Earnings call transcript Q2 2023

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Operator

Good day and thank you for standing by. [Operator Instructions] I'd now like to turn the conference over to your speaker today.

Unidentified Company Representative

Good morning and welcome to Tradeweb’s second quarter 2023 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 Treasury, FP&A and Investor Relations, Ashley Serrao. ahead. go Please

Ashley Serrao

good and Thank morning. you

growth update; Joining me little Billy and deeper are Pluta, business CEO, into some the initiatives complying disclosing of FD. who who under for provide will material, information and will Sara a brief CFO, our will results. disclosure financial Regulation means quarter our and call as Hult, the to intend review a our our with for obligations We use Furber, Tom today review the dive the website non-public President, our a who highlights

other that I'd Securities results like and forward-looking to statements things, may could Litigation XXXX. release, Statements Reform statements with reports within filed among presentation remind from may these Actual factors differ forward-looking the statements. future contained constitute SEC. and you and differ periodic our Q&A to during cause Act events is from materially results of that our relate Information statements in the such, to to, concerning certain the related are meaning forward-looking Private this actual presentation the as statements. and guidance expectations, earnings in forward-looking of

is we Information as regarding certain including market and data. presentation. will our today’s measures data, as GAAP presentation. non-GAAP in measures, sources, well earnings to reconciliations In on regarding these addition, earnings our certain and release call industry and measures, market reference Information non-GAAP is including in industry

Billy. Now, turn let over me call the to

Billy Hult

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

the with many balance allows showcased we of record investing expense base to continued across that gains The scalability for backdrop, quarter. our a quarter Despite challenging growth expansion. produced of the our margin markets and us share second

sea will doesn’t and get often that further that change spurs My can point spot when through across be asked analysts them be behavior we living tipping you’re response to ahead, our by is markets. changes hard what electronification and the on investors Looking overnight.

to for the years iPhone, how barely or airdrop technology make between phone would to in stream us only than it the pictures know and our not to at first example, introduced relationship XXXX, more bills calls, pay also hard movies, time even but humans the allowing another. -- XX Take from was it one ago, phone reinvent

generation, multi-asset is will and rich innovation, I Tradeweb, both we’ll the I For and lead influence I over with in learning. an class more to driving in next by leveraging markets we’ve of will great the plays financial advances, and maximize the being led markets. to personally the an We play Company, at resulting more the depth to client “unprecedented” position to described financial really that to technological believe eternal role rich structure class in with that of our as technological one we culture X well markets is will and seen and the data become this leads used trading be overused, dynamic should data. than and calm years am complexity. Combine and multi-asset technology heritage by last optimist, the believe word be solve and trading more AI and increasingly supercharged traders our over believe turbulent backdrop I structural become value that changes years. model, important navigate traders see talent even the idea Electronic expect technology the believe, continue market helping XX a are innovation markets, machine business change. will and also our in We to we markets that just interconnected,

for driving a the quarter, when first trimmed to total revenue clients activity very risk years. the April in Diving and activity moved in rebounded into time from sidelines the year-over-year second nicely decline

As rate despite as volatility cleared, remaining elevated. accelerated progressed the June the quarter and May coast into revenues

$XXX currency X.X% to by of basis slide EBITDA revenues second and million were the quarter margins on of up a constant basis Specifically, relative year-over-year XX record basis adjusted second points on X, expanded XXXX. on nearly quarter and a X.X% reported

continue and expansion EBITDA our relative X% first We basis-point with of to of of during revenue to growth to growth XXXX. to the half increase balance revenue XX.X% first in half XX translating the XXXX Adjusted margin a margin

XX% our slide provided XX% growth, to money the revenue while markets and the X, Turning for of respectively, of growth. led market way, rates data and accounting XX%

revenues led by government share Specifically, lower including the derivatives in fell but U.S. equity by by was higher and volumes. U.S. offset credit and revenues June, Equity swaps. markets grade rates share also franchise was bonds growth European business in offset was market Credit retail were continued deposit lower corporate of growth due reached strong investment industry growth our global X%, derivative in levels revenue electronic certificate strong and fueled organic which Money continued industry across ETF credit, and volumes partially market institutional by driven by repos. during growth. record to record

revenues driven robust a growth continue third-party product and data proprietary were enjoy strong market by pipeline. to Finally, which data products,

Treasuries U.S. swaps. Turning ETFs it rate on dig global over to to credit Tom provide will into update and a deeper interest slide areas, X, two and of I main U.S. to our and focus brief turn

industry with growth revenues propel XX% where year-over-year Starting to our retail X%. continuing by rate volume increased attractive primarily revenues environment eclipsing nearly tripled. Treasuries, by business This driven U.S. the of was

offering. trades of of the institutional also gained growing business by XX% versus Automation trades client record continues our ever, with remain average protocol XX% daily had be daily important by over best led RFQ+ Bloomberg quarter average average revenue our AiEX U.S. increasing year-over-year. more business engagement strong. theme up healthy across We and indicators institutional share institutional Our leading than volume and was year-over-year. with to daily streaming The its Treasury an adoption institutional institutional

protocol our revenues streaming than quarter central the which protocol. book second-best across revenue across strong produced in we and our our strong by business, more industry led wholesale conditions offset our to order history, Turning sessions limit tough volumes

liquidity the to third conditions, onboard protocol made providers, While faced quarter. the onboarding expect in team progress market during more we our tough and CLOB

we back, over first off-the-run innovation. the half and from focused Stepping phone liquid driving to off-the-runs this away year grown remain markets have electronic through our XX% U.S. of volumes, since approximately our less year, and volumes In off-the-run XX% on-the-run the the XXXX. of the on represented per XX% by Treasury

