TW - Earnings call transcript Q2 2020

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Operator

Good morning, and welcome to Tradeweb's Second Quarter 2020 Earnings Conference Call.

As a reminder, today's call is being recorded and will be available for playback. To begin, I'll 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

who Joining CFO, me Olesky, quarter our Lee results. and Billy call provide into little some growth will for will review review the initiatives; Hult, President, who our the Warshaw, business are dive the a a deeper our CEO, Bob update; today will who highlights and financial for our

full-year Act like available to prepared relate differ other XXXX. and on release factors earnings Information these expectations you which during second release, statements earnings are concerning with and among remarks our things, guidance, of forward-looking and differ from our pandemic, potential of statements. constitute website. presentation and including periodic the of is forward-looking quarter materially cause that within as may are forward-looking and statements I'd Investor the Statements contained could guidance, to our certain Actual the impacts in the XXXX are remind Relations the filed to, results that Reform and presentation in reports from meaning portion SEC. Our Securities inherently of accompanying Private results such, statements COVID-XX to the future this statements. events may Q&A related forward-looking Litigation uncertain,

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

morning, certain GAAP and more posted per for provide we we industry earnings which our various this $X.XX. share estimates of earnings To Lastly, and See management's reported recap, diluted details. data, sources. based is market industry on presentation

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

Lee Olesky

for earnings remains thank appreciative and the and being Thanks, Ashley. efforts quarter we all morning, this The and everyone, world you combat the all restore to virus our are joining economy. second that of Good made an uncertain remain place, call.

the recognize our promote equality. organizations also various efforts We and external by employees both to

On their and of to the this business March. their solutions. the broader them we tail of Tradeweb willingness new market began product collaboration entire clients with increased continue innovating to the frequency front, to end suite the The our look margin second years proactively Tradeweb, that strategies. at revenue to focusing along remotely, and investments saw to in are At quarter operate scaling and our engaging region, name Australia, at geographic expanding new develop quality clients protocols in as early few We developing with investing in with excited electronic opportunity our reassess with ahead has across data, and forced on stabilization remain credit, signs committed growth remain over of success and next globally. and driving a scale few. as Asia Pacific reach, our the and by commercializing us just of the to especially the rates pandemic expansion we Today,

of has our remains the team the highly engaged, we team sales look pipeline Our rest and year. technology over a busy out as

new challenging second X. a despite volume in quarter across set our Turning history new to environment. Slide strongest revenue, multiple our records We and reported the macro products

year-on-year were Specifically, basis. reported up and of quarter by second on on XX.X% of revenues XXXX $XXX the XX.X% million currency gross a a basis during constant

growth. strong once financial was performance Our again by characterized

profitability resulting XXX the margin second basis points XX.X%. double-digit expanded scale Our year-over-year translated our improved to and over EBITDA into as quarter continued revenue growth adjusted

the see can growth. Turning to you X, Slide of diversity revenue our

saw double but to on markets XX% equities Fed swaps other display money grew than growth, U.S. credit treasuries as and rate growth by business our do slower business and and were both core quarters, while from digits, at actions, rates, benefited rates our well, engines rates and mortgages previous XX.X%, of the While Within too. revenues, cash respectively. continued

on X. Moving to Slide

volumes swaps, X%. me areas. a update credit; swaps on volume, by grew to a by tougher lower interest higher XX% our Clarus, characterized global U.S. environment ETFs. duration our macro dropped per Let Starting treasuries; swaps, and provide interest interest volatility, four according core brief rate swaps; in with where rate focus main Global longer U.S. core million fee IRS by rate

