QUARTERLY CASH DIVIDEND RAISED BY 11.1% to $0.10 PER
SHARE
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 fourth quarter
and full year ended December 31, 2023.
$370.0 million quarterly revenues increased 26.3%
(24.6% on a constant currency basis) compared to prior year
period
$1.7 trillion average daily volume (“ADV”) for the
quarter, an increase of 56.9% compared to prior year period;
quarterly ADV records in fully electronic U.S. High Grade credit,
U.S. government bonds, equity convertibles/swaps/options, global
repurchase agreements and swaps/swaptions ≥ 1-year; record
17.2% share of fully electronic U.S. High Grade TRACE
$103.7 million net income and $151.9 million
adjusted net income for the quarter, increases of 4.8% and
30.0% respectively from prior year period
53.0% adjusted EBITDA margin and $195.9 million
adjusted EBITDA for the quarter, compared to 52.8% and $154.7
million respectively for prior year period
$0.42 diluted earnings per share (“Diluted EPS”) and
$0.64 adjusted diluted earnings per share for the
quarter
$0.10 per share quarterly cash dividend declared, an
11.1% per share increase from prior year period
Billy Hult, CEO of Tradeweb: "Tradeweb performed
exceptionally well operationally and financially in 2023, a year
with no shortage of macro challenges. We invested in growing our
international footprint across new geographies and expanded our
product offerings through two strategic acquisitions, r8fin and
Yieldbroker. Keeping with this growth mindset, we announced a
series of new or expanded partnerships with FTSE Russell, LSEG Data
& Analytics and BlackRock. Capitalizing on organic
opportunities, we grew market share across our global businesses
and helped clients stay in front of important trends such as
multi-asset class and algorithmic trading. In credit, we reached a
record 17.2% share of fully electronic U.S. High Grade TRACE in the
fourth quarter. Our successes over the past year have led to our
24th consecutive year of revenue growth and profitability,
positioning us well for future opportunities. I am proud of what we
accomplished in 2023 and pleased with our strong start to
2024."
SELECT FINANCIAL RESULTS
4Q23
4Q22
Change
Constant
Currency
Change (1)
(dollars in thousands except per share
amounts)(Unaudited)
GAAP Financial Measures
Total revenue
$
370,000
$
293,042
26.3
%
24.6
%
Rates
$
191,743
$
145,314
32.0
%
30.1
%
Credit
$
104,267
$
83,393
25.0
%
23.6
%
Equities
$
26,056
$
23,003
13.3
%
10.7
%
Money Markets
$
16,606
$
13,299
24.9
%
23.8
%
Market Data
$
25,908
$
22,295
16.2
%
15.3
%
Other
$
5,420
$
5,738
(5.5
)%
(5.6
)%
Net income
$
103,741
$
99,002
4.8
%
Net income attributable to Tradeweb
Markets Inc. (2)
$
89,314
$
88,946
0.4
%
Diluted EPS
$
0.42
$
0.42
0.0
%
Net income margin
28.0
%
33.8
%
-575
bps
Non-GAAP Financial Measures
Adjusted EBITDA (1)
$
195,943
$
154,749
26.6
%
27.6
%
Adjusted EBITDA margin (1)
53.0
%
52.8
%
15
bps
122
bps
Adjusted EBIT (1)
$
180,957
$
141,439
27.9
%
29.0
%
Adjusted EBIT margin (1)
48.9
%
48.3
%
64
bps
166
bps
Adjusted Net Income (1)
$
151,937
$
116,875
30.0
%
31.1
%
Adjusted Diluted EPS (1)
$
0.64
$
0.49
30.6
%
30.6
%
(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
4Q23
4Q22
YoY
Rates
Cash
$
398
$
318
25.1%
Derivatives
690
311
121.8%
Total
1,088
629
72.9%
Credit
Cash
14
10
41.2%
Derivatives
10
11
(13.8)%
Total
24
22
12.0%
Equities
Cash
11
10
15.2%
Derivatives
12
8
63.4%
Total
24
17
36.6%
Money Markets
Cash
541
401
35.1%
Total
541
401
35.1%
Total
$
1,677
$
1,069
56.9%
DISCUSSION OF RESULTS: FOURTH QUARTER 2023
Rates – Revenues of $191.7 million in the fourth quarter
of 2023 increased 32.0% compared to prior year period (increased
30.1% on a constant currency basis). Rates ADV was up 72.9% from
prior year period, as heightened interest rate volatility and
continued market share gains drove record volume in swaps/swaptions
≥ 1-year and U.S. government bonds. European government bonds
reported a 21.6% ADV increase from prior year period, supported by
sustained rates market volatility and wallet share gains across
hedge fund clients, while Mortgages ADV was up 20.8% reflecting
increased institutional client activity as well as growing adoption
of our specified pool trading platform.
