Tradeweb Reports Second Quarter 2024 Financial Results
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53.5% adjusted EBITDA margin and
“We delivered strong organic growth complemented by continued investment in our multi-asset class, global business, resulting in a 30.4% revenue increase year-over-year in Q2 2024. Tradeweb set quarterly ADV records in rates, money markets, and credit – where we also captured a record 18.8% share of fully electronic
SELECT FINANCIAL RESULTS |
|
2Q24 |
|
|
2Q23 |
|
Change |
Constant Currency Change(1) |
||
(dollars in thousands except per share amounts)(Unaudited) |
||||||||||
GAAP Financial Measures |
||||||||||
Total revenue |
$ |
404,951 |
|
$ |
310,613 |
|
30.4 |
% |
30.8 |
% |
Rates |
$ |
217,531 |
|
$ |
160,354 |
|
35.7 |
% |
36.4 |
% |
Credit |
$ |
111,324 |
|
$ |
84,048 |
|
32.5 |
% |
32.6 |
% |
Equities |
$ |
22,871 |
|
$ |
22,146 |
|
3.3 |
% |
3.8 |
% |
Money Markets |
$ |
18,045 |
|
$ |
15,834 |
|
14.0 |
% |
14.2 |
% |
Market Data |
$ |
29,227 |
|
$ |
22,776 |
|
28.3 |
% |
28.4 |
% |
Other |
$ |
5,953 |
|
$ |
5,455 |
|
9.1 |
% |
9.2 |
% |
Net income |
$ |
136,416 |
|
$ |
101,939 |
|
33.8 |
% |
|
|
Net income attributable to |
$ |
119,239 |
|
$ |
89,082 |
|
33.9 |
% | ||
Diluted EPS |
$ |
0.55 |
|
$ |
0.42 |
|
31.0 |
% |
|
|
Net income margin |
|
33.7 |
% |
|
32.8 |
% |
+87 |
bps |
|
|
Non-GAAP Financial Measures |
||||||||||
Adjusted EBITDA (1) |
$ |
216,533 |
|
$ |
163,055 |
|
32.8 |
% |
32.6 |
% |
Adjusted EBITDA margin (1) |
|
53.5 |
% |
|
52.5 |
% |
+98 |
bps |
+70 |
bps |
Adjusted EBIT (1) |
$ |
201,312 |
|
$ |
148,797 |
|
35.3 |
% |
35.0 |
% |
Adjusted EBIT margin (1) |
|
49.7 |
% |
|
47.9 |
% |
+181 |
bps |
+154 |
bps |
Adjusted Net Income (1) |
$ |
166,711 |
|
$ |
123,749 |
|
34.7 |
% |
34.5 |
% |
Adjusted Diluted EPS (1) |
$ |
0.70 |
|
$ |
0.52 |
|
34.6 |
% |
34.6 |
% |
(1) |
Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT, Adjusted EBIT margin, Adjusted Net Income, Adjusted Diluted EPS and constant currency change are non-GAAP financial measures. See “Non-GAAP Financial Measures” below and the attached schedules for additional information and reconciliations of such non-GAAP financial measures. |
(2) |
Represents net income less net income attributable to non-controlling interests. |
ADV (US $bn) (Unaudited) |
|||||||
Asset Class |
Product |
|
2Q24 |
|
2Q23 |
YoY |
|
Rates |
Cash |
$ |
462 |
$ |
345 |
34.1 |
% |
|
Derivatives |
|
787 |
|
429 |
83.4 |
% |
|
Total |
|
1,249 |
|
774 |
61.4 |
% |
Credit |
Cash |
|
17 |
|
11 |
58.5 |
% |
|
Derivatives |
|
13 |
|
8 |
53.8 |
% |
|
Total |
|
30 |
|
19 |
56.5 |
% |
Equities |
Cash |
|
10 |
|
10 |
0.2 |
% |
|
Derivatives |
|
11 |
|
9 |
19.9 |
% |
|
Total |
|
21 |
|
19 |
9.8 |
% |
Money Markets |
Cash |
|
622 |
|
484 |
28.4 |
% |
|
Total |
|
622 |
|
484 |
28.4 |
% |
|
Total |
$ |
1,922 |
$ |
1,297 |
48.3 |
% |
DISCUSSION OF RESULTS
Rates – Revenues of
Credit – Revenues of
Equities – Revenues of
Money Markets – Revenues of
Market Data – Revenues of
Other – Revenues of
Operating Expenses of
Adjusted Expenses of
RECENT HIGHLIGHTS
Second Quarter 2024
-
Announced definitive agreement to acquire
Institutional Cash Distributors (“ICD”), an institutional investment technology provider for corporate treasury organizations trading short-term investments, for$785 million , subject to customary adjustments, which will add Corporates as our fourth client channel alongside Institutional, Wholesale and Retail. The closing of the acquisition is subject to customary closing conditions and regulatory reviews. -
Announced organizational changes, including the addition of
Amy Clack , who will join Tradeweb inAugust 2024 as Chief Administrative Officer (CAO), overseeing operations, business integration, risk and corporate services. In addition, Tradeweb announced that PresidentThomas Pluta will leave the Company and its Board of Directors, effectiveSeptember 30, 2024 . - Agreed with Alphaledger, a leading provider of blockchain infrastructure for fixed income assets, to jointly develop innovative products leveraging Alphaledger's blockchain technology.
