TW - Earnings call transcript Q2 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning. And welcome to Tradeweb Second Quarter 2019 Earnings Conference Call.

As a reminder, today's call is being recorded and will be available by playback. To begin, I'll turn the call over to Head of U.S. Corporate Development and Investor Relations, Ashley Serrao. ahead. go Please

Ashley Serrao

good and Thank morning. you,

strategic Joining me Bob our a Executive the little are Billy Warshaw, a Chief deeper review into opportunities; Chief the Lee for quarter who Olesky, and dive provide for our call will Officer, highlights who our the Financial financial President, who growth today results. will will our update; some and Hult, review Officer,

Relations earnings release, of certain available accompanying presentation of Information results volumes these differ reports like July I'd are statements constitute Investor presentation in statements maturely and that the earnings quarter and from on factors during XXXX. may concerning report to from the and differ contained events our within forward-looking actual the and as second meaning future expectations, portion Reform release this you Actual such, forward-looking website. our the Q&A the may Our results projections. remind of to could Private and that SEC. periodic relate in cause Securities is to with statements Act filed Litigation

XX-Q earnings SEC. Form including and the on posted presentation adjusted basis. will addition, comparable in measures GAAP and on non-GAAP included call, the we website will income, free cash measures in reference certain our reconciliations our filed In measures More most currency to flow, information adjusted earnings on regarding be a adjusted net non-GAAP constant as measures, applicable presented release EBITDA, with be included certain and to today's are including expenses these the

of per $X.XX. reported we morning, GAAP recap, To income net share this

Please historical and the Refinitiv-related adjusted filed an and rate assuming XX.X%, be results. regarding the effective FX per $X.XX. Tradeweb's IPO, information see reported Excluding non-cash stock-based items the expense of earnings compensation for and the presentation additional certain to Form income release of the our we XX-Q acquisition with of share tax SEC and net to D&A, tied

Now over to Lee. let call me turn the

Lee Olesky

Thanks, joining you and morning, all earnings quarter call. Ashley. everyone, for Good thank our second

second new We and market four. drivers trading. growth. to various amidst Slide volatility, multiple In results and quarter a reported set low business to continue our by our records secular Turning the characterized record fuel investments of challenging environment a for volume

record $XXX.X during up XX% on quarter domestically Specifically, a 'XX currency and second basis gross reported of growth and supported XX% strong revenues million basis by were constant year-on-year a internationally. on both

constant margin basis translated This and EBITDA by expanded profitability to basis. currency XXX a points our to improved nearly a XX.X% as adjusted on amount by similar

continue and As to we to be ahead, revenue greater balancing we for on laser-focused growth shareholders. create both look value margin our expansion

Slide five. to Turning

the revenue growth can line with of asset constant on classes all currency double-digit and basis. You growth our recording both see top reported our the of diversity

on XX% also reported Our currency basis. growth nearly data business constant a

very what clients lot work Tradeweb. excited power And do to our for their to we helping by of lies ahead of the network we by We know our workloads. remain have trading improve a increase

Slide to moving Now on six.

Let our update initiatives. of give growth me brief a key you

the second during after XX% interest business year-on-year. quarter record hit a by our swaps growing First, new rate nearly

hold to best by and that overall bit globally. this both by remains think a on Sell of touch runway later. Side a recognized This consecutive fourth will as recently market swap a grow were the electronification We year little Billy facility has the for year GlobalCapital of lot as Technology. the execution we takes

rates. Turning growth to within driver the other

not making book, our U.S. it order RFQ and a sessions, our click-to-trade, on underlying appreciate multi-protocol the estimated some one continue of bet central approach. share to ecosystem, market and of We will when but a share consolidated Treasuries XX.X% Treasury new a XX.X% look gain we're on ago. important U.S. records any in with drivers design. limit volume second, I we to Be from that's at increasing our streams to the hit protocol, cash year within it's by touch or

while allowing the they We're liquidity simultaneously market. ourselves to positioning clients want to as with evolve to choose they trade for search how

to U.S. Our strength. area with AiEX institutional of Treasury grow, cornerstone business growth an continues being

We are encouraged protocols. to provide by market our continue on-the-run in innovate as sector the we client and with momentum electronic of solutions off-the-run the both wholesale and

continues Our to session-based trading protocol resonate.

and record We as opposed impact using as clients also than streams attracted improve order as activity fill hit direct year-over-year a books. quadrupled to limit more for central rates client trading lower to new are market

to Moving on credit.

institutional between to believe Our the working. differentiated that lines the the wholesale continue market, distinction the X the blur. solutions in the of client multifaceted and on spanning providing sectors advances will centered sectors with U.S. and entire to strategy is we retail corporate bond technology, Ultimately,

We build the eventually to have influence ideal vantage to and pool. understand liquidity, deepest invested point the thereby give both Tradeweb of convergence this positioning ourselves to liquidity

electronic with share of During at onboard year-on-year. record reported year-on-year basis grade points quarter, X.X% which X.X%, we share reported XXX the at That's up share clients. second as up continue high in to basis electronic XX.X%, TRACE. XX high-yield new we is points also trending at We've record about

