Tradeweb Markets Inc. Q4 FY2025 earnings call

Management Statement and Operational Highlights

• Record Performance: 2025 was the best revenue year and quarter in history, with over $2 billion in annual revenue, double-digit growth, and 26th consecutive record annual revenues.
• Client Focus: Clients focused on data-driven tools, automation, and interconnected global markets; electronic trading extended into previously manual areas like uncleared swaps and block trading in global credit.
• Capability Enhancements: Achieved firsts like fully electronic bilateral swaptions, launched platforms for Saudi Royal Bonds and Mexican repos, enhanced RFQ offering, and rolled out dealer algo solutions.
• Digital Assets: Partnered with start-ups, made on-chain transactions, and advanced market infrastructure for digital assets.

Segment Performance

• Rates: Record revenue quarter, driven by organic growth in swaps, global government bonds, and mortgages.
• Credit: Low single-digit revenue growth for the quarter, with strong double-digit growth in European credit, municipal bonds, credit derivatives, China bonds, and EM credit; US credit had weakness due to retail corporate credit decline.
• Money markets: Revenue growth led by record quarterly revenues in global repos; ICD balances recovered post tariff volatility, with ICD revenues up 11% QoQ.
• Equity: Almost 10% YoY growth led by global ETFs and equity derivatives; ETFs saw double-digit revenue growth, and AIX automation solution had significant trade growth.
• Other revenues: Over 90% YoY growth from emerging digital initiatives.
• Market data: Driven by growth in the renewed LSAG market data contract and proprietary data products.

Guidance

• Expenses: 2026 adjusted expenses expected to range $1.1 billion to $1.16 billion, midpoint representing 11% YoY increase.
• EBITDA and Margin: Expect adjusted EBITDA and operating margin expansion compared to 2025.
• Net Interest Income: Expected $15 million in 2026.
• CapEx: CapEx and capitalized software development $107M to $117M.
• LSAG Revenue: 2026 revenue under LSAG master data agreement ~$105M, spread evenly over four quarters.
• January 2026: Revenue strong, 17% YoY growth; adjusting for factors, average daily revenue up 26% YoY.

Risks

• Market Volatility: Impact on revenues due to fluctuating market conditions.
• Regulatory Changes: Potential regulatory shifts affecting business operations.
• Competition: Intense competition from other market participants.
• Currency Fluctuations: FX losses impacting financial results.

Question and Answer

• Q: Patrick Moley asked about the outlook for the market in 2026 and January revenue strength. A: Billy Hult discussed market environment, AI integration, debt markets, AI infrastructure spending, geopolitical complexity, and client activity.
• Q: Craig Siegenthaler asked about AI utilization and differentiating generative and predictive AI. A: Billy Hult talked about AI as an extension of efficiency gains, proprietary data, data scientists collaborating with product teams, predictive AI focus on less liquid markets.
• Q: Alexander Blostein asked about expense growth trajectory and margins. A: Sara Furber explained expense flexibility, variable vs. fixed expenses, and ability to maintain operating leverage through cycles.
• Q: Ken Worthington asked about mortgage business outlook and innovations. A: Billy Hult discussed mortgage business strength, primary issuance, rate cycle impact, and potential for more participants.
• Q: Alex Kramm asked about tokenization initiatives and revenue opportunities. A: Sara Furber talked about tokenization as infrastructure upgrade, US Treasuries tokenization efforts, and DTCC pilot program.
• Q: Tyler Moore asked about share buybacks. A: Sara Furber mentioned considering buybacks, recent repurchases, and capital allocation framework.
• Q: Simon Alistair Clinch asked about credit competitive environment. A: Billy Hult discussed competitive framework, bank partnerships, market linking, data, and risk solving.
• Q: Bradley Hayes asked about tokenization impact on swaps market. A: Sara Furber talked about smart contracts streamlining post-trade life cycle management.