Results

Tradeweb Markets Inc.

10/28/2021 | Press release | Distributed by Public on 10/28/2021 05:02

Investor Relations - Form 8-K

Investor Relations
Ashley Serrao + 1 646 430 6027
Media Relations
Daniel Noonan + 1 646 767 4677
TRADEWEB REPORTS THIRD QUARTER 2021 FINANCIAL RESULTS
New York, October 28, 2021 - Tradeweb Markets Inc. (Nasdaq: TW), a leading, global operator of electronic marketplaces for rates, credit, equities and money markets, today reported financial results for the quarter ended September 30, 2021.
$265.3 million quarterly revenues increased 24.6% (23.9% on a constant currency basis) compared to prior year period
$964.5 billion average daily volume ("ADV") for the quarter, an increase of 23.6% compared to prior year period, with record ADV in U.S. government bonds. In U.S. credit, Tradeweb set new records for its share of fully electronic TRACE volume: High Grade was 12.6%, up from 7.7% in the prior year period, and High Yield was 6.2%, up from 2.5% in the prior year period
$65.3 million net income and $94.2 million adjusted net income for the quarter, increases of 38.8%, and 34.6% respectively from prior year period
50.1% adjusted EBITDA margin or $132.9 million adjusted EBITDA for the quarter, compared to 47.4% or $100.9 million respectively for prior year period
$0.26 diluted earnings per share ("Diluted EPS") for the quarter and $0.39 adjusted diluted earnings per share
$0.08 per share quarterly cash dividend declared; $12.0 million of shares repurchased
Lee Olesky, CEO of Tradeweb Markets:
"Tradeweb's strong momentum from the first half of the year continued through the third quarter of 2021, producing our second-best revenue quarter ever. Growth in trading volume was broad-based across our markets, with U.S. Credit, global swaps and U.S. Treasuries leading the way. We were delighted to welcome Sara Furber as our new CFO, helping us navigate Tradeweb's next phase of growth and development. Finally, we published our inaugural Corporate Sustainability Report to increase transparency for our strong foundation in ESG."
SELECT FINANCIAL
RESULTS
3Q21 3Q20 Change
Constant
Currency
Growth (1)
ADV (US $bn)
(Unaudited)
(dollars in thousands except per share amounts)(Unaudited) Asset Class Product 3Q21 3Q20 YoY
GAAP Financial Measures Rates Cash $ 337 $ 311 8.4 %
Total revenue $ 265,325 $ 212,870 24.6 % 23.9 % Derivatives 247 179 37.9 %
Rates $ 139,418 $ 115,766 20.4 % 19.7 % Total 584 490 19.2 %
Credit $ 72,243 $ 50,216 43.9 % 43.2 % Credit Cash 8 7 20.0 %
Equities $ 16,457 $ 11,857 38.8 % 37.7 % Derivatives 14 13 10.3 %
Money Markets $ 11,221 $ 10,491 7.0 % 6.4 % Total 22 20 13.8 %
Market Data $ 20,515 $ 18,598 10.3 % 9.2 % Equities Cash 8 5 38.8 %
Other $ 5,471 $ 5,942 (7.9) % (7.9) % Derivatives 7 4 92.9 %
Net income $ 65,305 $ 47,048 38.8 % Total 15 9 60.4 %
Net Income attributable to Tradeweb Markets Inc. (2)
$ 54,763 $ 36,812 48.8 % Money Markets Cash 344 262 31.3 %
Total 344 262 31.3 %
Diluted EPS $ 0.26 $ 0.19 36.8 % Total $ 964 $ 780 23.6 %
Non-GAAP Financial Measures
Adjusted EBITDA (1)
$ 132,946 $ 100,913 31.7 % 30.0 %
(1) Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT, Adjusted EBIT margin, Adjusted Net Income, Adjusted Diluted EPS and constant currency growth are non-GAAP financial measures. See "Non-GAAP Financial Measures" below and the attached schedules for additional information and reconciliations of such non-GAAP financial measures.

(2) Represents net income less net income attributable to non-controlling interests.