Credit – Revenues of $104.3 million in the fourth quarter
of 2023 increased 25.0% compared to prior year period (increased
23.6% on a constant currency basis). Credit ADV was up 12.0% from
prior year period, as strong U.S. credit volumes, most notably
record ADV in fully electronic U.S. High Grade credit, reflected
continued client adoption across Tradeweb protocols, including
request-for-quote (RFQ), Tradeweb AllTrade® and portfolio trading.
European Credit ADV was up 28.5% from prior year period, driven by
strong activity in portfolio trading, sessions-based trading, RFQ,
Tradeweb AllTrade and Tradeweb Automated Intelligent Execution
(AiEX). Our share of fully electronic TRACE for U.S. High Grade was
a record 17.2%, up 284 bps from prior year period, and U.S. High
Yield was 6.7%, unchanged from prior year period.
Equities – Revenues of $26.1 million in the fourth
quarter of 2023 increased 13.3% compared to prior year period
(increased 10.7% on a constant currency basis). Equities ADV was up
36.6% from prior year period, driven by strong U.S. and European
ETF institutional activity.
Money Markets – Revenues of $16.6 million in the fourth
quarter of 2023 increased 24.9% compared to prior year period
(increased 23.8% on a constant currency basis). Money Markets ADV
was up 35.1% 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 $25.9 million in the fourth
quarter of 2023 increased 16.2% compared to prior year period
(increased 15.3% on a constant currency basis). The increase was
derived primarily from increased proprietary third party market
data fees and increased LSEG market data fees driven primarily by
the amended and restated market data license agreement effective as
of November 1, 2023 and increased trade reporting services (APA)
revenue.
Other – Revenues of $5.4 million in the fourth quarter of
2023 remained relatively flat with a decrease of 5.5% compared to
prior year period (decreased 5.6% on a constant currency
basis).
Operating Expenses of $228.4 million in the fourth
quarter of 2023 increased 13.3% compared to $201.5 million in the
prior year period, primarily due to an increase in headcount and
related salaries and benefits as well as increases in incentive
compensation expense and commissions tied to our operating
performance.
Adjusted Expenses of $189.0 million in the fourth quarter
of 2023 increased 24.7% (increased 20.7% on a constant currency
basis) compared to prior year period primarily due to higher
expenses related to employee compensation and benefits. Please see
"Non-GAAP Financial Measures" below for additional information.
DISCUSSION OF RESULTS: FULL-YEAR 2023
Tradeweb recorded its 24th consecutive year of record revenues
for the year ended December 31, 2023, as total revenue increased
12.6% (increased 12.2% on a constant currency basis) to $1.3
billion compared to full year 2022. Revenue was driven by average
daily trading volume of more than $1.4 trillion and record activity
in each of the following: ADV in U.S. government bonds, European
government bonds, swaps/swaptions ≥ 1-year, fully electronic U.S.
High Grade and U.S. High Yield credit, European credit, Chinese
bonds, U.S. ETFs, equity convertibles/swaps/options, global
repurchase agreements and record share of fully electronic U.S.
High Grade and U.S. High Yield TRACE of 15.5% and 6.6%,
respectively. Net income increased 16.7% to $419.5 million for the
year ended December 31, 2023, compared to $359.6 million in 2022.
Adjusted EBITDA margin increased to 52.4% for the year ended
December 31, 2023 compared to 51.9% in 2022, representing an
increase of 49 bps (+100 bps on a constant currency basis). Diluted
EPS increased 15.5% to $1.71 for the year ended December 31, 2023.
Adjusted Diluted EPS increased 18.9% to $2.26 for the year ended
December 31, 2023.
RECENT HIGHLIGHTS
January 2024
- Completed the acquisition of r8fin, a technology provider that
specializes in algorithmic-based execution for U.S. Treasuries and
interest rate futures.
Fourth Quarter 2023
- Announced a strategic partnership with FTSE Russell to develop
the next generation of fixed income index pricing and index trading
products.
- Introduced the next phase of Tradeweb's previously announced
platform integration with BlackRock’s Aladdin order execution
management system (OEMS), enabling Aladdin users trading U.S. and
European credit access to enhanced liquidity via Tradeweb AllTrade,
Tradeweb’s network of anonymous liquidity connecting institutional,
wholesale and retail markets.
