Virtu Financial Inc
NASDAQ:VIRT
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Virtu Financial Inc
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Good day and welcome to the Virtu Financial 2021 First Quarter Results Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Andrew Smith. Please go ahead.
Thank you, Grant and good morning. Thanks for joining us everyone. Our first quarter results were released this morning and are available on our website. On this morning's call, we have Mr. Douglas Cifu, our CEO; and Mr. Joe Molluso, our Co-President and Chief Operating Officer; and Mr. Sean Galvin, our Chief Financial Officer. They will 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 therefore, subject to risks, assumptions and uncertainties, which maybe outside the company's control. Please note that our actual results and financial conditions may differ materially from what's 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 the disclaimers in our press release and encourage you to review the description of risk factors contained in our Annual Report and Form 10-K and other public filings.
During today's call, in addition to GAAP results, we may refer to certain non-GAAP measures, including adjusted net trading income, adjusted net income, adjusted EBITDA and adjusted EBITDA margin. Non-GAAP measures should be considered as a supplement to and not as superior to financial measures prepared in accordance with GAAP. We direct listeners to consult the Investor portion of our website where you will find supplemental information referred to on this call as well as reconciliations 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.
And with that, I'd turn the call over to Doug.
Thank you, Andrew. Good morning, everyone and thanks for joining our first quarter earnings call. I will start with a brief overview of our near record results in the quarter and highlight some recent successes including the strong contribution from our organic growth initiatives and provide an update on the record quarter delivered by our execution services business.
At our core, everything at Virtu is driven by our ability to apply technology to efficiently and transparently serve our customers and the market. It is because of this business model centered on building and leveraging our operating scale that we were able to generate a record 77.6% adjusted EBITDA margin in the first quarter of this year.
I'll get some more of our results in a moment but I want to point out how the market changes over the last year created lasting opportunities for Virtu. The levels of activity in the market in Q1 were extremely robust. Our performance was driven, however, by the beneficial long-term trends in the market, as well as our organic growth initiatives. Beginning in 2020 and to this day, we see a new level of engagement from first time market participants and the way they are engaging continues to evolve.
A Deutsche Bank study from earlier this year reported that 45% of retail investors are new to the market in the last year. And one of the major e-brokers recently commented that almost 70% of daily logins are from a mobile device. While it is difficult to estimate the levels at which these activities will continue compared to the recent past, we are confident the underlying trends will remain in place supported by Virtu and a robust market ecosystem system capable of handling this level of extraordinary activity.
During the first quarter, our market making results reflected continued strength across the board in our underlying businesses. Our customer market making business performed exceptionally well. And the long-term trend is driven by technology, innovation and competition, continue to enable and support unprecedented levels of retail and professional investor engagement. This performance was but trusted by our non-customer market making business which saw healthy and steady performance across asset classes and geographies where we make markets.
In total, our market making business realized $575 million in adjusted net trading income or $9.4 million per day on par with the first half of 2020. We also provided a total of $470 million in price improvement to retail investors in Q1. It is important to note that while this amount is impressive as a standalone matter, it is more impressive when what we call size improvement is conservative. We not only offer investors excellent execution prices, we do so at sizes that are offered about three times larger than what is available at the top of book national best bid best offer prices. None of this size improvement is included in any rule 605 or 606 filing.
Our go to execution services businesses also performed exceedingly well this quarter. We realized $153 million in adjusted net trading income, a record quarter performance for VES. We have a slide in our supplemental materials which provides a snapshot of this business. The beginning of the second quarter marked the second anniversary of our closed on the acquisition of ITG and slide three illustrate the 26% CAGR we achieved over this timeframe. Two years later, you can see the business remains truly global and our clients represent the largest global institutions and are connected to Virtu across a broad array of products and services.
