NEW YORK--(BUSINESS WIRE)-- 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 and full year ended December 31, 2020.

$233.1 million quarterly gross revenues increased 18.1% (15.9% on a constant currency basis) year over year. Full Year 2020 gross revenue increase of 15.1% vs Full Year 2019

$897.9 billion record average daily volume (“ADV”) for the quarter, an increase of 30.9% year over year with ADV records in U.S. High Yield bonds, Chinese bonds and Repos. Quarterly records for TRACE market share in U.S. High Grade and U.S. High Yield bonds

$66.4 million net income and $80.5 million adjusted net income for the quarter, increases of 16.0%, and 33.1% respectively from the prior year period

49.2% adjusted EBITDA margin or $114.6 million adjusted EBITDA for the quarter, compared to 46.9% or $92.4 million respectively for the prior year period

$0.28 diluted earnings per share (“Diluted EPS”) for the quarter and $0.34 adjusted diluted earnings per share

$0.08 per share quarterly cash dividend declared and $150 million share repurchase program launched

Lee Olesky, CEO of Tradeweb Markets:

“Strong financial results for the fourth quarter capped off a transformative year for Tradeweb. We reported record average daily volumes for Q4 thanks to broad-based momentum across asset classes. Wherever our clients were working in 2020, we know that electronic trading, digital processing and data helped them navigate unprecedented debt issuance and market volatility. Our markets are evolving, and with 2021 volumes off to a strong start we are excited about the role electronic trading continues to play in that evolution."

DISCUSSION OF RESULTS: FOURTH QUARTER 2020

Rates – Revenues from rates of $121.7 million in the fourth quarter of 2020 increased 13.2% compared to the fourth quarter of 2019 (10.8% on a constant currency basis). ADV in rates of $537.3 billion for the fourth quarter of 2020 increased 19.1% compared with the fourth quarter of 2019. Government bond trading increased due in part to growth in execution via firm streams and new client acquisition, along with higher global issuances and volatility around COVID-19, the U.S. election and Brexit. Low mortgage rates drove mortgage origination and higher secondary trading volumes, while macro uncertainty contributed to higher volumes in rates derivatives.

Credit – Revenues from credit of $59.3 million in the fourth quarter of 2020 increased 36.1% compared to the fourth quarter of 2019 (33.9% on a constant currency basis) as continued growth in portfolio trading and anonymous all-to-all trading protocols helped Tradeweb capture quarterly record TRACE market share in U.S. High Grade and U.S. High Yield bonds, with fully electronic representing the majority of each. Quarterly ADV in credit of $17.9 billion for the fourth quarter increased 35.4% over the prior year period with records in U.S. High Yield, U.S. High Grade-Fully Electronic and Chinese bonds.

Money Markets – Revenues from money markets of $10.4 million in the fourth quarter of 2020 increased 3.5% compared to the fourth quarter of 2019 (2.1% on a constant currency basis). Record quarterly ADV in money markets of $330.3 billion increased 55.6% driven in part by the addition of new dealers and participants on our global institutional Repo platform.

Equities – Revenues from equities of $15.0 million in the fourth quarter of 2020 increased 28.7% compared to the fourth quarter of 2019 (23.8% on a constant currency basis). ADV in equities of $12.4 billion for the fourth quarter of 2020 increased 37.9% as global ETF trading benefited from sharp fluctuations in equity markets and continued new client adoption.

Market Data – Revenues from market data of $20.9 million in the fourth quarter of 2020 increased 7.8% compared to the fourth quarter of 2019 (7.3% on a constant currency basis) due to delivery of additional data under our market data license agreements with Refinitiv.

Other – Other revenues of $5.9 million in the fourth quarter of 2020 increased 13.4% compared to the fourth quarter of 2019 (13.4% on a constant currency basis).

Operating Expenses – Operating expenses of $161.5 million in the fourth quarter of 2020 increased 13.0% compared to the fourth quarter of 2019 due to higher employee compensation and benefits expense, as well as higher depreciation and amortization expense. Adjusted Expenses were $129.5 million in the fourth quarter of 2020, an increase of 11.8% from the prior year period, primarily due to higher employee compensation and benefits expense associated with performance-related compensation and higher headcount, as well as higher technology and communications expense. Please see "Non-GAAP Financial Measures" below for additional information.

DISCUSSION OF RESULTS: FULL YEAR 2020

Tradeweb recorded its 21st consecutive year of record revenues in 2020. Gross revenue increased 15.1% (14.5% on a constant currency basis), to $892.7 million, compared to full year 2019, driven by record volumes across all of our asset classes and capped off by a record fourth quarter. Net income increased 26.2% to $218.4 million for the year ended December 31, 2020, compared to $173.0 million for the year ended December 31, 2019. Adjusted EBITDA margin increased to 48.9% for the year ended December 31, 2020 compared to 45.5% for the year ended December 31, 2019, representing an increase of 336 basis points (285 bps on a constant currency basis). Diluted EPS was $0.88 for the year ended December 31, 2020. Adjusted Diluted EPS was $1.31 for the year ended December 31, 2020.

