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Item 7. Management’s Discussion and Analysis

2025-02-21 compared with 2024-02-16 · 161 added, 138 removed, 610 unchanged (33% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following management’s discussion and analysis covers the years ended December 31, 2023, and 2022 should be read in conjunction with the audited Consolidated Financial Statements and accompanying notes for the year ended December 31, 2023, which are included in Item 8, of the Company's Annual Report on Form 10-K for the year ended December 31, 2023.

The following management’s discussion and analysis covers the years ended December 31, 2024 and 2023 should be read in conjunction with the audited Consolidated Financial Statements and accompanying notes for the year ended December 31, 2024, which are included in Part II, Item 8 of this Annual Report on Form 10-K.

This management’s discussion and analysis contains forward-looking statements that involve risks and uncertainties.

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• risks inherent to the electronic market making business and trading generally;

• recent SEC proposals focused on equity markets which may, if adopted, materially change U.S.

• SEC proposals under the prior administration focused on equity markets which may, if adopted, materially change U.S.

equity market structure, including by reducing overall trading volumes, reducing off-exchange trading and market making opportunities, requiring additional tools, platforms and services to register as an ATS or exchange, and generally increasing the implicit and explicit cost as well as the complexity of the U.S.

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• risks associated with international operations and expansion, including failed acquisitions or dispositions;

• the effects of and changes in economic conditions (such as volatility in the financial markets, increased inflation, monetary conditions and foreign currency and continued or exacerbated exchange rate fluctuations, foreign currency controls and/or government mandated pricing controls, as well as in trade, monetary, fiscal and tax policies in international markets), political conditions (such as military actions and terrorist activities), and other global events such as fires, geopolitical conflicts, natural disasters, pandemics or extreme weather;

• the effects of and changes in economic conditions (such as volatility in the financial markets, increased inflation, monetary conditions and foreign currency and continued or exacerbated exchange rate fluctuations, foreign currency controls and/or government mandated pricing controls, as well as in trade, tariff, monetary, fiscal and tax policies in international markets), political conditions (such as military actions and terrorist activities), and other global events such as fires, geopolitical conflicts, natural disasters, pandemics or extreme weather;

• risks associated with potential growth and associated corporate actions;

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• risks associated with losing access to a significant exchange or other trading venue;

• risks associated with changes in governmental administrations and agencies.

Our forward-looking statements made herein are made only as of the date of this Annual Report on Form 10-K.

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Credit Agreement

On March 1, 2019, the “ITG Closing Date”, we announced the completed acquisition of Investment Technology Group, Inc.

and its subsidiaries (“ITG”) in an all-cash transaction (the “ITG Acquisition”).

In connection with the ITG Acquisition, Virtu Financial, VFH Parent LLC, a Delaware limited liability company and a subsidiary of Virtu Financial (“VFH”), and Impala Borrower LLC (the “Acquisition Borrower”), a subsidiary of the Company, entered into a credit agreement, with the lenders party thereto, Jefferies Finance LLC, as administrative agent and Jefferies Finance LLC and RBC Capital Markets, as joint lead arrangers and joint bookrunners (the “Acquisition Credit Agreement”).

The Acquisition Credit Agreement provided (i) a senior secured first lien term loan (together with the Acquisition Incremental Term Loans, as defined below;

the “Acquisition First Lien Term Loan Facility”) in an aggregate principal amount of $1,500.0 million, drawn in its entirety on the ITG Closing Date, of which approximately $404.5 million was borrowed by VFH to repay all amounts outstanding under a previous term loan facility and the remaining approximately $1,095.0 million borrowed by the Acquisition Borrower to finance the consideration and fees and expenses paid in connection with the ITG Acquisition, and (ii) a $50.0 million senior secured first lien revolving facility to VFH (the “Acquisition First Lien Revolving Facility”), with a $5.0 million letter of credit subfacility and a $5.0 million swingline subfacility.

After the ITG Closing Date, VFH assumed the obligations of the Acquisition Borrower in respect of the acquisition term loans.

On October 9, 2019, VFH entered into an amendment (“Amendment No.

1”), which amended the Acquisition Credit Agreement dated as of March 1, 2019, to, among other things, provide for $525.0 million in aggregate principal amount of incremental term loans (the “Acquisition Incremental Term Loans”), and amend the related collateral agreement.

On March 2, 2020, VFH entered into a second amendment (“Amendment No.

2”), which further amended the Acquisition Credit Agreement to, among other things, reduce the interest rate spread over adjusted London Interbank Offered Rate (“LIBOR”) or the alternate base rate by 0.50% per annum and eliminated any step-down in the spread based on VFH's first lien leverage ratio.

On January 13, 2022 (the “Credit Agreement Closing Date”), VFH and Virtu Financial entered into a credit agreement, with the lenders party thereto, JPMorgan Chase Bank, N.A.

as administrative agent and JPMorgan Chase bank, N.A., Goldman Sachs Bank USA, RBC Capital Markets, Barclays Bank plc, Jefferies Finance LLC, BMO Capital Markets Corp., and CIBC World Markets Corp., as joint lead arrangers and bookrunners (the “Credit Agreement”).

The Credit Agreement provides (i) a senior secured first lien term loan in an aggregate principal amount of $1,800.0 million, drawn in its entirety on the Credit Agreement Closing Date, the proceeds of which were used by VFH to repay all amounts outstanding under the Acquisition Credit Agreement, to pay fees and expenses in connection therewith, to fund share repurchases under the Company’s repurchase program and for general corporate purposes, and (ii) a $250.0 million senior secured first lien revolving facility to VFH, with a $20.0 million letter of credit subfacility and a $20.0 million swingline subfacility.

The Original Credit Agreement provides (i) a senior secured first lien term loan in an aggregate principal amount of $1,800.0 million, drawn in its entirety on the Credit Agreement Closing Date, the proceeds of which were used by VFH to repay all amounts outstanding under the previous credit agreement entered into in relation to the ITG Acquisition, to pay fees and expenses in connection therewith, to fund share repurchases under the Company’s repurchase program and for general corporate purposes, and (ii) a $250.0 million senior secured first lien revolving facility to VFH, with a $20.0 million letter of credit subfacility and a $20.0 million swingline subfacility.

On June 21, 2024 (the “Amendment Effective Date”), the Company entered into Amendment No.

1 to the Original Credit Agreement (as amended, the “Credit Agreement”) and completed the issuance of the Notes (as defined below).

Pursuant to the Credit Agreement, $1,245.0 million in aggregate principal amount of Senior Secured First Lien Term B-1 Loans due 2031 (the “New Term Loans”) were issued, the proceeds of which were used, along with the proceeds of the Notes, to repay in full all term loans previously outstanding under the Original Credit Agreement.

Additionally, the Credit Agreement provides an increase in its senior secured first lien revolving credit facility from $250.0 million to $300.0 million and an extension of the maturity thereof to three years after the Amendment Effective Date.

The New Term Loans will bear interest, at the Company’s election, at either (i) the greatest of (a) the prime rate in effect, (b) the greater of (1) the federal funds effective rate and (2) the overnight bank funding rate, in each case plus 0.50%, (c) term SOFR for a borrowing with an interest period of one month plus 1.00% and (d) 1.00%, plus, in each case, 1.75%, or (ii) the greater of (x) term SOFR for the interest period in effect and (y) 0%, plus, in each case, 2.75%.