Turning volumes continue industry remain volatility. to equity Broader challenged reduced equities. to given

quarter propel and area main nearly to XX%. adoption of focus trend forward. increased secular business equities block the growth ETFs. institutional with continues ETF is That volumes in increasing Our reported institutional The strong of another by

Bond to celebrated Billy, turn recently I two let of anniversary over the me it touch briefly on Connect. We year Before China.

traded our investors the offshore sell foreign government daily over and We since Today, have way enable long a first to and on billion corporate platform. bonds. becoming platform Chinese to buy come $X is

enhance invest to to transparency. recently dealer prices streaming We free-trade continue and launched

with onshore became We buy-side by developed offshore messaging trading making possible instant it with RFQ. integrate submitting for prior the messenger. tool CFETS, iDeal to platform to That's firms communicate first to also an the dealers

highlight me AiEX, it our are swaps turn that U.S. credit let trading areas automated to that, about: to over With the excited we Billy X market. solution, and

William Hult

Lee. Thanks,

start me automated X, our trading with solution, Slide to let on AiEX. Moving

off said, mouse. a and clicking getting As was the phone a have always I first people between battle

that clients and data away, going smaller mouse about customize through core, XX tools. algorithms more it's than and is auto-execute leverage sophisticated engaging clients to trades. more Now parameters AiEX to At its the empowers

in market-moving frees turn trades. and on more focus to traders value-adding, up This larger

Our network clients pricing end these time saving while stickier and strengthening newer in the as like benchmarks become composite and our and parameters, money of customize market-leading And also up AiPrice compliance. clients endorsement tools credit growth. our

about Today, than our classes is of some You trades key from across can than story of XX XX% institutional story this driven AiEX the are from slide across by XX-plus is more asset growth. clients The see our products. the same. more

for tool and bonds AiEX ETFs. across credit, demand broad-based seeing fully integrated are government We our

our growth with Moving interest in key our other a we to eight, is is regulators for involved rate another global market closely that Slide adjacent large us markets and in constant clients. This mortgages, and given area rate been dialogue U.S. like and network presence have Treasuries swaps.

know, the market of of rate manual until you by of five regulation many swaps changed when Today, As are the fastest-growing swaps the fairly one interest dynamics years ago led market. our was products. and Dodd-Frank first largest

the Looking backdrop favorable. is ahead, we think

a chart, the market are as a continues it's clearing with growth of just to the electronic debt which And XXXX regulatory passage efficiencies U.S. believe trading market the got kick five continued by also clip The brings, measured adoption top after markets. years of continues global [indiscernible] Starting not in and from the Clarus. grow increased healthy the Europe, at the to of We increased Dodd-Frank. the grow of growth global key drivers left

the that for is market to to This in right. lots of especially the chart room illustrates on Moving there on Europe. the top electronify

shown tendency the Given of MiFID markets market levels such that and than to ongoing and a about government optimistic rehire II, here. are the electronification have other trajectory European as the bonds we U.S. credit impact

together, space electronification these and tailwinds various growth, organic be Putting of our market we capitalize increased plenty believe all to white there it of efforts, is regulation, on.

bottom the in results chart. our see can You

the global industry. IRS to outpace volumes Our continue

Looking incubate continue new products features to and our to serve clients. forward, will we

credit to nine. Slide Turning on

As approaching market are credit Lee said, we differently. the

an across innovating our lot, Today, constantly complete serve demand solution integrated across put to from block response experience. wholesale to to for trade are post entire it approach sizes odd are trade client's from clear are improve pre-trade market's channels. in retail, To institutional we building taking market trades all simply, the and competition. the and we the trading We

appreciate will continue workflows also of markets and plenty larger the role to high-grade voice high-yield have both to trades. and We play for while room do a matter relationships electronify,

have of marketplace linked net We our hedging marketplace. spotting are we credit a the This leader in the these digitization of our institutional voice with U.S. where is spotting Treasury our to protocols. post-trade trades and

And whether XX% accounts and or overall of and per institutional net hedged. nearly for clients is more net notional XX% a save are roughly Today value our hedges, trades to This high-grade volume notional about credit for million netted. our of electronic volume. of unique traditional about spotting of our XX% Tradeweb credit spotting it's $XXX credit

the on see of results can strategy right. You the our far

Our high-grade is continues click-to-trade. and And increase. to anonymous of shares suite network continue grow. investment to session our trading high-yield area spanning and protocol One all-to-all our of

here. We are growth significant seeing

the We integrating greater to [XXX,XXX] of liquidity recently with differentiated our access live-streaming institutional now Institutional quotes billion markets for RFQs. live first retail all-to-all X,XXX by than offering $XX into time. clients have

over high-yield area and block X% activity of Tradeweb. Another XX% focus occurs Today, and at trading. is high-grade block of

portfolio unique trading with and our spotting electronic net spotting we to addition functionalities, In were first-to-market solution.

