STOCK TITAN
  1. Home
  2. News
  3. TW

Tradeweb Reports Fourth Quarter and Full Year 2020 Financial Results

Rhea-AI Impact
(Neutral)
Rhea-AI Sentiment
(Neutral)
Tags
earnings

Tradeweb Markets Inc. (Nasdaq: TW), a leading, global operator of electronic marketplaces for rates, credit, equities and money markets, today reported financial results for the quarter and full year ended December 31, 2020.

$233.1 million quarterly gross revenues increased 18.1% (15.9% on a constant currency basis) year over year. Full Year 2020 gross revenue increase of 15.1% vs Full Year 2019

$897.9 billion record average daily volume (“ADV”) for the quarter, an increase of 30.9% year over year with ADV records in U.S. High Yield bonds, Chinese bonds and Repos. Quarterly records for TRACE market share in U.S. High Grade and U.S. High Yield bonds

$66.4 million net income and $80.5 million adjusted net income for the quarter, increases of 16.0%, and 33.1% respectively from the prior year period

49.2% adjusted EBITDA margin or $114.6 million adjusted EBITDA for the quarter, compared to 46.9% or $92.4 million respectively for the prior year period

$0.28 diluted earnings per share (“Diluted EPS”) for the quarter and $0.34 adjusted diluted earnings per share

$0.08 per share quarterly cash dividend declared and $150 million share repurchase program launched

Lee Olesky, CEO of Tradeweb Markets:

“Strong financial results for the fourth quarter capped off a transformative year for Tradeweb. We reported record average daily volumes for Q4 thanks to broad-based momentum across asset classes. Wherever our clients were working in 2020, we know that electronic trading, digital processing and data helped them navigate unprecedented debt issuance and market volatility. Our markets are evolving, and with 2021 volumes off to a strong start we are excited about the role electronic trading continues to play in that evolution."

SELECT FINANCIAL
RESULTS

4Q20

4Q19

Change

Constant
Currency
Growth(1)

(dollars in thousands except per share amounts)(Unaudited)

GAAP Financial Measures

Gross revenue

$

233,076

 

$

197,308

 

18.1

%

15.9

%

Rates

$

121,699

 

$

107,539

 

13.2

%

10.8

%

Credit

$

59,255

 

$

43,542

 

36.1

%

33.9

%

Equities

$

15,011

 

$

11,665

 

28.7

%

23.8

%

Money Markets

$

10,382

 

$

10,027

 

3.5

%

2.1

%

Market Data

$

20,864

 

$

19,361

 

7.8

%

7.3

%

Other

$

5,865

 

$

5,174

 

13.4

%

13.4

%

Net income

$

66,449

 

$

57,278

 

16.0

%

 

 

Net Income attributable to Tradeweb Markets Inc.(2) $

55,060

$

41,329

33.2

%

 

Diluted EPS

$

0.28

 

$

0.25

 

12.0

%

 

 

Non-GAAP Financial Measures

Adjusted EBITDA (1)

$

114,576

 

$

92,441

 

23.9

%

20.0

%

Adjusted EBITDA

margin (1)

49.2

%

46.9

%

231

bps

167

bps

Adjusted EBIT (1)

$

103,563

 

$

81,482

 

27.1

%

22.7

%

Adjusted EBIT margin (1)

44.4

%

41.3

%

314

bps

242

bps

Adjusted Net Income (1)

$

80,483

 

$

60,489

 

33.1

%

28.4

%

Adjusted Diluted

EPS (1)

$

0.34

 

$

0.26

 

30.8

%

26.9

%

(1)

Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT, Adjusted EBIT margin, Adjusted Net Income, Adjusted Diluted EPS and constant currency growth are non-GAAP financial measures. See "Non-GAAP Financial Measures" below and the attached schedules for additional information and reconciliations of such non-GAAP financial measures.

(2)

Represents net income less net income attributable to non-controlling interests.

ADV (US $bn)
(Unaudited)

Asset Class

Product

4Q20

4Q19

YoY

Rates

Cash

328

 

268

 

22.5

%

 

Derivatives

209

 

184

 

14.1

%

 

Total

537

 

451

 

19.1

%

Credit

Cash

8

 

6

 

38.5

%

 

Derivatives

10

 

7

 

32.8

%

 

Total

18

 

13

 

35.4

%

Money Markets

Cash

330

 

212

 

55.6

%

 

Total

330

 

212

 

55.6

%

Equities

Cash

7

 

5

 

50.1

%

 

Derivatives

6

 

4

 

25.4

%

 

Total

12

 

9

 

37.9

%

 

Total

898

 

686

 

30.9

%

DISCUSSION OF RESULTS: FOURTH QUARTER 2020

Rates – Revenues from rates of $121.7 million in the fourth quarter of 2020 increased 13.2% compared to the fourth quarter of 2019 (10.8% on a constant currency basis). ADV in rates of $537.3 billion for the fourth quarter of 2020 increased 19.1% compared with the fourth quarter of 2019. Government bond trading increased due in part to growth in execution via firm streams and new client acquisition, along with higher global issuances and volatility around COVID-19, the U.S. election and Brexit. Low mortgage rates drove mortgage origination and higher secondary trading volumes, while macro uncertainty contributed to higher volumes in rates derivatives.