Adjusted EBITDA margin (1)
50.1 % 47.4 % +270 bps +234 bps
Adjusted EBIT (1)
$ 121,079 $ 90,015 34.5 % 32.6 %
Adjusted EBIT margin (1)
45.6 % 42.3 % +335 bps +298 bps
Adjusted Net Income (1)
$ 94,160 $ 69,939 34.6 % 32.7 %
Adjusted Diluted EPS (1)
$ 0.39 $ 0.30 30.0 % 30.0 %



DISCUSSION OF RESULTS
Rates - Revenues of $139.4 million in the third quarter of 2021 increased 20.4% compared to prior year period (19.7% on a constant currency basis). Rates ADV was up 19.2% with record trading activity in U.S. Treasuries and strong year-over-year volume growth in European government bonds and swaps/swaptions.

Credit - Revenues of $72.2 million in the third quarter of 2021 increased 43.9% compared to prior year period (43.2% on a constant currency basis). Credit ADV was up 13.8% with year-over-year increases in U.S. and European credit trading. In U.S. credit, Tradeweb set new records for its share of fully electronic TRACE volume: High Grade was 12.6%, up from 7.7% in the prior year period and High Yield was 6.2%, up from 2.5% over prior year period.

Equities - Revenues of $16.5 million in the third quarter of 2021 increased 38.8% compared to prior year period (37.7% on a constant currency basis). Equities ADV was up 60.4% with robust year-over-year volume growth in U.S. and European ETFs.

Money Markets - Revenues of $11.2 million in the third quarter of 2021 increased 7.0% compared to prior year period (6.4% on a constant currency basis). Money Markets ADV was up 31.3% led by a strong year-over-year volume growth in Global Repo trading.

Market Data - Revenues of $20.5 million in the third quarter of 2021 increased 10.3% compared to prior year period (9.2% on a constant currency basis). The increase was derived from increased third party market data fees, Refinitiv market data fees, and revenue from our APA reporting service.

Other - Revenues of $5.5 million in the third quarter of 2021 decreased 7.9% compared to prior year period (7.9% decrease on a constant currency basis).

Operating Expenses - Operating expenses of $179.8 million in the third quarter of 2021 increased 16.5% compared to $154.3 million in the prior year period due to: higher employee compensation and benefits associated with higher headcount to support growth and higher performance-related compensation; higher depreciation and amortization expense; higher technology and communications expenses primarily due to investments in our data strategy and cybersecurity and clearance and data fees driven by higher trading volumes; and higher general and administrative expenses as we gradually recover from the pandemic, which were partially offset by lower foreign exchange losses. Adjusted Expenses of $144.2 million increased 17.4% (17.5% on a constant currency basis) compared to the prior year period due to: higher employee compensation and benefits associated with higher headcount to support growth and higher performance-related compensation; higher technology and communications expenses; higher general and administrative expenses; and higher professional fees. Please see "Non-GAAP Financial Measures" below for additional information.
RECENT HIGHLIGHTS
Third Quarter 2021
•Appointed Sara Furber as Chief Financial Officer
•Published Tradeweb's inaugural Corporate Sustainability Report
•Completed first Southbound Bond Connect transactions via the trading link between Tradeweb and China Foreign Exchange Trade System (CFETS), allowing mainland China onshore institutions to invest in Hong Kong's fixed income markets
•Appointed Devi Shanmugham as Global Head of Compliance
•Recognized in numerous awards including: Best Workplaces for Innovators (Fast Company); OTC Trading Venue of the Year (GlobalCapital); OTC Trading Platform of the Year (Asia Risk); Buy-Side Trading System of the Year (Asia Risk); Excellence in Trading Platforms - Jennifer Keser (Markets Media), Rising Star - Santa Dudica (Markets Media)

October 2021
•Introduced Trade at Close functionality for electronic portfolio trading, allowing U.S. and European clients to electronically execute portfolio trades at end-of-day prices
•Named to list of Best ESG Companies of 2021 by Investor's Business Daily, ranking 36 among top 100 stocks

CAPITAL MANAGEMENT

•$821.9 million in cash and cash equivalents and an undrawn $500 million credit facility at September 30, 2021
•Non-acquisition related capital expenditures and capitalization of software development in third quarter 2021: $10.0 million
•Free cash flow for the trailing twelve months ended September 30, 2021 of $477.4 million, up 25.6% year over year. See "Non-GAAP Financial Measures" for additional information
•During the third quarter of 2021, as part of its Share Repurchase Program, Tradeweb purchased 140,169 shares of Class A common stock, at an average price of $85.61, for purchases totaling $12.0 million. During the nine months ended September 30, 2021, we purchased a total of 757,813 shares of Class A common stock, at an average price of $84.03, for purchases totaling $63.7 million. As of September 30, 2021, a total of $86.3 million remained available for repurchase pursuant to the Share Repurchase Program
•$3.1 million in shares were withheld in the third quarter of 2021 to satisfy tax obligations related to the exercise of stock options. During the nine months ended September 30, 2021, a total of $56.6 million in shares were withheld for this purpose
•The Board of Directors of Tradeweb Markets Inc. declared a quarterly cash dividend of $0.08 per share of Class A common stock and Class B common stock. The dividend will be payable on December 15, 2021 to stockholders of record as of December 1, 2021

