Tradeweb Revenues Increase 13.9%08.03.2022
Tradeweb Markets Inc., a leading, global operator of electronic marketplaces for rates, credit, equities and money markets, reported financial results for the quarter ended June 30, 2022.
$297.1 million quarterly revenues increased 13.9% (17.8% on a constant currency basis) compared to prior year period
$1.2 trillion average daily volume (“ADV”) for the quarter, an increase of 20.4% compared to prior year period, with record ADV in swaps/swaptions ≥ 1-year; fully electronic U.S. High Grade; Municipal Bonds and Repurchase Agreements
$81.6 million net income and $111.7 million adjusted net income for the quarter, increases of 23.2% and 19.3% respectively from prior year period
52.4% adjusted EBITDA margin and $155.6 million adjusted EBITDA for the quarter, compared to 50.6% and $131.9 million respectively for prior year period
$0.33 diluted earnings per share (“Diluted EPS”) for the quarter and $0.47 adjusted diluted earnings per share
$0.08 per share quarterly cash dividend declared; $9.0 million of shares repurchased
In addition to our July volumes, today we reported our second quarter 2022 financial results which included revenues of $297.1 million and average daily volume of $1.2 trillion.
— Tradeweb (@Tradeweb) August 3, 2022
Lee Olesky, Chairman and CEO, Tradeweb Markets: “Tradeweb delivered another quarter of robust year-over-year revenue growth thanks to strong contributions from multiple asset classes, showcasing our differentiated and diversified business model. While complex macroeconomic conditions and continued rates volatility made for challenging global markets, we saw increased adoption and engagement with a range of trading protocols. Institutional and wholesale clients continued to be active this quarter, and a surge in retail trading volumes was led by municipal bonds and U.S. Treasuries. In June we launched the Spotlight Dealer Diversity Program, developed with input from the dealer and buyside communities to promote diverse dealers on the Tradeweb platform. More recently, we were delighted to announce that Thomas Pluta will succeed Billy Hult as President of Tradeweb when Billy succeeds me as CEO on January 1, 2023. We remain sharply focused on collaborating with clients through challenging markets and positioning Tradeweb for continued growth.”
DISCUSSION OF RESULTS
Rates – Revenues of $151.6 million in the second quarter of 2022 increased 13.1% compared to prior year period (17.6% on a constant currency basis). Rates ADV was up 23.2% with record ADV in swaps/swaptions ≥ 1-year driven by robust client interest in the request-for-market (RFM) protocol, increased engagement from international clients and strong trading activity in emerging markets swaps.
Credit – Revenues of $84.0 million in the second quarter of 2022 increased 16.3% compared to prior year period (19.4% on a constant currency basis). Credit ADV was up 47.4% with record ADV in fully electronic U.S. High Grade credit and Municipal Bonds. Tradeweb’s share of fully electronic TRACE volume for U.S. High Grade and U.S. High Yield for the quarter increased by +70 bps and +140 bps, respectively, compared to prior year period. Client adoption was strong across Tradeweb protocols, including request-for-quote (RFQ), Tradeweb AllTrade and portfolio trading.
Equities – Revenues of $22.7 million in the second quarter of 2022 increased 30.2% compared to prior year period (37.6% on a constant currency basis). Equities ADV was up 4.1%, with double-digit ADV increases in U.S. and European ETFs offset by double-digit ADV decreases in equity derivatives as market volatility remained elevated.
Money Markets – Revenues of $12.2 million in the second quarter of 2022 increased 7.3% compared to prior year period (10.5% on a constant currency basis). Money Markets ADV was up 15.5% led by record ADV in Repurchase Agreements.
Market Data – Revenues of $21.0 million in the second quarter of 2022 increased 5.1% compared to prior year period (7.0% on a constant currency basis). The increase was derived from increased third party market data fees and Refinitiv market data fees.
Other – Revenues of $5.7 million in the second quarter of 2022 decreased 3.0% compared to prior year period (2.9% decrease on a constant currency basis).
Operating Expenses of $190.5 million in the second quarter of 2022 increased 7.6% compared to $177.0 million in the prior year period due to: higher employee compensation and benefits associated with higher headcount to support growth and higher performance-related compensation, including $5.7 million in CEO Retirement Accelerated Stock-Based Compensation Expense recognized during the second quarter of 2022; higher depreciation and amortization expense; and higher technology and communications expenses primarily due to increased clearing and data fees driven by higher trading volumes; partially offset by lower general and administrative expense, as foreign exchange gains increased more than travel and entertainment expense increased following the easing of restrictions relating to the pandemic.
Adjusted Expenses of $154.5 million increased 9.9% (12.6% 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 and higher performance-related compensation; higher general and administrative expenses; higher technology and communications expenses; and higher depreciation and amortization expenses. Please see “Non-GAAP Financial Measures” below for additional information.
RECENT HIGHLIGHTS Second Quarter 2022
• Launched Spotlight Dealer Diversity Program designed to promote diverse dealers on the Tradeweb platform
• Introduced enhanced functionality of electronic portfolio trading tool to increase flexibility and efficiency for institutional clients
• Completed the first-ever fully electronic SOFR swaption trade
• Recognized in numerous awards including: Trading & Tech Awards — Best Fixed Income Trading Platform (Financial News); Trading & Tech Awards, Trading Initiative of the Year — AiEX (Financial News); 40 Top Innovators in Financial Markets — Lee Olesky (TabbForum); Person of the Decade — Lee Olesky (Markets Media); Women in Finance Asia Awards, Excellence in Trading — YiLin Lee (Markets Media)
• Announced Thomas Pluta will join Tradeweb in October as President-elect
• Appointed Jacques Aigrain and Rana Yared as Independeent Directors to Tradeweb’s board
• Celebrated the opening of Tradeweb’s new Paris office
Signs of a revival emerged as green issuance picked up in the second quarter.
Reductions in issuance costs could lead to an expansion of capital markets.
U.S. Treasury ADV rose 64% to $22.7bn, and credit ADV was up 15% to $12.3bn.
DCM Flow, powered by Nivaura, offers a secure platform to digitise and automate the origination process.
Green bond proceeds exceeded $100bn for the sixth consecutive quarter.