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01/11 10:24
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary highlights strong financial performance with record revenue growth and market share gains, as well as positive client engagement and expansion plans. The Q&A section indicates analysts' positive sentiment towards new fees and cross-selling strategies, with management addressing concerns about volatility and regulatory impacts. Although some management responses were unclear, the overall outlook remains optimistic with a focus on innovation and growth. Considering the positive financial performance and strategic initiatives, the stock price is likely to experience a positive movement in the short term.
Revenue Record revenues of $513 million, up 26.7% year-over-year on a reported basis and 24.7% on a constant currency basis. Growth driven by strong client activity, international business growth (41% revenue growth), and strategic initiatives in EM and APAC.
Adjusted EBITDA Margin Expanded by 70 basis points year-over-year to 54.2%. Growth attributed to scalability and variable nature of expense base, as well as investments in digital assets, consulting, and client relationship development.
Equities Revenue Up 50% year-over-year, driven by growth in global ETF and equity derivatives business. Market volatility and frequent rebalancing contributed to the increase.
Global Swaps Revenue Grew over 45% year-over-year, supported by strong client engagement, favorable mix shift towards risk trading, and a 4% increase in weighted average duration. International swaps achieved record revenues, growing over 55% year-over-year.
Credit Revenue Double-digit revenue growth driven by strong performance in credit derivatives and municipal bonds. Global Corporate Credit delivered mid-single-digit revenue growth, while retail corporate credit revenues were down 17% year-over-year due to better relative yields in money markets and munis.
Money Markets Revenue Growth led by the addition of ICD and record quarterly revenues across global repos. However, negatively impacted by market volatility as large clients drew down money market fund balances to tactically buy back shares and increased spend ahead of potentially higher global tariffs.
Cash Equities Fee Per Million Increased 15% year-over-year due to higher fees in U.S. ETFs and a mix shift towards EU ETFs, which carry a relatively higher fee per million.
Cash Credit Fee Per Million Decreased 11% year-over-year due to migration of certain dealers from fully variable plans to fixed plans and a mix shift away from retail within U.S. credit, which carries a higher fee per million.
Adjusted Expenses Increased 24% year-over-year, driven by investments in digital assets, consulting, client relationship development, and a 20% increase in headcount (50% related to ICD addition).
AiEX and Portfolio Trading: Clients leaned into newer innovations like AiEX and Portfolio Trading during periods of market volatility, achieving record volumes in many asset classes.
U.S. Treasuries and ETFs: Record revenues were achieved in U.S. Treasuries and ETFs, with significant adoption of electronic solutions like AiEX.
Global Swaps: Record revenues driven by strong client engagement, favorable mix shifts, and increased adoption of electronic trading solutions.
International Business: Achieved 41% revenue growth, driven by strategic initiatives in EM and APAC regions.
Emerging Markets Credit: Revenues grew nearly 40% year-over-year, signaling strong momentum in this area.
Global Swaps Expansion: International swaps achieved record revenues, growing over 55% year-over-year, with strong performance in EM and APAC regions.
Revenue Growth: Achieved 26.7% year-over-year revenue growth, with record revenues of $513 million in Q2 2025.
Adjusted EBITDA Margins: Expanded by 70 basis points year-over-year, reflecting operational efficiency.
Fee Adjustments: Introduced minimum fee floors and subscription fees for certain dealers, contributing to fixed revenue growth.
Digital Assets: Continued investments in digital assets and infrastructure to enhance trading capabilities.
New York City Headquarters: Relocation to a new headquarters in NYC, with increased occupancy expenses expected in the second half of 2025.
Canton Network: Earned $1.8 million from work with the Canton Network, compensated in Canton coins.
Market Volatility: The U.S. treasury markets experienced significant volatility, with 10-year yields moving nearly 50 basis points in a short period. This volatility impacted market share and trading behaviors, with a shift towards voice-centric trades.
Liquidity Crunch: A liquidity crunch was observed, although less severe than in March 2020. This impacted certain asset classes and client behaviors.
Fee Per Million Decline: Average fees per million declined in several areas, including cash rate products and cash credit, due to mix shifts and migration of dealers to fixed plans.
Market Share Decline: Market share in U.S. treasuries and global swaps declined year-over-year, driven by shifts in trading behaviors and reduced compression volumes.
Expense Growth: Adjusted expenses increased by 24%, driven by investments in technology, infrastructure, and client development, as well as FX losses and increased travel and marketing costs.
Regulatory and Tariff Risks: Potentially higher global tariffs impacted client behaviors, including drawdowns in money market fund balances.
Compression Volume Reduction: A significant reduction in U.S. and European client-related compression volumes negatively impacted total market share in global swaps.
Operational Costs: Upcoming occupancy expenses are expected to rise by 40% year-over-year due to the move to a new headquarters, including duplicate rent-related expenses.
Revenue Growth: The company expects 2025 to produce another year of double-digit revenue growth, driven by strong client engagement and market conditions.
Adjusted Expense Guidance: The company has increased its adjusted expense guidance to $1 billion to $1.05 billion for 2025, with investments focused on U.S. and European credit, specified pools and mortgages, global repos, and digital assets.
Adjusted EBITDA Margin: The company expects its 2025 adjusted EBITDA margin to exceed 2024 levels, although expansion will be more modest due to increased investments.
Revenue from Master Data Agreement: Revenues generated under the master data agreement with LSEG are expected to be approximately $90 million in 2025, up 10% from 2024.
Market Expansion and Innovation: The company plans to continue investing in electronic trading solutions, including AiEX and portfolio trading, and expanding into emerging markets credit and swaps.
Digital Assets: The company is focusing on digital assets as a new area to enhance its one-stop shop offering.
Global Swaps Market: The company sees significant long-term growth potential in the global swaps market, with only 30% of the cleared swaps market currently electronified.
New York City Headquarters: The company expects second-half 2025 occupancy expenses to rise 40% year-over-year due to the move to its new headquarters.
Quarterly Dividend: The Board declared a quarterly dividend of $0.12 per Class A and Class B shares, up 20% year-over-year.
Share Repurchase: Some large clients drew down their money market fund balances during the quarter to tactically buy back shares in the market and increased spend ahead of the potentially higher global tariffs.
The earnings call summary indicates strong financial performance with record revenues, growth in emerging markets, and significant contributions from digital assets. The Q&A session reveals optimism about electronification trends, tokenization, and strategic investments, although management's vague responses on market volumes pose a slight concern. Overall, the company's positive revenue growth, strategic focus, and potential catalysts suggest a favorable stock price movement, likely in the positive range of 2% to 8% over the next two weeks.
The earnings call summary highlights strong financial performance with record revenue growth and market share gains, as well as positive client engagement and expansion plans. The Q&A section indicates analysts' positive sentiment towards new fees and cross-selling strategies, with management addressing concerns about volatility and regulatory impacts. Although some management responses were unclear, the overall outlook remains optimistic with a focus on innovation and growth. Considering the positive financial performance and strategic initiatives, the stock price is likely to experience a positive movement in the short term.
Tradeweb Markets Inc. reported record-high revenue growth, strong EBITDA margins, and increased dividends, indicating a robust financial performance. The company's strategic acquisitions and market share gains further support a positive outlook. While some uncertainties were noted in the Q&A, such as competition from Citadel, the overall sentiment remains optimistic due to strong client engagement and favorable market conditions. The positive dividend increase and strong revenue growth in emerging markets and global swaps contribute to a positive sentiment, likely resulting in a positive stock price movement over the next two weeks.
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