TRADEWEB REPORTS THIRD QUARTER 2022 FINANCIAL RESULTS
Tradeweb Markets Inc. (Nasdaq: TW) reported strong financial results for the quarter ended September 30, 2022, with revenues of $287.1 million, an increase of 8.2% year-over-year. Average daily volume (ADV) rose to $1.1 trillion, up 14.0% from the previous year. Net income reached $81.6 million, a 24.9% increase, with adjusted EBITDA margin at 51.0%. The company declared a quarterly cash dividend of $0.08 per share and repurchased $9.0 million worth of shares. Guidance for adjusted expenses was updated to $620 - 640 million.
- Revenue increased by 8.2% to $287.1 million compared to the previous year.
- Net income rose 24.9% to $81.6 million for the quarter.
- Adjusted EBITDA margin improved to 51.0% from 50.1% year-over-year.
- Average daily volume (ADV) increased 14.0% to $1.1 trillion.
- Equities revenue up 29.3%, indicating strong institutional client activity.
- Operating expenses increased by 2.5% to $184.3 million, driven by higher employee compensation and technology costs.
-
quarterly revenues increased$287.1 million 8.2% (13.1% on a constant currency basis) compared to prior year period -
average daily volume (“ADV”) for the quarter, an increase of$1.1 trillion 14.0% compared to prior year period, with record ADV in fully electronicU.S. High Grade credit, equity convertibles/swaps/options and institutional municipal bonds. Tradeweb captured a record 13.9% of fully electronicU.S. High Grade TRACE -
net income and$81.6 million adjusted net income for the quarter, increases of$106.5 million 24.9% and13.1% respectively from prior year period -
51.0% adjusted EBITDA margin and adjusted EBITDA for the quarter, compared to$146.3 million 50.1% and respectively for prior year period$132.9 million -
diluted earnings per share (“Diluted EPS”) for the quarter and$0.33 adjusted diluted earnings per share$0.45 -
per share quarterly cash dividend declared;$0.08 of shares repurchased$9.0 million
"Tradeweb reported record third quarter revenues driven by strong trading volumes across asset classes and products. Despite challenging markets, we delivered double-digit revenue growth on a constant currency basis in rates, credit, equities and money markets. Our clients leveraged a wide range of electronic tools and protocols to help advance their trading strategies as markets reflected concerns around inflation and geopolitical conflict. Client engagement was strong across all of our markets and we’ve seen increased interest in electronifying markets that have been persistently analog, like swaps and repos.
As I prepare to retire as CEO at year-end and stay on as chairman, I am proud that Tradeweb has continued to grow, innovate and collaborate with our clients to make markets more efficient.
SELECT FINANCIAL RESULTS |
|
|
|
|
|
Constant |
||||
(dollars in thousands except per share amounts)(Unaudited) |
Currency |
|||||||||
GAAP Financial Measures |
3Q22 |
|
3Q21 |
Change |
Growth (1) |
|||||
Total revenue |
$ |
287,115 |
$ |
265,325 |
8.2 |
% |
13.1 |
% |
||
Rates |
$ |
148,167 |
$ |
139,418 |
6.3 |
% |
11.8 |
% |
||
Credit |
$ |
78,101 |
$ |
72,243 |
8.1 |
% |
11.7 |
% |
||
Equities |
$ |
21,277 |
$ |
16,457 |
29.3 |
% |
38.6 |
% |
||
Money Markets |
$ |
12,969 |
$ |
11,221 |
15.6 |
% |
19.7 |
% |
||
Market Data |
$ |
21,222 |
$ |
20,515 |
3.4 |
% |
6.1 |
% |
||
Other |
$ |
5,379 |
$ |
5,471 |
(1.7) |
% |
(1.6) |
% |
||
Net income |
$ |
81,566 |
$ |
65,305 |
24.9 |
% |
|
|
||
Net income attributable to |
$ |
69,083 |
$ |
54,763 |
26.1 |
% |
||||
Diluted EPS |
$ |
0.33 |
$ |
0.26 |
26.9 |
% |
|
|
||
Non-GAAP Financial Measures |
||||||||||
Adjusted EBITDA (1) |
$ |
146,334 |
$ |
132,946 |
10.1 |
% |
16.0 |
% |
||
Adjusted EBITDA margin (1) |
|
|
|
|
+86 |
bps |
+130 |
bps |
||
Adjusted EBIT (1) |
$ |
133,114 |
$ |
121,079 |
9.9 |
% |
16.3 |
% |
||
Adjusted EBIT margin (1) |
|
|
|
|
+73 |
bps |
+130 |
bps |
||
Adjusted Net Income (1) |
$ |
