Tradeweb Reports Fourth Quarter and Full Year 2021 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 fourth quarter and full year ended December 31, 2021.

$276.9 million quarterly revenues increased 18.8% (19.9% on a constant currency basis) compared to prior year period

$1.1 trillion average daily volume (“ADV”) for the quarter, an increase of 24.1% compared to prior year period; quarterly ADV records in U.S. government bonds, U.S. High Yield credit and swaps/swaptions ≥ 1-year; Tradeweb's share of fully electronic TRACE volume for U.S. High Grade and U.S. High Yield for the quarter increased by +331 bps and +334 bps respectively compared to prior year period

$60.0 million net income for the quarter decreased by 9.7% from prior year period due to higher tax expense, as state apportionment rate changes drove a reduction in deferred tax assets. $99.7 million adjusted net income increased by 23.9% from prior year period

50.6% adjusted EBITDA margin or $140.1 million adjusted EBITDA for the quarter, compared to 49.2% or $114.6 million respectively in prior year period

$0.23 diluted earnings per share (“Diluted EPS”) for the quarter and $0.42 adjusted diluted earnings per share for the quarter

$0.08 per share quarterly cash dividend declared; $12.0 million of shares repurchased in the fourth quarter

Lee Olesky, CEO of Tradeweb Markets:

"Tradeweb recorded its 22nd consecutive year of revenue growth in 2021 and surpassed $1 billion in annual revenues for the first time. We became the largest electronic trading platform for U.S. Treasuries, and as rates volatility increased we benefited from a global resurgence in swaps market activity on our platform. In credit, we continued to grow volume and market share, extending our industry leadership in electronic portfolio trading and reflecting strong client demand for both traditional RFQ and increased automation. We published our inaugural corporate sustainability report and continued to attract and develop world-class talent — reaffirming the strength of our culture during a time that tested each and every one of us. While increased adoption of electronic trading has been a long-term trend in recent years, we saw a clear acceleration of that trend during 2021. Looking ahead, we believe markets will continue to benefit from growth in electronic execution and digitized workflow."

SELECT FINANCIAL RESULTS

4Q21

 

4Q20

 

Change

Constant

Currency

Growth (1)

(dollars in thousands except per share amounts)(Unaudited)

GAAP Financial Measures

Total revenue

$

276,883

 

 

 

$

233,076

 

 

 

18.8

 

%

19.9

 

%

Rates

$

146,528

 

 

 

$

121,699

 

 

 

20.4

 

%

21.7

 

%

Credit

$

73,614

 

 

 

$

59,255

 

 

 

24.2

 

%

25.1

 

%

Equities

$

18,361

 

 

 

$

15,011

 

 

 

22.3

 

%

25.4

 

%

Money Markets

$

10,915

 

 

 

$

10,382

 

 

 

5.1

 

%

5.9

 

%

Market Data

$

21,648

 

 

 

$

20,864

 

 

 

3.8

 

%

3.5

 

%

Other

$

5,817

 

 

 

$

5,865

 

 

 

(0.8

)

%

(0.8

)

%

Net Income

$

60,005

 

 

 

$

66,449

 

 

 

(9.7

)

%

 

 

Net Income attributable to Tradeweb Markets Inc. (2)

$

48,890

 

 

 

$

55,060

 

 

 

(11.2

)

%

Diluted EPS

$

0.23

 

 

 

$

0.28

 

 

 

(17.9

)

%

 

 

Non-GAAP Financial Measures

Adjusted EBITDA (1)

$

140,088

 

 

 

$

114,576

 

 

 

22.3

 

%

23.1

 

%

Adjusted EBITDA margin (1)

 

50.6

 

%

 

 

49.2

 

%

 

144

 

bps

132

 

bps

Adjusted EBIT (1)

$

128,217

 

 

 

$

103,563

 

 

 

23.8

 

%

24.8

 

%

Adjusted EBIT margin (1)

 

46.3

 

%

 

 

44.4

 

%

 

187

 

bps

180

 

bps

Adjusted Net Income (1)

$

99,689

 

 

 

$

80,483

 

 

 

23.9

 

%

24.8

 

%

Adjusted Diluted EPS (1)

$

0.42

 

 

 

$

0.34

 

 

 

23.5

 

%

20.6

 

%

(1) Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT, Adjusted EBIT margin, Adjusted Net Income, Adjusted Diluted EPS and constant currency growth are non-GAAP financial measures. See "Non-GAAP Financial Measures" below and the attached schedules for additional information and reconciliations of such non-GAAP financial measures.

