TW - Earnings call transcript Q4 2019

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Operator

Good morning and welcome to Tradeweb's Fourth Quarter 2019 Earnings Conference Call.

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

Ashley Serrao

morning. good and you, Thank

Joining me Olesky quarter our Lee call provide for will review the who the business are the a CEO, update. today highlights and for

Hult and Bob our deeper Billy Our a financial review Warshaw, will the opportunities; of CFO, little President, growth into who our some results. will dive

presentation earnings like presentation the this Litigation and quarter statements Reform portion Act of during to the Relations statements of Investor you and our volumes certain report, Private XXXX. fourth constitute the within may future Our I’d Q&A January release, accompanying website. remind that Securities meaning and forward-looking on relate are and events the available as in to such of expectations,

factors forward-looking actual to periodic Actual results may is differ statements reports materially SEC. from earnings could concerning filed differ results that release from these in Information contained our forward-looking the and with cause statements.

will regarding are including non-GAAP today’s on on certain measures. reference our addition our website. in included to information More earnings reconciliations release earnings call, presentation In and posted measures, non-GAAP GAAP we these measures

and certain based Lastly, on industry sources. industry and market data which we management's provide estimates is various

information posted presentation For our on website. our see more earnings

of this GAAP per recap, $X.XX. earnings To diluted reported share morning

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

to over turn Now, Lee. the call let me

Lee Olesky

of inception, our have earnings for power solve you our employees call. technology for global harnessed And the Thanks, Since Ashley. morning, everyone. of network joining growing our our Good fourth problems to clients. of and creativity quarter we our thank

of the globalization driven debt, to the making continue products. and of secular sophistication other across on data proliferation to driving increasing decision of changes reducing ETFs focus also trading of the growth These respond trends. include technology, cost, We

of markets trade our we the defining that are of in These clients. improvement trends for and fuel digitization the the quality believe will execution

four, As led you focus to Tradeweb. on at our can of continued see on in year client XXXX, another slide execution strong needs

XX% reported currency volumes on translated revenue and growth constant and basis a XX% into respectively. Record

result, consecutive revenues. our EBITDA a recorded scale As results approximately strong earnings of XXX by XXth basis record top we our margin The XX% year expansion drove of growth. points and generated line

to our leveraging focused spotting, has In by scale, And consistent a adding protocol continue treasury our portfolio of our and trading, to seen strong investment. we tradition innovate as to the organic liquidity support platform our electronic after by that clients. game trading, changing credit growth of continue net initiatives maintained uptake institutional we

as our bonds functions We price over That today the in further electronics enhanced AI XX,XXX portfolio price and reference trades. and price session for is credit.

Beyond leveraged and asset trading electronify footprint block credit, we our solution swaps to US improve multi for class options. asset our

streaming We've offering cater also institutional our US clients. Treasury expanded to to

complementing customized are RFP on workflows For time, now able first institutions Tradeweb. liquidity, consume the to their

offering our name integrations with few. institutional several and a for with tools, OpenGamma we executed rate data with bonds, just Cassini to augmenting interest Additionally, market partnerships ICE and investor swaps municipal and

life another began new as for company. milestone a chapter publicly our marked also Tradeweb listed XXXX we in a as

tier us Our globally destination talent. a more and made IPO has our elevated top attractive brand for

During product technology, infrastructure XXXX, cyber management. security, and added data senior across we talent

we be ahead, expect XXXX no look we As different. to

footprint electronic asset network, to continue mindset and will our invest and our global across growth enhance classes. We solutions a pioneer with operate amplifier

Our operating same. remains philosophy the

existing work in and close clients. We with will and do continuing advances new strategically this by technology financial both leading to

yield our fourth credit strongest grade records volume across derivatives. new high the reported history, We five. and high the US multiple slide to quarter and Turning in and set equity

during significantly we million nearly overall currency year $XXX are despite XX% of period a in year industry compared up a and a 'XX, constant quarter on basis, reported lower on backdrop XXXX. Specifically XX.X% gross same the basis volume, on fourth revenues volatility to when and

again by Our performance internationally. and once both strong growth, was domestically characterized financial

We continue progress scale potential pleased a to international overtime. footprint to be European, and with and our see continue emerging markets to our of lot across Asian

Our as to increased double improved quarter digit scale translated profitability fourth EBITDA revenue growth and margins into the resulting XX.X%. our adjusted

Turning and the revenue strongly. our see to diversity grow our growth six, of rates biggest asset you credit to can as slide continue classes,

Specifically, their revenue double growth. eighth of registered they digit consecutive both quarter

quarter by relative equities trades Our 'XX. selloff market given elevated year-on-year the XXXX. marked the given That and the fourth in ETF of U.S. management market volatility in to substantially revenue declined was for December challenging comparisons tax

a and reported Our data currency on grew basis. constant XX% business

me Moving main update a X, and largest X Starting brief rate let treasuries, Slide rate on with on to global areas; interest revenue, swaps. by U.S. swaps, ETFs. interest product focus our provide global our U.S. rates credit

XX% over year quarter, fourth with over one during swaps duration by year-on-year than greater Our growing XX%. and total were the up volumes

broaden We in be continue our set, very partnering on functionality driving clients to with workflows. products enhance higher market our to by our electronification focused this and improve

