TRADEWEB INVESTOR PRESENTATION
4Q 2019
© 2020 Tradeweb Markets LLC. All rights reserved.
Disclaimer
The information in this presentation is current only as of its date and may have changed. We undertake no obligation to update this information in light of new information, future events or otherwise.
This presentation includes estimates regarding market and industry data that we prepared based on our management's knowledge and experience in the markets in which we operate, together with information obtained from various sources, including publicly available information, industry reports and publications, surveys, our clients, trade and business organizations and other contacts in the markets in which we operate. In presenting this information, we have made certain assumptions that we believe to be reasonable based on such data and other similar sources and on our knowledge of, and our experience to date in, the markets in which we operate. While such information is believed to be reliable for the purposes used herein, no representations are made as to the accuracy or completeness thereof and we take no responsibility for such information. Our market leader position in US treasuries, TBA MBS, European government bonds, interest rate swaps and European ETFs is based on our share of the electronic market for such products.
Basis of Presentation
The historical financial information and other disclosures contained in this presentation relate to periods that ended both prior to and after the completion of the Reorganization Transactions (as defined below) and initial public offering (the "IPO") of Tradeweb Markets Inc. (unless the context otherwise requires, together with its subsidiaries, referred to as "we," "our," "Tradeweb," "Tradeweb Markets" or the "Company"). The IPO closed on April 8, 2019. As a result of certain reorganization transactions (the "Reorganization Transactions") completed in connection with the IPO, on April 4, 2019, Tradeweb Markets Inc. became a holding company whose only material assets consist of its equity interest in Tradeweb Markets LLC ("TWM LLC") and related deferred tax assets. As the sole manager of TWM LLC, Tradeweb Markets Inc. operates and controls all of the business and affairs of TWM LLC and, through TWM LLC and its subsidiaries, conducts its business. As a result of this control, and because Tradeweb Markets Inc. has a substantial financial interest in TWM LLC, Tradeweb Markets Inc. consolidates the financial results of TWM LLC and its subsidiaries. The historical financial information contained in this presentation relating to periods prior to and including March 31, 2019, which we refer to as the "pre-IPO period," pertain to TWM LLC, the predecessor of Tradeweb Markets Inc. for financial reporting purposes. The historical financial information contained in this presentation relating to periods beginning on April 1, 2019, and through and including December 31, 2019, which we refer to as the "post-IPO period," pertain to Tradeweb Markets Inc. The pre-IPO period excludes, and the post-IPO period includes, our financial results from April 1, 2019 through April 3, 2019, which are not material.
On October 1, 2018, Refinitiv Holdings Ltd. ("Refinitiv"), which is controlled by certain investment funds affiliated with The Blackstone Group L.P., an affiliate of Canada Pension Plan Investment Board, an affiliate of GIC Special Investments Pte. Ltd. and certain co-investors, indirectly acquired substantially all of the financial and risk business of Thomson Reuters Corporation and Thomson Reuters Corporation indirectly acquired a non-controlling ownership interest in Refinitiv (collectively, the "Refinitiv Transaction"). As a result of the Refinitiv Transaction, as a consolidating subsidiary of Refinitiv, we accounted for the Refinitiv Transaction using pushdown accounting. Due to the change in the basis of accounting resulting from the application of pushdown accounting, the financial information for the period beginning on October 1, 2018, and through and including December 31, 2019, or the "successor period," and the financial information for the periods prior to, and including, September 30, 2018, or the "predecessor period," are not comparable. However, the change in basis resulting from the Refinitiv Transaction did not materially impact certain financial information. Accordingly, we present certain financial information for the year ended December 31, 2018 on a combined basis as the change in basis resulting from the Refinitiv Transaction did not materially impact such financial information and we believe it provides a meaningful method of comparison to other periods. The combined financial information is being presented for informational purposes only and (i) has not been prepared on a pro forma basis as if the Refinitiv Transaction occurred on the first day of the period, (ii) may not reflect the actual results we would have achieved absent the Refinitiv Transaction, (iii) may not be predictive of future results of operations and (iv) should not be viewed as a substitute for the financial results of the separate periods presented in accordance with GAAP.
We believe that gross revenue is the key driver of our operating performance and therefore is the revenue measure we utilize to assess our business on a period by period basis.
Forward-Looking Statements
This presentation contains forward-looking statements within the meaning of the federal securities laws. Statements related to, among other things, our future performance, the industry and markets in which we operate, our expectations, beliefs, plans, strategies, objectives, prospects and assumptions and future events are forward-looking statements. We have based these forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. These and other important factors, including those discussed under the heading "Risk Factors" in the documents of Tradeweb Markets Inc. on file with or furnished to the SEC, may cause our actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements. Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements contained in this presentation are not guarantees of future performance and our actual results of operations, financial condition or liquidity, and the development of the industry and markets in which we operate, may differ materially from the forward-looking statements contained in this presentation. In addition, even if our results of operations, financial condition or liquidity, and events in the industry and markets in which we operate, are consistent with the forward-looking statements contained in this presentation, they may not be predictive of results or developments in future periods. Any forward-looking statement that we make in this presentation speaks only as of the date of such statement. Except as required by law, we do not undertake any obligation to update or revise, or to publicly announce any update or revision to, any of the forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this presentation.
Non-GAAP Financial Measures
This presentation contains "non-GAAP financial measures," including Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT, Adjusted EBIT margin, Adjusted Net Income and Adjusted Net Income per diluted share ("Adjusted Diluted EPS"), which are supplemental financial measures that are not calculated and presented in accordance with GAAP. We make use of non-GAAP financial measures in evaluating our past results and future prospects. We present these non-GAAP financial measures because we believe they assist investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance.
See "Appendix" for reconciliations of the non-GAAP financial measures contained in this presentation to their most comparable GAAP financial measure. Non-GAAP financial measures have limitations as analytical tools, and you should not consider these non- GAAP financial measures in isolation or as alternatives to net income attributable to Tradeweb Markets Inc., net income, earnings per share, operating income, or cash flow from operating activities or any other financial measure derived in accordance with GAAP. You are encouraged to evaluate each adjustment included in the reconciliations. In addition, in evaluating Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT, Adjusted EBIT margin, Adjusted Net Income and Adjusted Diluted EPS you should be aware that in the future, we may incur expenses similar to the adjustments in the presentations of these non-GAAP financial measures. Our presentation of non-GAAP financial measures should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. In addition, the non-GAAP financial measures contained in this presentation may not be comparable to similarly titled measures used by other companies in our industry or across different industries.
We present certain growth information on a "constant currency" basis. Since our consolidated financial statements are presented in U.S. dollars, we must translate non-U.S. dollar revenues and expenses into U.S. dollars. Constant currency growth, which is a non-GAAP financial measure, is defined as growth excluding the effects of foreign currency fluctuations. Constant currency information is calculated by translating the current period and prior period's results using the average exchange rates for 2018. We use constant currency growth as a supplemental metric to evaluate our underlying performance between periods by removing the impact of foreign currency fluctuations. We present certain constant currency growth information because we believe it provides investors and analysts a useful comparison of our results and trends between periods. This information should be considered in addition to, not as a substitute for, results reported in accordance with GAAP, and may not be comparable to similarly titled measures used by other companies.
