01—Abstract
Summary
Summary of the 10-K filed February 24, 2023. Cited figures are marked; the original filing is the authoritative source.
Tradeweb Markets Inc. (Nasdaq: TW) reported total revenue of $1,188.8 milliona for the year ended December 31, 2022, up 10.4% from $1,076.4 million in 2021, with a 14.0% constant currency increase offset by a 3.6% foreign currency impact.
Transaction fees and commissions, the largest revenue line at $950.3 millionb (79.9% of total), rose 12.3%, driven mainly by rates derivatives, municipals, U.S. ETFs, government bonds and corporate bonds. Operating income increased 15.0% to $412.6 million, and net income attributable to Tradeweb Markets Inc. rose 36.4% to $309.3 million. Adjusted EBITDA reached $617.3 million, a 51.9% margin, and Free Cash Flow was $572.7 million.
Cash and cash equivalents were approximately $1.3 billionc at year-end, against $972.0 million a year earlier, and the company had no outstanding borrowings under its $500.0 million Revolving Credit Facility. The Tax Receivable Agreement liability stood at $425.7 million. The board approved a new share repurchase program of up to $300.0 million in December 2022, and the company declared a first-quarter 2023 dividend of $0.09 per share, up from $0.08.
Billy Hult became Chief Executive Officer effective January 1, 2023, succeeding Lee Olesky. Refinitiv, which is controlled by London Stock Exchange Group following the LSEG Transaction, held approximately 91.2%d of the combined voting power as of December 31, 2022, making Tradeweb a controlled company. The company faces antitrust class actions relating to U.S. Treasuries and interest rate swaps, both of which the company is contesting; it has no contingency reserves established for them.
02—Key points
Key Highlights
- Total revenue rose 10.4% to $1,188.8 million in 2022, with a 14.0% constant currency increase partly offset by a 3.6% foreign currency impact.
- Net income attributable to Tradeweb Markets Inc. increased 36.4% to $309.3 million, and diluted EPS was $1.48 versus $1.09 in 2021.
- Adjusted EBITDA was $617.3 million with a 51.9% margin, up from 50.8%; Free Cash Flow was $572.7 million.
- Cash and cash equivalents were about $1.3 billion at December 31, 2022, and the $500.0 million Revolving Credit Facility had no borrowings outstanding.
- A new $300.0 million share repurchase program was authorized on December 5, 2022, with $275.0 million remaining at year-end; the Q1 2023 dividend was raised to $0.09 per share from $0.08.
- Refinitiv controls approximately 91.2% of combined voting power, so the company is a controlled company under Nasdaq rules.
- Billy Hult succeeded Lee Olesky as CEO effective January 1, 2023, and Thomas Pluta became President.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 24, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $1.19B$1.08B | +10.4% |
| Operating Expenses | $776.21M$717.62M | +8.2% |
| Operating Income | $412.57M$358.83M | +15.0% |
| Net Income | $309.34M$226.83M | +36.4% |
| EPS (Basic) | $1.50$1.13 | +32.7% |
| EPS (Diluted) | $1.48$1.09 | +35.8% |
| Shares Outstanding (Basic) | 205.58M201.42M | +2.1% |
| Shares Outstanding (Diluted) | 208.40M207.25M | +0.6% |
05—Questions
Frequently Asked Questions
What drove revenue growth in 2022?
Transaction fees and commissions increased $103.9 million, or 12.3%, to $950.3 million, primarily due to higher volumes and fees for rates derivatives, municipals, U.S. ETFs, U.S. government bonds and U.S. corporate bonds. Subscription fees rose 4.1%, and Retail client sector revenue grew 56.5%.
How much cash does the company have and how is it returning capital?
Cash and cash equivalents were approximately $1.3 billion at December 31, 2022. During 2022 the company paid $66.0 million in cash dividends, repurchased $99.3 million of shares under its repurchase programs, and paid $91.5 million in net payroll taxes on equity awards.
What is the Tax Receivable Agreement obligation?
As of December 31, 2022, total amounts due to Continuing LLC Owners under the Tax Receivable Agreement were $425.7 million, substantially all payable over 15 years. The company pays 50% of realized tax savings to these owners.
What legal proceedings could affect the company?
The company is a defendant in the Treasuries antitrust litigation, where the district court dismissed claims against it in March 2022 and the plaintiffs have appealed to the Second Circuit. It is also named in the interest rate swaps litigation, where the court has not named Tradeweb Markets LLC as a defendant. The company believes it has meritorious defenses and has not established contingency reserves.
06—Continue