If you recall, our entrance into the execution services business began as an organic initiative, and its growth was accelerated through the acquisition of KCG and ITG. At the time, when we acquired KCG and ITG, the profitability in each of their execution services businesses were struggling, burdened by legacy technology costs and efficiencies and a backward-looking view of these businesses. In the years following these acquisitions, through the heavy lifting of integrating and the leadership of Steve Cavoli, we were able to successfully Invest in the customer technology enhancements necessary to thrive and compete in this business, while at the same time managing the cost basis in a Virtu way.
While we do not break out segment profitability, I am proud to report that the profit margins in this business are far superior to the marginally profitable businesses we acquired and likely among the most profitable global institutional businesses. Along the path of improving profit profitability of this segment, we continue to find efficient ways to offer more value to our clients without the risks inherent in a more traditional prime brokerage model run by nearly every competing scaled player. These offerings are organic because of our scale and integration often generate almost 100% incremental margins.
Once this driver of our growth story constantly unique offerings and sources, which our clients can only access through our execution tools, including allowing customers to realize the potential benefits available by accessing the multiple sources of unique liquidity by virtue of our global market making relationships in our US 605 wholesale business, as well as the 2000 VEF clients I mentioned just now.
With this offering, our global client quiet network of investors including buy side and sell side institutions, our IAS asset managers and ETF issuers are able to transparently interact with pools of unique liquidity from across our businesses, including retail order flow, to achieve their investment objectives by trading with more offsetting flow, and achieving larger size fills. Again, access to all of this liquidity is only available through Virtu. I know we have spoken briefly about his offering in the past, but I provide this update to highlight the meaningful progress we've made over the last several months and the larger opportunity ahead.
Continuing along our growth theme, one aspect of the Virtu story that we are very proud of, and I think we'll make increasingly important contributions in the coming years is the performance of our organic growth initiatives. Overall, since 2018, the investments we have made in these various businesses on slide four now comprise 8% of our adjusted net trading income.
You can see that our myriad avenues of growth contributed to our performance. Our $942,000 per day of ANTI from these growth initiatives represents 8% of our ANTI for the quarter. These initiatives are truly organic, and that are ANTI for many of these revenue sources was immaterial only a few years ago, and we've achieved these results without additional acquisition. We achieve this the Virtu way, which means by leveraging our scaled infrastructure, supplemented with a handful of individual hires.
There are a few initiatives that deserve mentioned beyond what is presented in slide four and the supplemental materials. First, our options market making business continues to make significant progress. Compared to 2020, our daily average adjusted net trading income in options increased over 50% in the first quarter of 2021. Options as a high priority growth avenue for Virtu and we're investing and made a handful of key tech hires to help accelerate our time [ph].
Our recent efforts in the crypto asset space also contributed to strong results in the first quarter. Our focus on trading crypto products comes from the launch of the Bitcoin and ETF in Canada in late February this year. The ETFs now have over $1 billion Canadian assets in Canada. Virtu worked with the ETF issuers to launch the products and become the designated broker or lead market maker and an authorized participant on a handful of the new ETFs providing liquidity on screen and in blocks to our clients. As an AP, we create and redeem ETF shares with ETF issuers and trade in the underlying crypto assets. The takeaway here is that the growth of illiquid tradable crypto-related products is another way that the total addressable market is growing for Virtu's scale liquidity provision and execution services.
Our growing at the market business had a strong quarter, setting a new record helping clients raise nearly 900 million of capital from the public markets by leveraging our existing electronic execution capabilities and network of clients. This is another example of how we generate very high incremental margin revenue due to our operating scale, common technology platform and sizeable footprint. The first quarter also included more than its share of discussion around market structure rules and regulations, congressional hearings around the so called lean [ph] stocks, payment for order flow, investor education, shortening of settlement cycles, gamification and other important issues.
We welcome SEC Chairman Gensler and congratulate him on his new role. We will continue to maintain an open dialogue with all of our global regulators about how to continue to improve the global market structure for all market participants. We believe that we operate in a transparent market structure in the US that serves all market participants exceedingly well. In US equities, for example, US virtue returned 1.3 billion to retail investors in the form of price improvement in 2020 without giving effect to the size improvement noted above. We believe that the levels of activity in the market is evident itself of the open and transparent access that all investors enjoy today.