Tradeweb Social Media
Investors and others should note that Tradeweb Markets announces material financial and operational information using its investor relations website, press releases, SEC filings and public conference calls and webcasts. Information about Tradeweb Markets, its business and its results of operations may also be announced by posts on the Company's accounts on the following social media channels: Instagram, LinkedIn and Twitter. The information that we post through these social media channels may be deemed material. As a result, we encourage investors, the media, and others interested in Tradeweb Markets to monitor these social media channels in addition to following our press releases, SEC filings and public conference calls and webcasts. These social media channels may be updated from time to time on our investor relations website.
© 2020 Tradeweb Markets LLC. All rights reserved.
BUSINESS OVERVIEW
2 © 2020 Tradeweb Markets LLC. All rights reserved.
Tradeweb at a Glance - 20+ Years of Innovation
Conceived in 1996, starting with $8mm of capital, Tradeweb is a leader in building and operating electronic marketplaces for its network of clients located in 65+ countries globally
$776M | $725B | ||
DECEMBER 31, 2019 | DECEMBER 31, 2019 | ||
REVENUE | AVERAGE DAILY VOLUME | ||
PEOPLE | + NETWORK + | TECHNOLOGY | = GROWTH |
900+ | 40+ | 300+ | 13.7% |
EMPLOYEES | PRODUCTS | TECHNOLOGISTS | ADV CAGR |
2004-20191 |
OFFICES IN | 2,500+ | 50,000+ | 12.3% |
7 | CLIENTS | DAILY TRADES | REVENUE CAGR |
COUNTRIES | GLOBALLY | 2004-20191 |
Notes:
1. 2004 marks the acquisition of Tradeweb by The Thomson Corporation.
3 © 2020 Tradeweb Markets LLC. All rights reserved.
Diverse Product Offering (December 31, 2019)
RATES
123VOLUME ($T) | +38% |
Y/Y | |
434REVENUE ($M) | +14% |
Y/Y |
GLOBAL GOVERNMENT BONDS
U.S. Treasuries
Other N.Amer. Government Bonds
UK Gilts
Euro Government Bonds
Other European Government Bonds
Japanese Government Bonds
APAC (ex-Japan) Government Bonds
SECURITIZED PRODUCTS
TBA-MBS
Specified Pools
Other Securitized Products
SSAS/COVERED BONDS
U.S. Agencies
Covered Bonds
Other SSAs
GLOBAL RATES DERIVATIVES
North American Rates Derivatives
CREDIT
4VOLUME ($T) | +17% |
Y/Y | |
162REVENUE ($M) | +16% |
Y/Y | |
GLOBAL CREDIT |
U.S. High-Grade
U.S. High-Yield
Euro High-Grade
Euro High-Yield
Asian High-Grade
Asian High-Yield
Emerging Market Bonds
MUNICIPAL BONDS
U.S. Municipal Bonds
CHINA BONDS
China Interbank Bond Market
GLOBAL CREDIT DERIVATIVES
CDX Indices
iTraxx Indices
U.S. Single Name CDS
European Single Name CDS
Emerging Markets Single Name CDS
EQUITIES
2VOLUME ($T) | +0% |
Y/Y | |
47REVENUE ($M) | +15% |
Y/Y | |
GLOBAL ETFs |
U.S. ETFs
European ETFs
Asian ETFs
GLOBAL CONVERTIBLES
U.S. Convertibles
European Convertibles
Asian Convertibles
GLOBAL EQUITY DERIVATIVES
U.S. Equity Derivatives
European Equity Derivatives
CASH EQUITIES
European Cash Equities
PREFERRED EQUITIES
U.S. Preferred Equities
MONEY MARKETS
54VOLUME ($T) | +23% |
Y/Y | |
40REVENUE ($M) | +16% |
Y/Y |
REPURCHASE AGREEMENTS
U.S. Repo
European Repo
AGENCY DISCOUNT NOTES
U.S. Agency Discount Notes
COMMERCIAL PAPER
N. Amer. Commercial Paper
European Commercial Paper
CERTIFICATES OF DEPOSIT (CDS) / DEPOSITS
U.S. CDs
European CDs / Deposits
European IRS
Asia Pacific IRS
Emerging Markets IRS
Institutional Wholesale Retail
+11% | OTHER FEES 21REVENUE ($M) | N/A |
MARKET DATA 71REVENUE ($M) Y/Y |
4 © 2020 Tradeweb Markets LLC. All rights reserved.
INVESTMENT HIGHLIGHTS
5 © 2020 Tradeweb Markets LLC. All rights reserved.
Key Investment Highlights
1. ESTABLISHED ELECTRONIC FIXED INCOME NETWORK WITH SCALE ADVANTAGES
A leading electronic fixed income network with clients in 65+ countries trading over $720 billion daily
2. TRACK RECORD OF GROWTH AND SERIAL INNOVATION
History of selectively expanding into and scaling new products across asset classes and geographies
3. AT THE INTERSECTION OF POWERFUL SECULAR GROWTH THEMES
Capitalizing on growing global debt pools, increasing electronification, rising popularity of ETFs and pursuit of greater efficiencies
4. SEVERAL TANGIBLE GROWTH OPPORTUNITIES
Focused on executing on U.S Treasuries, global interest rate swaps, U.S. credit, global ETFs and investing for the future
5. GROWING POOL OF DATA & ANALYTICS
Diligently using data to improve execution outcomes and create new data products
6. STRONG REVENUE & EARNINGS GROWTH
Management and strategy focused on balancing revenue growth and margin expansion to create long-term shareholder value
GROWTH | 14.4% | 24.6% | 20.7% |
2016-2019 | |||
FROM | |||
(CAGR) | REVENUE | ADJUSTED EBIT | ADJUSTED EBITDA |
GROWTH | GROWTH1 | GROWTH1 |
6 © 2020 Tradeweb Markets LLC. All rights reserved.
