Tradeweb Markets Inc. · NASDAQ:TW
Tradeweb Markets — Q4 2023 Earnings Presentation
26 slides from Tradeweb Markets's earnings presentation, Feb 6, 2024
Slide 1: 4Q23 Earnings Conference Call
4Q23 EARNINGS CONFERENCE CALL FEBRUARY 6, 2024 © 2024 Tradeweb Markets LLC. All rights reserved.
Slide 2: Disclaimers
Disclaimers The information in this presentation is current only as of its date and may have changed. We undertake no obligation to update this information in light of new information, future events or otherwise. Basis of Presentation Tradeweb Markets Inc. (unless the context otherwise requires, tog
Slide 3: 4Q23 Earnings Call Participants
4Q23 Earnings Call Participants STRATEGIC REVIEW GROWTH INITIATIVES Billy Hult Thomas Pluta CHIEF EXECUTIVE OFFICER PRESIDENT FINANCIAL REVIEW WELCOME/ Sara Furber INTRODUCTION CHIEF FINANCIAL OFFICER Ashley Serrao HEAD OF TREASURY, FP&A & IR 3 ©2024 Tradeweb Markets LLC. All rights reserved.
Slide 4: 4Q23 Summary
4Q23 Summary OPERATING PERFORMANCE HIGHLIGHTS REVENUE INTERNATIONAL ADJUSTED REVENUES NET INCOME2 $370.0M $137.1M $151.9M +26.3% y/y* +40.0% y/y +30.0% y/y +24.6% y/y (CC**)1 +35.0% y/y (CC)1 +31.1% y/y (CC)1 ADJUSTED ADJUSTED ADJUSTED EBITDA MARGIN2 EBIT MARGIN2 DILUTED EPS2 53.0% 48.9% $0.64 +15 b
Slide 5: 4Q23 Revenue Results
4Q23 Revenue Results ($ in millions) 4Q23 REVENUE GROWTH OF 26.3% (CC 24.6% Y/Y)1 FY23 GROWTH OF 12.6% (CC 12.2% Y/Y)1 $(0.3) $46.4 4Q23 y/y growth % 32.0% 25.0% 13.3% 24.9% 16.2% (5.5)% 26.3% 4Q23 y/y constant currency growth % 1 30.1% 23.6% 10.7% 23.8% 15.3% (5.6)% 24.6% FY23 y/y growth % 14.9% 10
Slide 6: A Growth Company
A Growth Company Continuing to Strike the Right Balance Between Investing to Drive Revenue Growth & Margin Expansion GROWTH FROM 2016-2023 14.5% 21.9% 19.6% 25.9% (CAGR) REVENUE ADJUSTED EBIT ADJUSTED EBITDA FREE CASH GROWTH GROWTH1 GROWTH1 FLOW1 BENCHMARKING PERFORMANCE FY 2023 FY 2022 Y/Y GROWTH V
Slide 7: Asset Class Growth Led By Rates & Credit in 2023
Asset Class Growth Led By Rates & Credit in 2023 STRONG GROWTH ACROSS ASSET CLASSES1 INTERNATIONAL REVENUES CONTINUE TO SCALE1 ($ in millions) ($ in millions) $1,400 $1,338 $600 $1,189 $1,200 $1,076 $488 $500 $1,000 $893 $428 $403 $776 $400 $800 $684 $323 $518 $563 $278 $600 $300 $244 $400 $200 $178
Slide 8: Key Growth Initiatives
Key Growth Initiatives GLOBAL IRS (ADV AND SHARE1) 4Q23 Y/Y Growth U.S. TREASURIES (ADV AND SHARE2) 4Q23 Y/Y Growth ($ in billions) Total: +122% ($ in billions) Total: +29% Swaps/Swaptions≥ 1Y Swaps/Swaptions< 1Y Overall Share (%) $175 ADV Share (%) 27% 23.6% $162 $1,000 25.0% $135 $150 $144 $143 24
Slide 9: Credit Growth Initiatives
Credit Growth Initiatives EXPANDING SHARE1,2 (Share of TRACE GROWING FOUNDATIONAL U.S. RFQ PROTOCOL $ in billions, ADV) ($ in millions, ADV) Inst. Client 681 726 769 839 910 $1,856 Count U.S. Investment Grade 25.2% 24.1% $7.9 $1,444 22.6% $6.5 19.6% 15.9% $5.0 8.0% $4.5 $1,175 $3.3 9.7% 9.5% 9.2% 8.