Finally, given the strength of the results from the beginning of this year and the continued cast generative nature of our business, we are meaningfully expanding our share buyback program by an incremental $300 million, which represents an increase to the existing $170 million authorization. In a moment, Joe will provide more detail on this and other matters. And then Sean will wrap up the call with a review of our numbers.
Before I conclude my prepared remarks, I want to pause for a moment to honor the memory of an industry leader and a longtime member of the Virtu Board of Directors, Mr. Jack Sandner. Jack was a mentor to Vinnie and myself and was a great man. Jack was the chairman of the CME for the better part of two decades and among those responsible for guiding the CME into the modern electronic age. Jack, we will miss you and are grateful for all your efforts over the years on behalf of Virtu and the capital markets more generally. Rest in peace, Jack.
Now I'll turn the call over to Joe.
Thank you, Doug. Measuring against the progress we have made versus the model that we presented in the second half of last year, and how it progressed in our growth initiatives and performance are consistent with what we outlined. And expressing confidence in the future of long-term growth of our business, we are increasing our share repurchase program meaningfully.
Our sharing program began in November 2020 with an initial $100 million authorization and increase to 170 million in total when we announced our Q4 earnings. As Doug just mentioned, our board has authorized an incremental 300 million increase to our repurchase program, bringing the total to 470 million. We have provided specific parameters for earnings and share repurchases in prior communication. We believe increasing the share repurchase authorization by an additional 300 million is consistent with our prior guidance. This increase allows us to achieve our goals of returning excess capital in an efficient manner to our shareholders, allows us to be a continuous purchaser in the market for our shares, reduce the share outstanding over time, and allows us to remain flexible to increase the authorization in the future and conditions and our results allow.
To date we have repurchased $151 million of our shares at an average cost of $27.37, resulting in 5.4 million share repurchase since the inception of our buyback program about six months ago. It is important to note that our share buybacks are the result of excess cash generated by our business after making proper allowance for adequate amounts of trading capital and liquidity to allow us to take advantage of market opportunities. Our ability to devote excess cash for share repurchase program is also related to our total capitalization and long-term debt outstanding. Given that our total debt-to-EBITDA ratio stands at one time trailing EBITDA, as of March 31, we would expect to maintain our current level of indebtedness for the foreseeable future.
Turning to slide five in the supplemental material to review our capital management session. As, Virtu has consistently paid a $0.24 quarterly dividend since our IPO in 2015. There are two important things to point out on this slide. Consistent with guidance, our share count has been declining due to our buyback program. This decline is net of investing of restricted stock and other share awards that are part of our regular employee compensation.
We would expect that as we contemplate the existing repurchase authorization within the next 12 months, and net shares outstanding will continue to decline. Importantly, we want to point out what we believe is a significant and underappreciated aspect of Virtu's operation. Despite Virtu's growth as a global multi-asset class market maker and our strategic expansion into offer a suite of execution, workflow and analytics products to the buy side and sell side, we continue to remain focused on capital efficiency. The nature of our operations and services we provide are not capital intensive and allow us to maintain a relatively consistent level of capital across market environments.
You can see from this slide that even in 2019, a trough year for market making and a year that also included our completion of the ITG acquisition; we're able to achieve strong cash return on invested capital. Now compare that to 2020, we are driven by Virtu realizing additional expense synergies from integration, executing on organic growth initiatives, and a new level of market activity, Virtu generated a return on invested capital of 100% in 2020. This extraordinary outcome is due to a number of factors, including our disciplined management of capital and costs, and our business model designed to leverage our global operating scale, all of which helped us generate more free cash flow.
I'll now turn the call over to Sean for a review of our financial results before moving to questions and answers.
