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, 2023.
$310.6 million quarterly revenues, an increase of
4.5% (4.4% on a constant currency basis) compared to
prior year period
$1.3 trillion average daily volume (“ADV”) for the
quarter, an increase of 10.2% compared to prior year period;
quarterly ADV records in global repurchase agreements and equity
convertibles/swaps/options, and a record 14.9% share of
fully electronic U.S. High Grade TRACE
$101.9 million net income and $123.7 million
adjusted net income for the quarter, increases of 24.9% and
10.8% respectively from prior year period
52.5% adjusted EBITDA margin and $163.1 million
adjusted EBITDA for the quarter, compared to 52.4% and $155.6
million respectively for prior year period
$0.42 diluted earnings per share (“Diluted EPS”) for the
quarter and $0.52 adjusted diluted earnings per share
$0.09 per share quarterly cash dividend declared; $7.6
million of shares repurchased
Billy Hult, CEO of Tradeweb:
“Market conditions steadily improved during the second quarter,
with our business performing well against a backdrop of mixed
markets. We produced double-digit revenue growth across global
government bonds, U.S. and European Credit, equity derivatives, and
money markets. In Credit, we captured a record 16.0% share of
fully-electronic U.S. High Grade TRACE for the month of June and a
record 14.9% for the quarter. It was not long ago that our share of
U.S. High Grade was in the single digits, and we remain confident
in our ability to realize continued market share growth. More
broadly, one theme playing a huge role across all of our markets is
automation. Average daily trades through our AiEX automation tool
grew by 90% in Treasuries and 70% in Credit this quarter compared
with prior year period. In Market Data, we continue to evolve our
Ai-Price bond-pricing engine with new innovations such as this
quarter’s launch of benchmark closing prices for European
government bonds with FTSE Russell.”
SELECT FINANCIAL
RESULTS
2Q23
2Q22
Change
Constant
Currency
Change(1)
(dollars in thousands except per share
amounts)(Unaudited)
GAAP Financial Measures
Total revenue
$
310,613
$
297,138
4.5
%
4.4
%
Rates
$
160,354
$
151,586
5.8
%
5.6
%
Credit
$
84,048
$
83,991
0.1
%
0.1
%
Equities
$
22,146
$
22,659
(2.3
)%
(2.9
)%
Money Markets
$
15,834
$
12,166
30.1
%
30.0
%
Market Data
$
22,776
$
21,030
8.3
%
8.2
%
Other
$
5,455
$
5,706
(4.4
)%
(4.4
)%
Net income
$
101,939
$
81,600
24.9
%
Net income attributable to Tradeweb Markets Inc. (2)
$
89,082
$
68,344
30.3
%
Diluted EPS
$
0.42
$
0.33
27.3
%
Net income margin
32.8
%
27.5
%
+536
bps
Non-GAAP Financial Measures
Adjusted EBITDA (1)
$
163,055
$
155,621
4.8
%
4.9
%
Adjusted EBITDA margin (1)
52.5
%
52.4
%
+12
bps
+27
bps
Adjusted EBIT (1)
$
148,797
$
142,612
4.3
%
4.5
%
Adjusted EBIT margin (1)
47.9
%
48.0
%
-9
bps
+5
bps
Adjusted Net Income (1)
$
123,749
$
111,659
10.8
%
11.1
%
Adjusted Diluted EPS (1)
$
0.52
$
0.47
10.6
%
10.6
%
(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
2Q23
2Q22
YoY
Rates
Cash
$
345
$
341
1.0
%
Derivatives
429
368
16.8
%
Total
774
709
9.2
%
Credit
Cash
11
10
4.2
%
Derivatives
8
16
(49.3
)%
Total
19
27
(28.8
)%
Equities
Cash
10
10
(0.3
)%
Derivatives
9
7
39.7
%
Total
19
17
15.9
%
Money Markets
Cash
484
424
14.2
%
Total
484
424
14.2
%
Total
$
1,297
$
1,176
10.2
%
DISCUSSION OF RESULTS
Rates – Revenues of $160.4 million in the second quarter
of 2023 increased 5.8% compared to prior year period (5.6% increase
on a constant currency basis). Rates ADV was up 9.2% from prior
year period, driven by strong volumes in swaps/swaptions ≥ 1-year
led in part by heightened trading in shorter dated instruments and
42% increase in compression and LIBOR-transition related activity
as compared to prior year period. U.S. and European government bond
volumes were supported by sustained rates market volatility.
