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
June 30, 2024.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20240725918017/en/
Billy Hult, CEO, Tradeweb Markets (Photo:
Business Wire)
$405.0 million quarterly revenues, an increase of
30.4% (30.8% on a constant currency basis) compared
to prior year period
$1.9 trillion average daily volume (“ADV”) for the
quarter, an increase of 48.3% compared to prior year period;
quarterly ADV records in U.S. government bonds, fully electronic
U.S. high yield credit and global repurchase agreements; record
18.8% share of fully electronic U.S. high grade TRACE
$136.4 million net income and $166.7 million
adjusted net income for the quarter, increases of 33.8% and
34.7% respectively from prior year period
53.5% adjusted EBITDA margin and $216.5 million
adjusted EBITDA for the quarter, compared to 52.5% and $163.1
million respectively for prior year period
$0.55 diluted earnings per share (“Diluted EPS”) and
$0.70 adjusted diluted earnings per share for the
quarter
$0.10 per share quarterly cash dividend declared
Billy Hult, CEO of Tradeweb:
“We delivered strong organic growth complemented by continued
investment in our multi-asset class, global business, resulting in
a 30.4% revenue increase year-over-year in Q2 2024. Tradeweb set
quarterly ADV records in rates, money markets, and credit – where
we also captured a record 18.8% share of fully electronic U.S. high
grade TRACE. Markets continue to become increasingly
interconnected, and our technology is helping to make that
possible. Tradeweb recently became the first electronic trading
platform to connect repo and IRS markets, and we expanded our
partnership with FTSE Russell to produce benchmark U.S. treasury
closing prices. In Q2 2024, we agreed to acquire ICD, an
institutional investment technology provider for corporate treasury
organizations, which would introduce Corporates as our fourth
client channel. We also made a minority investment in Securitize, a
leader in tokenizing real-world assets, and entered into a
commercial agreement with blockchain infrastructure provider
Alphaledger, reflecting our continued efforts to strategically
place bets on technology that helps to advance our business. I'm
proud of our strides this quarter and look forward to continually
identifying new opportunities for our long-term growth.”
SELECT FINANCIAL
RESULTS
2Q24
2Q23
Change
Constant
Currency
Change(1)
(dollars in thousands except per share
amounts)(Unaudited)
GAAP Financial Measures
Total revenue
$
404,951
$
310,613
30.4
%
30.8
%
Rates
$
217,531
$
160,354
35.7
%
36.4
%
Credit
$
111,324
$
84,048
32.5
%
32.6
%
Equities
$
22,871
$
22,146
3.3
%
3.8
%
Money Markets
$
18,045
$
15,834
14.0
%
14.2
%
Market Data
$
29,227
$
22,776
28.3
%
28.4
%
Other
$
5,953
$
5,455
9.1
%
9.2
%
Net income
$
136,416
$
101,939
33.8
%
Net income attributable to Tradeweb Markets Inc. (2)
$
119,239
$
89,082
33.9
%
Diluted EPS
$
0.55
$
0.42
31.0
%
Net income margin
33.7
%
32.8
%
+87
bps
Non-GAAP Financial Measures
Adjusted EBITDA (1)
$
216,533
$
163,055
32.8
%
32.6
%
Adjusted EBITDA margin (1)
53.5
%
52.5
%
+98
bps
+70
bps
Adjusted EBIT (1)
$
201,312
$
148,797
35.3
%
35.0
%
Adjusted EBIT margin (1)
49.7
%
47.9
%
+181
bps
+154
bps
Adjusted Net Income (1)
$
166,711
$
123,749
34.7
%
34.5
%
Adjusted Diluted EPS (1)
$
0.70
$
0.52
34.6
%
34.6
%
(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
2Q24
2Q23
YoY
Rates
Cash
$
462
$
345
34.1
%
Derivatives
787
429
83.4
%
Total
1,249
774
61.4
%
Credit
Cash
17
11
58.5
%
Derivatives
13
8
53.8
%
Total
30
19
56.5
%
Equities
Cash
10
10
0.2
%
Derivatives
11
9
19.9
%
Total
21
19
9.8
%
Money Markets
Cash
622
484
28.4
%
Total
622
484
28.4
%
Total
$
1,922
$
1,297
48.3
%
DISCUSSION OF RESULTS
Rates – Revenues of $217.5 million in the second quarter
of 2024 increased 35.7% compared to prior year period (increased
36.4% on a constant currency basis). Rates ADV was up 61.4% from
prior year period, driven by strong volume in swaps/swaptions ≥ and
< 1-year and record volume in U.S. government bonds. The
addition of r8fin continued to contribute positively to wholesale
volumes. European government bonds ADV was up 12.3% from prior year
period, driven by market volatility and sustained primary issuance
across Europe and the UK. Mortgages ADV was up 24.8%, reflecting
robust to-be-announced (TBA) volumes led by heightened dollar roll
and coupon swap activity as well as continued strong client
adoption of our specified pool trading platform.
