Tradeweb Markets Inc. · NASDAQ:TW
Tradeweb Markets — Q1 2023 Earnings Presentation
24 slides from Tradeweb Markets's earnings presentation, Apr 27, 2023
Slide 1: 1Q23 Earnings Conference Call
1Q23 EARNINGS CONFERENCE CALL APRIL 27, 2023 © 2023 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: 1Q23 Earnings Call Participants
1Q23 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 ©2023 Tradeweb Markets LLC. All rights reserved.
Slide 4: 1Q23 Summary
1Q23 Summary OPERATING PERFORMANCE HIGHLIGHTS REVENUE INTERNATIONAL ADJUSTED REVENUES NET INCOME2 $329.2M $120.5M $129.0M +5.7% y/y* (0.5)% y/y +12.2% y/y 7.5% y/y (CC**)1 3.9% y/y (CC)1 14.1% y/y (CC)1 ADJUSTED ADJUSTED ADJUSTED EBITDA MARGIN2 EBIT MARGIN2 DILUTED EPS2 52.3% 48.1% $0.54 +73 bps y/y
Slide 5: 1Q23 Revenue Results
1Q23 Revenue Results ($ in millions) 1Q23 REVENUE GROWTH OF 5.7% (CC 7.5% Y/Y)1 $(0.3) 1Q23 y/y growth % 6.3% 3.1% (1.3)% 28.5% 5.0% 16.3% 5.7% 1Q23 y/y constant currency growth % 1 8.3% 4.7% 1.2% 30.3% 6.5% 16.3% 7.5% 1. Changes presented on a “constant currency” basis reflect changes for the perio
Slide 6: Key Growth Initiatives
Key Growth Initiatives GLOBAL IRS (ADV AND SHARE1) 1Q23 Y/Y Growth U.S. TREASURIES (ADV AND SHARE2) 1Q23 Y/Y Growth ($ in billions) Total: +41% ($ in billions) Total: -4% Swaps/Swaptions≥ 1Y Swaps/Swaptions< 1Y Overall Share (%) ADV Share (%) 27% 17.7% $150 $144 14.7% 15.3% 18.0% $150 $132 14.3% 15.
Slide 7: One-Stop Shop for Emerging Markets
One-Stop Shop for Emerging Markets Leveraging our leading rates and credit brand to expand into emerging markets Global Swaps Global Credit EM Interest EM Cash & China Rate CDS Bonds Swaps Industry ADV¹ $136B $23B $155B TW Share2 ~8% <1% ~1% EM TOTAL ADDRESSABLE MARKET (REVENUES): $1+ Billion Local
Slide 8: Strongly Positioned Municipal Bond Platform
Strongly Positioned Municipal Bond Platform TRADEWEB’S LEADING PLATFORM IS FOCUSED ON MUNICIPAL BOND MARKET Percentages based on 2022 par amount traded1 LARGEST SEGMENTS OF THE MARKET WITH Total Market ADV: OPPORTUNITIES FOR FUTURE GROWTH Other ~$14B2 7% Taxable 1 in 5 MSRB trades facilitated on Tra
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. $1,719 Client 586 690 722 783 877 Count U.S. Investment Grade $1,451 23.0% 19.5% 22.5% $7.5 $1,263 $5.7 $6.1 15.0% 11.3% $4.0 9.7% $2.9 9.3% 10.5% 9.0% 7
Slide 10: IRS Growth Initiatives
IRS Growth Initiatives RECOVERING GLOBAL INTEREST RATE SWAPS ADV1 TRADEWEB MARKET SHARE BY CURRENCY2 ($ in trillions) $3.3 22.3% 21.3% $2.8 20.3% $2.7 $2.3 $2.3 $2.4 16.3% $1.9 $2.0 13.5% 12.7% 11.3%12.3% 6.8% 7.3% 7.6% 8.2% 2017 2018 2019 2020 2021 2022 3M22 3M23 Overall USD EUR GBP Other G11 EM 3M
Slide 11: Quarterly ADV
Quarterly ADV 1Q ADV of $1,364BN (+16.2% y/y, +11.4% ex Swaps <1 year) KEY RATES1 1Q23 Y/Y GROWTH CREDIT1 1Q23 Y/Y GROWTH ($ in billions) Total: +16% ($ in billions) Total: -3% Cash: -6% Cash: +6% Derivatives: +41% Derivatives: -7% $871 $900 $36 $33.2 $32.3 $800 $729 $749 $709 $32 $29.3 $666 $653 $2
Slide 12: 1Q23 Financial Performance
1Q23 Financial Performance1 ($ in thousands, except share and per share amounts) REVENUE GROWTH OF 5.7% (7.5% CC)2 WITH 1Q23 EBITDA MARGIN OF 52.3% 1Q23 EBITDA MARGIN EXPANSION OF +37 bps to 52.3% vs. FY 2022 OF 51.9% %∆ %∆ Constant Currency 1Q23 1Q22 1Q23 vs 1Q22 1Q23 vs 1Q222 Trading Revenues Fixe