Notes:
1. See "Appendix" for reconciliation of Adjusted EBIT and Adjusted EBITDA to net income.
1. POWERFUL NETWORK EFFECTS
A Deeply Integrated & Powerful Network
A powerful client network that trades over $0.7 trillion daily across our global electronic marketplaces,
which are deeply integrated and supported by our proprietary technology
OUR CLIENT NETWORK | OUR DEEP POOLS OF LIQUIDITY | ||||||||||
TRUSTED RELATIONSHIPS, MANY DEVELOPED OVER 20+ YEARS | EFFICIENT & TRANSPARENT TRADING | ||||||||||
THREE CLIENT SECTORS | FOUR ASSET CLASSES | ||||||||||
INSTITUTIONAL | 2,500+ | 65+ | RATES | $725B / | |||||||
WHOLESALE | CREDIT | ||||||||||
RETAIL | CLIENTS | COUNTRIES | EQUITIES | 50,000+ TRADES | |||||||
90%+ | 80%+ | MONEY MARKETS | DECEMBER 2019 AVERAGE DAILY VOLUME | ||||||||
TOP 100 GLOBAL | TOP 25 | GOVERNMENT | |||||||||
OFFICES IN | ASSET MANAGERS INSURANCE COMPANIES | ELECTRONIC | 40+ | ||||||||
BONDS | |||||||||||
45,000+ | 50+ | ||||||||||
NORTH AMERICA, | MARKET LEADER FOR | PRODUCTS | |||||||||
TBA MBS | |||||||||||
MULTIPLE PRODUCTS1 | |||||||||||
EUROPE AND ASIA | FINANCIAL | CENTRAL BANKS/ | INTEREST RATE | TRADED | |||||||
ADVISORS | SOVEREIGN ENTITIES | SWAPS | |||||||||
TECHNOLOGY-HEAVILY INTEGRATED IN CUSTOMER WORKFLOWS | 300+ TECHNOLOGISTS | ||||||||||
FULL SPECTRUM OF TRADING PROTOCOLS BUILT ON PROPRIETARY TECHNOLOGY |
SOLUTIONS SUPPORTING CLIENTS ACROSS THE WHOLE TRADE LIFECYCLE
PRE-TRADE | EXECUTION | POST-TRADE | DATA & REPORTING | |||
VOICE | INVENTORY | REQUEST | ALL-2-ALL | SESSIONS | ACTIONABLE | ORDER BOOK |
BASED | TRADING | STREAMS | ||||
STP / INTEGRATION | BUY-SIDE ORDER | REPO | RISK | CENTRAL | CLEARING | 3RD | SWAP | CREDIT | ACCOUNTING |
MANAGEMENT | CLEARING | MANAGEMENT | CLEARING | FIRMS / PRIME | PARTY | DATA | |||
HUBS | SYSTEMS | ||||||||
400+/30+ | SYSTEMS | BANKS | SYSTEMS | ORGANIZATIONS | BROKERS | MIDDLEWARE | REPOSITORIES | ||
PROPRIETARY/VENDOR OMSs |
Notes: | ||
7 | © 2020 Tradeweb Markets LLC. All rights reserved. | 1. Based on public industry sources and Tradeweb management estimates. Public sources by product: government bonds (TRACE, SIFMA, |
AFME), TBA MBS (TRACE) and interest rate swaps (ISDA). See "Disclaimer" for additional information regarding market information. |
1. POWERFUL NETWORK EFFECTS
Calculated Network Expansion to Connect the Dots
TW NETWORK: CONNECTING KEY DIFFERENTIATORS TO GENERATE A STEADY…
…STREAM OF INNOVATIONS
Net Spotting 2016
1998: Rates | MULTI- | MULTI- | |||||||
2003: Money | |||||||||
ASSET | |||||||||
SECTOR | |||||||||
Markets | Selectively add | ||||||||
2005: Credit | Distribute | ||||||||
adjacent | |||||||||
products across | |||||||||
2010: Equities | asset classes over | ||||||||
sectors | |||||||||
the long-term | |||||||||
DEEP INTEGRATIONS | |||||||||
(Make workflows seamless) | |||||||||
Allocations: | Orders/Trades: | ||||||||
1998: USA | Account Net | EMS/OMS | |||||||
Infrastructure: | Reporting: | ||||||||
2000: Europe | Clearinghouses/ | Repositories/ | |||||||
Middleware | Accounting | ||||||||
2004: HK/ | Systems: | ||||||||
Singapore | Front/Middle/ | MULTI- | |||||||
2017: China | GLOBAL2 | Back Office | |||||||
PROTOCOL | |||||||||
Replicate asset |
class footprint | Offer full | |
spectrum of | ||
globally | ||
protocols | ||
Notes:
- We first established a presence in the retail client sector in 2006 and scaled our presence through the BondDesk acquisition in 2013.
- Represents the year the office opened in that location.
8 © 2020 Tradeweb Markets LLC. All rights reserved.
1998: Institutional
2008: Wholesale
2013: Retail1
1998: RFQ
2001: Inventory
2008: RFS
2009: CLOB
2009: CTT
2010: RFM
2013: Session
2014: Compression
2017: A2A
2018: Direct Streams
2019: Portfolio Trading
Hedging of U.S. HG Credit with USTs
Asset Swaps 2019
Trading IRS and government bonds simultaneously
Bond Connect 2017
Connecting bond traders with China (Northbound trading)
UST Closing Prices 2019
Replicating a UK concept for Gilt trading in the U.S. for USTs
Credit AiPrice 2018
Delivering prices using content from all three sectors
Credit Live Streams 2019
Introducing retail liquidity to institutional RFQs
AiEX 2013
Automation via multiple protocols (RFQ, CTT)
UST Streams 2018
Improving on a CLOB with streams
2. TRACK RECORD OF GROWTH
Track Record of Growth, Product Diversification and Serial Innovation
Our deep relationships with our clients allows us to identify growth opportunities early
and grow them into meaningful contributors of revenue over time
LAUNCH YEAR2 STAGE | PRODUCT | TIME TO $25+ MM IN REVENUE | |||||||
1999 | UST (U.S. TREASURIES) | 4 Years | |||||||
2001 | TBA-MBS | 4 Years | |||||||
2001 | EUROPEAN GOVERNMENT BONDS | 4 Years | |||||||
2005/20131 | U.S. DERIVATIVES (IRS / CDS) | After Dodd-Frank - 3 Years | |||||||
2005/20181 | EUROPEAN DERIVATIVES (IRS / CDS) | After MiFID II - 1 Year | |||||||
2012 | GLOBAL ETFs | 6 Years | |||||||
2013 | SESSION TRADING (SWEEP) | 5 Years | |||||||
2014 | U.S. INSTITUTIONAL CASH CREDIT | 4 Years | |||||||
Cornerstone Products | Newer Products | ||||||||
9 © 2020 Tradeweb Markets LLC. All rights reserved.
Notes:
- U.S. derivatives and European derivatives were launched in 2005, however, revenue growth is being presented post Dodd-Frank (2013) and MiFID II (2018) to show the impact of regulation.
- Launch year is the first year of revenue.
3. POWERFUL GROWTH THEMES
Expansive and Growing Addressable Markets
TRADEWEB'S GROWTH ADVANTAGE | EXPANSIVE ADDRESSABLE MARKETS (ADV)1 |
GROWTH IN EXISTING MARKETS
ELECTRONIFICATION OF MARKETS
INCREASE MARKET SHARE
GROWTH IN UNDERLYING
ASSET CLASSES
ENHANCE DATA AND
ANALYTICS CAPABILITIES
ENTER NEW MARKETS AND OTHER DRIVERS OF LONG-TERM GROWTH
NEW ASSET CLASSES NEW REGIONS AND CLIENTS
STRATEGIC ACQUISITIONS
AND PARTNERSHIPS
Total Market CAGRs2: | TW CAGRs2: | |||
Rates +15% | Rates +25% | |||
Credit +5% | Credit +32% | |||
Equities +4% | Equities +12% | |||
Money Markets +10% | Money Markets +23% | |||
Overall +13% | Overall +24% | |||
TAM: ~$6.3T | ||||
TW % of TAM: 11% | ||||
RATES | ||||
$5.6T | TAM: $3.7T | |||
TW : $487B | ||||
$4.9T | TW % of TAM:13% | |||
$4.3T | CREDIT | |||
$4.0T | TAM: $109B | |||
TW : $14B | ||||
TW % of TAM: 13% | ||||
EQUITIES (ETFs)3 | ||||
TAM: $99B | ||||
TW: $4B | ||||
TW % of TAM: 4% | ||||
MONEY MARKETS | ||||
TAM: $2.3T | ||||
TW: $195B | ||||
TW % of TAM: 8% | ||||
2015 | 2016 | 2017 | 2018 | 2019 |
10 © 2020 Tradeweb Markets LLC. All rights reserved.