The New Term Loans will mature on the seventh anniversary of the Amendment Effective Date and amortize in annual installments equal to 1.0% of the original aggregate principal amount of the New Term Loans.

The New Term Loans are also subject to contingent principal payments based on excess cash flow and certain other triggering events.

On June 21, 2024, VFH and Valor Co-Issuer, Inc., a subsidiary of Virtu Financial, (the “Co-Issuer”) completed the offering of $500.0 million aggregate principal amount of 7.50% senior secured first lien notes due 2031 (the “Notes”).

The Notes were issued under an Indenture, dated as of June 21, 2024 (the “Indenture”), among the VFH, the Co-Issuer, Virtu Financial and the subsidiary guarantors party thereto, and U.S.

Bank Trust Company, National Association, as the trustee and collateral agent.

The Notes mature on June 15, 2031.

Interest on the Notes accrues at 7.50% per annum, payable every six months through maturity on each June 15 and December 15, beginning on December 15, 2024.

We refer to VFH and the Co-Issuer together as, the “Issuers.”

Amended and Restated 2015 Management Incentive Plan

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The fair value of the stock option grants was determined through the application of the Black-Scholes-Merton model and was recognized on a straight-line basis over the vesting period.

Amended and Restated Investment Technology Group, Inc.

2007 Omnibus Equity Compensation Plan

On the ITG Closing Date, the Company assumed the Amended and Restated ITG 2007 Omnibus Equity Compensation Plan, dated as of June 8, 2017 (the “Amended and Restated ITG 2007 Equity Plan”) and certain stock option awards, restricted stock unit awards, deferred stock unit awards and performance stock unit awards granted under the Amended and Restated ITG 2007 Equity Plan (the “Assumed Awards”).

The Assumed Awards are subject to the same terms and conditions that were applicable to them under the Amended and Restated ITG 2007 Equity Plan, except that (i) the Assumed Awards relate to shares of the Company’s Class A Common Stock, (ii) the number of shares of Class A Common Stock subject to the Assumed Awards was the result of an adjustment based upon an Exchange Ratio (as defined in the Agreement and Plan of Merger by and between the Company, Impala Merger Sub, Inc., a Delaware corporation and an indirect wholly owned subsidiary of the Company, and ITG, dated as of November 6, 2018, the “ITG Merger Agreement”) and (iii) the performance share unit awards were converted into service-based vesting restricted stock unit awards that were no longer subject to any performance based vesting conditions.

Components of Our Results of Operations

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Total operating expenses 1,783,044 1,527,921 1,332,280

Income before income taxes and noncontrolling interest 315,602 480,559 925,968

Income (loss) before income taxes and noncontrolling interest 591,052 315,602 480,559

Execution Services

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Total operating expenses 445,470 436,102 472,899

Income before income taxes and noncontrolling interest 10,440 41,342 70,019

Income (loss) before income taxes and noncontrolling interest 61,760 10,440 41,342

Total revenue (4,377) 3,308 37,732

Total operating expenses 3,465 4,219 2,835

Income before income taxes and noncontrolling interest (911) 34,897 917

Income (loss) before income taxes and noncontrolling interest (7,842) (911) 34,897

Total revenue 2,876,949 2,293,373 2,364,812

Total operating expenses 2,231,979 1,968,242 1,808,014

Income before income taxes and noncontrolling interest $ 325,131 $ 556,798 $ 996,904

Income (loss) before income taxes and noncontrolling interest $ 644,970 $ 325,131 $ 556,798

The following table shows our results of operations for the years ended December 31, 2024, 2023, and 2022:

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Commissions and fees are derived from commissions charged for trade executions in client execution services.

We earn commissions and commission equivalents, as well as, in certain cases, contingent fees based on client revenues, which represent variable consideration.

The services offered under these contracts have the same pattern of transfer;

accordingly, they are being measured and recognized as a single performance obligation.

The performance obligation is satisfied over time, and accordingly, revenue is recognized as time passes.

Variable consideration has not been included in the transaction price as the amount of consideration is contingent on factors outside our control.

Recurring revenues are primarily derived from workflow technology connectivity fees generated for matching client orders, and analytics services to select third parties.

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Commissions, net and technology services.

We earn revenues on transactions for which we charge explicit commissions or commission equivalents, which include the majority of our institutional client orders.

We earn revenues on transactions for which we charge explicit commissions, which include the majority of our institutional client orders.

Commissions and fees are primarily affected by changes in our equities, fixed income and futures transaction volumes with institutional clients, which vary based on client relationships;

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Revenue is recognized on a trade date basis, which is the point at which the performance obligation to the customer is satisfied, based on the trade being executed.

In addition, we offer workflow technology and analytics services to select third

In addition, we offer workflow technology and analytics services to select third parties.

Revenues are derived from fees generated by matching sell-side and buy-side clients orders, and from analytic products delivered to the clients.

We have interests in multiple strategic investments and telecommunications joint ventures (“JVs”).

We record our pro-rata share of each JV’s earnings or losses within Other, net, while fees related to the use of communication services provided by the JVs are recorded within Communications and data processing.

We record our pro-rata share of our JVs’ earnings or losses within Other, net, while fees related to the use of communication services provided by the JVs are recorded within Communications and data processing.

We have a noncontrolling investment (the “JNX Investment”) in Japannext Co., Ltd.

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Revenues or losses are recognized due to the changes in fair value of the investment or fluctuations in Japanese Yen conversion rates within Other, net.

Other, net can also include gains on sales of strategic investments and businesses, as well as revenues from service agreements related to the sale of businesses.

Other, net can also include gains on sales of strategic investments and businesses, settlement fund recoveries, as well as revenues from service agreements related to the sale of businesses.

Operating Expenses

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Employee compensation and payroll taxes include employee salaries, cash and non-cash incentive compensation, employee benefits, payroll taxes, severance and other employee related costs.

Employee compensation and payroll taxes also includes non-cash compensation expenses with respect to restricted stock units and restricted stock awards pursuant to the Amended and Restated 2015 Management Incentive Plan and Class A Common Stock underlying certain awards assumed pursuant to the Amended and Restated ITG 2007 Equity Plan.

Interest and dividends expense.

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Termination of office leases.

Termination of office leases represents the write-off expense related to certain office space we ceased use of as part of the effort to integrate and consolidate office space.

Termination of office leases represents the write-off expense and asset retirement obligations related to certain office space we ceased use of as part of the effort to integrate and consolidate office space.

The aggregate write-off amount includes the impairment of operating lease right-of-use assets, leasehold improvements and fixed assets, and dilapidation charges.

Debt issue cost related to debt refinancing, prepayment and commitment fees.

As a result of the refinancing or early termination of our long-term borrowings, we accelerate the capitalized debt issue cost and the discount on the term loan that would otherwise be amortized or accreted over the life of the term loan.

As a result of the refinancing or early termination of our long-term borrowings, we accelerate the capitalized debt issue cost and the discount on the term loan that

would otherwise be amortized or accreted over the life of the term loan.

Premium paid in connection with retiring outstanding bonds, and commitment fees paid for lines of credit are also included in this category.

