01—Abstract
Summary
Summary of the 10-Q filed July 25, 2024. Cited figures are marked; the original filing is the authoritative source.
Tradeweb Markets Inc. reported total revenue of $404.95 milliona for the three months ended June 30, 2024, up from $310.61 million a year earlier, and $813.69 million for the six months, up from $639.86 million.
Transaction fees and commissions were the primary driver, rising to $330.48 millionb in the quarter from $246.46 million. Operating income increased to $162.49 million from $116.34 million, and net income attributable to Tradeweb Markets Inc. rose to $119.24 million from $89.08 million. Diluted EPS was $0.55 versus $0.42 in the prior-year quarter.
Adjusted EBITDA was $216.53 millionc for the quarter, with an Adjusted EBITDA margin of 53.5%, and Adjusted Diluted EPS was $0.70. The company ended the quarter with cash and cash equivalents of $1.72 billion and no outstanding borrowings under its $500.0 million revolving credit facility. The tax receivable agreement liability declined to $380.94 million from $457.52 million, reflecting $76.6 million in payments during the six months.
Stockholders' equity attributable to Tradeweb Markets Inc. was $5.63 billiond at June 30, 2024. The company completed the r8fin acquisition in January 2024 for total consideration of $125.9 million and has agreed to acquire the Institutional Cash Distributors business (ICD) for $785 million in cash, expected to close in the third quarter of 2024.
The filing also discloses a Treasury settlement issue: following a November 2023 ransomware attack on ICBC systems, the company self-cleared U.S. Treasury trades, resulting in a $432.0 million receivable and $424.8 million payable tied to failed settlements, all of which settled in July 2024. President Thomas Pluta will leave the company effective September 30, 2024, with a cash severance payment of $2.9 million recorded in the quarter.
02—Key points
Key Highlights
- Total revenue rose 30.4% to $404.95 million for Q2 2024, with transaction fees and commissions up $84.01 million to $330.48 million, led by rates derivatives and corporate bonds.
- Operating income increased 39.7% to $162.49 million for Q2 2024; net income attributable to Tradeweb Markets Inc. grew 33.9% to $119.24 million.
- Diluted EPS was $0.55 for Q2 2024 versus $0.42 a year earlier; Adjusted Diluted EPS was $0.70 versus $0.52, and Adjusted EBITDA margin was 53.5%.
- Cash and cash equivalents were $1.72 billion at June 30, 2024, and there were no borrowings outstanding under the $500.0 million 2023 Revolving Credit Facility.
- The company agreed to acquire ICD for $785 million in cash, expected to close in the third quarter of 2024, and completed the r8fin acquisition in January 2024 for $125.9 million.
- Tax receivable agreement liability decreased to $380.94 million from $457.52 million, with $76.59 million of TRA payments made in the six months ended June 30, 2024.
- A U.S. Treasury failed-settlement exposure of $432.0 million receivable and $424.8 million payable, linked to the November 2023 ICBC ransomware attack, was fully settled in July 2024.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2024filed July 25, 2024Financial Statements
Q2 FY2024 against Q2 FY2023
| Line item | Q2 FY2024Q2 FY2023 | Change |
|---|---|---|
| Revenue | $404.95M$310.61M | +30.4% |
| Operating Expenses | $242.46M$194.28M | +24.8% |
| Operating Income | $162.49M$116.33M | +39.7% |
| Net Income | $119.24M$89.08M | +33.9% |
| EPS (Basic) | $0.56$0.42 | +33.3% |
| EPS (Diluted) | $0.55$0.42 | +31.0% |
| Shares Outstanding (Basic) | 213.16M211.57M | +0.8% |
| Shares Outstanding (Diluted) | 214.90M213.16M | +0.8% |
05—Questions
Frequently Asked Questions
How did Tradeweb's revenue and profitability trend in the second quarter of 2024?
Total revenue for the three months ended June 30, 2024 was $404.95 million, up 30.4% from $310.61 million. Operating income rose to $162.49 million from $116.34 million, and net income attributable to Tradeweb Markets Inc. was $119.24 million versus $89.08 million. The growth was primarily driven by transaction fees and commissions, which increased to $330.48 million from $246.46 million.
What is the proposed ICD acquisition and how will it be funded?
On April 5, 2024, TWM LLC agreed to acquire the Institutional Cash Distributors business (ICD) for $785 million in cash, subject to customary working capital and other adjustments. The Corporation will also issue $4.5 million of Class A common stock to an equityholder of the seller. The acquisition is expected to close in the third quarter of 2024, and the purchase price is expected to be funded with cash and cash equivalents on hand.
Does Tradeweb have debt, and what liquidity does it have?
As of June 30, 2024, the company had no outstanding indebtedness. It had cash and cash equivalents of approximately $1.7 billion and a $500.0 million unsecured revolving credit facility maturing November 21, 2028, with $0.5 million of letters of credit issued and no borrowings outstanding. The company stated it was in compliance with all covenants.
What is the status of the U.S. Treasury failed-settlement transactions?
Following the November 2023 ransomware attack on ICBC systems, Tradeweb began self-clearing U.S. Treasury trades, which increased fed wire settlements and failed settlement transactions. As of June 30, 2024, the company recorded a $432.0 million receivable and a $424.8 million payable related to failed settlements, and self-funded a $7.3 million difference. All of these failed settlements were fully settled during July 2024.
What leadership change was announced, and what costs does it create?
Thomas Pluta, President of the Company, will leave the Company and its Board of Directors effective September 30, 2024. During the three months ended June 30, 2024, the company incurred $2.9 million in incremental cash severance expense and $0.3 million in accelerated stock-based compensation, with a further $2.4 million of accelerated stock-based compensation to be recorded in the third quarter. Amy Clack will join in August 2024 as Chief Administrative Officer.
06—Continue