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,...
NEW YORK: Tradeweb Markets Inc. (Nasdaq: TW), a leading, global operator of electronic marketplaces for rates, credit, equities and money markets, today reported financial results for the quarter ended June 30, 2024.
$405.0 million quarterly revenues, an increase of 30.4% (30.8% on a constant currency basis) compared to prior year period
$1.9 trillion average daily volume (“ADV”) for the quarter, an increase of 48.3% compared to prior year period; quarterly ADV records in U.S. government bonds, fully electronic U.S. high yield credit and global repurchase agreements; record 18.8% share of fully electronic U.S. high grade TRACE
$136.4 million net income and $166.7 million adjusted net income for the quarter, increases of 33.8% and 34.7% respectively from prior year period
53.5% adjusted EBITDA margin and $216.5 million adjusted EBITDA for the quarter, compared to 52.5% and $163.1 million respectively for prior year period
$0.55 diluted earnings per share (“Diluted EPS”) and $0.70 adjusted diluted earnings per share for the quarter
$0.10 per share quarterly cash dividend declared
Billy Hult, CEO of Tradeweb:
“We delivered strong organic growth complemented by continued investment in our multi-asset class, global business, resulting in a 30.4% revenue increase year-over-year in Q2 2024. Tradeweb set quarterly ADV records in rates, money markets, and credit – where we also captured a record 18.8% share of fully electronic U.S. high grade TRACE. Markets continue to become increasingly interconnected, and our technology is helping to make that possible. Tradeweb recently became the first electronic trading platform to connect repo and IRS markets, and we expanded our partnership with FTSE Russell to produce benchmark U.S. treasury closing prices. In Q2 2024, we agreed to acquire ICD, an institutional investment technology provider for corporate treasury organizations, which would introduce Corporates as our fourth client channel. We also made a minority investment in Securitize, a leader in tokenizing real-world assets, and entered into a commercial agreement with blockchain infrastructure provider Alphaledger, reflecting our continued efforts to strategically place bets on technology that helps to advance our business. I'm proud of our strides this quarter and look forward to continually identifying new opportunities for our long-term growth.”
SELECT FINANCIAL RESULTS |
| 2Q24 |
|
| 2Q23 |
| Change | Constant Currency Change(1) | ||
(dollars in thousands except per share amounts)(Unaudited) | ||||||||||
GAAP Financial Measures | ||||||||||
Total revenue | $ | 404,951 |
| $ | 310,613 |
| 30.4 | % | 30.8 | % |
Rates | $ | 217,531 |
| $ | 160,354 |
| 35.7 | % | 36.4 | % |
Credit | $ | 111,324 |
| $ | 84,048 |
| 32.5 | % | 32.6 | % |
Equities | $ | 22,871 |
| $ | 22,146 |
| 3.3 | % | 3.8 | % |
Money Markets | $ | 18,045 |
| $ | 15,834 |
| 14.0 | % | 14.2 | % |
Market Data | $ | 29,227 |
| $ | 22,776 |
| 28.3 | % | 28.4 | % |
Other | $ | 5,953 |
| $ | 5,455 |
| 9.1 | % | 9.2 | % |
Net income | $ | 136,416 |
| $ | 101,939 |
| 33.8 | % |
|
|
Net income attributable to Tradeweb Markets Inc. (2) | $ | 119,239 |
| $ | 89,082 |
| 33.9 | % | ||
Diluted EPS | $ | 0.55 |
| $ | 0.42 |
| 31.0 | % |
|
|
Net income margin |
| 33.7 | % |
| 32.8 | % | +87 | bps |
|
|
Non-GAAP Financial Measures | ||||||||||
Adjusted EBITDA (1) | $ | 216,533 |
| $ | 163,055 |
| 32.8 | % | 32.6 | % |
Adjusted EBITDA margin (1) |
| 53.5 | % |
| 52.5 | % | +98 | bps | +70 | bps |
