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Tradeweb Reports Third Quarter 2021 Financial Results

Tradeweb Markets Inc. (Nasdaq: TW), a leading, global operator of electronic marketplaces for rates, credit, equities and money markets, today reported financial results for the quarter ended September 30, 2021.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20211028005163/en/

Tradeweb CEO Lee Olesky (Photo: Business Wire)

Tradeweb CEO Lee Olesky (Photo: Business Wire)

$265.3 million quarterly revenues increased 24.6% (23.9% on a constant currency basis) compared to prior year period

$964.5 billion average daily volume (“ADV”) for the quarter, an increase of 23.6% compared to prior year period, with record ADV in U.S. government bonds. In U.S. credit, Tradeweb set new records for its share of fully electronic TRACE volume: High Grade was 12.6%, up from 7.7% in the prior year period, and High Yield was 6.2%, up from 2.5% in the prior year period

$65.3 million net income and $94.2 million adjusted net income for the quarter, increases of 38.8%, and 34.6% respectively from prior year period

50.1% adjusted EBITDA margin or $132.9 million adjusted EBITDA for the quarter, compared to 47.4% or $100.9 million respectively for prior year period

$0.26 diluted earnings per share (“Diluted EPS”) for the quarter and $0.39 adjusted diluted earnings per share

$0.08 per share quarterly cash dividend declared; $12.0 million of shares repurchased

Lee Olesky, CEO of Tradeweb Markets:

“Tradeweb’s strong momentum from the first half of the year continued through the third quarter of 2021, producing our second-best revenue quarter ever. Growth in trading volume was broad-based across our markets, with U.S. Credit, global swaps and U.S. Treasuries leading the way. We were delighted to welcome Sara Furber as our new CFO, helping us navigate Tradeweb’s next phase of growth and development. Finally, we published our inaugural Corporate Sustainability Report to increase transparency for our strong foundation in ESG.” 

SELECT FINANCIAL

RESULTS

3Q21

3Q20

Change

Constant

Currency

Growth (1)

(dollars in thousands except per share amounts)(Unaudited)

GAAP Financial Measures

Total revenue

$

265,325

 

$

212,870

 

24.6

%

23.9

%

Rates

$

139,418

 

$

115,766

 

20.4

%

19.7

%

Credit

$

72,243

 

$

50,216

 

43.9

%

43.2

%

Equities

$

16,457

 

$

11,857

 

38.8

%

37.7

%

Money Markets

$

11,221

 

$

10,491

 

7.0

%

6.4

%

Market Data

$

20,515

 

$

18,598

 

10.3

%

9.2

%

Other

$

5,471

 

$

5,942

 

(7.9)

%

(7.9)

%

Net income

$

65,305

 

$

47,048

 

38.8

%

 

 

Net Income attributable to Tradeweb Markets Inc. (2) $

54,763

$

36,812

48.8

%

Diluted EPS

$

0.26

 

$

0.19

 

36.8

%

 

 

Non-GAAP Financial Measures

Adjusted EBITDA (1)

$

132,946

 

$

100,913

 

31.7

%

30.0

%

Adjusted EBITDA margin (1)

50.1

%

47.4

%

+270

bps

+234

bps

Adjusted EBIT (1)

$

121,079

 

$

90,015

 

34.5

%

32.6

%

Adjusted EBIT margin (1)

45.6

%

42.3

%

+335

bps

+298

bps

Adjusted Net Income (1)

$

94,160

 

$

69,939

 

34.6

%

32.7

%

Adjusted Diluted EPS (1)

$

0.39

 

$

0.30

 

30.0

%

30.0

%

(1)

Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT, Adjusted EBIT margin, Adjusted Net Income, Adjusted Diluted EPS and constant currency growth 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

3Q21

3Q20

YoY

Rates

Cash

$

337

 

$

311

 

8.4

%

 

Derivatives

247

 

179

 

37.9

%

 

Total

584

 

490

 

19.2

%

Credit

Cash

8

 

7

 

20.0

%

 

Derivatives

14

 

13

 

10.3

%

 

Total

22

 

20

 

13.8

%

Equities

Cash

8

 

5

 

38.8

%

 

Derivatives

7

 

4

 

92.9

%

 

Total

15

 

9

 

60.4

%

Money Markets

Cash

344

 

262

 

31.3

%

 

Total

344

 

262

 

31.3

%

 

Total

$

964

 

$

780

 

23.6

%

DISCUSSION OF RESULTS

Rates – Revenues of $139.4 million in the third quarter of 2021 increased 20.4% compared to prior year period (19.7% on a constant currency basis). Rates ADV was up 19.2% with record trading activity in U.S. Treasuries and strong year-over-year volume growth in European government bonds and swaps/swaptions.