XX% down as were per quarter million per than fee in volumes higher more million longer-duration the swaps decline total in the during growth XX% offset a second year-on-year swaps. Our shorter-duration lower fee volume

remain cycle post U.S. on competitor, the We Europe market to closest products electronify. continues gained scaling EM focus share you Longer global recent the pools the quarter pay for to versus an improves both investments wallet our March and term, our we control, deep by and off. can on year-over-year. continue meaningful opportunity the client as excited give we to as share here we liquidity continued like and deepening XX%, We Bloomberg, and Billy growing what strategies focus update the momentarily. our will rate believe substantially our nearly share second The IRS swaps. in new to drove

treasuries. to Moving on

were year-on-year. up volumes Our XX%

quarter a share in share in the the The to days heavy estimate of markets. U.S. entire the initiatives of issuance. organic share from purchases, treasury Fed nicely treasury of our the wholesale growth protocols the bill Amidst U.S. when variety our second seen as that March We prevalent increased institutional voice both execution was drift to of treasury by a the record to new during year-on-year trading several and had driven market. XX.X% second sectors. record record quarter, us levels institutional issuance business and the volatility during backdrop lows have helped Our the take recovered exceptional using more continue

offerings and electronify new competition We both differentiate new the continue to and our the market. clients push sign further from functionality to

Our providers. critical are the preset at liquidity clients' quarter, AiEX streaming more continues as further we in we launched its our which execute the institutional recently brand as clients giving clients our during new see to automatically workflow, enhanced times. ability functionality onboarded resumed from to effort, Stack, interest and dealers role

On the the also added we product front, our XX-year to bond offerings.

month continue has wholesale as One that the also and innovations of anonymous to versus ability The working trading as trading in protocols. strength secondary credit to primarily our more $XX of in continue in higher as and activity recover. the to cash for both to revenue each spreads result has challenging successive growth treasury trading home sectors. driven our new adoption portfolio in March, the to RFQ session institutional exchange amidst generated continued market traditional like wholesale formulas business, their backdrop market, trading and as a by of comfort actively which March scale been as onboard U.S. the credit, it and more On purchase by the tightened. as to streaming from success rebounded the the putting technology grew to generating continued the an dealers markets derivative business our spotting share its our million revenues our see to for alternative our across platform U.S. the we Session around nearly of Dealers driven our onus normalization also tapered, manage business Fed order strong growth, franchises Shifting net balance from books. sheets risk. rebounded on increased note,

trading towards seen continues year. earlier this highs to Our trend business session

of opportunity our of use credit on lot a in our be pools. retail see we to and as ahead, offerings wholesale liquidity Looking we focused very continue various to the technology components converge and institutional, connecting

to up combination targeted Volumes of to Finally, growth volatility institutional globally. and to with add due new equities, was by the XX% this quarter efforts highlighted clients continue ETFs. were our

bearing beyond other franchise flagship options, with continuing delta to Our convertibles. equity and in also business expand the initiatives one momentum fruit, ETF our are

of Looking a we positioned expanding growth sum, we newer additions growth our continued benefit footprint. and challenges, we are product the quarter to continuing capitalize focused clients and grow trends offering, credit the our remain client ahead the ETFs class robust on opportunities in way, us. opportunities business macro These multi-asset spread ahead, this collaborating to continue an as our to well our various with mindset, the despite as growth led to revenue equities of across market the and diversity with In and showcased operate with money globally, on rates of well. are our from and

evaluating to turn builds time to growth, it that, I'm we as cash balance sheet. going over on a are M&A of to spending addition Billy. opportunities In With lot organic our

William Hult

Lee. Thanks,

volatility. rate in quarter, given Industry Turning decline second look lower were index IRS rate The broader swaps The quarter as tough down and the driven Lee to future challenging in indicated, to as grew interest while primarily year-over-year. with business increased such declined, decline better, fee per nearly remain environment, during swaps fared rate industry higher interest operating our and by the was products as by continue its core closer our a invest swaps. for per market swaps we clients. core year-over-year measured XX% X XX% a Slide fee at backdrop Clarus, million the volumes, in for for But this core million the market overnight agreements. forward down and engaged XX% share. relatively very volume Amidst

offering. within X.X% market IRS powering generation X.X% from to year, our off. share our core a primarily the XX% next rose to of As gains where pay record swaps growth efforts a as result, last share growth to by These increased continued efforts our are driven

responding We more benchmarks wholesale LIBOR, are swaps protocols, by the adding to and the currencies, introducing necessitated expanding of flow. set, new of changes product our replacement electronifying strengthening