(2) Represents net income less net income attributable to non-controlling interests.

ADV (US $bn)

(Unaudited)

Asset Class

Product

4Q21

 

4Q20

 

YoY

Rates

Cash

$

346

 

$

328

 

5.4

 

%

 

Derivatives

 

384

 

 

209

 

83.1

 

%

 

Total

 

729

 

 

537

 

35.7

 

%

Credit

Cash

 

9

 

 

8

 

6.2

 

%

 

Derivatives

 

10

 

 

10

 

3.1

 

%

 

Total

 

19

 

 

18

 

4.6

 

%

Equities

Cash

 

9

 

 

7

 

25.7

 

%

 

Derivatives

 

7

 

 

6

 

33.0

 

%

 

Total

 

16

 

 

12

 

29.0

 

%

Money Markets

Cash

 

351

 

 

330

 

6.2

 

%

 

Total

 

351

 

 

330

 

6.2

 

%

 

Total

$

1,115

 

$

898

 

24.1

 

%

DISCUSSION OF RESULTS: FOURTH QUARTER 2021

Rates – Revenues of $146.5 million in the fourth quarter of 2021 increased 20.4% compared to prior year period (21.7% on a constant currency basis). Rates performance was led by record activity in swaps/swaptions ≥ 1-year and U.S. government bonds; the latter aided in part by the acquisition of NFI.

Credit – Revenues of $73.6 million in the fourth quarter of 2021 increased 24.2% compared to prior year period (25.1% on a constant currency basis). Credit performance was led by robust trading in U.S. credit, with record trading in U.S. High Yield, and supported by strong growth in European credit. Tradeweb's share of fully electronic TRACE volume for U.S. High Grade was 13.4% compared with 10.1% in the prior year period (+331 bps) and for U.S. High Yield was 7.3%, compared with 4.0% in the prior year period (+334 bps).

Equities – Revenues of $18.4 million in the fourth quarter of 2021 increased 22.3% compared to prior year period (25.4% on a constant currency basis). Equities performance reflected increased adoption of RFQ for electronic trading in ETFs globally.

Money Markets – Revenues of $10.9 million in the fourth quarter of 2021 increased 5.1% compared to prior year period (5.9% on a constant currency basis). Growth in Global Repo activity was supported by the continued addition of new clients and dealers on the platform and partially offset by lower revenue from certificates of deposit.

Market Data – Revenues of $21.6 million in the fourth quarter of 2021 increased 3.8% compared to prior year period (3.5% on a constant currency basis). The increase was derived from increased third party market data fees and revenue from our APA reporting service.

Other – Revenues of $5.8 million in the fourth quarter of 2021 decreased 0.8% compared to prior year period (decreased 0.8% on a constant currency basis).

Operating Expenses – Operating expenses of $185.7 million in the fourth quarter of 2021 increased 15.0% compared to $161.5 million in the prior year period. Adjusted expenses of $148.7 million increased 14.8% (16.0% on a constant currency basis) compared to the prior year period. Increases in both operating expenses and adjusted expenses were driven primarily by higher incentive compensation expenses tied to operating performance, as well as salaries and benefits resulting from increased employee headcount. Please see "Non-GAAP Financial Measures" below for additional information.

DISCUSSION OF RESULTS: FULL-YEAR 2021

Tradeweb recorded its 22nd consecutive year of record revenues in 2021, as total revenue increased 20.6% (19.3% on a constant currency basis) to $1.1 billion compared to full year 2020. Revenue was driven by average daily trading volume of more than $1 trillion and record activity in: U.S. and European government bonds; swaps/swaptions ≥ 1-year; swaps/swaptions ≤ 1-year; Rates Futures; U.S. High Grade and High Yield credit; European credit; Chinese bonds; U.S. and European ETFs; equity convertibles/swaps/options; and Repurchase Agreements. Net income increased 25.1% to $273.1 million for the year ended December 31, 2021, compared to $218.4 million for the year ended December 31, 2020. Adjusted EBITDA margin increased to 50.8% for the year ended December 31, 2021 compared to 48.9% for the year ended December 31, 2020, representing an increase of 192 bps (211 bps on a constant currency basis). Diluted EPS increased 23.9% to $1.09 for the year ended December 31, 2021. Adjusted Diluted EPS increased 24.4% to $1.63 for the year ended December 31, 2021.