Notes:
- Total ADV by asset class is based on public industry sources and Tradeweb management estimates and for the purposes of this slide, total ADVs and Tradeweb ADVs omit volumes in products where the total market ADV cannot be sourced reliably: APAC excluding Japan government bonds in rates, Chinese bonds in credit, equity derivatives in equities, and bi-lateral repo, commercial paper, agency discount notes and certificates of deposits in money markets. Total market size for all products included in each asset class based on ADV through 2019. Public sources by asset class: rates (SIFMA, TRACE, CLARUS, AFME, JSDA); credit (TRACE, TRAX, ISDA, SIFMA, CFETS, EMTA); equities (CBOE, Flowtraders); money markets (N.Y. Fed).
- CAGRs based on growth between 2015 and 2019.
- Total ADV for equities is based on ETF volumes only.
3. POWERFUL GROWTH THEMES
Secular Tailwinds Expected to Position Tradeweb for Long-Term Growth
MARKET VOLUME GROWTH1 | ELECTRONIFICATION | ||
EXPANDING | FOCUS | ||
GOVERNMENT | ON COST | ||
DEBT POOL | REDUCTION |
GROWING | |
CORPORATE | INCREASING |
DEBT | REGULATION |
OUTSTANDING |
RISING | WORKFLOW |
POPULARITY | |
DIGITIZATION | |
OF ETFs | |
CHINA | |
CAPITAL | DATA-DRIVEN |
MARKETS | |
TRADING | |
REFORM | |
GROWTH IN
ELECTRONIC
TRADING VOLUMES
&
RISING VALUE OF
TRADING DATA
11 © 2020 Tradeweb Markets LLC. All rights reserved.
Note:
1. Sources: Government bonds (TRACE, TRAX), corporate bonds (SIFMA), ETFs (ETFGI data, ETF/EFP Sponsors, Bloomberg, BMO Global Asset Management ETF Report), Chinese bonds (CFETS).
3. POWERFUL GROWTH THEMES
AiEX Adoption - The Rise in Automated Trading
AiEX TRADE ACTIVITY | ADTV CAGR '15-19: +60% | CLIENT GROWTH | CAGR '15-19: +43% | ||||||||
Average Daily AiEX Trades | % of Institutional Trades | Top 200 clients | Other Clients | Represents | |||||||
Total AiEX | 101 | ||||||||||
5,000 | 23% | 25% | Clients | ||||||||
4,000 | 4,856 | 20% | 25 | ||||||||
14% | |||||||||||
3,000 | 11% | 12% | 15% | 16 | |||||||
16 | |||||||||||
2,000 | 6% | 2,216 | 10% | 24 | 9 | 76 | |||||
1,000 | 5% | 41 | 53 | ||||||||
1,373 | 1,521 | 29 | |||||||||
739 | 23 | ||||||||||
0 | 0% | ||||||||||
2015 | 2016 | 2017 | 2018 | 2019 | 2015 | 2016 | 2017 | 2018 | 2019 | ||
NUMBER OF CLIENTS BY PRODUCT GROUP
PENETRATION OF TOP 100 CLIENTS
Global ETFs | U.S./Europe Government Bonds | U.S./Europe Credit | 45 | 46 | |||||
37 | 38 | ||||||||
27 | 29 | 29 | |||||||
21 | 20 | ||||||||
16 | 18 | 17 | |||||||
15 | |||||||||
9 | 10 | ||||||||
2015 | 2016 | 2017 | 2018 | 2019 |
AiEX (Automated Intelligent Execution) uses pre-programmed execution rules to automatically execute trades on Tradeweb sent from a client's EMS/OMS.
12 © 2020 Tradeweb Markets LLC. All rights reserved.
4. TANGIBLE GROWTH OPPORTUNITIES
Leading Global Electronic Rates Business
U.S. TREASURIES
TW UST SHARE CONTINUES TO GROW1
11.6%12.3%
9.4%
7.5%
2016 | 2017 | 2018 | 2019 |
VOICE STILL ACCOUNTS FOR ~35-40% OF UST TRADING2
$305B | $346B | $651B | |
Voice | |||
~20% | Voice | ||
Voice | 35-40% | ||
~60% | |||
Streams 7-8% | Electronic | ||
Electronic | RFQ | ||
~80% | 19-20% | ||
Electronic | |||
CLOB | |||
~40% | |||
35-40% |
Dealer-to-Customer | Dealer-to-Dealer | Overall; by Protocol |
Source: TRACE and Liberty Street Economics data as of August 2017 - July 2018; Greenwich estimates and Tradeweb market intelligence as of 4Q19.
Notes:
- Share reflects Tradeweb Treasuries volume across institutional, wholesale and retail client sectors, divided by SIFMA volume, adjusted by Tradeweb management to approximate TRACE volume.
- Electronification rates based on UST volumes traded.
13 © 2020 Tradeweb Markets LLC. All rights reserved.
GLOBAL SWAPS
GLOBAL IRS MARKET IS GROWING ($ in trillions, ADV)
Global IRS Market (Clarus)1
22% CAGR | $2.7 | |||
$2.4 | ||||
$1.9 | ||||
$1.5 | Estimated Market | |||
$1.2 | Electronification : 20-25%2 | |||
2015 | 2016 | 2017 | 2018 | 2019 |
TW GLOBAL IRS ADV GROWTH OUTPACING MARKET ADV GROWTH (Y/Y GROWTH)1 ($ in billions, ADV)
Represents | ||||||||||
TW ADV | ||||||||||
2018: | $212.5 | |||||||||
2014: | ||||||||||
MiFID II | $127.8 | |||||||||
CFTC | (Category | |||||||||
Trading | $62.4 | 1 & 2) | 105% | |||||||
Mandate | ||||||||||
$38.3 | 63% | 66% | ||||||||
24% | 20% | 29% | 24% | 15% | ||||||
2016 | 2017 | 2018 | 2019 | |||||||
TW Growth | Market Growth | |||||||||
Notes:
- Global IRS market estimate based on Clarus cleared market volumes; Global IRS market refers to volumes traded by U.S. and non-U.S. entities.
- Based on Clarus volumes and management estimates.
