billion, and adjusted EPS of $7.69. All of these numbers represent all-time highs for Virtu from a trillion-12-month perspective. On slide 5 of our supplemental materials, we provided a summary of our operating expenses. Our third quarter 2026 cash compensation ratio was at 23%, which is consistent with our expectations. Through September 30th, our year-to-day cash compensation ratio is 23, and our total compensation ratio is 28%. Again, these are levels that we have stated would be appropriate in the near term. Turning to capital, after raising $500 million through new debt in July, our invested capital stands at $3.4 billion as of September 30th. Our trailing debt-to-evidot ratio is 1.4 times, so we remain modestly leveraged. We will continue to grow our capital base organically and deploy capital where we see the greatest Thank you. All while maintaining our quarterly dividend at $0.24 per share. We will now take your questions.
Operator
We will now be entering the question and answer portion of the event. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 to raise your hand. Withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from Patrick Molle with Piper Sandler. Please go ahead. Your line is now open.
Yes, good morning, and thanks for taking the question. So maybe start on market making. You did about $9 million a day, down only about 4% sequentially, and it came in a quarter where? You know, U.S. equity volumes are down mid-teens, realized vol was down more than 20, so you clearly outperformed the backdrop. Could you maybe just help us understand what drove that? Any color there would be great. Thanks.
Hey, Patrick. Thanks. Sure. So as you noted, U.S. equity volumes were down, but, you know, that's not the only place where we're trading, obviously. So there was definitely some heightened activity. Other places, like there's been a lot of, you know, the offshore equity perpetuals that have come online. There have been some interesting events in the crypto space. Obviously, they're episodic. Things going on with AI and chip stocks in multiple countries around the world, not just U.S. equities. So I think it's, again, just another kind of piece of evidence that, you know, we're really diversifying the firm and trying to grow trading, not just concentrated in U.S. equities and especially not just concentrated in wholesaling of U.S. equities. And so, you know, I think you can expect that going forward that it's not going to be as correlated with those metrics as it used to be.
Sure. Great color. And then just as a follow-up, I also want to ask about execution services. There's been some media reports that you could be exploring a sale of that business. I understand that you might be limited in what you can say, but maybe just at a high level, do you feel like the market gives you credit for VES inside of Virtu? And maybe just how do you think about the strategic fit between that and the market-making business going forward?
Well, I'll answer the question in the abstract, Patrick, this is Joe, because we don't, you know, when that, in response to the news story, you know, we said we don't comment on rumors. And your question, do we get credit for VES inside of Virtu? You know, the public market may not give us credit for Virtu inside of Virtu. So, um... But I'll tell you that Virtue Execution Services is a strategic business for us. It's done exceptionally well. You can see the growth in net trading income on a quarterly basis. You know, this is a business that has 1,400 blue-chip clients, truly a global business. And we don't break it out, but if you went back and looked at, you know, ITG's margins. Prior to us buying them, we have more than double those margins, and so we think it's operated in a best-in-class way among its peers. Clients will tell you that the technology is differentiating, the technology that underlies the products that are spread across these 1,400 clients. So we like the business. You know, there's a lot of questions we've gotten around this in terms of capital and I saw your math when the news story came out. And look, what I'd say in the past, we've articulated a near-term capital goal of around $4 billion plus, we called it. That's not a forever goal. It's a near-term goal. But as Aaron mentioned, when you look at where we are today, we're well on our way to achieving that goal. You know, we've accumulated, I think, $900 million-ish of trading capital this year, around half of it organically, half of it from supplementing our debt stack. So I think we feel very good about how we've grown the capital base and deployed it. And to get to our long-term goal, medium-term goal, we don't need to do anything in terms of asset sales. And all that being said, we're always focused on shareholder value, as you know, Patrick. So that would be sort of how we answer that question.
All right. Great. Thanks, Joe and Aaron.
Operator
Your next question comes from the line of Eli Aboud with Bank of America. Please go ahead. Your line is now open.
Good morning. Thank you for taking the question. When you IPO'd in 2013, you said at the time that you only had one money-losing day in the past four years. We're often asked by investors whether Virtu's appetite for risk has changed since the CEO changed. So to that end, when you look at the past year, how many months losing days has there been?
Hey, I'll take that question. So, you know, we don't break out in granularity, like, especially the level of exact number of days of any certain level of P&L. But I will say that if you look at when we IPO'd, you know, the statistical distribution of our P&L was such that a losing day represents an operational error rather than any result of the trading strategies themselves. But since, you know, we've grown a lot since then, the business has changed a lot, beginning with our acquisition of KCG. I would say that materially, the distribution of that P&L changed quite a lot. The retail wholesaling business, the ETF block trading businesses, those are just kind of different animals than the sort of very traditional on-screen market making that we were doing, you know, back in those days, which was a long time ago at this point. Definitely, the width of the distribution of our P&L has increased meaningfully from our IPO days, but, you know, fortunately, we've also increased the mean of the distribution quite a bit, such that bouncing off of zero is still quite rare, although not zero. And so... I think since I took over, I don't think the distribution has really changed meaningfully. We are open to more trading opportunities than we perhaps were, but qualitatively, there's a bigger difference between our IPO in 2014 and even 2018-19 than there is between a year and a half ago and today.