CAPITAL MANAGEMENT

  • $972.0 million in cash and cash equivalents and an undrawn $500 million credit facility at December 31, 2021
  • Capital expenditures and capitalization of software development in fourth quarter 2021 of $15.8 million and in full-year 2021 of $51.3 million
  • Free cash flow for the year ended December 31, 2021 of $526.7 million, up 31.4% compared to prior year period. See “Non-GAAP Financial Measures” for additional information
  • During the fourth quarter of 2021, as part of its Share Repurchase Program, Tradeweb purchased 144,155 shares of Class A common stock, at an average price of $83.24, for purchases totaling $12.0 million. For the full year 2021, Tradeweb purchased a total of 901,968 shares of Class A common stock, at an average price of $83.90, for annual purchases totaling $75.7 million. As of December 31, 2021, a total of $74.3 million remained available for repurchase pursuant to the Share Repurchase Program. In addition, $14.5 million in shares were withheld in the fourth quarter of 2021 and $71.0 million in shares were withheld in the full-year 2021 to satisfy tax obligations related to the exercise of stock options
  • 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 March 15, 2022 to stockholders of record as of March 1, 2022

OTHER MATTERS

Full-Year 2022 Guidance*

  • 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 fourth quarter and full-year 2021 results starting at 9:30 AM EST today, February 3, 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 passcode 6480158. 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.

TRADEWEB MARKETS INC.

INCOME STATEMENT

Dollars in Thousands, Except Per Share Data

 

 

Quarter Ended December 31,

 

Year Ended December 31,

 

 

2021

 

2020

 

2021

 

2020

Revenues

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

Transaction fees and commissions

 

$

216,841

 

 

$

177,835

 

 

$

846,354

 

 

$

681,588

 

Subscription fees

 

 

41,307

 

 

 

36,652

 

 

 

158,448

 

 

 

142,358

 

Refinitiv market data fees

 

 

16,116

 

 

 

16,240

 

 

 

61,161

 

 

 

59,706

 

Other

 

 

2,619

 

 

 

2,349

 

 

 

10,484

 

 

 

9,007

 

Total revenue

 

 

276,883

 

 

 

233,076

 

 

 

1,076,447

 

 

 

892,659

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

Employee compensation and benefits

 

 

107,153

 

 

 

86,305

 

 

 

407,260

 

 

 

349,658

 

Depreciation and amortization

 

 

43,652

 

 

 

39,837

 

 

 

171,308

 

 

 

153,789

 

Technology and communications

 

 

13,941

 

 

 

13,103

 

 

 

56,189

 

 

 

47,500

 

General and administrative

 

 

10,344

 

 

 

10,302

 

 

 

32,153

 

 

 

34,822

 

Professional fees

 

 

7,188

 

 

 

7,967

 

 

 

36,181

 

 

 

28,875

 

Occupancy

 

 

3,424

 

 

 

3,982

 

 

 

14,528

 

 

 

14,660

 

Total expenses

 

 

185,702

 

 

 

161,496

 

 

 

717,619

 

 

 

629,304

 

Operating income

 

 

91,181

 

 

 

71,580

 

 

 

358,828

 

 

 

263,355

 

Tax receivable agreement liability adjustment

 

 

12,745

 

 

 

11,425

 

 

 

12,745

 

 

 

11,425

 

Net interest income (expense)

 

 

(411

)

 

 

(380

)

 

 

(1,590

)

 

 

(316

)

Income before taxes

 

 

103,515

 

 

 

82,625

 

 

 

369,983

 

 

 

274,464

 

Provision for income taxes

 

 

(43,510

)

 

 

(16,176

)

 

 

(96,875

)

 

 

(56,074

)

Net income

 

 

60,005

 

 

 

66,449

 

 

 

273,108

 

 

 

218,390

 

Less: Net income attributable to non-controlling interests

 

 

11,115

 

 

 

11,389

 

 

 

46,280

 

 

 

52,094

 

Net income attributable to Tradeweb Markets Inc.