- Signed a new market data license agreement with LSEG Data &
Analytics (formerly Refinitiv) to distribute certain Tradeweb
market data through LSEG’s Enterprise Data Solutions and
Workspace.
- Recognized in numerous awards celebrating our company, as well
as our outstanding and diverse talent, including: OTC Trading
Platform of the Year (Risk Awards); Twenty Most Influential in
Trading and Technology - Enrico Bruni (Financial News); U.S. Women
in Finance Awards, Rising Star - Caroline Baron (Markets Media);
U.S. Women in Finance Awards, Trailblazer - Lisa Schirf (Markets
Media); ETF Stream Awards, RFQ Platform of the Year (ETF Stream);
New Leaders in Trading Awards, Outstanding Fixed Income Trading
Platform (The Trade); Most Disruptive Technology Solution (With
Intelligence)
CAPITAL MANAGEMENT
- $1.7 billion in cash and cash equivalents and an undrawn $500.0
million credit facility at December 31, 2023
- In November 2023, Tradeweb entered into a new five-year $500.0
million unsecured revolving credit facility, replacing our prior
facility that was scheduled to mature in April 2024
- Non-acquisition cash capital expenditures and capitalized
software development in the fourth quarter 2023 of $12.2 million
and $61.8 million in full-year 2023
- Free cash flow for the year ended December 31, 2023 of $684.3
million, up 19.5% compared to prior year period. See “Non-GAAP
Financial Measures” for additional information
- During the year ended December 31, 2023, as part of its share
repurchase program, Tradeweb purchased a total of 485,730 shares of
Class A common stock, at an average price of $72.48, for purchases
totaling $35.2 million. As of December 31, 2023, a total of $239.8
million remained available for repurchase pursuant to the current
share repurchase program authorization. There were no shares
repurchased during the fourth quarter of 2023
- $2.0 million in shares of Class A common stock were withheld in
the fourth quarter of 2023 and $51.5 million in shares of Class A
common stock were withheld in the full-year 2023 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 of Directors declared a quarterly cash dividend of
$0.10 per share of Class A common stock and Class B common stock, a
11.1% per share increase from prior year. The dividend will be
payable on March 15, 2024 to stockholders of record as of March 1,
2024
OTHER MATTERS
Full-Year 2024 Guidance*
*GAAP operating expenses and tax rate guidance are not provided
due to the inherent difficulty in quantifying certain amounts due
to a variety of factors including the unpredictability in the
movement of foreign currency rates. Expense guidance assumes an
average 2024 Sterling/US$ foreign exchange rate of 1.24 and
includes completed M&A transactions.
CONFERENCE CALL
Tradeweb Markets will hold a conference call to discuss fourth
quarter and full year 2023 results starting at 9:30 AM EST today,
February 6, 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/nmw25trc/
- To join the call via phone, please register in advance here:
https://register.vevent.com/register/BIe0fa0c25d4934e47a992aa38aac17a1a.
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 $1.4 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
Quarter Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
Revenues
(in thousands, except share and
per share data)
Transaction fees and commissions
$
301,800
$
232,780
$
1,078,344
$
950,269
Subscription fees
47,489
41,585
183,972
165,922
LSEG market data fees
17,821
16,367
64,336
62,721
Other
2,890
2,310
11,567
9,869
Total revenue
370,000
293,042
1,338,219
1,188,781
Expenses
Employee compensation and benefits
125,872
101,820
460,305
432,421
Depreciation and amortization
47,500
44,881
185,350
178,879
Technology and communications
21,505
17,231
77,506
65,857
General and administrative
19,803
21,755
51,495
46,561
Professional fees
10,043
11,932
42,364
37,764
Occupancy
3,647
3,869
15,930
14,726
Total expenses
228,370
201,488
832,950
776,208
Operating income
141,630
91,554
505,269
412,573
Tax receivable agreement liability
adjustment
(9,517
)
13,653
(9,517
)
13,653
Net interest income (expense)
20,285
8,400
65,350
11,907
Other income (loss), net
(11,100
)
(1,000
)
(13,122
)
(1,000
)
Income before taxes
141,298
112,607
547,980
437,133
Provision for income taxes
(37,557
)
(13,605
)
(128,477
)
(77,520
)
Net income
103,741
99,002
419,503
359,613
Less: Net income attributable to
non-controlling interests
14,427
10,056
54,637
50,275
Net income attributable to Tradeweb
Markets Inc.