Thank you, Joe. In the first quarter, as presented on slide three of our supplemental materials, our adjusted net trading income, which represents our trading gains, net of direct trading expenses, totaled $728 million or $11.9 million per day, which is 7% lower than Q1 2020 and 60% of the fourth quarter. Market making adjusted trading - net trading income was $575 million or $9.4 million per day, 10% lower than the year ago quarter but 88% above the fourth quarter. Execution services adjusted net trading income was $153 million or $2.5 million per day, which is a record high and a 19% increase year-over-year.
At $2.04 in adjusted EPS was just a penny shy of last year's record first quarter and well above $1.18 cent per share in fourth quarter of 2020. In the first quarter, our cash and overall compensation ratios were 12% and 14% of adjusted net trading income respectively. I'd note that our compensation ratio consistent with past practice, we accrue year end incentive compensation to a range of percentages earlier in the year. Depending upon how the remainder of the year unfolds, this may result in adjustments to our compensation ratio in later quarters this year, as we refine our specific compensation targets. Overall, we believe our full year cost results will be consistent with the cost guidance we previously provided for 2021.
Adjusted EBITDA came in at $565 million for Q1, 1% lower than the prior year quarter and 64% above the fourth quarter. We delivered a record adjusted EBITDA margin of 77.6% for the first quarter by continuing to successfully leverage our efficient cost structure and by carefully managing our expenses. As Joe mentioned, our capitalization remains adequate and our debt remains relatively flat at $1.67 billion, reflecting a $1.5 million repayment in the first quarter.
Financing interest expense was $19 million for the first quarter of 2021 compared to 26 million for the prior year first quarter. With this decreased primarily due to repayment of 289 million of long-term - $289 million of long-term debt in 2020. We remain committed to our $0.24 quarterly dividend, which we have consistently paid over 23 quarters in every market environment since our IPO and the $300 million increase we announced today to our existing $170 million share buyback authorization fully demonstrates our continued commitment to return capital to our shareholders.
I will now turn the call back over to the operator for Q&A.
[Operator Instructions] Our first question today will come from Rich Repetto with Piper Sandler. Please go ahead.
Q - Rich Repetto
Yeah, good morning, Doug and Joe and Sean. First congrats over the top quarter here. So I guess my first question has to do with cash flow. You did buy back shares and you have paid down debt in the past but in your previously sort of public statements you talked about a buyback commensurate with the adjusted net trading income. So I mean, I'm trying to understand the timing of the buyback. Does it be more accelerated, I guess, going forward because of the increased cash flow.
Rich, yeah, we put those heavy charts out that show EPS and levels of cash flow had different levels of net trading income. So we think this is consistent. I mean, what we put out in the past and we now look at this quarter, it's grown [ph], right. So you want to take the full year range and put out here if you quarterize it, I think it's consistent. And it's also a statement about the full year. Obviously, if we continue to print more like this, we would have more - we would have share buybacks consistent with what was guided for the full year. So I guess that's the first point.
The second point is we've already bought back $150 million worth of shares, it's is almost the full authorization of 170 prior to this and I would expect the board has authorized this new repurchase horizon for a year from now and I would target, starting now through the end of the first quarter of next year. So I look at it as kind of rolling 12-month periods. We've chosen to not try to take stock prices where there will be buyer and not pick other prices where there won't be a buyer. We've tried to look at it - I think most people look at these things over 12-to-18-month period, we've tried to tighten that up, because we've been so specific in our guidance, and trying to be just a consistent purchaser in the market at all levels and I think that seems to have worked so far.
Got it. That's helpful, Joe. And then I guess my follow up would be you didn't update or address the sensitivity tables on adjusted net trading income and EPS that you've published. I'm assuming that you still believe the earnings - and you far surpassed this, but the earning capacity in a normalized environment is at least $3 in EPS. The question that will either come from me or someone else later is can you talk about have we returned to that more sort of a normalized environment and how close are we to it like in 2Q to date in April?