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OTHER MATTERS
Full-Year 2021 Guidance*
Full-Year 2021 guidance is unchanged from prior quarter.
•Adjusted Expenses: $565 - $580 million
•Acquisition and Refinitiv Transaction related depreciation and amortization expense: $124 million
•Assumed non-GAAP tax rate: 22.0%
•Capital expenditures and capitalization of software development: $49 - $53 million

*GAAP operating expenses and tax rate guidance are not provided due to the inherent difficulty in quantifying certain amounts due to a variety of factors including the unpredictability in the movement of foreign currency rates.
CONFERENCE CALL
Tradeweb Markets will hold a conference call to discuss third quarter 2021 results starting at 9:30 AM EDT today, October 28, 2021. A live, audio webcast of the conference call along with related materials will be available at http://investors.tradeweb.com. Alternatively, interested parties can access the call by dialing 866-221-1629 (U.S.) or +1 470-495-9175 (international) and entering conference ID 9727576. After the conference call, an archived recording will be available at http://investors.tradeweb.com.
ABOUT TRADEWEB MARKETS
Tradeweb Markets Inc. (Nasdaq: TW) is a leading, global operator of electronic marketplaces for rates, credit, equities and money markets. Founded in 1996, Tradeweb provides access to markets, data and analytics, electronic trading, straight-through-processing and reporting for more than 40 products to clients in the institutional, wholesale and retail markets. Advanced technologies developed by Tradeweb enhance price discovery, order execution and trade workflows while allowing for greater scale and helping to reduce risks in client trading operations. Tradeweb serves approximately 2,500 clients in more than 65 countries. On average, Tradeweb facilitated more than $970 billion in notional value traded per day over the past four fiscal quarters. For more information, please go to www.tradeweb.com.
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TRADEWEB MARKETS INC.
INCOME STATEMENT
Dollars in Thousands, Except Per Share Data
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Revenues (unaudited) (unaudited) (unaudited) (unaudited)
Transaction fees and commissions $ 206,316 $ 160,175 $ 629,513 $ 503,753
Subscription fees 41,390 36,217 117,141 105,706
Refinitiv market data fees 15,002 14,273 45,045 43,466
Other 2,617 2,205 7,865 6,658
Total revenue 265,325 212,870 799,564 659,583
Expenses
Employee compensation and benefits 98,036 83,967 300,107 263,353
Depreciation and amortization 44,823 38,857 127,656 113,952
Technology and communications 14,747 12,037 42,248 34,397
General and administrative 9,561 8,657 21,809 24,520
Professional fees 8,897 7,388 28,993 20,908
Occupancy 3,733 3,443 11,104 10,678
Total expenses 179,797 154,349 531,917 467,808
Operating income 85,528 58,521 267,647 191,775
Net interest income (expense) (361) (349) (1,179) 64
Income before taxes 85,167 58,172 266,468 191,839
Provision for income taxes (19,862) (11,124) (53,365) (39,898)
Net income 65,305 47,048 213,103 151,941
Less: Net income attributable to non-controlling interests 10,542 10,236 35,165 40,705
Net income attributable to Tradeweb Markets Inc. $ 54,763 $ 36,812 $ 177,938 $ 111,236
Earnings per share attributable to Tradeweb Markets Inc. Class A and B common stockholders:
Basic $ 0.27 $ 0.20 $ 0.89 $ 0.63
Diluted $ 0.26 $ 0.19 $ 0.86 $ 0.60
Weighted average shares outstanding:
Basic 202,238,122 187,774,170 201,029,196 177,257,994
Diluted 208,197,439 194,955,695 206,908,330 185,026,108