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• “Adjusted Net Trading Income”, which is the amount of revenue we generate from our market making activities, or Trading income, net, plus Commissions, net and technology services, plus Interest and dividends income, less direct costs associated with those revenues, including Brokerage, exchange, clearance fees and payments for order flow, net, and Interest and dividends expense.

We also disclose Adjusted Net Trading Income by segment, including daily averages.

We also disclose Adjusted Net Trading Income by segment, and as daily averages by dividing Adjusted Net Trading Income by the number of trading days in a given period.

Starting in the fourth quarter of 2024, we began counting days on which U.S.

equities exchanges close early or otherwise operate for less than a full trading day as half-days, whereas previously such days were counted as whole days.

Prior periods have not been restated as the impact of the change is immaterial in relation to our average daily Adjusted Net Trading Income.

Management believes that Adjusted Net Trading Income is useful for comparing general operating performance from period to period.

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Year Ended December 31, 2022

Market Making Execution Services Corporate Total

(in thousands) Market Making Execution Services Corporate Total

Trading income, net $ 1,607,819 $ 21,079 $ — $ 1,628,898

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Adjusted Net Trading Income by Segment:

Total Average Daily % Total Average Daily % Total Average Daily %

Market Making:

Total Average Daily (1)

% Total Average Daily % Total Average Daily %

Market Making $ 1,195,107 $ 4,771 74.8 % $ 846,607 $ 3,386 69.9 % $ 1,058,474 $ 4,217 72.1 %

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Adjusted Net Trading Income $ 1,597,687 $ 6,378 100.0 % $ 1,210,683 $ 4,842 100.0 % $ 1,467,635 $ 5,847 100.0 %

(1) Effective fourth quarter 2024, we began counting days on which U.S.

equities exchanges close early or otherwise operate for less than a full trading day as half-days.

Prior periods have not been restated as the impact of the change is immaterial in relation to our average daily Adjusted Net Trading Income.

Year Ended December 31, 2024 Compared to Year Ended December 31, 2023

Total Revenues

Our total revenues decreased $71.4 million, or 3.0%, to $2,293.4 million for the year ended December 31, 2023, compared to $2,364.8 million for the year ended December 31, 2022.

This decrease was primarily attributable to decreases of $327.6 million in Trading income, net and $74.2 million in Commissions, net and technology services, during the year ended December 31, 2023 compared to the prior period, partially offset by an increase of $303.5 million in Interest and dividends income, which is largely driven by the level of trading assets held over periods when dividends are paid, and the levels of stock borrowing and trading asset financing during the year ended December 31, 2023 compared to the same period in 2022.

Our total revenues increased $583.5 million, or 25.4%, to $2,876.9 million for the year ended December 31, 2024, compared to $2,293.4 million for the year ended December 31, 2023.

This increase was primarily attributable to an increase of $521.1 million in Trading income, net due to higher trading volumes and increased opportunities across global markets and an increase of $61.2 million in Commissions, net and technology services driven by strengthened institutional engagement during the year ended December 31, 2024 compared to the same period in 2023.

The following table shows the total revenues by segment for the years ended December 31, 2024 and 2023.

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Commissions, net and technology services 42,376 29,571 43.3%

Other, net 78,413 4,176 NM

Other, net 81,449 78,413 3.9%

Total revenues from Market Making $ 2,374,096 $ 1,843,523 28.8%

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Trading income, net $ 23,495 $ 17,664 33.0%

Interest and dividends income 10,707 456 NM

Interest and dividends income 10,741 10,707 0.3%

Commissions, net and technology services 474,407 426,027 11.4%

Other, net (7,856) 5,041 NM

Total revenues from Execution Services $ 446,542 $ 514,241 (13.2)%

Other, net (1,413) (7,856) (82.0)%

Total revenues from Corporate $ 3,308 $ 37,732 (91.2)%

Total revenues from Execution Services $ 507,230 $ 446,542 13.6%

Other, net $ (4,377) $ 3,308 NM

Total revenues from Corporate $ (4,377) $ 3,308 NM

Trading income, net $ 1,822,437 $ 1,301,344 40.0%

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Trading income, net was primarily earned by our Market Making segment.

Trading income, net, decreased $327.6 million, or 20.1%, to $1,301.3 million for the year ended December 31, 2023, compared to $1,628.9 million for the year ended December 31, 2022.

The decrease was largely a result of the decreased opportunity in our customer market making trading as a result of lower spread opportunity and decreased quality of the order flow with which we interact.

Rather than analyzing Trading income, net, in isolation, we evaluate it in the broader context of our Adjusted Net Trading Income, together with Interest and dividends income, Interest and dividends expense, Commissions, net and technology services and Brokerage, exchange, clearance fees and payments for order flow, net, each of which are described below.

Trading income, net, increased $521.1 million, or 40.0%, to $1,822.4 million for the year ended December 31, 2024, compared to $1,301.3 million for the year ended December 31, 2023.

The increase was largely a result of higher trading volumes and increased opportunities across global markets during the year ended December 31, 2024 compared to the same period in 2023.

Rather than analyzing Trading income, net, in isolation, we evaluate it in the broader context of our Adjusted Net Trading Income, together with Interest and dividends income, Commissions, net and technology services, Interest and dividends expense, and Brokerage, exchange, clearance fees and payments for order flow, net, each of which are described below.

Interest and dividends income.

Interest and dividends income was primarily earned by our Market Making segment.

Interest and dividends income increased $303.5 million, or 190.8%, to $462.6 million for the year ended December 31, 2023, compared to $159.1 million for the year ended December 31, 2022.

This increase was primarily attributable to an increase in interest income earned on cash collateral posted as part of securities borrowed transactions, and higher dividends earned on market making trading assets held over periods when dividends are paid, both of which benefited from higher interest rates for the period compared to the prior period.

Interest and dividends income remained around the same level year-over-year, slightly decreasing by $0.5 million, or 0.1%, to $462.1 million for the year ended December 31, 2024, compared to $462.6 million for the year ended December 31, 2023.

Fluctuations were primarily attributable to changes in interest income earned on cash collateral posted as part of securities borrowed transactions and securities purchased under the agreements to resell, driven by the movements of interest rates as well as the level of our activities in securities borrowing and reverse repurchase agreements.

The slight decrease was due to overall lower interest rates for the period compared to the same period during the prior year.

As indicated above, rather than analyzing interest and dividends income in isolation, we evaluate it in the broader context of our Adjusted Net Trading Income.

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Commissions, net and technology services revenues were primarily earned by our Execution Services segment.

Commissions, net and technology services revenues decreased $74.2 million, or 14.0%, to $455.6 million for the year ended December 31, 2023, compared to $529.8 million for the year ended December 31, 2022.

This decrease was driven by the reduction of institutional investors commissions available, and declining institutional engagement, both of which resulted in lower commission income.

Commissions, net and technology services revenues increased $61.2 million, or 13.4%, to $516.8 million for the year ended December 31, 2024, compared to $455.6 million for the year ended December 31, 2023.

This increase was driven by relatively higher client volumes and increasing institutional engagement compared to the same period in 2023.

As indicated above, rather than analyzing commission income in isolation, we evaluate it in the broader context of our Adjusted Net Trading Income.