CAPITAL MANAGEMENT

• $791.3 million in cash and cash equivalents and an undrawn $500 million credit facility at December 31, 2020.
• Capital expenditures and capitalization of software development: $42.5 million.
• Free cash flow for the year ended December 31, 2020 of $400.7 million up 50.3%. See “Non-GAAP Financial Measures” for additional information.
• The Board of Directors of Tradeweb Markets Inc. declared a quarterly cash dividend of $0.08 per share of Class A common stock and Class B common stock, payable on March 15, 2021 to stockholders of record as of March 1, 2021.
• The Board also authorized a $150 million share repurchase program. The amounts and timing of the repurchases will be subject to, among other factors, general market conditions and the prevailing price and trading volumes of our Class A common stock. The repurchase program, which is authorized through the end of 2023, does not require the Company to acquire a specific number of shares and may be suspended, amended or discontinued at any time.
  

OTHER MATTERS

Full-Year 2021 Guidance*

• Adjusted Expenses: $530 - $560 million
  • Non-GAAP adjusted expense guidance does not include any expenses tied to our recently announced acquisition of Nasdaq’s U.S. fixed income electronic trading platform. We will update our guidance following the closing of the deal.
• Acquisition and Refinitiv Transaction related depreciation and amortization expense: $120 million
• Assumed non-GAAP tax rate: 22.0%
• Capital expenditures and capitalization of software development: $45 - $50 million

*GAAP operating expenses and tax rate guidance are not provided due to the inherent difficulty in quantifying certain amounts due to a variety of factors including the unpredictability in the movement of foreign currency rates.

CONFERENCE CALL

Tradeweb Markets will hold a conference call to discuss fourth quarter 2020 results starting at 9:25 AM EST today, February 4, 2021. A live, audio webcast of the conference call along with related materials will be available at http://investors.tradeweb.com. Alternatively, interested parties can access the call by dialing 866-221-1629 (U.S.) or +1 470-495-9175 (international) and entering passcode 6190256. After the conference call, an archived recording will be available at http://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 $835 billion 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. (post-IPO period) and Tradeweb Markets LLC (pre-IPO period):

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

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 2021 guidance, and 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. In addition, statements herein relating to the COVID-19 pandemic, the potential impacts of which remain inherently uncertain, 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 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 performance and 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 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 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.

PRESENTATION

The historical financial information and other disclosures contained in this press release relate to periods that ended both prior to and after the completion of the Reorganization Transactions and the IPO of Tradeweb Markets Inc. (unless the context otherwise requires, together with its subsidiaries, referred to as “we,” “our,” “Tradeweb,” “Tradeweb Markets” or the “Company”). The IPO closed 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. The historical financial information contained in this press release relating to periods prior to and including March 31, 2019, which we refer to as the “pre-IPO period,” pertain to TWM LLC, the predecessor of Tradeweb Markets Inc. for financial reporting purposes. The historical financial information contained in this press release relating to periods beginning on April 1, 2019, and through and including December 31, 2020, which we refer to as the “post-IPO period,” pertain to Tradeweb Markets Inc. The pre-IPO period excludes, and the post-IPO period includes, our financial results from April 1, 2019 through April 3, 2019, which are not material.

TRADEWEB SOCIAL MEDIA

Investors and others should note that Tradeweb Markets announces material financial and operational information using its investor relations website, press releases, SEC filings and public conference calls and webcasts. Information about Tradeweb Markets, 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 Markets to monitor these social media channels in addition to following our 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.

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 Diluted EPS, Adjusted Expenses and Free Cash Flow, which are supplemental financial measures that are not calculated or 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 expenditures for capitalized software development costs and furniture, equipment and leasehold improvements.

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, earnings per share, operating income, operating expenses or cash flow from operating activities or any other financial measure 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 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.

We present certain growth information 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 growth, which is a non-GAAP financial measure, is defined as growth excluding the effects of foreign currency fluctuations. Constant currency information is calculated by translating the current period and prior period’s results using the average exchange rates for the prior period. We use constant currency growth as a supplemental metric to evaluate our underlying performance between periods by removing the impact of foreign currency fluctuations. We present certain constant currency growth 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, and may not be comparable to similarly titled measures used by other companies.

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Investor Relations

Ashley Serrao + 1 646 430 6027

[email protected]



Media Relations

Daniel Noonan + 1 646 767 4677

[email protected]

Source: Tradeweb Markets Inc.