-
Invested
$10 million as part of$47 million strategic funding round led by BlackRock for Securitize, a leader in tokenizing real-world assets. - Served as network participant in the launch of Global Synchronizer, the Canton Network's decentralized interoperability infrastructure. The Canton Network is a public-permissioned blockchain network designed with the privacy and controls essential to facilitate the exchange of regulated financial assets.
-
Entered into a
$159.2 million lease for Tradeweb's new NYC headquarters, expected to commence in mid-2025 with an expected initial lease term of approximately 16 years. -
Launched an enhanced functionality for RFQ trading in
U.S. credit markets; “RFQ Edge” deploys Tradeweb's advanced portfolio trading analytics to its RFQ protocol to deliver a more powerful list trading experience forU.S. credit and ETF traders. -
Expanded strategic partnership between Tradeweb and FTSE Russell to produce benchmark closing prices for the
U.S. Treasury markets. - Became the first electronic trading platform to make overnight index swap (OIS) curves available during the repo trade negotiation process, helping institutional clients assess the price competitiveness of different repo rates across different currencies and maturities.
-
Awarded two framework agreements to provide Electronic Trading Platforms to the
European Central Bank (ECB) and other Eurosystem National Central Banks, after successfully participating in the procurement procedure organized by theECB . -
Recognized in numerous awards celebrating our company, as well as our outstanding and diverse talent, including: 40 Top Innovators (TabbFORUM); Asset Management Awards - Best Data & Technology Provider and Rising Star in Asset Services (AsianInvestor); Inside Market Data & Inside Reference Data Awards - Most
Innovative Market Data Project (WatersTechnology); Women in Finance Asia Awards - Excellence in ETFs -Keri Neo (Markets Media); Markets Choice Awards - Best Company (Markets Media)
CAPITAL MANAGEMENT
-
$1.7 billion in cash and cash equivalents and an undrawn$500 million credit facility atJune 30, 2024 -
$785 million acquisition of ICD is expected to close in the third quarter of 2024, subject to the satisfaction of customary closing conditions and regulatory reviews and the purchase price, subject to customary adjustments, is expected to be funded with cash on hand -
Free cash flow for the trailing twelve months ended
June 30, 2024 of$721.7 million , up 13.7% compared to prior year period. See “Non-GAAP Financial Measures“ for additional information -
Cash capital expenditures and capitalized software development in the second quarter 2024 of
$16.6 million (excludes amounts paid at closing for acquisitions) -
$239.8 million remained available for repurchase pursuant to the share repurchase program authorization as ofJune 30, 2024 . No shares were repurchased during the second quarter of 2024 -
$0.3 million in shares of Class A common stock were withheld in the second quarter of 2024 to satisfy tax obligations related to the exercise of stock options and vesting of restricted stock units and performance-based restricted stock units held by employees -
The Board declared a quarterly cash dividend of
$0.10 per share of Class A common stock and Class B common stock. The dividend will be payable onSeptember 16, 2024 to stockholders of record as ofSeptember 3, 2024
OTHER MATTERS
Updated Full-Year 2024 Guidance*
-
Adjusted Expenses:
$830 - 860 million -
Acquisition and Refinitiv Transaction related depreciation and amortization expense:
$158 million - Assumed non-GAAP tax rate: ~ 24.5% - 25.5%
-
Cash capital expenditures and capitalized software development:
$77 - 85 million -
LSEG Market Data Contract Revenue:
~$80 million (~$90 million in 2025)
The guidance has been revised to reflect higher expenses and expenditures in light of strong business momentum, the anticipated closing of ICD during the third quarter of 2024 and recently announced management changes. Assumed non-GAAP tax rate and LSEG Market Data Contract Revenue guidance is unchanged from the prior quarter guidance.
*GAAP operating expenses and tax rate guidance are not provided due to the inherent difficulty in quantifying certain amounts due to a variety of factors including the unpredictability in the movement of foreign currency rates. Expense guidance assumes an average 2024 Sterling/US$ foreign exchange rate of 1.24 and includes completed M&A transactions as well as the expected closing of the ICD acquisition in the third quarter of 2024. Guidance amounts for cash capital expenditures and capitalized software development excludes amounts paid at closing for acquisitions.
CONFERENCE CALL
- To join the call via audio webcast, click here: https://edge.media-server.com/mmc/p/n8n9p3bv/
- To join the call via phone, please register in advance here: https://register.vevent.com/register/BI10fde228f4fd46c686f35483a283443e. Registered participants will receive an email confirmation with a unique PIN to access the conference call.
An archived recording of the call will be available afterward at https://investors.tradeweb.com.
