01—Abstract
Summary
Summary of the 10-K filed February 24, 2022. Cited figures are marked; the original filing is the authoritative source.
Tradeweb Markets Inc. (Nasdaq: TW) reported total revenue of $1,076.4 milliona for 2021, up 20.6% from $892.7 million in 2020, with operating income of $358.8 million (up 36.3%) and net income attributable to Tradeweb Markets Inc. of $226.8 million (up 36.4%).
Transaction fees and commissions, at $846.4 millionb, were the primary driver, supported by higher volumes in U.S. and European corporate bonds, rates derivatives and U.S. government bonds. Rates revenue rose 18.2% to $562.9 million and Credit revenue rose 37.6% to $292.4 million. The company closed the June 2021 acquisition of Nasdaq's U.S. fixed income electronic trading platform (NFI Acquisition) for $190.0 million in cash.
Adjusted EBITDA increased to $547.0 millionc (50.8% margin) from $436.4 million, and Free Cash Flow was $526.7 million. Cash and cash equivalents were $972.0 million at year-end, with no outstanding borrowings under the $500.0 million Revolving Credit Facility, and the Tax Receivable Agreement liability stood at $412.4 million.
Refinitiv controls approximately 87.8% of the combined voting power, making Tradeweb a controlled company following LSEG's acquisition of Refinitiv on January 29, 2021. Subsequent events include the announced CEO transition, under which co-founder Lee Olesky will retire as CEO on December 31, 2022 and President Billy Hult will succeed him on January 1, 2023, and a quarterly dividend of $0.08d per share for the first quarter of 2022.
02—Key points
Key Highlights
- Total revenue rose 20.6% to $1,076.4 million in 2021, driven by a $164.8 million increase in transaction fees and commissions.
- Operating income increased 36.3% to $358.8 million; net income attributable to Tradeweb Markets Inc. was $226.8 million, up 36.4%.
- Credit revenue grew 37.6% to $292.4 million and Rates revenue grew 18.2% to $562.9 million, the company's largest asset class.
- Adjusted EBITDA reached $547.0 million, a 50.8% margin, compared with $436.4 million in 2020; Free Cash Flow was $526.7 million.
- Acquired Nasdaq's U.S. fixed income electronic trading platform (NFI Acquisition) in June 2021 for $190.0 million in cash.
- Refinitiv holds approximately 87.8% of combined voting power as the controlling shareholder; Tradeweb is a 'controlled company' under Nasdaq rules.
- Cash and cash equivalents of $972.0 million and no outstanding borrowings under the $500.0 million Revolving Credit Facility at December 31, 2021; the $150.0 million share repurchase program had $74.3 million remaining.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 24, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $1.08B$892.66M | +20.6% |
| Operating Expenses | $717.62M$629.30M | +14.0% |
| Operating Income | $358.83M$263.36M | +36.3% |
| Net Income | $226.83M$166.30M | +36.4% |
| EPS (Basic) | $1.13$0.92 | +22.8% |
| EPS (Diluted) | $1.09$0.88 | +23.9% |
| Shares Outstanding (Basic) | 201.42M180.41M | +11.6% |
| Shares Outstanding (Diluted) | 207.25M188.22M | +10.1% |
05—Questions
Frequently Asked Questions
What drove Tradeweb's revenue growth in 2021?
Total revenue increased $183.8 million, or 20.6%, to $1,076.4 million. The primary driver was a $164.8 million increase in transaction fees and commissions, attributed to higher volumes and fees for U.S. and European corporate bonds, rates derivatives and U.S. government bonds. Foreign currency contributed 1.3 percentage points of the growth, and constant currency growth was 19.3%.
How did profitability change in 2021?
Operating income rose to $358.8 million from $263.4 million, and net income attributable to Tradeweb Markets Inc. increased to $226.8 million from $166.3 million. Adjusted EBITDA rose to $547.0 million from $436.4 million, with an Adjusted EBITDA margin of 50.8% versus 48.9% in 2020. Diluted EPS was $0.19 on a GAAP basis, while Adjusted Diluted EPS was $1.63.
Does Tradeweb have significant debt or liquidity risk?
As of December 31, 2021, the company had no outstanding indebtedness and $972.0 million of cash and cash equivalents. The $500.0 million Revolving Credit Facility, which matures April 8, 2024, had $0.5 million of letters of credit outstanding and $499.5 million of availability. Management stated it believes projected cash, operating cash flows and, if needed, facility borrowings will fund liquidity requirements for at least the next 12 months.
What obligations arise from the Tax Receivable Agreement?
Tradeweb must pay 50% of certain U.S. tax savings it realizes to Continuing LLC Owners. The liability was $412.4 million at December 31, 2021, substantially all payable over 15 years. The first payment was made in January 2021, and $9.1 million is due within one year. Payments may accelerate upon certain change-of-control events or early termination.
What leadership and governance changes were announced after year-end?
On February 16, 2022, the company announced that Chairman Martin Brand resigned effective February 11, 2022, and Lee Olesky became Chairman while Paula Madoff became Lead Independent Director. Lee Olesky will retire as CEO on December 31, 2022, and President Billy Hult will succeed him as CEO effective January 1, 2023. Accelerated stock-based compensation of approximately $7.7 million related to Mr. Olesky is expected in 2022.
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