Got it. That's very helpful. And then, has there been any change in how long you were warehousing this? I think in the past, you've described your average holding period as a few seconds. Is that something that has changed?
I haven't described it in that way. I don't know exactly where that statement came from. There's not like a one number that I could even point to, to be honest. There's very different segments of trading that have very different holding times. But I would say that the the set of holding times of our various trading strategies has not changed meaningfully in the last year.
Operator
Your next question comes from the line of Ken Worthington with J.P. Morgan. Please go ahead. Your line is now open.
Hi. Good morning. You raised $500 million of debt at the end of July. Did the capital raise make it to the trading desks near instantly, or did it migrate at a more measured pace over the quarter? And how would you judge the returns on the incremental capital?
What I would say to you, Ken, is we – this is Joe – we don't measure kind of incremental returns because cash is fungible, capital is fungible, and it's spread across. Our various businesses and our various legal entities in our various jurisdictions. So what I will tell you is we maintain buffers, internal buffers, as you would expect from a trading standpoint, a usage standpoint, a regulatory standpoint in those legal entities. And, and trading desks. And prior to that capital raise, we were seeing opportunity, you know, where we were, you know, using some of the buffer as in a business as usual way. And also from time to time, using some of our contingent liquidity, you know, in terms of revolvers, etc. And that has largely come to an end. So we always want to operate with belt and suspenders, trading capital, belt and suspenders, excess trading capital. And the environment at the time allowed us to, I'd say, deploy most of it right away. But when we say deploy, we mean deploy, you know, with adequate buffer. So I think the environment has slowed down a little bit, as was noted at the beginning of the call. And that usually causes us to use less capital, all things equal, you know, but all things are never equal. I think, you know, Aaron mentioned some of the highlights of kind of new products, and these new products have various levels of efficiency around settlement and margin, so that drives capital usage as well. I would say net-net, we were able to deploy the capital, we have adequate buffers. And we're going to continue to organically grow the capital base. And then as we continue to reset the bar at higher levels of net trading income and higher levels of profitability, we'll always look to opportunistically supplement our debt capitalization as well.
Great. Thank you. And for the follow-up, how would you characterize the investment that the industry is making in new technologies like AI and other? Is it sort of business as usual, or do you see this as sort of a, you know, being in the midst of a technology arms race? And if so, does Virtu have to change the level of investing that it's making from current levels?
I mean, I guess it's tough to answer. I mean, again, trading is a pretty diversified business. And so there are different types of trading with different technological requirements. I mean, on the one hand, we've been in a technological arms race since the founding in 2008. I think it's just much more visible now. And the dollar amounts are higher because of the AI spend that people are doing. And there's a bit of a, you know. Price difference just because of supply chain constraints and other things. So, you know, we are continuing to spend a significant fraction of, you know, dollars on technology, but it's not really new or representing some, you know, great acceleration. We are incrementally investing more as we are growing into our sort of like, you know, physical capital base and compute and power and storage and everything else. So, I mean, yes, it is an uptick, which we've highlighted before that we were going to do, so I don't think it's anything surprising, but I think we feel very comfortable where we're at and don't feel a need to do anything beyond what we've sort of telegraphed.
Excellent. Thank you so much.
Operator
Your next question comes from the line of Dan Fannin with Jeffries. Please go ahead. Your line is now open.
Thanks. So I was curious about where you think you are in terms of your hiring goals. You've talked about investing in the business and people. Is that something that has a time period to it, or is it something we should be thinking about that's going to be ongoing as we go into next year and beyond?
Uh, well... I guess I don't know how forward looking you want to be. Certainly into the next year, I don't think you're going to see any change. We still have quite a few unmet hiring goals, and we're trying hard to fill them. I mean, we don't. This business changes quite quickly. And so, you know, we do have sort of near term and what we would call medium term goals. And medium term for us is probably at most a year. So I don't think I can predict beyond that. I mean, we would love to be in a state where we just keep finding new trading strategies, keep making more money, keep hiring more people, but it's hard to really plan beyond sort of the next year at most.
Understood. And then in the context of expenses, as we think about what you've mentioned in terms of investing in the business plus the people, any change in philosophy about or how we should think about expense growth sequentially as we think about the end of the year, but also, again, into next year, given what appears to be a more consistent investment period of hiring and other investments.
Uh, no, Dan, I mean, I think you could see the numbers, right? Expenses have gone up. You know, we don't think they've gone up any more than we expected them to. On the people front, I think just to underline what Aaron said, you know, we've already, you know, increased our hiring meaningfully. You know, we're at the end of the, as we speak here, we're just below 1,100 people. And, you know, we expect to be over 1,100 in the near term. So, you know, hiring has stepped up, and it's been driven in sort of the high-value areas in terms of trading and development. So, you know, and you can see the comp ratio is sort of that Cindy mentioned is where we've guided it to. So, I think, you know, you can look at the trends and extrapolate pretty accurately.
Operator
A reminder that if you would like to ask a question, please press star 1 to raise your hand. There are no further questions at this time. This concludes today's call. Thank you for attending. You may now disconnect.
