Virtu Financial, Inc. VIRT reported fourth-quarter 2023 adjusted earnings per share (EPS) of 27 cents, which missed the Zacks Consensus Estimate by 35.7%. The bottom line dropped 27% year over year.

VIRT’s adjusted net trading income of $260.9 million in the fourth quarter missed the consensus mark by 4.4%. The top line declined 4.8% year over year.

The company reported weak quarterly results caused by deterioration in net trading income and commissions, net and technology service revenues and higher expenses. However, the results were partially offset by improved interest and dividend income.

Virtu Financial, Inc. Price, Consensus and EPS Surprise

Virtu Financial, Inc. price-consensus-eps-surprise-chart | Virtu Financial, Inc. Quote

Q4 Performance Details

Revenues from commissions, net and technology services declined 3% year over year to $114.4 million. The metric missed our estimate of $115.5 million. Interest and dividends income increased 142.8% year over year in the fourth quarter to $154.7 million. The metric surpassed our estimate of $122.5 million.

Adjusted EBITDA amounted to $99 million, which fell 21.1% from the prior-year quarter and fell short of our estimate of $144.9 million. The adjusted EBITDA margin declined to 37.9% from 45.8% a year ago.

Total operating expenses of $519.2 million increased 13.3% from the year-ago figure and were 7.9% higher than our estimate. VIRT recorded increases in communication and data processing, interest and dividend expenses, employee compensation and payroll taxes. This was partially offset by lower net brokerage, exchange and clearance fees and payments for order flow expenses.

Segmental Update

Market Making: The segment reported an adjusted net trading income of $167.5 million, which declined 9.3% from the prior-year figure. Segmental total revenues jumped 9.4% to $422 million in the fourth quarter of 2023 but missed our estimate of $429.6 million.

Execution Services: The adjusted net trading income of the segment increased 4.5% to $93.4 million in the fourth quarter and remained well above our estimate of $89.9 million. Total revenues declined 4.8% in the quarter under review to $106.5 million and missed our estimate of $114 million.

Financial Update (as of Dec 31, 2023)

Virtu Financial exited the fourth quarter with cash and cash equivalents of $820.4 million, which declined from the 2022-end level of $981.6 million. Total assets of $14.5 billion increased from $10.6 billion at 2022-end.

Long-term borrowings, net, amounted to $1.73 billion, down from the 2022-end figure of $1.80 billion.