Tradeweb Markets (TW) Q3 Earnings call transcript Oct 30, 2024

In Tradeweb's latest earnings call, the company reported a record quarter with revenue surpassing $449 million, a 36.7% year-over-year increase. This growth is a testament to Tradeweb's strategic focus on market share expansion, multi-asset class trading, and targeted acquisitions.

Strategic Growth Initiatives

Tradeweb's growth strategy is centered on driving market share in many of its markets, with a particular focus on electronifying and changing behavior across swaps, surging U.S. credit, and expanding EM offerings. This approach has led to significant gains in the institutional treasury business, where Tradeweb now holds over 50% market share in U.S. treasuries against Bloomberg.

The company's efforts to capitalize on the trend of multi-asset class trading have also yielded impressive results, with nearly 50% of revenue growth generated away from its cornerstone rates business. The acquisition of ICD in August and the integration of YieldBroker have been instrumental in this growth, with both revenues tracking ahead of plan.

Market Trends and Challenges

Tradeweb's strong performance comes amidst a challenging global economic environment, with central banks retreating from markets, monetary policies diverging, and fixed income markets continuing to grow. These conditions present both opportunities and challenges for Tradeweb, particularly in the credit market where automation is surging. The company has seen double-digit revenue growth in U.S. and European credit, as well as across credit derivatives, municipal bonds, and China bonds.

Investing for Future Growth

Despite the strong performance, Tradeweb remains focused on investing for future growth. The company is expanding its global swaps business, targeting solutions for more parts of the swaps market, and making inroads into the cleared swaps market. Tradeweb is also increasing its engagement and wallet share with ETF market makers, driven by average daily volume up over 45% year-over-year.

Financial Performance and Outlook

Tradeweb's financial performance was highlighted by a 38% of third quarter revenues derived from international clients, with approximately 30% of the revenue base denominated in currencies other than dollars. The company's variable revenues increased by 50% and total trading revenues by 37%, while adjusted EBITDA margins expanded by 154 basis points relative to the third quarter of 2023.

Looking ahead, Tradeweb is increasing its adjusted expense guidance to $855 million to $875 million for 2024, reflecting the company's continued investment in growth and profitability. The company also expects its 2024 adjusted EBITDA margin expansion to exceed 2023 levels, underscoring its commitment to sustainable growth.

Conclusion

Tradeweb's third quarter earnings call underscores the company's strong financial health and strategic growth trajectory. Despite the challenges of a rapidly evolving global economic landscape, Tradeweb is well-positioned to capitalize on opportunities in the risk intermediation business and continue its momentum into 2025 and beyond.