4. TANGIBLE GROWTH OPPORTUNITIES
Building a Next Generation U.S. Corporate Credit Market Place
MARKET-WIDE FOCUS
HG/HY U.S. MARKET VOLUME MIX (TRACE)1
D2C/C2C ~70% | D2D ~30% | |
INSTITUTIONAL RETAIL WHOLESALE
CONSTANT INNOVATION
ELECTRONIC PROTOCOLS
A2A 2.0
Institutional RFQ accesses $10bn+ of live streaming retail liquidity across over 5,000 CUSIPs; accessible via AiEX
SWEEP
Daily electronic wholesale sessions
STRONG GROWTH
EXPANDING TW CLIENT NETWORK3
492569674
4Q17 | 4Q18 | 4Q19 |
INCREASING TW MARKET SHARE1,4
CLICK-TO-TRADE
Executable odd-lot liquidity across 20,000 CUSIPs
BLOCK TRADING
HG 15.8
10.5 %
7.4% % 8.5%
4.7% | 6.3% | 7.3% |
4.2% | ||
2.7% | ||
4Q17 | 4Q18 | 4Q19 |
HY | 4.3% | |
4.6% | ||
2.6% | 3.4% | 1.6% |
1.3% | 2.1% | 2.7% |
1.3% | 1.3% | |
4Q17 | 4Q18 | 4Q19 |
PRE-TRADE | AiPrice, Liquidity Scores, Streaming | |
Prices, Inventories, Portfolio | ||
Monitoring, Analytics and Reporting | ||
HG: ~30-35%2 | HG: ~65-70%2 | |
HY: ~12-15%2 | HY: ~85-88%2 | |
TRADE | ELECTRONIC | VOICE |
Spotting/Net Spotting Leveraging
POST-TRADE TW UST Market, TCA, Compliance
Trade Exemption Reporting,
Prevailing Market Price
14 © 2020 Tradeweb Markets LLC. All rights reserved.
PORTFOLIO TRADING
Live since November 2018 with $40bn+ traded
MULTI-DEALER NET SPOTTING
~25% of TW notional volume; $200/mm in average savings for trades using net spotting
LIVE INVENTORY/AXES
~$30bn of block liquidity
SPOTTING
Electronic hedging - ~95% of institutional HG trades
Notes:
- Source: TRACE.
- Source: TRACE, Greenwich Associates, competitor reports and TW management estimates.
- Reflects total number of institutional credit clients.
- Share reflects TW high grade and high yield volume across institutional, wholesale and retail client sectors, divided by TRACE volume, adjusted by TW management to exclude emerging market and convertible bond volumes.
- Reflects TW high grade and high yield volumes intermediated with undisclosed counterparties.
- Block trades are defined as $5mm+ for HG and $1mm+ for HY.
*Unless otherwise noted, all data is as of 4Q19.
Electronic Electronically Processed
GROWING TW ANONYMOUS VOLUMES5
($ in billions)
$39
$19
$4$7
4Q18 | HG | HY 4Q19 | ||
INCREASING TW BLOCK SHARE4,6
HGHY
17.2% | 2.9% | 3.3% |
8.9% | 11.7% | 1.8% | 1.9% | ||
15.0% | 2.5% | ||||
8.2% | 10.8% | 1.6% | |||
2.2% | 0.4% | 1.4% | |||
0.8% | 0.3% | ||||
0.7% | |||||
4Q17 | 4Q18 | 4Q19 | 4Q17 | 4Q18 | 4Q19 |
Electronic | Electronically Processed |
Note: Totals may not foot due to rounding.
4. TANGIBLE GROWTH OPPORTUNITIES
Electronifying Block ETFs & Investing in the Future
GLOBAL ETFs
MAKING BLOCK TRADING MORE EFFICIENT
BETTER | PRODUCT LAUNCHES | |
2012 | European ETFs | |
PRICING & SIZE | ||
STREAMLINED | 2016 | U.S. ETFs |
WORKFLOW | ||
CLEAR | 2017 | Asian ETFs |
COMPLIANCE | ||
TW INSTITUTIONAL ETF ADV CONTINUES TO GROW ($B)
$2.0 | U.S. ETFs | European and Asian ETFs |
$1.5 | 37% CAGR | ||||
$1.0 | |||||
$0.5 | |||||
$0.0 | |||||
2014 | 2015 | 2016 | 2017 | 2018 | 2019 |
15 © 2020 Tradeweb Markets LLC. All rights reserved.
EARLY STAGE OPPORTUNITIES
RATES
- UST Directed Streams: Electronic tailored order book that gives clients the ability to source liquidity at larger sizes and better price increments vs. CLOB with minimal information leakage
- Specified Pools: Access to trade and view inventory of the industry's leading liquidity providers
CREDIT
- China Bonds: First electronic platform for international investors to access the Chinese Bond Market
MONEY MARKETS
- Bilateral Repo: Strong pipeline of clients globally with plans to expand into additional collateral types
EQUITIES
- U.S. Options: Introduced RFQ technology to facilitate more efficient trading of block U.S. options
- European Cash Equities: Strategic partnership with Plato focused on block RFQ trading of single-stock securities
MARKET DATA
• Benchmarks: Tradeweb-ICE closing prices
4. TANGIBLE GROWTH OPPORTUNITIES
M&A and Partnerships-Selectively Accelerating Growth
HISTORY OF SUCCESSFUL STRATEGIC ACQUISITIONS… | …AND PARTNERSHIPS | ||||||||||||
DATE | TARGET | DESCRIPTION | STRATEGIC RATIONALE | ||||||||||
2008 | Hilliard | Wholesale voice broker with a | Entered wholesale sector | ||||||||||
and launched an electronic | |||||||||||||
Farber | strong MBS franchise | ||||||||||||
TBA platform | |||||||||||||
2011 | Rafferty | Wholesale voice broker with a | Introduced hybrid | ||||||||||
Capital | |||||||||||||
strong UST franchise | electronic UST trading | ||||||||||||
Markets | 1 | ||||||||||||
2013 | Leading U.S. retail fixed income | Scaled position in the retail | |||||||||||
BondDesk | trading technology vendor to | ||||||||||||
client sector | |||||||||||||
wealth management firms | |||||||||||||
2016 | Data-driven trade identification | Enhanced corporate bond | |||||||||||
CodeStreet | and workflow management | platform pre-trade | |||||||||||
software for corporate bonds | intelligence |
WILL CONTINUE TO SELECTIVELY EVALUATE OPPORTUNITIES TO EXPAND IN A DISCIPLINED FASHION
PRE-TRADE | INTEGRATION |
AND WORKFLOW | |
LEVERAGE CLIENT NETWORK AND GUI- | |||||
DRIVE MORE BUSINESS TO EXECUTION | |||||
EXAMPLES | |||||
• | Analytics | • | Basis trading | ||
• | Inventory | • | Algorithms | ||
16 © 2020 Tradeweb Markets LLC. All rights reserved.