simply views by and utilizing markets large Portfolio bonds. buying basket to trading than selling credit investment a allows rather express custom

are ability We live also to and our client's against access inventory. to access execute directly improve investing and

RFQ trading their across in value let with it works execute on their Tradeweb. proposition. turn that, protocols, With flow we place a me and They to of portfolio of clients offer Bob. over our electronically process trades can netting all compelling along Because one inventory all weekly

Robert Warshaw

year will noted. Thanks, otherwise the be All period, to morning. and good prior Billy, unless comparisons

Let strength quarterly growth me broad-based. Slide The Rates of XX%. on driven and cash daily both We begin derivatives. record volume average volumes up XX%, overview of across XX. $XXX reported ADV billion, our was by was up with an

to cash. hit up high-grade also increase take ADV new quarterly as volumes X% driven As primarily increased share to Lee share the electronic U.S. share Billy grow. mentioned, we record in a and was continue and to our mentioned, market high. a XX% record rate Credit swaps Treasury continue by interest U.S. a in

in up our momentum in our by money continued institutional volumes Equities XX%. repo to products. driven was continued due XX% growth up offering. ADV ETF bond was ADV market China X% up And was

on due currencies Slide revenues we Trading I XX% XX% from XX% and revenue currency software by XX% for some fees in than The and of newly grew continue predominantly to revenues quarterly grow other well. increased decline a of XX% a primarily market constant by Refinitiv Other agreement. our base basis. summary and Recall, revenue XX% X of dollars, of growth development in on as increased by data fixed license the was gross related revenues by FX. driven our denominated by contract just earnings is expected. international actually, performance. basis strong In classes currency to our customers technology implementation, a XX% renewed major a item. in data due revenues to asset and The the euros. fixed Information as into described our approximately a timing constant restructured XX translated primarily revenue derive market to provides Services onetime and increasing volume XX%

or EBITDA currency a reduce will as All income we at adjusted our of software investment was margin a share from first investments quarter Adjusted us XXX planned constant back on net increased XX.X% note, off. basis benefiting did not margin result by per to points The expenditures our and cycle. As expanded to on $X.XX. came of in, this scale pay We reported diluted a delay in revert continue basis. levels. broader

sum, year-on-year. fees In trends million. the declined Slide million XX% out XX fee in our lays per per blended

Excluding or mix and There the short-duration trades versus volume traded fluctuations versus fee compression derivatives trades tenor million: rates versus credit mix non-compression of declined derivatives. drivers swaps, only electronically per of in million protocols cash our derivatives our cash underpinning are such processed three and fees the blended cash per quarterly and X%. in products of electronic discounts, as

We trends underlying to was This primarily XX%. change rates, by did per towards rates Let's fee swaps not business. class. decreased average Starting new to spend with million short-tenor due for for a securities our discount any the mix asset schedule the reviewing wins. minute fee business off shift by driven

in fees lower products their substantially duration. have derivative swaps other Short-tenor short given

fee per swaps, X%. increased have rates short-tenor the by million Excluding would

of driven typically was to towards credit Average Continuing the per from by Recall This fee of the credit. in XX%. million second periods. electronic derivatives. because and away roll of shift seasonally CDS and weaker quarter mix absence increased quarter volumes that fourth cash are

per towards volume. driven money a European U.S. X%. increased And fee finally toward growth wholesale million away Average by equities. Fees market. for This million increased and area mix shift with XX%. shift Continuing by per within driven repo remains This from was mix ETFs us. which was

details Adjusted and expenses invest gains on and our for Tradeweb's losses a continue X.X% expense has philosophy here. and no Refinitiv-related been we stock-based FX basis. to growth. high currency XX Slide X.X% acquisition compensation at and level, There certain tied our a At change excluding grew expenses. to constant D&A to non-cash

expense X.X% again, year Recall constant Compensation of growth impact XXX XX.X% our and expense grew a as currencies an headcount of revenue-based predominantly on increase dollars, X.X% on basis. as in a other in currency approximately primarily employees to from is denominated compensation. due non-comp to base sterling. or the grew in benefits well XXX XX% expense ago Adjusted than

normal to Specifically, increased and Occupancy partially higher fees audit is associated due increased business. with of fees a and technology including Professional due third-party up as fees legal incurred and partially corporate associated trading with gains consulting result administrative and communications insurance expenses decreased FX to the reduced certain to our due tax slightly higher of structure during offset offset fees General by increased increased Amsterdam course and due to offices. IPO. the new fees Asia volumes. by our advisory incurred fees

MTF We today. are a fully to clients are handle APA with using ready which Brexit licensed already and

Slide management XX details guidance. and capital our

dividend position, per board A cash cash holding Class cash earnings, quarter dividend share. We quarterly of Class and a the declared B $X.XX $XXX and our on quarter's First, ended second this million and policy non-restricted equivalents. from

during spend CapEx free to tends on which million be We trailing second And XXXX. CapEx million cash million. $XXX XX-month to flow $XX lower. expect on quarter, reached the to $X.X We spent seasonally million in $XX still