Slide 13: Fees per Million Detail
Fees per Million1 Detail %∆ %∆ 1Q23 4Q22 1Q22 1Q23 vs 4Q22 1Q23 vs 1Q22 Rates $ 2.09 $ 2.33 $ 2.22 (10.3) % (5.7) % Rates Cash $ 2.54 $ 2.42 $ 2.05 5.0 % 24.0 % Rates Derivatives $ 1.78 $ 2.24 $ 2.40 (20.8) % (26.0) % Rates Derivatives >= 1 Yr $ 3.03 $ 3.31 $ 3.96 (8.3) % (23.5) % Other Rates Deriva
Slide 14: Adjusted Expenses Detail
Adjusted Expenses1 Detail ($ in thousands) 1Q23 ADJUSTED EXPENSES INCREASED 4.5% (6.4% CC y/y)2 %∆ %∆ Constant Currency 1Q23 1Q22 1Q23 vs 1Q22 1Q23 vs 1Q22 2 Adjusted Expenses Employee compensation and benefits a $ 113,643 $ 114,122 (0.4) % 1.1 % Depreciation and amortization b 13,787 12,681 8.7 % 9
Slide 15: Capital Management & FY Guidance
Capital Management & FY Guidance Capital Management Key Highlights ▪ $1.2 billion in cash and cash equivalents (March 31st, 2023) ▪ Undrawn $500 million credit facility ▪ TTM FCF: $599.6 million1 (+17.4% yr/yr) ▪ 1Q23 Cash paid for capex & cap software development: $16.7 million (-7.4% yr/yr) ▪ $22.
Slide 16: Share Count Sensitivity
Share Count Sensitivity PRO FORMA ADJUSTED FULLY DILUTED WEIGHTED AVERAGE SHARES Assumed Average Share Price Q2 2023 $60.00 236,339,808 $70.00 236,545,174 $80.00 236,775,666 $90.00 236,962,865 The pro forma adjusted fully diluted weighted average shares outstanding and assumed share prices provided
Slide 17: Appendix
APPENDIX 17 ©2023 Tradeweb Markets LLC. All rights reserved.
Slide 18: FPM Commentary
FPM Commentary RATES CREDIT • Average fees per million for rates decreased 6%. • Average fees per million for credit increased 6%. • For cash rates products, fees per million were up 24%, primarily due • For Cash Credit, average fees per million decreased 1% due to a to a positive mix shift towards
Slide 19: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures ($ in thousands) Net Income to Adjusted EBITDA, Adjusted EBIT and Adjusted EBT 1Q23 1Q22 FY22 Net income $ 102,193 $ 97,445 $ 359,613 Merger and acquisition transaction and integration costs 1 585 (18) 1,069 Net interest (income) expense (12,491) 447 (11
Slide 20: Reconciliation of Non-GAAP Financial Measures cont.
Reconciliation of Non-GAAP Financial Measures cont. ($ in thousands, except share and per share amounts) Operating Expenses to Adjusted Expenses 1Q23 1Q22 Operating expenses $ 206,683 $ 199,884 Merger and acquisition transaction and integration costs 1 (585) 18 D&A related to acquisitions and the Re
Slide 21: 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 Successor Successor Successor Successor Successor Successor Successor Predecessor Predecessor Predecessor Inc. to Adjusted Net Income
Slide 22: Quarterly Volumes
Quarterly Volumes Q1 2023 Q4 2022 Q1 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 362,618 22,568,694 318,194 19,481,112 387,505 24,060,508 13.96% -6.42% U.S. Government Bonds 144,070 8,932,353 126,182 7,697
Slide 23: U.S. Corporate Bonds
U.S. Corporate Bonds USING MARKET REPORTING STANDARDS TRADEWEB MARKETS Q1 2023 Q4 2022 Q1 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 24: 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