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TRADEWEB MARKETS INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED)
Dollars in Thousands, Except per Share Data
Reconciliation of Net Income to Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EBIT and Adjusted EBIT Margin Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
(dollars in thousands)
Net income
$ 65,305 $ 47,048 $ 213,103 $ 151,941
Acquisition transaction costs (1)
459 - 5,186 -
Net interest (income) expense
361 349 1,179 (64)
Depreciation and amortization
44,823 38,857 127,656 113,952
Stock-based compensation expense (2)
1,995 1,816 11,181 10,308
Provision for income taxes
19,862 11,124 53,365 39,898
Foreign exchange (gains) / losses (3)
141 1,719 (4,742) 5,837
Tax receivable agreement liability adjustment (4)
- - - -
Adjusted EBITDA
$ 132,946 $ 100,913 $ 406,928 $ 321,872
Less: Depreciation and amortization
(44,823) (38,857) (127,656) (113,952)
Add: D&A related to acquisitions and the Refinitiv Transaction (5)
32,956 27,959 92,799 81,363
Adjusted EBIT
$ 121,079 $ 90,015 $ 372,071 $ 289,283
Adjusted EBITDA margin (6)
50.1 % 47.4 % 50.9 % 48.8 %
Adjusted EBIT margin (6)
45.6 % 42.3 % 46.5 % 43.9 %
(1)Represents transaction and other costs related to the NFI Acquisition, which closed in June 2021. Acquisition-related costs primarily include legal, consulting and advisory fees and severance costs incurred that relate to the acquisition transaction.
(2)Represents non-cash stock-based compensation expense associated with the Special Option Award and post-IPO options awarded in 2019 and payroll taxes associated with exercises of such options during the applicable period. Beginning on August 30, 2021 and during the three and nine months ended September 30, 2021, this adjustment also includes a total of $0.5 million of non-cash stock-based compensation expense relating to the acceleration of expense associated with the Company's former CFO and related payroll taxes.
(3)Represents unrealized gain or loss recognized on foreign currency forward contracts and foreign exchange gain or loss from the revaluation of cash denominated in a different currency than the entity's functional currency.
(4)Represents income recognized during the applicable period due to changes in the tax receivable agreement liability recorded in the statement of financial condition as a result of changes in the mix of earnings, tax legislation and tax rates in various jurisdictions which impacted our tax savings.
(5)Represents intangible asset and acquired software amortization resulting from the NFI Acquisition and intangible asset amortization and increased tangible asset and capitalized software depreciation and amortization resulting from the application of pushdown accounting to the Refinitiv Transaction (where all assets were marked to fair value as of the closing date of the Refinitiv Transaction).
(6)Adjusted EBITDA margin and Adjusted EBIT margin are defined as Adjusted EBITDA and Adjusted EBIT, respectively, divided by revenue for the applicable period.
Reconciliation of Net Income to Adjusted Net Income and Adjusted Diluted EPS Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
(in thousands, except per share amounts)
Earnings per diluted share
$ 0.26 $ 0.19 $ 0.86 $ 0.60
-
Net income attributable to Tradeweb Markets Inc.
$ 54,763 $ 36,812 $ 177,938 $ 111,236
Net income attributable to non-controlling interests (1)
10,542 10,236 35,165 40,705
Net income
65,305 47,048 213,103 151,941
Provision for income taxes
19,862 11,124 53,365 39,898
Acquisition transaction costs (2)
459 - 5,186 -
D&A related to acquisitions and the Refinitiv Transaction (3)
32,956 27,959 92,799 81,363
Stock-based compensation expense (4)
1,995 1,816 11,181 10,308
Foreign exchange (gains) / losses (5)
141 1,719 (4,742) 5,837
Tax receivable agreement liability adjustment (6)
- - - -
Adjusted Net Income before income taxes
120,718 89,666 370,892 289,347
Adjusted income taxes (7)
(26,558) (19,727) (81,596) (63,656)
Adjusted Net Income
$ 94,160 $ 69,939 $ 289,296 $ 225,691
Adjusted Diluted EPS (8)
$ 0.39 $ 0.30 $ 1.22 $ 0.97
(1)Represents the reallocation of net income attributable to non-controlling interests from the assumed exchange of all outstanding LLC Interests held by non-controlling interests for shares of Class A or Class B common stock.
(2)Represents transaction and other costs related to the NFI Acquisition, which closed in June 2021. Acquisition-related costs primarily include legal, consulting and advisory fees and severance costs incurred that relate to the acquisition transaction.
(3)Represents intangible asset and acquired software amortization resulting from the NFI Acquisition and intangible asset amortization and increased tangible asset and capitalized software depreciation and amortization resulting from the application of pushdown accounting to the Refinitiv Transaction (where all assets were marked to fair value as of the closing date of the Refinitiv Transaction).
(4)Represents non-cash stock-based compensation expense associated with the Special Option Award and post-IPO options awarded in 2019 and payroll taxes associated with exercises of such options during the applicable period. Beginning on August 30, 2021 and during the three and nine months ended September 30, 2021, this adjustment also includes a total of $0.5 million of non-cash stock-based compensation expense relating to the acceleration of expense associated with the Company's former CFO and related payroll taxes.
(5)Represents unrealized gain or loss recognized on foreign currency forward contracts and foreign exchange gain or loss from the revaluation of cash denominated in a different currency than the entity's functional currency.
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(6)Represents income recognized during the applicable period due to changes in the tax receivable agreement liability recorded in the statement of financial condition as a result of changes in the mix of earnings, tax legislation and tax rates in various jurisdictions which impacted our tax savings.
(7)Represents corporate income taxes at an assumed effective tax rate of 22% applied to Adjusted Net Income before income taxes for each of the three and nine months ended September 30, 2021 and 2020.
(8)For a summary of the calculation of Adjusted Diluted EPS, see "Reconciliation of Diluted Weighted Average Shares Outstanding to Adjusted Diluted Weighted Average Shares Outstanding" below.