ABOUT
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) |
||||||||||||||||
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
|
|
|
||||||||||||
|
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Revenues |
(dollars in thousands, except per share amounts) |
|||||||||||||||
Transaction fees and commissions |
|
$ |
330,475 |
|
|
$ |
246,461 |
|
|
$ |
665,926 |
|
|
$ |
513,059 |
|
Subscription fees |
|
|
50,746 |
|
|
|
45,748 |
|
|
|
100,427 |
|
|
|
90,122 |
|
LSEG market data fees |
|
|
20,581 |
|
|
|
15,461 |
|
|
|
41,081 |
|
|
|
31,055 |
|
Other |
|
|
3,149 |
|
|
|
2,943 |
|
|
|
6,256 |
|
|
|
5,626 |
|
Total revenue |
|
|
404,951 |
|
|
|
310,613 |
|
|
|
813,690 |
|
|
|
639,862 |
|
|
|
|
|
|
|
|
|
|
||||||||
Expenses |
|
|
|
|
|
|
|
|
||||||||
Employee compensation and benefits |
|
|
137,236 |
|
|
|
103,924 |
|
|
|
280,323 |
|
|
|
218,417 |
|
Depreciation and amortization |
|
|
49,936 |
|
|
|
45,887 |
|
|
|
99,273 |
|
|
|
91,291 |
|
Technology and communications |
|
|
24,230 |
|
|
|
18,701 |
|
|
|
45,540 |
|
|
|
36,268 |
|
General and administrative |
|
|
12,755 |
|
|
|
11,072 |
|
|
|
23,609 |
|
|
|
24,992 |
|
Professional fees |
|
|
13,324 |
|
|
|
10,666 |
|
|
|
25,124 |
|
|
|
21,842 |
|
Occupancy |
|
|
4,976 |
|
|
|
4,028 |
|
|
|
9,649 |
|
|
|
8,151 |
|
Total expenses |
|
|
242,457 |
|
|
|
194,278 |
|
|
|
483,518 |
|
|
|
400,961 |
|
Operating income |
|
|
162,494 |
|
|
|
116,335 |
|
|
|
330,172 |
|
|
|
238,901 |
|
Interest income |
|
|
21,511 |
|
|
|
15,576 |
|
|
|
42,571 |
|
|
|
28,516 |
|
Interest expense |
|
|
(542 |
) |
|
|
(467 |
) |
|
|
(2,260 |
) |
|
|
(916 |
) |
Other income (loss), net |
|
|
— |
|
|
|
(456 |
) |
|
|
— |
|
|
|
(115 |
) |
Income before taxes |
|
|
183,463 |
|
|
|
130,988 |
|
|
|
370,483 |
|
|
|
266,386 |
|
Provision for income taxes |
|
|
(47,047 |
) |
|
|
(29,049 |
) |
|
|
(90,685 |
) |
|
|
(62,254 |
) |
Net income |
|
|
136,416 |
|
|
|
101,939 |
|
|
|
279,798 |
|
|
|
204,132 |
|
Less: Net income attributable to non-controlling interests |
|
|
17,177 |
|
|
|
12,857 |
|
|
|
34,417 |
|
|
|
27,194 |
|
Net income attributable to |
|
$ |
119,239 |
|
|
$ |
89,082 |
|
|
$ |
245,381 |
|
|
$ |
176,938 |
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per share attributable to |
|
|
|
|
|
|
|
|
||||||||
Basic |
|
$ |
0.56 |
|
|
$ |
0.42 |
|
|
$ |
1.15 |
|
|
$ |
0.84 |
|
Diluted |
|
$ |
0.55 |
|
|
$ |
0.42 |
|
|
$ |
1.14 |
|
|
$ |
0.83 |
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
||||||||
Basic |
|
|
213,162,158 |
|
|
|
211,569,728 |
|
|
|
212,936,015 |
|
|
|
209,847,153 |
|
Diluted |
|
|
214,895,947 |
|
|
|
213,156,753 |
|
|
|
214,778,342 |
|
|
|
211,659,814 |
|
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED) |
||||||||||||||||
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
Reconciliation of Net Income to Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EBIT and Adjusted EBIT Margin |
|
|
|
|
||||||||||||
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
|
(dollars in thousands) |
||||||||||||||
Net income |
|
$ |
136,416 |
|
|
$ |
101,939 |
|
|
$ |
279,798 |
|
|
$ |
204,132 |
|
Merger and acquisition transaction and integration costs (1) |
|
|
3,650 |
|
|
|
1,212 |
|
|
|
7,264 |
|
|
|
1,797 |
|
Interest income |
|
|
(21,511 |
) |
|
|
(15,576 |
) |
|
|
(42,571 |
) |
|
|
(28,516 |
) |
Interest expense |
|
|
542 |
|
|
|
467 |
|
|
|
2,260 |
|
|
|
916 |
|
Depreciation and amortization |
|
|
49,936 |
|
|
|
45,887 |
|
|
|
99,273 |
|
|
|
91,291 |
|
Stock-based compensation expense (2) |
|
|
531 |
|
|
|
585 |
|
|
|
1,714 |
|
|
|
1,435 |
|
Provision for income taxes |
|
|
47,047 |
|
|
|
29,049 |
|
|
|
90,685 |
|
|
|
62,254 |
|
Foreign exchange (gains) / losses (3) |
|
|
(78 |
) |
|
|
(964 |
) |
|
|
(2,362 |
) |
|
|
1,834 |
|
Tax receivable agreement liability adjustment (4) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Other (income) loss, net |