we a believe complete make differentiate advance we of to across in-roads with selection Treasury market markets pools. the to further continue and We trading, liquidity protocols link continue U.S. as can automated and

overall but faced outperformed industry tough the a dispersion equities, volatility a lack and rebalance lower price equity backdrop minimized given business Within market, that our activity. market ETF of

this quarter our expand of the brand to our However, other initiatives really was offering our diversity beyond our as fruit. evident ETF flagship equity equity bore franchise

by options derivatives over Our growth XX% year-over-year, driven convertibles. revenues strong across double-digit were up and institutional equity

as believe our Looking our we long-term well-positioned client remains story, pipeline electronic are secular of ahead, fixed on the ETF to equities, to the growth the resonate. income strong benefits capitalize not We but across business. in solutions continue just

further that transaction forward provided & that the intend pleased its conduct inquiry pending the we the look any doesn’t coming into and to We Consumer now Commission Competition acquisition. it announce our Yieldbroker to closing are in approval to indicated Australian Finally, months.

to over will With that Tom. I it turn

Tom Pluta

Billy. Thanks

product their interconnected, given change in As seeing continue opening, and Similarly, Company as channels, to something grow behaviors. line the as to focus. well clients the global continue focused between company. we channels yet channel sets asset to up to and on teams multi-client traditionally multi-asset our a geographies, more sales increasingly are pay are markets the continue to these our our Across we in fixed class continues will cohesive driving Modernization across a been this and his remain all our income, believe strategy Billy blur. has slow nimble classes dividends highlighted and client unfold we

look for softer Credit. China and X to underlying industry offset across as double-digit trends overall by CDS. were The Turning trends slide mixed across U.S. revenue at and Credit was closer growth munis, European a

favoring forward. automation led to to with trades year-over-year. Treasuries, this nearly we retail this average XX% differentials if clients rebounds backdrop, U.S. munis, global across Despite between and munis continued daily the should unattractive though surge Treasuries increasing issuance Specifically AiEX yield U.S. credit moving muni mixed has change believe

on grew with in business FPM year-over-year, duration-related the institutional for in revenue Normalizing U.S. channels. grown client corporate IG have XX% credit, year-over-year credit our the XX% three would growing Honing year-over-year. U.S. across headwinds all business, by

we hit fully coming are all-to-all, and opportunity portfolio sessions. plenty market with believe for further and a have in We pleased our similar footprint potential years. innovation, to can high leading share wallet a we in the and a IG, our in lead is investments young credit Electronically, meaningful RFQ, believe of trading quarters yield and across DRFQ, market to we to expand share grow and outcome record electronic and across a further new

business was tale the institutional robust lower investment revenue double-digit XX% two pullback growth Our a grade volumes. in cities, year-over-year given average revenues but high-yield in daily industry of

trading our underlying digits volumes Retail ADV Overall, with X% year-over-year portfolio with due growing conditions portfolio U.S. quarter, portfolio pricing institutional primary ever credit second to grew growing in the highest we lower given trading fell U.S. on XX% by produced second while double-digit despite advisors focus portfolio to protocols, volumes IG were In IG focusing Looking continues tougher high-yield. up at both buying volumes growth Treasuries. year-over-year. year-over-year, revenues for volumes and off trading. strong trading the RFQ low-single year-over-year, X% dealers, the pay across their European across

quarter with a produced strong $XXX AllTrade billion volume. in nearly

XX% continues year-over-year responses increasing of XX% broadening of business nearly network platform. volumes the our which In XXX% second Our be by aided on quarter, out focused number on year-over-year. the our growing all-to-all part over all-to-all rose XXX% and by team in The year-over-year. over grew number responders grow the volumes responses saw by increased and over AllTrade to the dealer-RFQ

year-over-year yield grew match ADV continued tough XX% Our high with despite across the one-way sessions elevated flow. rates over

protocols trading making block wallet further goal All continues team with focus of markets. non-block the in, across inroads in increasing on the to our the share and

block ‘XX, IG respectively. high-yield market, and XQ and Approximately fully IG XX% comes and from As of electronic electronic XX% X.X% and high-yield our respectively. X.X%, was our share the of fully block share

the channels focus the positioned work like to further credit we we across and U.S. electronify Looking remains our biggest area market. client we way ahead, our three as are

credit, executed U.S. progress currency our single-name local electronic our the expansion trade, RFM continue this quarter first first to Beyond CDS One quarter after bond steadily. trade. efforts completing EM Mexican we

taxable on of client soft across focused muni continues channels. are liquidity our and taxable Finally, muni we launch the integration

as overall swaps X, challenging macro a business in his that particularly was despite environment. was highlighted second our well this Billy in slide evident opening, and to quarter Moving mixed, global the performed

positions. The the asset quiet environment May manager per our a in March hedge and regional activity, further clients pickup improved was in their in as revenue compression in elevated our April revenues with after bank derisked the fee and coupled fund despite increased million. June crisis