106,491 |
$ |
94,160 |
13.1 |
% |
19.5 |
% |
||
Adjusted Diluted EPS (1) |
$ |
0.45 |
$ |
0.39 |
15.4 |
% |
20.5 |
% |
(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 |
|
3Q22 |
|
3Q21 |
YoY |
||
Rates |
Cash |
$ |
324 |
$ |
337 |
(3.8) % |
||
|
Derivatives |
|
329 |
|
247 |
33.1 % |
||
|
Total |
|
653 |
|
584 |
11.8 % |
||
Credit |
Cash |
|
9 |
|
8 |
9.9 % |
||
|
Derivatives |
|
20 |
|
14 |
45.1 % |
||
|
Total |
|
29 |
|
22 |
31.7 % |
||
Equities |
Cash |
|
9 |
|
8 |
16.6 % |
||
|
Derivatives |
|
7 |
|
7 |
0.3 % |
||
|
Total |
|
16 |
|
15 |
8.7 % |
||
Money Markets |
Cash |
|
401 |
|
344 |
16.7 % |
||
|
Total |
|
401 |
|
344 |
16.7 % |
||
|
Total |
$ |
1,099 |
$ |
964 |
14.0 % |
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
Third Quarter 2022
-
Announced the appointment of
Thomas Pluta as President of Tradeweb beginningJanuary 1, 2023 -
Appointed
Jacques Aigrain andRana Yared as Independent Directors to Tradeweb’s board -
Announced collaboration with
S&P Global Market Intelligence to connect primary and secondary markets inEurope - Published our second annual 2021 Corporate Sustainability Report
- Facilitated the first fully automated dealer-to-client EUR interest rate swap versus Eurex bund future trade; non-deliverable interest rate swap transaction in Thai Baht (#THB) and interest rate swap transaction in Israeli Shekel (#ILS) on the Tradeweb platform
-
Recognized in numerous awards including: Best Workplaces for Innovators (
Fast Company ); European Markets Choice Awards, Markets Recognition Award (Markets Media); Excellence in Trading & Tech Awards, Best Fixed Income Trading Platform (Financial News ); Excellence in Trading & Tech Awards, Trading Initiative of the Year (Financial News ); Americas Derivatives Awards, Outstanding Achievement Award -Lee Olesky (GlobalCapital); Americas Derivatives Awards, Swap Execution Facility of the Year (GlobalCapital); Global Derivatives Awards, OTC Trading Venue of the Year (GlobalCapital); Asia Risk Awards, Buy-Side Trading System of the Year (Risk.net);Asia Capital Markets Awards, Fixed Income Trading System of the Year (FOW Global Investor Group );Asia Capital Markets Awards, Multi-Asset Trading System of the Year (FOW Global Investor Group )
CAPITAL MANAGEMENT
-
in cash and cash equivalents and an undrawn$1.1 billion credit facility at$500 million September 30, 2022 -
Non-acquisition related capital expenditures and capitalization of software development in third quarter 2022:
$12.3 million -
Free cash flow for the trailing twelve months ended
September 30, 2022 of , up$555.2 million 16.3% compared to the prior year period. See “Non-GAAP Financial Measures” for additional information -
During the third quarter of 2022, as part of its Share Repurchase Program, Tradeweb purchased 129,809 shares of Class A common stock, at an average price of
, for purchases totaling$69.33 . As of$9.0 million September 30, 2022 , a total of remained available for repurchase pursuant to the Share Repurchase Program$9.0 million -
in shares were withheld in the third quarter of 2022 to satisfy tax obligations related to the exercise of stock options and vesting of restricted stock units and performance-based restricted stock units$2.3 million -
The Board of Directors of
Tradeweb Markets Inc. declared a quarterly cash dividend of per share of Class A common stock and Class B common stock. The dividend will be payable on$0.08 December 15, 2022 to stockholders of record as ofDecember 1, 2022
OTHER MATTERS
Updated Full-Year 2022 Guidance*
Adjusted expenses:
No change to other guidance:
-
Acquisition and Refinitiv Transaction related depreciation and amortization expense:
$127 million
-
Assumed non-GAAP tax rate: ~
22.0%
-
Capital expenditures and capitalization of software development:
- 68 million$62
*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
After the conference call, an archived recording will be available at http://investors.tradeweb.com.