|
|
— |
|
|
|
456 |
|
|
|
— |
|
|
|
115 |
|
Adjusted EBITDA |
|
$ |
216,533 |
|
|
$ |
163,055 |
|
|
$ |
436,061 |
|
|
$ |
335,258 |
|
Less: Depreciation and amortization |
|
|
(49,936 |
) |
|
|
(45,887 |
) |
|
|
(99,273 |
) |
|
|
(91,291 |
) |
Add: D&A related to acquisitions and the Refinitiv Transaction (5) |
|
|
34,715 |
|
|
|
31,629 |
|
|
|
69,082 |
|
|
|
63,246 |
|
Adjusted EBIT |
|
$ |
201,312 |
|
|
$ |
148,797 |
|
|
$ |
405,870 |
|
|
$ |
307,213 |
|
Net income margin (6) |
|
|
33.7 |
% |
|
|
32.8 |
% |
|
|
34.4 |
% |
|
|
31.9 |
% |
Adjusted EBITDA margin (6) |
|
|
53.5 |
% |
|
|
52.5 |
% |
|
|
53.6 |
% |
|
|
52.4 |
% |
Adjusted EBIT margin (6) |
|
|
49.7 |
% |
|
|
47.9 |
% |
|
|
49.9 |
% |
|
|
48.0 |
% |
(1) |
Represents incremental direct costs associated with the acquisition and integration of completed and potential mergers and acquisitions. These costs generally include legal, consulting, advisory, due diligence, severance and other third party costs incurred that directly relate to the acquisition transaction or its integration. |
(2) |
Represents non-cash stock-based compensation expense associated with the Special Option Award and post-IPO options awarded in 2019 and payroll taxes associated with the exercise of such options. During the three and six months ended |
(3) |
Represents unrealized gain or loss recognized on foreign currency forward contracts and foreign exchange gain or loss from the revaluation of cash denominated in a different currency than the entity’s functional currency. |
(4) |
Represents income recognized during the applicable period due to changes in the tax receivable agreement liability recorded in the consolidated statement of financial condition as a result of changes in the mix of earnings, tax legislation and tax rates in various jurisdictions which impacted our tax savings. |
(5) |
Represents intangible asset and acquired software amortization resulting from acquisitions and intangible asset amortization and increased tangible asset and capitalized software depreciation and amortization resulting from the application of pushdown accounting to the Refinitiv Transaction (where all assets were marked to fair value as of the closing date of the Refinitiv Transaction). |
(6) |
Net income margin, Adjusted EBITDA margin and Adjusted EBIT margin are defined as net income, Adjusted EBITDA and Adjusted EBIT, respectively, divided by revenue for the applicable period. |
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
Reconciliation of Net Income to Adjusted Net Income and Adjusted Diluted EPS |
|
|
|
|
||||||||||||
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
(dollars in thousands, except per share amounts) |
|||||||||||||||
Earnings per diluted share |
|
$ |
0.55 |
|
|
$ |
0.42 |
|
|
$ |
1.14 |
|
|
$ |
0.83 |
|
Net income attributable to |
|
$ |
119,239 |
|
|
$ |
89,082 |
|
|
$ |
245,381 |
|
|
$ |
176,938 |
|
Net income attributable to non-controlling interests (1) |
|
|
17,177 |
|
|
|
12,857 |
|
|
|
34,417 |
|
|
|
27,194 |
|
Net income |
|
|
136,416 |
|
|
|
101,939 |
|
|
|
279,798 |
|
|
|
204,132 |
|
Provision for income taxes |
|
|
47,047 |
|
|
|
29,049 |
|
|
|
90,685 |
|
|
|
62,254 |
|
Merger and acquisition transaction and integration costs (2) |
|
|
3,650 |
|
|
|
1,212 |
|
|
|
7,264 |
|
|
|
1,797 |
|
D&A related to acquisitions and the Refinitiv Transaction (3) |
|
|
34,715 |
|
|
|
31,629 |
|
|
|
69,082 |
|
|
|
63,246 |
|
Stock-based compensation expense (4) |
|
|
531 |
|
|
|
585 |
|
|
|
1,714 |
|
|
|
1,435 |
|
Foreign exchange (gains) / losses (5) |
|
|
(78 |
) |
|
|
(964 |
) |
|
|
(2,362 |
) |
|
|
1,834 |
|
Tax receivable agreement liability adjustment (6) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Other (income) loss, net |
|
|
— |
|
|
|
456 |
|
|
|
— |
|
|
|
115 |
|
Adjusted Net Income before income taxes |
|
|
222,281 |
|
|
|
163,906 |
|
|
|