Credit – Revenues of $72.2 million in the third quarter of 2021 increased 43.9% compared to prior year period (43.2% on a constant currency basis). Credit ADV was up 13.8% with year-over-year increases in U.S. and European credit trading. In U.S. credit, Tradeweb set new records for its share of fully electronic TRACE volume: High Grade was 12.6%, up from 7.7% in the prior year period and High Yield was 6.2%, up from 2.5% over prior year period.

Equities – Revenues of $16.5 million in the third quarter of 2021 increased 38.8% compared to prior year period (37.7% on a constant currency basis). Equities ADV was up 60.4% with robust year-over-year volume growth in U.S. and European ETFs.

Money Markets – Revenues of $11.2 million in the third quarter of 2021 increased 7.0% compared to prior year period (6.4% on a constant currency basis). Money Markets ADV was up 31.3% led by a strong year-over-year volume growth in Global Repo trading.

Market Data – Revenues of $20.5 million in the third quarter of 2021 increased 10.3% compared to prior year period (9.2% on a constant currency basis). The increase was derived from increased third party market data fees, Refinitiv market data fees, and revenue from our APA reporting service.

Other – Revenues of $5.5 million in the third quarter of 2021 decreased 7.9% compared to prior year period (7.9% decrease on a constant currency basis).

Operating Expenses – Operating expenses of $179.8 million in the third quarter of 2021 increased 16.5% compared to $154.3 million in the prior year period due to: higher employee compensation and benefits associated with higher headcount to support growth and higher performance-related compensation; higher depreciation and amortization expense; higher technology and communications expenses primarily due to investments in our data strategy and cybersecurity and clearance and data fees driven by higher trading volumes; and higher general and administrative expenses as we gradually recover from the pandemic, which were partially offset by lower foreign exchange losses. Adjusted Expenses of $144.2 million increased 17.4% (17.5% on a constant currency basis) compared to the prior year period due to: higher employee compensation and benefits associated with higher headcount to support growth and higher performance-related compensation; higher technology and communications expenses; higher general and administrative expenses; and higher professional fees. Please see "Non-GAAP Financial Measures" below for additional information.

RECENT HIGHLIGHTS

Third Quarter 2021

  • Appointed Sara Furber as Chief Financial Officer
  • Published Tradeweb’s inaugural Corporate Sustainability Report
  • Completed first Southbound Bond Connect transactions via the trading link between Tradeweb and China Foreign Exchange Trade System (CFETS), allowing mainland China onshore institutions to invest in Hong Kong’s fixed income markets
  • Appointed Devi Shanmugham as Global Head of Compliance
  • Recognized in numerous awards including: Best Workplaces for Innovators (Fast Company); OTC Trading Venue of the Year (GlobalCapital); OTC Trading Platform of the Year (Asia Risk); Buy-Side Trading System of the Year (Asia Risk); Excellence in Trading Platforms – Jennifer Keser (Markets Media), Rising Star – Santa Dudica (Markets Media)

October 2021

  • Introduced Trade at Close functionality for electronic portfolio trading, allowing U.S. and European clients to electronically execute portfolio trades at end-of-day prices
  • Named to list of Best ESG Companies of 2021 by Investor’s Business Daily, ranking 36 among top 100 stocks

CAPITAL MANAGEMENT

  • $821.9 million in cash and cash equivalents and an undrawn $500 million credit facility at September 30, 2021
  • Non-acquisition related capital expenditures and capitalization of software development in third quarter 2021: $10.0 million
  • Free cash flow for the trailing twelve months ended September 30, 2021 of $477.4 million, up 25.6% year over year. See “Non-GAAP Financial Measures” for additional information
  • During the third quarter of 2021, as part of its Share Repurchase Program, Tradeweb purchased 140,169 shares of Class A common stock, at an average price of $85.61, for purchases totaling $12.0 million. During the nine months ended September 30, 2021, we purchased a total of 757,813 shares of Class A common stock, at an average price of $84.03, for purchases totaling $63.7 million. As of September 30, 2021, a total of $86.3 million remained available for repurchase pursuant to the Share Repurchase Program
  • $3.1 million in shares were withheld in the third quarter of 2021 to satisfy tax obligations related to the exercise of stock options. During the nine months ended September 30, 2021, a total of $56.6 million in shares were withheld for this purpose
  • The Board of Directors of Tradeweb Markets Inc. declared a quarterly cash dividend of $0.08 per share of Class A common stock and Class B common stock. The dividend will be payable on December 15, 2021 to stockholders of record as of December 1, 2021

OTHER MATTERS

Full-Year 2021 Guidance*

Full-Year 2021 guidance is unchanged from prior quarter.