Other, net increased $1.8 million, or 2.4%, to $75.7 million for the year ended December 31, 2024, compared to $73.9 million for the year ended December 31, 2023.

The income for the year ended December 31, 2023 primarily related to gains on settlement fund recoveries in which we are eligible to participate based on our transactions in the applicable products.

The income in 2022 was primarily due to gains recognized from sales of investments in our strategic investments portfolio.

The income for the years ended December 31, 2024 and 2023 were primarily related to gains on settlement fund recoveries in which we are eligible to participate based on our transactions in the applicable products.

Adjusted Net Trading Income

Adjusted Net Trading Income, which is a non-GAAP measure, decreased $257.0 million, or 17.5%, to $1,210.7 million for the year ended December 31, 2023, compared to $1,467.6 million for the year ended December 31, 2022.

This decrease was primarily attributable to lower Trading income, net and Commissions, net and technology services, as noted above, and higher Interest and dividends expense, as noted below, partially offset by an increase in Interest and dividends income, as described above, and lower Brokerage, exchange, clearance fees and payments for order flow, net as described below.

Average daily Adjusted Net Trading Income decreased $1.0 million, or 17.2%, to $4.8 million for the year ended December 31, 2023, compared to $5.8 million for the year ended December 31, 2022.

The number of trading days was 250 days for the year ended December 31, 2023, compared to 251 days for the year ended December 31, 2022.

Adjusted Net Trading Income, which is a non-GAAP measure, increased $387.0 million, or 32.0%, to $1,597.7 million for the year ended December 31, 2024, compared to $1,210.7 million for the year ended December 31, 2023.

This increase was primarily attributable to higher Trading income, net and Commissions, net and technology services, as noted above, partially offset by higher Brokerage, exchange, clearance fees and payments for order flow, net and Interest and dividends expense as described below.

Average daily Adjusted Net Trading Income increased $1.6 million, or 33.3%, to $6.4 million for the year ended December 31, 2024, compared to $4.8 million for the year ended December 31, 2023.

Taking shortened trading days into consideration for the year ended December 31, 2024, the number of trading days was 250.5 days, compared to 250 days for the year ended December 31, 2023 under the previous trading day convention.

For a full description of Adjusted Net Trading Income and a reconciliation of Adjusted Net Trading Income to trading income, net, see “Non-GAAP Financial Measures and Other Items” in this “Item 7.

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Our operating expenses increased $263.8 million, or 13.4%, to $2,232.0 million for the year ended December 31, 2024, compared to $1,968.2 million for the year ended December 31, 2023.

The increase was primarily driven by increase in Interest and dividends expense, offset in part, by lower Brokerage, exchange, clearance fees and payments for order flow, net, and lower Debt issue cost related to debt refinancing, prepayment and commitment fees.

The increase was primarily driven by increases in Brokerage, exchange, clearance fees and payments for order flow, net, Interest and dividends expense, Employee compensation and payroll taxes, and Debt issue cost related to debt refinancing, prepayment and commitment fees.

Brokerage, exchange, clearance fees and payments for order flow, net.

Brokerage, exchange, clearance fees and payments for order flow, net, decreased $110.8 million, or 17.9%, to $508.4 million for the year ended December 31, 2023, compared to $619.2 million for the year ended December 31, 2022.

Brokerage, exchange, clearance fees and payments for order flow, net, increased $166.0 million, or 32.7%, to $674.4 million for the year ended December 31, 2024, compared to $508.4 million for the year ended December 31, 2023.

These costs vary period to period based upon the level and composition of our trading activities.

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Communication and data processing expense increased $5.6 million, or 2.4%, to $236.4 million for the year ended December 31, 2024, compared to $230.8 million for the year ended December 31, 2023.

This increase was primarily attributable to increased connectivity spending on colocation, market data, access ports and gateways, and microwave communication networks maintained by our joint ventures.

This increase was primarily attributable to increased connectivity spending on market data, subscription, and communication networks maintained by our joint ventures.

Employee compensation and payroll taxes.

Employee compensation and payroll taxes increased $40.8 million, or 10.4%, to $434.8 million for the year ended December 31, 2024, compared to $394.0 million for the year ended December 31, 2023.

The increase in compensation levels was primarily attributable to an increase in salaries and wages, as well as the anticipated mix of cash and stock-based awards.

The increase in compensation levels was primarily attributable to an increase in accrued incentive compensation, which is recorded at management’s discretion and is generally accrued in connection with the overall level of profitability on a year-to-date basis, as well as the anticipated mix of cash and stock-based awards.

We have capitalized and therefore excluded employee compensation and benefits related to software development of $44.7 million and $40.4 million for the years ended December 31, 2024 and 2023, respectively.

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Interest and dividends expense increased $28.7 million, or 5.7%, to $529.2 million for the year ended December 31, 2024, compared to $500.5 million for the year ended December 31, 2023.

This increase was primarily attributable to higher interest expense incurred on cash collateral received driven by higher interest rates, as well as an increase in securities lending transactions and higher dividends expense with respect to securities sold, not yet purchased for the period compared to the same period during the prior year.

This increase was primarily attributable to higher interest expense incurred on cash collateral received driven by an increase in securities lending transactions, as well as higher dividends expense with respect to securities sold, not yet purchased for the period compared to the same period during the prior year.

As indicated above, rather than analyzing interest and dividends expense in isolation, we generally evaluate it in the broader context of our Adjusted Net Trading Income.

Operations and administrative.

Operations and administrative expense increased $12.9 million, or 15.0%, to $99.0 million for the year ended December 31, 2023, compared to $86.1 million for the year ended December 31, 2022.

The increase was primarily driven by the beneficial effect of a strong U.S.

dollar on foreign exchange translation gains during the prior year period.

Operations and administrative expense decreased $2.0 million, or 2.0%, to $97.0 million for the year ended December 31, 2024, compared to $99.0 million for the year ended December 31, 2023.

The decrease was primarily driven by a decrease in occupancy expenses.

Depreciation and amortization.

Depreciation and amortization decreased $3.1 million, or 4.7%, to $63.3 million for the year ended December 31, 2023, compared to $66.4 million for the year ended December 31, 2022.

This decrease was driven primarily by decreased depreciation of computer equipment, and amortization of capitalized software compared to the prior period.

Depreciation and amortization increased $2.5 million, or 3.9%, to $65.8 million for the year ended December 31, 2024, compared to $63.3 million for the year ended December 31, 2023.

This increase was driven primarily by increased amortization of capitalized software compared to the prior period.

Amortization of purchased intangibles and acquired capitalized software.

Amortization of purchased intangibles and acquired capitalized software decreased $13.5 million, or 21.1%, to $50.5 million for the year ended December 31, 2024, compared to $64.0 million for the year ended December 31, 2023.

This decrease was primarily attributable to certain intangible assets being fully amortized in 2022.

This decrease was primarily attributable to certain intangible assets being fully amortized in 2023 and during 2024.

Termination of office leases.

Termination of office leases was $0.5 million for the year ended December 31, 2023, compared to $7.0 million for the year ended December 31, 2022.

These expenses in the prior period are related to the impairment of lease right-of-use assets, leasehold improvements and fixed assets for certain abandoned or vacated office space.

