Tradeweb Annual Revenue Passes $1bn02.03.2022
Tradeweb Markets Inc. a leading, global operator of electronic marketplaces for rates, credit, equities and money markets, reported financial results for the fourth quarter and full year ended December 31, 2021.
$276.9 million quarterly revenues increased 18.8% (19.9% on a constant currency basis) compared to prior year period
$1.1 trillion average daily volume (“ADV”) for the quarter, an increase of 24.1% compared to prior year period; quarterly ADV records in U.S. government bonds, U.S. High Yield credit and swaps/swaptions ≥ 1- year; Tradeweb’s share of fully electronic TRACE volume for U.S. High Grade and U.S. High Yield for the quarter increased by +331 bps and +334 bps respectively compared to prior year period
$60.0 million net income for the quarter decreased by 9.7% from prior year period due to higher tax expense, as state apportionment rate changes drove a reduction in deferred tax assets.
$99.7 million adjusted net income increased by 23.9% from prior year period
50.6% adjusted EBITDA margin or $140.1 million adjusted EBITDA for the quarter, compared to 49.2% or $114.6 million respectively in prior year period
$0.23 diluted earnings per share (“Diluted EPS”) for the quarter and $0.42 adjusted diluted earnings per share for the quarter
$0.08 per share quarterly cash dividend declared; $12.0 million of shares repurchased in the fourth quarter
In addition to our January volumes, we reported fourth quarter and full year 2021 financial results this morning. Quarterly revenues increased 18.8% year over year, and quarterly ADV was $1.1tn.
— Tradeweb (@Tradeweb) February 3, 2022
Lee Olesky, CEO of Tradeweb Markets: “Tradeweb recorded its 22nd consecutive year of revenue growth in 2021 and surpassed $1 billion in annual revenues for the first time. We became the largest electronic trading platform for U.S. Treasuries, and as rates volatility increased we benefited from a global resurgence in swaps market activity on our platform. In credit, we continued to grow volume and market share, extending our industry leadership in electronic portfolio trading and reflecting strong client demand for both traditional RFQ and increased automation. We published our inaugural corporate sustainability report and continued to attract and develop world-class talent — reaffirming the strength of our culture during a time that tested each and every one of us. While increased adoption of electronic trading has been a long-term trend in recent years, we saw a clear acceleration of that trend during 2021. Looking ahead, we believe markets will continue to benefit from growth in electronic execution and digitized workflow.”
DISCUSSION OF RESULTS: FOURTH QUARTER 2021
Revenues of $146.5 million in the fourth quarter of 2021 increased 20.4% compared to prior year period (21.7% on a constant currency basis). Rates performance was led by record activity in swaps/swaptions ≥ 1-year and U.S. government bonds; the latter aided in part by the acquisition of NFI.
Revenues of $73.6 million in the fourth quarter of 2021 increased 24.2% compared to prior year period (25.1% on a constant currency basis). Credit performance was led by robust trading in U.S. credit, with record trading in U.S. High Yield, and supported by strong growth in European credit. Tradeweb’s share of fully electronic TRACE volume for U.S. High Grade was 13.4% compared with 10.1% in the prior year period (+331 bps) and for U.S. High Yield was 7.3%, compared with 4.0% in the prior year period (+334 bps).
Revenues of $18.4 million in the fourth quarter of 2021 increased 22.3% compared to prior year period (25.4% on a constant currency basis). Equities performance reflected increased adoption of RFQ for electronic trading in ETFs globally.
Money Markets –
Revenues of $10.9 million in the fourth quarter of 2021 increased 5.1% compared to prior year period (5.9% on a constant currency basis). Growth in Global Repo activity was supported by the continued addition of new clients and dealers on the platform and partially offset by lower revenue from certificates of deposit.
Market Data – Revenues of $21.6 million in the fourth quarter of 2021 increased 3.8% compared to prior year period (3.5% on a constant currency basis). The increase was derived from increased third party market data fees and revenue from our APA reporting service.
Other – Revenues of $5.8 million in the fourth quarter of 2021 decreased 0.8% compared to prior year period (decreased 0.8% on a constant currency basis).
Operating Expenses – Operating expenses of $185.7 million in the fourth quarter of 2021 increased 15.0% compared to $161.5 million in the prior year period. Adjusted expenses of $148.7 million increased 14.8% (16.0% on a constant currency basis) compared to the prior year period. Increases in both operating expenses and adjusted expenses were driven primarily by higher incentive compensation expenses tied to operating performance, as well as salaries and benefits resulting from increased employee headcount. Please see “Non-GAAP Financial Measures” below for additional information.
DISCUSSION OF RESULTS: FULL-YEAR 2021
Tradeweb recorded its 22nd consecutive year of record revenues in 2021, as total revenue increased 20.6% (19.3% on a constant currency basis) to $1.1 billion compared to full year 2020.
Revenue was driven by average daily trading volume of more than $1 trillion and record activity in: U.S. and European government bonds; swaps/swaptions ≥ 1-year; swaps/swaptions ≤ 1-year; Rates Futures; U.S. High Grade and High Yield credit; European credit; Chinese bonds; U.S. and European ETFs; equity convertibles/swaps/options; and Repurchase Agreements.
Net income increased 25.1% to $273.1 million for the year ended December 31, 2021, compared to $218.4 million for the year ended December 31, 2020. Adjusted EBITDA margin increased to 50.8% for the year ended December 31, 2021 compared to 48.9% for the year ended December 31, 2020, representing an increase of 192 bps (211 bps on a constant currency basis).
Diluted EPS increased 23.9% to $1.09 for the year ended December 31, 2021. Adjusted Diluted EPS increased 24.4% to $1.63 for the year ended December 31, 2021.
The electronic broker collaborated with Sustain.Life for emissions data.
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Corporate bond trading platform has more than doubled market share since 2020.
Trade automation was a record in terms of trading volume, trade count and active clients
ADV rise of 22% was driven by record U.S. Treasury, emerging markets and municipal bond volume.