EXECUTION PLATFORM | STP AND | POST-TRADE |
WORKFLOW | ||
LEVERAGE TECHNOLOGY & INFORMATION | |||||
CREATED BY TRADING ACTIVITY | |||||
• | Asset classes | • Reporting | • | Data | |
• Geographies | • Benchmarks | ||||
• | Client sectors | • | TCA |
- Products & Protocols
Note:
1. Tradeweb's ETF CCP service is expected to be available in the coming months, subject to regulatory approvals.
5. GROWING POOL OF DATA AND ANALYTICS
Platforms and Solutions Powered by Data and Analytics
Data and analytics play a critical role by improving the trading experience of our clients and
driving more liquidity to our platforms
DATA SUPPORTS THE PLATFORM | DIRECTLY MONETIZING DATA | |
KEY INPUT | LONG-STANDING | |
INTO TRADEWEB'S | LICENSE AGREEMENT | |
SOLUTIONS | WITH REFINITIV | |
HISTORY OF INNOVATION | PROPRIETARY DATA | |
AND FACILITATING BETTER | AND ANALYTICS | |
TRADING DECISIONS | SOLUTIONS |
PRICING/DISTRIBUTION
- Anonymized Composite Pricing via Refinitiv and Tradeweb
- Direct Dealer Content to clients over TW infrastructure
BENCHMARKS | ANALYTICS | REPORTING | ||
• Tradeweb Composite prices | • Transaction Cost Analytics | • APA-pre- and post-trade data | ||
• Closing Prices-UST, UK Gilts | • AiPrice-prices ~19,000 | sets | ||
• Dealerweb UST-RCM 19901 | corporate bonds |
GROWTH STRATEGY | |||
Create New Data Sets As | Increase | Invest in | Pursue |
Asset Classes and | Solution | Differentiated | Strategic |
Products Expand | Penetration | Analytics | Partnerships |
17 © 2020 Tradeweb Markets LLC. All rights reserved.
FINANCIAL OVERVIEW
18 © 2020 Tradeweb Markets LLC. All rights reserved.
6. STRONG REVENUE AND EARNINGS GROWTH
Straightforward & Diversified Business Model
TRADEWEB HAS A DIVERSIFIED REVENUE BASE WITH AN EVEN MIX OF VARIABLE AND FIXED REVENUE
Percentage of | Variable (56%) | Fixed (44%) | |||||||
2019 revenue | |||||||||
Volume | |||||||||
(35%) | (9%) | ||||||||
= | + | Fixed Transaction | + | Market Data | |||||
Total Revenue | x | ||||||||
& Subscription | (7% Refinitiv/2% | ||||||||
Average Fee Per | Fees | Non-Refinitiv) | |||||||
Million | |||||||||
2019 GROSS REVENUE BY
ASSET CLASS | CLIENT SECTOR | GEOGRAPHY | TYPE | |||||||||||||||||
9 % | 9 % | |||||||||||||||||||
3 % | 10 % | |||||||||||||||||||
6 % | 36 % | |||||||||||||||||||
5 % | 44 % | |||||||||||||||||||
21 % | 56 % | 22 % | 59 % | 64 % | 56 % | |||||||||||||||
Rates | Equities | Institutional | Retail | U.S. | Variable | |||||||||||||||
Credit | Other Trading | |||||||||||||||||||
Wholesale | Market Data | International | Fixed | |||||||||||||||||
Money Markets | Market Data | |||||||||||||||||||
19 © 2020 Tradeweb Markets LLC. All rights reserved.
6. STRONG REVENUE AND EARNINGS GROWTH
Strong & Broad-based Revenue and Margin Expansion
2019 REVENUE GROWTH BY ASSET CLASS AND MARGIN EXPANSION ($M)
45.5% | |||||||||||||||
Adj. EBITDA | |||||||||||||||
Margin1 | |||||||||||||||
$5.7 | $6.9 | ||||||||||||||
$22.5 | $6.0 | $(4.9) | |||||||||||||
40.8% | |||||||||||||||
Adj. EBITDA | $55.0 | ||||||||||||||
Margin1 | $775.6 | ||||||||||||||
$684.4 | |||||||||||||||
20182 | Rates | Credit | Equities | Money Markets | Market Data | Other | 2019 | ||||||||
y/y Growth % | 14.5% | 16.1% | 14.6% | 16.3% | 10.9% | (18.7)% | 13.3% | ||||||||
GROSS REVENUE GROWTH ($M) | ADJUSTED EBITDA GROWTH ($M)1 |
CAGR: 14.4 % | CAGR: 20.7% | ||||||||
$ 563 | $ 684 | $ 776 | $ 279 | $ 353 | |||||
$ 518 | |||||||||
$ 201 | $ 215 | ||||||||
2016 | 2017 | 2018 2 | 2019 | 2016 | 2017 | 20182 | 2019 | ||
Volume ($B) | $81,142 | $99,615 | $137,237 | $182,272 | Adj. EBITDA | 38.7% | 38.2% | 40.8% | 45.5% |
margin1 | |||||||||
ADV ($B) | $324 | $398 | $548 | $725 | Adj. Net | $118 | $131 | $178 | $231 |
Income1 | |||||||||
Notes: | |||||||||
- See "Appendix" for reconciliation of Adjusted EBITDA and Adjusted Net Income to their most comparable GAAP financial measures. Adjusted EBITDA margin is defined as Adjusted EBITDA divided by gross revenue for the applicable period.
- Represents the combined results of the period from January 1, 2018 to September 30, 2018 and the period from October 1, 2018 to December 31, 2018 for the full year ended December 31, 2018. This combination was performed by mathematical addition and is not a presentation made in accordance with GAAP. See "Disclaimer" for additional information and "Appendix" for additional reconciliations.
20 © 2020 Tradeweb Markets LLC. All rights reserved.
SIMPLE PHILOSOPHY
Capital Management
- Balanced capital strategy of returning capital to shareholders via a dividend and investing in the business
- Strong balance sheet, supported by strong free cash flow generation
- Sufficient cash to support regulatory, risk and working capital
- $500 million revolver entered into in conjunction with IPO, undrawn as of December 31, 2019
FUTURE CAPITAL ALLOCATION PHILOSOPHY
Invest in | Return Capital | Opportunistic |
Profitable Growth | to Shareholders | Acquisitions |
3-5 YEAR | SECTOR | EXPAND OR |
LEVEL | ENHANCE | |
TIME HORIZON | DIVIDEND | CAPABILITIES |
21 © 2020 Tradeweb Markets LLC. All rights reserved.
A Growth Company: 2019 vs. 2018
Continuing to Strike the Right Balance Between Investing to Drive
Revenue Growth & Margin Expansion
BENCHMARKING PERFORMANCE
2019 | 20181 | GROWTH2 | |||||||
VOLUMES | $725 B ADV | $548 B ADV | +32% | ||||||
REVENUES | $776 M | $684 M | +13% / +15% y/y (CC) | ||||||
ADJ. EBITDA MARGIN3 | 45.5% | 40.8% | +471 bps | ||||||
ADJ. DILUTED EPS3 | $1.004 ($0.23/$0.77) | $0.82 | +22% | ||||||
INVESTMENTS & INNOVATIONS SINCE IPO | |||||||||
Asset Swaps | Portfolio Trading | UST Closing Prices | Euro-CCP | Cassini + | |||||
(IRS + GOV. BONDS) | (CREDIT) | (MARKET DATA) | (ETFs) | OpenGamma (IRS) | |||||
GROWTH ADVANTAGES | |||||||||
GLOBAL & MULTI- | DEEP | STRONG | CULTURE OF | ||||||
ASSET CLASS | CLIENT | COLLABORATIVE | |||||||
NETWORK | INTEGRATIONS | RELATIONSHIPS | INNOVATION |
Notes:
- Represents the combined results of the period from January 1, 2018 to September 30, 2018 and the period from October 1, 2018 to December 31, 2018. This combination was performed by mathematical addition and is not a presentation in accordance with GAAP. See "Disclaimer" for additional information for the full year ended December 31, 2018.