  • Adjusted Expenses: $565 - $580 million
  • Acquisition and Refinitiv Transaction related depreciation and amortization expense: $124 million
  • Assumed non-GAAP tax rate: 22.0%
  • Capital expenditures and capitalization of software development: $49 - $53 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.

CONFERENCE CALL

Tradeweb Markets will hold a conference call to discuss third quarter 2021 results starting at 9:30 AM EDT today, October 28, 2021. A live, audio webcast of the conference call along with related materials will be available at http://investors.tradeweb.com. Alternatively, interested parties can access the call by dialing 866-221-1629 (U.S.) or +1 470-495-9175 (international) and entering conference ID 9727576. After the conference call, an archived recording will be available at http://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 $970 billion in notional value traded per day over the past four fiscal quarters. For more information, please go to www.tradeweb.com.

 

TRADEWEB MARKETS INC.

INCOME STATEMENT

Dollars in Thousands, Except Per Share Data

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2021

 

2020

 

2021

 

2020

Revenues

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

Transaction fees and commissions

 

$

206,316

 

 

$

160,175

 

 

$

629,513

 

 

$

503,753

 

Subscription fees

 

41,390

 

 

36,217

 

 

117,141

 

 

105,706

 

Refinitiv market data fees

 

15,002

 

 

14,273

 

 

45,045

 

 

43,466

 

Other

 

2,617

 

 

2,205

 

 

7,865

 

 

6,658

 

Total revenue

 

265,325

 

 

212,870

 

 

799,564

 

 

659,583

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

Employee compensation and benefits

 

98,036

 

 

83,967

 

 

300,107

 

 

263,353

 

Depreciation and amortization

 

44,823

 

 

38,857

 

 

127,656

 

 

113,952

 

Technology and communications

 

14,747

 

 

12,037

 

 

42,248

 

 

34,397

 

General and administrative

 

9,561

 

 

8,657

 

 

21,809

 

 

24,520

 

Professional fees

 

8,897

 

 

7,388

 

 

28,993

 

 

20,908

 

Occupancy

 

3,733

 

 

3,443

 

 

11,104

 

 

10,678

 

Total expenses

 

179,797

 

 

154,349

 

 

531,917

 

 

467,808

 

Operating income

 

85,528

 

 

58,521

 

 

267,647

 

 

191,775

 

Net interest income (expense)

 

(361)

 

 

(349)

 

 

(1,179)

 

 

64

 

Income before taxes

 

85,167

 

 

58,172

 

 

266,468

 

 

191,839

 

Provision for income taxes

 

(19,862)

 

 

(11,124)

 

 

(53,365)

 

 

(39,898)

 

Net income

 

65,305

 

 

47,048

 

 

213,103

 

 

151,941

 

Less: Net income attributable to non-controlling interests

 

10,542

 

 

10,236

 

 

35,165

 

 

40,705

 

Net income attributable to Tradeweb Markets Inc.

 

$

54,763

 

 

$

36,812

 

 

$

177,938

 

 

$

111,236

 

 

 

 

 

 

 

 

 

 

Earnings per share attributable to Tradeweb Markets Inc. Class A and B common stockholders:

 

 

 

 

 

 

 

 

Basic

 

$

0.27

 

 

$

0.20

 

 

$

0.89

 

 

$

0.63

 

Diluted

 

$

0.26

 

 

$

0.19

 

 

$

0.86

 

 

$

0.60

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

202,238,122

 

 

187,774,170

 

 

201,029,196

 

 

177,257,994

 

Diluted

 

208,197,439

 

 

194,955,695

 

 

206,908,330

 

 

185,026,108

 

 

TRADEWEB MARKETS INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED)

Dollars in Thousands, Except per Share Data

 

