Tradeweb Reports First Quarter 2022 Financial Results

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 March 31, 2022.

$311.5 million quarterly revenues increased 13.9% (15.9% on a constant currency basis) compared to prior year period

$1.2 trillion average daily volume (“ADV”) for the quarter, an increase of 10.9% compared to prior year period, with record ADV in U.S. and European government bonds; swaps/swaptions ≥ 1-year; fully electronic U.S. High Grade and fully electronic U.S. High Yield credit; European credit; U.S. and European ETFs; and Repurchase Agreements

$97.4 million net income and $115.1 million adjusted net income for the quarter, increases of 19.5% and 13.3% respectively from prior year period

51.6% adjusted EBITDA margin or $160.6 million adjusted EBITDA for the quarter, compared to 52.0% or $142.1 million respectively for prior year period

$0.40 diluted earnings per share (“Diluted EPS”) for the quarter and $0.48 adjusted diluted earnings per share

$0.08 per share quarterly cash dividend declared; $47.3 million of shares repurchased

Lee Olesky, Chairman and CEO, Tradeweb Markets:

“Tradeweb surpassed $300 million in quarterly revenue for the first time in our history, showcasing the diversity of our business with strong contributions from rates, credit and equities. Increased rates volatility in the first quarter of 2022 contributed to record volumes in U.S. Treasuries, European government bonds and swaps. Credit delivered a record revenue quarter driven by broad-based product growth and strong corporate bond client engagement across RFQ, Tradeweb AllTrade, and Portfolio Trading – which saw a ~60% YoY increase in the number of firms using the tool. In February, our board announced succession plans for the company; I was honored to be appointed Chairman, and I am tremendously excited that my longtime partner Billy Hult will succeed me as CEO on January 1, 2023. Tradeweb has an outstanding leadership team and we believe we are well positioned for the future."

DISCUSSION OF RESULTS

Rates – Revenues of $160.3 million in the first quarter of 2022 increased 12.2% compared to prior year period (14.4% on a constant currency basis). Rates ADV was up 12.4% with record ADV in U.S. and European government bonds, as well as swaps/swaptions ≥ 1-year.

Credit – Revenues of $86.3 million in the first quarter of 2022 increased 16.1% compared to prior year period (17.6% on a constant currency basis). Credit ADV was up 22.7% with record ADV in fully electronic U.S. High Grade credit, fully electronic U.S. High Yield credit, and European credit. Tradeweb's share of fully electronic TRACE volume for U.S. High Grade and U.S. High Yield for the quarter increased by +180 bps and +320 bps, respectively, compared to prior year period.

Equities – Revenues of $26.5 million in the first quarter of 2022 increased 40.7% compared to prior year period (45.6% on a constant currency basis). Equities ADV was up 32.6% with record ADV in U.S. and European ETFs.

Money Markets – Revenues of $11.5 million in the first quarter of 2022 increased 6.5% compared to prior year period (8.1% on a constant currency basis). Money Markets ADV was up 6.4% led by record ADV in Repurchase Agreements.

Market Data – Revenues of $21.4 million in the first quarter of 2022 increased 7.0% compared to prior year period (7.5% on a constant currency basis). The increase was derived from increased third party market data fees, Refinitiv market data fees and revenue from our APA reporting service.

Other – Revenues of $5.4 million in the first quarter of 2022 decreased 16.2% compared to prior year period (16.2% decrease on a constant currency basis). The decrease was driven primarily by lower fees from software development and implementation projects performed on behalf of certain retail clients.

Operating Expenses of $199.9 million in the first quarter of 2022 increased 14.2% compared to $175.1 million in the prior year period due to: higher employee compensation and benefits associated with higher headcount to support growth and higher performance-related compensation; higher depreciation and amortization expense; higher technology and communications expenses primarily due to increased clearing, data and client service fees driven by higher trading volumes; and higher general and administrative expense, as foreign exchange gains decreased and travel and entertainment expense increased following the easing of restrictions relating to the pandemic.

Adjusted Expenses of $163.5 million increased 14.6% (17.1% on a constant currency basis) compared to the prior year period due to: higher employee compensation and benefits associated with higher headcount to support growth and higher performance-related compensation; higher technology and communications expenses; higher depreciation and amortization expenses; and higher general and administrative expenses. Please see "Non-GAAP Financial Measures" below for additional information.

CAPITAL MANAGEMENT

• $828.1 million in cash and cash equivalents and an undrawn $500 million credit facility at March 31, 2022

• Non-acquisition related capital expenditures and capitalization of software development in first quarter 2022: $18.0 million

• Free cash flow for the trailing twelve months ended March 31, 2022 of $510.9 million, up 7.8% compared to the prior year period. See “Non-GAAP Financial Measures” for additional information

• During the first quarter of 2022, as part of its Share Repurchase Program, Tradeweb purchased 559,428 shares of Class A common stock, at an average price of $84.59, for purchases totaling $47.3 million. As of March 31, 2022, a total of $27.0 million remained available for repurchase pursuant to the Share Repurchase Program

• $95.8 million in shares were withheld in the first quarter of 2022 to satisfy tax obligations related to the exercise of stock options and vesting of restricted stock units and performance-based restricted stock units

• 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. The dividend will be payable on June 15, 2022 to stockholders of record as of June 1, 2022

OTHER MATTERS

Full-Year 2022 Guidance*

Full-Year 2022 guidance is unchanged from prior quarter.

• Adjusted Expenses: $620 - $655 million

• Acquisition and Refinitiv Transaction related depreciation and amortization expense: $127 million

• Assumed non-GAAP tax rate: ~22.0%

• Capital expenditures and capitalization of software development: $62 - $68 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 first quarter 2022 results starting at 9:30 AM EDT today, April 28, 2022. 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 conference ID 9566847. 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 $1 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/.

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 2022 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.

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.

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 Annual Report on Form 10-K for capitalized terms not otherwise defined herein.

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 non-acquisition related 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.

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 annual 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.

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.

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Tradeweb surpassed $300 million in quarterly revenue for the first time in our history, showcasing the diversity of our business with strong contributions from rates, credit and equities.