Tradeweb Markets Inc. · NASDAQ:TW
Tradeweb Markets — Q3 2023 Earnings Presentation
22 slides from Tradeweb Markets's earnings presentation, Oct 26, 2023
Slide 1: 3Q23 Earnings Conference Call
3Q23 EARNINGS CONFERENCE CALL OCTOBER 26, 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: 3Q23 Earnings Call Participants
3Q23 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: 3Q23 Summary
3Q23 Summary OPERATING PERFORMANCE HIGHLIGHTS REVENUE INTERNATIONAL ADJUSTED REVENUES NET INCOME2 $328.4M $120.5M $130.8M +14.4% y/y* +18.1% y/y +22.8% y/y +12.5% y/y (CC**)1 +13.0% y/y (CC)1 +23.0% y/y (CC)1 ADJUSTED ADJUSTED ADJUSTED EBITDA MARGIN2 EBIT MARGIN2 DILUTED EPS2 51.9% 47.4% $0.55 +92 b
Slide 5: 3Q23 Revenue Results
3Q23 Revenue Results ($ in millions) 3Q23 REVENUE GROWTH OF 14.4% (CC 12.5% Y/Y)1 $(0.4) 3Q23 y/y growth % 16.6% 15.3% (1.8)% 21.5% 8.2% 8.8% 14.4% 3Q23 y/y constant currency growth % 1 14.6% 13.8% (4.8)% 20.0% 6.9% 8.8% 12.5% YTD y/y growth % 9.5% 5.9% (1.7)% 26.6% 7.1% 6.7% 8.1% YTD y/y constant c
Slide 6: Key Growth Initiatives
Key Growth Initiatives GLOBAL IRS (ADV AND SHARE1) 3Q23 Y/Y Growth U.S. TREASURIES (ADV AND SHARE2) 3Q23 Y/Y Growth ($ in billions) Total: +50% ($ in billions) Total: +15% Swaps/Swaptions≥ 1Y Swaps/Swaptions< 1Y Overall Share (%) $175 ADV Share (%) 27% 17.7% 18.2% 16.3% $125 $150 $144 $135 24% $700
Slide 7: 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 642 723 752 830 899 Count $1,599 U.S. Investment Grade 25.3% 23.9% $6.8 $1,241 21.0% $6.0 17.7% 12.6% $3.9 $4.5 8.8% $1,090 9.9% $2.6 8.3% 10.0% 7
Slide 8: IRS Growth Initiatives
IRS Growth Initiatives RECOVERING GLOBAL INTEREST RATE SWAPS ADV1 TRADEWEB MARKET SHARE BY CURRENCY2 ($ in trillions) 23.0% $2.9 21.6% 20.6% $2.7 $2.3 $2.4 $2.5 16.5% 17.2% $2.3 $1.9 $2.0 14.2% 13.2% 11.9% 8.1% 8.5% 8.8% 6.1% 2017 2018 2019 2020 2021 2022 9M22 9M23 Overall USD EUR GBP Other G11 EM 9
Slide 9: Quarterly ADV
Quarterly ADV 3Q ADV of $1,424BN (+29.6% y/y, +29.3% ex Swaps <1 year) KEY RATES1 3Q23 Y/Y GROWTH CREDIT1 3Q23 Y/Y GROWTH ($ in billions) Total: +31% ($ in billions) Total: +2% Cash: +11% Cash: +40% Derivatives: +50% Derivatives: -15% $871 $853 $36 $33.2 $900 $32.3 $749 $774 $29.9 $800 $729 $32 $29.
Slide 10: 3Q23 Financial Performance
3Q23 Financial Performance1 ($ in thousands, except share and per share amounts) REVENUE GROWTH OF 14.4% (12.5% CC)2 WITH 3Q23 EBITDA MARGIN OF 51.9% 9M23 EBITDA MARGIN EXPANSION OF +29 bps to 52.2% vs. FY 2022 OF 51.9% %∆ %∆ Constant Currency 3Q23 3Q22 3Q23 vs 3Q22 3Q23 vs 3Q222 Trading Revenues Fi
Slide 11: Fees per Million Detail
Fees per Million1 Detail %∆ %∆ 3Q23 2Q23 3Q22 3Q23 vs 2Q23 3Q23 vs 3Q22 Rates $ 2.10 $ 2.10 $ 2.23 0.2 % (5.7) % Rates Cash $ 2.42 $ 2.44 $ 2.23 (0.8) % 8.5 % Rates Derivatives $ 1.87 $ 1.83 $ 2.24 2.4 % (16.4) % Rates Derivatives >= 1 Yr $ 2.72 $ 2.75 $ 3.46 (1.1) % (21.4) % Other Rates Derivatives
Slide 12: Adjusted Expenses Detail
Adjusted Expenses1 Detail ($ in thousands) 3Q23 ADJUSTED EXPENSES INCREASED 12.1% (8.5% CC y/y)2 %∆ %∆ Constant Currency 3Q23 3Q22 3Q23 vs 3Q22 3Q23 vs 3Q22 2 Adjusted Expenses Employee compensation and benefits a $ 114,147 $ 100,045 14.1 % 12.9 % Depreciation and amortization b 14,588 13,220 10.3 %
Slide 13: Capital Management & FY Guidance
Capital Management & FY Guidance Capital Management Key Highlights ▪ $1.5 billion in cash and cash equivalents (September 30th, 2023) and undrawn $500 million credit facility ▪ TTM FCF: $645.1 million1 (+16.2% yr/yr) ▪ 3Q23 cash paid for non-acquisition capex & cap software development: $17.9 millio
Slide 14: Share Count Sensitivity
Share Count Sensitivity PRO FORMA ADJUSTED FULLY DILUTED WEIGHTED AVERAGE SHARES Assumed Average Share Price Q4 2023 $70.00 236,787,171 $80.00 236,959,792 $90.00 237,102,351 $100.00 237,219,852 The pro forma adjusted fully diluted weighted average shares outstanding and assumed share prices provided
Slide 15: Appendix
APPENDIX 15 ©2023 Tradeweb Markets LLC. All rights reserved.
Slide 16: FPM Commentary
FPM Commentary RATES Avg FPM: -6% CREDIT Avg FPM: +14% Cash Rates: +8% Cash Credit: -4% • Higher FPM due to a mix shift towards higher fee per million U.S. • Lower FPM due to a mix shift away from munis partially offset by an Treasuries. U.S. Treasuries fee per million was also aided by the increase
Slide 17: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures ($ in thousands) Net Income to Adjusted EBITDA, Adjusted EBIT and Adjusted EBT 3Q23 3Q22 9M23 FY22 Net income $ 111,630 $ 81,566 $ 315,762 $ 359,613 Merger and acquisition transaction and integration costs 1 4,614 43 6,411 1,069 Net interest (income) exp
Slide 18: 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 3Q23 3Q22 Operating Expenses $ 203,619 $ 184,305 Merger and acquisition transaction and integration costs 1 (4,614) (43) D&A related to acquisitions and th
Slide 19: 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 20: Quarterly Volumes
Quarterly Volumes Q3 2023 Q2 2023 Q3 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 361,432 22,842,103 344,674 21,627,623 324,168 20,774,062 4.86% 11.50% U.S. Government Bonds 142,641 8,986,371 135,128 8,513,
Slide 21: U.S. Corporate Bonds
U.S. Corporate Bonds USING MARKET REPORTING STANDARDS TRADEWEB MARKETS Q3 2023 Q2 2023 Q3 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 22: 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