 

$

48,890

 

 

$

55,060

 

 

$

226,828

 

 

$

166,296

 

 

 

 

 

 

 

 

 

 

Earnings per share attributable to Tradeweb Markets Inc. Class A and B common stockholders:

 

 

 

 

 

 

 

 

Basic

 

$

0.24

 

 

$

0.29

 

 

$

1.13

 

 

$

0.92

 

Diluted

 

$

0.23

 

 

$

0.28

 

 

$

1.09

 

 

$

0.88

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

202,576,021

 

 

 

189,795,356

 

 

 

201,419,081

 

 

 

180,409,462

 

Diluted

 

 

208,282,322

 

 

 

197,745,297

 

 

 

207,254,840

 

 

 

188,223,032

 

TRADEWEB MARKETS INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED)

Dollars in Thousands, Except per Share Data

Reconciliation of Net Income to Adjusted EBITDA, Adjusted

EBITDA Margin, Adjusted EBIT and Adjusted EBIT Margin

 

Quarter Ended December 31,

 

Year Ended December 31,

 

2021

 

2020

 

2021

 

2020

 

 

(dollars in thousands)

Net income

 

$

60,005

 

 

 

$

66,449

 

 

 

 

$

273,108

 

 

 

$

218,390

 

 

Acquisition transaction costs (1)

 

 

(113

)

 

 

 

 

 

 

 

5,073

 

 

 

 

 

 

Net interest (income) expense

 

 

411

 

 

 

 

380

 

 

 

 

 

1,590

 

 

 

 

316

 

 

Depreciation and amortization

 

 

43,652

 

 

 

 

39,837

 

 

 

 

 

171,308

 

 

 

 

153,789

 

 

Stock-based compensation expense (2)

 

 

5,328

 

 

 

 

2,717

 

 

 

 

 

16,509

 

 

 

 

13,025

 

 

Provision for income taxes

 

 

43,510

 

 

 

 

16,176

 

 

 

 

 

96,875

 

 

 

 

56,074

 

 

Foreign exchange (gains) / losses (3)

 

 

40

 

 

 

 

442

 

 

 

 

 

(4,702

)

 

 

6,279

 

 

Tax receivable agreement liability adjustment (4)

 

 

(12,745

)

 

 

(11,425

)

 

 

(12,745

)

 

 

(11,425

)

Adjusted EBITDA

 

$

140,088

 

 

 

$

114,576

 

 

 

 

$

547,016

 

 

 

$

436,448

 

 

Less: Depreciation and amortization

 

 

(43,652

)

 

 

(39,837

)

 

 

(171,308

)

 

 

(153,789

)

Add: D&A related to acquisitions and the Refinitiv Transaction(5)

 

 

31,781

 

 

 

 

28,824

 

 

 

 

 

124,580

 

 

 

 

110,187

 

 

Adjusted EBIT

 

$

128,217

 

 

 

$

103,563

 

 

 

 

$

500,288

 

 

 

$

392,846

 

 

Adjusted EBITDA margin (6)

 

 

50.6

 

%

 

 

49.2

 

 

%

 

 

50.8

 

%

 

 

48.9

 

%

Adjusted EBIT margin (6)

 

 

46.3

 

%

 

 

44.4

 

 

%

 

 

46.5

 

%

 

 

44.0

 

%

(1) Represents transaction and other costs related to the NFI Acquisition, which closed in June 2021. Acquisition-related costs primarily include legal, consulting and advisory fees and severance costs incurred that relate to the acquisition transaction.

(2) Represents non-cash stock-based compensation expense associated with the Special Option Award and post-IPO options awarded in 2019 and payroll taxes associated with exercises of such options during the applicable period. Beginning on August 30, 2021, this adjustment also includes the non-cash Former CFO Accelerated Stock-Based Compensation Expense, and related payroll taxes, which totaled $1.7 million during the year ended December 31, 2021.

(3) Represents unrealized gain or loss recognized on foreign currency forward contracts and foreign exchange gain or loss from the revaluation of cash denominated in a different currency than the entity’s functional currency.

(4) Represents income recognized during the applicable period due to changes in the tax receivable agreement liability recorded in the statement of financial condition as a result of changes in the mix of earnings, tax legislation and tax rates in various jurisdictions which impacted our tax savings.

(5) Represents intangible asset and acquired software amortization resulting from the NFI Acquisition and intangible asset amortization and increased tangible asset and capitalized software depreciation and amortization resulting from the application of pushdown accounting to the Refinitiv Transaction (where all assets were marked to fair value as of the closing date of the Refinitiv Transaction).

(6) Adjusted EBITDA margin and Adjusted EBIT margin are defined as Adjusted EBITDA and Adjusted EBIT, respectively, divided by revenue for the applicable period.