ABOUT
|
||||||||||||||
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||||
|
|
|
|
|
||||||||||
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||
Revenues |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
||||||
Transaction fees and commissions |
|
$ |
228,015 |
|
$ |
206,316 |
|
$ |
717,489 |
|
$ |
629,513 |
||
Subscription fees |
|
|
41,342 |
|
|
41,390 |
|
|
124,337 |
|
|
117,141 |
||
Refinitiv market data fees |
|
|
15,370 |
|
|
15,002 |
|
|
46,354 |
|
|
45,045 |
||
Other |
|
|
2,388 |
|
|
2,617 |
|
|
7,559 |
|
|
7,865 |
||
Total revenue |
|
|
287,115 |
|
|
265,325 |
|
|
895,739 |
|
|
799,564 |
||
|
|
|
|
|
|
|
|
|
||||||
Expenses |
|
|
|
|
|
|
|
|
||||||
Employee compensation and benefits |
|
|
102,720 |
|
|
98,036 |
|
|
330,601 |
|
|
300,107 |
||
Depreciation and amortization |
|
|
44,778 |
|
|
44,823 |
|
|
133,998 |
|
|
127,656 |
||
Technology and communications |
|
|
16,816 |
|
|
14,747 |
|
|
48,626 |
|
|
42,248 |
||
General and administrative |
|
|
6,892 |
|
|
9,561 |
|
|
24,806 |
|
|
21,809 |
||
Professional fees |
|
|
9,400 |
|
|
8,897 |
|
|
25,832 |
|
|
28,993 |
||
Occupancy |
|
|
3,699 |
|
|
3,733 |
|
|
10,857 |
|
|
11,104 |
||
Total expenses |
|
|
184,305 |
|
|
179,797 |
|
|
574,720 |
|
|
531,917 |
||
Operating income |
|
|
102,810 |
|
|
85,528 |
|
|
321,019 |
|
|
267,647 |
||
Net interest income (expense) |
|
|
3,413 |
|
|
(361) |
|
|
3,507 |
|
|
(1,179) |
||
Income before taxes |
|
|
106,223 |
|
|
85,167 |
|
|
324,526 |
|
|
266,468 |
||
Provision for income taxes |
|
|
(24,657) |
|
|
(19,862) |
|
|
(63,915) |
|
|
(53,365) |
||
Net income |
|
|
81,566 |
|
|
65,305 |
|
|
260,611 |
|
|
213,103 |
||
Less: Net income attributable to non-controlling interests |
|
|
12,483 |
|
|
10,542 |
|
|
40,219 |
|
|
35,165 |
||
Net income attributable to |
|
$ |
69,083 |
|
$ |
54,763 |
|
$ |
220,392 |
|
$ |
177,938 |
||
|
|
|
|
|
|
|
|
|
||||||
Earnings per share attributable to |
|
|
|
|
|
|
|
|
||||||
Basic |
|
$ |
0.34 |
|
$ |
0.27 |
|
$ |
1.08 |
|
$ |
0.89 |
||
Diluted |
|
$ |
0.33 |
|
$ |
0.26 |
|
$ |
1.06 |
|
$ |
0.86 |
||
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
||||||
Basic |
|
|
205,721,162 |
|
|
202,238,122 |
|
|
204,767,261 |
|
|
201,029,196 |
||
Diluted |
|
|
208,329,469 |
|
|
208,197,439 |
|
|
207,748,037 |
|
|
206,908,330 |
||
|
|||||||||||||||||
|
|
Three Months Ended |
|
Nine Months Ended |
|||||||||||||
Reconciliation of Net Income to Adjusted EBITDA, Adjusted EBITDA Margin,
|
|
|
|
|
|||||||||||||
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
||
|
|
(dollars in thousands) |
|||||||||||||||
Net income |
|
$ |
81,566 |
|
|
$ |
65,305 |
|
|
$ |
260,611 |
|
|
$ |
213,103 |
|
|
Acquisition transaction costs (1) |
|
|
43 |
|
|
|
459 |
|
|
|
40 |
|
|
|
5,186 |
|
|
Net interest (income) expense |