Adjusted EBIT (1) | $ | 201,312 |
| $ | 148,797 |
| 35.3 | % | 35.0 | % |
Adjusted EBIT margin (1) |
| 49.7 | % |
| 47.9 | % | +181 | bps | +154 | bps |
Adjusted Net Income (1) | $ | 166,711 |
| $ | 123,749 |
| 34.7 | % | 34.5 | % |
Adjusted Diluted EPS (1) | $ | 0.70 |
| $ | 0.52 |
| 34.6 | % | 34.6 | % |
(1) | Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT, Adjusted EBIT margin, Adjusted Net Income, Adjusted Diluted EPS and constant currency change are non-GAAP financial measures. See “Non-GAAP Financial Measures” below and the attached schedules for additional information and reconciliations of such non-GAAP financial measures. |
(2) | Represents net income less net income attributable to non-controlling interests. |
ADV (US $bn) (Unaudited) | |||||||
Asset Class | Product |
| 2Q24 |
| 2Q23 | YoY | |
Rates | Cash | $ | 462 | $ | 345 | 34.1 | % |
| Derivatives |
| 787 |
| 429 | 83.4 | % |
| Total |
| 1,249 |
| 774 | 61.4 | % |
Credit | Cash |
| 17 |
| 11 | 58.5 | % |
| Derivatives |
| 13 |
| 8 | 53.8 | % |
| Total |
| 30 |
| 19 | 56.5 | % |
Equities | Cash |
| 10 |
| 10 | 0.2 | % |
| Derivatives |
| 11 |
| 9 | 19.9 | % |
| Total |
| 21 |
| 19 | 9.8 | % |
Money Markets | Cash |
| 622 |
| 484 | 28.4 | % |
| Total |
| 622 |
| 484 | 28.4 | % |
| Total | $ | 1,922 | $ | 1,297 | 48.3 | % |
DISCUSSION OF RESULTS
Rates – Revenues of $217.5 million in the second quarter of 2024 increased 35.7% compared to prior year period (increased 36.4% on a constant currency basis). Rates ADV was up 61.4% from prior year period, driven by strong volume in swaps/swaptions ≥ and < 1-year and record volume in U.S. government bonds. The addition of r8fin continued to contribute positively to wholesale volumes. European government bonds ADV was up 12.3% from prior year period, driven by market volatility and sustained primary issuance across Europe and the UK. Mortgages ADV was up 24.8%, reflecting robust to-be-announced (TBA) volumes led by heightened dollar roll and coupon swap activity as well as continued strong client adoption of our specified pool trading platform.
Credit – Revenues of $111.3 million in the second quarter of 2024 increased 32.5% compared to prior year period (increased 32.6% on a constant currency basis). Credit ADV was up 56.5% from prior year period, as strong U.S. credit volumes, including record ADV in fully-electronic U.S. high yield credit, reflected continued client adoption across Tradeweb products and protocols, including request-for-quote (RFQ), Tradeweb AllTrade® and portfolio trading. European credit ADV was up 19.7% from prior year period, driven by strong activity in portfolio trading and our unique dealer selection tool (SNAP IOI). We reported a record 18.8% share of fully electronic U.S. high grade TRACE, up 392 bps from prior year period, and a 7.6% share of fully electronic U.S. high yield TRACE, up 139 bps from prior year period.
Equities – Revenues of $22.9 million in the second quarter of 2024 increased 3.3% compared to prior year period (increased 3.8% on a constant currency basis). Equities ADV was up 9.8% from prior year period, driven by strong growth in equity derivatives while ETF market volumes remained muted as market volatility remained low.
Money Markets – Revenues of $18.0 million in the second quarter of 2024 increased 14.0% compared to prior year period (increased 14.2% on a constant currency basis). Money Markets ADV was up 28.4% from prior year period, led by record activity in global repurchase agreements and increased client adoption of Tradeweb's electronic trading solutions.