Reconciliation of Net Income to Adjusted EBITDA,

Adjusted EBITDA Margin, Adjusted EBIT and Adjusted EBIT Margin

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2021

 

2020

 

2021

 

2020

 

 

(dollars in thousands)

Net income

 

$

65,305

 

 

$

47,048

 

 

$

213,103

 

 

$

151,941

 

Acquisition transaction costs (1)

 

459

 

 

 

 

5,186

 

 

 

Net interest (income) expense

 

361

 

 

349

 

 

1,179

 

 

(64)

 

Depreciation and amortization

 

44,823

 

 

38,857

 

 

127,656

 

 

113,952

 

Stock-based compensation expense (2)

 

1,995

 

 

1,816

 

 

11,181

 

 

10,308

 

Provision for income taxes

 

19,862

 

 

11,124

 

 

53,365

 

 

39,898

 

Foreign exchange (gains) / losses (3)

 

141

 

 

1,719

 

 

(4,742)

 

 

5,837

 

Tax receivable agreement liability adjustment (4)

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

132,946

 

 

$

100,913

 

 

$

406,928

 

 

$

321,872

 

Less: Depreciation and amortization

 

(44,823)

 

 

(38,857)

 

 

(127,656)

 

 

(113,952)

 

Add: D&A related to acquisitions and the Refinitiv Transaction (5)

 

32,956

 

 

27,959

 

 

92,799

 

 

81,363

 

Adjusted EBIT

 

$

121,079

 

 

$

90,015

 

 

$

372,071

 

 

$

289,283

 

Adjusted EBITDA margin (6)

 

50.1

%

 

47.4

%

 

50.9

%

 

48.8

%

Adjusted EBIT margin (6)

 

45.6

%

 

42.3

%

 

46.5

%

 

43.9

%

(1)

Represents transaction and other costs related to the NFI Acquisition, which closed in June 2021. Acquisition-related costs primarily include legal, consulting and advisory fees and severance costs incurred that relate to the acquisition transaction.

(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 exercises of such options during the applicable period. Beginning on August 30, 2021 and during the three and nine months ended September 30, 2021, this adjustment also includes a total of $0.5 million of non-cash stock-based compensation expense relating to the acceleration of expense associated with the Company's former CFO and related payroll taxes.

(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 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)

Adjusted EBITDA margin and Adjusted EBIT margin are defined as 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

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2021

 

2020

 

2021

 

2020

 

 

(in thousands, except per share amounts)

Earnings per diluted share

 

$

0.26

 

 

$

0.19

 

 

$

0.86

 

 

$

0.60

 

 

 

 

 

 

 

 

 

 

Net income attributable to Tradeweb Markets Inc.

 

$

54,763

 

 

$

36,812

 

 

$

177,938

 

 

$

111,236

 

Net income attributable to non-controlling interests (1)

 

10,542

 

 

10,236

 

 

35,165

 

 

40,705

 

Net income

 

65,305

 

 

47,048

 

 

213,103

 

 

151,941

 

Provision for income taxes

 

19,862

 

 

11,124

 

 

53,365

 

 

39,898

 

Acquisition transaction costs (2)

 

459

 

 

 

 

5,186

 

 

 

D&A related to acquisitions and the Refinitiv Transaction (3)

 

32,956

 

 

27,959

 

 

92,799

 

 

81,363

 

Stock-based compensation expense (4)

 

1,995

 

 

1,816

 

 

11,181

 

 

10,308

 

Foreign exchange (gains) / losses (5)

 

141

 

 

1,719

 

 

(4,742)

 

 

5,837

 

Tax receivable agreement liability adjustment (6)

 

 

 

 

 

 

 

 

Adjusted Net Income before income taxes

 

120,718

 

 

89,666

 

 

370,892

 

 

289,347

 

Adjusted income taxes (7)

 

(26,558)

 

 

(19,727)

 

 

(81,596)

 

 

(63,656)

 

Adjusted Net Income

 

$

94,160

 

 

$

69,939

 

 

$

289,296

 

 

$

225,691

 

Adjusted Diluted EPS (8)

 

$

0.39

 

 

$

0.30

 

 

$

1.22

 

 

$

0.97

 

(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 transaction and other costs related to the NFI Acquisition, which closed in June 2021. Acquisition-related costs primarily include legal, consulting and advisory fees and severance costs incurred that relate to the acquisition transaction.