The following table summarizes the calculation of Adjusted Diluted EPS for the periods presented:
Reconciliation of Diluted Weighted Average Shares Outstanding to Adjusted Diluted Weighted Average Shares Outstanding Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Diluted weighted average shares of Class A and Class B common stock outstanding
208,197,439 194,955,695 206,908,330 185,026,108
Assumed exchange of LLC Interests for shares of Class A or Class B common stock (1)
30,531,933 39,513,246 30,756,925 48,397,598
Adjusted diluted weighted average shares outstanding
238,729,372 234,468,941 237,665,255 233,423,706
Adjusted Net Income (in thousands)
$ 94,160 $ 69,939 $ 289,296 $ 225,691
Adjusted Diluted EPS
$ 0.39 $ 0.30 $ 1.22 $ 0.97
(1)Assumes the full exchange of the weighted average of all outstanding LLC Interests held by non-controlling interests for shares of Class A or Class B common stock, resulting in the elimination of the non-controlling interests and recognition of the net income attributable to non-controlling interests.

Reconciliation of Operating Expenses to Adjusted Expenses Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
(in thousands)
Operating expenses
$ 179,797 $ 154,349 $ 531,917 $ 467,808
Acquisition transaction costs (1)
(459) - (5,186) -
D&A related to acquisitions and the Refinitiv Transaction (2)
(32,956) (27,959) (92,799) (81,363)
Stock-based compensation expense (3)
(1,995) (1,816) (11,181) (10,308)
Foreign exchange gains / (losses) (4)
(141) (1,719) 4,742 (5,837)
Adjusted Expenses
$ 144,246 $ 122,855 $ 427,493 $ 370,300

(1)Represents transaction and other costs related to the NFI Acquisition, which closed in June 2021. Acquisition-related costs primarily include legal, consulting and advisory fees and severance costs incurred that relate to the acquisition transaction.
(2)Represents intangible asset and acquired software amortization resulting from the NFI Acquisition and intangible asset amortization and increased tangible asset and capitalized software depreciation and amortization resulting from the application of pushdown accounting to the Refinitiv Transaction (where all assets were marked to fair value as of the closing date of the Refinitiv Transaction).
(3)Represents non-cash stock-based compensation expense associated with the Special Option Award and post-IPO options awarded in 2019 and payroll taxes associated with exercises of such options during the applicable period. Beginning on August 30, 2021 and during the three and nine months ended September 30, 2021, this adjustment also includes a total of $0.5 million of non-cash stock-based compensation expense relating to the acceleration of expense associated with the Company's former CFO and related payroll taxes.
(4)Represents unrealized gain or loss recognized on foreign currency forward contracts and foreign exchange gain or loss from the revaluation of cash denominated in a different currency than the entity's functional currency.