|
|
(3,413 |
) |
|
|
361 |
|
|
|
(3,507 |
) |
|
|
1,179 |
|
|
Depreciation and amortization |
|
|
44,778 |
|
|
|
44,823 |
|
|
|
133,998 |
|
|
|
127,656 |
|
|
Stock-based compensation expense (2) |
|
|
2,675 |
|
|
|
1,995 |
|
|
|
13,839 |
|
|
|
11,181 |
|
|
Provision for income taxes |
|
|
24,657 |
|
|
|
19,862 |
|
|
|
63,915 |
|
|
|
53,365 |
|
|
Foreign exchange (gains) / losses (3) |
|
|
(3,972 |
) |
|
|
141 |
|
|
|
(6,306 |
) |
|
|
(4,742 |
) |
|
Tax receivable agreement liability adjustment (4) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Adjusted EBITDA |
|
$ |
146,334 |
|
|
$ |
132,946 |
|
|
$ |
462,590 |
|
|
$ |
406,928 |
|
|
Less: Depreciation and amortization |
|
|
(44,778 |
) |
|
|
(44,823 |
) |
|
|
(133,998 |
) |
|
|
(127,656 |
) |
|
Add: D&A related to acquisitions and the Refinitiv Transaction (5) |
|
|
31,558 |
|
|
|
32,956 |
|
|
|
95,088 |
|
|
|
92,799 |
|
|
Adjusted EBIT |
|
$ |
133,114 |
|
|
$ |
121,079 |
|
|
$ |
423,680 |
|
|
$ |
372,071 |
|
|
Adjusted EBITDA margin (6) |
|
|
51.0 |
% |
|
|
50.1 |
% |
|
|
51.6 |
% |
|
|
50.9 |
% |
|
Adjusted EBIT margin (6) |
|
|
46.4 |
% |
|
|
45.6 |
% |
|
|
47.3 |
% |
|
|
46.5 |
% |
(1) |
Represents transaction and other costs related to the NFI Acquisition, which closed in |
|
(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 totaling |
|
(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) |
Adjusted EBITDA margin and Adjusted EBIT margin are defined as Adjusted EBITDA and Adjusted EBIT, respectively, divided by revenue for the applicable period. |
|
|
|
Three Months Ended |
|
Nine Months Ended |
|||||||||||||
Reconciliation of Net Income to Adjusted Net Income and Adjusted Diluted EPS |
|
|
|
|
|||||||||||||
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
||
|
|
(in thousands, except per share amounts) |
|||||||||||||||
Earnings per diluted share |
|
$ |
0.33 |
|
|
$ |
0.26 |
|
|
$ |
1.06 |
|
|
$ |
0.86 |
|
|
Net income attributable to |
|
$ |
69,083 |
|
|
$ |
54,763 |
|
|
$ |
220,392 |
|
|
$ |
177,938 |
|
|
Net income attributable to non-controlling interests (1) |
|
|
12,483 |
|
|
|
10,542 |
|
|
|
40,219 |
|
|
|
35,165 |
|
|
Net income |
|
|
81,566 |
|
|
|
65,305 |
|
|
|
260,611 |
|
|
|
213,103 |
|
|
Provision for income taxes |
|
|
24,657 |
|
|
|
19,862 |
|
|
|
63,915 |
|
|
|
53,365 |
|
|
Acquisition transaction costs (2) |
|
|
43 |
|
|
|
459 |
|
|
|
40 |
|
|
|
5,186 |
|
|
D&A related to acquisitions and the Refinitiv Transaction (3) |
|
|
31,558 |
|
|
|
32,956 |
|
|
|
95,088 |
|
|
|
92,799 |
|
|
Stock-based compensation expense (4) |
|
|
2,675 |
|
|
|
1,995 |
|
|
|
13,839 |
|
|
|
11,181 |
|
|
Foreign exchange (gains) / losses (5) |
|
|
(3,972 |
) |
|
|
141 |
|
|
|
(6,306 |
) |
|
|
(4,742 |
) |
|