Reconciliation of Net Income to Adjusted Net Income and

Adjusted Diluted EPS

 

Quarter Ended December 31,

 

Year Ended December 31,

 

2021

 

2020

 

2021

 

2020

 

 

(in thousands, except per share amounts)

Earnings per diluted share

 

$

0.23

 

 

$

0.28

 

 

$

1.09

 

 

$

0.88

 

 

 

 

 

 

 

 

 

Net income attributable to Tradeweb Markets Inc.

 

$

48,890

 

 

$

55,060

 

 

$

226,828

 

 

$

166,296

 

Net income attributable to non-controlling interests (1)

 

 

11,115

 

 

 

11,389

 

 

 

46,280

 

 

 

52,094

 

Net income

 

 

60,005

 

 

 

66,449

 

 

 

273,108

 

 

 

218,390

 

Provision for income taxes

 

 

43,510

 

 

 

16,176

 

 

 

96,875

 

 

 

56,074

 

Acquisition transaction costs (2)

 

 

(113

)

 

 

 

 

 

5,073

 

 

 

 

D&A related to acquisitions and the Refinitiv Transaction (3)

 

 

31,781

 

 

 

28,824

 

 

 

124,580

 

 

 

110,187

 

Stock-based compensation expense (4)

 

 

5,328

 

 

 

2,717

 

 

 

16,509

 

 

 

13,025

 

Foreign exchange (gains) / losses (5)

 

 

40

 

 

 

442

 

 

 

(4,702

)

 

 

6,279

 

Tax receivable agreement liability adjustment (6)

 

 

(12,745

)

 

 

(11,425

)

 

 

(12,745

)

 

 

(11,425

)

Adjusted Net Income before income taxes

 

 

127,806

 

 

 

103,183

 

 

 

498,698

 

 

 

392,530

 

Adjusted income taxes (7)

 

 

(28,117

)

 

 

(22,700

)

 

 

(109,713

)

 

 

(86,357

)

Adjusted Net Income

 

$

99,689

 

 

$

80,483

 

 

$

388,985

 

 

$

306,173

 

Adjusted Diluted EPS (8)

 

$

0.42

 

 

$

0.34

 

 

$

1.63

 

 

$

1.31

 

(1) For post-IPO periods, represents the reallocation of net income attributable to non-controlling interests from the assumed exchange of all outstanding LLC Interests held by non-controlling interests for shares of Class A or Class B common stock.

(2) Represents transaction and other costs related to the NFI Acquisition, which closed in June 2021. During the year ended December 31, 2021, Acquisition-related costs primarily include legal, consulting and advisory fees and severance costs incurred that relate to the acquisition transaction.

(3) Represents intangible asset and acquired software amortization resulting from the NFI Acquisition and intangible asset amortization and increased tangible asset and capitalized software depreciation and amortization resulting from the application of pushdown accounting to the Refinitiv Transaction (where all assets were marked to fair value as of the closing date of the Refinitiv Transaction).

(4) Represents non-cash stock-based compensation expense associated with the Special Option Award and post-IPO options awarded in 2019 and payroll taxes associated with exercises of such options during the applicable period. Beginning on August 30, 2021, this adjustment also includes the non-cash Former CFO Accelerated Stock-Based Compensation Expense, and related payroll taxes, which totaled $1.7 million during the year ended December 31, 2021.

(5) Represents unrealized gain or loss recognized on foreign currency forward contracts and foreign exchange gain or loss from the revaluation of cash denominated in a different currency than the entity’s functional currency.

(6) Represents income recognized during the applicable period due to changes in the tax receivable agreement liability recorded in the statement of financial condition as a result of changes in the mix of earnings, tax legislation and tax rates in various jurisdictions which impacted our tax savings.

(7) Represents corporate income taxes at an assumed effective tax rate of 22% applied to Adjusted Net Income before income taxes for the years ended December 31, 2021 and 2020 and 26.4% applied to Adjusted Net Income before income taxes for the year ended December 31, 2019. For pre-IPO periods, this adjustment assumes Tradeweb Markets LLC was subject to a corporate tax rate for the periods presented December 31, 2021 and 2020.

(8) For a summary of the calculation of Adjusted Diluted EPS, see “Reconciliation of Diluted Weighted Average Shares Outstanding to Adjusted Diluted Weighted Average Shares Outstanding” below.