Moving treasuries. on to

the to X% volumes conditions a the variety our wholesale take trading challenging share market down protocols our that pleased year-on-year and during growth sectors. have organic quarter, I'm institutional in initiatives given allowed of here, While the both were fourth us using

Treasury January. share our leverage actively to record as to the of is with healthy We proprietary our our continued platform dealers. Traction into market. pipeline we of record streaming year-end reaching wholesale that U.S. continue a onboard was another technology another XX.X% in XXXX hit as of estimate on streams We

initiative The has the data. demand U.S. of given partnership lot industry, the in for trusted interest generated a in closing price reference with ICE price Treasury

enhanced with have a to already participants methodology variety are engaged adoption. the currently industry and and bodies of We drive

during wave records. to overall XX.X% also We a to continue current estimate innovation. grade strides the have the hitting and high U.S. and X.X%, high increased electronic new yield credit fourth with share We as made that record share quarter corporate rapid lead in of we our in respectively

client The into continued year-over-year. XX% for count grade January. see institutional XXXX and reported overall to grow trading as to high We we as has records increased network runway our in momentum both significant by new become and high volume liquidity continue Our yield stronger.

As inroads our sector on into the the including U.S. focusing off. making entire of to credit institutional market strong pay continues strategy

Finally efforts with institutional ETFs, than volumes up were as in subdued more volatility. organic Europe X% market growth offset

block Today, we remain ETF to continue over alternative broad Going clients globally. wealth to platform than see continued to hedge the efficiently managers our as of a more solutions quickly and the facilitate from of growth venues. pension ETFs ahead, funds interacting to well benefit from our positioned of range we risk funds transfer

success our and on Building ETFs.

off Over past for a but our Still early developed U.S. have days quarters, few the we an and that, business Solution is for the nicely complements flagship start promising RFQ to ETF offering. RFQ options.

you on With to trading and swaps automated more that, I color to will global portfolio turn give some Billy it over trading.

Billy Hult

Lee. Thanks

evolve and our trading continue revolutionizes risk single advances led markets a while in innovation twin But done. and So the like by of management. to a way workflow the portfolio really once gradually is simplification driving forces trading

automation a to Slide become more the unfolding let bit, around that an over counter and are The I'll on be trading quantitative. me search how on market to update a with in AiEX trend is we using multiyear liquidity leader start continues X. but that talk the about for

execution with growing involved based helping complexity We staging outcomes in to navigate clients orders the rules our trading. are improve

dealers more years, to allows continued auto-coding fashion. have dealers in in For to side AiEX the by sending interact capabilities. inquiries invest buy with automated efficiently an

both solution This is win-win sides. for a

network room fixed trading ETFs of are Today by income of with whole leading LMS AiEX institutional and our are grow. approximately leveraging derivatives, and over our this wide automation leveraging XX% plenty We trades now integrations. across to [ph] and driven --

over AiEX new remains Tradeweb doubling on years. a number over they users automated have clients in adding average, the the of last strong. XX% the trades XXXX, send record XX of After top their four usage pipeline Our to

We within are in and for even Trading XXX grow, we as of still sophisticated sizes gradually also most top increasing is plenty penetrate There's days changing to of we behavior automation as are early continues the especially our speak, AiEX clients. swaps. room trade to adoption. and seeing

swaps. to are made investments growth key of for global like the demand advent XXXX for another is year. Another respond changes and paying interest we off. compression tools rate structure The clearing was area market to central us record

ability government bonds Our and traders to offer allowed to also us have with mortgages also trading packets and adjacent attract trading. in like classes asset to markets helped multi innovations swap It asset platform. more also like electronic connect correlated our

we expertise interest Tradeweb’s regulatory swaps. with become the combined in change, to venue trade for we believe clients leading navigating When rate have

resonating market offering continues across we increase and Our to currencies. our believe is share

we II, Europe It's post is are is important regional not growth based undergoing rapid broader or just to to note that change MiFID the that confined seeing region growth. volume

them market indices. front, partnering help regulatory are we LIBOR the transition from swaps with On to away participants

solutions and swaps no we're Specifically, rates. to Tradeweb, do providing portfolio at different. Improving client and to we fundamental rates workflows has into everything been is switch transparency risk free reference

We used our solution while types. are we the and protocols swap efficiently RFM of is invoice or to example more now request where a our large with market move expanding include partnered risk electronically solution mirroring RFM execution. for a great clients have to

access to are protocols We broadest their that swaps. focused to ensuring interest have the rate clients on of execute scope

market. slide the XXXX on nine. credit further validated differentiated credit to our Turning approach to

market clients to has solutions leverage to corporate of the which our current focused earlier the and other heritage find laser a electronic picture, The creative power we lead side are illiquid across classes wave that search engine trade. We on asset focus us the an credit. pioneering of helping of innovation helped the in our in referred big is

credit future liquidity defining traditional wholesale our integrate retail, using the We're sectors. technology and proprietary institutional by the trading electronic across to of

on TRACE. focus U.S. market multi-sector presence bringing us measured today, to allows workflows the as credit by Our of electronic to XXX%

and and never customers credit can for Tradeweb. options Electronic find execution of workflow at been you them digital and better have all

engagement increased fourth quarter, our continued the and as season share markets client to network improved. our materially During

add As Lee to high has on step and back, runway credit. and cylinders. share investment we our believe high report and mentioned, clients both we is the significant have across into strategy are to that focused more pleased all and When yield our grow momentum firing January we we differentiated grade continued

trading, leading traditional was institutional protocols and liquidity session such RFQ Our across all-to-all also of RFQs as next and net connecting generation into based broad trading. the both and we're retail and as across spotting, innovations that such portfolio growth

see price. excited with the the ETFs time income reference portfolio trading, tandem like We proprietary are precision Tradeweb’s real of very increasing in AI fixed and tools of of which future about we sourcing growth growing pricing