Tax receivable agreement liability adjustment (6) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Adjusted Net Income before income taxes |
|
|
136,527 |
|
|
|
120,718 |
|
|
|
427,187 |
|
|
|
370,892 |
|
|
Adjusted income taxes (7) |
|
|
(30,036 |
) |
|
|
(26,558 |
) |
|
|
(93,982 |
) |
|
|
(81,596 |
) |
|
Adjusted Net Income |
|
$ |
106,491 |
|
|
$ |
94,160 |
|
|
$ |
333,205 |
|
|
$ |
289,296 |
|
|
Adjusted Diluted EPS (8) |
|
$ |
0.45 |
|
|
$ |
0.39 |
|
|
$ |
1.40 |
|
|
$ |
1.22 |
|
(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 |
|
(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 totaling |
|
(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 |
|
(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 |
|
Nine Months Ended |
||||||||||
|
|
|
|
|||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|||
Diluted weighted average shares of Class A and Class B common stock outstanding |
|
|
208,329,469 |
|
|
208,197,439 |
|
|
207,748,037 |
|
|
206,908,330 |
||
Weighted average of other participating securities (1) |
|
|
246,238 |
|
|
— |
|
|
121,115 |
|
|
— |
||
Assumed exchange of LLC Interests for shares of Class A or Class B common stock (2) |
|
|
28,750,603 |
|
|
30,531,933 |
|
|
29,667,383 |
|
|
30,756,925 |
||
Adjusted diluted weighted average shares outstanding |
|
|
237,326,310 |
|
|
238,729,372 |
|
|
237,536,535 |
|
|
237,665,255 |
||
Adjusted Net Income (in thousands) |
|
$ |
106,491 |
|
$ |
94,160 |
|
$ |
333,205 |
|
$ |
289,296 |
||
Adjusted Diluted EPS |
|
$ |
0.45 |
|
$ |
0.39 |
|
$ |
1.40 |
|
$ |
1.22 |
(1) |
Represents weighted average unvested restricted stock units and unsettled vested performance-based restricted stock units issued to certain retired executives 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 |
|
Nine Months Ended |
|||||||||||||
Reconciliation of Operating Expenses to Adjusted Expenses |
|
|
|
|
|||||||||||||
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
||
|
|
(in thousands) |
|||||||||||||||
Operating expenses |
|
$ |
184,305 |
|
|
$ |
179,797 |
|
|
$ |
574,720 |
|
|
$ |
531,917 |
|
|
Acquisition transaction costs (1) |
|
|
(43 |
) |
|
|
(459 |
) |
|
|
(40 |
) |
|
|
(5,186 |
) |
|
D&A related to acquisitions and the Refinitiv Transaction (2) |
|
|
(31,558 |
) |
|
|
(32,956 |
) |
|
|
(95,088 |
) |
|
|
(92,799 |
) |
|
Stock-based compensation expense (3) |
|
|
(2,675 |
) |
|
|
(1,995 |
) |
|
|
(13,839 |
) |
|
|
(11,181 |
) |
|
Foreign exchange gains / (losses) (4) |
|
|
3,972 |
|
|
|
(141 |
) |
|
|
6,306 |
|
|
|
4,742 |
|
|
Adjusted Expenses |
|
$ |
154,001 |
|
|
$ |
144,246 |
|
|
$ |
472,059 |
|
|
$ |
427,493 |
|
(1) |
Represents transaction and other costs related to the NFI Acquisition, which closed in |
|
(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 totaling |
|
(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 Flows from Operating Activities to Free Cash Flow |