$XXX working we'll million we to reminder, cash capital $XXX a in estimate to require risk As million and cover needs.

income. we million Turning to conjunction with undrawn. $XXX in remains currently our IPO, Recall the revolver interest revolver and that a installed

Our net of investment quarter our watch program opposed launched as efficient we as [ph]. of prior working schedule interest quarter assumption guidance cash income exceeded second prior our more a during the to third ahead

that range. expect of million versus adjusted the the the operating expected midpoint With $XXX guidance, our earlier to to our it's XXXX other million, respect trend $XXX we lower within to now range expenses and range but between of guidance suggests half the

results our which current D&A Refinitiv-related and Acquisition adjusted to sheet. expected total we assuming $XX exclude million balance from is

we XX.X% forecasting rate using non-GAAP For purposes, a are tax adjusted of for the year.

Special new be guidance the stock-based related Award non-cash We million to quarter are third for range introducing compensation per quarter expense fourth $X.X the million the in expect to $X.X and quarter. to in we Option of

quarter. to options costs compensation the the Option to XXXX, Special $XX.X the Award second was and was related quarter second Most stock-based In tied the expense of the million. charged invested in to at required IPO be

to Recall models float buyback as help for not fluctuations do be our to in of for Finally, let our near our price. share me our term. We've we calibrate discuss a will you have share currently sensitivity place XXXX in count. authorization balance sensitive in count quarterly share the the we updated limited your

Lee Olesky

Bob. Thanks,

We are year-on-year. for just progress The the has Average billion, continued pleased this we making. about XX% volumes, daily July is morning. with second was volume increased which momentum Tradeweb the $XXX in into July released quarter

rate trades U.S. to and first exceeded swaps interest increase. and Of activity the yield time. share high of note, swaptions for continue X%

investing ahead, our Looking future and the balance various and margin opportunities to businesses expansion. for the on focused right capitalizing the are we growth continuing on strike between across

regarding expected by close will acquisition to minute Exchange, remain publicly hold economic to XX% will Refinitiv of half and to in a continue second the company. Tradeweb the Let XXXX. of recent Refinitiv our is continue stake Stock a anticipated me which the the in London standalone traded announcement address spend a company.

Tradeweb market don't business as have usual. expect we operations strategy, the in or And existing unchanged on at voting board expect to any also any data The license we not our changes will do the some, impact foresee the of or We acquisition. remain agreement and conclusion shareholder rights management.

conclude contributed And my in Tradeweb. by our to to like and I want colleagues their their remarks efforts I'd a record to thank clients business partnership quarter. that for quarter the for my for thanking

to will your it that, With questions. turn back I for Ashley

Ashley Serrao

Lee. Thanks,

free As you our take a can back the question limit Feel hop the Q&A ask reminder, Operator, one at please question. only. first and queue at Time. end questions X:XX to yourself Eastern to in end. The now additional will

Operator

[Operator question first you Alex Our Sachs. Goldman comes Thank Blostein from Instructions] with

Your line open. is now

Alex Blostein

the morning, Good question. Great. Thanks for everyone.

mentioned the or definitely in on some guys and evolved of The X So better the larger customer Slide credit how players XX revenue you any at maybe over to concentration a the starting of you your progress expansion the get how helpful. away from can maybe credit in of last progressing stats of has so, banks? with months Just business. here. the stats just the if But share all, kind business sense is the

in of share kind picked and this run that driving increased fully And over are Any meaningfully up recent July traction you share, of market rates. June in protocols terms particular looks guys? electronic like for in pretty there

Lee Olesky

Thanks, Alex.

classes, -- strategy is one bit of the But really of doing in we're to credit our breadth what the little mean a be yes, comprehensive to business. operating significant for main of there's So across chime of main we're a but in a to number our a I drivers. credit Billy focuses credit. detail. I'm on some very going different our to asset continues one ask we're

session-based need wholesale, and a I think and segments institution, focus to sorts kind be variety of retail, slightly of they really highest the customers where of of Each on at RFQ, all that's optionality the we different level institutional customer has perspective each different protocols, different core trading, kind responsive objectives. different from our accomplish give on customer that this to a that thing. the things different

is nicely. forward very this generally, moving But

can see in that You our numbers.

You can continues in terms share function grow. TRACE. see our in well and high-level And business to that market of our

respect a on and grow. with continue treasury number there. our we're portfolio We to links spotting into have successful new and very some net to of market focusing initiatives trading, But... our innovation Obviously,

William Hult

the think always and and clear market really a about of the space. getting kind business, Alex, that is sort is of we're And down does which competition I resounding fundamental to Lee yes. it the I when answer the credit in talk comes back question, that the want

ask you combination which what's the so And always that that And sort kind of the way question, answer one good a a things. of sort driver, there's It's right? one is of of we not driver. is

And real that's we spotting with lightbulb feel a think clients -- strongly the really trading that similar in we like portfolio mentioned way net a We was. component. moment

which And so Tradeweb just and these kind doing to getting is strong workflow. are examples two really we solving in what best, for efficiencies of of talking do clients their and of

So and us two strong we'll point out really spotting continued sort success of with of examples really as of base. client our the portfolio resonating trading net

Operator

question And from you. Repetto O'Neill. next Sandler with comes Richard our Thank

line now is Your open.