June one despite to rose grew XX.X% quarter, our record month-over-month fact, revenues our falling rose X% challenging EM-denominated swaps. market low-single digits XX% year with institutional swaps dollar while the In across month-over-month. share greater swaps revenues and with share Even global ADV

remain across solution we AiEX penetration multi-asset bonds, that business, Tradeweb, market. six European XX% is we clients strongest believe with the on of In automation a focused the At U.S. over providing the across and AiEX credit. ETFs, trades Treasuries, the were months having our average government with daily U.S. up the in year, European first year-over-year unrivaled

swaps emerging our adoption daily year, in global basis. are our trades on months equity-focused of were this swaps. We are year-over-year. our XX% six swaps first Systematic markets interacting greater business, platform funds with signs AiEX seeing across than now In especially now year more-automated a more the that average growing one up were historically of

across clients to expect We continue solution invest AiEX of swaps in our strong to continue adoption automation. as

out and protocol. lot Across continue XXX% we increasing that grow. RFM the of our share is and second of emerging seeing RFM saw further EM over a protocol, swaps still to We quarter make to across we record utilizing protocol. progress our swaps we revenues room are a year-over-year, with are markets broadening in the clients growing Finally, our there rapidly believe

long-term believe is potential ahead, revenue the swaps revenues environment we to reaccelerate and as Looking meaningful we growth the expect normalizes.

the market believe we do the lot electronified, manual fixed flows we markets that while clients’ help global our work remains swaps digitize can broader and With market income than a still grow. less XX% to there

let And it to our more over financials Sara detail. to turn with me that, discuss in

Sara Furber

morning. good and Tom, Thanks

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

Let me on an begin of volumes with slide overview our X.

strong when We quarter nearly U.S. second repos. Areas credit, up daily reported growth global XX% tenor swaps, investment up of derivatives, XX% and swaps. and average equity of European grade include year-over-year, excluding bonds, $X.X volume short trillion, government

of our provides a performance. XX quarterly earnings summary Slide

by a in We currencies XX% into and reported our growth on revenues second predominantly that X.X% revenues denominated of basis X.X% increasing The in volume and derived international basis. constant customers, gross translated approximately our approximately other XX% quarter from revenue dollars, is than currency recall Euros. a on base of

total fixed X.X% our variable increased major both Our currency and other on constant up by four a revenues Total trading were revenues classes to related down reported trading revenues were X.X%. X%. asset basis. And and

the reminder, XX points a XXXX. enhancements EBITDA XX by clients. a year currency revenues points basis increased performed reflects retail basis, it our to line technology this XX.X% As Year-to-date fluctuates a on basis, as for from margin basis adjusted reported constant periodic full and tied on of

slide key highlight XX for the a million Moving and trends on on quarter. fees the to of per

slide our fee detail for million this can of earnings You the performance regarding see additional per quarter. XX presentation

million our due fees per decrease from and to primarily swaps in tenor a shift Overall, year-over-year, decreased blended million. away per a X% fee Credit, long mix

Excluding short X%. down swaps and million million blended fees lower per per futures, were tenor our fee

to per products, continued fees million channel. primarily also aided Treasuries. U.S. towards X%, fee per retail in higher mix rates fees shift our the by cash positive million up Treasuries were a For U.S. were million pickup per due

protocol. growth and For down XX% offset compression swaps were long fees primarily decline increase our EM This and duration trades. tenor in year-over-year per an RFM swaps, due XX%, an was by in partially to in million

million strong credit, per by due volumes. average U.S. decreased electronic cash fees munis, High in shift from our to partially growth away mix X% offset fully a For Grade

decreased shift per fee European per cash equities, higher a For due from away million mix average fees million by X% ETFs. to

and And driven money U.S. increased million shift average repos. global finally, away by within a CDs from markets, fees mix XX% towards per

growth level, scalability There details continue margins. no of invest variable change our has been philosophy to adjusted expense and and XX a high Slide here. expenses. nature our for base to the us At allows our in grow

a compensation. X.X% in Adjusted fees, tax due in and expenses technology basis. administrative salaries, mostly credit reported basis on expenses. which on had strategy a fees for increased and Technology and the second mainly pickup due due previously lower to XX.X%, communication communicated higher offset X.X% costs accruals X.X% Compensation increases a Adjusted currency investments headcount consulting of costs by were in and quarter for our to to increased variable that increased absence infrastructure. higher primarily data Professional the general a and second in constant data and increased we increased philanthropy. quarter to due and costs the of ‘XX performance-related

X.X% Excluding in the adjusted G&A year-over-year. ago credit year grew period, the tax

June ’XX, reduced gains. of adjusted gain by $X $X and $X.X of unfavorable half in FX Recall respectively. a hedging $X.X a movements addition, second million resulted of expenses in G&A would FX quarter quarter million approximately as In million million loss and in third million be $X XXXX, fourth in in quarter this versus in second the ‘XX. FX were Using FX of losses rates XXth,

XX% capital year-over-year. guidance, trailing which reached position and details Free and cash and $XXX ended capital the XQ we strong XX up return in million On unchanged. XX position, with $X.X a months, Slide policy, equivalents. flow management for cash nearly remains our billion in cash approximately cash the our

hand. a As pending funding reminder, be cash we Yieldbroker with our on acquisition will

more income of hikes Our of our balances efficient This interest of cash. Fed driven to primarily net a by interest recent due was combination higher management yields. increased cash and higher $XX.X million and

X% decrease our to investment year-over-year, the quarter and $XX timing due primarily CapEx million, for capitalized spend. a of of was development software

declared of per earnings, of quarter’s share this the stock. Class $X.XX B and dividend Board A And a Class quarterly common with

from million Finally, we leaving under for and spent at end share compensation approximately included the million which of deployment planned $X opportunistic dilution future quarter. repurchases our buyback program, plans, approximately offset to $XXX the stock-based

remarks. to back for Billy turn I’ll it now concluding And

Billy Hult

Sara. Thanks,

wrote opportunities managers slow on as alpha activities. five up to allowing not the believe focus it current to and traders, tasks, significant of to the technology skilled helping look create more technology a coders, I generations skills trader. capabilities The next them and be will our managers and one for years, stage forward continue be we even will of enables for value Trader’s relationship As and to the portfolio combination generators, that transformation drive also all traders future pace, only higher change at recently, and clients future and over quants, but of marketers. sets a will efficiency wrapped themes We until change. these The increases evolve takes on doesn’t. happens mundane inside period