Credit – Revenues of $111.3 million in the second quarter
of 2024 increased 32.5% compared to prior year period (increased
32.6% on a constant currency basis). Credit ADV was up 56.5% from
prior year period, as strong U.S. credit volumes, including record
ADV in fully-electronic U.S. high yield credit, reflected continued
client adoption across Tradeweb products and protocols, including
request-for-quote (RFQ), Tradeweb AllTrade® and portfolio trading.
European credit ADV was up 19.7% from prior year period, driven by
strong activity in portfolio trading and our unique dealer
selection tool (SNAP IOI). We reported a record 18.8% share of
fully electronic U.S. high grade TRACE, up 392 bps from prior year
period, and a 7.6% share of fully electronic U.S. high yield TRACE,
up 139 bps from prior year period.
Equities – Revenues of $22.9 million in the second
quarter of 2024 increased 3.3% compared to prior year period
(increased 3.8% on a constant currency basis). Equities ADV was up
9.8% from prior year period, driven by strong growth in equity
derivatives while ETF market volumes remained muted as market
volatility remained low.
Money Markets – Revenues of $18.0 million in the second
quarter of 2024 increased 14.0% compared to prior year period
(increased 14.2% on a constant currency basis). Money Markets ADV
was up 28.4% from prior year period, led by record activity in
global repurchase agreements and increased client adoption of
Tradeweb's electronic trading solutions.
Market Data – Revenues of $29.2 million in the second
quarter of 2024 increased 28.3% compared to prior year period
(increased 28.4% 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 $6.0 million in the second quarter of
2024 increased 9.1% compared to prior year period (increased 9.2%
on a constant currency basis).
Operating Expenses of $242.5 million in the second
quarter of 2024 increased 24.8% compared to $194.3 million in prior
year period, primarily due to an increase in incentive compensation
expense tied to our financial performance, as well as an increase
in headcount and related salaries and employee compensation and
benefits to support our continued growth. During the quarter, we
also incurred $2.9 million in incremental cash compensation expense
and $0.3 million in accelerated stock-based compensation expense in
connection with the departure of an executive effective September
30, 2024.
Adjusted Expenses of $203.6 million in the second quarter
of 2024 increased 25.8% (increased 27.0% on a constant currency
basis) compared to prior year period primarily due to higher
expenses related to adjusted employee compensation and benefits,
including $2.9 million in incremental cash compensation expense in
the second quarter of 2024 in connection with the departure of an
executive effective September 30, 2024. Please see "Non-GAAP
Financial Measures" below for additional information.
RECENT HIGHLIGHTS
Second Quarter 2024
- Announced definitive agreement to acquire Institutional Cash
Distributors (“ICD”), an institutional investment technology
provider for corporate treasury organizations trading short-term
investments, for $785 million, subject to customary adjustments,
which will add Corporates as our fourth client channel alongside
Institutional, Wholesale and Retail. The closing of the acquisition
is subject to customary closing conditions and regulatory
reviews.
