Tradeweb Markets Inc. Q4 FY2024 earnings call

• Billy Hult highlighted 2024 as the best revenue year with 29% revenue growth, record volumes, and 91 basis points of adjusted EBITDA margin expansion.
• Key initiatives included integrating RateFin and Yield Broker, making progress on mortgage specified pool platform, rolling out RFQ Edge in global cash credit, and scaling client relationships.
• Strong partnerships: Integrated with BlackRock's Aladdin, expanded with FTSE Indices, became strategic partner for Goldman Sachs's digital assets platform, and partnered with Tokyo Stock Exchange.

Rates: Record fourth quarter revenue, driven by organic growth in swaps, global government bonds, mortgages, and acquisitions like RateFin and Yield Broker. Credit: Revenue growth in US and European credit, with second-highest fully electronic quarterly market share in USIG and highest in US high yield, and double-digit growth in credit derivatives. Money Markets: Aided by ICD, with record quarterly revenues in global repos. Equities: Double-digit revenue growth, led by global ETF and equity derivatives. Market Data: Driven by growth in LSAG, market data contracts, and proprietary data products. Revenue contribution: Rates still major, but non-rates businesses contributed significantly to growth in 2024.

• 2025 adjusted expenses expected to range $970 million to $1.03 billion, midpoint ~15% year-over-year increase. Excluding acquisitions, midpoint ~11% increase.
• CapEx expected $99 million to $109 million, midpoint ~17% year-over-year increase, driven by New York City office and ICD acquisition.
• Dividend declared at $0.12 per Class A and Class B shares, up 20% year-over-year.
• Expectations for EM expansion, including launching Saudi Arabian offering and working on Indian offering, with focus on building robust trading solutions and local networks.

• Market volatility could impact revenue and trading volumes.
• Regulatory changes may affect product launches and expansions in emerging markets.
• Intense competition in electronic markets could affect market share.

Q: Chris Allen asked about interest rate swaps and the macro backdrop.

A: Billy Hult discussed market volatility, risk-on trading, and the company's focus on building client solutions, highlighting strong active user growth and optimism for swaps business going forward.

Q: Benjamin Budish inquired about digital assets.

A: Billy Hult talked about the company's focus on adding value through trusted data, smart contracts, and tokenization, mentioning partnerships and focus on three key areas: trusted shareable data, smart contracts, and tokenization and synchronized data.

Q: Alex Kramm asked about guidance and expense leverage.

A: Sara Furber explained the company's operating leverage with 50% of expense base being variable/discretionary, allowing flexibility in different revenue environments and citing ability to navigate weaker revenue periods while maintaining margins.

Q: Dan Fannon asked about regulation and electronification.

A: Billy Hult discussed private sector intermediation being good for the business, stating that the onward march of electronification is not a pendulum swing and the company benefits from banks being strong and efficient.

Q: Craig Siegenthaler asked about streaming and session trading in US treasuries.

A: Billy Hult discussed protocol shifts, noting 35% year-over-year growth in wholesale streaming and ~25% growth in wholesale sessions, and the company's comprehensive protocol offering in US treasuries.

Q: Alex Kramm questioned credit focus.

A: Billy Hult emphasized laser focus on credit, investing in portfolio trading, partnership with Aladdin, and dealer access, stating innovation is key over price adjustments.

Q: Patrick Moley asked about ICD integration.

A: Sara Furber reported ICD integration progress with core metrics on plan, focusing on long-term revenue opportunities, leveraging client relationships, and expanding product offering with US treasuries expected on ICD's platform by mid-2025.

Q: Jeff Schmidt asked about automated trades in treasuries.

A: Billy Hult discussed algorithmic protocols resonating due to search for liquidity and ability to find liquidity efficiently, highlighting as a lead differentiator in rates space.

Q: Kyle Voigt asked about M&A appetite.

A: Billy Hult and Sara Furber discussed M&A criteria (culture, network, technology), stating ambition for strategic fits that amplify earnings, accelerate growth, or enhance profitability within couple of years.

Q: Michael Cyprys asked about emerging markets.

A: Billy Hult discussed EM initiatives in rates, credit, with EM revenues run rate over $60 million, and large total addressable opportunity in EM across rates and credit.