Yeah, look, I'd say, you're [indiscernible] Rich. I feel pretty good about $3 a share this year, given that we are at $2.04. So the year has got 12 months, which is a good thing. There's no reason to update the chart, given that its math right, it's the adjusting the trading income per day times the number of trading days and when we've been really precise about expense guidance, we always are so. So it's pretty easy math. You were nice enough to host the virtual book [ph] at March. We put a range of different outcomes around ANTI and we think that's the relevant range. Now if anyone - if you look at the past year, year and a half, two years and if you can point to something that's normal, I'm all ears. But yeah, I mean the answer to your question is, yes.
Okay. Thank you. That's helpful. Thank you.
Our next question will come from Dan Fannon with Jefferies. Please go ahead
[indiscernible] trying to get a sense of what's normal, but kind of what is happening in your business as we think about kind of the external metrics, all moderating here in April and if you could kind of update us on how you're tracking within this kind of backdrop.
Yeah, Dan, obviously you look at the same metrics I do, just to give you a little commentary on them. I mean, April, volumes were a hair under 10 billion shares per day, which is 32 odd percent from the first court, I would point out, only down 5%, from Q4 of 2020. And on a notional basis, which is important as well, it's actually up from Q4. So there's always some distortion in these periods. And they can look - particularly like the first quarter can look very exaggerated by a lot of these lower price names, like an SNDL that'll trade a couple billion shares a day and it tends to distort the data on a notional basis. The changes are really not as relevant.
We don't realize volatility is down in April as well as, down to 33% from Q1. I'm really trying to stay out of the commentary game going forward. I mean, it really has not served us well. Frankly, the way I'm excited about the future of this company, we're very, very proud of the EBITDA margin that we produced in this quarter and we continue to focus on operating discipline. We're very committed to capital return to our investors as is witnessed by buying back $150 million of shares. My board is very supportive of that going forward as we just articulated. And we're running this company - I'm running this company for the next 20 quarters.
And also, what April means, as compared to April of 2023, kind of doesn't really matter to me. We will continue to focus on the organic growth initiatives that have worn significant fruit, I mean, 8% of our adjusted net trading income. So we're executing on everything that we said we were going to execute on. We are integrated two massive companies that were materially larger to us that frankly, in many regards, were a mess. We create enormous amount of value, we created an execution services business that I'm proud to say is unparalleled. In scale, and efficiency, it doesn't rely on the vagaries of prime brokerage, and risk taking.
We're finding new opportunities in options, in ETF block and as we announced, we're very supportive of crypto as a new asset class that we can provide a lot of value to. So that's really the investment case for Virtu and obviously, I understand you have a job to do and investors look at monthly, daily, weekly volumes and get all excited about them. What - I'm trying to stay in the middle of fairway and run this firm for the next five or more years and that's what we intend to do.
Excellent [ph]. And then just the disclosures did change and transparency is kind of narrowed over the last few years of your business, and just could you maybe talk about the growth prospect [ph] for global equities based on that.
Yeah. Sure, I mean, it's consistent with how we report on a GAAP basis, right. So a lot of it was historical, when we were smaller company, and didn't have a customer, non-customer segment didn't have execution, services, business, etc. So the company has gotten a lot larger and more complicated. But again, it goes back to the point I just tried to make, which is Virtu is a story of not whether or not our metals business is up consistent in a quarter with some metric that somebody's looking at.
The vagaries of that type of analysis are not consistent, in my view, with long holder - shareholder value creation. And so I'm all about providing transparency. This is not the easiest business in the world that we intend to explain. But my conclusion was, with the support of my colleagues here in this room of, my point [ph] was that providing that level of granularity, I guess, was not consistent with the long-term value of - long-term shareholder value we're trying to create and all the table that was encouraged folks trade in and out of the stock, which they have done with alacrity and they were entitled to do. But certainly, we're not going to provide them additional information, so that people can do that on a more regular basis.