Richard Repetto

Yeah, good morning. Thanks Refinitiv. for the remarks on

Lee. You saved questions there, of one my

down. was current to and declining and up color bonds. I XX-year to I more is, wondering, and segment how yield around what more saw was trying about So rates volumes me and the and U.S. moving is with the U.S. government business peculiar And going government I the environment just yields -- because guess follow another inverted get I major question explanation yields curve on to on just July

the other environment? on Could But there's -- factors? in rates and some may us a give color bit you specifically that be you Treasury this just businesses because could U.S. business some the give more little us

Lee Olesky

comments Well, in zero-rate a is Obviously, I'll dig make a not environment then best little the in and general. Sure. some environment general look, deeper.

uncertainty better of Our business periods, do does though during right? are good volumes typically broadly volatile for Short the bursts business. in

to going doing to it's all comment market I'm So not on what participants.

very on an is time. I say really We've operate how extended a before. not We've these been in low-yield basis. thing. period that's our daily to that would had the what in been we strategically go years. you in particularly in really of not That's U.S. in environments We've think few And back for them or if Europe a environments fact,

of part business. So it is just our

volatility is have the by say in other I terms sectors. the client thing X how really magnitude vary think sector, to benefit impacts our of we of does right? business the So

hand, wholesale of are Retail, much We institutional have less And institutional, be continue in bonds during to other more that. moments. to and inclined as volatility. at we other sectors volatile wholesale. to see clip retail, same tends the And expect active buy channels to bouts on the

segment will negatively. from standpoint react that So slightly our

lot a have of You volatility.

business other long good But this But fundamentally, is The two at you become about proves looking volumes correct segments volatility day-to-day. doesn't expect from more our that as not extreme. that too active. for can it get history type we're if of as

William Hult

is innovation bond other business about say I'd market RFQ government AiEX The thing Rich, And around talking the continuing market. around whether or continues to in innovate. our occur or is, progress the in streams, segment making to we're growing the not we're

that of is an then our RFQ of us us good for position. kind around place book from direct leadership puts because that order in innovation streams such and All

Richard Repetto

Thank you very Got much. you. Thank it.

Operator

JPMorgan. our Ken with Thank comes question you. from And next Worthington

Your now line is open.

Ken Worthington

Tradeweb can your on to business? improved approved, you? deal or are you get that grow in either be comments can near want opportunities did try leverage that a or Should business to improve cue be be maybe off I for LSE to So might where the further help to morning. management be there and processes Refinitiv. to that good client the made LSE the close, Hi, there term, management introductions might following helpful

that there attractiveness your marketplace? improve has And Might be underlying of longer then the clearing trading LSE and trading there capabilities. can things term, various

Lee Olesky

for clearing on guess statements for want on customers a deal. do very they and Ken. the high how though. of much of our comment how to general to a to our not with we're work few pending A regulatory region We Right. those where do going level, framework Thanks, we want each the to at clearing it's variety continue customers, clear to We to want I us and interact globally them. houses with business, focus that. houses, within

In is been It's years. room improvement again for for what our the for business there terms about of room that's broadly, improvement, concept. has XX

reducing core of costs our does really what that's a more clients, reducing So to making friction, terms for things points workflow, in Tradeweb innovating seamless. of lot

So that's broadly we're what all about.

Otherwise, business right commenting it's as now We're said the before. collaborate it's going continue But with going on push to I our as find forward. and I'm to not usual. solutions Really, clients to into deal. specifically to pending get

Ken Worthington

Okay, great. you. Thank

Operator

Suisse. Thank comes And question next Crédit our from Ari you. with Ghosh

Your line is now open.

Ari Ghosh

everyone. Lee for morning, Billy good or Hey, one Maybe here.

Just to facilitate about to trading of you've credit platform, six contribution since plus the getting tools some launch? just the portfolio back last the and launched credit on that Could over on you months the volumes trading. portfolio the talk

to that, what related you. here fixed-income talk competitors? you platform maybe Thank of versus could then if big your And about just differentiates offering some your

Lee Olesky

fit in for think I evolving credit has now. these some the And that happening continuing right like Ari. are the portfolio space. in market time Thanks, with Look, tools been Sure. innovations

be So of that portfolio second we're moving out very phase app into actually a we'll a shortly. rolling

think to functionality are a you'll the a coming It's in mind, standpoint. hear in mean too of more detail it We're welcomed us. as more not but that, to I of clients going as and about much that our my portfolio basket been on from months into active more addition bonds. and from a weeks get I

moving market the kind that's credit has how been forward. of And

into markets. links other both the have You

have the You links. ETF

have You new participants.

terms And new a essentially, new the have credit trading. You in is providers. moving market of evolution phase of liquidity into

with the as That's you when Phase for so And months deliver about can excited we're to already quite of the but clients portfolios. on well pretty several of that. sort us recently, over X exactly out. of know now pointed Phase don't prepping and it to X that delivery really for worked we're launched our the innovation respect I last we we

William Hult

and it Yes. complicated of speak -- getting it, how workflow, partner that It's get have. of to into sort or kind in how without to the a with and our our we it you think around that and And we multifaceted do we about I specific too it of clients it does clients. to right right get we kind speaks into have able we with engage a way were it engage way. [indiscernible] And to much how

Ari Ghosh

very it. Thank Got you much.