- Announced organizational changes, including the addition of Amy
Clack, who will join Tradeweb in August 2024 as Chief
Administrative Officer (CAO), overseeing operations, business
integration, risk and corporate services. In addition, Tradeweb
announced that President Thomas Pluta will leave the Company and
its Board of Directors, effective September 30, 2024.
- Agreed with Alphaledger, a leading provider of blockchain
infrastructure for fixed income assets, to jointly develop
innovative products leveraging Alphaledger's blockchain
technology.
- Invested $10 million as part of $47 million strategic funding
round led by BlackRock for Securitize, a leader in tokenizing
real-world assets.
- Served as network participant in the launch of Global
Synchronizer, the Canton Network's decentralized interoperability
infrastructure. The Canton Network is a public-permissioned
blockchain network designed with the privacy and controls essential
to facilitate the exchange of regulated financial assets.
- Entered into a $159.2 million lease for Tradeweb's new NYC
headquarters, expected to commence in mid-2025 with an expected
initial lease term of approximately 16 years.
- Launched an enhanced functionality for RFQ trading in U.S.
credit markets; “RFQ Edge” deploys Tradeweb's advanced portfolio
trading analytics to its RFQ protocol to deliver a more powerful
list trading experience for U.S. credit and ETF traders.
- Expanded strategic partnership between Tradeweb and FTSE
Russell to produce benchmark closing prices for the U.S. Treasury
markets.
- Became the first electronic trading platform to make overnight
index swap (OIS) curves available during the repo trade negotiation
process, helping institutional clients assess the price
competitiveness of different repo rates across different currencies
and maturities.
- Awarded two framework agreements to provide Electronic Trading
Platforms to the European Central Bank (ECB) and other Eurosystem
National Central Banks, after successfully participating in the
procurement procedure organized by the ECB.
- Recognized in numerous awards celebrating our company, as well
as our outstanding and diverse talent, including: 40 Top Innovators
(TabbFORUM); Asset Management Awards - Best Data & Technology
Provider and Rising Star in Asset Services (AsianInvestor); Inside
Market Data & Inside Reference Data Awards - Most Innovative
Market Data Project (WatersTechnology); Women in Finance Asia
Awards - Excellence in ETFs - Keri Neo (Markets Media); Markets
Choice Awards - Best Company (Markets Media)
CAPITAL MANAGEMENT
- $1.7 billion in cash and cash equivalents and an undrawn $500
million credit facility at June 30, 2024
- $785 million acquisition of ICD is expected to close in the
third quarter of 2024, subject to the satisfaction of customary
closing conditions and regulatory reviews and the purchase price,
subject to customary adjustments, is expected to be funded with
cash on hand
- Free cash flow for the trailing twelve months ended June 30,
2024 of $721.7 million, up 13.7% compared to prior year period. See
“Non-GAAP Financial Measures“ for additional information
- Cash capital expenditures and capitalized software development
in the second quarter 2024 of $16.6 million (excludes amounts paid
at closing for acquisitions)
- $239.8 million remained available for repurchase pursuant to
the share repurchase program authorization as of June 30, 2024. No
shares were repurchased during the second quarter of 2024
- $0.3 million in shares of Class A common stock were withheld in
the second 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 September 16, 2024 to stockholders of record as of
September 3, 2024
OTHER MATTERS
Updated Full-Year 2024 Guidance*
- Adjusted Expenses: $830 - 860 million
- 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 (~$90 million
in 2025)
The guidance has been revised to reflect higher expenses and
expenditures in light of strong business momentum, the anticipated
closing of ICD during the third quarter of 2024 and recently
announced management changes. Assumed non-GAAP tax rate and LSEG
Market Data Contract Revenue guidance is unchanged from the prior
quarter guidance.