The following table summarizes the calculation of Adjusted Diluted EPS for the periods presented:

Reconciliation of Diluted Weighted Average Shares Outstanding to Adjusted

Diluted Weighted Average Shares Outstanding

 

Quarter Ended December 31,

 

Year Ended December 31,

 

2021

 

2020

 

2021

 

2020

Diluted weighted average shares of Class A and Class B common stock outstanding

 

 

208,282,322

 

 

197,745,297

 

 

207,254,840

 

 

188,223,032

Assumed exchange of LLC Interests for shares of Class A or Class B common stock (1)

 

 

30,529,403

 

 

38,176,219

 

 

30,699,577

 

 

45,828,289

Adjusted diluted weighted average shares outstanding

 

 

238,811,725

 

 

235,921,516

 

 

237,954,417

 

 

234,051,321

Adjusted Net Income (in thousands)

 

$

99,689

 

$

80,483

 

$

388,985

 

$

306,173

Adjusted Diluted EPS

 

$

0.42

 

$

0.34

 

$

1.63

 

$

1.31

(1) Assumes the full exchange of the weighted average of all outstanding LLC Interests held by non-controlling interests for shares of Class A or Class B common stock, resulting in the elimination of the non-controlling interests and recognition of the net income attributable to non-controlling interests.

Reconciliation of Operating Expenses to Adjusted Expenses

 

Quarter Ended December 31,

 

Year Ended December 31,

 

2021

 

2020

 

2021

 

2020

 

 

(in thousands)

Operating expenses

 

$

185,702

 

 

$

161,496

 

 

$

717,619

 

 

$

629,304

 

Acquisition transaction costs (1)

 

 

113

 

 

 

 

 

 

(5,073

)

 

 

 

D&A related to acquisitions and Refinitiv Transaction (2)

 

 

(31,781

)

 

 

(28,824

)

 

 

(124,580

)

 

 

(110,187

)

Stock-based compensation expense (3)

 

 

(5,328

)

 

 

(2,717

)

 

 

(16,509

)

 

 

(13,025

)

Foreign exchange gains / (losses) (4)

 

 

(40

)

 

 

(442

)

 

 

4,702

 

 

 

(6,279

)

Adjusted Expenses

 

$

148,666

 

 

$

129,513

 

 

$

576,159

 

 

$

499,813

 

(1) Represents transaction and other costs related to the NFI Acquisition, which closed in June 2021. Acquisition-related costs primarily include legal, consulting and advisory fees and severance costs incurred that relate to the acquisition transaction.

(2) Represents intangible asset and acquired software amortization resulting from the NFI Acquisition and intangible asset amortization and increased tangible asset and capitalized software depreciation and amortization resulting from the application of pushdown accounting to the Refinitiv Transaction (where all assets were marked to fair value as of the closing date of the Refinitiv Transaction).

(3) Represents non-cash stock-based compensation expense associated with the Special Option Award and post-IPO options awarded in 2019 and payroll taxes associated with exercises of such options during the applicable period. Beginning on August 30, 2021, this adjustment also includes the non-cash Former CFO Accelerated Stock-Based Compensation Expense, and related payroll taxes, which totaled $1.7 million during the year ended December 31, 2021.

(4) Represents unrealized gain or loss recognized on foreign currency forward contracts and foreign exchange gain or loss from the revaluation of cash denominated in a different currency than the entity’s functional currency.

Reconciliation of Cash Flows from Operating Activities to Free Cash Flow

 

Year Ended December 31, 2021

 

 

(in thousands)

Cash flow from operating activities

 

$

578,021

 

Less: Capitalization of software development costs

 

 

(34,470

)

Less: Purchases of furniture, equipment and leasehold improvements

 

 

(16,878

)

Free Cash Flow

 

$

526,673

 

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.:

EPS: Net income attributable to Tradeweb Markets Inc.

 

Quarter Ended December 31,

 

Year Ended December 31,

 

2021

 

2020

 

2021

 

2020

 

 

(in thousands, except share and per share amounts)

Numerator:

 

 

 

 

 

 

 

 

Net income attributable to Tradeweb Markets Inc.