With be XXXX. and we days, strong overall growth days government interest left The in our trading month-end to of relative remains diversity July swaps, are revenues strongest volume volumes a up to a global corporate important tend digits of and credit. rate July as seeing couple across our growth bonds, which double revenue global theme are

while is June with in high-yield Our higher IG June levels is levels. relatively share share than line

like would more legal, Catherine global I Catherine to our to Board XX brings Johnson years of of to Board. Directors. than compliance markets welcome our experience and

Olesky the Board like congratulate would I had I and friendship on collaboration his last that the his and Lee truly Aigrain close appreciated XX on appointment from retirement with Board. the as to years. Lee Finally, over Jacques I’ve Chair

and my contributed second I the clients colleagues would in our for and thank best to our their want partnership and to for my Tradeweb. quarter, efforts like I thanking that at volumes their conclude revenues remarks business to by quarter

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

Ashley Serrao

Thanks Billy.

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

Operator

Rosenblatt Andrew of comes Our Bond Instructions] from first [Operator Securities. question

Andrew Bond

dealer in multi-asset gaining direct improves on to years, trading access or to to interest direct as data is class So, institutions threat brings as seems view this desks for trading that a another interest ultimately over streaming platforms? has just and workflows past theme, the once side. improved. streaming on competitive connectivity buy electronic more to activity again This you Do few of EMS focused the prices be have tool and

Billy Hult

the very Congratulations Goldman way, questions. the Hey on mute. Andrew, I giggling, baton real question. parts. it's analysts’ good for a Billy. like by And a asking not is the is you're It's Repetto’s Alex and I with as much but different on thanks question and seven on a Mr. of know for also, understand from in he taking question, where lead hitter Thanks definitely coming from that. question the it's kind completely

liquidity You've talk, more around heard transpired Andrew, that way a XX% trend the clients engage think tickets. phone important is I this active that a with movement of the tickets AiEX for obviously very me one-way we of sophisticated our were of to best before marketplace. AiEX is to mouse very in play around This very capabilities to our think this most trend. how been significant described in in sort a We've one-way in. the We total a clearly we've terms through and July. the this has role

is picture getting view client is So, our big base the sophisticated. more that

long of algorithmic going trading, working the us. future with We be the not have We an a think to of marketplace for We is EMS less. functionality. believe this more history is advantage very

we've of component In ever. ever competed against platforms dealer single forever the single obviously, and of it, like kind terms of and dealer

into movement more in the very general not business. play strong of clients the counterparties, that very very we of side liquidity important side so, And Our feel way that on and of all obviously most right for getting in marketplace that role buy right? side we're the less, strong automated want efficient this strongly a is a and is buy the is more very something this, good we and our view

our a of I is goes the very something understanding a to of real Always a very, think focus. ethos and way and of through Look strong everything of think perspective, as has absolutely landscape. breathe like the in my also think, how and a is the mind competitive And from And it competitive I I so here the evolving, is certainly landscape strategy, it's every clients. what little culture. said we've and thing do always have one primary ask with that interesting but you and specific question, with understanding question, the live make your at that angle bit

have about we And so, them. better to we think provided clients, as service we couldn't a about with we that very the position how important feel have our

And is good the question. for feel And trend this one absolutely us. we an thanks for so,

Operator

Moley you. Please Patrick moment Thank Sandler. This proceed. question Piper from next One for of question. our comes

Patrick Moley

Yes. Good morning.

back though So gains so, grade, on you've by. in we If bit little credit. months high continued been last my look question’s to seems over tougher share XX high has come the seen or a yield

that a headwinds So, bit the I Maybe half Thanks. how been over this specifically. biggest some of maybe year? there see little the more was the feel about hoping you you of credit of the back talk course what out in you and could tailwinds competitive landscape playing and have

Billy Hult

it's I a good good It's Billy. it's a really Patrick. question, think --

agree, version and right? all MarketAxess trades is around serum, we oriented right? our some odd always the then of do I say how of breathed if onto trades think I Tradeweb, I get so, and trades phone, large, business onto build phone our an you true us perspective, management in know kinds gave visual, so, is, And Tradeweb the protocols everything of both of that from have think room sort would is risk of a of and stubborn and I do is sort thing, competitor of complexity. electronic which which exact truth And terms phone-based the we which being the we more how interesting, management about into a that have lived sort those off is is senior the that we and got senior same marketplace,

us phone-based of credit that that a And to right? this in terms the we shape good in be of numbers So, after guys of how able all and very We're day Our very get out, compete really and for business as take business. share know well, operating focus and out traditional RFQ you in market daily year-over-year, in is area is things day doubled. strong XX% continue successful our are day volume these average of to sort and responses have up platform. We're all-to-all to a doing right? was strong, right very day as

I what of think as brought us trading got bit to guys better of the is, describe lot with you the activity, a we little portfolio our have continually talk a place the have resonated market reality into clients. that again, as has cadence that we a important natural innovations heard about marketplace, is with how a

So well our up year-over-year. and protocols have is for presence for around investment ability These innovate volume the clients, XX% our example, bed significant over portfolio do innovations that with grade -- average clients continued trading we're are our credit. in a to making our daily and our and

the thanks And so, we feel it. And good really about for question.

Operator

One moment from our for you. Thank proceed. This comes Budish of Benjamin Please question next Barclays. question.

