Tradeweb Markets Inc. (Nasdaq: TW), a leading, global operator
of electronic marketplaces for rates, credit, equities and money
markets, today reported financial results for the quarter ended
September 30, 2024.
$448.9 million quarterly revenues, an increase of
36.7% (36.5% on a constant currency basis) compared
to prior year period
$2.2 trillion average daily volume (“ADV”) for the
quarter, an increase of 55.3% compared to prior year period;
quarterly ADV records in U.S. government bonds, fully electronic
U.S. high yield credit, credit derivatives and global repurchase
agreements
$130.2 million net income and $179.3 million
adjusted net income for the quarter, increases of 16.7% and
37.1% respectively from prior year period
53.4% adjusted EBITDA margin and $239.8 million
adjusted EBITDA for the quarter, compared to 51.9% and $170.4
million respectively for prior year period
$0.53 diluted earnings per share (“Diluted EPS”) and
$0.75 adjusted diluted earnings per share for the
quarter
$0.10 per share quarterly cash dividend declared;
$25.0 million of shares repurchased
Billy Hult, CEO of Tradeweb:
“We are pleased to report record quarterly revenues of $448.9
million, reflecting a 36.7% increase year-over-year. This strong
growth was driven by record average daily volume (ADV) of $2.2
trillion, up 55% compared to the same period last year. We achieved
quarterly ADV records across rates, credit, and money markets,
highlighting the success of our organic expansion efforts and the
contributions from our recent acquisitions of ICD, r8fin, and
Yieldbroker, which have strengthened our global business.
Throughout the quarter, we worked closely with clients as they
navigated a remarkable period of macroeconomic uncertainty and
rates volatility. In Asia, we expanded our geographic presence into
India with the appointment of a new country head. We also
reinforced our global commitment to advancing ESG initiatives with
the publication of our fourth annual Corporate Sustainability
Report. Credit markets reached an important milestone in September,
as electronic trading for the month accounted for 50% of total U.S.
high grade TRACE volume for the first time.
Looking ahead, we remain focused on identifying strategic growth
opportunities and further expanding our presence across key
markets.”
SELECT FINANCIAL RESULTS
3Q24
3Q23
Change
Constant
Currency
Change(1)
(dollars in thousands except per share
amounts)(Unaudited)
GAAP Financial Measures
Total revenue
$
448,915
$
328,357
36.7
%
36.5
%
Rates
$
233,122
$
172,832
34.9
%
34.7
%
Credit
$
118,305
$
90,062
31.4
%
31.3
%
Equities
$
25,514
$
20,890
22.1
%
22.0
%
Money Markets
$
36,126
$
15,763
129.2
%
128.2
%
Market Data
$
29,760
$
22,956
29.6
%
29.2
%
Other
$
6,088
$
5,854
4.0
%
4.0
%
Net income
$
130,223
$
111,630
16.7
%
Net income attributable to Tradeweb Markets Inc.(2)
$
113,916
$
98,614
15.5
%
Diluted EPS
$
0.53
$
0.46
15.2
%
Net income margin
29.0
%
34.0
%
-499
bps
Non-GAAP Financial Measures
Adjusted EBITDA(1)
$
239,816
$
170,360
40.8
%
39.2
%
Adjusted EBITDA margin(1)
53.4
%
51.9
%
+154
bps
+102
bps
Adjusted EBIT(1)
$
223,893
$
155,772
43.7
%
41.9
%
Adjusted EBIT margin(1)
49.9
%
47.4
%
+243
bps
+192
bps
Adjusted Net Income(1)
$
179,332
$
130,794
37.1
%
35.6
%
Adjusted Diluted EPS(1)
$
0.75
$
0.55
36.4
%
33.9
%
(1)
Adjusted EBITDA, Adjusted EBITDA
margin, Adjusted EBIT, Adjusted EBIT margin, Adjusted Net Income,
Adjusted Diluted EPS and constant currency change are non-GAAP
financial measures. See "Non-GAAP Financial Measures" below and the
attached schedules for additional information and reconciliations
of such non-GAAP financial measures.
(2)
Represents net income less net
income attributable to non-controlling interests.
ADV (US $bn)
(Unaudited)
Asset Class
Product
3Q24
3Q23
YoY
Rates
Cash
$
497
$
361
37.4%
Derivatives
802
492
63.0%
Total
1,298
853
52.1%
Credit
Cash
15
13
17.5%
Derivatives
27
17
61.2%
Total
43
30
42.3%
Equities
Cash
10
9
8.8%
Derivatives
13
9
32.3%
Total
23
19
20.6%
Money Markets
Cash
848
522
62.5%
Total
848
522
62.5%
Total
$
2,212
$
1,424
55.3%
DISCUSSION OF RESULTS
Rates – Revenues of $233.1 million in the third quarter
of 2024 increased 34.9% compared to prior year period (increased
34.7% on a constant currency basis). Rates ADV was up 52.1% from
prior year period, driven by record ADV in U.S. government bonds as
well as strong year-over-year growth in mortgages and
swaps/swaptions ≥ and < 1-year. The addition of r8fin continued
to contribute to wholesale volumes. European government bonds ADV
was up 15.3% from prior year period, led by strong growth in UK
Gilts. Mortgages ADV was up 27.3% from prior year period,
reflecting record specified pool volumes as well as record
to-be-announced ("TBA") volumes, which was led by record roll
trading activity.