Credit – Revenues of $84.0 million in the second quarter
of 2023 increased 0.1% compared to prior year period (the same
percentage increase on a constant currency basis). Credit ADV was
down 28.8% from prior year period, as lower credit derivatives
volumes reflected an overall decline in broader swap execution
facility (SEF) market activity. Our share of fully electronic TRACE
for U.S. High Grade was a record 14.9%, up 200 bps compared with
prior year period, while U.S. High Yield was 6.2%, same as prior
year period.
Equities – Revenues of $22.1 million in the second
quarter of 2023 decreased 2.3% compared to prior year period (2.9%
decrease on a constant currency basis). Equities ADV was up 15.9%
from prior year period and we reported record ADV in equity
convertibles/swaps/options in the quarter. U.S. ETF growth was
driven by strong wholesale activity, while institutional client
engagement remained robust. European ETF volumes reflected
declining overall market volumes.
Money Markets – Revenues of $15.8 million in the second
quarter of 2023 increased 30.1% compared to prior year period
(30.0% increase on a constant currency basis), driven by growth in
our retail CDs and continued organic growth in institutional
repurchase agreements. Money Markets ADV was up 14.2% from prior
year period, led by record activity in global repurchase agreements
and continued client adoption of Tradeweb's electronic trading
solutions.
Market Data – Revenues of $22.8 million in the second
quarter of 2023 increased 8.3% compared to prior year period (8.2%
increase on a constant currency basis). The increase was derived
primarily from increased proprietary third party market data
revenue.
Other – Revenues of $5.5 million in the second quarter of
2023 decreased 4.4% compared to prior year period (the same
percentage decrease on a constant currency basis).
Operating Expenses of $194.3 million in the second
quarter of 2023 increased 2.0% compared to $190.5 million in prior
year period due to higher general and administrative expenses,
higher technology and communications expenses and higher
professional fee expenses. These increases were partially offset by
a decrease in expenses related to employee compensation and
benefits, primarily due to decreases in incentive compensation.
Adjusted Expenses of $161.8 million increased 4.7% (4.3%
increase on a constant currency basis) compared to prior year
period due to higher technology and communications expenses, higher
general and administrative expenses and higher depreciation and
amortization. Please see "Non-GAAP Financial Measures" below for
additional information.
RECENT HIGHLIGHTS
Second Quarter 2023
- Tradeweb agreed to acquire Yieldbroker, a leading Australian
trading platform for Australian and New Zealand government bonds
and interest rate derivatives covering the institutional,
wholesale, and primary markets, subject to customary closing
conditions and regulatory approvals
- Tradeweb jointly announced a collaboration with Euroclear and
Informa Global Markets to automate the security identification and
setup process for soon-to-be issued syndicated Eurobonds in the
primary market
- Tradeweb facilitated its first transactions on Swap Connect,
China’s new electronic trading channel for CNY interest rate swaps
(IRS). Tradeweb is currently the only international electronic
trading platform that supports both request-for-quote (RFQ) and
click-to-trade (CTT) execution protocols on Swap Connect
- Tradeweb, Bloomberg and MarketAxess entered into a joint
venture agreement to establish an independent company for the
purpose of participating in the public procurement procedure to
become the fixed income consolidated tape provider in the European
Union, all subject to relevant regulatory approvals
- Tradeweb collaborated with FTSE Russell to launch benchmark
closing prices for European government bonds
- Tradeweb was recognized in numerous awards celebrating our
company, including: Portfolio Awards, Best Web Video (Financial
Communications Society), Portfolio Awards, Best Digital Collateral
(Financial Communications Society), Portfolio Awards, Best Organic
Social Media (Financial Communications Society), Inside Market Data
& Inside Reference Data Awards, Best Real-Time Market Data
Initiative (WatersTechnology), Excellence in Trading & Tech
Awards, Best Fixed Income Trading Platform (Financial News),
Excellence in Trading & Tech Awards and Best OTC Trading
Platform (Financial News)
- Jacques Aigrain succeeded Lee Olesky as Chair of the Board of
Directors (the "Board") effective July 1, 2023. Mr. Olesky retired
from the Board at the end of the second quarter of 2023.