$
89,314
$
88,946
$
364,866
$
309,338
Earnings per share attributable to
Tradeweb Markets Inc. Class A and B common stockholders:
Basic
$
0.42
$
0.43
$
1.73
$
1.50
Diluted
$
0.42
$
0.42
$
1.71
$
1.48
Weighted average shares outstanding:
Basic
211,843,460
207,978,371
210,796,802
205,576,637
Diluted
213,833,001
210,329,656
212,668,808
208,400,040
TRADEWEB MARKETS INC.
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES (UNAUDITED)
Reconciliation of Net Income to
Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EBIT and Adjusted
EBIT Margin
Quarter Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
(dollars in thousands)
Net income
$
103,741
$
99,002
$
419,503
$
359,613
Merger and acquisition transaction and
integration costs (1)
1,631
1,029
8,042
1,069
Net interest (income) expense
(20,285
)
(8,400
)
(65,350
)
(11,907
)
Depreciation and amortization
47,500
44,881
185,350
178,879
Stock-based compensation expense (2)
987
6,570
2,947
20,409
Provision for income taxes
37,557
13,605
128,477
77,520
Foreign exchange (gains) / losses (3)
4,195
10,715
(47
)
4,409
Tax receivable agreement liability
adjustment (4)
9,517
(13,653
)
9,517
(13,653
)
Other (income) loss, net
11,100
1,000
13,122
1,000
Adjusted EBITDA
$
195,943
$
154,749
$
701,561
$
617,339
Less: Depreciation and amortization
(47,500
)
(44,881
)
(185,350
)
(178,879
)
Add: D&A related to acquisitions and
the Refinitiv Transaction (5)
32,514
31,571
127,731
126,659
Adjusted EBIT
$
180,957
$
141,439
$
643,942
$
565,119
Net income margin (6)
28.0
%
33.8
%
31.3
%
30.3
%
Adjusted EBITDA margin (6)
53.0
%
52.8
%
52.4
%
51.9
%
Adjusted EBIT margin (6)
48.9
%
48.3
%
48.1
%
47.5
%
(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 quarter and year ended
December 31, 2022, this adjustment also includes $5.6 million and
$15.0 million, respectively, of non-cash accelerated stock-based
compensation expense and related payroll taxes associated with our
retired CEO.
(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.
Reconciliation of Net Income to
Adjusted Net Income and Adjusted Diluted EPS
Quarter Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
(in thousands, except per
share amounts)
Earnings per diluted share
$
0.42
$
0.42
$
1.71
$
1.48
Net income attributable to Tradeweb
Markets Inc.
$
89,314
$
88,946
$
364,866
$
309,338
Net income attributable to non-controlling
interests (1)
14,427
10,056
54,637
50,275
Net income
103,741
99,002
419,503
359,613
Provision for income taxes
37,557
13,605
128,477
77,520
Merger and acquisition transaction and
integration costs (2)
1,631
1,029
8,042
1,069
D&A related to acquisitions and the
Refinitiv Transaction (3)
32,514
31,571
127,731
126,659
Stock-based compensation expense (4)
987
6,570
2,947
20,409
Foreign exchange (gains) / losses (5)
4,195
10,715
(47
)
4,409
Tax receivable agreement liability
adjustment (6)
9,517
(13,653
)
9,517
(13,653
)
Other (income) loss, net
11,100
1,000
13,122
1,000
Adjusted Net Income before income
taxes
201,242
149,839
709,292
577,026
Adjusted income taxes (7)
(49,305
)
(32,964
)
(173,777
)
(126,946
)
Adjusted Net Income
$
151,937
$
116,875
$
535,515
$
450,080
Adjusted Diluted EPS (8)
$
0.64
$
0.49
$
2.26
$
1.90
(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 quarter and year ended
December 31, 2022, this adjustment also includes $5.6 million and
$15.0 million, respectively, of non-cash accelerated stock-based
compensation expense and related payroll taxes associated with our
retired CEO.
(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 24.5% applied to Adjusted Net
Income before income taxes for the quarter and year ended December
31, 2023 and 22.0% for the quarter and year ended December 31,
2022.
(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
Quarter Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
Diluted weighted average shares of Class A
and Class B common stock outstanding
213,833,001
210,329,656
212,668,808
208,400,040
Weighted average of other participating
securities (1)
281,059
382,800
270,249
193,441
Assumed exchange of LLC Interests for
shares of Class A or Class B common stock (2)
23,079,809
26,347,881
23,902,379
28,830,686
Adjusted diluted weighted average shares
outstanding
237,193,869
237,060,337
236,841,436
237,424,167
Adjusted Net Income (in thousands)
$
151,937
$
116,875
$
535,515
$
450,080
Adjusted Diluted EPS
$
0.64
$
0.49
$
2.26
$
1.90
(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.