Credit – Revenues of $118.3 million in the third quarter
of 2024 increased 31.4% compared to prior year period (increased
31.3% on a constant currency basis). Credit ADV was up 42.3% from
prior year period, driven by record activity in credit derivatives
and strong U.S. credit volumes, including record ADV in
fully-electronic U.S. high yield credit. U.S. credit ADV was up
37.0% from prior year period, reflecting continued client adoption
across Tradeweb products and protocols, including request-for-quote
("RFQ"), Tradeweb AllTrade® and portfolio trading. European credit
ADV was up 12.0% from prior year period, driven by strong activity
across a wide range of protocols. We reported 17.7% share of fully
electronic U.S. high grade TRACE, up 109 bps from prior year
period, and a 7.8% share of fully electronic U.S. high yield TRACE,
down 3 bps from prior year period.
Equities – Revenues of $25.5 million in the third quarter
of 2024 increased 22.1% compared to prior year period (increased
22.0% on a constant currency basis). Equities ADV was up 20.5% from
prior year period, driven by strong institutional ETF platform
activity and higher trading volumes in European ETFs and equity
derivative products.
Money Markets – Revenues of $36.1 million in the third
quarter of 2024 increased 129.2% compared to prior year period
(increased 128.2% on a constant currency basis). Money Markets ADV
was up 62.5% from prior year period, driven by contributions from
the August 1, 2024 acquisition of ICD, record activity in global
repurchase agreements and increased client adoption of Tradeweb's
electronic trading solutions.
Market Data – Revenues of $29.8 million in the third
quarter of 2024 increased 29.6% compared to prior year period
(increased 29.2% on a constant currency basis). The increase was
derived primarily from increased LSEG market data fees from the
contract that was amended effective November 1, 2023 and
proprietary third party market data revenue.
Other – Revenues of $6.1 million in the third quarter of
2024 increased 4.0% compared to prior year period (increased 4.0%
on a constant currency basis).
Operating Expenses of $289.6 million in the third quarter
of 2024 increased 42.2% compared to $203.6 million in prior year
period, primarily due to an increase in employee compensation and
benefits, including incentive compensation expense tied to our
financial performance, as well as an increase in headcount and
related salaries, bonus and benefits associated with our continued
growth, including the August 1, 2024 ICD Acquisition. During the
quarter, we also incurred $2.4 million in accelerated stock-based
compensation expense in connection with the departure of an
executive effective September 30, 2024 and $1.4 million in
compensation expense related to the acceleration of vesting of
previously unvested stock awards issued by the ICD seller.
Adjusted Expenses of $225.0 million in the third quarter
of 2024 increased 30.4% (increased 31.5% on a constant currency
basis) compared to prior year period primarily due to higher
expenses related to adjusted employee compensation and benefits.
Please see "Non-GAAP Financial Measures" below for additional
information.
RECENT HIGHLIGHTS
October 2024
- FTSE Russell to incorporate a price source change to include
Tradeweb FTSE benchmark closing prices for U.S Treasuries, European
Government Bonds and UK Gilts in FTSE’s global fixed income
indices, including its premiere World Government Bond Index
(WGBI).
- Commemorated the 10-year anniversary of the launch of our U.S.
Credit Platform.
- Recognized as Multi-Asset Trading System of the Year - Asia
Pacific Awards (FOW) and 100 Women in European Finance - Nawel
Khelil (Financial News)
Third Quarter 2024
- Announced the addition of Daniel Maguire to Tradeweb's Board of
Directors, effective as of September 18, 2024.
- Appointed Maxlin Thomas as Head of India as part of our efforts
to further strengthen our global presence.
- Completed Tradeweb's acquisition of Institutional Cash
Distributors (“ICD”), an investment technology provider for
corporate treasury organizations trading short-term investments,
adding corporates as a fourth client channel, alongside our
existing focus on institutional, wholesale and retail clients.
- Published our fourth annual Corporate Sustainability Report and
our second annual standalone Task Force on Climate-Related
Financial Disclosure (TCFD) Report.
- Executed the first fully-automated European Government Bond
Basis trade, in collaboration with Eurex, with Nomura providing
liquidity to Nykredit Bank.
- In June 2024, we signed a 16-year lease for our new NYC
headquarters, which is expected to commence in July 2025. Including
expected double rent from our existing NYC office and other
anticipated leasing activity in the second half of 2025, we expect
our second half 2025 occupancy expenses to be approximately $7
million higher than the second half of 2024.
- Recognized in numerous awards celebrating our company, as well
as our outstanding and diverse talent, including: Best Company -
Markets Choice Awards (Markets Media); Best Sustainable Companies
to Own (Morningstar); Most Influential in European Finance - Enrico
Bruni (Financial News); Rising Star - Allie Hunt (Women in
Financial Markets); European Women in Finance Awards - Excellence
in Trading Platforms - Alessandra Stagliano (Markets Media)
CAPITAL MANAGEMENT
- $1.2 billion in cash and cash equivalents and an undrawn $500
million credit facility at September 30, 2024
- As purchase consideration for the August 1, 2024 acquisition of
ICD, we paid $771.2 million in net cash and also issued 41,705
shares of restricted Class A common stock in connection with the
acquisition
- Free cash flow for the trailing twelve months ended September
30, 2024 of $797.4 million, up 23.6% compared to prior year period.