- Growth information provided on a "constant currency" basis reflects growth for the period excluding the impact of foreign currency fluctuations. See "Disclaimers-Non-GAAP Financial Measures" for more information. Adjusted EBITDA margin growth on a constant currency basis was +530bps.
- See "Appendix" for a reconciliation of Adjusted EBITDA and Adjusted Diluted EPS to their most comparable GAAP financial measures. Adjusted EBITDA margin is defined as Adjusted EBITDA divided by gross revenue for the applicable period.
22 © 2020 Tradeweb Markets LLC. All rights reserved. 4. Represents combined Adjusted Diluted EPS for Tradeweb Markets Inc. (post-IPO period 2019) and Tradeweb Markets LLC (pre-IPO period 2019) for the full year ended December 31, 2019. This combination was performed by mathematical addition and is not a presentation made in accordance with GAAP. However, we believe it provides a meaningful method
of comparison of Adjusted Diluted EPS for the full year ended December 31, 2019 to the combined year ended December 31, 2018.
Contacts
Ashley Serrao
Head of U.S. Corporate Development
-
Investor Relations Tel: 646-430-6027
Email:ashley.serrao@tradeweb.com
Karen Werbel
VP Investor Relations
Tel: 646-430-6297
Email:karen.werbel@tradeweb.com
Global Offices
New York | Tokyo |
Jersey City | Hong Kong |
London | Singapore |
Amsterdam | Shanghai |
23 © 2020 Tradeweb Markets LLC. All rights reserved.
Tradeweb Markets Inc.
1177 Avenue of the Americas New York, NY 10036
For more information on Tradeweb: www.tradeweb.com
APPENDIX
24 © 2020 Tradeweb Markets LLC. All rights reserved.
Reconciliation of Non-GAAP Items ($ in thousands)
Net Income to Adjusted EBITDA, | Successor | Successor | Predecessor | Predecessor | Predecessor | |||||
Adjusted EBIT and Adjusted EBT | FY19 | 4Q18 | 9M18 | 2017 | 2016 | |||||
Net Income | $ | 173,024 | $ | 29,307 | $ | 130,160 | $ | 83,648 | $ | 93,161 |
Contingent consideration | - | - | 26,830 | 58,520 | 26,224 | |||||
Interest income, net | (2,373) | (787) | (1,726) | (685) | 695 | |||||
Depreciation and amortization | 139,330 | 33,020 | 48,808 | 68,615 | 80,859 | |||||
Stock-based compensation expense1 | 25,098 | - | - | - | - | |||||
Provision for income taxes | 52,302 | 3,415 | 11,900 | 6,129 | (725) | |||||
Unrealized foreign exchange (gains) / losses | (2,310) | 263 | (960) | (364) | 1,872 | |||||
(Gain) / loss from revaluation of foreign denominated cash2 | 1,225 | 90 | (921) | (678) | (1,315) | |||||
Tax receivable agreement liability adjustment3 | (33,134) | - | - | - | - | |||||
Adjusted EBITDA | $ | 353,162 | $ | 65,308 | $ | 214,091 | $ | 215,185 | $ | 200,771 |
Less: Depreciation and amortization | (139,330) | (33,020) | (48,808) | (68,615) | (80,859) | |||||
Add: Acquisition and Refinitiv Transaction related D&A4 | 97,565 | 22,413 | 19,576 | 31,236 | 41,125 | |||||
Adjusted EBIT | $ | 311,397 | $ | 54,701 | $ | 184,859 | $ | 177,806 | $ | 161,037 |
Add: Interest income, net | 2,373 | 787 | 1,726 | 685 | (695) | |||||
Adjusted EBT | $ | 313,770 | $ | 55,488 | $ | 186,585 | $ | 178,491 | $ | 160,342 |
Adjusted EBITDA Margin5 | 45.5% | 36.6% | 42.3% | 38.2% | 38.7% | |||||
Adjusted EBIT Margin5 | 40.2% | 30.6% | 36.5% | 31.6% | 31.1% |
- Represents non-cashstock-based compensation expense associated with the Special Option Award and post-IPO options awarded in 2019 and the payroll taxes associated with exercises of such options during the applicable period.
- Represents foreign exchange gain or loss from the revaluation of cash denominated in a different currency than the entity's functional currency.
- Represents income recognized during the applicable period due to changes in the tax receivable agreement liability recorded in the statement of financial condition as a result of changes in the mix of earnings, tax legislation and tax rates in various jurisdictions which impacted our tax savings.
- Represents acquisition-related intangibles amortization and increased tangible asset and capitalized software depreciation and amortization resulting from the Refinitiv Transaction and the application of push down accounting (where all assets were marked to fair value as of the closing date of the Refinitiv Transaction).
- Adjusted EBITDA margin and Adjusted EBIT margin are defined as Adjusted EBITDA and Adjusted EBIT, respectively, divided by gross revenue for the applicable period. See slide 20 for gross revenue.
25 © 2020 Tradeweb Markets LLC. All rights reserved.
Reconciliation of Non-GAAP Items (continued)
Reconciliation of Net Income attributable to Tradeweb Markets Inc. to | Successor | Successor | Predecessor | |||
Adjusted Net Income and Adjusted Diluted EPS | FY19 | 4Q18 | 9M18 | |||
Earnings per diluted share1 | $ | 0.19ba | $ | 0.13a | $ | 0.60a |
0.54 | ||||||
Pre-IPO net income attributable to Tradeweb Markets LLC1 | $42,352 | $29,307a | $130,160a | |||
Add: Net income attributable to Tradeweb Markets Inc.1 | 83,769 | - | - | |||
Add: Net income attributable to non-controlling interests1,2 | 46,903 | - | - | |||
Net income | $ | 173,024a,b | $ | 29,307a | $ | 130,160a |
Provision for income taxes | 52,302 | 3,415 | 11,900 | |||
Contingent consideration | - | - | 26,830 | |||
Acquisition and Refinitiv Transaction related D&A3 | 97,565 | 22,413 | 19,576 | |||
Stock-based compensation expense4 | 25,098 | - | - | |||
Unrealized foreign exchange (gains) / losses | (2,310) | 263 | (960) | |||
(Gain) / loss from revaluation of foreign denominated cash5 | 1,225 | 90 | (921) | |||
Tax receivable agreement liability adjustment6 | (33,134) | - | - | |||
Adjusted Net Income before income taxes | 313,770 | 55,488 | 186,585 | |||
Adjusted income taxes7 | (82,835) | (14,649) | (49,258) | |||
Adjusted Net Income | $ | 230,935 | $ | 40,839 | $ | 137,327 |
Adjusted Diluted EPS1,8 | $ | 0.23a | $ | 0.18a | $ | 0.64a |
0.77b |
- In April 2019, the Company completed the Reorganization Transactions and the IPO. As a result, certain earnings information is being presented separately for Tradeweb Markets LLC and Tradeweb Markets Inc.