integrated quarter, major of that EM currencies. the is into now same $XXX numbers for the XX as to and trade we EM second we more record are since the fully volumes quarter momentum today, traded XX large infrastructure asset both the in building, dealers, than months. The swap clients managers Clients have leveraged Tradeweb and last XXXX. saw over currencies doubling second billion have Specifically, XX

continue XXXX. we the are add dealers actively more clients and and currencies seeing Looking liquidity to ahead, provide onboard in we our satisfy from to demand

are also package swaptions multi-asset now to billion swaps our voice-traded $XX electronic continuing products in grow since such package launch as historically for We August traded in multi-asset our Clients year. swaps. solutions last have and

are signs daily build for a or helps billion market. early intent and Protocol-wise, encouraging. RFM, protect or which a FRA requesting the to by We continue, Our efforts buy their to the second during $XX sell growing clients we market, are nearly quarter. traded offering request competitive two-sided

corporate feature Tradeweb and tools credit products. our are voice capabilities improve of X, our utilizing further are Clients and anticipation trade investing And electronic resilience swaps institutional list to indices and leveraging in list and invest also Clients the continue trading we a partnered and that are Brexit. in platform. Honing to we we swaps price to types risk-free quotes unique used benchmark executed swaptions portfolios to bespoke the to on number risk, to extensively, now on global second to franchise on front, continue In and rate, retail build record liquidity also trading with new protocol the to central sectors. migrate positions ICE market. quarter. across the sum, our between other rate-linked offering structured We to electronify our of a of both recently swap will from U.S. workflows with the to the pool their add LIBOR Slide finally, on wholesale, swap switch use shared by diverse in handle institutional which counterparties can data

last our about temporary. was belief in our the market share that in pullback call, March spoke On we earnings the

in quarter seen approaching levels each share unfolded, year. of the trending beginning successive market the at as higher rebounded, As expected, the month,

XXX our to Our grow, network more than now continues clients have platform. and we on

has drivers, strongly as share innovations to as and our network which continued trading of with share has by record saw such share continues The clients to IG In changed. composition rebound in terms June institutional and of our resonate franchise, portfolio grow. the led in our our our as spotting been net

$XX items in since quarter threshold line launch, trades on dealers the crossed portfolio billion Specifically, more platform in and billion competition, to increasingly multi-dealer put also second than of a Clients the portfolio our record. new with continue $XXX volume single portfolios in trading alone. hit the and cumulative number

manual electronic record billion the nearly to offering processes. maximize spotting increasingly another of of savings net with advanced comingle activity trades and quarter, clients Our $XXX as and voice eliminate inefficiencies saw

Our as liquidity block our increase share continued to deepens. pool

billion, volume continues invest our franchises. continue which the also nearly our driven Trading which the to session to in by last trading here levels all-to-all today broadest offering record along market to middle doubled the responders. build year creating We our as includes trading of growth liquidity and all-to-all volumes, to market, anonymous $XX network rose offering, have over in in with

our end, liquidity. Lee As have liquidity institutional we connecting platform. retail on our billions RFQ are our pools into of interacts of to to that Today, mentioned, continues inquiry we effort adoption. unmatched very trading three focused incorporate To see this with increased

matches are focused to technology sectors. on across maximize discovery inquiries very by and We leveraging optimize our price connecting

of Turning our of business. our believe the participate our to credit products. rest of We variety of advantages credit us a credit in one franchise, of is allows the diversity the electronification which strategic to

gain share. Our continued credit we default posted another swap more market to strong business quarter as

run, launched, road business Stepping is credit portfolio back, pools, to by the exciting next innovation all and digitize. off, for trading we in a Our products, optimize the a that institutional credit This and enhance investments not theme just technology to that like also next-generation efforts we to net anonymous innovation includes focus and grow to a we the credit. have markets three new of pay markets. AiEX growing credit, and our lot lead setting of our our record. drive map business spotting sum, on room across convergence have continues In our also helping volume share technology an wave liquidity in already we believe as has continues trading, the muni and across to

which from electronic price improving given demand surge to We giving dealers We in now currently platform, are enhanced our and specified investing home, a in highly-manual work offering, inquiry, from seen clients discovery. traders workflows. our as bond agency prices spreadsheet-based the pools in ability has a all single request

to to and where dealers very clients Europe, onboard regulation we repo this in manual continue encourage upcoming We SFTR expect platform, automation and to our in domestically market. new both

