Tradeweb Markets Inc. (TW) Earnings

Management highlights

• Record quarterly revenue of over $600 million achieved, with 21.2% year-over-year growth. • International business set new records with 29% revenue growth, with double-digit growth across all four asset classes and product segments. • Rates, credit, money markets, equities, and other revenues all had strong performances. • U.S. Treasuries saw significant pickup in March intraday volatility, with first quarter market share 22% driving record revenues. • ETF business posted revenue growth >35% year over year, with AIX automation solution a key differentiator. • Global credit had double-digit revenue growth in European credit, EM credit, and credit derivatives, with U.S. credit focused on expanding penetration in RFQ markets. • Global swaps delivered record quarterly revenues up over 45% year-over-year, with core risk market share reaching a record. • Frontier markets progress made through partnerships and investments in tokenization, institutional crypto, and prediction markets.

Guidance

• Adjusted expenses to trend towards the top half of the initial guidance range of $1.1 billion to $1.16 billion. • Expect adjusted EBITDA and operating margin expansion compared to 2025 at either end of the range, with focus on investing in credit, rates, international markets, ICD, and digital assets. • April 2026 trending toward another top five revenue month despite tougher comparison and different volatility environment. • April average daily volume running ahead of April 2025, with preliminary positive average daily volume growth across multiple areas.

Segment performance

Rates business produced a record revenue quarter driven by organic growth across swaps, global government bonds, and mortgages. Credit revenues led by strength in global corporate bonds and credit derivatives. Money markets revenue growth led by global repos and ICD. Equities produced record revenues led by growth in global ETFs and equity derivatives. Other revenues grew over 56% year over year driven by digital assets initiatives. Market data revenues down ~5% year over year but grew 13% adjusting for timing difference. International business had 29% revenue growth, contributing nearly 60% of overall revenue growth, with double-digit growth across all four asset classes and product segments. U.S. clients contributed over 20% of international product revenue growth.

Risks & headwinds

• Market volatility can lead to wider bid-ask spreads and potential dislocated market environments. • Regulatory uncertainty around emerging markets like prediction markets and crypto execution. • Trade-off between minimizing information leakage and achieving optimal pricing in U.S. credit RFQ markets. • Unfavorable movements in FX can impact financial results. • Affiliate trades in U.S. credit can distort reported market share and electronification.

Analyst Q&A

• Q: On swaps, perspective on good versus bad volatility debate, especially in Europe.

  A: Volatility in sterling and European markets was higher than U.S. rates market in March, markets moved orderly with healthy price discovery, both buy side and dealer communities better positioned to navigate electronically, increased usage of electronic protocols.

• Q: Views on AI's role in increasing automation across workflows in credit and rates, KPIs to track.

  A: AI goal is to move clients from data retrieval to insight generation, launched AI-powered assistant Terra in beta, launching AI Price 2.0 at end of second quarter, focusing on predictive side like price discovery.

• Q: Philosophy for expense growth in terms of flexibility and willingness to adjust investments up or down.

  A: ~55% of expenses are fixed and 45% are variable/discretionary, most variable expenses tied to revenue/EBITDA growth, leaving flexibility to manage expenses and deliver operating leverage.

• Q: EM swaps growth, opportunities and progress.

  A: EM swaps revenues grew over 40% year over year in first quarter, cleared EM swaps market grew at over 20% CAGR last five years with low electronification, busy with recent launches and focused on long-term EM franchise health.

• Q: Potential impact of DTCC's tokenized treasury pilot on fixed income volumes and rates, broader opportunity and risks.

  A: Tokenization upgrades market infrastructure, making settlement faster, more transparent, and enabling real-time collateral movement, pilot is meaningful step, risks seen but execution layer remains valuable.

• Q: ICD update, cross-selling, balances, product roadmap after T-bills.

  A: ICD performed well with ~8% year-over-year growth in revenues and balances, focus on cross-selling to ICD clients and taking ICD offering to international clients, completed Singapore regulatory approvals, T-bills cross-selling in progress with focus on international opportunity.

• Q: Kalshi partnership, revenue opportunities and regulatory uncertainty.

  A: Partnership with Kalshi is early, launching free viewer in second quarter, next step is normalized API feed, regulatory uncertainty to be seen but confident in partnerships for innovation.

• Q: MaxEx partnership in U.S. Resi Morages, early returns and go-forward in mortgage MBS trading.

  A: Early still with MaxEx partnership, mortgage market important, focus on expanding institutional access, continuing to invest in mortgage market for further innovation