Benjamin Budish

question. I making around to with higher it Hey progress sounds I a guys. ask taking the wanted for like you're Thanks level M&A. mean, Yieldbroker. question Billy,

overall kind acquisition, at? What any that you for of post thinking looking What’s through buy, what thinking strategy build maybe kinds versus Thanks. there? you're updates feeds further assets appetite of the your So might M&A? be

Billy Hult

Yes, good question.

about very that about and that mentioning feeling Yieldbroker I confident yes, and appreciate So, acquisition. you

is organic To right? important, start feel are think an So, our which in tremendous So, amount about I'll that that credit we mentioning is use And businesses, of with, into very really example good we example. another putting for ETFs. as I thanks continued bonds, movement energy government that.

room in and this we -- it's of in voice working all this terms So, that feel terms business of well. traditional like, to really like of feels go approach to like still our

So, I'll that. start with

to feeling thoughtful. year, get We're really well. the say as aggressive word specific produce can be We're very will we we to to of on going And around get this a in M&A the maybe kind our like margins I'll through we As approach. this continue continue way. use I

with I’ll as say, very relationship lens. great I us of, supportive that fine been think a have and We partners, sort our we've of tuned they've

look we to it's and perspective, network our M&A, always technology our footprint expanding our with so, about kind augment of And growth. period. product revenue From

do absolutely that disciplined I macro tune market interesting. ways. And way the to kind in we significantly say, what are be to. interesting sort to that's would our point you I will where asking at We of the of where area feel you this without if say is you marketplace did, of us that getting And would lot into over-specifics, were a sort continuing very, is in of can to me some us, expect an there, court continue of And very get the and our home us we we strategy. think there potentially stronger opportunities fine just

asking. It's very much. a good Thanks question. And for thanks

Operator

question. for is from moment Allen our Chris with next One This you. Thank Citi.

Chris Allen

Citadel to recent a making a article credit was move There trading. bigger about

just well? term wondering some I'm makers in block thoughts electronic with that market impact market will So, structure, provide how to and just impact, if how of trading as also on interface play and longer you you expect pricing could the of customer terms out

Tom Pluta

I'll Yes. Hey How that one. take are Tom. Chris, you? it's

systematic making move in that credit about process indicative one-off, more the as of Citadel way always Securities the to trend client mentioned, a more is need where think you market of that great it's They've automated it's as couple IG seen over announced this entry their So, years. a us to not with and maker we've a into I of ours been credit continuation quoting but But we and weeks partner market a think the ago. a is very the fast.

in others. more trading systematic in coming like new market coming the bank seeing big the makers credit beginning. dealers are market And We we're seeing but also who've been also making from Citadel, from there's

the algorithmic very for they'll it's prices. related respond unambiguously algo is to exciting This and also voice for that definitely a traders, Tradeweb. desks addition In positive have development credit markets

seeing getting are positive electronic is Billy off people time which growth the increasingly of as the growth I time, think, becoming important was and running for that the mentioning it's in in about been market trading we as trend parallel automation Billy automated to earlier. and of that we've making, all And very the phone, says. execution also in and talk Technology the over

this think all us. I for is So, good

about customers. You asked on impact the

creates they're experience and getting responses for receiving them those they're I think, quickly. to it inquiry, more responses positive as more their a more

competition will being time electronic think will as that that electronically into market view my quoted I increased to come volume into more trading. So, draw this time. makers size over more And trades over credit, larger is lead

this these So, trends all we're and it's quite happy good and move for us. with think very

Billy Hult

that's a we the question a are Tom Tradeweb I to when imagine new with and was first moment. technology. would that days of the ago and comment, new breathes into get answered lenses wasn't the over. those that that think with Citadels and marketplaces, very that's entrant, marketplace by are a dealer flat a lives into Those that into right? that long it foremost And and marketplaces out lot that in, time, in and and they at can got hiring correctly. like they're you our of as this There And types development are Virtus they obviously something an going to and that enter the where leading marketplaces important the of be institutions sophisticated speaks salespeople,

Operator

Daniel from is Jefferies LLC. question This Fannon of

Daniel Fannon

for fee mix discuss and going about the more kind swaps. should trends for think we Can shifts on on as perspective Tom, fee seeing about we the another you, the per what's of the think maybe you you're of maybe how per million quarter? question term, longer kind these million Maybe And July and the products? in in in

Sara Furber

the little long-term it's a talk of maybe Tom and bit then of Sara. over I Nice turn more part of it start to hear Hey to first that to take question you. Sure. and don't Dan, Why impact. the

in I think terms let of start. swaps, me

within compression look focus you fee Let's bulk than lot fluctuate which in greater the to revenues swaps year, quarter. our a where that's the And if just talked are. of we've the of on about. particularly related at per quarter, activity, given did second months one the million that's Certainly,

It'll little easier a So, break follow. let be down me it bit. to

In April, disclosed. X.XX. we down to May, And actually in as it X.XX, was million rebounded X.XX. was per fee June In that quarter to X.XX. it it the went For

kind of was activity. about, that with paired was you talking that I So, see just that compression volatility really

paired which million. depresses with activity, in So, the fee XX% drop month-over-month May --sorry, XX% decline per month-over-month was a compression increase obviously in a

On million the helped June, flip fee decrease XX% in in that per June about compression side, rebound.