RFM to other expanding from maximizing of value rate and swaps We are the products data. our

Tradeweb comment. markets critical Tradeweb, forward. move introduced detail. During to Bob at the me ICE with CMT more we market in our to the Rates work to for it to do continue to we quarter, we everything discuss Innovation And turn remains and financials let that, over tirelessly

Robert Warshaw

good Thanks, morning. Billy, and

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

swaps in the all continued Let ADV After of begin and repo second and highest of quarter our volumes dollars, total momentum base our predominantly in and revenues X% XX.X% across by credit, on into and classes, a ADV is me record that example, summary of approximately nearly growth revenue on performance. credit ETFs increasing products, we cash The We ADV earnings provides an X. XX% XX% denominated on year, growth. as our growth revenue reported constant volume last double-digit asset U.S. with our derived revenues of gross cash Slide across XX billion, and just equities. record We of approximately quarterly a euros. quarterly and CDS posting our customers, in overview other Slide reported rates, posted described global one translated currencies that up supported recall mortgages, $XXX I ADV business saw from currency mix over a basis. international with XX.X% global over a of for than

income Information services Our as continue four X%, and increased increased by revenues Refinitiv margin variable classes in adjusted related to nicely trading XX%. asset led our expected. share of XX%, second revenues increased our by per major relative EBITDA came total to $X.XX. grow reported revenue scale. to Fixed by and by XXXX as Adjusted in, we business. we quarter APA to All diluted from our benefit XX.X%, expanded continued at net

are our asset to various result per our tenor of about fees primarily to fees per XX% lower The year-over-year, from the increased million driven XX. within swaps. away sum, Moving products Slide In shift a describe fee on million core mix classes. by a million mix of trends on I'm per as blended short

fee in our X% per futures, tenor lower per Excluding million swaps blended increased by short million fees year-over-year.

underlying overall. year-over-year year-over-year on XX% basis. with All class. rates per trends the asset for rates, up will million by review be average Let's discussed a was trends fees Starting

products, the mix saw due government and mortgages, For rate increased shift in more per institutional include activity cash quarter. which TBAs, million X% positive during to fees which income, bonds

For other a to in sequential proportion year-over-year. was to fees million mix increased credit flat XXX% U.S. credit relatively higher fee swaps, activity. fees high-yield included which tenor cash on per stayed fees includes growth for The per million rates mix fees forward average million XX% carry down decline agreements, X% higher derivatives, per long of volumes. cash futures activity, swaps, In of rate to positive swaps. average. as that rates normalization overnight a and year-over-year credit. to than per Drilling derivative declined average compression shifts million a due million high-grade per due lower Continuing per than in increased which tenor short carries fee index and due a Average higher which towards fee credit, credit result million per the million

the average and Looking on category, derivative's class lower decreased were credit tier per due derivatives discounts features, carries at Total fees cash and X% million mix unchanged. per asset which average. due volume decreased U.S. equity credit with than Continuing equities. per fees cash shift fees fees towards a derivatives. electronically-processed million Equity million to growth per XX% to higher credit million the equity equity derivatives relatively in

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

stock-based D&A issued and IPO, and Adjusted than quarter as second for result and of gains primarily increased options adjusted currencies other losses. approximately excludes base to denominated non-cash certain acquisition reminder, related in dollar, compensation XX% predominantly Refinitiv-related Recall, is a our FX-related a expenses expense of X.X%. As the in expenses expense sterling.