(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 exercises of such options during the applicable period. Beginning on August 30, 2021 and during the three and nine months ended September 30, 2021, this adjustment also includes a total of $0.5 million of non-cash stock-based compensation expense relating to the acceleration of expense associated with the Company's former CFO and related payroll taxes.

(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 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 22% applied to Adjusted Net Income before income taxes for each of the three and nine months ended September 30, 2021 and 2020.

(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” 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

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2021

 

2020

 

2021

 

2020

Diluted weighted average shares of Class A and Class B common stock outstanding

 

208,197,439

 

 

194,955,695

 

 

206,908,330

 

 

185,026,108

 

Assumed exchange of LLC Interests for shares of Class A or Class B common stock (1)

 

30,531,933

 

 

39,513,246

 

 

30,756,925

 

 

48,397,598

 

Adjusted diluted weighted average shares outstanding

 

238,729,372

 

 

234,468,941

 

 

237,665,255

 

 

233,423,706

 

Adjusted Net Income (in thousands)

 

$

94,160

 

 

$

69,939

 

 

$

289,296

 

 

$

225,691

 

Adjusted Diluted EPS

 

$

0.39

 

 

$

0.30

 

 

$

1.22

 

 

$

0.97

 
(1)

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

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2021

 

2020

 

2021

 

2020

 

 

(in thousands)

Operating expenses

 

$

179,797

 

 

$

154,349

 

 

$

531,917

 

 

$

467,808

 

Acquisition transaction costs (1)

 

(459)

 

 

 

 

(5,186)

 

 

 

D&A related to acquisitions and the Refinitiv Transaction (2)

 

(32,956)

 

 

(27,959)

 

 

(92,799)

 

 

(81,363)

 

Stock-based compensation expense (3)

 

(1,995)

 

 

(1,816)

 

 

(11,181)

 

 

(10,308)

 

Foreign exchange gains / (losses) (4)

 

(141)

 

 

(1,719)

 

 

4,742

 

 

(5,837)

 

Adjusted Expenses

 

$

144,246

 

 

$

122,855

 

 

$

427,493

 

 

$

370,300

 

(1)

Represents transaction and other costs related to the NFI Acquisition, which closed in June 2021. Acquisition-related costs primarily include legal, consulting and advisory fees and severance costs incurred that relate to the acquisition transaction.

(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 exercises of such options during the applicable period. Beginning on August 30, 2021 and during the three and nine months ended September 30, 2021, this adjustment also includes a total of $0.5 million of non-cash stock-based compensation expense relating to the acceleration of expense associated with the Company's former CFO and related payroll taxes.

(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.

 

Reconciliation of Cash Flows from Operating Activities to Free Cash Flow

 

Trailing Twelve Months Ended

September 30, 2021

 

 

(in thousands)

Cash flow from operating activities

 

$

526,072

 

Less: Capitalization of software development costs

 

(33,995)

 

Less: Purchases of furniture, equipment and leasehold improvements

 

(14,720)

 

Free Cash Flow

 

$

477,357

 

 

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.:

EPS: Net income attributable to Tradeweb Markets Inc.

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2021

 

2020

 

2021

 

2020

 

 

(in thousands, except share and per share amounts)

Numerator:

 

 

 

 

 

 

 

 

Net income attributable to Tradeweb Markets Inc.

 

$

54,763

 

 

$

36,812

 

 

$

177,938

 

 

$

111,236

 

 

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

 

Weighted average shares of Class A and Class B common stock outstanding - Basic

 

202,238,122

 

 

187,774,170

 

 

201,029,196

 

 

177,257,994

 

Dilutive effect of equity-settled PRSUs

 

2,146,473

 

 

2,584,192

 

 

2,000,005

 

 

2,371,727

 

Dilutive effect of options

 

3,516,893

 

 

4,402,391

 

 

3,609,906

 

 

5,264,106

 

Dilutive effect of RSUs

 

295,951

 

 

194,942

 

 

269,223

 

 

132,281

 

Weighted average shares of Class A and Class B common stock outstanding - Diluted

 

208,197,439

 

 

194,955,695

 

 

206,908,330

 

 

185,026,108

 

 

 

 

 

 

 

 

 

 

Earnings per share - Basic

 

$

0.27

 

 

$

0.20

 

 

$

0.89

 

 

$

0.63

 

Earnings per share - Diluted

 

$

0.26

 

 

$

0.19

 

 

$

0.86

 

 

$

0.60

 

 

TRADEWEB MARKETS INC.

