Tradeweb Markets Inc. Q3 FY2026 earnings call

• Strategic Acquisition: Announced a definitive agreement to acquire TruMid to expand presence in the credit markets, specifically the new issue space, and to broaden client coverage among hedge funds.
• Market Electronification: Emphasized that the majority of global fixed income activity remains voice/chat-driven, presenting substantial long-term runway for electronic adoption across rates, credit, equities, and money markets.
• U.S. Treasuries: Achieved record market share increases, reaching 23.6% (up 160 basis points YoY). Institutional U.S. Treasuries revenue grew nearly 20% YoY. Significant momentum in basis and multi-leg trades, with average daily volume growing over 50% YoY.
• Global Swaps: Delivered second-highest quarterly revenue ever, up 26% YoY. Core risk market share reached a record 25.3% (up 330 basis points YoY). Growth was broad-based across developed and emerging markets, with APAC swaps hitting record revenues.
• Credit Markets: U.S. institutional credit revenue grew 15%, supported by strong RFQ and block trading volumes. AI enhancements to 'AI Price' and 'Snap Plus' protocols aim to reduce manual intervention and improve liquidity matching. Terra AI assistant adoption is deepening.
• International Expansion: Strategic initiatives in Europe, APAC, and Emerging Markets are paying off, with European government bonds achieving record volumes and AIX usage in European credit reaching record levels.
• Equities & ETFs: ETF revenue grew over 25% YoY, driven by AIX automation. Institutional equity derivative revenues grew over 30%. New capabilities in basket trading and convertible bonds are gaining traction.

TradeWeb reported its second-highest quarterly revenue in history at $585 million, representing a 14.9% year-over-year increase on a reported basis and 15.4% on a constant currency basis. International business was a key growth driver, contributing over 60% of total revenue growth with international revenues increasing more than 22%. Within this, European client revenue grew nearly 20% and Asian client revenue grew approximately 30%. Rates revenues were driven by organic growth in swaps and global government bonds, while credit revenues saw strength in global corporate bonds, municipal bonds, and credit derivatives. Equities revenue growth was led by global ETFs and equity derivatives, which posted growth exceeding 25% year-over-year. Money markets revenue grew due to global repos and ICD, and market data revenues increased nearly 20% year-over-year.

• Adjusted Expenses: Updated guidance for full-year 2026 adjusted expenses to a range of $1.155 billion to $1.175 billion. The company is currently trending towards the middle of this range, reflecting continued investment in technology, AI, and client relationships.
• Margin Outlook: Management expects adjusted EBITDA and operating margin expansion compared to 2025 at either end of the expense guidance range, though incremental margin expansion is expected to be more muted than in 2025 as they balance profitability with future investments.
• Other Revenue: Fourth-quarter other revenues are expected to decline in the low single digits relative to Q3, primarily due to moderate super validator fees and periodic tech enhancement cycles.

• Macroeconomic Volatility: Interest rate changes, inflation dynamics, and central bank policies create volatility that impacts issuance, client behavior, and market liquidity, though TradeWeb generally benefits from increased activity.
• Competitive Landscape: The market features entrenched competitors (e.g., Bloomberg) and rising non-bank liquidity providers (e.g., Citadel, Jane Street) who are increasing capital positions and investing heavily in technology, potentially altering market structure and dealer-client dynamics.
• Execution Complexity: Complex and multi-leg trades remain predominantly voice-driven or executed leg-by-leg; transitioning these workflows to fully electronic platforms faces behavioral barriers and requires continuous iteration based on client/dealer feedback.
• Revenue Variability: 'Other revenue' is subject to quarter-to-quarter fluctuations based on Canton network dynamics, coin value, and periodic retail tech enhancements.

Q: Dan Wilden asked whether the TruMid acquisition's revenue opportunity is primarily transactional or derived from data/liquidity capture in secondary markets. / A: CEO Billy Hult stated that while data reinforces the strategy, the primary view is a transaction revenue story. He explained that new issues serve as an entry point to engage hedge funds, creating a "halo effect" that drives secondary RFQ and swap trading. Enhanced data from TruMid will strengthen AI pricing tools, giving clients confidence to trade larger sizes, thereby connecting workflows across new issues and secondary markets.

Q: Patrick Moley asked how the influx of hedge fund and systematic clients from TruMid will shift the client mix and impact dealer/all-to-all liquidity dynamics. / A: Hult noted that combining TradeWeb’s asset manager base with TruMid’s loyal hedge fund following creates a complementary platform with greater breadth and velocity. While hedge funds currently contribute less than 15% of U.S. credit revenue, their high-velocity flow is critical. This combination improves overall liquidity for all participants but does not change the core importance of dealer relationships, which remain vital for risk and block trades.

Q: Alexander Bolsterd asked about the durability of TradeWeb’s competitive moat in the global swaps franchise against entrenched competitors like Bloomberg. / A: Hult attributed their durable leadership (70-80% electronic swaps market share) to being a true global franchise offering 28 currencies and complex regulatory infrastructure that is difficult to replicate. He emphasized that competition has always existed but welcomed it as it drives innovation. The moat is built on decades of building connectivity to clearinghouses and regulators, ensuring best-in-class liquidity and client comfort across evolving regimes.

Q: Simon Clinch asked how recent surges in bond yields, inflation, and rate fears are affecting trading volumes and what the outlook is for the next year. / A: Hult highlighted that TradeWeb thrives in volatility, noting September was a record month for Treasuries despite macro turbulence. He anticipates continued volume growth in 2027 due to a Fed focused on inflation, post-election uncertainty, and heavy debt funding for AI capex. This volatile environment is viewed as bullish for rates and credit businesses, driving speculation and repositioning activity.

Q: Jeff Schmitz asked for updates on the electronification of complex multi-leg trades and the barriers to further adoption. / A: Hult reported that multi-leg average daily volume grew over 50% YoY, with seven consecutive quarters of sequential growth, indicating strong stickiness. However, he acknowledged that complexity remains a barrier, as many clients still execute legs separately via voice or fragmented screens. The company is focusing on iterating solutions based on direct client and dealer feedback to solve for these complex workflows rather than relying solely on technological capability.