|
|
2022 |
|
|
|
2021 |
|
|
|
|
(in thousands) |
|||||||
Cash flow from operating activities |
|
$ |
616,473 |
|
|
$ |
526,072 |
|
|
Less: Capitalization of software development costs |
|
|
(36,127 |
) |
|
|
(33,995 |
) |
|
Less: Purchases of furniture, equipment and leasehold improvements |
|
|
(25,123 |
) |
|
|
(14,720 |
) |
|
Free Cash Flow |
|
$ |
555,223 |
|
|
$ |
477,357 |
|
|
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
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
EPS: Net income attributable to |
|
|
|
|
||||||||||||
|
|
2022 |
|
|
|
2021 |
|
|
2022 |
|
|
|
2021 |
|||
|
|
(in thousands, except share and per share amounts) |
||||||||||||||
Numerator: |
|
|
|
|
|
|
|
|
||||||||
Net income attributable to |
|
$ |
69,083 |
|
|
$ |
54,763 |
|
$ |
220,392 |
|
|
$ |
177,938 |
||
Less: Distributed and undistributed earnings allocated to unvested RSUs and unsettled vested PRSUs (1) |
|
|
(82 |
) |
|
|
— |
|
|
(111 |
) |
|
|
— |
||
Net income attributable to outstanding shares of Class A and Class B common stock - Basic and Diluted |
|
$ |
69,001 |
|
|
$ |
54,763 |
|
$ |
220,281 |
|
|
$ |
177,938 |
||
|
|
|
|
|
|
|
|
|
||||||||
Denominator: |
|
|
|
|
|
|
|
|
||||||||
Weighted average shares of Class A and Class B common stock outstanding - Basic |
|
|
205,721,162 |
|
|
|
202,238,122 |
|
|
204,767,261 |
|
|
|
201,029,196 |
||
Dilutive effect of PRSUs |
|
|
746,043 |
|
|
|
2,146,473 |
|
|
796,090 |
|
|
|
2,000,005 |
||
Dilutive effect of options |
|
|
1,661,705 |
|
|
|
3,516,893 |
|
|
1,940,970 |
|
|
|
3,609,906 |
||
Dilutive effect of RSUs |
|
|
200,559 |
|
|
|
295,951 |
|
|
243,716 |
|
|
|
269,223 |
||
Weighted average shares of Class A and Class B common stock outstanding - Diluted |
|
|
208,329,469 |
|
|
|
208,197,439 |
|
|
207,748,037 |
|
|
|
206,908,330 |
||
|
|
|
|
|
|
|
|
|
||||||||
Earnings per share - Basic |
|
$ |
0.34 |
|
|
$ |
0.27 |
|
$ |
1.08 |
|
|
$ |
0.89 |
||
Earnings per share - Diluted |
|
$ |
0.33 |
|
|
$ |
0.26 |
|
$ |
1.06 |
|
|
$ |
0.86 |
(1) |
During the three and nine months ended |
|
|
|||||||||||||||||||||||||
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
2022 |
|
2021 |
|
$ Change |
|
% Change |
|||||||||||||||||
Revenues |
|
Variable |
|
Fixed |
|
Variable |
|
Fixed |
|
Variable |
|
Fixed |
|
Variable |
|
Fixed |
|||||||||
|
|
(dollars in thousands) |
|||||||||||||||||||||||
Rates |
|
$ |
93,673 |
|
$ |
54,494 |
|
$ |
80,888 |
|
$ |
58,530 |
|
$ |
12,785 |
|
$ |
(4,036 |
) |
|
|
|
(6.9)% |
||
Credit |
|
|
71,724 |
|
|
6,377 |
|
|
65,742 |
|
|
6,501 |
|
|
5,982 |
|
|
(124 |
) |
|
|
|
(1.9)% |
||
Equities |
|
|
18,969 |
|
|
2,308 |
|
|
14,235 |
|
|
2,222 |
|
|
4,734 |
|
|
86 |
|
|
|
|
|
||
Money Markets |
|
|
8,507 |
|
|
4,462 |
|
|
7,198 |