Termination of office leases increased $15.7 million to $16.2 million for the year ended December 31, 2024, compared to $0.5 million for the year ended December 31, 2023.

The increase was related to the impairment of lease right-of-use assets and asset retirement obligations for certain abandoned or vacated office spaces in 2024.

Debt issue cost related to debt refinancing, prepayment and commitment fees.

Expense from debt issue cost related to debt refinancing, prepayment and commitment fees decreased $21.6 million, or 72.2%, to $8.3 million for the year ended December 31, 2023, compared to $29.9 million for the year ended December 31, 2022.

The year-over-year change was primarily driven by the acceleration of deferred debt issuance costs as a result of refinancing our long-term debt transaction in January 2022.

Expense from debt issue cost related to debt refinancing, prepayment and commitment fees increased $21.2 million, or 255.4%, to $29.5 million for the year ended December 31, 2024, compared to $8.3 million for the year ended December 31, 2023.

The increase was primarily driven by the acceleration of capitalized debt issue cost and discount on our previous term loan as a result of refinancing during the year ended December 31, 2024.

See Note 9 “Borrowings” of Part II, Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for additional details.

Transaction advisory fees and expenses.

Transaction advisory fees and expenses were $0.3 million for the year ended December 31, 2023, compared to $1.1 million for the year ended December 31, 2022.

These expenses were primarily incurred in relation to our strategic investment portfolio.

Transaction advisory fees and expenses were insignificant for the years ended December 31, 2024 and December 31, 2023.

These expenses, when incurred, are primarily in relation to our strategic investment portfolio.

Financing interest expense on long term borrowings.

Financing interest expense on long-term borrowings increased $7.3 million, or 7.9%, to $99.3 million for the year ended December 31, 2023, compared to $92.0 million for the year ended December 31, 2022.

This increase was attributable to the increase in outstanding principal as a result of refinancing our long-term debt in January 2022, as described in further detail below, and the effect of higher interest rates on the unhedged portion of our long-term debt.

Financing interest expense on long-term borrowings decreased $1.5 million, or 1.5%, to $97.8 million for the year ended December 31, 2024, compared to $99.3 million for the year ended December 31, 2023.

This decrease was attributable to the decrease in outstanding principal as a result of the voluntary prepayment in December 2023, the amortization of the amounts in AOCI related to the interest rate swaps terminated in December 2023, as well as a lower overall interest rate after our debt refinancing described in Note 9 “Borrowings”.

Provision for income taxes

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This balance is maintained primarily to support operating activities, for capital expenditures and for short-term access to liquidity, and for other general corporate purposes.

As of December 31, 2023, we had borrowings under our prime brokerage credit facilities of approximately $175.3 million, no borrowings under our broker dealer facilities, and long-term debt outstanding in an aggregate principal amount of approximately $1,751.8 million.

As of December 31, 2024, we had borrowings under our prime brokerage credit facilities of approximately $123.0 million, borrowings under our broker dealer facilities of $10.0 million, and long-term debt outstanding in an aggregate principal amount of approximately $1,767.3 million.

The majority of our trading assets consist of exchange-listed marketable securities, which are marked-to-market daily, and collateralized receivables from broker-dealers and clearing organizations arising from proprietary securities transactions.

Collateralized receivables consist primarily of securities borrowed, receivables from clearing houses for settlement of securities transactions and, to a lesser extent, securities purchased under agreements to resell.

We actively manage our liquidity, and we

maintain significant borrowing facilities through the securities lending markets and with banks and prime brokers.

We actively manage our liquidity, and we maintain significant borrowing facilities through the securities lending markets and with banks and prime brokers.

We have continually received the benefit of uncommitted margin financing from our prime brokers globally.

These margin facilities are secured by securities in accounts held at the prime brokers.

These margin facilities are

secured by securities in accounts held at the prime brokers.

For purposes of providing additional liquidity, we maintain a committed credit facility and an uncommitted credit facility for our wholly-owned U.S.

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federal and state income tax returns and realized the cash tax savings from the favorable tax attributes.

We made our first payment of $7.0 million in February 2017, and subsequent payments of $12.4 million in September 2018, $13.3 million in March 2020, $16.5 million in April 2021, $21.3 million in March 2022, and $23.3 million in April 2023.

We made payments totaling $114.0 million from February 2017 through December 2024.

Future payments under the tax receivable agreements in respect of subsequent exchanges would be in addition to these amounts.

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In June 2023 our U.S.

subsidiary RFQ-Hub Americas LLC (“RAL”) became a registered U.S.

subsidiary RFQ-hub Americas LLC (“RAL”, which is currently held for sale, as described in Note 3 “Business Held for Sale”) became a registered U.S.

broker-dealer and as such is subject to regulation and capital requirements from its primary regulators, the SEC and FINRA.

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See Note 9 “Borrowings” of Part II, Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for details on our various credit facilities.

As of December 31, 2023, there was no outstanding principal balance on our broker-dealer facilities, and the outstanding aggregate short-term credit facilities with various prime brokers and other financial institutions from which the Company receives execution or clearing services was approximately $175.3 million, which was netted within Receivables from broker-dealers and clearing organizations on the Consolidated Statements of Financial Condition of Part II Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.

On March 20, 2020, a broker-dealer subsidiary of the Company entered into a loan agreement (the “Founder Member Loan Facility”) with TJMT Holdings LLC (the “Founder Member”), as lender and administrative agent, providing for unsecured term loans from time to time (the “Founder Member Loans”) in an aggregate original principal amount not to exceed $300 million.

The Founder Member Loans were available to be borrowed in one or more borrowings on or after March 20, 2020 and prior to September 20, 2020, though no borrowings were made.

The Founder Member is an affiliate of Mr.

Vincent Viola, the Company’s founder and Chairman Emeritus.

Upon the execution of and in consideration for the Lender’s commitments under the Founder Member Loan Facility, the Company delivered to the Founder Member a warrant to purchase shares of the Company’s Class A Common Stock, as described below.

On March 20, 2020, in connection with and in consideration of the Founder Member’s commitments under the Founder Member Loan Facility, the Company delivered to the Founder Member a warrant (the “Warrant”) to purchase shares of the Company’s Class A Common Stock.

Pursuant to the Warrant, the Founder Member was entitled to purchase up to 3,000,000 shares of Class A Common Stock on or after May 22, 2020 and up to and including January 15, 2022 at a price of $22.98.

The Warrant was exercised on December 17, 2021 for 3,000,000 shares of the Company's Class A Common Stock.

The Warrant and Class A Common Stock issued pursuant to the Warrant were offered, issued and sold, in reliance on the exemption from the registration requirements of the Securities Act, set forth under Section 4(a)(2) of the Securities Act relating to sales by an issuer not involving any public offering.

As of December 31, 2024, there was an outstanding principal balance on our broker-dealer facilities of $10.0 million, and the outstanding aggregate short-term credit facilities with various prime brokers and other financial institutions from which the Company receives execution or clearing services was approximately $123.0 million, which was netted within Receivables from broker-dealers and clearing organizations on the Consolidated Statements of Financial Condition of Part II, Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.

Credit Agreement

On January 13, 2022 (the “Credit Agreement Closing Date”), Virtu Financial, VFH Parent LLC, a Delaware limited liability company and a subsidiary of Virtu Financial (“VFH”), entered into the Credit Agreement, with the lenders party thereto, JPMorgan Chase Bank, N.A.