Slide 10: IRS Growth Initiatives
IRS Growth Initiatives TRADEWEB MARKET SHARE BY CURRENCY1 STRONG 2021-2023 ACTIVE USER CAGR GROWTH² ($ in millions) 25.3% USD 26% 21.1% 21.4% 18.2% 17.4% 14.2% 15.0% EUR 27% 11.8% 8.1% 9.6% 9.3% GBP 25% 6.2% EM 65% Overall USD EUR GBP Other G11 EM Other G10 40% 2022 2023 GROWING TW EM SWAPS ADV1 GRO
Slide 11: Durable Swaps Business in Early Innings of Growth
Durable Swaps Business in Early Innings of Growth DURABLE TRADEWEB VARIABLE SWAPS REVENUE GROWTH THE RECOVERY IN GLOBAL INDUSTRY SWAPS ADV¹… ($ in millions) ($ in trillions) $250 $236 6% 5 YEAR CAGR: +26% $2.9 $193 5% $2.7 $200 10 YEAR CAGR: +31% $168 $2.3 $2.4 $2.3 4% $150 $2.0 $120 $99 3% $100 $75
Slide 12: Compression Volumes Are Accretive To Swaps Growth
Compression Volumes Are Accretive To Swaps Growth CORE RISK FPM IS AFFECTED BY DURATION AND MIX SHIFT¹ TRADE WEIGHTED DURATION HAS FALLEN 10% SINCE 2021¹ $7.00 14.0 $6.00 12.0 $5.00 10.0 $4.00 8.0 $3.00 6.0 $2.00 4.0 $1.00 2.0 $0.00 0.0 2019 2020 2021 2022 2023 USD EUR GBP EM Other G10 FPM Ex Compre
Slide 13: 4Q23 Financial Performance
4Q23 Financial Performance1 ($ in thousands, except share and per share amounts) 4Q23 REVENUE GROWTH OF 26.3% (24.6% CC)2 WITH 4Q23 EBITDA MARGIN OF 53.0% FY23 EBITDA MARGIN EXPANSION OF +49 bps to 52.4% vs. FY 2022 OF 51.9% %∆ %∆ Constant Currency 4Q23 4Q22 4Q23 vs 4Q22 4Q23 vs 4Q222 Trading Revenu
Slide 14: Fees per Million Detail
Fees per Million1 Detail %∆ %∆ 4Q23 3Q23 4Q22 4Q23 vs 3Q23 4Q23 vs 4Q22 Rates $ 1.95 $ 2.10 $ 2.33 (7.2) % (16.2) % Rates Cash $ 2.47 $ 2.42 $ 2.42 1.9 % 1.9 % Rates Derivatives $ 1.66 $ 1.87 $ 2.24 (11.6) % (26.0) % Rates Derivatives >= 1 Yr $ 2.36 $ 2.72 $ 3.31 (13.0) % (28.6) % Other Rates Deriva
Slide 15: Adjusted Expenses Detail
Adjusted Expenses1 Detail ($ in thousands) 4Q23 ADJUSTED EXPENSES INCREASED 24.7% (20.7% CC y/y)2 FY23 ADJUSTED EXPENSES INCREASED 11.3% (9.9% CC y/y)2 %∆ Const. %∆ Const. %∆ Currency %∆ Currency 4Q23 4Q22 4Q23 vs 4Q22 4Q23 vs 4Q222 FY23 vs FY22 FY23 vs FY222 Adjusted Expenses Employee compensation
Slide 16: Capital Management & FY Guidance
Capital Management & FY Guidance Capital Management Key Highlights ▪ $1.7 billion in cash and cash equivalents (December 31st, 2023) and undrawn $500 million credit facility ▪ Acquired r8fin in January 2024 for a net cash amount of $89.2 million plus the issuance of 374,601 Class A shares valued at
Slide 17: Share Count Sensitivity
Share Count Sensitivity PRO FORMA ADJUSTED FULLY DILUTED WEIGHTED AVERAGE SHARES Assumed Average Share Price Q1 2024 $80.00 237,071,818 $90.00 237,221,562 $100.00 237,344,444 $110.00 237,444,983 $120.00 237,528,766 The pro forma adjusted fully diluted weighted average shares outstanding and assumed
Slide 18: Appendix
APPENDIX 18 ©2024 Tradeweb Markets LLC. All rights reserved.