GROSS REVENUES BY ASSET CLASS (UNAUDITED)

 

 

 

Three Months Ended

 

Three Months Ended

 

 

 

 

 

 

September 30, 2021

 

September 30, 2020

 

$ Change

 

% Change

Revenues

 

Variable

 

Fixed

 

Variable

 

Fixed

 

Variable

 

Fixed

 

Variable

 

Fixed

 

 

(dollars in thousands)

Rates

 

$

80,888

 

 

$

58,530

 

 

$

64,139

 

 

$

51,627

 

 

$

16,749

 

 

$

6,903

 

 

26.1

%

 

13.4

%

Credit

 

65,742

 

 

6,501

 

 

44,278

 

 

5,938

 

 

21,464

 

 

563

 

 

48.5

%

 

9.5

%

Equities

 

14,235

 

 

2,222

 

 

9,329

 

 

2,528

 

 

4,906

 

 

(306)

 

 

52.6

%

 

(12.1)

%

Money Markets

 

7,198

 

 

4,023

 

 

6,390

 

 

4,101

 

 

808

 

 

(78)

 

 

12.6

%

 

(1.9)

%

Market Data

 

 

 

20,515

 

 

 

 

18,598

 

 

 

 

1,917

 

 

 

 

10.3

%

Other

 

 

 

5,471

 

 

 

 

5,942

 

 

 

 

(471)

 

 

 

 

(7.9)

%

Total revenue

 

$

168,063

 

 

$

97,262

 

 

$

124,136

 

 

$

88,734

 

 

$

43,927

 

 

$

8,528

 

 

35.4

%

 

9.6

%

 

TRADEWEB MARKETS INC.

AVERAGE VARIABLE FEES PER MILLION DOLLARS OF VOLUME (UNAUDITED)

 

 

 

Three Months Ended September 30,

 

YoY

 

 

2021

 

2020

 

% Change

Rates

 

$

2.15

 

 

$

2.03

 

 

5.8

%

Cash Rates

 

$

1.95

 

 

$

1.83

 

 

6.5

%

Rates Derivatives

 

$

2.42

 

 

$

2.37

 

 

1.9

%

Swaps / Swaptions Tenor (greater than 1 year)

 

$

3.73

 

 

$

3.37

 

 

10.9

%

Other Rates Derivatives (1)

 

$

0.20

 

 

$

0.25

 

 

(18.4)

%

 

 

 

 

 

 

 

Credit

 

$

45.67

 

 

$

34.89

 

 

30.9

%

Cash Credit (2)

 

$

144.48

 

 

$

127.70

 

 

13.1

%

Credit Derivatives and U.S. Cash "EP"

 

$

6.16

 

 

$

6.02

 

 

2.4

%

 

 

 

 

 

 

 

Equities

 

$

15.20

 

 

$

15.95

 

 

(4.7)

%

Cash Equities

 

$

24.37

 

 

$

20.25

 

 

20.3

%

Equity Derivatives

 

$

5.23

 

 

$

9.46

 

 

(44.7)

%

 

 

 

 

 

 

 

Money Markets (Cash)

 

$

0.33

 

 

$

0.38

 

 

(14.3)

%

 

 

 

 

 

 

 

Total Fees per Million

 

$

2.70

 

 

$

2.47

 

 

9.5

%

Total Fees per Million excluding Other Rates Derivatives (3)

 

$

2.97

 

 

$

2.65

 

 

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 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)

 

 

 

 

2021 Q3

 

2020 Q3

 

YoY

Asset Class

Product

 

ADV (USD mm)

Volume (USD mm)

 

ADV (USD mm)

Volume (USD mm)

 

ADV

Rates

Cash

 

$

337,167

 

$

21,632,199

 

 

$

311,033

 

$

19,951,302

 

 

8.40

%

 

U.S. Government Bonds

 

124,578

 

7,972,973

 

 

86,956

 

5,565,202

 

 

43.26

%

 

European Government Bonds

 

28,800

 

1,900,795

 

 

24,317

 

1,604,918

 

 

18.44

%

 

Mortgages

 

180,033

 

11,522,093

 

 

195,986

 

12,543,075

 

 

(8.14)

%

 

Other Government Bonds

 

3,757

 

236,337

 

 

3,774

 

238,107

 

 

(0.46)

%

 

Derivatives

 

246,981

 

15,992,323

 

 