as communication increased quarter by performance-related compensation. declined as on basis X.X% Second technology and higher were a compensation to offset operating reported well to and lower expenses compared non-comp and constant due second due higher higher on as G&A. costs basis. Adjusted a employee X.X% to costs quarter higher partially headcount XXXX declined expenses, were year-on-year currency XXXX Compensation events

entertainment primarily Specifically, expense. general and and administrative travel less due declined fees to

we costs per the from As we Technology data XXXX. review. increased half credit communication our during is $X to million result quarter U.S. of home, under as higher and million of volumes back of and our between continue Treasury as to primarily Long-term, grow. feeds to work $X trend G&A expect clearing and to streaming level due volumes to continued higher anonymous trading a volumes spend

management million quarter million addition, ended free capital saw guidance. reached strong increase cash our flow versus second strategy quarter $X equivalents, and months. in in $XXX position, the investments the a and and in also million impact Slide details embeds previously XX In the to this our XXXX. and of $X Recall, We million XX communicated guidance trailing data our a $XXX cash for holding cash cybersecurity.

to for A a to per and quarter quarterly earnings, year-over-year in of the of and of continues quarter's an $X.XX have Class XX% CapEx be with quarter B capitalized a undrawn this the share. Board declared dividend software We $XX.X was remains access With as and million, that revolver expectations. line million our Class $XXX end. increase

to for guidance Turning XXXX.

XXXX between million decision estate of environment, real and trend we York New expenses our expect the a now and to in of reduced million expenses delay as XXXX. the $XXX $XXX T&E to adjusted Given work-from-home result

to XXXX compared can range. this margin drive either believe end of operating continue we expansion to We at

non-GAAP the purposes, tax using of are rate forecasting For for year. XX% assumed we an

of $XX the expenditures software expect capitalized be to in and also capital to We million. $XX million range

we models your updated count quarterly for in share help for XXXX have sensitivity fluctuations to our Finally, our share you calibrate price.

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

Lee Olesky

secular Thanks The electronification automation intact. remain and powering trends Bob.

efforts margin asset With improve we to of our continues Overall, and similar be a month to business. my all U.S. down higher diversity volumes saw I'd to are opportunities associated same month. double-digits business, yield we than by in strong it with an like are our With of running against days high-yield left especially with second and remarks classes, couple important partnerships to relative history. workflows. thanking July our balancing I thank We end clients quarter, cash derivative to June our of shares and I'll Rates credit conditions classes, our levels. conclude XXXX. revenue have growth executing lack and XXXX months for a derivatives our derivatives investments conditions benefiting continues to rates – double-digits Ashley our are mortgage Driving to affords IG are that colleagues to are expansion for their their want across us back the last questions. strongest client issuance your business flatter and July, priority. These that, our up my volatility and given help plan our electronic exciting to variety asset of Fed the for contributed quarter the in curve, and market and Treasury across that in turn exception

Ashley Serrao

Lee. Thanks,

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

Operator

the Instructions] with comes Rich first Piper Sandler. [Operator question of you. Our line Repetto Thank from

Your line is open.

Richard Repetto

about Yes. guess access, can Lee. any talks landscape? platforms give but an question there I guess Billy, I competition. the to competitive competitors? for viable electronic guess. be would are us Billy, – become that on beginning and feel first Good Bob. I you other market this could update you And are the Good access, excluding everybody morning, morning, And is market about you

William Hult

from up have How question. in couple good a Tradeweb Bloomberg. businesses and that about Lee we've of competing core answer that a the That's with of I fact of you? Hey, grew kind it kind would Rich. Rich. talked our mentioned are I day basically ways, one

a the so in of just listening about sort think good of our sort around think environment. to a of think We little good bit, we good sort marketplace. the for comfortable interestingly, executing is said, and spend what being continue the what's clients. day balance awareness landscape. of very space much have It's flourish innovation. feel a fine-tuned kind good competition potentially going for So and a it to movements clearly That to into our it's competitive drive in landscape of we space. share I too for are on It's going is assess competitive If helps a we're we our more Rich, feel were to conscious sort We and day map the the what's with and clients, I the it's obviously, we also happening worrying to and much always their of the market continue out competitors companies in of like in the institutional And also and road ultimately to aware Bloomberg. aware like space, the we're take environment. with wholesale question, majority of we not of for very doing. and And that time are us spending of time Fenix

how company real competitive the landscape, kind you and how your honed of being forward. So said, aware day engage clients in day kind and balance being between that of knowing with you continue are, and to move out, it's what of a you markets and interesting

Richard Repetto

I'll Billy. back in you, Thank the get Got queue. Okay. it.

