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Tradeweb Markets Inc. (TW)·Q3 2025 Earnings Summary

Executive Summary

  • Reported revenue $508.6M (+13.3% YoY; +11.3% constant currency) and GAAP diluted EPS $0.86; adjusted diluted EPS $0.87. Total ADV hit $2.575T (+11.8% YoY); adjusted EBITDA margin expanded to 54.0% .
  • Results beat S&P Global consensus modestly: EPS $0.87 vs $0.829* and revenue $508.1M vs $507.5M*; Q4 consensus points to ~$516.4M revenue and $0.837 EPS* (modeling backdrop: ~$22M LSEG market data in Q4) .
  • Mix: Rates led (+17.7% YoY), Money Markets (+18.7%), Equities (+16.9%); Credit grew +2.6% with strong muni/European credit offset by weaker U.S. retail credit; international revenue rose +24.8% YoY .
  • Guidance tightened: FY25 adjusted expenses to $1,000–$1,025M (lower upper bound); LSEG Market Data revenue raised to ~$92M for 2025 (incl. ~$22M in Q4); tax rate, D&A, capex unchanged vs prior quarter .
  • Near-term narrative: very low rate volatility and increased voice package trades pressured U.S. Treasuries wholesale; management is attacking electronification of complex packages, expanding dealer algos, and seeing robust swaps and international strength .

What Went Well and What Went Wrong

What Went Well

  • Broad-based volume strength and records in mortgages, short-tenor U.S. swaps/swaptions, municipals, convertibles/swaps/options, and global repos drove ADV to $2.575T (+11.8% YoY) .
  • Rates revenue up +17.7% YoY; European gov’t bonds ADV +22.9% YoY; swaps delivered record revenues, core risk swap share rose >130bps YoY; global active users +8% YoY .
  • CEO: “We delivered a strong third quarter with record trading volumes and ADV… advancing interconnected markets and 24/7 liquidity… first real-time, fully on-chain financing of U.S. Treasuries against USDC” .

What Went Wrong

  • U.S. Treasuries revenues decreased ~2% YoY; wholesale revenues down ~6%, impacted by unusually low volatility and voice-centric package trades; electronification share pressured near-term .
  • Average fees per million fell in cash credit (−15.4% YoY) and total (−5.9% YoY) on mix and migration of dealers to fixed plans; adjusted expenses +12.5% YoY amid data/infrastructure investments and FX losses .
  • Credit: U.S. retail corporate credit revenues down nearly 30% YoY; fully electronic U.S. HY TRACE share fell 26bps YoY, total HY share −67bps YoY (HG total share +150bps YoY) .

Financial Results

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$509.7 $513.0 $508.6
GAAP Diluted EPS ($)$0.69 $0.71 $0.86
Adjusted Diluted EPS ($)$0.86 $0.87 $0.87
Net Income ($USD Millions)$168.3 $175.5 $210.5
Operating Income ($USD Millions)$204.1 $199.9 $210.4
Adjusted EBITDA ($USD Millions)$278.2 $277.9 $274.4
Adjusted EBITDA Margin (%)54.6% 54.2% 54.0%
Net Income Margin (%)33.0% 34.2% 41.4%
Q3 2025 vs EstimatesConsensusActualBeat/Miss
Revenue ($USD Millions)507.5*508.1 +0.6*
Primary EPS ($)0.829*0.87 +0.041*
EBITDA ($USD Millions)264.1*274.4 +10.3*
Next Quarter (Q4 2025) Revenue ($USD Millions)516.4*——
Next Quarter (Q4 2025) Primary EPS ($)0.837*——

Values with * retrieved from S&P Global.

Segment Breakdown (Q3 2025)

Segment Revenue ($USD Millions)Q3 2025YoY Change
Rates$274.5 +17.7%
Credit$121.3 +2.6%
Equities$29.8 +16.9%
Money Markets$42.9 +18.7%
Market Data$30.8 +3.6%
Other$9.2 +51.6% (Canton Network validation)

KPIs

KPIQ3 2025YoY
Total ADV ($USD Trillions)$2.575 +11.8%
European Gov’t Bonds ADV ($USD Billions)$52.8 +22.9%
Mortgages ADV ($USD Billions)$249.3 +12.3%
U.S. IG TRACE Share (Fully Electronic)18.6% +85bps YoY
U.S. HY TRACE Share (Fully Electronic)7.5% −26bps YoY
Free Cash Flow (TTM, $USD Millions)$987.5 +23.8%

