04.29.2021

Tradeweb Reports Record Average Daily Volume

Tradeweb Markets, a leading, global operator of electronic marketplaces for rates, credit, equities and money markets, today reported financial results for the quarter ended March 31, 2021.

$273.4 million quarterly revenues increased 16.5% (13.9% on a constant currency basis) compared to prior year period

$1.06 trillion record average daily volume (“ADV”) for the quarter, an increase of 18.0% compared to prior year period with ADV records in U.S. and European government bonds, mortgages, rates derivatives, U.S. High Grade bonds, U.S. High Yield bonds, European Credit, Chinese bonds, Repurchase Agreements and European ETFs.

Tradeweb share of fully electronic TRACE volume for the quarter was 10.1% for U.S. High Grade and 4.0% for U.S. High Yield, compared to 5.9% and 2.0% respectively in prior year period

$81.6 million net income and $101.6 million adjusted net income for the quarter, increases of 30.5%, and 19.0% respectively from prior year period

52.0% adjusted EBITDA margin or $142.1 million adjusted EBITDA for the quarter, compared to 51.0% or $119.7 million respectively for prior year period

$0.33 diluted earnings per share (“Diluted EPS”) for the quarter and $0.43 adjusted diluted earnings per share $0.08 per share quarterly cash dividend declared

Lee Olesky, CEO of Tradeweb Markets: “Tradeweb experienced sustained momentum throughout the first quarter of 2021 thanks in part to stronger client engagement, changing user behaviors and accelerated trends in electronic trading adoption and innovation. We averaged more than $1 trillion per day in trading volume during each of these three months, which was especially remarkable given the quarter’s relatively subdued volatility. Our first quarter’s record volume was driven by changing behaviors, which we believe will continue to fuel our growth over the long term.”

Rates

Revenues of $142.9 million in the first quarter of 2021 increased 13.4% compared to prior year period (10.7% on a constant currency basis). Higher global issuance and increased client adoption drove higher volumes in government bonds, mortgages and swaps. Government bond trading saw growth in execution via streams and session-based trading, while swaps saw growth in RFM List trading and Emerging Markets IRS.

Credit

Revenues of $74.4 million in the first quarter of 2021 increased 37.8% compared to prior year period (35.0% on a constant currency basis). U.S. and European corporate bond trading volumes grew to record levels. Corporate bond client activity was strong across trading protocols, most notably in global portfolio trading, as well as Tradeweb AllTrade with anonymous all-to-all and sessionbased trading being highlights. CDS volumes, which carry a lower fee per million than overall credit, decreased as volatility declined from unprecedented levels seen last year.

Equities

Revenues of $18.9 million in the first quarter of 2021 decreased 2.9% compared to prior year period (7.1% on a constant currency basis). Continued growth in institutional equities driven by new client adoption and higher AiEX activity was more than offset by lower volumes and revenue in wholesale ETFs as lower equity market volatility weighed on overall activity.

Money Markets

Revenues of $10.8 million in the first quarter of 2021 decreased 3.5% compared to prior year period (5.0% on a constant currency basis). Growth in institutional repo driven by the addition of new dealers and participants was more than offset by continued pressure on retail money markets activity due to the low interest rate environment.

Market Data

Revenues of $20.0 million in the first quarter of 2021 increased 7.6% compared to prior year period (6.3% on a constant currency basis) due to delivery of additional data under our market data license agreements with Refinitiv.

Other

Revenues of $6.5 million in the first quarter of 2021 increased 19.8% compared to prior year period (19.8% on a constant currency basis).

Operating Expenses

Operating expenses of $175.1 million in the first quarter of 2021 increased 11.5% compared to $157.0 million in the prior year period due to: higher employee compensation and benefits expense; higher depreciation and amortization expense; and higher technology and communications expense.

Adjusted Expenses of $142.7 million increased 13.4% (8.8% on a constant currency basis) compared to the prior year period due to: higher employee compensation and benefits expense associated with performance related compensation and higher headcount to support growth; higher technology and communications expense; and the adverse impact of foreign exchange.

RECENT HIGHLIGHTS

First Quarter 2021

• Agreed to acquire Nasdaq’s U.S. fixed income electronic trading platform (formerly known as eSpeed) for $190 million in cash

• Launched Multi-Client Net Spotting, a new tool that significantly enhances how credit market participants access the U.S. Treasury market to hedge their risk

• Completed first-ever fully electronic standardized total return swap trade based on IHS Markit’s iBoxx USD Liquid High Grade Index

• Appointed Von M. Hughes, Partner and Managing Director of PAAMCO Prisma, to the Board of Directors as an independent director and Murray Roos, Group Head of Capital Markets for London Stock Exchange Group, to the Board of Directors • Appointed James Sun as Managing Director, Head of Asia

• Recognized in numerous awards including: Impact Innovation Awards, Customer Experience – Portfolio Trading (Aite); Digital Initiative of the Year – AiEX (The TRADE); Best ETF Platform (ETF Express); Market Data Professional of the Year – Lisa Schirf (WatersTechnology); and Vendor Professional of the Year, Trading and Risk – Zara Pratley (WatersTechnology)

April 2021

• Joined the Climate Bonds Initiative’s Partners Program, a global movement seeking to mobilize bond markets for climate change solutions, and announced that Climate Bonds Initiative-screened Green bonds accounted for $79 billion of trading volume executed on Tradeweb in 2020, an increase of 65% over 2019 volumes

• Announced collaboration with Amazon Web Services to broaden access to Tradeweb U.S. Treasury and U.K. Gilt closing price data through AWS Data Exchange, making it easier to find, subscribe to, and use third-party data in the cloud

• Recognized in numerous awards including: Best Swap Execution Facility (WatersTechnology); Best Fixed Income Trading Platform (Markets Media); and Rising Star – Chika Nwafor (Markets Media)

CAPITAL MANAGEMENT

• $809.9 million in cash and cash equivalents and an undrawn $500 million credit facility at March 31, 2021

• Capital expenditures and capitalization of software development: $12.6 million

• Free cash flow for the trailing twelve months ended March 31, 2021 of $473.8 million, up 78.3% year over year. See “NonGAAP Financial Measures” for additional information

• 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 June 15, 2021 to stockholders of record as of June 1, 2021

OTHER MATTERS

Updated Full-Year 2021 Guidance*

• Adjusted Expenses: $530 – $560 million (upper half of range)

◦ Non-GAAP adjusted expense guidance does not include any expenses tied to our pending acquisition of Nasdaq’s U.S. fixed income electronic trading platform. We will update our guidance following the closing of the deal.

• Acquisition and Refinitiv Transaction related depreciation and amortization expense: $120 million

• Assumed non-GAAP tax rate: 22.0% • Capital expenditures and capitalization of software development: $45 – $50 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.

Source: Tradeweb

Related articles

  1. State Street Automates Fixed-Income ETFs

    Fintech Nivaura helped develop Flow which provides end-to-end automation in primary debt markets.

  2. Technology will advance trading relationships with minority-, women- and veteran-owned broker-dealers.

  3. The European Union has transformed into a market bellwether.

  4. European Investment Bank believes the digitalization of capital markets will benefit market participants.

  5. Trading automation continues to accelerate with both investors and dealers.