446,181 |
|
|
|
334,813 |
|
Adjusted income taxes (7) |
|
|
(55,570 |
) |
|
|
(40,157 |
) |
|
|
(111,545 |
) |
|
|
(82,029 |
) |
Adjusted Net Income |
|
$ |
166,711 |
|
|
$ |
123,749 |
|
|
$ |
334,636 |
|
|
$ |
252,784 |
|
Adjusted Diluted EPS (8) |
|
$ |
0.70 |
|
|
$ |
0.52 |
|
|
$ |
1.41 |
|
|
$ |
1.07 |
|
(1) |
Represents the reallocation of net income attributable to non-controlling interests from the assumed exchange of all outstanding LLC Interests held by non-controlling interests for shares of Class A or Class B common stock. |
(2) |
Represents incremental direct costs associated with the acquisition and integration of completed and potential mergers and acquisitions. These costs generally include legal, consulting, advisory, due diligence, severance and other third party costs incurred that directly relate to the acquisition transaction or its integration. |
(3) |
Represents intangible asset and acquired software amortization resulting from acquisitions and intangible asset amortization and increased tangible asset and capitalized software depreciation and amortization resulting from the application of pushdown accounting to the Refinitiv Transaction (where all assets were marked to fair value as of the closing date of the Refinitiv Transaction). |
(4) |
Represents non-cash stock-based compensation expense associated with the Special Option Award and post-IPO options awarded in 2019 and payroll taxes associated with the exercise of such options. During the three and six months ended |
(5) |
Represents unrealized gain or loss recognized on foreign currency forward contracts and foreign exchange gain or loss from the revaluation of cash denominated in a different currency than the entity’s functional currency. |
(6) |
Represents income recognized during the applicable period due to changes in the tax receivable agreement liability recorded in the consolidated statement of financial condition as a result of changes in the mix of earnings, tax legislation and tax rates in various jurisdictions which impacted our tax savings. |
(7) |
Represents corporate income taxes at an assumed effective tax rate of 25.0% applied to Adjusted Net Income before income taxes for the three and six months ended |
(8) |
For a summary of the calculation of Adjusted Diluted EPS, see “Reconciliation of Diluted Weighted Average Shares Outstanding to Adjusted Diluted Weighted Average Shares Outstanding and Adjusted Diluted EPS” below. |
The following table summarizes the calculation of Adjusted Diluted EPS for the periods presented:
Reconciliation of Diluted Weighted Average Shares Outstanding to Adjusted Diluted Weighted Average Shares Outstanding and Adjusted Diluted EPS |
|
Three Months Ended |
|
Six Months Ended |
||||||||
|
|
|
|
|||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Diluted weighted average shares of Class A and Class B common stock outstanding |
|
|
214,895,947 |
|
|
213,156,753 |
|
|
214,778,342 |
|
|
211,659,814 |
Weighted average of other participating securities (1) |
|
|
125,012 |
|
|
241,963 |
|
|
142,484 |
|
|
266,790 |
Assumed exchange of LLC Interests for shares of Class A or Class B common stock (2) |
|
|
23,077,698 |
|
|
23,153,250 |
|
|
23,077,836 |
|
|
24,738,197 |
Adjusted diluted weighted average shares outstanding |
|
|
238,098,657 |
|
|
236,551,966 |
|
|
237,998,662 |
|
|
236,664,801 |
Adjusted Net Income (in thousands) |
|
$ |
166,711 |
|
$ |
123,749 |
|
$ |
334,636 |
|
$ |
252,784 |
Adjusted Diluted EPS |
|
$ |
0.70 |
|
$ |
0.52 |
|
$ |
1.41 |
|
$ |
1.07 |
(1) |
Represents weighted average unvested restricted stock units and unsettled vested performance-based restricted stock units issued to certain retired or terminated employees that are entitled to non-forfeitable dividend equivalent rights and are considered participating securities prior to being issued and outstanding shares of common stock in accordance with the two-class method used for purposes of calculating earnings per share. |