179,054

 

11,612,291

 

 

37.94

%

 

Swaps/Swaptions ≥ 1Y

 

154,970

 

10,039,311

 

 

122,341

 

7,919,286

 

 

26.67

%

 

Swaps/Swaptions < 1Y

 

91,240

 

5,903,695

 

 

56,317

 

3,667,678

 

 

62.01

%

 

Futures

 

770

 

49,317

 

 

396

 

25,327

 

 

94.69

%

 

Total

 

584,148

 

37,624,522

 

 

490,087

 

31,563,593

 

 

19.19

%

Credit

Cash

 

8,440

 

543,735

 

 

7,036

 

455,496

 

 

19.95

%

 

U.S. High Grade

 

4,371

 

279,755

 

 

3,821

 

244,569

 

 

14.39

%

 

U.S. High Yield

 

836

 

53,502

 

 

406

 

25,978

 

 

105.95

%

 

European Credit

 

1,707

 

112,653

 

 

1,270

 

83,831

 

 

34.38

%

 

Municipal Bonds

 

173

 

11,056

 

 

201

 

12,851

 

 

(13.96)

%

 

Chinese Bonds

 

1,233

 

78,893

 

 

1,277

 

84,292

 

 

(3.48)

%

 

Other Credit Bonds

 

121

 

7,876

 

 

61

 

3,975

 

 

98.33

%

 

Derivatives

 

13,796

 

895,891

 

 

12,507

 

813,562

 

 

10.31

%

 

Swaps

 

13,796

 

895,891

 

 

12,507

 

813,562

 

 

10.31

%

 

Total

 

22,237

 

1,439,626

 

 

19,543

 

1,269,058

 

 

13.78

%

Equities

Cash

 

7,551

 

487,509

 

 

5,442

 

351,468

 

 

38.75

%

 

U.S. ETFs

 

5,421

 

346,951

 

 

3,849

 

246,367

 

 

40.83

%

 

Europe ETFs

 

2,130

 

140,558

 

 

1,592

 

105,101

 

 

33.74

%

 

Derivatives

 

6,992

 

449,243

 

 

3,624

 

233,482

 

 

92.93

%

 

Options/Convertibles/Swaps

 

3,559

 

229,356

 

 

1,188

 

77,469

 

 

199.49

%

 

Futures

 

3,433

 

219,886

 

 

2,436

 

156,014

 

 

40.94

%

 

Total

 

14,543

 

936,752

 

 

9,066

 

584,950

 

 

60.41

%

Money Markets

Cash

 

343,536

 

22,138,406

 

 

261,590

 

16,847,205

 

 

31.33

%

 

Repurchase Agreements (Repo)

 

329,374

 

21,231,648

 

 

250,039

 

16,106,552

 

 

31.73

%

 

Other Money Markets

 

14,162

 

906,758

 

 

11,551

 

740,653

 

 

22.60

%

 

Total

 

343,536

 

22,138,406

 

 

261,590

 

16,847,205

 

 

31.33

%

 

 

 

 

 

 

 

 

 

 

 

 

 

ADV (USD mm)

Volume (USD mm)

 

ADV (USD mm)

Volume (USD mm)

 

YoY

 

Total

 

$

964,464

 

$

62,139,306

 

 

$

780,286

 

$

50,264,805

 

 

23.60

%

To access historical traded volumes, go to https://www.tradeweb.com/newsroom/monthly-activity-reports/.

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 2021 guidance, and 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. In addition, statements herein relating to the COVID-19 pandemic, the potential impacts of which remain inherently uncertain, 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 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 performance and 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 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 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.

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.

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.

TRADEWEB SOCIAL MEDIA

Investors and others should note that Tradeweb Markets announces material financial and operational information using its investor relations website, press releases, SEC filings and public conference calls and webcasts. Information about Tradeweb Markets, 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 Markets to monitor these social media channels in addition to following our 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.

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 Diluted EPS, Adjusted Expenses and Free Cash Flow, which are supplemental financial measures that are not calculated or 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.

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, earnings per share, operating income, operating expenses or cash flow from operating activities or any other financial measure 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 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.

We present certain growth information 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 growth, which is a non-GAAP financial measure, is defined as growth 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 growth as a supplemental metric to evaluate our underlying performance between periods by removing the impact of foreign currency fluctuations. We present certain constant currency growth 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, and may not be comparable to similarly titled measures used by other companies.

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