Credit – Revenues from credit of $59.3 million in the fourth quarter of 2020 increased 36.1% compared to the fourth quarter of 2019 (33.9% on a constant currency basis) as continued growth in portfolio trading and anonymous all-to-all trading protocols helped Tradeweb capture quarterly record TRACE market share in U.S. High Grade and U.S. High Yield bonds, with fully electronic representing the majority of each. Quarterly ADV in credit of $17.9 billion for the fourth quarter increased 35.4% over the prior year period with records in U.S. High Yield, U.S. High Grade-Fully Electronic and Chinese bonds.

Money Markets – Revenues from money markets of $10.4 million in the fourth quarter of 2020 increased 3.5% compared to the fourth quarter of 2019 (2.1% on a constant currency basis). Record quarterly ADV in money markets of $330.3 billion increased 55.6% driven in part by the addition of new dealers and participants on our global institutional Repo platform.

Equities – Revenues from equities of $15.0 million in the fourth quarter of 2020 increased 28.7% compared to the fourth quarter of 2019 (23.8% on a constant currency basis). ADV in equities of $12.4 billion for the fourth quarter of 2020 increased 37.9% as global ETF trading benefited from sharp fluctuations in equity markets and continued new client adoption.

Market Data – Revenues from market data of $20.9 million in the fourth quarter of 2020 increased 7.8% compared to the fourth quarter of 2019 (7.3% on a constant currency basis) due to delivery of additional data under our market data license agreements with Refinitiv.

Other – Other revenues of $5.9 million in the fourth quarter of 2020 increased 13.4% compared to the fourth quarter of 2019 (13.4% on a constant currency basis).

Operating Expenses – Operating expenses of $161.5 million in the fourth quarter of 2020 increased 13.0% compared to the fourth quarter of 2019 due to higher employee compensation and benefits expense, as well as higher depreciation and amortization expense. Adjusted Expenses were $129.5 million in the fourth quarter of 2020, an increase of 11.8% from the prior year period, primarily due to higher employee compensation and benefits expense associated with performance-related compensation and higher headcount, as well as higher technology and communications expense. Please see "Non-GAAP Financial Measures" below for additional information.

DISCUSSION OF RESULTS: FULL YEAR 2020

Tradeweb recorded its 21st consecutive year of record revenues in 2020. Gross revenue increased 15.1% (14.5% on a constant currency basis), to $892.7 million, compared to full year 2019, driven by record volumes across all of our asset classes and capped off by a record fourth quarter. Net income increased 26.2% to $218.4 million for the year ended December 31, 2020, compared to $173.0 million for the year ended December 31, 2019. Adjusted EBITDA margin increased to 48.9% for the year ended December 31, 2020 compared to 45.5% for the year ended December 31, 2019, representing an increase of 336 basis points (285 bps on a constant currency basis). Diluted EPS was $0.88 for the year ended December 31, 2020. Adjusted Diluted EPS was $1.31 for the year ended December 31, 2020.

CAPITAL MANAGEMENT

  • $791.3 million in cash and cash equivalents and an undrawn $500 million credit facility at December 31, 2020.
  • Capital expenditures and capitalization of software development: $42.5 million.
  • Free cash flow for the year ended December 31, 2020 of $400.7 million up 50.3%. See “Non-GAAP Financial Measures” for additional information.
  • The Board of Directors of Tradeweb Markets Inc. declared a quarterly cash dividend of $0.08 per share of Class A common stock and Class B common stock, payable on March 15, 2021 to stockholders of record as of March 1, 2021.
  • The Board also authorized a $150 million share repurchase program. The amounts and timing of the repurchases will be subject to, among other factors, general market conditions and the prevailing price and trading volumes of our Class A common stock. The repurchase program, which is authorized through the end of 2023, does not require the Company to acquire a specific number of shares and may be suspended, amended or discontinued at any time.

OTHER MATTERS

Full-Year 2021 Guidance*

  • Adjusted Expenses: $530 - $560 million
    • Non-GAAP adjusted expense guidance does not include any expenses tied to our recently announced acquisition of Nasdaq’s U.S. fixed income electronic trading platform. We will update our guidance following the closing of the deal.
  • Acquisition and Refinitiv Transaction related depreciation and amortization expense: $120 million
  • Assumed non-GAAP tax rate: 22.0%
  • Capital expenditures and capitalization of software development: $45 - $50 million

*GAAP operating expenses and tax rate guidance are not provided due to the inherent difficulty in quantifying certain amounts due to a variety of factors including the unpredictability in the movement of foreign currency rates.