(2) |
Assumes the full exchange of the weighted average of all outstanding LLC Interests held by non-controlling interests for shares of Class A or Class B common stock, resulting in the elimination of the non-controlling interests and recognition of the net income attributable to non-controlling interests. |
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
Reconciliation of Operating Expenses to Adjusted Expenses |
|
|
|
|
||||||||||||
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
|
(dollars in thousands) |
||||||||||||||
Operating expenses |
|
$ |
242,457 |
|
|
$ |
194,278 |
|
|
$ |
483,518 |
|
|
$ |
400,961 |
|
Merger and acquisition transaction and integration costs (1) |
|
|
(3,650 |
) |
|
|
(1,212 |
) |
|
|
(7,264 |
) |
|
|
(1,797 |
) |
D&A related to acquisitions and the Refinitiv Transaction (2) |
|
|
(34,715 |
) |
|
|
(31,629 |
) |
|
|
(69,082 |
) |
|
|
(63,246 |
) |
Stock-based compensation expense (3) |
|
|
(531 |
) |
|
|
(585 |
) |
|
|
(1,714 |
) |
|
|
(1,435 |
) |
Foreign exchange gains / (losses) (4) |
|
|
78 |
|
|
|
964 |
|
|
|
2,362 |
|
|
|
(1,834 |
) |
Adjusted Expenses |
|
$ |
203,639 |
|
|
$ |
161,816 |
|
|
$ |
407,820 |
|
|
$ |
332,649 |
|
(1) |
Represents incremental direct costs associated with the acquisition and integration of completed and potential mergers and acquisitions. These costs generally include legal, consulting, advisory, due diligence, severance and other third party costs incurred that directly relate to the acquisition transaction or its integration. |
(2) |
Represents intangible asset and acquired software amortization resulting from acquisitions and intangible asset amortization and increased tangible asset and capitalized software depreciation and amortization resulting from the application of pushdown accounting to the Refinitiv Transaction (where all assets were marked to fair value as of the closing date of the Refinitiv Transaction). |
(3) |
Represents non-cash stock-based compensation expense associated with the Special Option Award and post-IPO options awarded in 2019 and payroll taxes associated with the exercise of such options. During the three and six months ended |
(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 |
||||||
Reconciliation of Cash Flow from Operating Activities to Free Cash Flow |
|
|
2024 |
|
|
|
2023 |
|
|
|
(dollars in thousands) |
||||||
Cash flow from operating activities |
|
$ |
785,734 |
|
|
$ |
693,446 |
|
Less: Capitalization of software development costs |
|
|
(45,208 |
) |
|
|
(39,123 |
) |
Less: Purchases of furniture, equipment and leasehold improvements |
|
|
(18,780 |
) |
|
|
(19,557 |
) |
Free Cash Flow |
|
$ |
721,746 |
|
|
$ |
634,766 |
|
BASIC AND DILUTED EPS CALCULATIONS (UNAUDITED) |
||||||||||||||||
The following table summarizes the basic and diluted earnings per share calculations for |
||||||||||||||||
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
EPS: Net income attributable to |
|
|
|
|
||||||||||||
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
(dollars in thousands, except per share amounts) |
|||||||||||||||
Numerator: |
|
|
|
|
|
|
|
|
||||||||
Net income attributable to |
|
$ |
119,239 |
|
|
$ |
89,082 |
|
|
$ |
245,381 |
|
|
$ |
176,938 |
|
Less: Distributed and undistributed earnings allocated to unvested RSUs and unsettled vested PRSUs (1) |
|
|
(70 |
) |
|
|
(102 |
) |
|
|
(164 |
) |
|
|
(225 |
) |
Net income attributable to outstanding shares of Class A and Class B common stock - Basic and Diluted |
|
$ |
119,169 |
|
|
$ |
88,980 |
|
|
$ |
245,217 |
|
|
$ |
176,713 |
|
|
|
|
|
|
|
|
|
|
||||||||
Denominator: |
|
|
|
|
|
|
|
|
||||||||
Weighted average shares of Class A and Class B common stock outstanding - Basic |
|
|
213,162,158 |
|
|
|
211,569,728 |
|
|
|
212,936,015 |