On the Credit Agreement Closing Date, VFH and Virtu Financial entered into the Credit Agreement.

The term loan borrowings and revolver borrowings under the Credit Agreement bear interest at a per annum rate equal to, at the Company’s election, either (i) the greatest of (a) the prime rate in effect, (b) the greater of (1) the federal funds effective rate and (2) the overnight bank funding rate, in each case plus 0.50%, (c) an adjusted term Secured Overnight Financing Rate (“SOFR”) rate with an interest period of one month plus 1.00% and (d)(1) in the case of term loan borrowings, 1.50% and (2) in the case of revolver borrowings, 1.00%, plus, (x) in the case of term loan borrowings, 2.00% and (y) in the case of revolver borrowings, 1.50% or (ii) the greater of (a) an adjusted term SOFR rate for the interest period in effect and (b) (1) in the case of term loan borrowings, 0.50% and (2) in the case of revolver borrowings, 0.00%, plus, (x) in the case of term loan borrowings, 3.00% and (y) in the case of revolver borrowings, 2.50%.

On January 13, 2022 (the “Credit Agreement Closing Date”), Virtu Financial, VFH Parent LLC, a Delaware limited liability company and a subsidiary of Virtu Financial (“VFH”), entered into a credit agreement, with the lenders party thereto, JPMorgan Chase Bank, N.A.

The term loan borrowings and revolver borrowings under the Original Credit Agreement bear interest at a per annum rate equal to, at the Company’s election, either (i) the greatest of (a) the prime rate in effect, (b) the greater of (1) the federal funds effective rate and (2) the overnight bank funding rate, in each case plus 0.50%, (c) an adjusted term Secured Overnight Financing Rate (“SOFR”) rate with an interest period of one month plus 1.00% and (d)(1) in the case of term loan borrowings, 1.50% and (2) in the case of revolver borrowings, 1.00%, plus, (x) in the case of term loan borrowings, 2.00% and (y) in the case of revolver borrowings, 1.50% or (ii) the greater of (a) an adjusted term SOFR rate for the interest period in effect and (b) (1) in the case of term loan borrowings, 0.50% and (2) in the case of revolver borrowings, 0.00%, plus, (x) in the case of term loan borrowings, 3.00% and (y) in the case of revolver borrowings, 2.50%.

In addition, a commitment fee accrues at a rate of 0.50% per annum on the average daily unused amount of the revolving facility, with step-downs to 0.375% and 0.25% per annum based on VFH’s first lien leverage ratio, and is payable quarterly in arrears.

In October 2019, the Company entered into a five-year $525.0 million floating-to-fixed interest rate swap agreement.

In January 2020, the Company entered into a five-year $1,000.0 million floating-to-fixed interest rate swap agreement.

These two interest rate swaps met the criteria to be considered and were designated as qualifying cash flow hedges under ASC 815 in the first quarter of 2020, and they effectively fixed interest payment obligations on $525.0 million and $1,000.0 million of principal under the previous first lien term loan facility in relation to the ITG Acquisition at rates of 4.3% and 4.4% through September 2024 and January 2025, respectively.

In April 2021, each of the swap agreements described above was novated to another counterparty and amended in connection with such novation.

The amendments included certain changes to collateral posting obligations and also had the effect of increasing the effective fixed interest payment obligations to rates of 4.5%, with respect to the earlier maturing swap arrangement, and 4.6% with respect to the later maturing swap arrangement.

In January 2022, in order to align the swap agreements with the Original Credit Agreement, the Company amended each of the swap agreements to align the floating rate term of such swap agreements to SOFR.

The effective fixed interest payment obligations remained at 4.5%, with respect to the earlier maturing swap arrangement, and 4.6% with respect to the later maturing swap arrangement.

In December 2023, the Company terminated the two interest rate swap arrangements and received $55.8 million in proceeds from the counterparty.

The Company therefore dedesignated those cash flow hedges under ASC 815, and the amounts in AOCI related to the terminated swaps are amortized through interest expense.

The Company simultaneously entered into a two-year $1,525.0 million floating-to-fixed interest rate swap agreement with the same counterparty (the “December 2023 Swap”).

The December 2023 Swap met the criteria to be considered and was designated as a qualifying cash flow hedge under ASC 815 as of December 2023, and it effectively fixed interest payment obligations on $1,525.0 million of principal under the First Lien Term Loan Facility at a rate of 7.5% through November 2025, based on the interest rates set forth in the Original Credit Agreement.

On June 21, 2024 (the “Amendment Effective Date”), the Company entered into Amendment No.

1 to the Original Credit Agreement (the “Credit Agreement”) and completed the issuance of the Notes (as defined below).

Pursuant to the Credit Agreement, $1,245.0 million in aggregate principal amount of senior secured first lien term B-1 loans due 2031 (the “New Term Loans”) were issued, the proceeds of which were used, along with the proceeds of the Notes, to repay in full all term loans previously outstanding under the Original Credit Agreement.

The New Term Loans are also subject to contingent principal payments based on excess cash flow and certain other triggering events.

The revolving facility under the Credit Agreement is subject to a springing net first lien leverage ratio which may spring into effect as of the last day of a fiscal quarter if usage of the aggregate revolving commitments exceeds a specified level as of such date.

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The Credit Agreement contains certain customary covenants and events of default, including relating to a change of control.

If an event of default occurs and is continuing, the lenders under the Credit Agreement will be entitled to take various actions, including the acceleration of amounts outstanding under the Credit Agreement and all actions permitted to be taken by a secured creditor in respect of the collateral securing the obligations under the Credit Agreement.

Under the Credit Agreement, the term loans will mature on January 13, 2029.

The term loans amortize in annual installments equal to 1.0% of the original aggregate principal amount of the term loans.

The revolving commitments will terminate on January 13, 2025.

If an event of default occurs and is continuing, the lenders under the Credit Agreement will be entitled to take various

actions, including the acceleration of amounts outstanding under the Credit Agreement and all actions permitted to be taken by a secured creditor in respect of the collateral securing the obligations under the Credit Agreement.

As of December 31, 2024, $1,245.0 million was outstanding under the term loans.

We were in compliance with all applicable covenants under the Credit Agreement as of December 31, 2024.

In October 2019, the Company entered into a five-year $525 million floating-to-fixed interest rate swap agreement.

In January 2020, the Company entered into a five-year $1,000.0 million floating-to-fixed interest rate swap agreement.

These two interest rate swaps met the criteria to be considered and were designated as qualifying cash flow hedges under ASC 815 in the first quarter of 2020, and they effectively fixed interest payment obligations on $525.0 million and $1,000.0 million of principal under the Acquisition First Lien Term Loan Facility at rates of 4.3% and 4.4% through September 2024 and January 2025, respectively, based on the interest rates set forth in the Acquisition Credit Agreement.

In April 2021, each of the swap agreements described above was novated to another counterparty and amended in connection with such novation.

The amendments included certain changes to collateral posting obligations and also had the effect of increasing the effective fixed

interest payment obligations to rates of 4.5%, with respect to the earlier maturing swap arrangement, and 4.6% with respect to the later maturing swap arrangement.