|
|
4,023 |
|
|
1,309 |
|
|
439 |
|
|
|
|
|
||
Market Data |
|
|
— |
|
|
21,222 |
|
|
— |
|
|
20,515 |
|
|
— |
|
|
707 |
|
|
— |
|
|
||
Other |
|
|
— |
|
|
5,379 |
|
|
— |
|
|
5,471 |
|
|
— |
|
|
(92 |
) |
|
— |
|
(1.7)% |
||
Total revenue |
|
$ |
192,873 |
|
$ |
94,242 |
|
$ |
168,063 |
|
$ |
97,262 |
|
$ |
24,810 |
|
$ |
(3,020 |
) |
|
|
|
(3.1)% |
||
|
||||||||||
|
|
Three Months Ended |
|
|
||||||
|
|
|
|
YoY |
||||||
|
|
2022 |
|
2021 |
|
% Change |
||||
Rates |
|
$ |
2.23 |
|
$ |
2.15 |
|
|
||
Cash Rates |
|
$ |
2.23 |
|
$ |
1.95 |
|
|
||
Rates Derivatives |
|
$ |
2.24 |
|
$ |
2.42 |
|
(7.4)% |
||
Swaps / Swaptions Tenor (greater than 1 year) |
|
$ |
3.46 |
|
$ |
3.73 |
|
(7.3)% |
||
Other Rates Derivatives (1) |
|
$ |
0.27 |
|
$ |
0.20 |
|
|
||
|
|
|
|
|
|
|
||||
Credit |
|
$ |
38.03 |
|
$ |
45.67 |
|
(16.7)% |
||
Cash Credit (2) |
|
$ |
150.38 |
|
$ |
144.48 |
|
|
||
Credit Derivatives and |
|
$ |
6.33 |
|
$ |
6.16 |
|
|
||
|
|
|
|
|
|
|
||||
Equities |
|
$ |
18.69 |
|
$ |
15.20 |
|
|
||
|
|
$ |
29.33 |
|
$ |
24.37 |
|
|
||
Equity Derivatives |
|
$ |
5.28 |
|
$ |
5.23 |
|
|
||
|
|
|
|
|
|
|
||||
Money Markets (Cash) |
|
$ |
0.33 |
|
$ |
0.33 |
|
|
||
|
|
|
|
|
|
|
||||
Total Fees per Million |
|
$ |
2.73 |
|
$ |
2.70 |
|
|
||
Total Fees per Million excluding Other Rates Derivatives (3) |
|
$ |
3.05 |
|
$ |
2.97 |
|
|
(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) |
|
(3) |
Included to contextualize the impact of short-tenored Swaps/Swaptions and Rates Futures on totals for all periods presented. |
|
|
|||||||||||||||
|
|
|
2022 Q3 |
|
2021 Q3 |
|
YoY |
||||||||
Asset Class |
Product |
|
ADV (USD mm) |
Volume (USD mm) |
|
ADV (USD mm) |
Volume (USD mm) |
|
ADV |
||||||
Rates |
Cash |
|
$ |
324,153 |
$ |
20,773,078 |
|
$ |
336,832 |
$ |
21,610,725 |
|
(3.76) % |
||
|
|
|
|
123,736 |
|
7,919,082 |
|
|
124,638 |
|
7,976,859 |
|
(0.72) % |
||
|
European Government Bonds |
|
|
33,338 |
|
2,166,946 |
|
|
28,800 |
|
1,900,795 |
|
15.76 % |
||
|
Mortgages |
|
|
162,542 |
|
10,402,677 |
|
|
179,636 |
|
11,496,734 |
|
(9.52) % |
||
|
Other Government Bonds |
|
|
4,538 |
|
284,373 |
|
|
3,757 |
|
236,337 |
|
20.78 % |
||
|
Derivatives |
|
|
328,636 |
|
21,158,402 |
|
|
246,981 |
|
15,992,323 |
|
33.06 % |
||
|
Swaps/Swaptions ≥ 1Y |
|
|
203,038 |
|
13,066,309 |
|
|
154,970 |
|
10,039,311 |
|
31.02 % |
||
|
Swaps/Swaptions < 1Y |
|
|
123,817 |
|
7,978,143 |
|
|
91,240 |
|
5,903,695 |
|
35.70 % |
||
|
Futures |
|
|
1,780 |
|
113,950 |
|
|
770 |
|
49,317 |
|
131.08 % |
||
|
Total |
|
|
652,789 |
|
41,931,480 |
|
|
583,813 |
|
37,603,048 |
|
11.81 % |
||
Credit |
Cash |
|
|
9,275 |
|
595,883 |
|
|
8,440 |
|
543,735 |
|
9.88 % |
||
|
|
|
|
3,282 |
|
210,038 |
|
|
2,602 |
|
166,536 |
|
26.12 % |
||
|
|
|
|
2,475 |
|
158,411 |
|
|
1,775 |