*GAAP operating expenses and tax rate
guidance are not provided due to the inherent difficulty in
quantifying certain amounts due to a variety of factors including
the unpredictability in the movement of foreign currency rates.
Expense guidance assumes an average 2024 Sterling/US$ foreign
exchange rate of 1.24 and includes completed M&A transactions
as well as the expected closing of the ICD acquisition in the third
quarter of 2024. 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 second
quarter 2024 results starting at 9:30 AM EDT today, July 25, 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/n8n9p3bv/
- To join the call via phone, please register in advance here:
https://register.vevent.com/register/BI10fde228f4fd46c686f35483a283443e.
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 2,500 clients in more than 70 countries. On average, Tradeweb
facilitated more than $1.7 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
Six Months Ended
June 30,
June 30,
2024
2023
2024
2023
Revenues
(dollars in thousands, except
per share amounts)
Transaction fees and commissions
$
330,475
$
246,461
$
665,926
$
513,059
Subscription fees
50,746
45,748
100,427
90,122
LSEG market data fees
20,581
15,461
41,081
31,055
Other
3,149
2,943
6,256
5,626
Total revenue
404,951
310,613
813,690
639,862
Expenses
Employee compensation and benefits
137,236
103,924
280,323
218,417
Depreciation and amortization
49,936
45,887
99,273
91,291
Technology and communications
24,230
18,701
45,540
36,268
General and administrative
12,755
11,072
23,609
24,992
Professional fees
13,324
10,666
25,124
21,842
Occupancy
4,976
4,028
9,649
8,151
Total expenses
242,457
194,278
483,518
400,961
Operating income
162,494
116,335
330,172
238,901
Interest income
21,511
15,576
42,571
28,516
Interest expense
(542
)
(467
)
(2,260
)
(916
)
Other income (loss), net
—
(456
)
—
(115
)
Income before taxes
183,463
130,988
370,483
266,386
Provision for income taxes
(47,047
)
(29,049
)
(90,685
)
(62,254
)
Net income
136,416
101,939
279,798
204,132
Less: Net income attributable to
non-controlling interests
17,177
12,857
34,417
27,194
Net income attributable to Tradeweb
Markets Inc.
$
119,239
$
89,082
$
245,381
$
176,938
Earnings per share attributable to
Tradeweb Markets Inc. Class A and B common stockholders:
Basic
$
0.56
$
0.42
$
1.15
$
0.84
Diluted
$
0.55
$
0.42
$
1.14
$
0.83
Weighted average shares outstanding:
Basic
213,162,158
211,569,728
212,936,015
209,847,153
Diluted
214,895,947
213,156,753
214,778,342
211,659,814
TRADEWEB MARKETS INC.
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES (UNAUDITED)
Three Months Ended
Six Months Ended
Reconciliation of Net Income to
Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EBIT and Adjusted
EBIT Margin
June 30,
June 30,
2024
2023
2024
2023
(dollars in thousands)
Net income
$
136,416
$
101,939
$
279,798
$
204,132
Merger and acquisition transaction and
integration costs (1)
3,650
1,212
7,264
1,797
Interest income
(21,511
)
(15,576
)
(42,571
)
(28,516
)
Interest expense
542
467
2,260
916
Depreciation and amortization
49,936
45,887
99,273
91,291
Stock-based compensation expense (2)
531
585
1,714
1,435
Provision for income taxes
47,047
29,049
90,685
62,254
Foreign exchange (gains) / losses (3)
(78
)
(964
)
(2,362
)
1,834
Tax receivable agreement liability
adjustment (4)
—
—
—
—
Other (income) loss, net
—
456
—
115
Adjusted EBITDA
$
216,533
$
163,055
$
436,061
$
335,258
Less: Depreciation and amortization
(49,936
)
(45,887
)
(99,273
)
(91,291
)
Add: D&A related to acquisitions and
the Refinitiv Transaction (5)
34,715
31,629
69,082
63,246
Adjusted EBIT
$
201,312
$
148,797
$
405,870
$
307,213
Net income margin (6)
33.7
%
32.8
%
34.4
%
31.9
%
Adjusted EBITDA margin (6)
53.5
%
52.5
%
53.6
%
52.4
%
Adjusted EBIT margin (6)
49.7
%
47.9
%
49.9
%
48.0
%
(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 other
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 six months ended
June 30, 2024, this adjustment also includes $0.3 million of
non-cash accelerated stock-based compensation expense and related
payroll taxes associated with our departing President.