See “Non-GAAP Financial Measures” for additional information
- Cash capital expenditures and capitalized software development
in the third quarter 2024 of $17.0 million (excludes amounts paid
at closing for acquisitions)
- During the third quarter of 2024, as part of its share
repurchase program, Tradeweb purchased 214,795 shares of Class A
common stock, at an average price of $116.41, for purchases
totaling $25.0 million. $214.8 million remained available for
repurchase pursuant to the share repurchase program authorization
as of September 30, 2024
- $2.1 million in shares of Class A common stock were withheld in
the third quarter of 2024 to satisfy tax obligations related to the
exercise of stock options and vesting of restricted stock units and
performance-based restricted stock units held by employees
- The Board declared a quarterly cash dividend of $0.10 per share
of Class A common stock and Class B common stock. The dividend will
be payable on December 16, 2024 to stockholders of record as of
December 2, 2024
OTHER MATTERS
Updated Full-Year 2024 Guidance*
- Adjusted Expenses: $855 - 875 million (trending toward middle
of range)
- Acquisition and Refinitiv Transaction related depreciation and
amortization expense: $158 million
- Assumed non-GAAP tax rate: ~ 24.5% - 25.5%
- Cash capital expenditures and capitalized software development:
~ $77 - 85 million
- LSEG Market Data Contract Revenue: ~$80 million (~$90 million
in 2025)
The guidance has been revised to reflect higher adjusted
expenses in light of strong business momentum. Depreciation and
amortization, assumed non-GAAP tax rate, expenditures and LSEG
Market Data Contract Revenue guidance is unchanged from the prior
quarter guidance.
*GAAP operating expenses and tax rate
guidance are not provided due to the inherent difficulty in
quantifying certain amounts due to a variety of factors including
the unpredictability in the movement of foreign currency rates.
Expense guidance assumes an average 2024 Sterling/US$ foreign
exchange rate of 1.24 and includes completed M&A transactions.
Guidance amounts for cash capital expenditures and capitalized
software development excludes amounts paid at closing for
acquisitions.
CONFERENCE CALL
Tradeweb Markets will hold a conference call to discuss third
quarter 2024 results starting at 9:30 AM EDT today, October 30,
2024. A live, audio webcast of the conference call along with
related presentation materials will be available at https://investors.tradeweb.com/events-and-presentations.
- To join the call via audio webcast, click here: https://edge.media-server.com/mmc/p/8fmfndxv/
- To join the call via phone, please register in advance here:
https://register.vevent.com/register/BI7f65d6e977a04267a4a86c5cf7eef76f.
Registered participants will receive an email confirmation with a
unique PIN to access the conference call.
An archived recording of the call will be available afterward at
https://investors.tradeweb.com.
ABOUT TRADEWEB MARKETS
Tradeweb Markets Inc. (Nasdaq: TW) is a leading, global operator
of electronic marketplaces for rates, credit, equities and money
markets. Founded in 1996, Tradeweb provides access to markets, data
and analytics, electronic trading, straight-through-processing and
reporting for more than 50 products to clients in the
institutional, wholesale and retail markets. Advanced technologies
developed by Tradeweb enhance price discovery, order execution and
trade workflows while allowing for greater scale and helping to
reduce risks in client trading operations. Tradeweb serves more
than 2,800 clients in more than 70 countries. On average, Tradeweb
facilitated more than $1.9 trillion in notional value traded per
day over the past four fiscal quarters. For more information,
please go to www.tradeweb.com.
TRADEWEB MARKETS INC.
CONSOLIDATED STATEMENTS OF
INCOME
(UNAUDITED)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2024
2023
2024
2023
Revenues
(dollars in thousands, except
per share amounts)
Transaction fees and commissions
$
373,493
$
263,485
$
1,039,419
$
776,544
Subscription fees
51,206
46,361
151,633
136,483
LSEG market data fees
20,512
15,460
61,593
46,515
Other
3,704
3,051
9,960
8,677
Total revenue
448,915
328,357
1,262,605
968,219
Expenses
Employee compensation and benefits
160,161
116,016
440,484
334,433
Depreciation and amortization
57,872
46,559
157,145
137,850
Technology and communications
24,300
19,733
69,840
56,001
General and administrative
20,417
6,700
44,026
31,692
Professional fees
21,434
10,479
46,558
32,321
Occupancy
5,415
4,132
15,064
12,283
Total expenses
289,599
203,619
773,117
604,580
Operating income
159,316
124,738
489,488
363,639
Tax receivable agreement liability
adjustment
(870
)
—
(870
)
—
Interest income
16,663
17,929
59,234
46,445
Interest expense
(1,446
)
(464
)
(3,706
)
(1,380
)
Other income (loss), net
10
(1,907
)
10
(2,022
)
Income before taxes
173,673
140,296
544,156
406,682
Provision for income taxes
(43,450
)
(28,666
)
(134,135
)
(90,920
)
Net income
130,223
111,630
410,021
315,762
Less: Net income attributable to
non-controlling interests
16,307
13,016
50,724
40,210
Net income attributable to Tradeweb
Markets Inc.
$
113,916
$
98,614
$
359,297
$
275,552
Earnings per share attributable to
Tradeweb Markets Inc. Class A and B common stockholders:
Basic
$
0.53
$
0.47
$
1.69
$
1.31
Diluted
$
0.53
$
0.46
$
1.67
$
1.30
Weighted average shares outstanding:
Basic
213,206,193
211,618,475
213,026,732
210,444,082
Diluted
215,096,974
213,491,634
214,885,210
212,276,908
TRADEWEB MARKETS INC.