Operator

Thank you.

from comes Suisse. question of Ari Credit the from next Our line Ghosh

open. is line Your

Arinash Ghosh

trading, Billy year. you then portfolio higher continue to crisis the everyone. see this this here. during Hey, And quality strong the even talked year for one good of Maybe volumes height you too, and on about execution traction earlier morning,

in on client So hoping us just behavior. update can you change

execute portfolio more to to curious, average – Are size million clients any now increased credit sort Just just fees are trades? seeing these overall looking on the per as trends… impact trade then color overall at of the via And percentage the clients greater comfort.

William Hult

for you question. sure. question. you Thank Thank the for the Yes,

around And in an this my formed moment trading that describe liquidity environment, your in information the the around home, I one our that what is I is do habits I around for portfolio are leakage. terms both really good kind light Lee about to of habits clients' and And clearly, to share And that credit. bulb that innovation interesting around time in do is this, think increase an the of build very issues. just market. And burn execution it while is other are think the elegance as how on mind our is in is there question, getting this I think think a and gains unique leading are of moment minimize continues it portfolio sort trading. momentum. are I sort of where of bright talked of I one, which work we're this, And there us around around institutional market it work-from-home certainty continuing I is how and form in center and front think to I would which of issues the these from how solves I think two of for really to those continues search sort

Arinash Ghosh

if then as impact the And color you to the fee trends it. these out? any per million guys. on Thanks Got could, play

William Hult

Bob, Bob. want let you to that handle I'll one?

Lee Olesky

you Bob, are mute. on

Operator

on maybe you mute. Bob,

Robert Warshaw

I Sorry, the credit, mute. for higher we talk that's bunch part was mute. good of high-grade on session basically, you have on the that a that. for higher know want as but to I I high-yield, and level, was I this Sure. apologize at million a have does there's it. – does to it, it per pieces of and fee – trade, a for protocol

general. an real mix in trend but so high-grade trading, there impact, does it as the increase goes up, was in And have it our

Arinash Ghosh

that, Appreciate guys. Thank you.

Operator

you. Thank

line Our Alex next of UBS. question comes Kramm from the of

open. is line Your

Alexander Kramm

can IRS I morning. at Yes. generally doing doing as July. business, Seems for the there think thank see, good Lee, like is you the poorly. end well, the pretty what Hey, but about fairly you comments

any weak maybe what or of Bob, And you're a a what a business have see comments of an is change anything the I think So seeing an that business very enough persist, and offset? business, really it's these IRS there may if biggest to that too bit conditions to to compensation there? your related, is small so impact little you've Thanks. that? you then as tweak noted

Lee Olesky

volatility, Yes. Thanks, and a across a and reduced Alex. macro markets. a So right? number side out, relative curve. The really environment, swaps is say, our headwinds, flatter we volume flip higher of facing is the due off trading mixed Yes, start headwind. the have at value the rates low up – sure. Look, have right. let very to that's definitely pointing – businesses rates now yield as rates volatility board, sort our And me business our you're tailwinds, nice of that's That slowed a so level

So good like have growth surge mortgages, and things we're share which has issuance are growing us. doing course, in of treasuries, T-bill the well. thing a And been in quite some for

very have the So businesses. as are is our diversity the today, of the over structure to fortunate we've we years, in grown thing that these

of our and on most thing important at largely to our doing. And result this not so terribly we're market the think, think in we're that that clients a for the measure, look at worried is quite to is of and of about And the Things before, all it headwinds we're And this of you I how slowdown percentage kind so doing of well. environment doing us. been a type. the when any and to as period this change, the the have markets not swaps unique, I we're kind comes business really in business, tailwinds, share, when we've with of we're look while

some for up other that's markets a will here rates, in period established. prolonged certainly and down. We are low end, markets sure, go continue may have doing short that actually the well of, believers. not doomsday think that been are space. on the But We in we we And to have we're rate quite

the the terms question view performance compensation about follow-on of way compensation, In of we your company. the holistic is

individuals accordingly think of And and quarter. stay is foremost. where and on holistic see our very at a aligned and future company, kind So products to based That's to of to solid that we on a as together, ups we're the into we're little based and adjust very doing. markets, team. how on look But a all And we and how downs performance. are first doing individual as a well might have course, individual it we'll very see overall then, we it's given difficult approach, are had how challenging and look environment. a we And the I performance we

Alexander Kramm

you. Thank helpful. Very

Lee Olesky

Alex. Thanks, Yes.

