Tradeweb Markets Inc. (Nasdaq: TW), a leading, global operator of electronic marketplaces for rates, credit, equities and money markets, today reported financial results for the quarter ended June 30, 2023.

$310.6 million quarterly revenues, an increase of 4.5% (4.4% on a constant currency basis) compared to prior year period

$1.3 trillion average daily volume (“ADV”) for the quarter, an increase of 10.2% compared to prior year period; quarterly ADV records in global repurchase agreements and equity convertibles/swaps/options, and a record 14.9% share of fully electronic U.S. High Grade TRACE

$101.9 million net income and $123.7 million adjusted net income for the quarter, increases of 24.9% and 10.8% respectively from prior year period

52.5% adjusted EBITDA margin and $163.1 million adjusted EBITDA for the quarter, compared to 52.4% and $155.6 million respectively for prior year period

$0.42 diluted earnings per share (“Diluted EPS”) for the quarter and $0.52 adjusted diluted earnings per share

$0.09 per share quarterly cash dividend declared; $7.6 million of shares repurchased

Billy Hult, CEO of Tradeweb:

“Market conditions steadily improved during the second quarter, with our business performing well against a backdrop of mixed markets. We produced double-digit revenue growth across global government bonds, U.S. and European Credit, equity derivatives, and money markets. In Credit, we captured a record 16.0% share of fully-electronic U.S. High Grade TRACE for the month of June and a record 14.9% for the quarter. It was not long ago that our share of U.S. High Grade was in the single digits, and we remain confident in our ability to realize continued market share growth. More broadly, one theme playing a huge role across all of our markets is automation. Average daily trades through our AiEX automation tool grew by 90% in Treasuries and 70% in Credit this quarter compared with prior year period. In Market Data, we continue to evolve our Ai-Price bond-pricing engine with new innovations such as this quarter’s launch of benchmark closing prices for European government bonds with FTSE Russell.”

DISCUSSION OF RESULTS

Rates – Revenues of $160.4 million in the second quarter of 2023 increased 5.8% compared to prior year period (5.6% increase on a constant currency basis). Rates ADV was up 9.2% from prior year period, driven by strong volumes in swaps/swaptions ≥ 1-year led in part by heightened trading in shorter dated instruments and 42% increase in compression and LIBOR-transition related activity as compared to prior year period. U.S. and European government bond volumes were supported by sustained rates market volatility.

Credit – Revenues of $84.0 million in the second quarter of 2023 increased 0.1% compared to prior year period (the same percentage increase on a constant currency basis). Credit ADV was down 28.8% from prior year period, as lower credit derivatives volumes reflected an overall decline in broader swap execution facility (SEF) market activity. Our share of fully electronic TRACE for U.S. High Grade was a record 14.9%, up 200 bps compared with prior year period, while U.S. High Yield was 6.2%, same as prior year period.

Equities – Revenues of $22.1 million in the second quarter of 2023 decreased 2.3% compared to prior year period (2.9% decrease on a constant currency basis). Equities ADV was up 15.9% from prior year period and we reported record ADV in equity convertibles/swaps/options in the quarter. U.S. ETF growth was driven by strong wholesale activity, while institutional client engagement remained robust. European ETF volumes reflected declining overall market volumes.

Money Markets – Revenues of $15.8 million in the second quarter of 2023 increased 30.1% compared to prior year period (30.0% increase on a constant currency basis), driven by growth in our retail CDs and continued organic growth in institutional repurchase agreements. Money Markets ADV was up 14.2% from prior year period, led by record activity in global repurchase agreements and continued client adoption of Tradeweb's electronic trading solutions.

Market Data – Revenues of $22.8 million in the second quarter of 2023 increased 8.3% compared to prior year period (8.2% increase on a constant currency basis). The increase was derived primarily from increased proprietary third party market data revenue.

Other – Revenues of $5.5 million in the second quarter of 2023 decreased 4.4% compared to prior year period (the same percentage decrease on a constant currency basis).

Operating Expenses of $194.3 million in the second quarter of 2023 increased 2.0% compared to $190.5 million in prior year period due to higher general and administrative expenses, higher technology and communications expenses and higher professional fee expenses. These increases were partially offset by a decrease in expenses related to employee compensation and benefits, primarily due to decreases in incentive compensation.

Adjusted Expenses of $161.8 million increased 4.7% (4.3% increase on a constant currency basis) compared to prior year period due to higher technology and communications expenses, higher general and administrative expenses and higher depreciation and amortization. Please see "Non-GAAP Financial Measures" below for additional information.

