01—Abstract
Summary
Summary of the 8-K filed February 6, 2024. Cited figures are marked; the original filing is the authoritative source.
Tradeweb Markets Inc. (Nasdaq: TW) reported financial results for the fourth quarter and full year ended December 31, 2023, in a press release furnished as Exhibit 99.1 to this Form 8-K under Item 2.02.
For the quarter, total revenue was $370.0 milliona, up 26.3% (24.6% on a constant currency basis), net income was $103.7 million, and adjusted net income was $151.9 million, up 30.0%. Diluted EPS was $0.42 and adjusted diluted EPS was $0.64. Adjusted EBITDA was $195.9 million, with a 53.0% adjusted EBITDA margin.
Average daily volume reached $1.7 trillionb, up 56.9% year over year, with record quarterly ADV in several products and a record 17.2% share of fully electronic U.S. High Grade TRACE. For full-year 2023, total revenue rose 12.6% to $1.3 billion, marking the company's 24th consecutive year of record revenue. Net income increased 16.7% to $419.5 million, and diluted EPS increased 15.5% to $1.71.
Adjusted diluted EPS rose 18.9% to $2.26c. Free cash flow was $684.3 million, up 19.5%. The company completed the acquisition of r8fin in January 2024 and had $1.7 billion in cash and cash equivalents at year-end, along with an undrawn $500.0 million revolving credit facility.
The board declared a quarterly cash dividend of $0.10d per share, an 11.1% increase, payable March 15, 2024. For 2024, guidance calls for Adjusted Expenses of $755 to $805 million, a non-GAAP tax rate of approximately 24.5% to 25.5%, and LSEG market data contract revenues of approximately $80 million, rising to about $90 million in 2025.
02—Key points
Key Highlights
- Q4 2023 total revenue of $370.0 million rose 26.3% year over year, with net income of $103.7 million and adjusted EBITDA of $195.9 million at a 53.0% margin.
- Average daily volume of $1.7 trillion in Q4 2023 increased 56.9%, with record quarterly ADV in U.S. High Grade credit, U.S. government bonds, and swaps/swaptions of one year or more.
- Full-year 2023 total revenue increased 12.6% to $1.3 billion, the company's 24th consecutive year of record revenue.
- Full-year 2023 net income rose 16.7% to $419.5 million, diluted EPS rose 15.5% to $1.71, and adjusted diluted EPS rose 18.9% to $2.26.
- Free cash flow for 2023 was $684.3 million, up 19.5%, and year-end cash and equivalents were $1.7 billion.
- The quarterly dividend was raised 11.1% to $0.10 per share, payable March 15, 2024.
- Full-year 2024 guidance includes Adjusted Expenses of $755 to $805 million and a non-GAAP tax rate of approximately 24.5% to 25.5%.
03—Questions
Frequently Asked Questions
How did Tradeweb perform in the fourth quarter of 2023?
Total revenue was $370.0 million, up 26.3% (24.6% on a constant currency basis). Net income was $103.7 million, and adjusted net income was $151.9 million, up 30.0%. Diluted EPS was $0.42 and adjusted diluted EPS was $0.64.
What drove the growth in trading volume?
Quarterly ADV was $1.7 trillion, up 56.9%. The filing cites heightened interest rate volatility and market share gains in rates, record U.S. High Grade credit volumes, strong ETF activity in equities, and record global repurchase agreement activity in money markets.
What is the company's capital return and liquidity position?
The board declared a $0.10 per share quarterly dividend, payable March 15, 2024. Tradeweb repurchased 485,730 shares for $35.2 million in 2023, leaving $239.8 million available under the authorization. Cash and equivalents were $1.7 billion at December 31, 2023, with an undrawn $500.0 million credit facility.
What is the outlook for 2024?
Full-year 2024 guidance calls for Adjusted Expenses of $755 to $805 million, cash costs of non-acquisition capital expenditures and capitalized software development of $75 to $83 million, and a non-GAAP tax rate of approximately 24.5% to 25.5%. LSEG market data contract revenues are expected to be about $80 million in 2024 and about $90 million in 2025.
What recent acquisitions and partnerships did the company announce?
Tradeweb completed the acquisition of r8fin in January 2024, a provider of algorithmic execution for U.S. Treasuries and interest rate futures. In the fourth quarter it announced a strategic partnership with FTSE Russell, expanded its integration with BlackRock's Aladdin OEMS, and signed a new market data license agreement with LSEG Data & Analytics.
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