 

$

48,890

 

$

55,060

 

$

226,828

 

$

166,296

 

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

 

Weighted average shares of Class A and Class B common stock outstanding - Basic

 

 

202,576,021

 

 

189,795,356

 

 

201,419,081

 

 

180,409,462

Dilutive effect of equity-settled PRSUs

 

 

2,270,263

 

 

2,776,023

 

 

2,067,558

 

 

2,472,801

Dilutive effect of options

 

 

3,064,477

 

 

4,924,119

 

 

3,473,549

 

 

5,179,109

Dilutive effect of RSUs

 

 

371,561

 

 

249,799

 

 

294,652

 

 

161,660

Weighted average shares of Class A and Class B common stock outstanding - Diluted

 

 

208,282,322

 

 

197,745,297

 

 

207,254,840

 

 

188,223,032

 

 

 

 

 

 

 

 

 

Earnings per share - Basic

 

$

0.24

 

$

0.29

 

$

1.13

 

$

0.92

Earnings per share - Diluted

 

$

0.23

 

$

0.28

 

$

1.09

 

$

0.88

TRADEWEB MARKETS INC.

REVENUES BY ASSET CLASS (UNAUDITED)

 

 

Quarter Ended

 

Quarter Ended

 

Year Ended

 

Year Ended

 

 

December 31, 2021

 

December 31, 2020

 

December 31, 2021

 

December 31, 2020

Revenues

 

Variable

 

Fixed

 

Variable

 

Fixed

 

Variable

 

Fixed

 

Variable

 

Fixed

 

 

(dollars in thousands)

Rates

 

$

88,090

 

$

58,438

 

$

69,045

 

$

52,654

 

$

338,395

 

$

224,483

 

$

270,826

 

$

205,501

Credit

 

 

66,915

 

 

6,699

 

 

53,205

 

 

6,050

 

 

266,367

 

 

26,070

 

 

189,789

 

 

22,765

Equities

 

 

15,752

 

 

2,609

 

 

12,202

 

 

2,809

 

 

60,579

 

 

10,497

 

 

51,536

 

 

10,173

Money Markets

 

 

6,731

 

 

4,184

 

 

6,336

 

 

4,046

 

 

27,884

 

 

16,410

 

 

26,308

 

 

16,312

Market Data

 

 

 

 

21,648

 

 

 

 

20,864

 

 

 

 

82,142

 

 

 

 

76,521

Other

 

 

 

 

5,817

 

 

 

 

5,865

 

 

 

 

23,620

 

 

 

 

22,928

Total revenue

 

$

177,488

 

$

99,395

 

$

140,788

 

$

92,288

 

$

693,225

 

$

383,222

 

$

538,459

 

$

354,200

TRADEWEB MARKETS INC.

AVERAGE VARIABLE FEES PER MILLION DOLLARS OF VOLUME (UNAUDITED)

 

 

Quarter Ended December 31,

 

YoY

 

 

2021

 

2020

 

% Change

Rates

 

$

1.93

 

$

2.05

 

(5.8

)

%

Cash Rates

 

$

1.98

 

$

1.82

 

8.5

 

%

Rates Derivatives

 

$

1.89

 

$

2.42

 

(21.9

)

%

Swaps / Swaptions Tenor (greater than 1 year)

 

$

3.49

 

$

3.47

 

0.5

 

%

Other Rates Derivatives (1)

 

$

0.14

 

$

0.17

 

(19.7

)

%

 

 

 

 

 

 

 

Credit

 

$

57.02

 

$

47.52

 

20.0

 

%

Cash Credit (2)

 

$

149.49

 

$

129.27

 

15.6

 

%

Credit Derivatives and U.S. Cash “EP”

 

$

8.08

 

$

7.55

 

7.0

 

%

 

 

 

 

 

 

 

Equities

 

$

15.40

 

$

15.38

 

0.1

 

%

Cash Equities

 

$

23.84

 

$

22.39

 

6.5

 

%

Equity Derivatives

 

$

5.62

 

$

6.79

 

(17.2

)

%

 

 

 

 

 

 

 

Money Markets (Cash)

 

$

0.31

 

$

0.31

 

(0.8

)

%

 

 

 

 

 

 

 

Total Fees per Million

 

$

2.55

 

$

2.51

 

1.4

 

%

Total Fees per Million excluding Other Rates Derivatives (3)

 

$

3.02

 

$

2.70

 

11.9

 

%

(1) Includes Swaps/Swaptions of tenor less than 1 year and Rates Futures.

(2) The “cash credit” category represents the “credit” asset class excluding (1) credit derivatives and (2) U.S. High Grade and High Yield electronically processed (“EP”) activity.

(3) Included to contextualize the impact of short-tenored Swaps/Swaptions and Rates Futures on totals for all periods presented.