- Catherine Johnson was elected to the Board at the 2023 Annual
Meeting held on May 15, 2023. In addition, each of current
directors Troy Dixon, Scott Ganeles and Murray Roos was elected to
serve another term on the Board at the 2023 Annual Meeting
CAPITAL MANAGEMENT
- $1.4 billion in cash and cash equivalents and an undrawn $500
million credit facility at June 30, 2023
- Cash capital expenditures and capitalization of software
development in the second quarter 2023: $15.0 million
- Free cash flow for the trailing twelve months ended June 30,
2023 of $634.8 million, up 17.9% compared to prior year period. See
“Non-GAAP Financial Measures” for additional information
- During the second quarter of 2023, as part of its share
repurchase program, Tradeweb purchased 107,365 shares of Class A
common stock, at an average price of $70.81, for purchases totaling
$7.6 million. As of June 30, 2023, a total of $244.7 million
remained available for repurchase pursuant to the share repurchase
program
- $1.9 million in shares of Class A common stock were withheld in
the second quarter of 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 declared a quarterly cash dividend of $0.09 per share
of Class A common stock and Class B common stock. The dividend will
be payable on September 15, 2023 to stockholders of record as of
September 1, 2023
OTHER MATTERS
Unchanged Full-Year 2023 Guidance*
- Adjusted Expenses: $669 - 714 million
- Acquisition and Refinitiv Transaction related depreciation and
amortization expense: $127 million
- Assumed non-GAAP tax rate: ~24% - 25%
- Cash costs of capital expenditures and capitalized software
development: $56 - 62 million
*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.
Current guidance is not reflective of any impact as a result of the
pending 2023 Yieldbroker acquisition.
CONFERENCE CALL
Tradeweb Markets will hold a conference call to discuss second
quarter 2023 results starting at 9:30 AM EDT today, July 27, 2023.
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/hfxjvxw7
- To join the call via phone, please register in advance here:
https://register.vevent.com/register/BIfc63e47c64dc4781a0582131daf2e918
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 40 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
approximately 2,500 clients in more than 65 countries. On average,
Tradeweb facilitated more than $1.2 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
Dollars in Thousands, Except Per Share
Data
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
Revenues
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Transaction fees and commissions
$
246,461
$
237,669
$
513,059
$
489,474
Subscription fees
45,748
41,540
90,122
82,995
Refinitiv market data fees
15,461
15,426
31,055
30,984
Other
2,943
2,503
5,626
5,171
Total revenue
310,613
297,138
639,862
608,624
Expenses
Employee compensation and benefits
103,924
109,890
218,417
227,881
Depreciation and amortization
45,887
44,770
91,291
89,220
Technology and communications
18,701
16,034
36,268
31,810
General and administrative
11,072
7,601
24,992
17,914
Professional fees
10,666
8,575
21,842
16,432
Occupancy
4,028
3,661
8,151
7,158
Total expenses
194,278
190,531
400,961
390,415
Operating income
116,335
106,607
238,901
218,209
Net interest income (expense)
15,109
541
27,600
94
Other income (loss), net
(456
)
—
(115
)
—
Income before taxes
130,988
107,148
266,386
218,303
Provision for income taxes
(29,049
)
(25,548
)
(62,254
)
(39,258
)
Net income
101,939
81,600
204,132
179,045
Less: Net income attributable to
non-controlling interests
12,857
13,256
27,194
27,736
Net income attributable to Tradeweb
Markets Inc.
$
89,082
$
68,344
$
176,938
$
151,309
Earnings per share attributable to
Tradeweb Markets Inc. Class A and B common stockholders:
Basic
$
0.42
$
0.33
$
0.84
$
0.74
Diluted
$
0.42
$
0.33
$
0.83
$
0.73
Weighted average shares outstanding:
Basic
211,569,728
204,501,035
209,847,153
204,282,406
Diluted
213,156,753
207,272,675
211,659,814
207,371,372
TRADEWEB MARKETS INC.