(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
Six Months Ended
Reconciliation of Net Income to
Adjusted Net Income and Adjusted Diluted EPS
June 30,
June 30,
2024
2023
2024
2023
(dollars in thousands, except
per share amounts)
Earnings per diluted share
$
0.55
$
0.42
$
1.14
$
0.83
Net income attributable to Tradeweb
Markets Inc.
$
119,239
$
89,082
$
245,381
$
176,938
Net income attributable to non-controlling
interests (1)
17,177
12,857
34,417
27,194
Net income
136,416
101,939
279,798
204,132
Provision for income taxes
47,047
29,049
90,685
62,254
Merger and acquisition transaction and
integration costs (2)
3,650
1,212
7,264
1,797
D&A related to acquisitions and the
Refinitiv Transaction (3)
34,715
31,629
69,082
63,246
Stock-based compensation expense (4)
531
585
1,714
1,435
Foreign exchange (gains) / losses (5)
(78
)
(964
)
(2,362
)
1,834
Tax receivable agreement liability
adjustment (6)
—
—
—
—
Other (income) loss, net
—
456
—
115
Adjusted Net Income before income
taxes
222,281
163,906
446,181
334,813
Adjusted income taxes (7)
(55,570
)
(40,157
)
(111,545
)
(82,029
)
Adjusted Net Income
$
166,711
$
123,749
$
334,636
$
252,784
Adjusted Diluted EPS (8)
$
0.70
$
0.52
$
1.41
$
1.07
(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 other
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 six months ended
June 30, 2024, this adjustment also includes $0.3 million of
non-cash accelerated stock-based compensation expense and related
payroll taxes associated with our departing President.
(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 six months ended June 30,
2024 and 24.5% for the three and six months ended June 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
Six Months Ended
June 30,
June 30,
2024
2023
2024
2023
Diluted weighted average shares of Class A
and Class B common stock outstanding
214,895,947
213,156,753
214,778,342
211,659,814
Weighted average of other participating
securities (1)
125,012
241,963
142,484
266,790
Assumed exchange of LLC Interests for
shares of Class A or Class B common stock (2)
23,077,698
23,153,250
23,077,836
24,738,197
Adjusted diluted weighted average shares
outstanding
238,098,657
236,551,966
237,998,662
236,664,801
Adjusted Net Income (in thousands)
$
166,711
$
123,749
$
334,636
$
252,784
Adjusted Diluted EPS
$
0.70
$
0.52
$
1.41
$
1.07
(1)
Represents weighted average unvested
restricted stock units and unsettled vested performance-based
restricted stock units 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
Six Months Ended
Reconciliation of Operating Expenses to
Adjusted Expenses
June 30,
June 30,
2024
2023
2024
2023
(dollars in thousands)
Operating expenses
$
242,457
$
194,278
$
483,518
$
400,961
Merger and acquisition transaction and
integration costs (1)
(3,650
)
(1,212
)
(7,264
)
(1,797
)
D&A related to acquisitions and the
Refinitiv Transaction (2)
(34,715
)
(31,629
)
(69,082
)
(63,246
)
Stock-based compensation expense (3)
(531
)
(585
)
(1,714
)
(1,435
)
Foreign exchange gains / (losses) (4)
78
964
2,362
(1,834
)
Adjusted Expenses
$
203,639
$
161,816
$
407,820
$
332,649
(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 other
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 six months ended
June 30, 2024, this adjustment also includes $0.3 million of
non-cash accelerated stock-based compensation expense and related
payroll taxes associated with our departing President.