|
113,615 |
|
39.43 % |
||
|
|
|
|
465 |
|
29,751 |
|
|
539 |
|
34,519 |
|
(13.81) % |
||
|
|
|
|
351 |
|
22,482 |
|
|
296 |
|
18,928 |
|
18.77 % |
||
|
European Credit |
|
|
1,367 |
|
88,838 |
|
|
1,707 |
|
112,653 |
|
(19.93) % |
||
|
Municipal Bonds |
|
|
354 |
|
22,673 |
|
|
173 |
|
11,056 |
|
105.08 % |
||
|
Chinese Bonds |
|
|
863 |
|
56,067 |
|
|
1,233 |
|
78,893 |
|
(30.03) % |
||
|
Other Credit Bonds |
|
|
118 |
|
7,622 |
|
|
116 |
|
7,534 |
|
1.96 % |
||
|
Derivatives |
|
|
20,020 |
|
1,289,959 |
|
|
13,796 |
|
895,891 |
|
45.12 % |
||
|
Swaps |
|
|
20,020 |
|
1,289,959 |
|
|
13,796 |
|
895,891 |
|
45.12 % |
||
|
Total |
|
|
29,295 |
|
1,885,842 |
|
|
22,237 |
|
1,439,626 |
|
31.74 % |
||
Equities |
Cash |
|
|
8,803 |
|
565,898 |
|
|
7,551 |
|
487,508 |
|
16.58 % |
||
|
|
|
|
6,299 |
|
403,126 |
|
|
5,421 |
|
346,950 |
|
16.19 % |
||
|
European ETFs |
|
|
2,504 |
|
162,772 |
|
|
2,130 |
|
140,558 |
|
17.59 % |
||
|
Derivatives |
|
|
7,009 |
|
449,209 |
|
|
6,992 |
|
449,243 |
|
0.25 % |
||
|
Convertibles/Swaps/Options |
|
|
4,384 |
|
281,007 |
|
|
3,559 |
|
229,356 |
|
23.18 % |
||
|
Futures |
|
|
2,625 |
|
168,202 |
|
|
3,433 |
|
219,886 |
|
(23.53) % |
||
|
Total |
|
|
15,812 |
|
1,015,106 |
|
|
14,543 |
|
936,751 |
|
8.73 % |
||
Money Markets |
Cash |
|
|
400,726 |
|
25,721,492 |
|
|
343,528 |
|
22,137,906 |
|
16.65 % |
||
|
Repurchase Agreements (Repo) |
|
|
382,040 |
|
24,525,135 |
|
|
329,366 |
|
21,231,148 |
|
15.99 % |
||
|
Other Money Markets |
|
|
18,686 |
|
1,196,357 |
|
|
14,162 |
|
906,758 |
|
31.95 % |
||
|
Total |
|
|
400,726 |
|
25,721,492 |
|
|
343,528 |
|
22,137,906 |
|
16.65 % |
||
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
ADV (USD mm) |
Volume (USD mm) |
|
ADV (USD mm) |
Volume (USD mm) |
|
YoY |
||||||
|
Total |
|
$ |
1,098,622 |
$ |
70,553,920 |
|
$ |
964,120 |
$ |
62,117,331 |
|
14.00 % |
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 2022 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.
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
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
Please refer to the Company's previously filed Annual Report on Form 10-K for capitalized terms not otherwise defined herein.
TRADEWEB SOCIAL MEDIA
Investors and others should note that
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
We present certain growth information on a “constant currency” basis. Since our consolidated financial statements are presented in
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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20221027005040/en/
Investor Relations
Ashley.Serrao@Tradeweb.com
Media Relations
Daniel.Noonan@Tradeweb.com
Source:
FAQ
What were Tradeweb Markets' revenues for Q3 2022?
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