01—Abstract
Summary
Summary of the 10-K filed February 9, 2024. Cited figures are marked; the original filing is the authoritative source.
Tradeweb Markets Inc. (Nasdaq: TW) reported total revenue of $1.34 billiona for the year ended December 31, 2023, up 12.6% from $1.19 billion in 2022, with transaction fees and commissions rising to $1.08 billion.
Operating income increased 22.5% to $505.3 millionb, and net income attributable to Tradeweb Markets Inc. rose 18.0% to $364.9 million. Adjusted EBITDA reached $701.6 million, a 52.4% margin, and Free Cash Flow was $684.3 million. Rates was the largest asset class at $695.4 million, or roughly 52% of revenue according to the risk factors.
The company ended 2023 with $1.7 billionc in cash and cash equivalents and no outstanding borrowings. It replaced its credit facility with a $500.0 million unsecured revolving facility maturing in 2028. Shareholder returns in 2023 included $75.9 million in dividends and $35.2 million in share repurchases, and the Board declared a quarterly dividend of $0.10 per share for Q1 2024, up from $0.09.
Key items for investors include a $457.5 milliond Tax Receivable Agreement liability, and Refinitiv (LSEG-controlled) holding approximately 89.9% of combined voting power as a controlled company. The company also completed the Yieldbroker acquisition in August 2023 and agreed to acquire r8fin for $125 million, which closed in January 2024. The auditor, Deloitte & Touche LLP, issued an unqualified opinion on both the financial statements and internal control over financial reporting.
02—Key points
Key Highlights
- Total revenue of $1,338.2 million for 2023, up 12.6% from $1,188.8 million in 2022, driven by a $128.1 million increase in transaction fees and commissions.
- Operating income of $505.3 million, up 22.5%, and net income attributable to Tradeweb Markets Inc. of $364.9 million, up 18.0%.
- Adjusted EBITDA of $701.6 million with a 52.4% margin, and Free Cash Flow of $684.3 million, up from $572.7 million in 2022.
- Cash and cash equivalents of $1.7 billion at year-end 2023 with no outstanding borrowings; a new $500.0 million unsecured revolving credit facility matures in November 2028.
- Quarterly dividend declared at $0.10 per share for Q1 2024, an increase from the $0.09 paid during 2023; 2023 dividends totaled $75.9 million.
- Tax Receivable Agreement liability of $457.5 million, with payments of $26.8 million due within one year.
- Refinitiv controls approximately 89.9% of combined voting power, making Tradeweb a controlled company; r8fin acquisition for $125 million closed January 19, 2024.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 9, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $1.34B$1.19B | +12.6% |
| Operating Expenses | $832.95M$776.21M | +7.3% |
| Operating Income | $505.27M$412.57M | +22.5% |
| Net Income | $364.87M$309.34M | +18.0% |
| EPS (Basic) | $1.73$1.50 | +15.3% |
| EPS (Diluted) | $1.71$1.48 | +15.5% |
| Shares Outstanding (Basic) | 210.80M205.58M | +2.5% |
| Shares Outstanding (Diluted) | 212.67M208.40M | +2.0% |
05—Questions
Frequently Asked Questions
How did Tradeweb perform financially in 2023?
Total revenue rose 12.6% to $1,338.2 million, operating income rose 22.5% to $505.3 million, and net income attributable to Tradeweb Markets Inc. rose 18.0% to $364.9 million. Diluted EPS was $1.71 compared with $1.48 in 2022.
Which asset classes drove revenue growth?
Rates revenue increased 14.9% to $695.4 million, credit increased 10.7% to $367.4 million, and money markets increased 26.1% to $63.0 million. Market data revenue rose 9.5% to $94.1 million, driven in part by the amended LSEG market data agreement effective November 1, 2023.
What are the main risks related to ownership and control?
Refinitiv holds about 89.9% of combined voting power and can significantly influence board composition and corporate actions. The company also has a $457.5 million Tax Receivable Agreement liability requiring cash payments to Continuing LLC Owners, and it depends on distributions from TWM LLC to fund dividends and taxes.
What capital allocation activity did the company undertake in 2023?
The company paid $75.9 million in dividends and repurchased 485,730 Class A shares for $35.2 million under the 2022 Share Repurchase Program, leaving $239.8 million available. Free Cash Flow of $684.3 million covered these outflows, and the company ended the year with $1.7 billion in cash.
What acquisitions did Tradeweb complete?
Tradeweb acquired Yieldbroker (now Tradeweb Australia Pty Ltd) on August 31, 2023 for A$123.6 million, or $80.1 million U.S. dollars. It also agreed in November 2023 to acquire r8fin for $125 million in cash and stock, and that acquisition closed on January 19, 2024.
06—Continue