Operator

Lynch. comes Thank from Merrill of Michael America next Bank with you. question Carrier And our

Your line open. now is

Michael Carrier

morning. Thanks for question. the Good taking

or Just fees on million. pricing the the a question per

just think a the product better the thinking quarter, you versus growth This business which like outlook are second particularly aware pricing I about seeing the the a should this standpoint of seasonality? or anything in that product bit -- there business, could mix? guys be of? the were structurally and where we because of side. More half year from on rate be credit expected than in shift could the guess shift you where product the a just little just maybe the Like even shifting growth

Lee Olesky

Good Sure. question.

you the tell me credit. on Let

in million I think which to in is that tends business. we're that going one got number drive quarter. tend the is also of we've And months thus and you so third, the per about, seasonality second our cash which terms enrollments a for this these of be talked that credit bit and not products first the direction and in fourth. -- There's the of to fees

side it. think about that what driver. of little tends of sort the so mostly credit been talking and we bit also But Billy And have I the dampen to it's a

per the growing our the terms cash that have fees continued million. fees of in of therefore and globally success we're credit having and push volume impact the real growth the and and on the We therefore the

probably involves for rates, where is versus are not other it in of the rates in than more are U.S. because some In we little fact and FX a bit terms things complicated, that Europe the

way FX vibrated. the So of why bit it's a in vibrated number there's has good noise that

talked you of If in also numbers short-tenor driving dramatically -- we about also down. what there's sort our is which we that volume the these reports are but that have swaps

per I fees you you -- kind about out X% number took as and rates growth, at you of million the look without If look it, mentioned. it's if that at

And we the -- driver. -- special still so would suite. affect -- duration particular of further think along going special of whatever that's it's as of that the XX% the sometimes tend And it's to expect. kind we split product But that's kind things or that but

Operator

And with from Deutsche comes Brian you. next Thank question Bedell our Bank.

is open. line Your now

Brian Bedell

Good morning, folks.

view come to course not just a -- specifically back being coming broadly of getting deal but on into potential wanted whatsoever, of with I customer into base to any revenue but you potential Do and numbers want question extension synergies? bit. Just about know, Lee, the maybe back of there Ken's the LSE? you don't on potential the to that a linking comment And little

then of Europe as very are you course guys well. And up on bulled

a So Europe maybe on broad wanted of with closing. this of a I little now to potential view the bit deal just get

Lee Olesky

really the LSE fact tremendous revenues that of Yes. just general, not going the we've say more Thanks, this to U.S. LSE international component from outside we've take our and pride the got our to XX%, room Brian. comes in just to already. XX% I than Right. coming from that business business I'm a lot respect have from comment, When had of of much it with in away

Asia, respect talking our is in of phase whole the market even the see it China percentage respect Europe to opportunity, than U.S. year. higher-growth of that were certainly to we're earlier we expansion and Europe continue where an before of of but continue expect Europe, in we innovation in have with another out and to network. a lot see that beyond about we with been year, in general things coming that growth last we It's the in for the quarter innovation, footprint the markets of really this the great And digitization out to a to

internationally. about catalyst massive briefly already it's I that. spoke China size, just it's And But project sheer to Obviously, a it. the for terrific a kind size market. of as terms with respect opportunity think given a of we to difficult us in sheer of timing it's

Brian Bedell

Okay, you. fair enough. Thank

Operator

And from Kramm Thank with question Alex you. our comes UBS. next

now line Your open. is

Alex Kramm

When a you are look some the your question Wanted is degree, Ken's everyone. back still as doing, morning, to and clients I that rates business Good fixed come to guess portion Hey. the at large extend of wondering how degree earlier. to business some and environment revenues? from to

bank a is of And your cetera. et customers, coming lot minimums, think from that I

time I of entering, environment are of because market it's make think money. because new having customers harder a some the participants to or increasingly and of those harder

as just money I'm exiting think being So be sort variable of on firms that having the for on wondering seeing time a harder Are seeing you're seeing are some you any fixed we the should as pricing the thinking think are more about that we Anything people or you about I in pushback price? making revenues. asking that minimums, business.