So I get correlation. a bit that in of you just helps think of that little terms clarity

from compression. from million. year, the curve the away with away trends, activity which like macro depressant shorter that trend, tick an some per and we're positive seeing driver. absolute a for end, we've in swaps dealing is one to before in up, activity, a on also fee for lot, is million were which But they compression both even a decrease a being higher increase that July, I We're that's million we're seeing about in are per big these of of get really duration, fee inverted in encouraging than duration and key yield per the fee rates much Importantly, of an and last talked factors trading which

it Tom overall maybe So really the more over, turn positive and bit a talk you of July. to I'll can a you trends. in little trend macro And

Tom Pluta

Dan. a Sara I'll points Hi couple mentioned. what of just Yes. to add

all, quarter was on noisy, of U.S. quite June First XXth. remember dollar second LIBOR because retired was

LIBOR gone, what the so it's bit flow was LIBOR doing, now a we've that to books as point of short So, seen caused the compressing their moving portfolios that obvious much to a on to of curve, per end off points through that way. million. But lot what the is will out are and little clients be and guess, fee think it'll the clearer now right? we LIBOR's dealers most all of the saw month-to-month SOFR, led those lot that noise a I to of more smoother and Fed's a couple activity trends why is I the been I that what one to and the

on of cycle tightening path -- XXX months. in through hiked participants speculative for the the money of end. a points on in midst taking XX of they've rates, It's where market More to need more than basis the Fed. driven short less or lot a been end We've views hedge short volatility we're the

version rates curve, short And driven this the second more activity, short of are that's of the on, highest seen in of in has these steepened the lots persisted yield the the as the Sara investing end. factor, touched activity long short So, the cycle so in into we've curve end that for years. as rates XX

the should So, be getting I think of we Fed tightening end as reaches cycle, close. its the

both think should somewhat. trades. factors of lengthen a duration begin there's or hike the IRS we And should see think Some of steepening two, to certainly another dissipate these yield curve done, but out some we're

watching that be ahead. months in the we'll So, path

Sara Furber

Thanks Dan.

Operator

from One moment our you. next Sachs. This proceed. question. Thank comes with Please Blostein Goldman for Alexander

Alexander Blostein

question. Hey good for morning. the Thanks everybody,

below public your So some last where we see, references Let's comments lumpy I understand discussed, disincentives feel to price months want or to million dynamic ultimately on the trade. can you we've that Tom, market. in I jam create per you as made asset fee and in the a obviously are are pricing? super guys so, to you mix. there couple six would think, for of And like And be comments the you classes people with never hit

benefits get be? to well for make the market marketplace, of guys could areas all that But you the increase adjustments? you and you below kind it is of liquidity you think realistic to guys because pricing when that. And providing price where the are realistically relative the impact? you're about actually to would So where how What

Tom Pluta

want to you Do start?

Billy Hult

Yes.

question, great Alex. a it's So,

to then, didn't we we early arrival wanted which would the as Alex, into So, that want right? And is value. Tom's We value the credit, before, think specifically from speaking like, clients. pricing, that I a added was forward was I've his of the of you've with the up and felt really with me real the comment ball model. stages the able feel in one creating perspective, the have very we rates our he on we for kind kind and look eyes, to fresh and that And pricing of team, specifically were at credit my follow to then excellent, the begin leverage taking taking lead our both to kind that like like roll we like set team, pricing pricing of Tradeweb sleeves a the and take -- the with of that heard this advantage nice have which made are lead things about the move in with we the of say advantage in conversations

in So, that way just was some you, Alex give that it to the asking. he color Tom, of hand to I'll

Tom Pluta

Yes.

products. providing products building are amounts the of charging to what and then And We the is I would and services as raised value rates we're as and you that for prices in receptive in make selectively our those U.S. value for continue appropriately spoke have provide across clients want add we think sure, what providing. technology, what for I investing Alex, we in large we're as we money in And last in So, think, first I credit with agree long I actually the protocols. us for and in since Billy said. year this And I the recently to absolutely foremost, they're well clients, we're

Operator

Kyle Voigt One from KBW. question our moment next comes of for question. This

Kyle Voigt

for Maybe question a multi-part Sara.

in back guidance expense implies year. a think, the I of the bit expenses of in a half the ramp

far, given the in the you with margin just whether was expansion given drive you environment reaffirm on XXXX. wondering the you're full in that combination could expect Just year in half operating in how for if played top-line year-on-year still and first seeing to what out I the July this

margins I expand in to flexible will that but ‘XX? incremental And ahead to expenses how again on whether you'd still maybe to early as comment just if a level and margins have to you that some bit XXXX, high about you think look could know view seem allow for

Sara Furber

make I'm multi-part have if all. it I think forgot Kyle. appreciate to great remind Thanks, hit to them sure I something. Still But, question. Great. question. I a me is going the I

invest think, I different grow the of we've I a types to muted given and we that more environment ability expansion margin ‘XX, environments, half see headcount. the revenue can including think to revenue first while and have deliver of continuing shown, in you

grow. The our with So balancing need continue natural great about to really news for built just business importantly, margin delivering There's talk growth does expansion. scale as into that. we long-term always scale is the invest we to

expense year about you is about either XX% at as diversity, or base our Specifically scales base platform the then not this variable only if our in discretionary. it as of think of size the the reminder, but and given next a ‘XX, expense think level specificity, you of

in going really fluctuate So, is think about variable, revenue. XX% line that with to as

XX% up So with compensation, and fees remainder in are that correlate there's and like there's nature. that variable that exchange volumes, obviously things then down discretionary are things more

down marketing to things are smartly and decisions Now, things those zero, thoughtfully. that can that taking you we're T&E. Those not managing on make like or but are

characteristics And to discretionary invest be business the so, our of really variable scales then expenses big two managed important ability in And of from and technology the real that's that you one thoughtfully. to The there's have and there's things as seat, we a about. lot on. think model platform, focus

half about tracking strong range. second We on the expense of that the particularly talked that quite July, And in expansion an to the still either expense lower track strong had But call, predict. close Billy commented have so end given Right digits, of that guidance little double coming bit now, which comfortable. delivering margin being a And the for half guidance. ‘XX, harder we're we're to we on acquisition months. mid in is on we're

some So, but we'll with guidance still that tune fine specifically, expense we're margin of comfortable expansion.