TRACE. lightbulb will over rapidly grown follow. the largest clients. for X% trend and account is our with to more global a believe XX trading We last moment we X% sophisticated now to has a portfolio of It's This most clients and estimate months

the addresses complex of Clients are with periods. that solution trade and reduce baskets the a now win-win containing to inefficiencies in large balance velocity another to and Dealers attractive at price across list liquidity is spectrum This holding certainty. increase are trading. able able mix speed and an sheet bonds

Many on dealers portfolio to improving desks to have or trading risk. portfolio of dedicated tools heavily also creating created They're process manage their investing desk in in dedicated this price the are -- and capitalize this.

to Looking dealers to the adoption and we portfolio demand trading. client in ahead, broad-based driving role a expect of play to central to increase continue continue

turn detail. over With discuss more to it me financials to that, let Bob in our

Bob Warshaw

And good Billy. Thanks, morning.

lead fourth year XXXX and us in earnings by growth and As providing year-over-year have growth margin value volumes, quarter, confidence our our clients. continued for improved in XXXX indicated to our in volumes full revenue, January our sustained we

also shareholders. creating for value We sustained our are

through go prior noted. comparisons I year to otherwise be will the the unless all As numbers, period

Slide Let on billion, overview volumes our with We me $XXX up XX. an quarterly begin of XX%. ADV reported of

the see, strengths. growth one business can the of our was We diversity you As of our broad-based. believe is

into summary by volume increasing XX The derived a XX% growth constant XX% currency nearly XX% customers. earnings translated just of on gross Slide and described provides our approximately international We by a performance. quarterly our revenues basis. of I revenues strong from

than our recall other dollars, in in is revenues dominated XX% base euros. currencies And of predominantly that

revenues Fixed Our by expected. trading variable XX%. grow major as increased total increased four and our to to revenue asset our related continue classes revenues XX% by

to growth digit expect continue We a rate going low-single forward.

in Information scale benefit due fourth related XX% the Other expanded to came nicely we relative APA from XX.X% IPO to reporting costs. continue at margin Services 'XX and by as in growth quarter our and lack business. increased to of EBITDA Adjusted

per Full diluted XX.X% to from reported per $X.XX. in Slide the XX.X% income trends adjusted All XXXX. year and million. adjusted EBITDA of increased fees lays out net margin we share XX

made We any fee have changes not our to schedules.

blended our was excluding within per various The swaps mix lower short our up X% sum describe I'm year-over-year. fee driven year-over-year, fee classes. trends blended but are to In products about per per million by million four X% tenure of million fee are asset the declined

the to with million term a spend towards Let's decreased per underlying weeks minute mix average trends Starting asset per short shift fees class. reviewing rates, by swaps. slightly due

was tender year-over-year with activity short fee per mortgage primarily non-TPA your higher Excluding swaps, due fee in up million. per million carries growth to a

Continuing primarily our growth per shift to per to X%. due grow million in credit, cash investments to fee products away increased products from was credit payoff. credit higher average mix by as driven This electronic derivatives

U.S. Continuing decreased lower million Average equity options, products. with million which XX%. primarily growth equities. driven carry other equity fee fees in per was than This per by our

builds. continue to U.S. as expect we clients and liquidity options as We equity grow onboard

repo million other to details market a which growth. markets, Finally, There's per expenses. our no fee change is been a growth XX philosophy Slide here. high per within level, million than decreased we At driven for primarily invest This in products. our continue fee lower to money carries X%. money by

expectations. quarter declined XXXX fourth our with currency in a full our constant operating year our line basis, adjusted expenses year-over-year, on grew almost than and While, X% X% more expenses

non-cash D&A and reminder, Refinitiv acquisition stock certain FX related expense expenses excludes As and related adjusted compensation options, a gains related based or losses.

denominated fourth quarter dollars, for expenses approximately XX% base of the expense a Adjusted currency in constant Recall, predominantly on is X.X%, declined Sterling. our in than other currencies X% basis.

on expenses accruals currency X.X% fourth due a were the Adjusted compared operating X.X% basis. XXXX quarter expense timing 'XX XXXX. constant than quarter Fourth declined lower performance to related or non-comp of compensation of to

Specifically, administrative insurance a declines debt in by offset onetime general expenses items, than primarily such increased bad decrease and as company public more as fees our reserve.

