10.28.2022

Tradeweb Reports Record Third Quarter Revenues

10.28.2022
High-Touch Sales Traders Go Electronic

Tradeweb Markets Inc., a leading, global operator of electronic marketplaces for rates, credit, equities and money markets, reported financial results for the quarter ended September 30, 2022.

$287.1 million quarterly revenues increased 8.2% (13.1% on a constant currency basis) compared to prior year period

$1.1 trillion average daily volume (“ADV”) for the quarter, an increase of 14.0% compared to prior year period, with record ADV in fully electronic U.S. High Grade credit, equity convertibles/swaps/options and institutional municipal bonds. Tradeweb captured a record 13.9% of fully electronic U.S. High Grade TRACE

$81.6 million net income and $106.5 million adjusted net income for the quarter, increases of 24.9% and 13.1% respectively from prior year period

51.0% adjusted EBITDA margin and $146.3 million adjusted EBITDA for the quarter, compared to 50.1% and $132.9 million respectively for prior year period

$0.33 diluted earnings per share (“Diluted EPS”) for the quarter and $0.45 adjusted diluted earnings per share $0.08 per share quarterly cash dividend declared; $9.0 million of shares repurchased

Lee Olesky, Chairman and CEO, Tradeweb Markets: “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. Billy Hult and our leadership team are well positioned to drive our next wave of growth, and I can’t wait to see what comes next. I am grateful to our clients and employees for their confidence and support.”

DISCUSSION OF RESULTS

Rates –

Revenues of $148.2 million in the third quarter of 2022 increased 6.3% compared to prior year period (11.8% on a constant currency basis). Rates ADV was up 11.8% driven by strong growth in swaps/swaptions ≥ 1-year and rates volatility in U.S. and European government bonds.

Credit –

Revenues of $78.1 million in the third quarter of 2022 increased 8.1% compared to prior year period (11.7% on a constant currency basis). Credit ADV was up 31.7% with record ADV in fully electronic U.S. High Grade credit and institutional municipal bonds, as well as record share of fully electronic U.S. High Grade TRACE (13.9%). U.S. and European credit volumes reflected continued client adoption across Tradeweb protocols, including request-for-quote (RFQ), Tradeweb AllTrade and portfolio trading.

Equities –

Revenues of $21.3 million in the third quarter of 2022 increased 29.3% compared to prior year period (38.6% on a constant currency basis). Equities ADV was up 8.7% with record ADV in equity convertibles/swaps/options. Equities performance reflected increased global institutional client activity driven by further adoption of RFQ and continued market volatility.

Money Markets –

Revenues of $13.0 million in the third quarter of 2022 increased 15.6% compared to prior year period (19.7% on a constant currency basis). Money Markets ADV was up 16.7% led by strong client adoption of Tradeweb’s electronic trading solutions and retail money markets activity, which increased over the third quarter and culminated with a monthly record in September.

Market Data –

Revenues of $21.2 million in the third quarter of 2022 increased 3.4% compared to prior year period (6.1% on a constant currency basis). The increase was derived from increased third party market data fees and Refinitiv market data fees.

Other –

Revenues of $5.4 million in the third quarter of 2022 decreased 1.7% compared to prior year period (1.6% decrease on a constant currency basis).

Operating Expenses of $184.3 million in the third quarter of 2022 increased 2.5% compared to $179.8 million in the prior year period due to: higher employee compensation and benefits associated with higher headcount to support growth, $2.0 million in CEO Retirement Accelerated Stock-Based Compensation Expense recognized during the third quarter of 2022 and higher technology and communications expenses primarily due to increased data and clearing fees driven primarily by higher trading volumes as well as increased investment in our data strategy and infrastructure; this was partially offset by lower general and administrative expenses, as foreign exchange gains more than offset the increased travel and entertainment expense following the easing of restrictions relating to the pandemic. \

Adjusted Expenses of $154.0 million increased 6.8% (10.4% on a constant currency basis) compared to the prior year period due to: higher employee compensation and benefits associated with higher headcount to support growth; higher technology and communications expenses; higher general and administrative expenses; higher depreciation and amortization and higher professional fees.

Source: Tradeweb

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