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES (UNAUDITED)
Dollars in Thousands, Except per Share
Data
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,
2023
2022
2023
2022
(dollars in thousands)
Net income
$
101,939
$
81,600
$
204,132
$
179,045
Merger and acquisition transaction and
integration costs (1)
1,212
15
1,797
(3
)
Net interest (income) expense
(15,109
)
(541
)
(27,600
)
(94
)
Depreciation and amortization
45,887
44,770
91,291
89,220
Stock-based compensation expense (2)
585
7,295
1,435
11,164
Provision for income taxes
29,049
25,548
62,254
39,258
Foreign exchange (gains) / losses (3)
(964
)
(3,066
)
1,834
(2,334
)
Tax receivable agreement liability
adjustment (4)
—
—
—
—
Other (income) loss, net
456
—
115
—
Adjusted EBITDA
$
163,055
$
155,621
$
335,258
$
316,256
Less: Depreciation and amortization
(45,887
)
(44,770
)
(91,291
)
(89,220
)
Add: D&A related to acquisitions and
the Refinitiv Transaction (5)
31,629
31,761
63,246
63,530
Adjusted EBIT
$
148,797
$
142,612
$
307,213
$
290,566
Net income margin (6)
32.8
%
27.5
%
31.9
%
29.4
%
Adjusted EBITDA margin (6)
52.5
%
52.4
%
52.4
%
52.0
%
Adjusted EBIT margin (6)
47.9
%
48.0
%
48.0
%
47.7
%
(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, 2022, this adjustment also includes $5.7 million and $7.4
million, respectively, of non-cash accelerated stock-based
compensation expense and related payroll taxes associated with our
former CFO and former 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 the NFI Acquisition 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,
2023
2022
2023
2022
(in thousands, except per
share amounts)
Earnings per diluted share
$
0.42
$
0.33
$
0.83
$
0.73
Net income attributable to Tradeweb
Markets Inc.
$
89,082
$
68,344
$
176,938
$
151,309
Net income attributable to non-controlling
interests (1)
12,857
13,256
27,194
27,736
Net income
101,939
81,600
204,132
179,045
Provision for income taxes
29,049
25,548
62,254
39,258
Merger and acquisition transaction and
integration costs (2)
1,212
15
1,797
(3
)
D&A related to acquisitions and the
Refinitiv Transaction (3)
31,629
31,761
63,246
63,530
Stock-based compensation expense (4)
585
7,295
1,435
11,164
Foreign exchange (gains) / losses (5)
(964
)
(3,066
)
1,834
(2,334
)
Tax receivable agreement liability
adjustment (6)
—
—
—
—
Other (income) loss, net
456
—
115
—
Adjusted Net Income before income
taxes
163,906
143,153
334,813
290,660
Adjusted income taxes (7)
(40,157
)
(31,494
)
(82,029
)
(63,946
)
Adjusted Net Income
$
123,749
$
111,659
$
252,784
$
226,714
Adjusted Diluted EPS (8)
$
0.52
$
0.47
$
1.07
$
0.95
(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 the NFI Acquisition 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, 2022, this adjustment also includes $5.7 million and $7.4
million, respectively, of non-cash accelerated stock-based
compensation expense and related payroll taxes associated with our
former CFO and former 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 three and six months ended June 30,
2023 and 22.0% for the three and six months ended June 30,
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:
Three Months Ended
Six Months Ended
June 30,
June 30,
Reconciliation of Diluted Weighted Average Shares Outstanding to
Adjusted Diluted Weighted Average Shares Outstanding and Adjusted
Diluted EPS
2023
2022
2023
2022
Diluted weighted average shares of Class A
and Class B common stock outstanding
213,156,753
207,272,675
211,659,814
207,371,372
Weighted average of other participating
securities (1)
241,963
76,426
266,790
80,778
Assumed exchange of LLC Interests for
shares of Class A or Class B common stock (2)
23,153,250
29,971,658
24,738,197
30,133,370
Adjusted diluted weighted average shares
outstanding
236,551,966
237,320,759
236,664,801
237,585,520
Adjusted Net Income (in thousands)
$
123,749
$
111,659
$
252,784
$
226,714
Adjusted Diluted EPS
$
0.52
$
0.47
$
1.07
$
0.95
(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,
2023
2022
2023
2022
(in thousands)
Operating Expenses
$
194,278
$
190,531
$
400,961
$
390,415
Merger and acquisition transaction and
integration costs (1)
(1,212
)
(15
)
(1,797
)
3
D&A related to acquisitions and the
Refinitiv Transaction (2)
(31,629
)
(31,761
)
(63,246
)
(63,530
)
Stock-based compensation expense (3)
(585
)
(7,295
)
(1,435
)
(11,164
)
Foreign exchange gains / (losses) (4)
964
3,066
(1,834
)
2,334
Adjusted Expenses
$
161,816
$
154,526
$
332,649
$
318,058
(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 the NFI Acquisition 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, 2022, this adjustment also includes $5.7 million and $7.4
million, respectively, of non-cash accelerated stock-based
compensation expense and related payroll taxes associated with our
former CFO and former 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.