to quarter around forward of FX G&A impact million XXXX. expect to the excluding going a trend We $XX million $XX in

due we fees opened by quarter fees consulting and fourth Professional primarily in higher elevated our driven costs response Amsterdam the Brexit. to in to to declined increased costs of IPO. tied due that tied to part to legal 'XX reduced Occupancy offices

our Slide XX and management details guidance. capital

First dividend on the million. cash reached free equivalents cash million and policy. holding in We position $XXX our cash and year for flow fourth ended unrestricted and quarter $XXX cash

With declared year year expectations. per for line class A dividend an with and B was year our of CapEx this million in of Board over quarterly earnings, class $XX increase X% a $X.XX quarter's the the share.

million are expecting continue expenses from for to invest XXXX in Turning to XXXX, to to will guidance range we adjusted and $XXX $XXX million.

this can this drive of approximate X% we range at expansion end margin The believe represent midpoint increase. an operating either will range. We of

drive Lee an story. As and is important our execution Billy mentioned, of harnessing data to part

includes our guidance our investments million tied such, primarily As strategy. $X data to

continue We also to cyber and security invest risk. in

guidance a advance of XXXX. duplicative in office million approximately expense $X rent includes of move Our potential in also

we working still We're duplicative finalizing are our minimize We with landlords move. that expense specifics to the may occur. of

XX% are we casting XX.X% purposes, Before for compared XXXX non-GAAP tax assuming XXXX. in now our of rate to

from of the our share driven is benefits windfall compensation. as jurisdictions, tax as by across as both PRSUs rate lower based marginal in The various tax well rates changes part

years. in We these subsequent changes to expect occur

to million Acquisition is the Refinitiv to due pushdown million. $XX to and be be accounting to which about out D&A, million. transactional we We $XXX expect expected adjust associated increase $XX CapEx with

discuss let our fluctuations count. quarterly calibrate share count sensitivity our for Finally, share updated me for new share price. models XXXX in We've our helping

back to Now, it turn for remarks. Lee concluding I'll

Lee Olesky

the for products. company another was numerous record and XXXX year by milestones Bob. marked Thanks, our

our expand excited businesses potential by continued and across see we for Tradeweb. our We opportunities we all the very to set of are

growth the term for between to We're the driving the strike create future and our ahead focused to right expansion and balance on on investing of us shareholders. value opportunities capitalizing long various margin for continuing

digitization continue We technology transition believe accelerating the this fundamentally Markets are that fueled out is for changing operate fixed to play income and will as to we we of speak. in years come.

gives we XXXX asset over is vantage generation that multi presence and from the the both point our multi-protocol such, carried believe multi momentum XXXX. participate sector, As global progress. of ideal in The and into Tradeweb to lead next

I'd volumes our January corporate increasing records across conclude mortgages, four to my growth classes, asset like thanking our and European with volume and broad US with government repo. remarks far, based So credit strongest new contributed bonds, their and XX% by in quarter. to partnership I for to their a and clients my want year our truly Tradeweb. for fourth in quarter record thank for in that the history, our And colleagues business efforts

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

Ashley Serrao

Thanks, Lee.

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

Operator

Piper question with [Operator comes Repetto Rick first Instructions] Our Sandler. from

Rick Repetto

one guess, know and trading lot question, of I I'll in I move Yeah, portfolio since direction. on comments it. the market have go Bob. a side of to good you've morning, continues I how I Lee, and the automation Billy And of that guess and to made

I you Could as Billy these there? fully portfolio fully you about I truly fully the know, that you're the impact an outlook talk And can How that grow and credit? know electronic trading share electronic what's trades electronic in side? of you guess include

Billy Hult

Rich, hey, good question. Very how Yeah, you? are

straight the is we answer at the So answer yes, that - business. fully look electronic as

the more consider is around trading. from trading trading to what portfolio we going competitive would environment think I into non-comp type be evolution

level it's of start they not it, value And once described is things customers. I clients absolutely, usage dismissed. and to lightbulb It those moment it the as of on think the an their on of I've way. with one that absolutely kind understand where innovation any board be

XXX% And client about they send portfolio out levels and level, offer using do better when levels list more bid perspective, out are they better seeing it's they portfolio the more send we lists, trades. when trades. clients or get some -- from get On do they

process the reality going electronic marketplace. the investment think think that's trades voice trades. Rich, as important for in fully are us. And dismissed we be portfolio to that there never But XXX% we have some about trades always We

Rick Repetto

trades And are there's risk that portfolio reported. transfer transference in you these

Billy Hult

XXX%.

Rick Repetto

you. it? Got Thank

Operator

Ghosh comes Suisse. Our Ari Credit from with question next

Ari Ghosh

Hey, good morning, everyone.