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES (UNAUDITED)
Three Months Ended
Nine Months Ended
Reconciliation of Net Income to
Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EBIT and Adjusted
EBIT Margin
September 30,
September 30,
2024
2023
2024
2023
(dollars in thousands)
Net income
$
130,223
$
111,630
$
410,021
$
315,762
Merger and acquisition transaction and
integration costs(1)
14,488
4,614
21,752
6,411
Interest income
(16,663
)
(17,929
)
(59,234
)
(46,445
)
Interest expense
1,446
464
3,706
1,380
Depreciation and amortization
57,872
46,559
157,145
137,850
Stock-based compensation expense(2)
3,681
525
5,395
1,960
Provision for income taxes
43,450
28,666
134,135
90,920
Foreign exchange (gains) / losses(3)
4,459
(6,076
)
2,097
(4,242
)
Tax receivable agreement liability
adjustment(4)
870
—
870
—
Other (income) loss, net
(10
)
1,907
(10
)
2,022
Adjusted EBITDA
$
239,816
$
170,360
$
675,877
$
505,618
Less: Depreciation and amortization
(57,872
)
(46,559
)
(157,145
)
(137,850
)
Add: D&A related to acquisitions and
the Refinitiv Transaction(5)
41,949
31,971
111,031
95,217
Adjusted EBIT
$
223,893
$
155,772
$
629,763
$
462,985
Net income margin(6)
29.0
%
34.0
%
32.5
%
32.6
%
Adjusted EBITDA margin(6)
53.4
%
51.9
%
53.5
%
52.2
%
Adjusted EBIT margin(6)
49.9
%
47.4
%
49.9
%
47.8
%
(1)
Represents incremental direct
costs associated with the acquisition and integration of completed
and potential mergers and acquisitions. These costs generally
include legal, consulting, advisory, due diligence, severance and
certain other transaction expenses and third party costs incurred
that directly relate to the acquisition transaction or its
integration.
(2)
Represents non-cash stock-based
compensation expense associated with the Special Option Award and
post-IPO options awarded in 2019 and payroll taxes associated with
the exercise of such options. During the three and nine months
ended September 30, 2024, this adjustment also includes $2.4
million and $2.7 million, respectively, of non-cash accelerated
stock-based compensation expense and related payroll taxes
associated with our former President and $0.4 million and $0.4
million, respectively, of non-cash stock-based compensation expense
and related payroll taxes associated with RSAs and RSUs issued to
help retain key employees during the integration of ICD.
(3)
Represents unrealized gain or
loss recognized on foreign currency forward contracts and foreign
exchange gain or loss from the revaluation of cash denominated in a
different currency than the entity’s functional currency.
(4)
Represents income recognized
during the applicable period due to changes in the tax receivable
agreement liability recorded in the consolidated statement of
financial condition as a result of changes in the mix of earnings,
tax legislation and tax rates in various jurisdictions which
impacted our tax savings.
(5)
Represents intangible asset and
acquired software amortization resulting from acquisitions and
intangible asset amortization and increased tangible asset and
capitalized software depreciation and amortization resulting from
the application of pushdown accounting to the Refinitiv Transaction
(where all assets were marked to fair value as of the closing date
of the Refinitiv Transaction).
(6)
Net income margin, Adjusted
EBITDA margin and Adjusted EBIT margin are defined as net income,
Adjusted EBITDA and Adjusted EBIT, respectively, divided by revenue
for the applicable period.
Three Months Ended
Nine Months Ended
Reconciliation of Net Income to
Adjusted Net Income and Adjusted Diluted EPS
September 30,
September 30,
2024
2023
2024
2023
(dollars in thousands, except
per share amounts)
Earnings per diluted share
$
0.53
$
0.46
$
1.67
$
1.30
Net income attributable to Tradeweb
Markets Inc.
$
113,916
$
98,614
$
359,297
$
275,552
Net income attributable to non-controlling
interests(1)
16,307
13,016
50,724
40,210
Net income
130,223
111,630
410,021
315,762
Provision for income taxes
43,450
28,666
134,135
90,920
Merger and acquisition transaction and
integration costs(2)
14,488
4,614
21,752
6,411
D&A related to acquisitions and the
Refinitiv Transaction(3)
41,949
31,971
111,031
95,217
Stock-based compensation expense(4)
3,681
525
5,395
1,960
Foreign exchange (gains) / losses(5)
4,459
(6,076
)
2,097
(4,242
)
Tax receivable agreement liability
adjustment(6)
870
—
870
—
Other (income) loss, net
(10
)
1,907
(10
)
2,022
Adjusted Net Income before income
taxes
239,110
173,237
685,291
508,050
Adjusted income taxes(7)
(59,778
)
(42,443
)
(171,323
)
(124,472
)
Adjusted Net Income
$
179,332
$
130,794
$
513,968
$
383,578
Adjusted Diluted EPS(8)
$
0.75
$
0.55
$
2.16
$
1.62
(1)
Represents the reallocation of
net income attributable to non-controlling interests from the
assumed exchange of all outstanding LLC Interests held by
non-controlling interests for shares of Class A or Class B common
stock.
(2)
Represents incremental direct
costs associated with the acquisition and integration of completed
and potential mergers and acquisitions. These costs generally
include legal, consulting, advisory, due diligence, severance and
certain other transaction expenses and third party costs incurred
that directly relate to the acquisition transaction or its
integration.
(3)
Represents intangible asset and
acquired software amortization resulting from acquisitions and
intangible asset amortization and increased tangible asset and
capitalized software depreciation and amortization resulting from
the application of pushdown accounting to the Refinitiv Transaction
(where all assets were marked to fair value as of the closing date
of the Refinitiv Transaction).