We want people to understand this story as a scaled electronic provider. And rest assured our FIC numbers are completely in line with historical averages. But just - and we said this in the last earnings call, we're going to narrow the focus of this firm, if you will, in the review of this firm as a technologically enabled financial services firm that is broad and is unique in the market, and will continue to return capital to investors; just trying to reduce the noise quarter-to-quarter.
I understand. Thank you.
Our next question will come from Chris Allen with Compass Point. Please go ahead.
Good morning, everyone. want to ask a little bit about execution services. Last quarter you noted a growing recurring revenue base the within that line, maybe you can give us some color in terms of framing that out, how that has been done as a percentage of that segment because obviously, first quarter was good - industry backdrop as well within that business.
Yeah, great question, Chris. I mean, we don't traditionally kind of break it out into recurring versus non-recurring. There's a little bit of a mixture in there as you know. If you think of the recurring segments, we have workflow solutions and analytics business. We're obviously very focused on that. We launched some new products which we outlined in the quarter, our open Intel, our open Python products, really re-platformed in large measure our Triton product and delivering our analytics solution in a very, very material way.
So, the way we look at it is like kind of these are like reoccurrence revenues, right. We have 2000 global clients. The vast proponents of them use two or more products, including commission management, which is really important part of that. And so, sure, there's going to be elements of transactional activity that will impact those products but it's no different than an institutional business and a large-scale broker dealer, as I've pointed out absence, of course, the vagaries of prime brokerage and risk taking, right.
So we're providing the skilled execution service solutions, multi-product in a very, very meaningful way. The key, though, to this quarter was two years after the acquisition, having launched a number of these new products, having re-platformed virtually all of the ITG product, it's working, right. There was concern that clients wouldn't resonate to the offerings because of the market maker HFT. And actually, we thought the opposite was true and indeed, the opposite is true. Our clients that have opted in to our full of natural liquidity and our ability to cross clients against each other, have given that service, rave reviews.
And I would stipulate or argue that we are the only firm in the planet that can provide that type of unique liquidity provision coupled with a technologically enabled view of global equities markets, in the deed markets around the world. So we think it's a very, very unique scale of business. We're very excited about it. Again, Steve Cavoli has done a great job integrating it. And we've taken out literally hundreds of millions of dollars of cost of business without sacrificing any client or customer service. Indeed, we've gotten a hell of a lot better. So I'm very, very proud of what we created an execution services two years in.
Got it. And then just a bit on the organic growth opportunities, maybe you can give us some color on, I think, with the big data analytics launch you noted on the slide. And one thing, I did not see on the slide was corporate credit, which you talked a little bit about in the past. So any color there would be helpful.
Yeah, great. So look, I mean, I just kind of went through our commitment to the analytics business. And we look at that again, it's probably a little bit of a silly analogy, but we kind of want to be the App Store, Chris, right, as opposed to - we always have provided consulting services and whatnot. But we want to enable our clients to access their data in a scaled way and enable them to have access to peer reports and peer data, obviously, in anonymized fashion in a way that is - where they can then take that information along with a library of APIs that we're going to provide and drive significant value for it, right.
That's really what our clients want. They don't want to be pushed a bunch of PDFs that say, okay, well, here would be your impact analysis on your parents algo order. I mean, that's literally like the late '90s type of delivery. And so we've revamped the way that we look at that business and say we want to be in the platform, data delivering and data provisioning business, and clients have really resonated to that. So we think that's certainly unique.
And we've got one, the technology footprint to do that, and two, the pure of clients to be able to provide that. In terms of corporate credit, again, it is something that we're very committed to. I told you that we launched it late last year, early this year. So its contributions are swallowed up by the rest of the results but it's certainly something that we're very, very excited about. It's not a standalone product that scales and leverages very well our existing capabilities globally in ETF and it further just bolsters the fixed income ETF market making offering that we have. So we will continue to be - continue to invest in that and we think will be a significant player, and the addressable market in fixed income ETF just continues to grow. And so it's a very exciting opportunity for us going forward.