RECENT HIGHLIGHTS

Second Quarter 2023

• Tradeweb agreed to acquire Yieldbroker, a leading Australian trading platform for Australian and New Zealand government bonds and interest rate derivatives covering the institutional, wholesale, and primary markets, subject to customary closing conditions and regulatory approvals
• Tradeweb jointly announced a collaboration with Euroclear and Informa Global Markets to automate the security identification and setup process for soon-to-be issued syndicated Eurobonds in the primary market
• Tradeweb facilitated its first transactions on Swap Connect, China’s new electronic trading channel for CNY interest rate swaps (IRS). Tradeweb is currently the only international electronic trading platform that supports both request-for-quote (RFQ) and click-to-trade (CTT) execution protocols on Swap Connect
• Tradeweb, Bloomberg and MarketAxess entered into a joint venture agreement to establish an independent company for the purpose of participating in the public procurement procedure to become the fixed income consolidated tape provider in the European Union, all subject to relevant regulatory approvals
• Tradeweb collaborated with FTSE Russell to launch benchmark closing prices for European government bonds
• Tradeweb was recognized in numerous awards celebrating our company, including: Portfolio Awards, Best Web Video (Financial Communications Society), Portfolio Awards, Best Digital Collateral (Financial Communications Society), Portfolio Awards, Best Organic Social Media (Financial Communications Society), Inside Market Data & Inside Reference Data Awards, Best Real-Time Market Data Initiative (WatersTechnology), Excellence in Trading & Tech Awards, Best Fixed Income Trading Platform (Financial News), Excellence in Trading & Tech Awards and Best OTC Trading Platform (Financial News)
• Jacques Aigrain succeeded Lee Olesky as Chair of the Board of Directors (the "Board") effective July 1, 2023. Mr. Olesky retired from the Board at the end of the second quarter of 2023.
• Catherine Johnson was elected to the Board at the 2023 Annual Meeting held on May 15, 2023. In addition, each of current directors Troy Dixon, Scott Ganeles and Murray Roos was elected to serve another term on the Board at the 2023 Annual Meeting

CAPITAL MANAGEMENT

• $1.4 billion in cash and cash equivalents and an undrawn $500 million credit facility at June 30, 2023
• Cash capital expenditures and capitalization of software development in the second quarter 2023: $15.0 million
• Free cash flow for the trailing twelve months ended June 30, 2023 of $634.8 million, up 17.9% compared to prior year period. See “Non-GAAP Financial Measures” for additional information
• During the second quarter of 2023, as part of its share repurchase program, Tradeweb purchased 107,365 shares of Class A common stock, at an average price of $70.81, for purchases totaling $7.6 million. As of June 30, 2023, a total of $244.7 million remained available for repurchase pursuant to the share repurchase program
• $1.9 million in shares of Class A common stock were withheld in the second quarter of 2023 to satisfy tax obligations related to the exercise of stock options and vesting of restricted stock units and performance-based restricted stock units held by employees
• The Board declared a quarterly cash dividend of $0.09 per share of Class A common stock and Class B common stock. The dividend will be payable on September 15, 2023 to stockholders of record as of September 1, 2023

OTHER MATTERS

Unchanged Full-Year 2023 Guidance*

• Adjusted Expenses: $669 - 714 million
• Acquisition and Refinitiv Transaction related depreciation and amortization expense: $127 million
• Assumed non-GAAP tax rate: ~24% - 25%
• Cash costs of capital expenditures and capitalized software development: $56 - 62 million

CONFERENCE CALL

Tradeweb Markets will hold a conference call to discuss second quarter 2023 results starting at 9:30 AM EDT today, July 27, 2023. A live, audio webcast of the conference call along with related presentation materials will be available at https://investors.tradeweb.com/events-and-presentations.

• To join the call via audio webcast, click here: https://edge.media-server.com/mmc/p/hfxjvxw7
• To join the call via phone, please register in advance here: https://register.vevent.com/register/BIfc63e47c64dc4781a0582131daf2e918
  
  Registered participants will receive an email confirmation with a unique PIN to access the conference call

An archived recording of the call will be available afterward at https://investors.tradeweb.com.

ABOUT TRADEWEB MARKETS

Tradeweb Markets Inc. (Nasdaq: TW) is a leading, global operator of electronic marketplaces for rates, credit, equities and money markets. Founded in 1996, Tradeweb provides access to markets, data and analytics, electronic trading, straight-through-processing and reporting for more than 40 products to clients in the institutional, wholesale and retail markets. Advanced technologies developed by Tradeweb enhance price discovery, order execution and trade workflows while allowing for greater scale and helping to reduce risks in client trading operations. Tradeweb serves approximately 2,500 clients in more than 65 countries. On average, Tradeweb facilitated more than $1.2 trillion in notional value traded per day over the past four fiscal quarters. For more information, please go to www.tradeweb.com.

The following table summarizes the calculation of Adjusted Diluted EPS for the periods presented:

TRADEWEB MARKETS INC.