|
|
|
209,847,153 |
|
Dilutive effect of PRSUs |
|
|
568,304 |
|
|
|
350,713 |
|
|
|
534,583 |
|
|
|
318,638 |
|
Dilutive effect of options |
|
|
449,252 |
|
|
|
1,143,376 |
|
|
|
524,413 |
|
|
|
1,306,297 |
|
Dilutive effect of RSUs |
|
|
252,498 |
|
|
|
92,936 |
|
|
|
348,282 |
|
|
|
187,726 |
|
Dilutive effect of PSUs |
|
|
463,735 |
|
|
|
— |
|
|
|
435,049 |
|
|
|
— |
|
Weighted average shares of Class A and Class B common stock outstanding - Diluted |
|
|
214,895,947 |
|
|
|
213,156,753 |
|
|
|
214,778,342 |
|
|
|
211,659,814 |
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per share - Basic |
|
$ |
0.56 |
|
|
$ |
0.42 |
|
|
$ |
1.15 |
|
|
$ |
0.84 |
|
Earnings per share - Diluted |
|
$ |
0.55 |
|
|
$ |
0.42 |
|
|
$ |
1.14 |
|
|
$ |
0.83 |
|
(1) |
During the three months ended |
R EVENUES BY ASSET CLASS (UNAUDITED) |
|||||||||||||||||||||||||
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
2024 |
|
2023 |
|
$ Change |
|
% Change |
|||||||||||||||||
Revenues |
|
Variable |
|
Fixed |
|
Variable |
|
Fixed |
|
Variable |
|
Fixed |
|
Variable |
|
Fixed |
|||||||||
|
|
(dollars in thousands) |
|||||||||||||||||||||||
Rates |
|
$ |
157,636 |
|
$ |
59,895 |
|
$ |
101,588 |
|
$ |
58,766 |
|
$ |
56,048 |
|
$ |
1,129 |
|
|
55.2 |
% |
|
1.9 |
% |
Credit |
|
|
102,785 |
|
|
8,539 |
|
|
77,334 |
|
|
6,714 |
|
|
25,451 |
|
|
1,825 |
|
|
32.9 |
% |
|
27.2 |
% |
Equities |
|
|
20,602 |
|
|
2,269 |
|
|
19,866 |
|
|
2,280 |
|
|
736 |
|
|
(11 |
) |
|
3.7 |
% |
|
(0.5 |
)% |
Money Markets |
|
|
13,695 |
|
|
4,350 |
|
|
11,535 |
|
|
4,299 |
|
|
2,160 |
|
|
51 |
|
|
18.7 |
% |
|
1.2 |
% |
Market Data |
|
|
132 |
|
|
29,095 |
|
|
45 |
|
|
22,731 |
|
|
87 |
|
|
6,364 |
|
|
193.3 |
% |
|
28.0 |
% |
Other |
|
|
— |
|
|
5,953 |
|
|
— |
|
|
5,455 |
|
|
— |
|
|
498 |
|
|
— |
|
|
9.1 |
% |
Total revenue |
|
$ |
294,850 |
|
$ |
110,101 |
|
$ |
210,368 |
|
$ |
100,245 |
|
$ |
84,482 |
|
$ |
9,856 |
|
|
40.2 |
% |
|
9.8 |
% |
|
|||||||||
|
|
Three Months Ended |
|
|
|||||
|
|
|
|
YoY |
|||||
|
|
|
2024 |
|
|
2023 |
|
% Change |
|
Rates |
|
$ |
2.00 |
|
$ |
2.10 |
|
(4.8 |
)% |
Rates Cash |
|
$ |
2.54 |
|
$ |
2.44 |
|
4.1 |
% |
Rates Derivatives |
|
$ |
1.69 |
|
$ |
1.83 |
|
(7.9 |
)% |
Rates Derivatives (greater than 1 year) |
|
$ |
2.71 |
|
$ |
2.75 |
|
(1.5 |
)% |
Other Rates Derivatives (1) |
|
$ |
0.20 |
|
$ |
0.23 |
|
(11.5 |
)% |
|
|
|
|
|
|
|
|||
Credit |
|
$ |
55.33 |
|
$ |
65.37 |
|
(15.4 |
)% |
Cash Credit (2) |
|
$ |
145.18 |
|
$ |
164.93 |
|
(12.0 |
)% |
Credit Derivatives, |
|
$ |
7.76 |
|
$ |
8.52 |
|
(8.9 |
)% |
|
|
|
|
|
|
|
|||
Equities |
|
$ |
15.39 |
|
$ |
16.60 |
|
(7.3 |
)% |
Equities Cash |
|
$ |
26.51 |
|
$ |
26.59 |
|
(0.3 |
)% |
Equities Derivatives |
|
$ |
5.62 |
|
$ |
6.14 |
|
(8.4 |
)% |
|
|
|
|
|
|
|
|||
Money Markets |
|
$ |
0.35 |
|
$ |
0.38 |
|
(8.1 |
)% |
|
|
|
|
|
|
|
|||
Total |
|
$ |
2.43 |
|
$ |
2.60 |
|
(6.3 |
)% |
Total excluding Other Rates Derivatives (3) |
|
$ |
2.88 |
|
$ |
2.92 |
|
(1.3 |
)% |
(1) |
Includes Swaps/Swaptions of tenor less than 1 year and Rates Futures. |
(2) |
The “Cash Credit” category represents the “Credit” asset class excluding (1) Credit Derivatives (2) |
(3) |
Included to contextualize the impact of short-tenored Swaps/Swaptions and Rates Futures on totals for all periods presented. |
AVERAGE DAILY VOLUME (UNAUDITED) (1) |
||||||||||||||
|
|
|
2024 Q2 |
|
2023 Q2 |
|
YoY |
|||||||
Asset Class |
Product |
|
ADV (USD mm) |
Volume (USD mm) |
|
ADV (USD mm) |
Volume (USD mm) |
|
ADV |
|||||
Rates |
Cash |
|
$ |
462,335 |
$ |
29,121,086 |
|
$ |
344,674 |
$ |
21,627,623 |
|
34.14 |
% |
|
|
|
|
202,460 |
|
12,754,982 |
|
|
135,128 |
|
8,513,069 |
|
49.83 |
% |
|
European Government Bonds |
|
|
45,699 |
|
2,879,044 |
|
|
40,694 |
|
2,482,305 |
|
12.30 |
% |
|
Mortgages |
|
|
203,813 |
|
12,840,218 |
|
|
163,359 |
|
10,291,618 |
|
24.76 |
% |
|
Other Government Bonds |