Trailing Twelve Months Ended
June 30,
Reconciliation of Cash Flow from
Operating Activities to Free Cash Flow
2023
2022
(in thousands)
Cash flow from operating activities
$
693,446
$
597,330
Less: Capitalization of software
development costs
(39,123
)
(35,767
)
Less: Purchases of furniture, equipment
and leasehold improvements
(19,557
)
(23,158
)
Free Cash Flow
$
634,766
$
538,405
TRADEWEB MARKETS INC.
BASIC AND DILUTED EPS CALCULATIONS (UNAUDITED)
Dollars in Thousands, Except per Share Data
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,
2023
2022
2023
2022
(in thousands, except share
and per share amounts)
Numerator:
Net income attributable to Tradeweb
Markets Inc.
$
89,082
$
68,344
$
176,938
$
151,309
Less: Distributed and undistributed
earnings allocated to unvested RSUs and unsettled vested PRSUs
(1)
(102
)
(26
)
(225
)
(53
)
Net income attributable to outstanding
shares of Class A and Class B common stock - Basic and Diluted
$
88,980
$
68,318
$
176,713
$
151,256
Denominator:
Weighted average shares of Class A and
Class B common stock outstanding - Basic
211,569,728
204,501,035
209,847,153
204,282,406
Dilutive effect of PRSUs
350,713
782,955
318,638
765,497
Dilutive effect of options
1,143,376
1,839,177
1,306,297
2,080,602
Dilutive effect of RSUs
92,936
149,508
187,726
242,867
Dilutive effect of PSUs
—
—
—
—
Weighted average shares of Class A and
Class B common stock outstanding - Diluted
213,156,753
207,272,675
211,659,814
207,371,372
Earnings per share - Basic
$
0.42
$
0.33
$
0.84
$
0.74
Earnings per share - Diluted
$
0.42
$
0.33
$
0.83
$
0.73
(1)
During the three months ended June 30,
2023 and 2022, there was a total of 241,963 and 76,426,
respectively, and during the six months ended June 30, 2023 and
2022, there was a total of 266,790 and 80,778, 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,
2023
2022
$ Change
% Change
Revenues
Variable
Fixed
Variable
Fixed
Variable
Fixed
Variable
Fixed
(dollars in thousands)
Rates
$
101,588
$
58,766
$
96,334
$
55,252
$
5,254
$
3,514
5.5
%
6.4
%
Credit
77,334
6,714
77,497
6,494
(163
)
220
(0.2
)%
3.4
%
Equities
19,866
2,280
20,409
2,250
(543
)
30
(2.7
)%
1.3
%
Money Markets
11,535
4,299
7,658
4,508
3,877
(209
)
50.6
%
(4.6
)%
Market Data
45
22,731
—
21,030
45
1,701
N/M
8.1
%
Other
—
5,455
—
5,706
—
(251
)
—
(4.4
)%
Total revenue
$
210,368
$
100,245
$
201,898
$
95,240
$
8,470
$
5,005
4.2
%
5.3
%
N/M = not meaningful
TRADEWEB MARKETS INC.