Reconciliation of Cash Flows from Operating Activities to Free Cash Flow
Trailing Twelve Months Ended
September 30, 2021
(in thousands)
Cash flow from operating activities $ 526,072
Less: Capitalization of software development costs (33,995)
Less: Purchases of furniture, equipment and leasehold improvements (14,720)
Free Cash Flow $ 477,357

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TRADEWEB MARKETS INC.
BASIC AND DILUTED EPS CALCULATIONS (UNAUDITED)
Dollars in Thousands, Except per Share Data

The following table summarizes the basic and diluted earnings per share calculations for Tradeweb Markets Inc.:

EPS: Net income attributable to Tradeweb Markets Inc. Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
(in thousands, except share and per share amounts)
Numerator:
Net income attributable to Tradeweb Markets Inc. $ 54,763 $ 36,812 $ 177,938 $ 111,236
Denominator:
Weighted average shares of Class A and Class B common stock outstanding - Basic 202,238,122 187,774,170 201,029,196 177,257,994
Dilutive effect of equity-settled PRSUs 2,146,473 2,584,192 2,000,005 2,371,727
Dilutive effect of options 3,516,893 4,402,391 3,609,906 5,264,106
Dilutive effect of RSUs 295,951 194,942 269,223 132,281
Weighted average shares of Class A and Class B common stock outstanding - Diluted 208,197,439 194,955,695 206,908,330 185,026,108
Earnings per share - Basic $ 0.27 $ 0.20 $ 0.89 $ 0.63
Earnings per share - Diluted $ 0.26 $ 0.19 $ 0.86 $ 0.60

TRADEWEB MARKETS INC.
GROSS REVENUES BY ASSET CLASS (UNAUDITED)

Three Months Ended Three Months Ended
September 30, 2021 September 30, 2020 $ Change % Change
Revenues Variable Fixed Variable Fixed Variable Fixed Variable Fixed
(dollars in thousands)
Rates $ 80,888 $ 58,530 $ 64,139 $ 51,627 $ 16,749 $ 6,903 26.1 % 13.4 %
Credit 65,742 6,501 44,278 5,938 21,464 563 48.5 % 9.5 %
Equities 14,235 2,222 9,329 2,528 4,906 (306) 52.6 % (12.1) %
Money Markets 7,198 4,023 6,390 4,101 808 (78) 12.6 % (1.9) %
Market Data - 20,515 - 18,598 - 1,917 - 10.3 %
Other - 5,471 - 5,942 - (471) - (7.9) %
Total revenue $ 168,063 $ 97,262 $ 124,136 $ 88,734 $ 43,927 $ 8,528 35.4 % 9.6 %

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TRADEWEB MARKETS INC.
AVERAGE VARIABLE FEES PER MILLION DOLLARS OF VOLUME (UNAUDITED)

Three Months Ended September 30, YoY
2021 2020 % Change
Rates $ 2.15 $ 2.03 5.8 %
Cash Rates $ 1.95 $ 1.83 6.5 %
Rates Derivatives $ 2.42 $ 2.37 1.9 %
Swaps / Swaptions Tenor (greater than 1 year)
$ 3.73 $ 3.37 10.9 %
Other Rates Derivatives (1)
$ 0.20 $ 0.25 (18.4) %
Credit $ 45.67 $ 34.89 30.9 %
Cash Credit (2)
$ 144.48 $ 127.70 13.1 %
Credit Derivatives and U.S. Cash "EP" $ 6.16 $ 6.02 2.4 %
Equities $ 15.20 $ 15.95 (4.7) %
Cash Equities $ 24.37 $ 20.25 20.3 %
Equity Derivatives $ 5.23 $ 9.46 (44.7) %
Money Markets (Cash) $ 0.33 $ 0.38 (14.3) %
Total Fees per Million $ 2.70 $ 2.47 9.5 %
Total Fees per Million excluding Other Rates Derivatives (3)
$ 2.97 $ 2.65 12.2 %

(1)Includes Swaps/Swaptions of tenor less than 1 year and Rates Futures.
(2)The "cash credit" category represents the "credit" asset class excluding (1) credit derivatives and (2) U.S. High Grade and High Yield electronically processed ("EP") activity.
(3)Included to contextualize the impact of short-tenored Swaps/Swaptions and Rates Futures on totals for all periods presented.