Operator

Thank you.

comes question Chris next Wells of with from Our Fargo. the Harris line

open. Your line is

Christopher Harris

Thanks.

in cash. seem follow-up a on to they derivatives question. that bit bigger impact to side The a low be last Just are much rates on having the than

low the So And business about low wouldn't that's franchise? ultimately affect what of it cash rates more and, volatility rates resilient? is therefore, side the why cash the

Lee Olesky

another bonds what Well, government question. really more well, to that, issuance right? situation, in forward, kind I – things to a massive there's it's looks global trading no on for but have volumes. future. effect now project good seems real doubt Chris. unique That of to a going we're a thanks have going – positive is in hard in really the seeing So it – is the lot It's We think issuance the like we're unprecedented. right surge And

So space the world business, the bond across a that comments, bond our from recorded pointed out has Billy really as to share, U.S. which activity seeing but supported government dynamic in positive, also a of we're Europe course, to China nice in market the we're is taking government and the

a relatively So that's kind unique this environment. real to that's positive of thing

that mortgage The other reacting we this a other environment that's things. a refinancing bunch and a whole aware strong and of of of as you're franchise very have is thing result in nicely very

tend corporate when have in both that of derivative cash kind bond on side issuance, on government slightly trading that. point the you cycles. these on So surge out bond the I of and run is to byproduct different a would things side,

component derivatives of overall see there's Now a there's the as so can the are that's have that on a slowed, of our and rates derivatives no and byproduct credit market numbers, doubt from happened but level – and overall some no markets. you doubt trading,

managing to their we portfolio. important tools to for So folks them risk expect continue see be in

we're we've look doubt, in no second bit doing while now, had the derivatives, say respect quarter slowdown. this at of our yes, business a at right a I'd look to we're So with this in but slowdown results,

Christopher Harris

Yes. Got it. you. Thank

Operator

Thank you.

Mike line Carrier America. of next from comes with the of Our question Bank

open. is line Your

Michael Carrier

Hi. guys to generated Good morning, Bob, and healthy shifting capital, a cash Maybe thanks for taking you over level the flow. question.

hedged priorities And pick modest this just to up? you're where You M&A of terms dividend. had to the point? at see kind of the I are wanted at in if any starting of opportunities

Lee Olesky

a to mute. go going Yes, – chance mute, Bob. go give off off to Bob, let sure. I'll him and

go ahead, Bob. Okay,

Robert Warshaw

Yes.

of look opportunities believe indicated. we our – it of of of still all going consolidation. are we It's we're We you very that it number have matter sort and think look things that looking as the a a think active priced strategies, We're really things. to interest, particularly we to at. effort of where does at is I that a be there's fit –

focused that product We perhaps. in or get places networks, technologies, before, we terms are where we've very new of, new looking new talked for about as

we business some And sort to retail added ago. of similar to did, what years businesses we our our wholesale

look. drive, that's it wanted to enhances And business, the it's is of that – to that we fact – make of we being alongside. It's And very long cash, so it to and sit is and sure excess continue in sort to we're are our our our because term. deploy market doesn't careful just to over it understand intention us we not on our for for the looking sort sit

actively we number, those rich continue have markets, ways whether and is the identify And good looking at in markets The they determine are we probably at fact, are, each at look distressed, opportunities, which And very looked said, the so I for of been be not a we'll value we us can, and to. there the as tend in we things. in at there to each have case. and moment,

Michael Carrier

Thanks.