So an initiatives give update I just expectations some was hoping us region. from overall growth new of European and could you on your that

saying? any of as seeing you peers curious from be And portfolio noted Thanks of helpful know, weakening really map what of at much. traction that you type in then Just from demand region? tools recent region rollouts see that'd asset you if the well, your including across all trading some have like client

Lee Olesky

morning, Ari. of honestly. a Well, within corporate Good a Billy bit, credit of number We Europe, key And thanks, rate Europe story. spoke that the a global areas about cash, lot opportunity see a trend. international swap component growth as a our Yeah, interest is business, really of portfolio business. you is trading mentioned, the in

both started way go room we just this. there's of a as up think The a the U.S. with meaningful lot are We And rapidly and terms quite doing Europe. of in Europe. just it in to in in Billy said, percentages going

So, with been trading adoption early days a portfolio us. year. as continues. for still It's over company We've doing a relatively now

the been this in leader clearly space. we've So

result of as have portfolio a think activity meaningful trading. nice I in we a share

to package you sterling asset as really that with the of started have, my But that also mentioned, now in activity started We asset that's swaps market multi old sterling rolling in we're speak, currencies. Europe, swaps. out the other kind in

time, our the It's the the trading a dots swap And together concept That's market linked for asset package market swap connect we've that whole basically bond the the market lot. hear and and and that's some you'll us existed talk electronically. part trading. about a of

a be years. saver link you efficiency. been to be a real markets to both doing going to It electronically. XX the To these link now able of it's in we're begin to them. for plus it is and real Obviously, have time markets on But

we the as the seeing emerging the also That's the risk on spending away from focus we're to global deal LIBOR move time markets of in beginning a Europe, on. free of good in that something And continues. we're rates. Europe, US, a also have

been innovate. in to great area of great there. excited place lot awful It we're over happening an about Europe. the growth us, very a there's for And has opportunities So, a

Ari Ghosh

Got you. it. Thank

Operator

with Ken from comes next Our question Rosenblatt. Hill

Ken Hill

highlighted Hey, to streaming treasury clients. offering that you In expanded good US prepared think the remarks, the morning. you I institutional

to the they're So, little a customize able bit. liquidity

being kind you're I environment flush RFQ and of additive, was of from as hoping a bit how perspective process? guys may kind how that to out versus maybe to that might of little for that's be there. behaviors implemented in then competitive you And more seeing client what be a

Lee Olesky

-- Yes, so have question. a that that's we great

certain So, important we types market. we want of certain have in business clients think the think And going to are to are evolution bond that call stack. we that's consume we government And environments pricing. that streams that that an there of

that and feel is Is a space strongly We playing a leadership evolution leader think, important this always very around this that we a been thing. we've very role RFQ a in going not. obviously away, of But around some type be will be we're streaming to that. to of role going that and around going there evolution leadership trading absolutely evolution, play is and

space. In you're competitive I the crowded It's [ph] describing, one of leadership landscape. environment played. pretty is we've pretty kind terms have, the in RACE we it's obviously, a would that Obviously, Tradeweb that the role thing the say in of

Bloomberg, kind that You CME, you you [ph]. of in you have NASDAQ, pretty of have Phenix competitors list It's have long field. a have

feel offering offer that one clients. is step just and we makes of the back little our the that pretty us When things that we about have a of confident offering to we bit, breadth

it. So, that feeling we're of a in XXX% a on And role it. that space. playing laser glad streaming that we're this And an strategy. is we're kind focused glad we're strong around And leadership important

Ken Hill

the for Thanks detail.

Operator

Blostein Next with question Alex Sachs. Goldman comes from

Alex Blostein

has dynamic incremental everybody. accelerating but of incremental little of of Hi, volumes, terms into within growth of bit gains in time in spend maybe to was terms like that a you areas little been business. dig seen Feels a credit deeper revenue bit share recent again, revenues, good in the morning, a I the guys have quite a hoping bit that product.

of seeing are the volume What on you capture set are couple over rate quarters? incremental that last you've guys seen the of

Billy Hult

of I a way it you think we kind One would little Billy. us. heard bit is describe as it Alex Hey,

prepared around something for heard that a Right, little the bit and is efficiencies which I done. clients. like Lee You important, always in talked creating Tradeweb's our something remarks is how

a little our of And a of kind very bit I It's say way. this obvious would oxygen. in

have right. a lot We of clients,

asset clients our of some And managers. are

clients Some our of are banks.

our are clients Some hedge of funds.

our of wealth are Some clients managers.

market Some makers, right. alternative of our clients are

always the necessarily the boxes think about we institutional think and like, interesting, and you don't around trading it's right. if landscape BXC second, credit trading So, for about trading, BXB pretty right. Like, a

that obviously have dealers. with You clients trade

clients that obviously trade You spoken the with that's clients. environment And have lot. kind we've that of a all all all to about

You trade that with have dealers. dealers

around think I played sweet RFQs that actually And role innovation And to. a send clients we've our strong out you product. respond very that then that and dealers have

of structure evolving So kind you have this very in credit. market

your if actually company the all is how on do business, segments. step bit, that's as Tradeweb bets We're really role the back table? see think clients. this these like you And how structure role in And you a our efficiencies little and to enough of we playing our evolves. that's play put of is how we create which And for that the leadership do we leadership kind going about market

of a we our talking innovations, that's when separate way side trading portfolio way, spotting, we about answer and we're kind and that. how talk the about And I the kind buy of obviously, types for net those derive efficiencies and value Alex, In best clients. of can

business massive always priority huge institutional is So a doing clients in and us. our that with side our for buy

Bob Warshaw

of impacts to than cash is, our of that continue one happens, as expect of faster that. the credit. piece Other we the will as that that credit derivatives And than thing grow -- grow would to one

that And piece expect as overtime blending would so well. when we familiar at look higher you start

just that's of byproduct those a So described. what

Alex Blostein

Thanks Great. very Got you. much.