Reconciliation of Operating Expenses to
Adjusted Expenses
Quarter Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
(in thousands)
Operating expenses
$
228,370
$
201,488
$
832,950
$
776,208
Merger and acquisition transaction and
integration costs (1)
(1,631
)
(1,029
)
(8,042
)
(1,069
)
D&A related to acquisitions and the
Refinitiv Transaction (2)
(32,514
)
(31,571
)
(127,731
)
(126,659
)
Stock-based compensation expense (3)
(987
)
(6,570
)
(2,947
)
(20,409
)
Foreign exchange gains / (losses) (4)
(4,195
)
(10,715
)
47
(4,409
)
Adjusted Expenses
$
189,043
$
151,603
$
694,277
$
623,662
(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 quarter and year ended
December 31, 2022, this adjustment also includes $5.6 million and
$15.0 million, respectively, of non-cash accelerated stock-based
compensation expense and related payroll taxes associated with our
retired CEO.
(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.
Year Ended December
31,
Reconciliation of Cash Flow from
Operating Activities to Free Cash Flow
2023
2022
(in thousands)
Cash flow from operating activities
$
746,089
$
632,822
Less: Capitalization of software
development costs
(43,235
)
(36,882
)
Less: Purchases of furniture, equipment
and leasehold improvements
(18,529
)
(23,214
)
Free Cash Flow
$
684,325
$
572,726
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.:
EPS: Net income attributable to
Tradeweb Markets Inc.
Quarter Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
(in thousands, except share
and per share amounts)
Numerator:
Net income attributable to Tradeweb
Markets Inc.
$
89,314
$
88,946
$
364,866
$
309,338
Less: Distributed and undistributed
earnings allocated to unvested RSUs and unsettled vested PRSUs
(1)
(118
)
(163
)
(467
)
(244
)
Net income attributable to outstanding
shares of Class A and Class B common stock - Basic and Diluted
$
89,196
$
88,783
$
364,399
$
309,094
Denominator:
Weighted average shares of Class A and
Class B common stock outstanding - Basic
211,843,460
207,978,371
210,796,802
205,576,637
Dilutive effect of PRSUs
691,150
694,635
458,343
770,726
Dilutive effect of options
877,866
1,420,913
1,150,159
1,810,956
Dilutive effect of RSUs
394,812
235,737
257,076
241,721
Dilutive effect of PSUs
25,713
—
6,428
—
Weighted average shares of Class A and
Class B common stock outstanding - Diluted
213,833,001
210,329,656
212,668,808
208,400,040
Earnings per share - Basic
$
0.42
$
0.43
$
1.73
$
1.50
Earnings per share - Diluted
$
0.42
$
0.42
$
1.71
$
1.48
(1)
During the quarters ended
December 31, 2023 and 2022, there was a total of 281,059 and
382,800, respectively, and during the years ended December 31, 2023
and 2022, there was a total of 270,249 and 193,441, 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)
Quarter Ended
Quarter Ended
Year Ended
Year Ended
December 31, 2023
December 31, 2022
December 31, 2023
December 31, 2022
Revenues
Variable
Fixed
Variable
Fixed
Variable
Fixed
Variable
Fixed
(in thousands)
Rates
$
132,248
$
59,495
$
90,384
$
54,930
$
462,132
$
233,302
$
383,780
$
221,626
Credit
96,799
7,468
76,891
6,502
338,981
28,413
305,760
26,043
Equities
23,673
2,383
20,825
2,178
86,003
9,292
84,354
9,120
Money Markets
12,448
4,158
8,867
4,432
45,830
17,180
32,306
17,652
Market Data
108
25,800
—
22,295
268
93,806
—
85,913
Other
—
5,420
—
5,738
—
23,012
—
22,227
Total revenue
$
265,276
$
104,724
$
196,967
$
96,075
$
933,214
$
405,005
$
806,200
$
382,581
TRADEWEB MARKETS INC.