|
|
10,363 |
|
646,843 |
|
|
5,493 |
|
340,631 |
|
88.66 |
% |
|
Derivatives |
|
|
787,132 |
|
49,552,512 |
|
|
429,285 |
|
26,633,837 |
|
83.36 |
% |
|
Swaps/Swaptions ≥ 1Y |
|
|
466,923 |
|
29,396,323 |
|
|
273,533 |
|
16,961,570 |
|
70.70 |
% |
|
Swaps/Swaptions < 1Y |
|
|
310,657 |
|
19,558,079 |
|
|
154,332 |
|
9,582,824 |
|
101.29 |
% |
|
Futures |
|
|
9,552 |
|
598,110 |
|
|
1,420 |
|
89,443 |
|
572.51 |
% |
|
Total |
|
|
1,249,467 |
|
78,673,598 |
|
|
773,959 |
|
48,261,459 |
|
61.44 |
% |
Credit |
Cash |
|
|
16,844 |
|
1,047,204 |
|
|
10,627 |
|
662,558 |
|
58.50 |
% |
|
|
|
|
6,480 |
|
408,223 |
|
|
3,963 |
|
249,667 |
|
63.51 |
% |
|
|
|
2,913 |
|
183,514 |
|
|
2,694 |
|
169,696 |
|
8.14 |
% |
|
|
|
|
|
773 |
|
48,712 |
|
|
568 |
|
35,765 |
|
36.20 |
% |
|
|
|
|
247 |
|
15,549 |
|
|
317 |
|
19,998 |
|
(22.25 |
)% |
|
European Credit |
|
|
2,343 |
|
147,618 |
|
|
1,958 |
|
119,461 |
|
19.65 |
% |
|
Municipal Bonds |
|
|
369 |
|
23,274 |
|
|
308 |
|
19,412 |
|
19.89 |
% |
|
Chinese Bonds |
|
|
3,476 |
|
205,061 |
|
|
720 |
|
42,505 |
|
382.44 |
% |
|
Other Credit Bonds |
|
|
243 |
|
15,253 |
|
|
98 |
|
6,054 |
|
147.63 |
% |
|
Derivatives |
|
|
12,863 |
|
810,324 |
|
|
8,362 |
|
520,513 |
|
53.83 |
% |
|
Swaps |
|
|
12,863 |
|
810,324 |
|
|
8,362 |
|
520,513 |
|
53.83 |
% |
|
Total |
|
|
29,707 |
|
1,857,527 |
|
|
18,989 |
|
1,183,071 |
|
56.45 |
% |
Equities |
Cash |
|
|
9,937 |
|
626,031 |
|
|
9,913 |
|
612,227 |
|
0.24 |
% |
|
|
|
|
7,286 |
|
459,042 |
|
|
7,547 |
|
467,930 |
|
(3.46 |
)% |
|
European ETFs |
|
|
2,651 |
|
166,989 |
|
|
2,366 |
|
144,297 |
|
12.05 |
% |
|
Derivatives |
|
|
11,318 |
|
713,035 |
|
|
9,444 |
|
584,528 |
|
19.85 |
% |
|
Convertibles/Swaps/Options |
|
|
7,982 |
|
502,841 |
|
|
6,340 |
|
392,306 |
|
25.89 |
% |
|
Futures |
|
|
3,336 |
|
210,194 |
|
|
3,103 |
|
192,221 |
|
7.51 |
% |
|
Total |
|
|
21,255 |
|
1,339,066 |
|
|
19,356 |
|
1,196,755 |
|
9.81 |
% |
Money Markets |
Cash |
|
|
621,840 |
|
39,173,818 |
|
|
484,304 |
|
30,339,263 |
|
28.40 |
% |
|
Repurchase Agreements (Repo) |
|
|
600,947 |
|
37,859,666 |
|
|
465,955 |
|
29,184,397 |
|
28.97 |
% |
|
Other Money Markets |
|
|
20,893 |
|
1,314,152 |
|
|
18,349 |
|
1,154,866 |
|
13.87 |
% |
|
Total |
|
|
621,840 |
|
39,173,818 |
|
|
484,304 |
|
30,339,263 |
|
28.40 |
% |
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
ADV (USD mm) |
Volume (USD mm) |
|
ADV (USD mm) |
Volume (USD mm) |
|
YoY |
|||||
|
Total |
|
$ |
1,922,270 |
$ |
121,044,010 |
|
$ |
1,296,607 |
$ |
80,980,548 |
|
48.3 |
% |
(1) |
We acquired Yieldbroker on |
To access historical traded volumes, go to https://www.tradeweb.com/newsroom/monthly-activity-reports/
BASIS OF PRESENTATION
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
FORWARD-LOOKING STATEMENTS
This release contains forward-looking statements within the meaning of the federal securities laws. Statements related to, among other things, our guidance, including full-year 2024 guidance and full-year 2024 and 2025 revenue guidance related to the LSEG market data license agreement, pending acquisitions, future performance, the industry and markets in which we operate, our expectations, beliefs, plans, strategies, objectives, prospects and assumptions and future events are forward-looking statements.
We have based these forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. These and other important factors, including those discussed under the heading “Risk Factors” in the documents of
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
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
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,
View source version on businesswire.com: https://www.businesswire.com/news/home/20240725918017/en/
Investor Relations
Ashley.Serrao@Tradeweb.com
Media Relations
Daniel.Noonan@Tradeweb.com
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