CONFERENCE CALL

Tradeweb Markets will hold a conference call to discuss fourth quarter 2020 results starting at 9:25 AM EST today, February 4, 2021. A live, audio webcast of the conference call along with related materials will be available at http://investors.tradeweb.com. Alternatively, interested parties can access the call by dialing 866-221-1629 (U.S.) or +1 470-495-9175 (international) and entering passcode 6190256. After the conference call, an archived recording will be available at http://investors.tradeweb.com.

ABOUT TRADEWEB MARKETS

Tradeweb Markets Inc. (Nasdaq: TW) is a leading, global operator of electronic marketplaces for rates, credit, equities and money markets. Founded in 1996, Tradeweb provides access to markets, data and analytics, electronic trading, straight-through-processing and reporting for more than 40 products to clients in the institutional, wholesale and retail markets. Advanced technologies developed by Tradeweb enhance price discovery, order execution and trade workflows while allowing for greater scale and helping to reduce risks in client trading operations. Tradeweb serves approximately 2,500 clients in more than 65 countries. On average, Tradeweb facilitated more than $835 billion in notional value traded per day over the past four fiscal quarters. For more information, please go to www.tradeweb.com.

 

TRADEWEB MARKETS INC.
INCOME STATEMENT
Dollars in Thousands, Except Per Share Data

 

 

Quarter Ended December 31,

 

Year Ended December 31,

 

2020

 

2019

 

2020

 

2019

Revenues

 

(unaudited)

 

 

 

(unaudited)

 

 

 

(unaudited)

 

 

 

 

 

Transaction fees

$

134,922

 

 

 

$

104,245

 

 

 

$

518,474

 

 

 

$

423,583

 

 

Subscription fees

 

36,652

 

 

 

 

34,333

 

 

 

 

142,358

 

 

 

 

138,731

 

 

Commissions

 

42,913

 

 

 

 

41,165

 

 

 

 

163,114

 

 

 

 

149,365

 

 

Refinitiv market data fees

 

16,240

 

 

 

 

15,383

 

 

 

 

59,706

 

 

 

 

55,635

 

 

Other

 

2,349

 

 

 

 

2,182

 

 

 

 

9,007

 

 

 

 

8,252

 

 

Gross revenue

 

233,076

 

 

 

 

197,308

 

 

 

 

892,659

 

 

 

 

775,566

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employee compensation and benefits

 

86,305

 

 

 

 

76,545

 

 

 

 

349,658

 

 

 

 

329,457

 

 

Depreciation and amortization

 

39,837

 

 

 

 

36,402

 

 

 

 

153,789

 

 

 

 

139,330

 

 

Technology and communications

 

13,103

 

 

 

 

10,199

 

 

 

 

47,500

 

 

 

 

39,285

 

 

General and administrative

 

10,302

 

 

 

 

8,999

 

 

 

 

34,822

 

 

 

 

34,960

 

 

Professional fees

 

7,967

 

 

 

 

7,048

 

 

 

 

28,875

 

 

 

 

28,029

 

 

Occupancy

 

3,982

 

 

 

 

3,786

 

 

 

 

14,660

 

 

 

 

14,686

 

 

Total expenses

 

161,496

 

 

 

 

142,979

 

 

 

 

629,304

 

 

 

 

585,747

 

 

Operating income

 

71,580

 

 

 

 

54,329

 

 

 

 

263,355

 

 

 

 

189,819

 

 

Tax receivable agreement liability adjustment

 

11,425

 

 

 

 

33,134

 

 

 

 

11,425

 

 

 

 

33,134

 

 

Net interest income (expense)

 

Stock TW logo
Tradeweb Markets Inc.

NASDAQ:TW

TW Rankings

#460 Ranked by Market Cap
#319 Ranked by Stock Gains
#2039 Ranked by Dividends

TW Latest News

TW Stock Data

23.53B
115.61M
15.67%
101.25%
0.88%
Investment Banking and Securities Dealing
Finance and Insurance
Link
United States of America
NEW YORK

About TW

tradeweb is a leading global marketplace for electronic fixed income, derivatives and etf trading. our focus since 1998, when we first introduced electronic trading for the u.s. treasury bond marketplace, has been to work with all industry participants to increase transparency, enhance access to liquidity and drive efficiency through the deployment of innovative technology and flexible protocols. since then we have grown dramatically--expanding into more than 20 marketplaces and entering into the retail and inter-dealer businesses. additionally, we offer a full range of trusted pre-trade pricing, post-trade processing and integration services to our global client base.