(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
June 30,
Reconciliation of Cash Flow from
Operating Activities to Free Cash Flow
2024
2023
(dollars in thousands)
Cash flow from operating activities
$
785,734
$
693,446
Less: Capitalization of software
development costs
(45,208
)
(39,123
)
Less: Purchases of furniture, equipment
and leasehold improvements
(18,780
)
(19,557
)
Free Cash Flow
$
721,746
$
634,766
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
Six Months Ended
EPS: Net income attributable to
Tradeweb Markets Inc.
June 30,
June 30,
2024
2023
2024
2023
(dollars in thousands, except
per share amounts)
Numerator:
Net income attributable to Tradeweb
Markets Inc.
$
119,239
$
89,082
$
245,381
$
176,938
Less: Distributed and undistributed
earnings allocated to unvested RSUs and unsettled vested PRSUs
(1)
(70
)
(102
)
(164
)
(225
)
Net income attributable to outstanding
shares of Class A and Class B common stock - Basic and Diluted
$
119,169
$
88,980
$
245,217
$
176,713
Denominator:
Weighted average shares of Class A and
Class B common stock outstanding - Basic
213,162,158
211,569,728
212,936,015
209,847,153
Dilutive effect of PRSUs
568,304
350,713
534,583
318,638
Dilutive effect of options
449,252
1,143,376
524,413
1,306,297
Dilutive effect of RSUs
252,498
92,936
348,282
187,726
Dilutive effect of PSUs
463,735
—
435,049
—
Weighted average shares of Class A and
Class B common stock outstanding - Diluted
214,895,947
213,156,753
214,778,342
211,659,814
Earnings per share - Basic
$
0.56
$
0.42
$
1.15
$
0.84
Earnings per share - Diluted
$
0.55
$
0.42
$
1.14
$
0.83
(1)
During the three months ended June 30,
2024 and 2023, there was a total of 125,012 and 241,963,
respectively, and during the six months ended June 30, 2024 and
2023, there was a total of 142,484 and 266,790, respectively,
weighted average unvested RSUs and unsettled vested PRSUs 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
June 30,
2024
2023
$ Change
% Change
Revenues
Variable
Fixed
Variable
Fixed
Variable
Fixed
Variable
Fixed
(dollars in thousands)
Rates
$
157,636
$
59,895
$
101,588
$
58,766
$
56,048
$
1,129
55.2
%
1.9
%
Credit
102,785
8,539
77,334
6,714
25,451
1,825
32.9
%
27.2
%
Equities
20,602
2,269
19,866
2,280
736
(11
)
3.7
%
(0.5
)%
Money Markets
13,695
4,350
11,535
4,299
2,160
51
18.7
%
1.2
%
Market Data
132
29,095
45
22,731
87
6,364
193.3
%
28.0
%
Other
—
5,953
—
5,455
—
498
—
9.1
%
Total revenue
$
294,850
$
110,101
$
210,368
$
100,245
$
84,482
$
9,856
40.2
%
9.8
%
TRADEWEB MARKETS INC.
AVERAGE VARIABLE FEES PER MILLION DOLLARS OF VOLUME
(UNAUDITED)
Three Months Ended
June 30,
YoY
2024
2023
% Change
Rates
$
2.00
$
2.10
(4.8
)%
Rates Cash
$
2.54
$
2.44
4.1
%
Rates Derivatives
$
1.69
$
1.83
(7.9
)%
Rates Derivatives (greater than 1
year)
$
2.71
$
2.75
(1.5
)%
Other Rates Derivatives (1)
$
0.20
$
0.23
(11.5
)%
Credit
$
55.33
$
65.37
(15.4
)%
Cash Credit (2)
$
145.18
$
164.93
(12.0
)%
Credit Derivatives, China Bonds and U.S.