(4)
Represents non-cash stock-based
compensation expense associated with the Special Option Award and
post-IPO options awarded in 2019 and payroll taxes associated with
the exercise of such options. During the three and nine months
ended September 30, 2024, this adjustment also includes $2.4
million and $2.7 million, respectively, of non-cash accelerated
stock-based compensation expense and related payroll taxes
associated with our former President and $0.4 million and $0.4
million, respectively, of non-cash stock-based compensation expense
and related payroll taxes associated with RSAs and RSUs issued to
help retain key employees during the integration of ICD.
(5)
Represents unrealized gain or
loss recognized on foreign currency forward contracts and foreign
exchange gain or loss from the revaluation of cash denominated in a
different currency than the entity’s functional currency.
(6)
Represents income recognized
during the applicable period due to changes in the tax receivable
agreement liability recorded in the consolidated statement of
financial condition as a result of changes in the mix of earnings,
tax legislation and tax rates in various jurisdictions which
impacted our tax savings.
(7)
Represents corporate income taxes
at an assumed effective tax rate of 25.0% applied to Adjusted Net
Income before income taxes for the three and nine months ended
September 30, 2024 and 24.5% for the three and nine months ended
September 30, 2023.
(8)
For a summary of the calculation
of Adjusted Diluted EPS, see “Reconciliation of Diluted Weighted
Average Shares Outstanding to Adjusted Diluted Weighted Average
Shares Outstanding and Adjusted Diluted EPS” below.
The following table summarizes the calculation of Adjusted
Diluted EPS for the periods presented:
Reconciliation of Diluted Weighted
Average Shares Outstanding to Adjusted Diluted Weighted Average
Shares Outstanding and Adjusted Diluted EPS
Three Months Ended
Nine Months Ended
September 30,
September 30,
2024
2023
2024
2023
Diluted weighted average shares of Class A
and Class B common stock outstanding
215,096,974
213,491,634
214,885,210
212,276,908
Weighted average of other participating
securities(1)
126,903
265,681
137,252
266,453
Assumed exchange of LLC Interests for
shares of Class A or Class B common stock(2)
23,076,235
23,080,571
23,077,298
24,179,583
Adjusted diluted weighted average shares
outstanding
238,300,112
236,837,886
238,099,760
236,722,944
Adjusted Net Income (in thousands)
$
179,332
$
130,794
$
513,968
$
383,578
Adjusted Diluted EPS
$
0.75
$
0.55
$
2.16
$
1.62
(1)
Represents the weighted average
of unvested stock awards and unsettled vested stock awards issued
to certain retired or terminated employees that are entitled to
non-forfeitable dividend equivalent rights and are considered
participating securities prior to being issued and outstanding
shares of common stock in accordance with the two-class method used
for purposes of calculating earnings per share.
(2)
Assumes the full exchange of the
weighted average of all outstanding LLC Interests held by
non-controlling interests for shares of Class A or Class B common
stock, resulting in the elimination of the non-controlling
interests and recognition of the net income attributable to
non-controlling interests.
Three Months Ended
Nine Months Ended
Reconciliation of Operating Expenses to
Adjusted Expenses
September 30,
September 30,
2024
2023
2024
2023
(dollars in thousands)
Operating expenses
$
289,599
$
203,619
$
773,117
$
604,580
Merger and acquisition transaction and
integration costs(1)
(14,488
)
(4,614
)
(21,752
)
(6,411
)
D&A related to acquisitions and the
Refinitiv Transaction(2)
(41,949
)
(31,971
)
(111,031
)
(95,217
)
Stock-based compensation expense(3)
(3,681
)
(525
)
(5,395
)
(1,960
)
Foreign exchange gains / (losses)(4)
(4,459
)
6,076
(2,097
)
4,242
Adjusted Expenses
$
225,022
$
172,585
$
632,842
$
505,234
(1)
Represents incremental direct
costs associated with the acquisition and integration of completed
and potential mergers and acquisitions. These costs generally
include legal, consulting, advisory, due diligence, severance and
certain other transaction expenses and third party costs incurred
that directly relate to the acquisition transaction or its
integration.
(2)
Represents intangible asset and
acquired software amortization resulting from acquisitions and
intangible asset amortization and increased tangible asset and
capitalized software depreciation and amortization resulting from
the application of pushdown accounting to the Refinitiv Transaction
(where all assets were marked to fair value as of the closing date
of the Refinitiv Transaction).
(3)
Represents non-cash stock-based
compensation expense associated with the Special Option Award and
post-IPO options awarded in 2019 and payroll taxes associated with
the exercise of such options. During the three and nine months
ended September 30, 2024, this adjustment also includes $2.4
million and $2.7 million, respectively, of non-cash accelerated
stock-based compensation expense and related payroll taxes
associated with our former President and $0.4 million and $0.4
million, respectively, of non-cash stock-based compensation expense
and related payroll taxes associated with RSAs and RSUs issued to
help retain key employees during the integration of ICD.
(4)
Represents unrealized gain or
loss recognized on foreign currency forward contracts and foreign
exchange gain or loss from the revaluation of cash denominated in a
different currency than the entity’s functional currency.
Trailing Twelve Months
Ended
September 30,
Reconciliation of Cash Flow from
Operating Activities to Free Cash Flow
2024
2023
(dollars in thousands)
Cash flow from operating activities
$
860,477
$
709,328
Less: Capitalization of software
development costs
(46,312
)
(41,517
)
Less: Purchases of furniture, equipment
and leasehold improvements
(16,791
)
(22,722
)
Free Cash Flow
$
797,374
$
645,089
TRADEWEB MARKETS INC. BASIC AND
DILUTED EPS CALCULATIONS (UNAUDITED)
The following table summarizes the basic
and diluted earnings per share calculations for Tradeweb Markets
Inc.:
Three Months Ended
Nine Months Ended
EPS: Net income attributable to
Tradeweb Markets Inc.