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TRADEWEB MARKETS INC.
AVERAGE DAILY VOLUME (UNAUDITED)

2021 Q3 2020 Q3 YoY
Asset Class Product ADV (USD mm) Volume (USD mm) ADV (USD mm) Volume (USD mm) ADV
Rates Cash $ 337,167 $ 21,632,199 $ 311,033 $ 19,951,302 8.40 %
U.S. Government Bonds 124,578 7,972,973 86,956 5,565,202 43.26 %
European Government Bonds 28,800 1,900,795 24,317 1,604,918 18.44 %
Mortgages 180,033 11,522,093 195,986 12,543,075 (8.14) %
Other Government Bonds 3,757 236,337 3,774 238,107 (0.46) %
Derivatives 246,981 15,992,323 179,054 11,612,291 37.94 %
Swaps/Swaptions ≥ 1Y 154,970 10,039,311 122,341 7,919,286 26.67 %
Swaps/Swaptions < 1Y 91,240 5,903,695 56,317 3,667,678 62.01 %
Futures 770 49,317 396 25,327 94.69 %
Total 584,148 37,624,522 490,087 31,563,593 19.19 %
Credit Cash 8,440 543,735 7,036 455,496 19.95 %
U.S. High Grade 4,371 279,755 3,821 244,569 14.39 %
U.S. High Yield 836 53,502 406 25,978 105.95 %
European Credit 1,707 112,653 1,270 83,831 34.38 %
Municipal Bonds 173 11,056 201 12,851 (13.96) %
Chinese Bonds 1,233 78,893 1,277 84,292 (3.48) %
Other Credit Bonds 121 7,876 61 3,975 98.33 %
Derivatives 13,796 895,891 12,507 813,562 10.31 %
Swaps 13,796 895,891 12,507 813,562 10.31 %
Total 22,237 1,439,626 19,543 1,269,058 13.78 %
Equities Cash 7,551 487,509 5,442 351,468 38.75 %
U.S. ETFs 5,421 346,951 3,849 246,367 40.83 %
Europe ETFs 2,130 140,558 1,592 105,101 33.74 %
Derivatives 6,992 449,243 3,624 233,482 92.93 %
Options/Convertibles/Swaps 3,559 229,356 1,188 77,469 199.49 %
Futures 3,433 219,886 2,436 156,014 40.94 %
Total 14,543 936,752 9,066 584,950 60.41 %
Money Markets Cash 343,536 22,138,406 261,590 16,847,205 31.33 %
Repurchase Agreements (Repo) 329,374 21,231,648 250,039 16,106,552 31.73 %
Other Money Markets 14,162 906,758 11,551 740,653 22.60 %
Total 343,536 22,138,406 261,590 16,847,205 31.33 %
ADV (USD mm) Volume (USD mm) ADV (USD mm) Volume (USD mm) YoY
Total $ 964,464 $ 62,139,306 $ 780,286 $ 50,264,805 23.60 %

To access historical traded volumes, go to https://www.tradeweb.com/newsroom/monthly-activity-reports/.
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FORWARD-LOOKING STATEMENTS
This release contains forward-looking statements within the meaning of the federal securities laws. Statements related to, among other things, our guidance, including full-year 2021 guidance, and future performance, the industry and markets in which we operate, our expectations, beliefs, plans, strategies, objectives, prospects and assumptions and future events are forward-looking statements. In addition, statements herein relating to the COVID-19 pandemic, the potential impacts of which remain inherently uncertain, are forward-looking statements.
We have based these forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. These and other important factors, including those discussed under the heading "Risk Factors" in documents of Tradeweb Markets Inc. on file with or furnished to the SEC, may cause our actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements. Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements contained in this release are not guarantees of future performance and our actual results of operations, financial condition or liquidity, and the development of the industry and markets in which we operate, may differ materially from the forward-looking statements contained in this release. In addition, even if our results of operations, financial condition, or liquidity, and events in the industry and markets in which we operate, are consistent with the forward-looking statements contained in this release, they may not be predictive of results or developments in future periods. Any forward-looking statement that we make in this release speaks only as of the date of such statement. Except as required by law, we do not undertake any obligation to update or revise, or to publicly announce any update or revision to, any of the forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this release.
BASIS OF PRESENTATION
Tradeweb Markets Inc. (unless the context otherwise requires, together with its subsidiaries, referred to as "we," "our," "Tradeweb," "Tradeweb Markets" or the "Company") closed its IPO on April 8, 2019. As a result of certain reorganization transactions (the "Reorganization Transactions") completed in connection with the IPO, on April 4, 2019, Tradeweb Markets Inc. became a holding company whose only material assets consist of its equity interest in Tradeweb Markets LLC ("TWM LLC") and related deferred tax assets. As the sole manager of TWM LLC, Tradeweb Markets Inc. operates and controls all of the business and affairs of TWM LLC and, through TWM LLC and its subsidiaries, conducts its business. As a result of this control, and because Tradeweb Markets Inc. has a substantial financial interest in TWM LLC, Tradeweb Markets Inc. consolidates the financial results of TWM LLC and its subsidiaries.