Cash EP
$
7.76
$
8.52
(8.9
)%
Equities
$
15.39
$
16.60
(7.3
)%
Equities Cash
$
26.51
$
26.59
(0.3
)%
Equities Derivatives
$
5.62
$
6.14
(8.4
)%
Money Markets
$
0.35
$
0.38
(8.1
)%
Total
$
2.43
$
2.60
(6.3
)%
Total excluding Other Rates Derivatives
(3)
$
2.88
$
2.92
(1.3
)%
(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 Q2
2023 Q2
YoY
Asset Class
Product
ADV (USD mm)
Volume (USD mm)
ADV (USD mm)
Volume (USD mm)
ADV
Rates
Cash
$
462,335
$
29,121,086
$
344,674
$
21,627,623
34.14
%
U.S. Government Bonds
202,460
12,754,982
135,128
8,513,069
49.83
%
European Government Bonds
45,699
2,879,044
40,694
2,482,305
12.30
%
Mortgages
203,813
12,840,218
163,359
10,291,618
24.76
%
Other Government Bonds
10,363
646,843
5,493
340,631
88.66
%
Derivatives
787,132
49,552,512
429,285
26,633,837
83.36
%
Swaps/Swaptions ≥ 1Y
466,923
29,396,323
273,533
16,961,570
70.70
%
Swaps/Swaptions < 1Y
310,657
19,558,079
154,332
9,582,824
101.29
%
Futures
9,552
598,110
1,420
89,443
572.51
%
Total
1,249,467
78,673,598
773,959
48,261,459
61.44
%
Credit
Cash
16,844
1,047,204
10,627
662,558
58.50
%
U.S. High Grade - Fully
Electronic
6,480
408,223
3,963
249,667
63.51
%
U.S. High Grade - Electronically
Processed
2,913
183,514
2,694
169,696
8.14
%
U.S. High Yield - Fully
Electronic
773
48,712
568
35,765
36.20
%
U.S. High Yield - Electronically
Processed
247
15,549
317
19,998
(22.25
)%
European Credit
2,343
147,618
1,958
119,461
19.65
%
Municipal Bonds
369
23,274
308
19,412
19.89
%
Chinese Bonds
3,476
205,061
720
42,505
382.44
%
Other Credit Bonds
243
15,253
98
6,054
147.63
%
Derivatives
12,863
810,324
8,362
520,513
53.83
%
Swaps
12,863
810,324
8,362
520,513
53.83
%
Total
29,707
1,857,527
18,989
1,183,071
56.45
%
Equities
Cash
9,937
626,031
9,913
612,227
0.24
%
U.S. ETFs
7,286
459,042
7,547
467,930
(3.46
)%
European ETFs
2,651
166,989
2,366
144,297
12.05
%
Derivatives
11,318
713,035
9,444
584,528
19.85
%
Convertibles/Swaps/Options
7,982
502,841
6,340
392,306
25.89
%
Futures
3,336
210,194
3,103
192,221
7.51
%
Total
21,255
1,339,066
19,356
1,196,755
9.81
%
Money Markets
Cash
621,840
39,173,818
484,304
30,339,263
28.40
%
Repurchase Agreements (Repo)
600,947
37,859,666
465,955
29,184,397
28.97
%
Other Money Markets
20,893
1,314,152
18,349
1,154,866
13.87
%
Total
621,840
39,173,818
484,304
30,339,263
28.40
%
ADV (USD mm)
Volume (USD mm)
ADV (USD mm)
Volume (USD mm)
YoY
Total
$
1,922,270
$
121,044,010
$
1,296,607
$
80,980,548
48.3
%
(1)
We acquired Yieldbroker on August 31, 2023
and acquired r8fin on January 19, 2024. 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 only material assets consist of its 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
six months ended June 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 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/20240725918017/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
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