Thanks Doug.
Thank you.
This next question will come from Sean Horgan who is with Rosenblatt Securities. Please go ahead.
Good morning. Thanks for taking my question, guys. There is just one on crypto. I was wondering if you could expand on the market making initiative there. Can we get a sense of the contribution of crypto market making to organic growth? And how impactful do you see this opportunity? How should we think of the business ramping up?
Yeah, I mean, look, I mean, the god bless Canada, it's a great country with the home of hockey and all that kind of stuff, I love hockey. So the Ontario Securities Commission [indiscernible] to approve a couple of ETFs. We looked at that as an opportunity for us to be a significant market maker because right now WisdomTree [ph], it's an equity security against either a cash or a future or both right and that's what we do as a market maker. We like being an authorized participant.
We want to partner with issuers so that they issue products that are attractive to investors. Otherwise, what's the point and it scales very, very nicely into our existing infrastructure. So the incremental spend to become an AP and a direct market maker up there was effectively zero. So the incremental margin of any revenue there is 100%, effectively, right. So, we've been a market maker in crypto futures for a long time.
As a part of a contribution - it's a small market and these are small products right now, the exciting thing, however is, there's obviously been a lot of talk about what's going to happen in the United States. I think there are five or six or seven and Fidelity, WisdomTree, and other world-class issuers that have proposals pending at the SEC.
I think the Chairman is extremely well-versed on these issues. He lectured about them at MIT. I watched his lecture; he's very, very thoughtful on it. And so I'm guardedly optimistic that that product or products will launch in the United States, and then the sort of floodgates open up, and we can grow very, very quickly with these issuers, excuse me, and partner with these issuers. It's just another example - again, I don't - I'm not a bitcoin guy, I'm not talking about whether or not the underlying asset and sort of you shouldn't come to me for that kind of questioning.
The opportunity, however, for us as a market maker is, if this is viewed as a store of value, people are going to want to access it as an ETF, as a spot position and as a future; that is virtue 101, right. So the exciting thing from us is that you have this entirely new addressable market with presumably trillions of dollars of value that needs to be market make and needs to have price discovery and we can do that without increasing our risk at all, right and without any real investment other than the technology plant we have and the personnel that we have today. That's why we're very excited about it.
Okay, got it. Great. Thanks. That's helpful. And just one other one, I guess, same question with the options market making. How should we think about the trajectory going forward there?
Yeah, I'm obviously - as I said, in the script, a 50% incremental growth against a really good quarter in the fourth quarter is exciting, right. And so we're building that business the Virtu way from scratch. And as I said earlier in my prepared remarks, we're adding, we're adding a couple of really talented free agents, if you will, that have some subject matter expertise, the fact that we were lacking here. And so doing it the Virtu way, having a team right now, that is smaller than a breadbox, if you will. It will grow somewhat, but we'll never be a giant, large scale group of folks and so it'll have a significant margin.
So I would say we're in the first inning right now. We have not addressed individual names. We're certainly not in the retail 605 [ph] business, which I've read is can be pretty profitable an options, right. And so there's a lot of opportunity and a lot of growth for us. Again, the significant thing is, it is a Virtu style growth story. We have the fixed cost point, it's a technological infrastructure. We had - we were continuing to address and tweak it for options. I'm very confident we will get there because we've had meaningful success there. We have all the connectivity to the exchanges.
We have the relationships. We have prime brokerage, and more importantly, we have relationships with the retail providers or the retail brokers, if you will, for all these options. So we have all of the makings of a global scale options business. It's just a question of blocking and tackling and executing. And that's something that I'm very proud to say we have been excellent in over the last 13 years. So I have every reason to believe that we will continue to see very significant improvement in this area. We're making awesome progress. I'm pretty happy with where we're at right now.
Okay, got it. Thanks, Doug.
Thank you.
Our next question will come from Alex Kramm who is with UBS. Please go ahead.