Lee Olesky

of Yes. Alex. obviously clients respect rates a now. tough right with Thanks, volatile Right. a collectively It's the world. all environment our for It's very environment around to

to can I business. their take sort helpful though layer actually clients note. you of much of that cost in is operating of would that we terms So reducing for do sort the the fact of into that of what

what in trading allow we've for the interface with of terms lower-cost surrounds theme We And around seamless much much that's that been actual interaction a customers world. allow constant We while years. doing interconnection of the workflow for and overall more a trading. these

effectively. So offers more and those focused are taking clients that And streamlining of for innovating is and our challenging number say these certainly, clients expense-reduction modernizing on profitability of that as a you doing things really a absolutely in environment in could businesses that by advantage what markets, are it much is their of terms things as process. Tradeweb

in very of standard exact We've for there, services. out charge some held price charge even to competition got the of don't we high We're terms lots services we that that always a for. our how

more close our aware face. We key is very reduce sort view our of we're clients, And success can our overall franchise. spend that's mindful they our the and stay we're and of customer challenges that. the to the of we innovation, collective their through So to with innovate

Alex Kramm

Very Great. helpful.

Operator

And our Chris Thank comes from you. with next Harris question Fargo. Wells

Your open. line is now

Chris Harris

Thanks.

shift mix consolidated being capture swaps. the impacted by short-tenor towards your revenue So is negatively

that. highlighted You

So to we product in you long If to think raise for just curious. there the could be an all the category? term, short-tenor about opportunity pricing medium

Lee Olesky

How okay, as revenue? Chris, market. have generating way to pricing in room would board question say sit something of In a position prices to the of and got the great as across seriousness, in where terms going increase we've I you never the we all we are direct in more a previous the approached we response. incrementally

We in deliver business. of And kind services, into our that's our built concept functionality innovation, always are growing looking to to response a core DNA here.

deserves what So the more How we for increase? the clients Billy pricing, doing talking going businesses that we for this is are first is kind proposed How their are increasing delivering about question we of if we're in value to are efficient? increase? room a making okay, the ask

We our well-established more the rather address years of We the the an for right? increase in with position And business through relationships growth. we customers. but to going here, in taking about to positions more term incremental strong are products we're market, not but services, many, that and the those not a these get innovation, have It's for advantage more trying And way that's grow long we playing it. value. be many across We're board.

William Hult

I think don't would a influence -- changes them. at is look fee be because one to the thing to million positive there's or we per tend that there to of lot tend to I as add negative

new it's a volume example, swaps, the a have short-tenor It we the so for set So before, million. to have to of that per fees looks additive. didn't on impact that's happens be what down and

be the MLP growing volume good, It more volume is well. having a of chunk rest the just all not [ph] big is And of it's to volumes. So as

Lee Olesky

Yes.

or it and short in long an or not end the mean look, the gets of macro our think, thing. movement that's to or end focus I we're increased the I job. yields back this on focusing other not the side

build workflow functionality Our a for products, job efficient build is more allows trading to and services, the interaction that for board. build across clients

William Hult

And of very Chris, from of we're is rates beginning, businesses had grew kind of Alex's in made about kind revealing sort we sort the I as question credit, the reality earlier wanted of the our this had competition. environment. market point on another competitive

to in a And D&A price how understood businesses. of how we around we environment very a price competitive have we our early. So lot

Operator

Thank Barclays. comes Our [Operator from with Instructions] question Jeremy Campbell you next

open. now is line Your

Jeremy Campbell

guys. you, Thank

different all issues block wondering little and Just quarter. side gain kind cadence about adoption to in here. at a Thanks. of implementation fully algos, you auto-response bit of in contributing whether between a sides? of can a In auto-execution, that the electronic Also wanted a gating factor if dig of expanded the bit algos in guys the share maybe the seeing some of you're to buy just buy- sell-side the and sell kind and talk the was little major

Lee Olesky

Right.

prices terms of eliminating So automation, side, right? use look, it's side customers and institutional the or on buy traditionally tools been the the whether generating workflow behavior machine what learning with from in approach dynamics, the for allow or further respect to different it's of of click are that algos has kind

the right? And of which it gets we're kind perspectives, down what have is to our role of of to this, approaching your And how is that's customer each in problems for variety solve core that going for to different we're marketplace. a these solutions

to sorts algorithmically for of prices of forward. And and feature. that you doing generating So we're things design streaming be and going going may are and itself them that in all

trader for, that way be being things You that's our workflow buy done and reducing machine rudimentary a or the learning more from AiEX looking the with a products. streamlining just big enhancing side, we've volume using responsive and of clicks may and a stuff rules-based

different different the gets the to got And approaches our and is depending breadth here. that this of of on back the So we to fact and customer I our have network network three value think we've accomplish these trying what segments. actually the that

the to the working of good the visibility these a space place terms one from in where have each we components all interaction to retail active and can in activity us on run. in place. sort another some used have we're to we true And the technology, might of way of machine-to-machine apply It allows

focusing advantage an software up. networks our people on we of how XXX-or-so technology run get things we and So team, focused in and that connecting synergy are our building the the on

it I the varies is what is the on objective -- depending But think it user. of

And that machine-to-machine advisers to the all tick have segment trading. So camp, other have all actually another one the segment. right? boxes, are users financial clients we from are or way we one customers then Some in firmly that everything some

think the to I helps have. that we it have global reach also us

not not -- it's here. as if So a one-region we're firm we're

revenues As before, are coming of of outside I percent from XX-plus said our U.S. the