Operator

with Michael Stanley. Our Morgan next from comes question Cyprys

Michael Cyprys

morning. how Thanks the hear access an your in any hoping your to good to or trade China. of the deal view for And international in taking markets? bond of on strategy recent impact question. timing does in development Chinese your I sort business just particular, was Hey and update

And out to maybe that you business that risk term. there growth of the of the big China the seeing longer and picture volume terms more the build and I markets guess impact seek what coronavirus? think activity any your from story you're I

Lee Olesky

Yeah It's the Michael. real. for to Lee. demand Thanks, very international be markets grow China and to and their Right. continues bond access

the Our participation this on focus has asset increasing been managers. with mainly electronification, with

for inflows of bond we to current terms coronavirus of net money putting outperform The creates impact market significant into that humanitarian definitely majority and account volatility. And kind of aside continue a situation short China the via capturing connect. real that demand. term we So, segment in conditions some

Our for our is China execution long plans, term our unchanged. outlook business

We demand international down. market. China's had growth and for our continue volumes, in see in see volume significant our that to you bond secular participation from We situation a January daily average went

February. New that in that calendar hit the Year, But some actually New actually Chinese of the fact year. Year in also Chinese was the hit January this And lunar year, last

bad little result closed January And a for of a the as bit a course of day markets of was coronavirus. timing. there in So, were the

and this be of very fine. team we longer get to we'll for it's haven't term expect medium continue But, term, -- committed for there. our challenging China out just of based situation us and a short term, all So, who some of markets the in

Michael Cyprys

Great. Thanks.

Operator

Carrier [Operator Instructions] Bank comes Our with from question next of America. Michael

Sameer Murukutla

Murukutla good for Hey, is Thanks on question. morning. This taking actually Samir Michael. for my

So times growth the revenue laser you're both highlighted expansion. to margin call focused in drive that business and Lee, several investments on on the you've

defend that But market And segment. are share to you pushing how enough revenues? spending given I your the into well-funded peers, the already new then there are confident peers many guess you're rate keep

any low end high your of provide Rob end guess you I on, can of guidance? and kind margin And what on the details expansion budgeting you're

Lee Olesky

Right.

of So and been as of And as our leading market. long been our competitive component pointed rates and it's been been of Billy has in the has known as space, long pretty years. pointing course, you're for for out part we've franchise many a our revenues we've out

And to the yet see. January until and one we've you grow continue quarter, from even fourth up that grown and grown numbers the have day and in right

opportunity trajectory. we We like So, our our set. like

software that greater the the innovation. and and that meets before, between to dots demands. It's allow about about about It's flow. I as being It's building all all the But of said clients it's mostly listening the about some client's for needs about clever. connecting markets creativity

And we path. building expected And for that on we're the and obviously same speak I themselves. will new on track. innovations. just things and continue are results And that investing And different we

terms Bob think I'm the guidance, that of let on expense guidance. I to in the going comments

Bob Warshaw

margin I Yeah, experience still believe parts. have is as on expense is quarters, can the talked -- business. a scale said, we've several One think I we guidance, side some as about last improvement. we either lot a we of for deliver the think, over that, reason And we is, the

And as we investments different we which through And investing that And in XXXX continue the been some will we value. in different new stages products, that also will that in to start products deliver to improve improve. see believe we've get most to scale investments in. our of

So I say. first thing think I'd I think that's the

performance, the I revenue second have and because amount the thing is against of of on compensation a are these expenses variable think on both that certain our earnings. we part networks is

slowly But up -- of the scale and more it's if of -- earnings. more we kind and/or the than earnings. happens, goes get it's it just sort of so up it more And revenue it revenue the goes

we've So more with that a I we can revenue. I that continuing are new devices, guess make call put way that value sure also to deliver to think you is in that

to inspite deliver substantially they XXXX there having the obviously company. related to XXXX same the are, thing I'd And some substantial costs absorb don't we growth, of company. were XXXX. think in public had increase being public a of is, be first And in yet we say to those expect costs a We we in did still demonstrated way I that margin the as last

But that's There's kind think the for those. of we still -- quo. of sort some status more it's a part, most what now of is

And so again that that growth against increasing that get in without will delivered substantially regard.

if some you kinds as be can think we're notice, always those efficient. of expenses But And the looking we at doing. scale and obviously, of the obviously things out We're would drivers and compensation. primary I more are samples figure

Sameer Murukutla

Perfect. Thanks again.

Operator

Cyprys, from a follow-up Michael is Our Stanley. next Morgan question question from

Michael Cyprys

to circle wanted the just back I follow-up. ETF the on taking for business. thanks Hey,

fixed you Just say to what of bigger geographic you look versus well? strategy versus ETF opportunity curious products. region, equities, but mix market types the if Where at also commodities by other and as the the income were is seeing ETFs, by are between

Lee Olesky

income. Yeah, is of overall in Yeah, between of ETF ETFs known market, the marketplace, thanks the the -- volumes we're broadly income and pretty reflective fixed so splits income. for equities ETF the us in know But we the are and between underlying reflective platform. breakdowns fixed sorry, question. equities for a and fixed that space, as I

there. nothing there's So

us the correlations because I is markets of see any do of obviously equity with evolution That links into meaningful credit we're of kind underlying we interesting that that portfolio particular the us interest from built. in market to credit not the is think, the to trading we've instruments. of are sort the particularly the player