TRADEWEB MARKETS INC.

AVERAGE DAILY VOLUME (UNAUDITED)

 

 

 

2021 Q4

 

2020 Q4

 

YoY

Asset Class

Product

 

ADV (USD mm)

Volume (USD mm)

 

ADV (USD mm)

Volume (USD mm)

 

ADV

Rates

Cash

 

$

345,517

$

21,489,844

 

$

327,865

$

20,382,030

 

5.38

 

%

 

U.S. Government Bonds

 

 

135,027

 

8,371,666

 

 

91,733

 

5,687,470

 

47.19

 

%

 

European Government Bonds

 

 

30,999

 

1,983,966

 

 

24,942

 

1,596,300

 

24.29

 

%

 

Mortgages

 

 

175,504

 

10,881,258

 

 

207,291

 

12,852,011

 

(15.33

)

%

 

Other Government Bonds

 

 

3,987

 

252,953

 

 

3,899

 

246,248

 

2.25

 

%

 

Derivatives

 

 

383,514

 

24,138,900

 

 

209,442

 

13,220,482

 

83.11

 

%

 

Swaps/Swaptions ≥ 1Y

 

 

200,495

 

12,639,759

 

 

142,921

 

9,001,633

 

40.28

 

%

 

Swaps/Swaptions < 1Y

 

 

182,152

 

11,445,372

 

 

65,988

 

4,185,769

 

176.04

 

%

 

Futures

 

 

867

 

53,769

 

 

534

 

33,080

 

62.54

 

%

 

Total

 

 

729,031

 

45,628,744

 

 

537,308

 

33,602,512

 

35.68

 

%

Credit

Cash

 

 

8,846

 

550,610

 

 

8,328

 

516,514

 

6.21

 

%

 

U.S. High Grade

 

 

4,855

 

300,979

 

 

4,393

 

272,335

 

10.52

 

%

 

U.S. High Yield

 

 

978

 

60,666

 

 

604

 

37,455

 

61.97

 

%

 

European Credit

 

 

1,597

 

102,180

 

 

1,541

 

98,623

 

3.61

 

%

 

Municipal Bonds

 

 

183

 

11,374

 

 

199

 

12,350

 

(7.90

)

%

 

Chinese Bonds

 

 

1,141

 

69,587

 

 

1,501

 

90,057

 

(24.00

)

%

 

Other Credit Bonds

 

 

92

 

5,824

 

 

91

 

5,695

 

1.56

 

%

 

Derivatives

 

 

9,886

 

623,015

 

 

9,587

 

603,015

 

3.12

 

%

 

Swaps

 

 

9,886

 

623,015

 

 

9,587

 

603,015

 

3.12

 

%

 

Total

 

 

18,732

 

1,173,625

 

 

17,915

 

1,119,529

 

4.56

 

%

Equities

Cash

 

 

8,577

 

548,912

 

 

6,826

 

436,848

 

25.65

 

%

 

U.S. ETFs

 

 

6,136

 

392,673

 

 

4,656

 

297,966

 

31.78

 

%

 

Europe ETFs

 

 

2,441

 

156,239

 

 

2,170

 

138,882

 

12.50

 

%

 

Derivatives

 

 

7,407

 

474,029

 

 

5,568

 

356,342

 

33.03

 

%

 

Options/Convertibles/Swaps

 

 

3,455

 

221,114

 

 

2,639

 

168,879

 

30.93

 

%

 

Futures

 

 

3,952

 

252,915

 

 

2,929

 

187,463

 

34.91

 

%

 

Total

 

 

15,983

 

1,022,941

 

 

12,394

 

793,190

 

28.97

 

%

Money Markets

Cash

 

 

350,803

 

21,888,973

 

 

330,296

 

20,615,266

 

6.21

 

%

 

Repurchase Agreements (Repo)

 

 

336,820

 

21,021,413

 

 

319,216

 

19,927,191

 

5.51

 

%

 

Other Money Markets

 

 

13,984

 

867,560

 

 

11,080

 

688,075

 

26.21

 

%

 

Total

 

 

350,803

 

21,888,973

 

 

330,296

 

20,615,266

 

6.21

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

ADV (USD mm)

Volume (USD mm)

ADV (USD mm)

Volume (USD mm)

YoY

 

Total

 

$

1,114,550

$

69,714,282

 

$

897,913

$

56,130,497

 

24.13

 

%

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.

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. 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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