we've of half I delivered in the that think year. already first the

expanding where curve. much those. very we're just continuing expect that given scale. of I And model it's and to for XX% which still margins We of expansion, growth munis. at initiatives much when XXXX levels historical margin, in say a the priority take, on was that prioritize is we've But would term we're are first third holds, in to while still long-term sort multi-year If credit, lower in relative right? I to we what business little given obviously at amount the think, of question, lot a part revenue we growth, I I about we're said of some your the outlook, So, bit rates, investing still longer have tempered probably now talked and this

how question. that sections of me missed thinking if one gives thank So, about hopefully the you. And that you sense let it. of we're And some I know of

Operator

moment for This question our comes you. Thank next Alex question. with Kramm One UBS. from

Alex Kramm

bit a like looks What's by at July maybe that of talked a little you are little some here color to you gaining. gave rate out a what's the track, credit I bit Billy, made back so, end we commentary can more. interest the It you the up not share flush Just you the know data less but working, maybe working? coming call swaps lot already, but about

So out something may the numbers -- point you should we next else for think us, you before see you yes, that maybe week.

Sara Furber

one kind look, So, July a calibrate as I is I to we're seeing perspective, volume done, overall, revenue think, get and mid of mentioned, Billy double-digit and it's month, not it. from But growth. so totally

government seeing increase. compression continued both market I And performance, share talked a so duration fall platform, little a of our in bit think well. Obviously, things going that bonds. involves I breadth terms credit with and of about about Billy the of swaps, talked number Tom and and activity

fixed that can as revenues of well. some see You in

So, don't it know particular would call as strengths asset. one out I highlighted it platform, by I'll maybe to across turn over that But I the it Billy.

Billy Hult

that in was that significant. That market rupture second occurred of the week in March

thrive month You we risk-off moment We the that as this as in do of we cadence July. would knew do, describe marketplace. we natural in really well back what we've the a into we was guys better than or that's happen as And when know seen April got of what trading. we

plays lining it's think because well our breadth for feel to We're really the we board, our performance. offering, in environment described. So, Sara way an of and talking it's about talking terms us. in And continue the the for perform we're perspective I that the up very market question. solid that to about like across and in to very thanks well straightforward excited from And mid-teens us the of we're exact

Operator

JP comes Ken Morgan. question with next from Our Worthington

Ken Worthington

of you velocity you trends the we seeing and around talk drivers look what can you're trading as main Billy, velocity, For see the about as forward?

Billy Hult

Absolutely. It's Ken. question, an interesting

marketplace velocity the that the I When would draw real in sort the word. credit become business and big a the they question is credit go. market a certain the where marketplace in view the of to of velocity makers, strong the leaning as statement markets? little credit that of a statement Citadels entering credit, to world feel They has the a in always of around a into velocity sort kind as of bit like are of does velocity of line Specifically trading of a part in is making going they're trading become that way, a very direction.

they it's almost chance, very sort becomes, a be about because needs there's the how be second, going view think actually or only is picking the going it market about placed a are Our of question why to we pricing within credit? share go, emphasis reliability the around So, market to of Tradeweb. resource and are might to within mid do increasing up electronic credit good they of share be ton data. the where we've you that's And when market

strong pretty factors Citadel, entrants first, who kind is about bringing this around velocity. my a We that. are protocol coming team like our contributing right? from sort It's this And into about that adoption lens which new the It's great continues concept again, are then, technology in around have really point continued market, leading velocity. it's of of, perspective, does about, a that to These to happen. of

like the fort And of So, the is the the think increase. right to into going that that as about of bring to we how with bet take on be trade I continue velocity to is market, of the kind the the change. man partners this the different we And we question, we that for to side our these continue and businesses velocity think how marketplace we steps Ken. credit thanks

Operator

next Please Thank Morgan for question. you. is Michael Stanley. from Cyprys, our One Okay. proceed. moment This

Michael Cyprys

the potentially regulation. question. you clearing the particular treasuries. Tom the one well on Hey. Good latest your for cut the as proposal thoughts your and trade’s of as taking for maybe around could Thanks to Maybe share central morning. time in Hoping on views regulatory reporting landscape

the Just might that see your where What's volumes and of passed? getting business? are we see those of two opportunity probability impact What we them with marketplace for terms you the proposals? the in in

Tom Pluta

Michael. to hear you. Sure. Hi, Great from

first greater of reporting the asked. for and on more thing adoption these get say, trades, business. very a before, the of So, to regulatory proposals regulators because topics trading. greater that me generally this tend Things the heard supportive clearing, times our faster that say electronic all a pre-trade and two focus price post-trade, you've I'll are reform on transparency, is business specific tailwind encourage for you I'll like central both into the

some to weeks. proposal reporting reduce couple income window of the developments in certain there's the been the fixed definitely on So, last on assets,

While it there's now seems that pieces, that been may the rule come proposals impact should some potential corporates moving munis. SEC and

X. and a filing, do SEC to to a public minutes then is the publish for So, would What for time rule out shortly FINRA the potentially MSRB the to of same submit voted And it with put months within happen reduce couple a the XX munis. that comment. we proposal would reporting rule from expect SEC to thing

trade of shorting reporting there So, by we year the early I ‘XX, maybe a this window. a end that have think that chance on would is or ruling