September 30,
September 30,
2024
2023
2024
2023
(dollars in thousands, except
per share amounts)
Numerator:
Net income attributable to Tradeweb
Markets Inc.
$
113,916
$
98,614
$
359,297
$
275,552
Less: Distributed and undistributed
earnings allocated to participating securities(1)
(68
)
(124
)
(231
)
(348
)
Net income attributable to outstanding
shares of Class A and Class B common stock - Basic and Diluted
$
113,848
$
98,490
$
359,066
$
275,204
Denominator:
Weighted average shares of Class A and
Class B common stock outstanding - Basic
213,206,193
211,618,475
213,026,732
210,444,082
Dilutive effect of PRSUs
625,822
504,945
564,996
380,740
Dilutive effect of options
363,623
1,110,175
470,816
1,240,923
Dilutive effect of RSUs and RSAs
405,562
258,039
367,375
211,163
Dilutive effect of PSUs
495,774
—
455,291
—
Weighted average shares of Class A and
Class B common stock outstanding - Diluted
215,096,974
213,491,634
214,885,210
212,276,908
Earnings per share - Basic
$
0.53
$
0.47
$
1.69
$
1.31
Earnings per share - Diluted
$
0.53
$
0.46
$
1.67
$
1.30
(1)
During the three months ended
September 30, 2024 and 2023, there was a total of 126,903 and
265,681, respectively, and during the nine months ended September
30, 2024 and 2023, there was a total of 137,252 and 266,453,
respectively, weighted average unvested or unsettled vested stock
awards that were considered a participating security for purposes
of calculating earnings per share in accordance with the two-class
method.
TRADEWEB MARKETS INC.
REVENUES BY ASSET CLASS
(UNAUDITED)
Three Months Ended
September 30,
2024
2023
$ Change
% Change
Revenues
Variable
Fixed
Variable
Fixed
Variable
Fixed
Variable
Fixed
(dollars in thousands)
Rates
$
173,698
$
59,424
$
114,128
$
58,704
$
59,570
$
720
52.2
%
1.2
%
Credit
109,518
8,787
82,484
7,578
27,034
1,209
32.8
%
16.0
%
Equities
23,218
2,296
18,567
2,323
4,651
(27
)
25.0
%
(1.2
)%
Money Markets
31,928
4,198
11,433
4,330
20,495
(132
)
179.3
%
(3.0
)%
Market Data
104
29,656
115
22,841
(11
)
6,815
(9.6
)%
29.8
%
Other
513
5,575
—
5,854
513
(279
)
N/M
(4.8
)%
Total revenue
$
338,979
$
109,936
$
226,727
$
101,630
$
112,252
$
8,306
49.5
%
8.2
%
N/M = not meaningful
TRADEWEB MARKETS INC.
AVERAGE VARIABLE FEES PER MILLION
DOLLARS OF VOLUME (UNAUDITED)
Three Months Ended
September 30,
YoY
2024
2023
% Change
Rates
$
2.07
$
2.10
(1.4
)%
Rates Cash
$
2.45
$
2.42
1.1
%
Rates Derivatives
$
1.85
$
1.87
(1.5
)%
Rates Derivatives (greater than 1
year)
$
3.19
$
2.72
17.2
%
Other Rates Derivatives(1)
$
0.22
$
0.22
1.1
%
Credit
$
39.76
$
43.26
(8.1
)%
Cash Credit(2)
$
151.90
$
162.20
(6.3
)%
Credit Derivatives, China Bonds and U.S.
Cash EP
$
5.71
$
5.75
(0.7
)%
Equities
$
15.82
$
15.50
2.1
%
Equities Cash
$
27.68
$
25.42
8.9
%
Equities Derivatives
$
5.99
$
5.50
9.0
%
Money Markets
$
0.54
$
0.35
55.0
%
Total
$
2.29
$
2.51
(8.5
)%
Total excluding Other Rates
Derivatives(3)
$
2.69
$
2.81
(4.4
)%
(1)
Includes Swaps/Swaptions of tenor
less than 1 year and Rates Futures.
(2)
The “Cash Credit” category
represents the “Credit” asset class excluding (1) Credit
Derivatives (2) China Bonds and (3) U.S. High Grade and High Yield
electronically processed (“EP”) activity.
(3)
Included to contextualize the
impact of short-tenored Swaps/Swaptions and Rates Futures on totals
for all periods presented.
TRADEWEB MARKETS INC.