Guidance Changes

MetricPeriodPrevious Guidance (Q2 PR)Current Guidance (Q3 8-K)Change
Adjusted Expenses ($USD Millions)FY 2025$1,000–1,050 $1,000–1,025 Tightened lower; lowered upper bound
D&A (Acquisition & Refinitiv-related) ($USD Millions)FY 2025$176 $176 Maintained
Non-GAAP Tax Rate (%)FY 2025~24.5–25.5 ~24.5–25.5 Maintained
Capex + Capitalized Software ($USD Millions)FY 2025~$99–109 ~$99–109 Maintained
LSEG Market Data Contract Revenue ($USD Millions)FY 2025~$90 ~$92 (incl. ~$22 in Q4) Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1)Previous Mentions (Q2)Current Period (Q3)Trend
AI/data strategyCoremont collaboration; SEC SBSEF registration Appointed Sherry Marcus Head of AI Continued investments; tech/comm +39% YoY; dealer algos expanded Scaling up
Macro/volatility/tariffsRecord UST volumes; macro uncertainty April tariffs, Middle East tensions; volatile Q2 backdrop Intraday vol −19% YoY; voice package trades up; UST revenues −2% YoY Volatility down; mix shift to voice
Product performanceRecords in UST, EU gov’t, mortgages, swaps Records in UST, <1Y swaps, repos Records in mortgages, RFM growth; swaption package protocol launched Continued innovation
Regional trendsInternational expansion; strong EU/UK International revenues +40.8% YoY International revs ~42% of total; strong APAC/EM; October growth ~20% YoY Growing share
Regulatory/digital assetsSEC SBSEF approval Funding for Digital Asset (Canton) BoE Digital Securities Sandbox Gate 1; $5M YTD Canton revenue; 1.7B coins FV ~$56M Building digital rails
U.S. Credit electronificationRecord fully electronic HG/HY shares Record fully electronic HY; portfolio trading expansion RFQ share up; record IG block share 10%; retail weakness Mixed; institutional momentum

Management Commentary

  • CEO prepared remarks: “We delivered a strong third quarter with record trading volumes and ADV… first fully electronic bilateral multi-asset package list trade and the first fully automated European government bond basis RFQ trade… first real-time, fully on-chain financing of U.S. Treasuries against USDC” .
  • CFO: “Adjusted expenses increased 12%… tech and communications +39%… expect Q4 FX losses of ~$4M; adjusted EBITDA margin to exceed 2024, with more modest expansion” .
  • On LSEG contract: “Agreement in principle… three years; value +9% annually effective Nov 1; for modeling, use ~$22M in Q4” .
  • On swaps electronification: “With just 30% of the cleared swaps market electronified… risk-based electronification rose from ~10% (2020) to ~19% (2025)” .

Q&A Highlights

  • Rate volatility and electronification: low volatility drove more complex voice package trades; U.S. Treasuries market share bottomed in Apr/May and reaccelerated into Sep/Oct; institutional UST share >50% vs main competitor .
  • Fee-per-million sensitivities: −100bps parallel rate shift lifts swaps FPM ~4–5% and cash credit ~2%; +1y duration adds ~7–8% to swaps FPM and ~2% to credit .
  • Digital assets/Canton: ~$2.3M quarter revenue; YTD ~$5M from Canton validators; GAAP realized gains $15M and unrealized $50.6M; 1.7B coins FV ~$56M; excluded from non-GAAP .
  • ICD/Treasury bills: initial client trades executed; pipeline reengagement due to integrated Tradeweb products; working on STP and custody integration .
  • Capital allocation: opportunistic buybacks under window constraints; priorities unchanged (organic > M&A > buybacks > dividends) .

Estimates Context

  • Q3 EPS beat: $0.87 actual vs $0.829 consensus*; Q3 revenue beat: $508.1M actual vs $507.5M consensus*; EBITDA beat: $274.4M actual vs $264.1M consensus*. Values retrieved from S&P Global.
  • Q4 setup: revenue ~$516.4M* and EPS ~$0.837*; management flagged sequential tech/comm expense increase, seasonal pro fees, and ~$4M FX losses in Q4 . Values retrieved from S&P Global.

Key Takeaways for Investors

  • Quality beat: Adjusted EPS and EBITDA margins held at mid-50s; modest top-line beat; strong GAAP EPS aided by other income while non-GAAP excludes coin gains .
  • Rates engine robust: swaps and European gov’t bonds strength; mortgages record revenues; international revenue scaling (+24.8% YoY) .
  • Near-term headwinds: low volatility and voice packages weigh on U.S. Treasuries wholesale; watch electronification progress in package trades and dealer algo onboarding .
  • Guidance positive: expense range tightened; LSEG data revenue raised to ~$92M for FY25 with ~$22M in Q4; supports Q4 modeling .
  • Digital optionality: ongoing Canton revenues and validator economics (excluded from non-GAAP) provide upside; BoE digital sandbox progress points to structural tailwinds .
  • Q4 cadence: expect higher tech/comm costs and FX losses (~$4M), modest EBITDA margin expansion vs 2024; factor into near-term estimates and valuation .
  • Execution focus: portfolio/RFQ/session trading in credit, RFM protocol in swaps, and cross-asset package innovation are core share gain levers .
Notes:  
- Values with * retrieved from S&P Global.