Virtu Financial misses forecasts as net income halves in 2022

abdelaziz Fathi

US electronic market maker Virtu Financial has reported its fiscal results for the fourth quarter and full fiscal year of 2022.

The Nasdaq-listed financial services provider reported fourth-quarter revenue of $498 million, down by 29 percent compared to $705.6 million for the same period in 2021. Net trading income ticked down to $313.3 million for the quarter compared to $513.4 million for the same period a year ago.

On an adjusted basis, net income decreased 43% to $274 million from $485 million for the Q4 2021. Adjusted EBITDA also decreased by nearly two thirds to $125.4 million.

Basic and diluted earnings per share for this quarter were $0.27, compared to $0.90, and $0.89, respectively, for the same period in 2021.

On a full-year scale, total revenue was lower by 16% to $2.36 billion from $2.81 billion for 2021. Net income totaled $468.3 million for this year, compared to net income of $827.2 million the previous year.

Virtu makes markets over 25,000 financial instruments, at over 235 venues, in 36 countries worldwide, continuously quoting buy and sell prices for others to trade against, profiting off the bid-offer spread, using high-frequency trading (HFT) strategies.

In 2017, Virtu Financial acquired rival KCG Holdings Inc. for $1.4 billion in cash, as tough market conditions forced high-frequency traders to consolidate and rethink business strategies. The combined entity created a giant HFT firm responsible for around 20 percent of the volume in US equities.

The company has two operating segments: market making and execution services; and one non-operating segment: Corporate.

Market Making principally consists of market making in the cash, futures and options markets across global equities, fixed income, currencies and commodities. Meanwhile, execution services comprise agency-based trading and trading venues, offering execution services in equities, options, futures and fixed income on behalf of institutions, banks and broker dealers. The company also provides proprietary technology and infrastructure, workflow technology, and trading analytics services to select third parties.

Virtu Financial made headline last year when it teamed up with Ken Griffin’s Citadel Securities alongside other Wall Street brokers to launch a cryptocurrency trading ecosystem. Fidelity Investments and Charles Schwab are also among the participants developing the combined crypto offering.

The alliance would allow retail brokerages to provide crypto-executions to their consumers. However, the initiative is still in its early development phase and the partners are watching regulatory reactions.

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