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Tradeweb Markets Inc. (TW)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $463.3M, up 25.2% YoY; diluted EPS $0.66 and adjusted diluted EPS $0.76, with net income margin 34.5% and adjusted EBITDA margin 52.8% .
  • Broad-based strength: rates set a record revenue quarter; money markets surged on ICD integration; credit hit record fully-electronic U.S. high-yield share (7.9%); total ADV reached $2.292T (+36.7% YoY) .
  • Board raised quarterly dividend 20% to $0.12, signaling confidence in cash generation; FY 2025 guidance introduced: adjusted expenses $970–$1,030M, non-GAAP tax rate ~24.5–25.5%, CapEx $99–$109M, LSEG market data ~$90M (maintained) .
  • Stock catalysts: sustained share gains in U.S. Treasuries and credit protocols, ICD cross-sell ramp in 2025, and regulatory milestone (SEC SBSEF approval for TW SEF LLC) to expand swap execution capabilities .

What Went Well and What Went Wrong

What Went Well

  • Rates delivered a record quarter driven by record U.S. government bonds and mortgages ADV, plus r8fin/Yieldbroker contributions; rates revenue +25.3% YoY .
  • Credit momentum: record fully electronic U.S. high-yield TRACE share (7.9%); U.S. credit ADV +23.7% YoY; European credit ADV +11.6% YoY .
  • ICD integration fueling money markets: money markets revenue +166.5% YoY; money markets ADV +82.5% YoY .
  • Management tone: “2024 was a banner year… strong fourth quarter, driven in part by a favorable market environment” — CEO Billy Hult .
  • Treasury leadership: institutional U.S. Treasuries market share >50% vs main competitor for third consecutive quarter; wholesale streaming and sessions growing .
  • Swaps strength: global swaps revenue +37% YoY; core risk market share set a record; expanding across G‑11 and EM currencies .

What Went Wrong

  • Average variable fees per million trended down in several categories (e.g., cash credit −12% YoY; total −10.4%) reflecting mix and plan changes, pressuring pricing yield .
  • Adjusted expenses +24.8% YoY as TW accelerated investments (tech/data, marketing, consulting), tempering margin expansion in-quarter (52.8% vs 53.0% LY) .
  • Overall swaps market share dipped to 20.8% due to lower European client-related compression volumes (lower fee rate business), despite core risk share records .
  • Retail credit revenues down 11% YoY on tough muni tax-loss comp from Q4’23 .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$404.951 $448.915 $463.344
Diluted EPS ($)$0.55 $0.53 $0.66
Adjusted Diluted EPS ($)$0.70 $0.75 $0.76
Net Income Margin (%)33.7% 29.0% 34.5%
Adjusted EBITDA Margin (%)53.5% 53.4% 52.8%

Segment revenues ($USD thousands):

SegmentQ2 2024Q3 2024Q4 2024
Rates$217,531 $233,122 $240,192
Credit$111,324 $118,305 $113,572
Equities$22,871 $25,514 $28,749
Money Markets$18,045 $36,126 $44,258
Market Data$29,227 $29,760 $30,011
Other$5,953 $6,088 $6,562

KPIs:

KPIQ2 2024Q3 2024Q4 2024
Total ADV ($USD Trillions)$1.922 $2.212 $2.292
U.S. Gov’t Bonds ADV ($USD Billions)$202.460 $221.864 $224.928
Fully Electronic U.S. IG TRACE Share (%)18.8% 17.7% 18.3%
Fully Electronic U.S. HY TRACE Share (%)7.6% 7.8% 7.9%
Dividend per Share ($)$0.10 $0.10 $0.12

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted Expenses ($M)FY 2025N/A$970–$1,030 New
Acquisition & Refinitiv D&A ($M)FY 2025N/A$176 New
Assumed Non-GAAP Tax Rate (%)FY 2025N/A~24.5–25.5 New
Cash CapEx + Capitalized Software ($M)FY 2025N/A~$99–109 New
LSEG Market Data Revenue ($M)FY 2025~$90 ~$90 (maintained) Maintained