AVERAGE DAILY VOLUME
(UNAUDITED)(1)
2024 Q3
2023 Q3
YoY
Asset Class
Product
ADV (USD mm)
Volume (USD mm)
ADV (USD mm)
Volume (USD mm)
ADV
Rates
Cash
$
496,603
$
31,860,816
$
361,421
$
22,842,103
37.40
%
U.S. Government Bonds
221,864
14,199,309
142,641
8,986,371
55.54
%
European Government Bonds
42,964
2,835,614
37,251
2,421,306
15.34
%
Mortgages
221,999
14,207,950
174,436
10,989,473
27.27
%
Other Government Bonds
9,775
617,943
7,093
444,954
37.82
%
Derivatives
801,512
51,882,416
491,837
31,422,421
62.96
%
Swaps/Swaptions ≥ 1Y
439,683
28,436,368
325,350
20,746,985
35.14
%
Swaps/Swaptions < 1Y
352,589
22,850,905
164,178
10,529,049
114.76
%
Futures
9,239
595,143
2,310
146,388
300.01
%
Total
1,298,114
83,743,233
853,258
54,264,524
52.14
%
Credit
Cash
15,251
980,526
12,980
824,984
17.49
%
U.S. High Grade - Fully
Electronic
6,433
411,704
4,228
266,368
52.15
%
U.S. High Grade - Electronically
Processed
2,649
169,509
2,339
147,359
13.23
%
U.S. High Yield - Fully
Electronic
775
49,578
611
38,465
26.88
%
U.S. High Yield - Electronically
Processed
276
17,679
217
13,668
27.33
%
European Credit
2,092
138,095
1,869
121,475
11.96
%
Municipal Bonds
380
24,300
334
21,054
13.62
%
Chinese Bonds
2,371
151,721
3,231
206,794
(26.63
)%
Other Credit Bonds
276
17,939
152
9,802
81.69
%
Derivatives
27,338
1,773,907
16,955
1,081,813
61.24
%
Swaps
27,338
1,773,907
16,955
1,081,813
61.24
%
Total
42,589
2,754,433
29,936
1,906,796
42.27
%
Equities
Cash
10,308
665,138
9,475
601,081
8.79
%
U.S. ETFs
7,608
486,909
7,402
466,323
2.78
%
European ETFs
2,700
178,229
2,073
134,758
30.25
%
Derivatives
12,507
802,100
9,451
596,615
32.33
%
Convertibles/Swaps/Options
9,279
595,271
6,285
396,969
47.63
%
Futures
3,228
206,829
3,166
199,646
1.97
%
Total
22,815
1,467,238
18,926
1,197,696
20.55
%
Money Markets
Cash
848,171
59,556,275
522,065
33,065,896
62.46
%
Repurchase Agreements (Repo)
647,745
41,687,516
505,191
32,000,195
28.22
%
Other Money Markets
200,427
17,868,759
16,874
1,065,701
1087.75
%
Total
848,171
59,556,275
522,065
33,065,896
62.46
%
ADV (USD mm)
Volume (USD mm)
ADV (USD mm)
Volume (USD mm)
YoY
Total
$
2,211,690
$
147,521,178
$
1,424,185
$
90,434,913
55.3
%
(1)
We acquired Yieldbroker, r8fin
and ICD on August 31, 2023, January 19, 2024 and August 1, 2024,
respectively. Total volume reported includes volumes from each
acquired business subsequent to the closing date of the applicable
acquisition.
To access historical traded volumes, go to https://www.tradeweb.com/newsroom/monthly-activity-reports/
BASIS OF PRESENTATION
Tradeweb Markets Inc. (unless the context otherwise requires,
together with its subsidiaries, referred to as “we,” “our,”
“Tradeweb,” “Tradeweb Markets” or the “Company”) closed its IPO on
April 8, 2019. As a result of certain reorganization transactions
(the “Reorganization Transactions”) completed in connection with
the IPO, on April 4, 2019, Tradeweb Markets Inc. became a holding
company whose principal assets consist of its direct and indirect
equity interest in Tradeweb Markets LLC (“TWM LLC”) and related
deferred tax assets. As the sole manager of TWM LLC, Tradeweb
Markets Inc. operates and controls all of the business and affairs
of TWM LLC and, through TWM LLC and its subsidiaries, conducts its
business. As a result of this control, and because Tradeweb Markets
Inc. has a substantial financial interest in TWM LLC, Tradeweb
Markets Inc. consolidates the financial results of TWM LLC and its
subsidiaries.
Numerical figures included in this release have been subject to
rounding adjustments and as a result totals may not be the
arithmetic aggregation of the amounts that precede them and figures
expressed as percentages may not total 100%.
Please refer to the Company's previously filed Quarterly Reports
on Form 10-Q and Annual Report on Form 10-K for capitalized terms
not otherwise defined herein.
UNAUDITED INTERIM RESULTS
The interim financial results presented herein for the three and
nine months ended September 30, 2024 and 2023 are unaudited.
Operating results for interim periods are not necessarily
indicative of the results that may be expected for the full
year.
FORWARD-LOOKING STATEMENTS
This release contains forward-looking statements within the
meaning of the federal securities laws. Statements related to,
among other things, our guidance, including full-year 2024 guidance
and full-year 2024 and 2025 revenue guidance related to the LSEG
market data license agreement, pending and completed acquisitions,
future performance, the industry and markets in which we operate,
our expectations, beliefs, plans, strategies, objectives, prospects
and assumptions and future events are forward-looking
statements.
We have based these forward-looking statements on our current
expectations, assumptions, estimates and projections. While we
believe these expectations, assumptions, estimates and projections
are reasonable, such forward-looking statements are only
predictions and involve known and unknown risks and uncertainties,
many of which are beyond our control. These and other important
factors, including those discussed under the heading “Risk Factors”
in the documents of Tradeweb Markets Inc. on file with or furnished
to the SEC, may cause our actual results, performance or
achievements to differ materially from those expressed or implied
by these forward-looking statements. Given these risks and
uncertainties, you are cautioned not to place undue reliance on
such forward-looking statements. The forward-looking statements
contained in this release are not guarantees of future events or
performance and future events, our actual results of operations,
financial condition or liquidity, and the development of the
industry and markets in which we operate, may differ materially
from the forward-looking statements contained in this release. In
addition, even if future events, our results of operations,
financial condition, or liquidity, and events in the industry and
markets in which we operate, are consistent with the
forward-looking statements contained in this release, they may not
be predictive of events, results or developments in future periods.