In January 2022, in order to align the swap agreements with the Credit Agreement, the Company amended each of the swap agreements to align the floating rate term of such swap agreements to SOFR.

The effective fixed interest payment obligations remained at 4.5%, with respect to the earlier maturing swap arrangement, and 4.6% with respect to the later maturing swap arrangement.

In December 2023, the Company terminated the two interest rate swap arrangements and received $55.8 million in proceeds from the counterparty.

The Company therefore dedesignated those cash flow hedges under ASC 815, and the amounts in AOCI related to the terminated swaps are to be amortized through interest expense.

The Company simultaneously entered into a two-year $1,525 million floating-to-fixed interest rate swap agreement with the same counterparty.

The new interest rate swap met the criteria to be considered and was designated as a qualifying cash flow hedge under ASC 815 as of December 2023, and it effectively fixed interest payment obligations on $1,525 million of principal under the First Lien Term Loan Facility at rate of 7.5% through November 2025, based on the interest rates set forth in the Credit Agreement.

In connection with its entry into the Credit Agreement and the associated reduction in term loan balance, the Company partially terminated the December 2023 Swap, reducing the notional amount thereof from $1,525.0 million to $1,075.0 million and received $2.0 million in proceeds from the counterparty.

The cash flow hedge was proportionally dedesignated under ASC 815 as of June 21, 2024.

As a result of the partial dedesignation, we recognized a gain of $5.7 million in Other Income.

The current interest rate swap effectively fixed interest payment obligations on the $1,075.0 million of principal of the New Term Loans at a rate of 7.17% through November 2025, based on the interest rates set forth in the Credit Agreement.

Senior Secured First Lien Notes

The Notes were issued under an Indenture, dated as of June 21, 2024 (the “Indenture”), among the VFH, the Co-Issuer, Virtu Financial and the subsidiary guarantors party thereto, and U.S.

Bank Trust Company, National Association, as the trustee and collateral agent.

The Notes mature on June 15, 2031.

Interest on the Notes accrues at 7.50% per annum, payable every six months through maturity on each June 15 and December 15, beginning on December 15, 2024.

We refer to VFH and the Co-Issuer together as, the “Issuers.”

The Notes and the related guarantees are secured by first-priority perfected liens on substantially all of the Issuers’ and guarantors’ existing and future assets, subject to certain exceptions, including all material personal property, a pledge of the

capital stock of the Issuers, the guarantors (other than Virtu Financial) and the direct subsidiaries of the Issuers and the guarantors and 100% of the non-voting capital stock and up to 65.0% of the voting capital stock of any now-owned or later acquired foreign subsidiaries that are directly owned by the Issuers or any of the guarantors, which assets also secure

obligations under the Credit Agreement on a first-priority basis.

The Indenture imposes certain limitations on our ability to (i) incur or guarantee additional indebtedness or issue preferred stock;

(ii) pay dividends, make certain investments and make repayments on indebtedness that is subordinated in right of payment to the Notes and make other “restricted payments”;

(iii) create liens on their assets to secure debt;

(iv) enter into transactions with affiliates;

(v) merge, consolidate or amalgamate with another company;

(vi) transfer and sell assets;

and (vii) permit restrictions on the payment of dividends by Virtu Financial’s subsidiaries.

The Indenture also contains customary events of default, including, among others, payment defaults related to the failure to pay principal or interest on Notes, covenant defaults, final maturity default or cross-acceleration with respect to material indebtedness and certain bankruptcy events.

Prior to June 15, 2027, we may redeem some or all of the Notes at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest, if any, to (but not including) the date of redemption, plus an applicable “make whole” premium.

Prior to June 15, 2027, we may also redeem up to 40% of the aggregate principal amount of the Notes with the net cash proceeds from certain equity offerings at a redemption price equal to 107.500% of the principal amount thereof, plus accrued and unpaid interest, if any, to (but not including) the date of redemption.

Prior to June 15, 2027, we may also, on one or more occasions, redeem during each successive twelve-month period following June 21, 2024 up to 10% of the aggregate original principal amount of notes, at a redemption price equal to 103% of the principal amount of notes to be redeemed, plus accrued and unpaid interest to, but not including, the redemption date.

On or after June 15, 2027, we may redeem some or all of the Notes, at the following redemption prices (expressed as percentages of principal amount), plus accrued and unpaid interest to (but not including) the date of redemption, if redeemed during the 12-month period beginning on June 15 of the years indicated below:

Period Percentage

2027 103.750%

2028 101.875%

2029 and thereafter

Upon the occurrence of specified change of control events as defined in the Indenture, we must offer to repurchase the outstanding Notes at 101% of the aggregate principal amount, plus accrued and unpaid interest, if any, to (but excluding) the purchase date.

Our main sources of liquidity are cash flow from the operations of our subsidiaries, our broker-dealer credit facilities (as described above), margin financing provided by our prime brokers and cash on hand.

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Net cash provided by operating activities was $599.0 million for the year ended December 31, 2024, compared to net cash provided by operating activities of $491.8 million for the year ended December 31, 2023.

The change in net cash provided by operating activities was primarily attributable to lower net income, as well as decreases in noncash adjustments for the year ended December 31, 2023 compared to the prior period.

The change in net cash provided by operating activities was primarily attributable to higher net income as well as movements in noncash adjustments for the year ended December 31, 2024 compared to the prior period.

Investing Activities

Net cash used in investing activities, which includes cash used with respect to capitalized software and cash used in the acquisition of property and equipment, was $61.8 million for the year ended December 31, 2024, compared with net cash used in investing activities of $94.5 million for the year ended December 31, 2023.

Net cash used in investing activities for the year ended December 31, 2022 included cash proceeds provided by the sale of strategic investments, partially offsetting cash uses in that period.

The change in net cash used in investing activities was primarily attributable to decreases in acquisition of property and equipment and other investing activities for the year ended December 31, 2024.

Financing Activities

Net cash used in financing activities was $585.0 million for the year ended December 31, 2023, compared to $735.7 million for the year ended December 31, 2022.

The cash used in financing activities for the year ended December 31, 2023 was primarily attributable to $306.1 million in dividends to stockholders and distributions made to noncontrolling interests and $229.0 million in purchases of treasury stock.

The cash used in financing activities of $735.7 million during the same period of 2022 primarily reflects $375.3 million net dividends to stockholders and distributions to noncontrolling interests, and $480.5 million purchase of treasury stock, partially offset by $164.4 million of net proceeds from long term borrowings, and an increase of $59.1 million in short-term borrowings.

Net cash used in financing activities was $469.6 million for the year ended December 31, 2024, compared to Net cash used in financing activities of $585.0 million for the year ended December 31, 2023.

The cash used in financing activities for the year ended December 31, 2024 was primarily attributable to $1,741.9 million of net proceeds from long-term borrowings and $38.5 million of net proceeds from short-term borrowings, offset by $1,727.0 million of repayment of our previous long-term borrowings, $299.4 million in dividends to stockholders and distributions made to noncontrolling interests, and $191.1 million in purchases of treasury stock.

The cash used in financing activities of $585.0 million during the same period of 2023 primarily reflects $306.1 million net dividends to stockholders and distributions to noncontrolling interests and $229.0 million purchase of treasury stock.