We are up the and things make obviously and all corporate that derivatives other bonds ETF.

clients future that whether that focus So connectivity, or of system those it's kind and into ETFs providers growth into the credit. we our see of we're bringing connections, on future linked liquidity are opportunity, harbinger as

what's to question, in are between and to fixed answer are first us. what's reflective it's your ETFs. Those going But, things split, income our equities on interesting market of those the really

Michael Cyprys

you. great, thank Okay,

Operator

comes Ken question JP with next Our from Morgan. Worthington

Ken Worthington

and XX%. the a at pre pretty guidance IPO Hi, really Maybe little rate. we and morning. can think decent XX% about XX.X% looking the you're IPO the XX%. I And post good a tax bit talk tax And there's gap those between at

this outlook? in tax talk look we guess, the So to into as change XXXX it about can a best unique we as you think XX%? Something future? further the is about driving more can or what's Is

Lee Olesky

taxes. I think about great love a question. talking is it I

makes my morning. So it

Ashley Serrao

short. it Make

Lee Olesky

really sourced things. Yes, primary different that time and are change things are. it we where the revenue two There's good two what the at causing things are, this spent smaller a other of and a looking few tax Make year The amount exactly. last short. jurisdictional rates primary as is

tax that's calculations. tax that the of And about We XX% into our savings determined could there were rate some change. we ingest marginal

So, complicated, it. tax basically associated marginal is lot but piece rate jurisdictional A thing. that's pretty major of it a with of that's work

the for issuance piece at it the value windfall when book big of accounts expense to because And think of for at is purposes PRSUs. the we we it benefit the we for it PRSUs. the equity PRSUs, Another it for time call that relates basis of accounting book one how a of I of

in it It's time book equity when we time. at point When invests that purposes. of tax the for value in the

particular higher much a there's for the PRSUs accounting in all purposes. impact. So and expense different equity of particular associated tax we with purposes have And as pieces this unraveled

R&D major sure as which rest FTSE of benefits. that's tax to same done good it. to of [ph], want a the related talk We've credits. as Gilts that's the some don't of you And things about it. and There's But far part I'm me pieces the

couple, We a problem years. we this to change decided the the is multiyear to And certainly believe three impact. next goes rate because

So, 'XX and 'XX. in 'XX,

We material a that there form. these year, change. tend the plan story we to But change terminus And will make we for year the know the if for update that's unless we it. behind to it's as rate material use obviously we some see is you once the in

Ken Worthington

much. very you thank Well, Right.

Operator

follow Our next question Goldman from is a Sachs. question with Alex Blostein up

Alex Blostein

contract? temporarily much rate how what Hi, quarter run contract that from that are, raised Thanks Refinitiv revenues kind specifically going longer guys the increase FDR, you And there a how follow not is I in guys quarterly off of of basis. well was think So like term? for had of Refinitiv and you're picking data, place the how the a you you sequentially. Real but one drove up. guys, I guess quick thinking a on there sort the good are about making Refinitiv on raised with much the to kind back number temporary in remember new thanks. up looks

Lee Olesky

just data. the plenty allows clients of I And little to broader take further there's, to in Refinitiv look, think particular, Yes, of execution. on data mean, Alex. let there's data Thanks, redistribute We lens a world. me to us around our to a take, bit room drive use

milestones, Refinitiv some to we in continue we restricted. I delivery them, mean, can contracts we We It's growth, all quarter. as had at partnership. don't great a been saw achieve you grow feel nice fourth the should if have overtime. The with have growth We there.

expectations our going about don't are forward. what revenue for We talk

increase than markets want data we our world in So on electronification monetize I real is the our other to of business. way to kind further say, component know, are with into a And general, all in very that desks the of wade changing don't important the focus for we've with we of got as how trading the data data. a scientists quants, can

to how it's doing. intelligent But really more the We're investigating about use data. very been what we there's we're a number drive with do to now right excited paths execution. data different And of that respect we're about

[indiscernible] that's coming AI the just built We used our from closing price sectors number it's protocols price on compliant. are that working suite we've We're got now and with in that [ph] did treasuries standards IASCO a of different We've sectors. being ICE. retail with that

We didn't previously and Gilts. FTSE with

We have TCI.

data. data So we for to Refinitiv incredibly deal think a complimentary is we strategy have And forward. in focus us in place our is meaningful the going that that overall

Alex Blostein

much. thanks Great, very

Lee Olesky

Sure.