Please refer to the Company's previously filed Quarterly Reports on Form 10-Q and Annual Report on Form 10-K for capitalized terms not otherwise defined herein.
TRADEWEB SOCIAL MEDIA
Investors and others should note that Tradeweb Markets announces material financial and operational information using its investor relations website, press releases, SEC filings and public conference calls and webcasts. Information about Tradeweb Markets, its business and its results of operations may also be announced by posts on the Company's accounts on the following social media channels: Instagram, LinkedIn and Twitter. The information that we post through these social media channels may be deemed material. As a result, we encourage investors, the media, and others interested in Tradeweb Markets to monitor these social media channels in addition to following our press releases, SEC filings and public conference calls and webcasts. These social media channels may be updated from time to time on our investor relations website.

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NON-GAAP FINANCIAL MEASURES
This release contains "non-GAAP financial measures," including Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT, Adjusted EBIT margin, Adjusted Net Income, Adjusted Diluted EPS, Adjusted Expenses and Free Cash Flow, which are supplemental financial measures that are not calculated or presented in accordance with GAAP. We make use of non-GAAP financial measures in evaluating our past results and future prospects. We present these non-GAAP financial measures because we believe they assist investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance.

Management and our board of directors use Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT and Adjusted EBIT margin to assess our financial performance and believe they are helpful in highlighting trends in our core operating performance, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate and capital investments. Further, our executive incentive compensation is based in part on components of Adjusted EBITDA.

We use Adjusted Net Income and Adjusted Diluted EPS as supplemental metrics to evaluate our business performance in a way that also considers our ability to generate profit without the impact of certain items. Each of the normal recurring adjustments and other adjustments included in Adjusted Net Income and Adjusted Diluted EPS help to provide management with a measure of our operating performance over time by removing items that are not related to day-to-day operations or are non-cash expenses.

We use Adjusted Expenses as a supplemental metric to evaluate our underlying operating performance over time by removing items that are not related to day-to-day operations or are non-cash expenses.

We use Free Cash Flow to assess our liquidity in a way that considers the amount of cash generated from our core operations after non-acquisition related expenditures for capitalized software development costs and furniture, equipment and leasehold improvements.

See the attached schedules for reconciliations of the non-GAAP financial measures contained in this release to their most comparable GAAP financial measure. Non-GAAP financial measures have limitations as analytical tools, and you should not consider these non-GAAP financial measures in isolation or as alternatives to net income attributable to Tradeweb Markets Inc., net income, earnings per share, operating income, operating expenses or cash flow from operating activities or any other financial measure derived in accordance with GAAP. You are encouraged to evaluate each adjustment included in the reconciliations. In addition, in evaluating Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT, Adjusted EBIT margin, Adjusted Net Income, Adjusted Diluted EPS, Adjusted Expenses and Free Cash Flow, you should be aware that in the future, we may incur expenses similar to the adjustments in the presentation of these non-GAAP financial measures. Our presentation of non-GAAP financial measures should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. In addition, the non-GAAP financial measures contained in this release may not be comparable to similarly titled measures used by other companies in our industry or across different industries.
We present certain growth information on a "constant currency" basis. Since our consolidated financial statements are presented in U.S. dollars, we must translate non-U.S. dollar revenues and expenses into U.S. dollars. Constant currency growth, which is a non-GAAP financial measure, is defined as growth excluding the effects of foreign currency fluctuations. Constant currency information is calculated by translating the current period and prior period's results using the annual average exchange rates for the prior period. We use constant currency growth as a supplemental metric to evaluate our underlying performance between periods by removing the impact of foreign currency fluctuations. We present certain constant currency growth information because we believe it provides investors and analysts a useful comparison of our results and trends between periods. This information should be considered in addition to, not as a substitute for, results reported in accordance with GAAP, and may not be comparable to similarly titled measures used by other companies.

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