AVERAGE VARIABLE FEES PER MILLION
DOLLARS OF VOLUME (UNAUDITED)
Three Months Ended
June 30,
YoY
2023
2022
% Change
Rates
$
2.10
$
2.20
(4.4
)%
Rates Cash
$
2.44
$
2.27
7.7
%
Rates Derivatives
$
1.83
$
2.14
(14.5
)%
Rates Derivatives (greater than 1
year)
$
2.75
$
3.42
(19.6
)%
Other Rates Derivatives (1)
$
0.23
$
0.22
4.3
%
Credit
$
65.37
$
47.31
38.2
%
Cash Credit (2)
$
151.91
$
155.56
(2.4
)%
Credit Derivatives and U.S. Cash “EP”
$
7.75
$
7.73
0.3
%
Equities
$
16.60
$
19.77
(16.0
)%
Equities Cash
$
26.59
$
29.20
(8.9
)%
Equities Derivatives
$
6.14
$
5.93
3.4
%
Money Markets
$
0.38
$
0.29
30.1
%
Total
$
2.60
$
2.78
(6.6
)%
Total excluding Other Rates Derivatives
(3)
$
2.92
$
3.14
(7.1
)%
(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 and (2) 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)
2023 Q2
2022 Q2
YoY
Asset Class
Product
ADV (USD mm)
Volume (USD mm)
ADV (USD mm)
Volume (USD mm)
ADV
Rates
Cash
$
344,674
$
21,627,622
$
341,367
$
21,126,389
0.97
%
U.S. Government Bonds
135,128
8,513,069
131,935
8,179,969
2.42
%
European Government Bonds
40,694
2,482,305
35,439
2,161,809
14.83
%
Mortgages
163,359
10,291,617
168,603
10,453,370
(3.11
)%
Other Government Bonds
5,493
340,631
5,389
331,240
1.92
%
Derivatives
429,285
26,633,837
367,604
22,616,932
16.78
%
Swaps/Swaptions ≥ 1Y
273,533
16,961,570
221,191
13,602,492
23.66
%
Swaps/Swaptions < 1Y
154,332
9,582,824
145,004
8,927,045
6.43
%
Futures
1,420
89,443
1,410
87,395
0.76
%
Total
773,959
48,261,458
708,971
43,743,321
9.17
%
Credit
Cash
10,627
662,558
10,196
626,277
4.23
%
U.S. High Grade - Fully
Electronic
3,960
249,509
3,260
202,106
21.49
%
U.S. High Grade - Electronically
Processed
2,694
169,695
2,652
164,397
1.58
%
U.S. High Yield - Fully
Electronic
567
35,718
652
40,432
(13.06
)%
U.S. High Yield - Electronically
Processed
317
19,997
353
21,910
(10.18
)%
European Credit
1,958
119,461
1,762
107,496
11.13
%
Municipal Bonds
308
19,414
394
24,444
(21.84
)%
Chinese Bonds
720
42,505
1,001
58,041
(28.01
)%
Other Credit Bonds
101
6,259
122
7,449
(16.57
)%
Derivatives
8,362
520,513
16,477
1,013,032
(49.25
)%
Swaps
8,362
520,513
16,477
1,013,032
(49.25
)%
Total
18,989
1,183,072
26,673
1,639,309
(28.81
)%
Equities
Cash
9,913
612,223
9,945
613,843
(0.32
)%
U.S. ETFs
7,547
467,926
7,202
446,499
4.80
%
European ETFs
2,366
144,297
2,743
167,344
(13.77
)%
Derivatives
9,444
584,528
6,761
418,547
39.67
%
Convertibles/Swaps/Options
6,340
392,306
3,273
202,579
93.69
%
Futures
3,103
192,221
3,488
215,968
(11.02
)%
Total
19,356
1,196,751
16,706
1,032,390
15.86
%
Money Markets
Cash
484,307
30,339,463
423,984
26,205,599
14.23
%
Repurchase Agreements (Repo)
465,958
29,184,597
405,652
25,069,414
14.87
%
Other Money Markets
18,349
1,154,866
18,332
1,136,185
0.09
%
Total
484,307
30,339,463
423,984
26,205,599
14.23
%
ADV (USD mm)
Volume (USD mm)
ADV (USD mm)
Volume (USD mm)
YoY
Total
$
1,296,611
$
80,980,743
$
1,176,333
$
72,620,618
10.20
%
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, 2023 and 2022 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 2023
guidance, 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 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/20230727189434/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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