Operator

Thank you.

next line Our from of Goldman Alex Sachs. question comes the with Blostein

is Your open. line

Sheriq Sumar

Sheriq, Alex. Hi. for is filling This in

expense rate is the your headwinds? the want to face pursue volumes sense we flex a to have how would And terms then get you initiatives? what front, absolute On much do industry-wide the in continues of to require you if expense minimum growth growth expense

Robert Warshaw

going it. to XX%, of variable, of expense Yes, I'm talk XX% you A maybe of dimensions. the our each about part how specifics is calibrate depends so it of exact good not to on it not to manage dramatically need really is – to to and strategy to change investment invest. going share in we We're our But theoretically to variable. this we have continue – environment. those

that's short-term and think XXXX. long-term, to year been and continue We ahead Tradeweb over looking forward, to of XXXX, art invest kind and is taking medium we time, this our investments of the

environment, current we strategy. think continue that with can – the even So in we that

being are how very careful resources. We we manage

things of investing initiatives headwinds all really Billy already money we on in sure market talked We hires talked are are cases, we're very as replacement focused in about that continue as of facing. swaps has think making are the Lee next have and some And we've share of hires the people spite new that what we well our terms are talked our data. we important the product do, growth about investments our where about, much and of where those, to want to in and of the the past, in in initiatives increase in some in in left, general,

is business. mode investing continue on general to the our in focus So to

of that's revenue impact to revenue we natural if Our happens. flexibility growth, have what in expenses lot and a will a its that tied way, is goes down, if have compensation that

Sheriq Sumar

Thank you.

Operator

Thank you.

Point. question Allen next from comes Our Chris Compass the with line of

is Your open. line

Christopher Allen

the I franchise. to wanted mortgage about Good guys. Hey. morning, ask

you predominantly broadly, going other to within relative us moving what electronic I the mortgages which forward? could your areas opportunity What's set seeing focused movement any of has You terms within the Are right trading mentioned in know the banks is you been strength remind on like there. reduced now? business mortgages Maybe by slow asset classes?

William Hult

Billy. It's

a mentioned, us as for been for It's one a franchise, a big time. long brand mortgage our for so – company. we strong has very yes the So

have aspect kind much flourished this would liquid most as very there fits the do market. We extremely we TBA, continue we the describe well. And historically mortgage space, environment the as very To-Be-Announced the the well moment what in to of of

going is I intuitive the specific way, a built going that of lists well functionality specified and to there's focus a which think pools, inside and of around the certain be can us market, liquidity can There resembles efficiency around mortgage trade various specified we've to at of area leveraged in market market. that aspect pool markets, the very for very think for lists of into that tends a so how offer lot time going credit very the of to forward around I potential points and be way bid the of for a is be pool world in a be certain challenging. that search specified trades credit some

an in low origination this obvious think continue That for client time, will again, COVID at as volumes it's are and continued aspects be other I as that they an rates So question, focus will is I the us. flourish. to for this a around group, be point us. just would which, And good without the with question, environment, you, to obviously, just the then of marketing piece in the mention that sort area area of to and will of origination focus

Christopher Allen

from pool is the specified to And TBA similar quick big a just the an follow-up, market market or...? just how perspective, overall

William Hult

where for a gets market than in market environments sure. the a It's efficiencies market the that strong. market smaller TBA are need market, is but for It's that smaller There very bigger.

of a feedback a efficiencies specified them. trade we're moment So is that to is tremendous getting from how clients more time value-add lot a around where pools this in

Christopher Allen

Thanks a lot, guys.

William Hult

Yes.

Operator

Thank further for in I'll to showing no call I'm over the management you. questions now back the queue. turn closing.

Lee Olesky

very Well, much joining all you us Okay. thank this morning. for listen,

environment solid proud of we're everybody. the quarter for I a really produced challenging we As such in said,

talking Stay a we're progress the wish where all And we to safe. light at to collective end on think the from And hopefully you we to it's you I'll here I health. see hope all train. our of the say not tunnel quarter forward just do situation are next today. we just I good looking coming. and the

So thanks, Take care. again.

William Hult

you. Thank

Operator

conference. Thank and your this you gentlemen, today's for Ladies concludes participation.

You wonderful may now Everyone, disconnect. day. a have

Tradeweb Markets (TW) 2 Aug 202020 Q2 Earnings call transcript