Operator

America. Michael Carrier question of with comes Bank from Our next

Sameer Murukutla

for taking my Thanks Hi. follow up.

management. a investment. It's one quick been capital your build Just pass on despite tremendous

at over the more And term, to increasing maybe on So on can some metric? one long guess tied and we other the dialogue this any give possibly can your or any dividends do dividend. update board the growth thoughts I the you earnings is around

Bob Warshaw

the -- pre at we we've look cash of had obviously the this other I'll IPO uses year with as, dividends. of one. for take kind we Thanks that the IPO some had and question. It's

XXXX, into might are heading potential we're uses for looking what have. we at cash As

acquisitions theme increase of potentially central in in that's is a potential, delivering shareholders. back number dividends, The value to ways that buybacks. obviously and And

we and not announcement plans go current change through obviously, Buybacks: -- to we'll I'll of any all don't that, that if we quickly. three as So have appropriate. make And those We have do it.

have we to on that and not. as there flow, dividends, we're doing think Board On sources against going to it flow. again, about obviously, a it's we But we're of of the cash or up increase slowly. whether tracking cash little walk sort to talked I how And the

things because so we walls to to -- to about as possible this things. cash the want -- because those and reason might we're up year at that do examining we're we walking inside as And ideas want four we slowly sure particularly of that our much of make the is externally, that as retain not look come that we're

we look support And story focused on at that's shareholders to value think finally, it. is of things said at. we're really that accumulate cash make to do we we And inorganic one through and I the least And the growth year. going this through ways sure we

Sameer Murukutla

you. Good Thank perfect.

Operator

Patrick from Raymond comes James. question next with Our O’Shaughnessy

Patrick O’Shaughnessy

morning. good Hey,

commission revenue? your underline explain a XX%. you fair by revenue grew transaction while why the the grown your XX%, revenue for So of XXXX, than entirety by would Can dynamics commission grew revenue fee amount have transaction faster

Lee Olesky

exactly you So is accounting it's every definition isn't not. problem. think an what of historical a The case bit commission revenue in commission revenues

all consider think related to I business, example wholesale it For we which normally. is our voice

this looks way do the other more revenue some -- in collected not directly to with has we have That's and of It transactional. overtime products. the

which So consistent to accounting what this statements, goes without which makes as look past going on. refine into bit a may We little the be really something our we gritty noisy. comparisons. year details with bit a it's of that, needed to -- little that's is And

revenue where our total is to normally commission would XX% coming is you voice is of from. Less than which think related

so, of And some are And we products but they like commission have end electronic some that our not that in models our category. up and commission.

Patrick O’Shaughnessy

you. Thank it. Got

Operator

Repetto Our next question comes from Piper Sandler. Rick with

Rick Repetto

being far for margin and and almost this taking out asked. played has as mean, and jumping year. Lee. I expansion as expansion margin XXX basis you point Yeah. to I my back I've about, has Bob apologize on forth. Thanks this exactly follow But if year talked been been as up, expenses,

had guess -- I incremental in margin a So year. XX% you and the

played So this outpacing growth whole out. idea growth expense about definitely revenue

or grew X% is expenses question my So this year. X.X%

off there And, you anything you is, X%. accelerated start was expense good an question volume. year why year. You and we're get them next X% peculiar growth a But guess it when the to for going next year only grew in had IPO this I the

Bob Warshaw

have we There's I the to some to X in are that expense, reasons Yeah, that as likely think sometimes for offices a couple that if know, may or overlap up move number identified potential XXXX. the is rent the that. lead we event. X But requires things. our we in some One months you the of

costs. potential And so there's some

up potential, with to That's because different landlords what about money we're negotiating we ways The this year. end spend only to doing. have that not

space In New our new terms a of new on space up has And York office. thing the that for are and with time. to when of that do leases agreeing sort mostly

So piece one that's of it.

about come some in the expense, data and talked particular. piece on we important business. is second both expenses related new identify additional to as And data is wanted a Lee doing of to execution our how to The we're Billy

and so how we've of and more of our that been more purpose. to focusing unleash more for sort more And data

in mostly of And due But cyber yes, as off to data $X part to really come to what A revenue of that but that's pools due large a effect been. opportunities to focus and good mostly farming due about might well. expanding million, our that's our data as the it's capabilities, has help and risk, specific execution. some

thought And should some get we are may expense, execution. to its thought that's And so and million investment pretty it Obviously, the be we adding not $X actually identify towards why happen. identified it we was specific. we -- that's

Lee Olesky

But said, I to just but would that, pretty reiterate it. which add is much just Bob I'll

business. growth a is this -- is view Our

classes, cetera, a have world, We of us et products, the in front different asset of around different cetera. lot different opportunities et

Are the to right. on performance And shareholders going be opportunities. our enhancing are, in to to seize continue how margin, going in some to factor got the continue those course view business invest we business. we're for of to we We our focused

of foremost, and lot lot a growth. a potential of out for and there's opportunity first we think there But

businesses, to to and in to regions, respect in invest in money. which is people, invest with going we're innovation technology, invest mostly in So continue invest

Billy Hult

get still expansion. I is we're thing both as indicated, to think add would margin range, we last at the ends going The of we

of And can kind can. expansion, done said, context get we can, we the it's invest? and and believe So margin believe of we in we we we

Rick Repetto

Got you. it. Thank

Lee Olesky

Rich. Thanks,

Operator

I'd any call time. over to not turn showing And host. this back like I'm the questions our further to

Lee Olesky

We're we in this us to we okay, very excited last much forward for had year obviously, Thank XXXX. about what Well, have look great. joining you done what even morning. really to and more all excited about

very you thank So much.

Operator

and gentlemen, concludes this today's Ladies presentation.

disconnect may wonderful a and now have day. You

Tradeweb Markets (TW) 12 Feb 202019 Q4 Earnings call transcript