Share Repurchase Program

On November 6, 2020, the Company’s Board of Directors authorized a new share repurchase program of up to $100.0 million in Class A common stock and Virtu Financial Units by December 31, 2021.

Subsequently, the Company's Board of Directors authorized expansions of the share repurchase program on February 11, 2021 to $170.0 million, on May 4, 2021 to $470.0 million (and extended the duration through May 4, 2022), on November 3, 2021 to $1,220.0 million (and extended the duration through November 3, 2023, and on November 2, 2023, further extended the program through December 31, 2024).

Subsequently, the Company’s Board of Directors authorized expansions of the share repurchase program on February 11, 2021 to $170.0 million, on May 4, 2021 to $470.0 million (and extended the duration through May 4, 2022), on November 3, 2021 to $1,220.0 million (and extended the duration through November 3, 2023, and on November 2, 2023, further extended the program through December 31, 2024), and on April 24, 2024 to $1,720 million (and extended the duration through April 24, 2026).

The share repurchase program authorizes the Company to repurchase shares from time to time in open market transactions, privately negotiated transactions or by other means.

Repurchases are also permitted to be made under Rule 10b5-1 plans.

Repurchases are also permitted to be made under Rule 10b5-1

The timing and amount of repurchase transactions are determined by the Company’s management based on its evaluation of market conditions, share price, cash sources, legal requirements and other factors.

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Our expected material cash requirements include the following contractual obligations:

As of December 31, 2023, we had $1,727.0 million of outstanding principal on our First Lien Term Loan Facility.

As of December 31, 2024, we had $1,245.0 million of outstanding principal on our First Lien Term B-1 Loan Facility.

Each year, we are required to repay $12.5 million of this balance, with the remaining principal due in 2031.

On December 12, 2023, we made a voluntary prepayment of $55.0 million, and the payment is applied toward subsequent annual amortization installments.

As of December 31, 2024, we also had $500.0 million of outstanding principal on our Senior Secured First Lien Notes, and the principal amount is due in 2031.

Additionally, $22.3 million of our long-term debt related to the SBI bonds is due in 2026.

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Estimating the fair value of level 3 financial instruments requires judgments to be made.

Due to the relative immateriality of our financial instruments classified as level 3, we do not believe that a significant change to the inputs underlying the fair value of our level 3 financial instruments would have a material impact on our Consolidated Financial Statements See Note 9 “Financial Assets and Liabilities” of Part II Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for further information about fair value measurements.

See Note 10 “Financial Assets and Liabilities” of Part II, Item 8 “Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for further information about fair value measurements.

Revenue Recognition

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Commissions, Net and Technology Services

Commissions, net, which primarily comprise commissions and commission equivalents earned on institutional client orders, are recorded on a trade date basis, which is the point at which the performance obligation to the customer is satisfied.

Commissions, net, which primarily comprise commissions earned on institutional client orders, are recorded on a trade date basis, which is the point at which the performance obligation to the customer is satisfied.

Under a commission management program, we allow institutional clients to allocate a portion of their gross commissions to pay for research and other services provided by third parties.

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Workflow technology revenues consist of order and trade execution management and order routing services we provide through our front-end workflow solutions and network capabilities.

We provide trade order routing from our execution management system (“EMS”) to our execution services offerings, with each trade order routed through the EMS representing a separate performance obligation that is satisfied at a point in time.

A portion of the commissions earned on the trade is then allocated to Workflow Technology based on the stand-alone selling price paid by third-party brokers for order routing.

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Share-based compensation transactions with employees are measured based on the fair value of equity instruments issued.

Share-based awards issued for compensation in connection with or subsequent to the Reorganization Transactions and the IPO pursuant to our Amended and Restated 2015 Management Incentive Plan, and assumed pursuant to the Amended and Restated ITG 2007 Equity Plan, were in the form of stock options, Class A Common Stock, restricted stock awards (“RSAs”) and restricted stock units (“RSUs”).

Share-based awards issued for compensation in connection with or subsequent to the Reorganization Transactions and the IPO pursuant to our Amended and Restated 2015 Management Incentive Plan were in the form of stock options, Class A Common Stock, restricted stock awards (“RSAs”) and restricted stock units (“RSUs”).

The fair value of the stock option grants is determined through the application of the Black-Scholes-Merton model.

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Certain of our wholly owned subsidiaries are subject to income taxes in foreign jurisdictions.

The provision for income tax is comprised of current tax and deferred tax.

The provision for income tax is composed of current tax and deferred tax.

Current tax represents the tax on current year tax returns, using tax rates enacted at the balance sheet date.

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• fluctuations in foreign exchange rates or other developments in equity and credit markets;

terms and relative to peers), a change in the market for an entity’s products or services, or a regulatory or political development;

• industry and market considerations such as a deterioration in the environment in which an entity operates, an increased competitive environment, a decline in market-dependent multiples or metrics (considered in both absolute terms and relative to peers), a change in the market for an entity’s products or services, or a regulatory or political development;

• cost factors such as increases in raw materials, labor, or other costs that have a negative effect on earnings and cash flows;

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Our estimate of goodwill impairment, if indicated based on results of the qualitative assessment, is highly dependent on our estimate of a reporting unit’s fair value.

An entity has an unconditional option to bypass this qualitative assessment for any reporting unit in any period and proceed directly to performing the first step of the goodwill impairment test.

An entity may resume performing the qualitative assessment in any subsequent period.

We assess goodwill for impairment on an annual basis as of July 1st and on an interim basis when certain events or circumstances exist.

In the impairment assessment as of July 1, 2023, we performed a quantitative assessment as described above for each reporting unit and, the estimated fair value of each of the reporting units exceeded its respective carrying value, and therefore, goodwill was not impaired.

The estimated fair value of each reporting unit was based on valuation techniques the Company believes market participants would use to value these reporting units, and allocated the enterprise value to each reporting unit based on an estimate of relative fair value for each reporting unit.

The carrying value of each reporting unit reflects an allocation of total shareholders’ equity and represents the estimated amount of total shareholders’ equity required to support the activities of the applicable reporting unit under currently applicable regulatory capital requirements.

In the impairment assessment as of July 1, 2024, we performed a qualitative assessment as described above for each reporting unit.

No impairment of goodwill was identified.

Valuation of intangible assets involves the use of significant estimates and assumptions with respect to the timing and amounts of revenue growth rates, customer attrition rates, future tax rates, royalty rates, contributory asset charges, discount rate and the resulting cash flows.

We amortize finite-lived intangible assets over their estimated useful lives.

Our largest finite-lived intangible asset is customer relationships, which is being amortized over an estimated useful life of ten years.

Had we used a shorter estimated useful life of seven years, the Company would have recorded an additional $21.7 million of amortization expense for the years ended December 31, 2023, 2022, and 2021, respectively.

Our largest finite-lived intangible asset is customer relationships, which is being amortized over an estimated useful life of ten to twelve years.

Had we used a shorter estimated useful life of seven years, the Company would have recorded an additional $18.4 million, $21.7 million, and $21.7 million for the years ended December 31, 2024, 2023, and 2022, respectively.

We test finite-lived intangible assets for impairment when impairment indicators are present, and if impaired, they are written down to fair value.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis