TRADEWEB REPORTS THIRD QUARTER 2022 FINANCIAL RESULTS

NEW YORK--(BUSINESS WIRE)--Oct 27, 2022--

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 ended September 30, 2022.

• $287.1 million quarterly revenues increased 8.2% ( 13.1% on a constant currency basis) compared to prior year period
• $1.1 trillion average daily volume (“ADV”) for the quarter, an increase of 14.0% compared to prior year period, with record ADV in fully electronic U.S. High Grade credit, equity convertibles/swaps/options and institutional municipal bonds. Tradeweb captured a record 13.9 % of fully electronic U.S. High Grade TRACE
• $81.6 million net income and $106.5 million adjusted net income for the quarter, increases of 24.9% and 13.1% respectively from prior year period
• 51.0% adjusted EBITDA margin and $146.3 million adjusted EBITDA for the quarter, compared to 50.1% and $132.9 million respectively for prior year period
• $0.33 diluted earnings per share (“Diluted EPS”) for the quarter and $0.45 adjusted diluted earnings per share
• $0.08 per share quarterly cash dividend declared; $9.0 million of shares repurchased

Lee Olesky, Chairman and CEO, Tradeweb Markets:

"Tradeweb reported record third quarter revenues driven by strong trading volumes across asset classes and products. Despite challenging markets, we delivered double-digit revenue growth on a constant currency basis in rates, credit, equities and money markets. Our clients leveraged a wide range of electronic tools and protocols to help advance their trading strategies as markets reflected concerns around inflation and geopolitical conflict. Client engagement was strong across all of our markets and we’ve seen increased interest in electronifying markets that have been persistently analog, like swaps and repos.

As I prepare to retire as CEO at year-end and stay on as chairman, I am proud that Tradeweb has continued to grow, innovate and collaborate with our clients to make markets more efficient. Billy Hult and our leadership team are well positioned to drive our next wave of growth, and I can’t wait to see what comes next. I am grateful to our clients and employees for their confidence and support.”

DISCUSSION OF RESULTS

Rates – Revenues of $148.2 million in the third quarter of 2022 increased 6.3% compared to prior year period (11.8% on a constant currency basis). Rates ADV was up 11.8% driven by strong growth in swaps/swaptions ≥ 1-year and rates volatility in U.S. and European government bonds.

Credit – Revenues of $78.1 million in the third quarter of 2022 increased 8.1% compared to prior year period (11.7% on a constant currency basis). Credit ADV was up 31.7% with record ADV in fully electronic U.S. High Grade credit and institutional municipal bonds, as well as record share of fully electronic U.S. High Grade TRACE (13.9%). U.S. and European credit volumes reflected continued client adoption across Tradeweb protocols, including request-for-quote (RFQ), Tradeweb AllTrade and portfolio trading.

Equities – Revenues of $21.3 million in the third quarter of 2022 increased 29.3% compared to prior year period (38.6% on a constant currency basis). Equities ADV was up 8.7% with record ADV in equity convertibles/swaps/options. Equities performance reflected increased global institutional client activity driven by further adoption of RFQ and continued market volatility.

Money Markets – Revenues of $13.0 million in the third quarter of 2022 increased 15.6% compared to prior year period (19.7% on a constant currency basis). Money Markets ADV was up 16.7% led by strong client adoption of Tradeweb's electronic trading solutions and retail money markets activity, which increased over the third quarter and culminated with a monthly record in September.

Market Data – Revenues of $21.2 million in the third quarter of 2022 increased 3.4% compared to prior year period (6.1% on a constant currency basis). The increase was derived from increased third party market data fees and Refinitiv market data fees.

Other – Revenues of $5.4 million in the third quarter of 2022 decreased 1.7% compared to prior year period (1.6% decrease on a constant currency basis).

Operating Expenses of $184.3 million in the third quarter of 2022 increased 2.5% compared to $179.8 million in the prior year period due to: higher employee compensation and benefits associated with higher headcount to support growth, $2.0 million in CEO Retirement Accelerated Stock-Based Compensation Expense recognized during the third quarter of 2022 and higher technology and communications expenses primarily due to increased data and clearing fees driven primarily by higher trading volumes as well as increased investment in our data strategy and infrastructure; this was partially offset by lower general and administrative expenses, as foreign exchange gains more than offset the increased travel and entertainment expense following the easing of restrictions relating to the pandemic.

Adjusted Expenses of $154.0 million increased 6.8% (10.4% on a constant currency basis) compared to the prior year period due to: higher employee compensation and benefits associated with higher headcount to support growth; higher technology and communications expenses; higher general and administrative expenses; higher depreciation and amortization and higher professional fees. Please see "Non-GAAP Financial Measures" below for additional information.

RECENT HIGHLIGHTS

Third Quarter 2022

• Announced the appointment of Thomas Pluta as President of Tradeweb beginning January 1, 2023
• Appointed Jacques Aigrain and Rana Yared as Independent Directors to Tradeweb’s board
• Announced collaboration with S&P Global Market Intelligence to connect primary and secondary markets in Europe
• Published our second annual 2021 Corporate Sustainability Report
• Facilitated the first fully automated dealer-to-client EUR interest rate swap versus Eurex bund future trade; non-deliverable interest rate swap transaction in Thai Baht (#THB) and interest rate swap transaction in Israeli Shekel (#ILS) on the Tradeweb platform
• Recognized in numerous awards including: Best Workplaces for Innovators (Fast Company); European Markets Choice Awards, Markets Recognition Award (Markets Media); Excellence in Trading & Tech Awards, Best Fixed Income Trading Platform (Financial News); Excellence in Trading & Tech Awards, Trading Initiative of the Year (Financial News); Americas Derivatives Awards, Outstanding Achievement Award - Lee Olesky (GlobalCapital); Americas Derivatives Awards, Swap Execution Facility of the Year (GlobalCapital); Global Derivatives Awards, OTC Trading Venue of the Year (GlobalCapital); Asia Risk Awards, Buy-Side Trading System of the Year (Risk.net); Asia Capital Markets Awards, Fixed Income Trading System of the Year (FOW Global Investor Group); Asia Capital Markets Awards, Multi-Asset Trading System of the Year (FOW Global Investor Group)

CAPITAL MANAGEMENT

• $1.1 billion in cash and cash equivalents and an undrawn $500 million credit facility at September 30, 2022
• Non-acquisition related capital expenditures and capitalization of software development in third quarter 2022: $12.3 million
• Free cash flow for the trailing twelve months ended September 30, 2022 of $555.2 million, up 16.3% compared to the prior year period. See “Non-GAAP Financial Measures” for additional information
• During the third quarter of 2022, as part of its Share Repurchase Program, Tradeweb purchased 129,809 shares of Class A common stock, at an average price of $69.33, for purchases totaling $9.0 million. As of September 30, 2022, a total of $9.0 million remained available for repurchase pursuant to the Share Repurchase Program
• $2.3 million in shares were withheld in the third quarter of 2022 to satisfy tax obligations related to the exercise of stock options and vesting of restricted stock units and performance-based restricted stock units
• 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. The dividend will be payable on December 15, 2022 to stockholders of record as of December 1, 2022

OTHER MATTERS

Updated Full-Year 2022 Guidance*

Adjusted expenses: $620 - 640 million (old: $620 - 655 million)

No change to other guidance:

• Acquisition and Refinitiv Transaction related depreciation and amortization expense: $127 million

• Assumed non-GAAP tax rate: ~22.0%

• Capital expenditures and capitalization of software development: $62 - 68 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 third quarter 2022 results starting at 9:30 AM EDT today, October 27, 2022. 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 registering at https://register.vevent.com/register/BIacb82889d7314bbdb89f62512916cf38. Once registered, the participant will receive an email confirmation with the dial-in information and a personalized PIN number to access the conference call. Only one person can use this PIN at a time. If you need additional PINs please register multiple times.

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 $1.0 trillion in notional value traded per day over the past four fiscal quarters. For more information, please go to www.tradeweb.com.

The following table summarizes the calculation of Adjusted Diluted EPS for the periods presented:

TRADEWEB MARKETS INC.
BASIC AND DILUTED EPS CALCULATIONS (UNAUDITED)
Dollars in Thousands, Except per Share Data

The following table summarizes the basic and diluted earnings per share calculations for Tradeweb Markets Inc.:

To access historical traded volumes, go to https://www.tradeweb.com/newsroom/monthly-activity-reports/

FORWARD-LOOKING STATEMENTS

This release contains forward-looking statements within the meaning of the federal securities laws. Statements related to, among other things, our guidance, including full-year 2022 guidance, and 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 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 release 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 release. 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 release, they may not be predictive of results or developments in future periods. Any forward-looking statement that we make in this release 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 release.

BASIS OF PRESENTATION

Tradeweb Markets Inc. (unless the context otherwise requires, together with its subsidiaries, referred to as “we,” “our,” “Tradeweb,” “Tradeweb Markets” or the “Company”) closed its IPO 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.

Numerical figures included in this release have been subject to rounding adjustments and as a result totals may not be the arithmetic aggregation of the amounts that precede them and figures expressed as percentages may not total 100%.

Please refer to the Company's previously filed Annual Report on Form 10-K for capitalized terms not otherwise defined herein.

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 investor relations website, 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.

NON-GAAP FINANCIAL MEASURES

This release contains “non-GAAP financial measures,” including Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT, Adjusted EBIT margin, Adjusted Net Income, Adjusted Diluted EPS, Adjusted Expenses and Free Cash Flow, which are supplemental financial measures that are not calculated or 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.

Management and our board of directors use Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT and Adjusted EBIT margin to assess our financial performance and believe they are helpful in highlighting trends in our core operating performance, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate and capital investments. Further, our executive incentive compensation is based in part on components of Adjusted EBITDA.

We use Adjusted Net Income and Adjusted Diluted EPS as supplemental metrics to evaluate our business performance in a way that also considers our ability to generate profit without the impact of certain items. Each of the normal recurring adjustments and other adjustments included in Adjusted Net Income and Adjusted Diluted EPS help to provide management with a measure of our operating performance over time by removing items that are not related to day-to-day operations or are non-cash expenses.

We use Adjusted Expenses as a supplemental metric to evaluate our underlying operating performance over time by removing items that are not related to day-to-day operations or are non-cash expenses.

We use Free Cash Flow to assess our liquidity in a way that considers the amount of cash generated from our core operations after non-acquisition related expenditures for capitalized software development costs and furniture, equipment and leasehold improvements.

See the attached schedules for reconciliations of the non-GAAP financial measures contained in this release 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, operating expenses 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, Adjusted Diluted EPS, Adjusted Expenses and Free Cash Flow, you should be aware that in the future, we may incur expenses similar to the adjustments in the presentation of these non-GAAP financial measures.

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 annual average exchange rates for the prior period. 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.

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 release may not be comparable to similarly titled measures used by other companies in our industry or across different industries.

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CONTACT: Investor Relations

Ashley Serrao + 1 646 430 6027

Ashley.Serrao@Tradeweb.com

Media Relations

Daniel Noonan + 1 646 767 4677

Daniel.Noonan@Tradeweb.com

KEYWORD: NEW YORK UNITED STATES NORTH AMERICA

INDUSTRY KEYWORD: BANKING PROFESSIONAL SERVICES

SOURCE: Tradeweb Markets Inc.

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