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 Tradeweb Markets Inc.:

To access historical traded volumes, go to https://www.tradeweb.com/newsroom/monthly-activity-reports/

BASIS OF PRESENTATION

Tradeweb Markets Inc. (unless the context otherwise requires, together with its subsidiaries, referred to as “we,” “our,” “Tradeweb,” “Tradeweb Markets” or the “Company”) closed its IPO on April 8, 2019. As a result of certain reorganization transactions (the “Reorganization Transactions”) completed in connection with the IPO, on April 4, 2019, Tradeweb Markets Inc. became a holding company whose only material assets consist of its equity interest in Tradeweb Markets LLC (“TWM LLC”) and related deferred tax assets. As the sole manager of TWM LLC, Tradeweb Markets Inc. operates and controls all of the business and affairs of TWM LLC and, through TWM LLC and its subsidiaries, conducts its business. As a result of this control, and because Tradeweb Markets Inc. has a substantial financial interest in TWM LLC, Tradeweb Markets Inc. consolidates the financial results of TWM LLC and its subsidiaries.

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 100%.

Please refer to the Company's previously filed Quarterly Reports on Form 10-Q and Annual Report on Form 10-K for capitalized terms not otherwise defined herein.

UNAUDITED INTERIM RESULTS

The interim financial results presented herein for the three and six months ended June 30, 2023 and 2022 are unaudited. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year.

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 2023 guidance, 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 the documents of Tradeweb Markets Inc. on file with or furnished to the SEC, may cause our actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements. Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements contained in this release are not guarantees of future events or performance and future events, our actual results of operations, financial condition or liquidity, and the development of the industry and markets in which we operate, may differ materially from the forward-looking statements contained in this release. In addition, even if future events, our results of operations, financial condition, or liquidity, and events in the industry and markets in which we operate, are consistent with the forward-looking statements contained in this release, they may not be predictive of events, results or developments in future periods. Any forward-looking statement that we make in this release speaks only as of the date of such statement. Except as required by law, we do not undertake any obligation to update or revise, or to publicly announce any update or revision to, any of the forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this release.

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 Net Income per diluted share ("Adjusted Diluted EPS"), Adjusted Expenses, Free Cash Flow and constant currency change, which are supplemental financial measures that are not calculated and 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.

We present certain changes on a “constant currency” basis. Since our consolidated financial statements are presented in U.S. dollars, we must translate non-U.S. dollar revenues and expenses into U.S. dollars. Constant currency change, which is a non-GAAP financial measure, is defined as change excluding the effects of foreign currency fluctuations. Constant currency information is calculated by translating the current period and prior period’s results using the annual average exchange rates for the prior period. We use constant currency change as a supplemental metric to evaluate our underlying performance between periods by removing the impact of foreign currency fluctuations. We present certain constant currency change information because we believe it provides investors and analysts a useful comparison of our results and trends between periods. This information should be considered in addition to, not as a substitute for, results reported in accordance with GAAP.

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 Tradeweb Markets Inc., net income, net income margin, earnings per share, operating income, operating expenses, cash flow from operating activities or any other financial measure prepared or derived in accordance with GAAP. You are encouraged to evaluate each adjustment included in the reconciliations. In addition, in evaluating Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT, Adjusted EBIT margin, Adjusted EBT, Adjusted Net Income, Adjusted Diluted EPS, Adjusted Expenses and Free Cash Flow, you should be aware that in the future, we may incur expenses similar to the adjustments in the presentation of these non-GAAP financial measures.

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.

MARKET AND INDUSTRY DATA

This release includes estimates regarding market and industry data that we prepared based on our management’s knowledge and experience in the markets in which we operate, together with information obtained from various sources, including publicly available information, industry reports and publications, surveys, our clients, trade and business organizations and other contacts in the markets in which we operate. In presenting this information, we have made certain assumptions that we believe to be reasonable based on such data and other similar sources and on our knowledge of, and our experience to date in, the markets in which we operate. While such information is believed to be reliable for the purposes used herein, no representations are made as to the accuracy or completeness thereof and we take no responsibility for such information.

TRADEWEB SOCIAL MEDIA

Investors and others should note that Tradeweb announces material financial and operational information using its investor relations website, press releases, SEC filings and public conference calls and webcasts. Information about Tradeweb, its business and its results of operations may also be announced by posts on the Company’s accounts on the following social media channels: Instagram, LinkedIn and Twitter. The information that we post through these social media channels may be deemed material. As a result, we encourage investors, the media, and others interested in Tradeweb to monitor these social media channels in addition to following our investor relations website, press releases, SEC filings and public conference calls and webcasts. These social media channels may be updated from time to time on our investor relations website.

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Billy Hult, CEO of Tradeweb: "One theme playing a huge role across all of our markets is automation. Average daily trades through our AiEX automation tool grew by 90% in Treasuries and 70% in Credit this quarter compared with prior year period."