How did Tradeweb perform in the third quarter of 2024?

Revenues were $448.9 million, up 36.7% year over year, and ADV was $2.2 trillion, up 55.3%. Net income was $130.2 million, up 16.7%, and adjusted net income was $179.3 million, up 37.1%.

What drove the increase in operating expenses?

Operating expenses of $289.6 million rose 42.2%, primarily due to higher employee compensation and benefits, including incentive compensation tied to financial performance, higher headcount, and the August 1, 2024 ICD acquisition. The quarter also included $2.4 million of accelerated stock-based compensation and $1.4 million of compensation expense tied to ICD seller stock awards.

Did the company change its 2024 guidance?

Yes. Adjusted expenses guidance was revised to $855 million to $875 million, trending toward the middle of the range, to reflect higher adjusted expenses given strong business momentum. Depreciation and amortization ($158 million), the assumed non-GAAP tax rate (about 24.5% to 25.5%), capital expenditures (about $77 to $85 million) and LSEG market data contract revenue (about $80 million) were unchanged.

What did the ICD acquisition contribute and what did it cost?

ICD was acquired on August 1, 2024. Tradeweb paid $771.2 million in net cash and issued 41,705 shares of restricted Class A common stock. The filing says Money Markets revenue increased 129.2% and Money Markets ADV increased 62.5%, with ICD contributing to the growth.

What are the company's capital return and liquidity positions?

Tradeweb repurchased 214,795 Class A shares for $25.0 million at an average price of $116.41 during the quarter, leaving $214.8 million available under its repurchase authorization. The Board declared a $0.10 per share quarterly dividend payable December 16, 2024, to holders of record on December 2, 2024. The company held $1.2 billion in cash and cash equivalents and had an undrawn $500 million credit facility.

TW 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed October 30, 2024. Cited figures are marked; the original filing is the authoritative source.

Tradeweb Markets Inc. (Nasdaq: TW) reported results for the quarter ended September 30, 2024 in a press release furnished as Exhibit 99.1 to this Form 8-K.

Revenues were $448.9 million^a, up 36.7% year over year (36.5% on a constant currency basis), and average daily volume (ADV) reached $2.2 trillion, up 55.3%. Net income was $130.2 million and adjusted net income was $179.3 million, with diluted EPS of $0.53 and adjusted diluted EPS of $0.75. Adjusted EBITDA was $239.8 million, a 53.4% adjusted EBITDA margin, compared with 51.9% in the prior-year period.

The company cited record quarterly ADV in U.S. government bonds, fully electronic U.S. high yield credit, credit derivatives and global repurchase agreements, and it attributed part of the growth to the acquisitions of ICD, r8fin and Yieldbroker. Operating expenses rose 42.2% to $289.6 million^b, driven mainly by higher employee compensation, headcount growth, and the August 1, 2024 ICD acquisition. The quarter also included $2.4 million of accelerated stock-based compensation tied to an executive departure and $1.4 million of compensation expense from the acceleration of ICD seller stock awards.

Management raised its full-year 2024 adjusted expense guidance to $855 million to $875 million^c, trending toward the middle of the range, while leaving other guidance items unchanged. Capital position included $1.2 billion in cash and cash equivalents and an undrawn $500 million credit facility at September 30, 2024.

The company repurchased $25.0 million^d of Class A shares during the quarter, with $214.8 million remaining under its authorization, and the Board declared a quarterly dividend of $0.10 per share payable December 16, 2024. Trailing twelve-month free cash flow was $797.4 million, up 23.6% from the prior-year period.

02—Key points

Key Highlights

Quarterly revenues of $448.9 million, up 36.7% year over year, described by management as a record.
Average daily volume of $2.2 trillion, up 55.3%, with quarterly ADV records in U.S. government bonds, fully electronic U.S. high yield credit, credit derivatives and global repurchase agreements.
Net income of $130.2 million (diluted EPS $0.53) and adjusted net income of $179.3 million (adjusted diluted EPS $0.75).
Adjusted EBITDA of $239.8 million, with a 53.4% margin versus 51.9% a year earlier.
Operating expenses rose 42.2% to $289.6 million, including $2.4 million of accelerated stock-based compensation tied to an executive departure.
Full-year 2024 adjusted expense guidance raised to $855 million to $875 million, trending toward the middle of the range.
Capital returns: $0.10 quarterly dividend declared and $25.0 million of shares repurchased; $1.2 billion of cash and an undrawn $500 million credit facility at quarter end.

03—Questions

Frequently Asked Questions

How did Tradeweb perform in the third quarter of 2024?
Revenues were $448.9 million, up 36.7% year over year, and ADV was $2.2 trillion, up 55.3%. Net income was $130.2 million, up 16.7%, and adjusted net income was $179.3 million, up 37.1%.
What drove the increase in operating expenses?
Operating expenses of $289.6 million rose 42.2%, primarily due to higher employee compensation and benefits, including incentive compensation tied to financial performance, higher headcount, and the August 1, 2024 ICD acquisition. The quarter also included $2.4 million of accelerated stock-based compensation and $1.4 million of compensation expense tied to ICD seller stock awards.
Did the company change its 2024 guidance?
Yes. Adjusted expenses guidance was revised to $855 million to $875 million, trending toward the middle of the range, to reflect higher adjusted expenses given strong business momentum. Depreciation and amortization ($158 million), the assumed non-GAAP tax rate (about 24.5% to 25.5%), capital expenditures (about $77 to $85 million) and LSEG market data contract revenue (about $80 million) were unchanged.
What did the ICD acquisition contribute and what did it cost?
ICD was acquired on August 1, 2024. Tradeweb paid $771.2 million in net cash and issued 41,705 shares of restricted Class A common stock. The filing says Money Markets revenue increased 129.2% and Money Markets ADV increased 62.5%, with ICD contributing to the growth.
What are the company's capital return and liquidity positions?
Tradeweb repurchased 214,795 Class A shares for $25.0 million at an average price of $116.41 during the quarter, leaving $214.8 million available under its repurchase authorization. The Board declared a $0.10 per share quarterly dividend payable December 16, 2024, to holders of record on December 2, 2024. The company held $1.2 billion in cash and cash equivalents and had an undrawn $500 million credit facility.

04—Continue

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