- Presents information for Tradeweb Markets LLC (pre-IPO period).
- Presents information for Tradeweb Markets Inc. (post-IPO period).
- For post-IPO periods, represents the reallocation of net income attributable to non-controlling interests from the assumed exchange of all outstanding LLC Interests for shares of Class A or Class B common stock.
- Represents acquisition-related intangibles amortization and increased tangible asset and capitalized software depreciation and amortization resulting from the Refinitiv Transaction and the application of pushdown accounting (where all assets were marked to fair value as of the closing date of the Refinitiv Transaction).
- Represents non-cashstock-based compensation expense associated with the Special Option Award and post-IPO options awarded in 2019 and the payroll taxes associated with exercises of such options during the applicable period.
- Represents foreign exchange gain or loss from the revaluation of cash denominated in a different currency than the entity's functional currency.
- Represents income recognized during the applicable period due to changes in the tax receivable agreement liability recorded in the statement of financial condition as a result of changes in the mix of earnings, tax legislation and tax rates in various jurisdictions which impacted our tax savings.
- Represents corporate income taxes at an assumed effective tax rate of 26.4% for all periods presented applied to Adjusted Net Income before income taxes. For pre-IPO periods, this adjustment assumes Tradeweb Markets LLC was subject to a corporate tax rate for the periods presented.
- Due to the Reorganization Transactions and the IPO completed in April 2019, shares outstanding during the year ended December 31, 2019 represent shares of TWM LLC (pre-IPO period) and shares of Class A and Class B common stock of Tradeweb Markets Inc. (post-IPO period).
The table below summarizes the calculation of Adjusted Diluted EPS for the periods presented:
Successor | Successor | Successor | Predecessor | |||||
Reconciliation of Diluted Weighted Average Shares Outstanding to | Pre-IPO Period | Post-IPO Period | ||||||
Adjusted Diluted Weighted Average Shares Outstanding | FY19 | FY19 | 4Q18 | 9M18 | ||||
Diluted weighted average TWM LLC shares outstanding | 223,320,457 | - | 222,243,851 | 215,365,920 | ||||
Diluted weighted average shares of Class A and Class B common stock | - | 156,540,246 | - | - | ||||
outstanding | ||||||||
Assumed exchange of TWM LLC interests for shares of Class A and Class B | - | 74,279,741 | - | - | ||||
common stock 1 | ||||||||
Adjusted diluted weighted average shares outstanding | 223,320,457 | 230,819,987 | 222,243,851 | 215,365,920 | ||||
Adjusted Net Income (in thousands) | $ | 52,190 | $ | 178,745 | $ | 40,839 | $ | 137,327 |
Adjusted Diluted EPS | $ | 0.23 | $ | 0.77 | $ | 0.18 | $ | 0.64 |
1. Assumes the exchange of all outstanding LLC Interests for shares of Class A and Class B common stock, resulting in the elimination of the non-controlling interests and recognition of the net income attributable to non-controlling interests.
26 © 2020 Tradeweb Markets LLC. All rights reserved.
Reconciliation of Non-GAAPItems ($ in thousands, except per share and share amounts)
The following table summarizes the basic and diluted earnings per share calculations for Tradeweb Markets LLC (pre-IPO period):
EPS: Pre-IPO net income attributable to | Successor | Successor | Predecessor | |||
Tradeweb Markets LLC1 | 1Q19 | 4Q18 | 9M18 | |||
Numerator: | ||||||
Pre-IPO net income attributable to | $ | 42,352 | $ | 29,307 | $ | 130,160 |
Tradeweb Markets LLC | ||||||
Denominator: | ||||||
Weighted average LLC Interests | 222,222,197 | 222,221,628 | 215,365,920 | |||
outstanding - Basic | ||||||
Dilutive effect of equity-settled PRSUs | 1,098,260 | 22,223 | - | |||
Weighted average LLC Interests | 223,320,457 | 222,243,851 | 215,365,920 | |||
outstanding - Diluted | ||||||
Earnings per share - Basic | $ | 0.19 | $ | 0.13 | $ | 0.60 |
Earnings per share - Diluted | $ | 0.19 | $ | 0.13 | $ | 0.60 |
1. Earnings per share and weighted average shares outstanding for the pre-IPO periods have been computed to give effect to the Reorganization Transactions, including the amendment and restatement of the fourth amended and restated limited liability company agreement of Tradeweb Markets LLC to, among other things, (i) provide for a new single class of common membership interests in Tradeweb Markets LLC ("LLC Interests") and (ii) exchange all of the original members' existing membership interests for LLC Interests.
The following table summarizes the basic and diluted earnings per share calculations for Tradeweb Markets Inc. (post-IPO period):
EPS: Post-IPO net income attributable to | Successor | |
Tradeweb Markets Inc. | FY19 | |
Numerator: | ||
Post-IPO net income attributable to Tradeweb | $ | 83,769 |
Markets Inc. | ||
Denominator: | ||
Weighted average shares of Class A and Class B | 148,013,274 | |
common stock outstanding - Basic | ||
Dilutive effect of equity-settled PRSUs | 2,464,137 | |
Dilutive effect of options | 6,062,835 | |
Weighted average shares of Class A and Class B | 156,540,246 | |
common stock outstanding - Diluted | ||
Earnings per share - Basic | $ | 0.57 |
Earnings per share - Diluted | $ | 0.54 |
The following is the calculation of gross revenue, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income and Adjusted Diluted EPS for the full year ended December 31, 2018. Revenue accounts were not, and the non-GAAP financial measures were not materially, impacted by the Refinitiv Transaction or the application of pushdown accounting. See "Disclaimer" for additional information.
Gross | Adjusted | Adjusted EBITDA | Adjusted | Adjusted | |||||
Revenue | EBITDA1 | Margin1 | Net Income | Diluted EPS | |||||
January 1, 2018 to September 30, 2018 | $ | 505,771 | $ | 214,091 | 42.3% | $ | 137,327 | $ | 0.64 |
October 1, 2018 to December 31, 2018 | $ | 178,637 | $ | 65,308 | 36.6% | $ | 40,839 | $ | 0.18 |
Full Year Ended December 31, 2018 | $684,408 | $ | 279,399 | 40.8% | $ | 178,166 | $ | 0.82 |
1. Adjusted EBITDA margin is defined as Adjusted EBITDA divided by gross revenue of $684.4 million for the full year ended December 31, 2018.
27 © 2020 Tradeweb Markets LLC. All rights reserved.
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Tradeweb Markets Inc. published this content on 12 February 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 February 2020 14:48:01 UTC