Any forward-looking statement that we make in this release speaks
only as of the date of such statement. Except as required by law,
we do not undertake any obligation to update or revise, or to
publicly announce any update or revision to, any of the
forward-looking statements, whether as a result of new information,
future events or otherwise, after the date of this release.
NON-GAAP FINANCIAL MEASURES
This release contains “non-GAAP financial measures,” including
Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT, Adjusted
EBIT margin, Adjusted Net Income, Adjusted Net Income per diluted
share ("Adjusted Diluted EPS"), Adjusted Expenses, Free Cash Flow
and constant currency change, which are supplemental financial
measures that are not calculated and presented in accordance with
GAAP. We make use of non-GAAP financial measures in evaluating our
past results and future prospects. We present these non-GAAP
financial measures because we believe they assist investors and
analysts in comparing our operating performance across reporting
periods on a consistent basis by excluding items that we do not
believe are indicative of our core operating performance.
Management and our board of directors use Adjusted EBITDA,
Adjusted EBITDA margin, Adjusted EBIT and Adjusted EBIT margin to
assess our financial performance and believe they are helpful in
highlighting trends in our core operating performance, while other
measures can differ significantly depending on long-term strategic
decisions regarding capital structure, the tax jurisdictions in
which we operate and capital investments. Further, our executive
incentive compensation is based in part on components of Adjusted
EBITDA.
We use Adjusted Net Income and Adjusted Diluted EPS as
supplemental metrics to evaluate our business performance in a way
that also considers our ability to generate profit without the
impact of certain items. Each of the normal recurring adjustments
and other adjustments included in Adjusted Net Income and Adjusted
Diluted EPS help to provide management with a measure of our
operating performance over time by removing items that are not
related to day-to-day operations or are non-cash expenses.
We use Adjusted Expenses as a supplemental metric to evaluate
our underlying operating performance over time by removing items
that are not related to day-to-day operations or are non-cash
expenses.
We use Free Cash Flow to assess our liquidity in a way that
considers the amount of cash generated from our core operations
after non-acquisition related expenditures for capitalized software
development costs and furniture, equipment and leasehold
improvements.
We present certain changes on a “constant currency” basis. Since
our consolidated financial statements are presented in U.S.
dollars, we must translate non-U.S. dollar revenues and expenses
into U.S. dollars. Constant currency change, which is a non-GAAP
financial measure, is defined as change excluding the effects of
foreign currency fluctuations. Constant currency information is
calculated by translating the current period and prior period’s
results using the annual average exchange rates for the prior
period. We use constant currency change as a supplemental metric to
evaluate our underlying performance between periods by removing the
impact of foreign currency fluctuations. We present certain
constant currency change information because we believe it provides
investors and analysts a useful comparison of our results and
trends between periods. This information should be considered in
addition to, not as a substitute for, results reported in
accordance with GAAP.
See the attached schedules for reconciliations of the non-GAAP
financial measures contained in this release to their most
comparable GAAP financial measure. Non-GAAP financial measures have
limitations as analytical tools, and you should not consider these
non-GAAP financial measures in isolation or as alternatives to net
income attributable to Tradeweb Markets Inc., net income, net
income margin, earnings per share, operating income, operating
expenses, cash flow from operating activities or any other
financial measure prepared or derived in accordance with GAAP. You
are encouraged to evaluate each adjustment included in the
reconciliations. In addition, in evaluating Adjusted EBITDA,
Adjusted EBITDA margin, Adjusted EBIT, Adjusted EBIT margin,
Adjusted EBT, Adjusted Net Income, Adjusted Diluted EPS, Adjusted
Expenses and Free Cash Flow, you should be aware that in the
future, we may incur expenses similar to the adjustments in the
presentation of these non-GAAP financial measures.
Our presentation of non-GAAP financial measures should not be
construed as an inference that our future results will be
unaffected by unusual or non-recurring items. In addition, the
non-GAAP financial measures contained in this release may not be
comparable to similarly titled measures used by other companies in
our industry or across different industries.
MARKET AND INDUSTRY DATA
This release includes estimates regarding market and industry
data that we prepared based on our management’s knowledge and
experience in the markets in which we operate, together with
information obtained from various sources, including publicly
available information, industry reports and publications, surveys,
our clients, trade and business organizations and other contacts in
the markets in which we operate. In presenting this information, we
have made certain assumptions that we believe to be reasonable
based on such data and other similar sources and on our knowledge
of, and our experience to date in, the markets in which we operate.
While such information is believed to be reliable for the purposes
used herein, no representations are made as to the accuracy or
completeness thereof and we take no responsibility for such
information.
TRADEWEB SOCIAL MEDIA
Investors and others should note that Tradeweb announces
material financial and operational information using its investor
relations website, press releases, SEC filings and public
conference calls and webcasts. Information about Tradeweb, its
business and its results of operations may also be announced by
posts on the Company’s accounts on the following social media
channels: Instagram, LinkedIn and X (formerly Twitter). The
information that we post through these social media channels may be
deemed material. As a result, we encourage investors, the media,
and others interested in Tradeweb to monitor these social media
channels in addition to following our investor relations website,
press releases, SEC filings and public conference calls and
webcasts. These social media channels may be updated from time to
time on our investor relations website.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241028544767/en/
Investor Relations Ashley Serrao + 1 646 430 6027
Ashley.Serrao@Tradeweb.com
Media Relations Daniel Noonan + 1 646 767 4677
Daniel.Noonan@Tradeweb.com
Tradeweb Markets (NASDAQ:TW)
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