AVERAGE VARIABLE FEES PER MILLION
DOLLARS OF VOLUME (UNAUDITED)
Quarter Ended December
31,
YoY
2023
2022
% Change
Rates
$
1.95
$
2.33
(16.2
)%
Rates Cash
$
2.47
$
2.42
1.9
%
Rates Derivatives
$
1.66
$
2.24
(26.0
)%
Rates Derivatives (greater than 1
year)
$
2.36
$
3.31
(28.6
)%
Other Rates Derivatives (1)
$
0.21
$
0.28
(23.9
)%
Credit
$
64.64
$
57.95
11.5
%
Cash Credit (2)
$
168.34
$
175.91
(4.3
)%
Credit Derivatives, China Bonds and U.S.
Cash “EP”
$
7.90
$
8.45
(6.6
)%
Equities
$
15.97
$
19.18
(16.8
)%
Equities Cash
$
27.92
$
29.60
(5.7
)%
Equities Derivatives
$
5.38
$
6.09
(11.7
)%
Money Markets
$
0.37
$
0.36
2.8
%
Total
$
2.54
$
3.00
(15.3
)%
Total excluding Other Rates Derivatives
(3)
$
2.91
$
3.31
(12.2
)%
(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)
2023 Q4
2022 Q4
YoY
Asset Class
Product
ADV (USD mm)
Volume (USD mm)
ADV (USD mm)
Volume (USD mm)
ADV
Rates
Cash
$
397,987
$
24,713,720
$
318,194
$
19,481,112
25.08
%
U.S. Government Bonds
162,335
10,064,801
126,182
7,697,129
28.65
%
European Government Bonds
40,491
2,550,927
33,305
2,098,195
21.58
%
Mortgages
185,883
11,524,751
153,847
9,384,660
20.82
%
Other Government Bonds
9,278
573,241
4,860
301,128
90.92
%
Derivatives
689,759
43,034,657
311,012
19,271,117
121.78
%
Swaps/Swaptions ≥ 1Y
462,960
28,881,153
201,759
12,504,981
129.46
%
Swaps/Swaptions < 1Y
223,305
13,936,828
107,597
6,665,075
107.54
%
Futures
3,494
216,676
1,656
101,061
110.94
%
Total
1,087,746
67,748,378
629,206
38,752,229
72.88
%
Credit
Cash
14,292
882,254
10,120
619,806
41.22
%
U.S. High Grade - Fully
Electronic
5,133
318,233
3,634
221,647
41.26
%
U.S. High Grade - Electronically
Processed
2,500
154,992
2,595
158,294
(3.67
) %
U.S. High Yield - Fully
Electronic
642
39,821
581
35,463
10.48
%
U.S. High Yield - Electronically
Processed
300
18,620
288
17,543
4.42
%
European Credit
2,044
128,744
1,591
100,203
28.48
%
Municipal Bonds
455
28,182
458
27,962
(0.84
)%
Chinese Bonds
2,984
179,033
863
51,781
245.75
%
Other Credit Bonds
234
14,630
111
6,914
111.49
%
Derivatives
9,864
615,208
11,443
706,958
(13.80
)%
Swaps
9,864
615,208
11,443
706,958
(13.80
)%
Total
24,155
1,497,462
21,563
1,326,763
12.02
%
Equities
Cash
11,054
696,382
9,595
604,516
15.20
%
U.S. ETFs
8,308
523,375
7,314
460,799
13.58
%
European ETFs
2,746
173,007
2,281
143,718
20.38
%
Derivatives
12,481
786,315
7,637
481,130
63.43
%
Convertibles/Swaps/Options
8,503
535,669
4,377
275,727
94.28
%
Futures
3,979
250,646
3,260
205,403
22.03
%
Total
23,535
1,482,697
17,232
1,085,646
36.57
%
Money Markets
Cash
541,403
33,641,288
400,884
24,585,919
35.05
%
Repurchase Agreements (Repo)
524,267
32,578,527
383,070
23,498,024
36.86
%
Other Money Markets
17,136
1,062,761
17,813
1,087,895
(3.81
)%
Total
541,403
33,641,288
400,884
24,585,919
35.05
%
ADV (USD mm)
Volume (USD mm)
ADV (USD mm)
Volume (USD mm)
YoY
Total
$
1,676,839
$
104,369,825
$
1,068,886
$
65,750,558
56.90
%
(1)
Total volume across Rates (Cash
and Derivatives), Credit and Money Markets include Australia and
New Zealand estimated volumes from the Yieldbroker business that
Tradeweb acquired on August 31, 2023.
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 AND FULL YEAR RESULTS
The interim and full year financial results presented herein for
the three months and the year ended December 31, 2023 and 2022 are
unaudited.
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, 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/20240202926437/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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