Market Data – Revenues of $29.2 million in the second quarter of 2024 increased 28.3% compared to prior year period (increased 28.4% on a constant currency basis). The increase was derived primarily from increased LSEG market data fees from the contract that was amended effective November 1, 2023 and proprietary third party market data revenue.
Other – Revenues of $6.0 million in the second quarter of 2024 increased 9.1% compared to prior year period (increased 9.2% on a constant currency basis).
Operating Expenses of $242.5 million in the second quarter of 2024 increased 24.8% compared to $194.3 million in prior year period, primarily due to an increase in incentive compensation expense tied to our financial performance, as well as an increase in headcount and related salaries and employee compensation and benefits to support our continued growth. During the quarter, we also incurred $2.9 million in incremental cash compensation expense and $0.3 million in accelerated stock-based compensation expense in connection with the departure of an executive effective September 30, 2024.
Adjusted Expenses of $203.6 million in the second quarter of 2024 increased 25.8% (increased 27.0% on a constant currency basis) compared to prior year period primarily due to higher expenses related to adjusted employee compensation and benefits, including $2.9 million in incremental cash compensation expense in the second quarter of 2024 in connection with the departure of an executive effective September 30, 2024. Please see "Non-GAAP Financial Measures" below for additional information.
RECENT HIGHLIGHTS
Second Quarter 2024
CAPITAL MANAGEMENT
OTHER MATTERS
Updated Full-Year 2024 Guidance*
The guidance has been revised to reflect higher expenses and expenditures in light of strong business momentum, the anticipated closing of ICD during the third quarter of 2024 and recently announced management changes. Assumed non-GAAP tax rate and LSEG Market Data Contract Revenue guidance is unchanged from the prior quarter guidance.
*GAAP operating expenses and tax rate guidance are not provided due to the inherent difficulty in quantifying certain amounts due to a variety of factors including the unpredictability in the movement of foreign currency rates. Expense guidance assumes an average 2024 Sterling/US$ foreign exchange rate of 1.24 and includes completed M&A transactions as well as the expected closing of the ICD acquisition in the third quarter of 2024. Guidance amounts for cash capital expenditures and capitalized software development excludes amounts paid at closing for acquisitions.
CONFERENCE CALL
Tradeweb Markets will hold a conference call to discuss second quarter 2024 results starting at 9:30 AM EDT today, July 25, 2024. A live, audio webcast of the conference call along with related presentation materials will be available at https://investors.tradeweb.com/events-and-presentations.
An archived recording of the call will be available afterward at https://investors.tradeweb.com.
ABOUT TRADEWEB MARKETS
Tradeweb Markets Inc. (Nasdaq: TW) is a leading, global operator of electronic marketplaces for rates, credit, equities and money markets. Founded in 1996, Tradeweb provides access to markets, data and analytics, electronic trading, straight-through-processing and reporting for more than 50 products to clients in the institutional, wholesale and retail markets. Advanced technologies developed by Tradeweb enhance price discovery, order execution and trade workflows while allowing for greater scale and helping to reduce risks in client trading operations. Tradeweb serves more than 2,500 clients in more than 70 countries. On average, Tradeweb facilitated more than $1.7 trillion in notional value traded per day over the past four fiscal quarters. For more information, please go to www.tradeweb.com.
TRADEWEB MARKETS INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) | ||||||||||||||||
|
| Three Months Ended |
| Six Months Ended | ||||||||||||
|
| June 30, |
| June 30, | ||||||||||||
|
|
| 2024 |
|
|
| 2023 |
|
|
| 2024 |
|
|
| 2023 |
|
Revenues | (dollars in thousands, except per share amounts) | |||||||||||||||
Transaction fees and commissions |
| $ | 330,475 |
|
| $ | 246,461 |
|
| $ | 665,926 |
|
| $ | 513,059 |
|
Subscription fees |
|
| 50,746 |
|
|
| 45,748 |
|
|
| 100,427 |
|
|
| 90,122 |
|
LSEG market data fees |
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