Slide 19: Quarterly ADV
Quarterly ADV 4Q ADV of $1,676BN (+56.9% y/y, +51.2% ex Swaps <1 year) KEY RATES1 4Q23 Y/Y GROWTH CREDIT1 4Q23 Y/Y GROWTH ($ in billions) Total: +73% ($ in billions) Total: +12% Cash: +25% Cash: +41% Derivatives: +122% Derivatives: -14% $1,200 $1,088 $36 $33.2 $32.3 $1,100 $32 $29.3 $29.9 $1,000 $87
Slide 20: FPM Commentary
FPM Commentary RATES Avg FPM: -16% CREDIT Avg FPM: +12% Cash Rates: +2% Cash Credit: -4% • Higher FPM due to an increase in the European government bond • Lower FPM due to a mix shift away from municipals partially offset fee per million. by an increase in our European Credit FPM. Swaps/Swaptions ≥
Slide 21: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures (dollars in thousands) Net Income to Adjusted EBITDA, Adjusted EBIT and Adjusted Successor Successor Successor Successor Successor Successor Successor Successor Predecessor Predecessor Predecessor EBT 4Q23 4Q22 FY23 FY22 FY21 FY20 FY19 4Q18 9M18 FY17 FY1
Slide 22: Reconciliation of Non-GAAP Financial Measures cont.
Reconciliation of Non-GAAP Financial Measures cont. (in thousands, except share and per share amounts) Reconciliation of Operating Expenses to Adjusted Expenses 4Q23 4Q22 FY23 FY22 Operating expenses $ 228,370 $ 201,488 $ 832,950 $ 776,208 Merger and acquisition transaction and integration costs 1 (
Slide 23: Reconciliation of Non-GAAP Financial Measures cont.
Reconciliation of Non-GAAP Financial Measures cont. (in thousands, except share and per share amounts) Reconciliation of Net Income attributable to Tradeweb Markets Inc. Successor Successor Successor Successor Successor Successor Successor Successor Predecessor Predecessor Predecessor to Adjusted Ne
Slide 24: Quarterly Volumes
Quarterly Volumes Q4 2023 Q3 2023 Q4 2022 QoQ YoY Asset Class Product ADV (USD mm) Volume (USD mm) ADV (USD mm) Volume (USD mm) ADV (USD mm) Volume (USD mm) ADV ADV Rates Cash 397,987 24,713,720 361,432 22,842,103 318,194 19,481,112 10.11% 25.08% U.S. Government Bonds 162,335 10,064,801 142,641 8,98
Slide 25: U.S. Corporate Bonds
U.S. Corporate Bonds USING MARKET REPORTING STANDARDS TRADEWEB MARKETS Q4 2023 Q3 2023 Q4 2022 QoQ YoY Volume (USD mm) Trades Volume (USD mm) Trades Volume (USD mm) Trades Volume (USD mm) Volume (USD mm) % of % of % of % of % of % of % of % of Product Type ADV Total TRACE ADT Total TRACE ADV Total T
Slide 26: Contacts
Contacts Ashley Serrao, CMA, CFA Tradeweb Markets Inc. Head of Treasury, FP&A & Investor Relations 1177 Avenue of the Americas Tel: 646-430-6027 New York, NY 10036 Email: ashley.serrao@tradeweb.com For more information on Tradeweb: www.tradeweb.com Sameer Murukutla, CFA Director, Investor Relations