X our would with us? executed. more clearly because mean does a it the business it happens, what trades be reporting for have business, market this in to if to So minute, be what for for and mean much does this would positive Well, electronically order within comply

rule. in XX there's to obviously be maybe a the and definitely the trend the XX now, electronification opposition to positive the from in the to requirement understand would So of market. arguments reporting I phase in X some where goes been for but this be debate to there'll some time, amount trades manual over window

clearing essentially, hedge of think this do market. listed their XX% it's have from SEC this of bank kind central Treasury the and centrally to The increase for the and of I going would mostly out the being to just that's which as that's cleared, we On other. very U.S. it's market each volume topic, of through. everybody, include with PTFs The go funds, XX% just top the the currently over proposal is amount and proposal and to close of refresh cleared -- the to to expand dealers agenda, centrally there trading would

be with credit without cleared So, trading much that's adopted. it workflows risk trades should amount our settlement as trades to to directionally This a would electronic e-trading continue of positive easier increase also business the centrally checks, make being or clearing for submit greater house. to

public As for We SEC expect far out end the but the set something as final and period, that been we the it's of and finished year. the comment potential Maybe of year, then with like a debate an actually proposal's timeline. a lot implementation timing, back forth, before they'd rule out while. could come a rule this one

markets. trading electronic overall don't help support of that in directionally either but I of increase would in market these share volumes, So should I think, the rules think definitely these affect an

Operator

One question. This America. of moment is for Bank Craig our next from from Siegenthaler

Unidentified Analyst

It's a little that could PT? was and seeing Eli the Craig's wondering some between makes there you differences in on Europe less any U.S. Europe structural elaborate of if I trading. perhaps Are the amenable Abboud [ph] from portfolio you're to headwinds bit European team.

Billy Hult

Good is, better yield Europe. in well, I question. There you credit I on in or I the in headwinds. spread credit price European historically as versus there's there U.S. wouldn't say, has that think, versus been know say, perception like electronic would liquidity the market in around structural U.S. the trades very trading

this And has U.S. would so, that there search for been as U.S. the portfolio first in trading got the strong in adopted, it makes it occur sense very because counterparties

terms of It your Europe. a little of So, is framing in of an there. in still with a lag question I agree would for you bit area focus that there's the of us

comes These portfolio and without produced the of, innovation us. a the it. think sort improving all Europe time results bringing perspective, asking good around the and on think, for and and around a area better an it's That there's for of us and comfort, a strong there's thanks for there. intend take of there. question an trading sales, it's marketplace. ease-of-use our have and real It's process process our question We this. our into in around things I results We focus with the doing territory of And from we advantage

Operator

Thank you.

one moment Bedell from come Brian will Our question -- of Deutsche from please, last Bank. comes

Brian Bedell

squeezing can a Thanks much in here. squeeze also me in I Thanks. for If just very two-parter.

any next any repo? start CME's First futures, to behavior your just see up or optimism you then, and is on in partnership impact of clear year, timing with and set one And from that on updates at supposed have your any that Refinitiv beginning change if treasuries view being cross-margining for client on potentially revenue any is on business that? As the what to on you of progressing, getting of and negotiations, data do take is that? increased the how the announcement DTCC

Tom Pluta

Hi. It's Tom.

Refinitiv I'll think one. first take then the and one, can take I the Sara

for interest last and week cross-margining for treasury definitely both the So increase to those of market treasuries Treasury that in headline, U.S. a next splashy trade weren't the of CME other like that who January futures to details opportunities rate contracts program and but and yes, things other an year thing existing cash a into It's futures. they'll note, participants announced include before. SOFR first of expansion it's an included futures looking couple DTCC

cannot be participants, could respective to both clients. those to the market To members for while market clearing in pass this, to their benefits to potentially this And and DTCC members expect benefit. need impact that it's this of have important benefit reap that to dual capital don't some would participants efficiencies create get note CME treasuries. the market significant we of So, down a on greater volumes

members. leave FICC they're for So, PTFs, as this example, of would not out clearing most scope

it's that this probably directionally positive point. think somewhat but think I we positive, So, limited at

Sara Furber

are a We've since time would early significant Brian, Refinitiv any a conversations say the do we release the Big making great use great to for going bit more positive partnership. Refinitiv, on like actually to last is quarter. last really hopefully I something we're we but out it's maybe the I'll picture, progress And news more contract track piece. end still even feel specifics, cases, the us before spoke made us. focused take and little that put for well, identifying We're flexible. which the and a on LSEG the is year. we have simpler, both we're of

put think new the time way while but place. collaborative the XX% the contract reflect business, in And the in great was which on the long the since and a remind And we look, way for we year-over-year. other proprietary which both have is it's data, come was would companies. has And data second of -- reality part our everyone, is, we're franchise data just a will on the deal up in last business, I XXXX, quarter our also a that

business. data, that our consumption So, of that for in a in line aggregate and can for the of value, obviously we huge is of our the us, deliver it, terms the value positive of clients ability trading all execution

Operator

conference like for Hult to questions now this Billy to time, at no back further Thank you. remarks. would and the turn I'm showing closing

Billy Hult

questions everyone. Great today

which we your very appreciate way easier us really in it and questions, attention. we the do. So Very it that for specific accurate to makes answer

So, appreciate we your really attention.

have to out nine in everyone could great day, will Sameer reach day I follow-up enjoy to thanks please for say time. if would, team I are obviously have to Ashley you a If and the questions, the since different parts And free doing and can’t, feel I the who great. and and it conclude I but

Sara Furber

you. Thank

Operator

This Thank you conference call. you. participating. for Thank concludes today’s

now may You disconnect.

Tradeweb Markets (TW) 27 Jul 232023 Q2 Earnings call transcript