01—Abstract
Summary
Summary of the 10-Q filed October 30, 2024. Cited figures are marked; the original filing is the authoritative source.
Tradeweb Markets Inc. reported strong third-quarter 2024 results in its Form 10-Q filed October 30, 2024.
Total revenue rose to $448.9 milliona for the three months ended September 30, 2024, up from $328.4 million a year earlier, and net income attributable to Tradeweb Markets Inc. was $113.9 million versus $98.6 million. Transaction fees and commissions were the primary driver, increasing $110.0 million to $373.5 million, led by rates derivatives, U.S. corporate bonds and U.S. government bonds, along with basis point commissions from the ICD Portal following the August 1, 2024 ICD acquisition. For the nine months ended September 30, 2024, total revenue was $1.26 billion and net income attributable to Tradeweb Markets Inc. was $359.3 million.
Operating cash flow was $615.7 millionb and Free Cash Flow, a non-GAAP measure, was $564.8 million. Adjusted EBITDA for the quarter was $239.8 million, an Adjusted EBITDA margin of 53.4%. Cash and cash equivalents fell to $1.17 billion at September 30, 2024 from $1.71 billion at December 31, 2023, reflecting $860.4 million of net cash paid for the ICD and r8fin acquisitions.
The company had no outstanding indebtedness at quarter end, with $500.0 millionc available under its 2023 Revolving Credit Facility, and it declared a $0.10 per share quarterly dividend on October 30, 2024. The filing also notes that the Tax Receivable Agreement liability stood at $382.4 million, and that Refinitiv (LSEG) held 89.9% of the combined voting power of Tradeweb Markets Inc.
02—Key points
Key Highlights
- Total revenue for Q3 2024 was $448.9 million, up 36.7% from $328.4 million in Q3 2023, with transaction fees and commissions reaching $373.5 million.
- Net income attributable to Tradeweb Markets Inc. for Q3 2024 was $113.9 million, or $0.53 diluted EPS, compared with $98.6 million and $0.46 a year earlier.
- Adjusted EBITDA was $239.8 million for Q3 2024 with an Adjusted EBITDA margin of 53.4%, and Adjusted Diluted EPS was $0.75 versus $0.55.
- The ICD acquisition, closed August 1, 2024 for $774.1 million in cash net of cash acquired and sale proceeds, added a new corporates client sector that generated $17.2 million of revenue in the period from closing through September 30, 2024.
- Nine-month operating cash flow was $615.7 million and Free Cash Flow was $564.8 million, while cash and cash equivalents declined to $1.17 billion from $1.71 billion at year-end 2023.
- The company had no outstanding borrowings at September 30, 2024, $500.0 million of capacity under its 2023 Revolving Credit Facility, and declared a $0.10 per share quarterly dividend.
- Refinitiv, an LSEG affiliate, held 89.9% of the combined voting power of Tradeweb Markets Inc. as of September 30, 2024, and the Tax Receivable Agreement liability was $382.4 million.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed October 30, 2024Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $448.92M$328.36M | +36.7% |
| Operating Expenses | $289.60M$203.62M | +42.2% |
| Operating Income | $159.32M$124.74M | +27.7% |
| Net Income | $113.92M$98.61M | +15.5% |
| EPS (Basic) | $0.53$0.47 | +12.8% |
| EPS (Diluted) | $0.53$0.46 | +15.2% |
| Shares Outstanding (Basic) | 213.21M211.62M | +0.8% |
| Shares Outstanding (Diluted) | 215.10M213.49M | +0.8% |
05—Questions
Frequently Asked Questions
What drove the increase in Tradeweb's third-quarter 2024 revenue?
Total revenue rose $120.6 million to $448.9 million, driven mainly by a $110.0 million increase in transaction fees and commissions to $373.5 million. The filing attributes this to higher revenues in rate derivatives, U.S. corporate bonds and U.S. government bonds, plus basis point commissions on money market fund balances through the ICD Portal for the two months after the acquisition.
How did the ICD and r8fin acquisitions affect the balance sheet and cash position?
The company paid $860.4 million in net cash for the acquisitions of ICD and r8fin during the nine months ended September 30, 2024. Goodwill rose to $3.15 billion from $2.82 billion at year-end 2023, and intangible assets, net, rose to $1.32 billion from $1.00 billion. Cash and cash equivalents fell to $1.17 billion from $1.71 billion.
What are Tradeweb's capital return and dividend commitments?
The board declared a $0.10 per share dividend on October 30, 2024, payable December 16, 2024. TWM LLC approved a distribution of $30.1 million payable December 12, 2024. During the nine months, dividends paid totaled $63.9 million and share repurchases totaled $24.4 million, with $214.8 million remaining under the 2022 Share Repurchase Program.
What is the outlook for Tradeweb's Tax Receivable Agreement payments?
As of September 30, 2024, the Tax Receivable Agreement liability was $382.4 million, and the company expects to pay approximately $8.0 million within the next 12 months and approximately $374.4 million thereafter. Payments are generally due over 15 years and will increase if future LLC Interest redemptions or exchanges raise the tax basis of TWM LLC's assets.
Are there any notable one-time or unusual items in the quarter?
Third-quarter general and administrative expense rose $13.7 million, including an $8.7 million swing in foreign exchange results. Accelerated stock-based compensation of $2.4 million related to former President Thomas Pluta's departure and $1.4 million of compensation tied to ICD award acceleration were recorded. Merger and acquisition transaction and integration costs were $14.5 million for the quarter.
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