Europe, seeing what's U.S. the in and markets what's advantage the get happening South of in happening in we in Japan, in markets So China, in America.

we've of that and into region services got we've a delivering those clients Pick markets. got the world, we're

the just huge of how efficiency build out I this think and I in we about scale the terms than of anyone. that's network get a we technology broader of think advantage much

William Hult

around all describing. see we're of side growing of of feeling of terms kind last AiEX, credit the in And the sophistication topic. And I more sort sort you on with this it's has is about then a of that adoption market FX advanced being Think buy markets then of these on the -- terms dramatically in historically rates indicator the in catching the think Lee of that the this all real pretty X months, of as over shifted topics up. kind

Lee Olesky

this just which in it, AiEX, our huge which the mean doing bit success through rules-based AiEX, that stage. has sheer It's automated percentage deliver now customers. is trades Even for early still at a software that through been look to of us, we're I of relatively our we fashion

look We've customers those across got, XX, you the I that have of our tools. broadly, don't But XX XX, know, thousands using if are board more we institutions customers.

get And benefit that. of some the

the Some learning of benefit are about that.

ease by. will their into of kind goes it Some to as time way continue

Operator

Cyprys from Morgan comes with Stanley. question Michael next our And

Michael Cyprys

seem guys, opportunities whether in would products, like of guess you white I as about lot for it's there's think expansion China or whether space, it just it's services, a platform we algos.

those approach could about think that? kind that of opportunities So how there. approach? I prioritizing a I of What's out guess you to see about do bit your you hoping talk little And was through all sifting you your

Lee Olesky

a it's question, for us. That's a great absolutely challenge and Mike,

do these you pointing We're out recently just of can of them. I think opportunities. back leaders and across as firm in the I key most making actually to would you're globally. right. off-site what focused our the opportunities hosted an prioritize And of the of number a front comes enthusiasm the great. with Everyone's on I And what was tone tell the you things. a we And wealth is that characterize how

And look, in got the swap opportunities markets. we've great interest rate

have strategic there's also classes other built for But And whether it's talked the into From us, we right diversity and markets. we've number major are standpoint, lot got that opportunities. We which financial of a a the love markets, money more the about. we've it our growing business or what credit now. asset just of equities creates

we we through on have priority basis. into the some We And rollout might was of do these prioritize try get the will talk months, of weekly technology kind and coming a opportunity is what not frequently things. things we'll these right? because a what in immediate we the slightly our wrong for years. We to go thought we team quarters, a And perfect right we adjust longer-term we're opportunity. is as And things, get terms

to nimble. and need thinking we be So adjust our

that's I you've be businesses nimble. to thing is -- one there's got in if years think picked running XX that last I for the that up

to adjust. got You've

grow, happening priorities what's your to think three we just get market. And will on prioritization as the terrific success as in Change as get number more us and and I one, the that continue we've a be prioritizing what's so on. for we're and what's but in so diverse, two, right. of You've innovate got terms And had number to opportunities. continuing challenge react bigger, to we those what's

Michael Cyprys

Great. you Thank

Operator

from you. comes And Thank Sandler next O'Neill. question our Repetto with Richard

Your open. now line is

Richard Repetto

share, clear market that when has question did of grown. out I is about and when But coming at your jump talked the me fully Billy. of heard electronic one sort you loud looked a from and This the growth areas. I Hi. credit at obviously, thing for And you number

of of that one the conversion of one bit factors to, But how And AiEX of as increasing the conversion year. you talked that Is markets? portfolio is the electronic process that I'm other the and compared this looking And down the positive. a the beginning is -- least say, a has that come trades… little fully electronic big from factors the at about, the at

William Hult

around the sort way nice Two first. of business. sort you. was That doing We've of always Yes. questions old-fashion of been of pragmatic

like So a than felt probably all around of the of of we was businesses in our breadcrumbs more a into energy and because processing sort always these put credit it of market. we lot trades electronic other of effort trade, any kind lot

so electronic backup And conversion from voice process to yes, trade trades. activity of there is a

But So mix, activity. we of sort of of in our pickup put the share. that voice for Rich, drivers one terms around reality never some will of in on sort that be electronic the granted took there the

of ultimately kind And that some us. seeing on we're now of And it. the digitizing was follow-through for of electronic activity always sort a fully priority

So absolutely yes, say. would I

Richard Repetto

that And as would it. likely I would higher margin conversion Got come get well, think? in at - you that a higher

Lee Olesky

discovery, trade occurs proposition always, there's for electronically, that's when more Look, us. nice valuable a a Yes. when

Richard Repetto

Thank Got you. it.

Operator

participating any This showing at a and Ladies Everyone, questions day. I'm And have all you. may not this you gentlemen, Thank conference. program, concludes today's in disconnect. further for you thank today's wonderful and time.

Tradeweb Markets (TW) 11 Aug 192019 Q2 Earnings call transcript