Yes. Good morning, everyone. Sorry to harp on the transparency discussion from earlier but just coming back to the question that was asked I think twice about second quarter trend so far. It seems to me that historically speaking, just as recently as conferences or your first quarter earnings call, you've been very happy to provide us with kind of like ideas of how things are trending from an anti-perspective, when things were trending fairly decently. So with all these metrics or industry metrics suggesting a little bit of a softening here, quarter-to-date and your lack of giving us some insights, I mean, how are we not supposed to infer that that things are running decently softer quarter-to-date? I'm not sure if that's the question, but just wanted to clarify.
You just wrote your note and I guess I'm not surprised. So, look, we have tried to be very transparent, we gave monthly reports in 2020. And we put out an August report that, I guess, was lower than someone's expectations, and the stock went down 15% right. So there was no benefit to our long-term investors to continuing to do that. So I'm just not going to do it. And you obviously will write whatever you're going to write, you continue to be very negative on the stock and that's fine. That's your prerogative.
I've had you at Virtu, I've shown you everything about the being on side from Virtu and we've shown you how we're going to grow this firm. I'm running this firm for the next 20 quarters. If you think April is important to that story, then write the note that you're going to write. I would candidly disagree with you and so therefore, I've given you my commentary on April, right, and I've given you where we're going to be in 2026. Where we're going to be in 2026 is a lot more important to me than what you think about April.
Hey Alex, what I had is, in the past - what Doug just mentioned there late last summer, when we stopped the monthly guidance, we did that for a reason because we tried to be more transparent. And frankly, it didn't help anything. It didn't help anyone understanding of the stock. It didn't help our shareholders, we heard directly from them. And frankly, it didn't help any of the people who write on the on Virtu. That's why we stopped doing it. I think since then we've been very consistent.
It is early, this is new and when we look at the fourth quarter and the first quarter, we've tried to kind of outline ANTI per day 6, 7, 8, 9, 10 or 11. What is the range available for carry purchases? What is the range for ETFs and that's meant to be a long-term tool, right? That's meant to be a very long-term tool to help people understand what to expect and build your models on the revenue side, and on the cost side. So I think that that's the best we can do. The month-to-month and quarter-to-quarter guidance just didn't help and I don't think it's new. I don't think this is something that we're just starting there.
Alright, I appreciate the comments, I guess. Sorry, to harp on it one more time. Just it's obviously not a question about being positive or negative on the stock but if I think about it from a new investor perspective and if you think about your firm, I think from the beginning you've prided yourself of being an open kimono company, with regulators, with your customers, etc. And it just seems to me, considering that you're complaining about the multiple that your stock trades that that to attract new investor interest, wouldn't you want to give people transparency that they can actually see the path for growth. So, again, sorry to harp, I just -
I can't really disagree with your characterization, okay. We have given more transparency than any public company in this space, right, about what we're trying to do to grow this business, right. You had a note two years ago that Virtu was a melting ice cube and you were wrong, right. We've shown you all the growth initiatives that we've initiated. We started options, we started block ETF, we're going to be a major player in crypto assets as they move into a more regulated environment, right.
We've taken out hundreds of millions of dollars of costs. We've recreated an execution services business that candidly your firm would love to have, okay. And so if all of those things don't attract new investors, then I don't know what else we can do. Whether or not we should harp on monthly results on a stock that is a five-year story, to me is not the right way to approach a stock. You're going to write your note, I know exactly what the headlines going to see, record quarter but softening in the future, I texted that to Andrew this morning. So write your note and let's have the next question.
Thank you.
[Operator Instructions] There being no further questions, we'll conclude the question-and-answer session. I'd like to turn the conference back on the Douglas Cifu for any closing remarks.
Great. I want to thank everybody for joining today. Again, it's particularly those that are interested in long-term investing in Virtu, we're here to answer any of your questions any Time and we look forward to talking to you, frankly, whenever you'd like or sometime in late July or August. Thank you everybody.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.