Additional capital management signals: $1.3B cash & equivalents; FY 2024 free cash flow $808.9M; $0.12 dividend declared (payable Mar 17, 2025) .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
Digital assets/tokenizationMinority investment in Securitize; Alphaledger agreement; joined Canton Network (Q2) First strategic partner for Goldman Sachs GS DAP; focus on smart contracts/tokenization; partnerships expanding Accelerating partnerships/experiments
APAC & JapanHead of India appointed; APAC platform scaling (Q3) TSE CONNEQTOR collaboration for Japanese ETFs; 20th anniversary in Japan; JGB and yen swaps growth Expanding regional footprint and volumes
U.S. Treasuries protocolsStream/sessions growth; institutional share gains (Q3) >50% institutional share vs competitor; record streaming; sessions adoption; r8fin contribution Protocol-led gains, share consolidation
Credit protocols (RFQ/PT/Sessions)Record U.S. IG share (18.8%) (Q2); IG/HY share gains (Q3) Second-highest U.S. IG share; record HY share; RFQ Edge roll-out; portfolio trading ADVs up Continued share gains; product innovation
Money markets (ICD)ICD acquisition announced (Q2); closed (Q3) Strong retention (99%), client growth (13%); cross-sell ramp, treasuries on ICD mid-2025 Integration momentum and cross-sell pipeline
Expenses flexibilityN/A50% of cost base variable/discretionary; ability to pivot to sustain operating leverage Confidence in positive operating leverage
RegulatoryN/ASEC SBSEF approval (Jan 2025) Platform capabilities broadened

Management Commentary

  • “2024 was a banner year for Tradeweb… The year culminated with a strong fourth quarter, driven in part by a favorable market environment that created additional tailwinds for our global business.” — Billy Hult, CEO .
  • “Our rates business produced a record revenue quarter… Credit was led by strength in U.S. and European corporate bonds… Money markets was led by the addition of ICD… Equities posted double-digit revenue growth.” — Billy Hult (prepared remarks) .
  • “We will continue to invest in the business in 2025… adjusted expenses to range from $970M to $1.03B… we believe we can drive adjusted EBITDA and operating margin expansion compared to 2024.” — Sara Furber, CFO .
  • “Record fourth quarter market share of 25% [U.S. Treasuries] drove revenue growth of 23% year-over-year… Automation continues to be an important theme.” — Billy Hult .

Q&A Highlights

  • Swaps mix shift: Risk-on trading environment and reduced compression activity supported higher long-tenor fee per million and market share in core risk; management remains bullish on swaps growth amid macro uncertainty .
  • Digital assets strategy: Focused on trusted data, smart contracts, tokenization; partnerships with GS DAP, Securitize, Alphaledger, Canton Network to pragmatically remove workflow friction .
  • Expense agility: ~50% variable/discretionary cost base (performance comp, exchange fees, marketing/T&E, hiring cadence) enables operating leverage even if revenue moderates .
  • Treasury protocols: Lower-volatility backdrop favors streaming/sessions; TW leading in emerging protocols while still targeting CLOB share gains .
  • Credit priorities: Laser focus on innovation (PT upgrades, RFQ Edge, AI-driven analytics, dealer inventory access); pricing is not the lead lever—client value and differentiation are .
  • ICD integration: Core metrics strong (99% retention, 13% client growth); treasuries to be offered on ICD mid-2025; international cross-sell underway .

Estimates Context

  • S&P Global Wall Street consensus (revenue/EPS) was unavailable due to SPGI daily request limit at time of analysis; therefore, explicit beat/miss vs estimates cannot be determined.
  • Given in-quarter performance and FY 2025 guidance (maintained ~$90M LSEG data revenue; adjusted expenses growth to support initiatives), sell-side models may adjust upward for money markets, rates volumes, and occupancy/capex timing; watch for mix-driven fee-per-million assumptions (cash credit −12% YoY in Q4) .

Key Takeaways for Investors

  • Revenues and EPS accelerated in Q4 with strong margin profile (Net income margin 34.5%; adjusted EBITDA margin 52.8%); momentum is broad across asset classes .
  • ICD integration is materially accretive to money markets revenue and sets up 2025 cross-sell (treasuries on ICD platform mid-year) and corporate treasury wallet expansion .
  • Credit leadership deepening via RFQ Edge, portfolio trading, sessions; record U.S. HY electronic share (7.9%) and resilient U.S. IG share (18.3%) underpin 2025 share capture potential .
  • U.S. Treasuries share gains (>50% institutional vs competitor) and wholesale protocol adoption (streaming/sessions) are durable catalysts in low-volatility regimes .
  • Swaps core risk share at record and revenue +37% YoY despite overall share impact from lower compression volumes; SEC SBSEF approval broadens opportunity set .
  • Investment cadence rising (tech/data, consultants, occupancy) but management expects operating margin expansion in 2025, supported by variable cost base and scale .
  • Dividend raised 20% to $0.12 reflecting confidence in FCF ($808.9M FY’24); ongoing buybacks add capital return optionality .
Notes:
- Where estimates comparisons are absent, S&P Global consensus was unavailable at query time due to request limits.