Tradeweb Reports Fourth Quarter and Full Year 2021 Financial Results

Tradeweb Markets Inc. (Nasdaq: TW), a leading, global operator of electronic marketplaces for rates, credit, equities and money markets, today reported financial results for the fourth quarter and full year ended December 31, 2021.

$276.9 million quarterly revenues increased 18.8% (19.9% on a constant currency basis) compared to prior year period

$1.1 trillion average daily volume (“ADV”) for the quarter, an increase of 24.1% compared to prior year period; quarterly ADV records in U.S. government bonds, U.S. High Yield credit and swaps/swaptions ≥ 1-year; Tradeweb's share of fully electronic TRACE volume for U.S. High Grade and U.S. High Yield for the quarter increased by +331 bps and +334 bps respectively compared to prior year period

$60.0 million net income for the quarter decreased by 9.7% from prior year period due to higher tax expense, as state apportionment rate changes drove a reduction in deferred tax assets. $99.7 million adjusted net income increased by 23.9% from prior year period

50.6% adjusted EBITDA margin or $140.1 million adjusted EBITDA for the quarter, compared to 49.2% or $114.6 million respectively in prior year period

$0.23 diluted earnings per share (“Diluted EPS”) for the quarter and $0.42 adjusted diluted earnings per share for the quarter

$0.08 per share quarterly cash dividend declared; $12.0 million of shares repurchased in the fourth quarter

Lee Olesky, CEO of Tradeweb Markets:

"Tradeweb recorded its 22^nd consecutive year of revenue growth in 2021 and surpassed $1 billion in annual revenues for the first time. We became the largest electronic trading platform for U.S. Treasuries, and as rates volatility increased we benefited from a global resurgence in swaps market activity on our platform. In credit, we continued to grow volume and market share, extending our industry leadership in electronic portfolio trading and reflecting strong client demand for both traditional RFQ and increased automation. We published our inaugural corporate sustainability report and continued to attract and develop world-class talent — reaffirming the strength of our culture during a time that tested each and every one of us. While increased adoption of electronic trading has been a long-term trend in recent years, we saw a clear acceleration of that trend during 2021. Looking ahead, we believe markets will continue to benefit from growth in electronic execution and digitized workflow."

(1) Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT, Adjusted EBIT margin, Adjusted Net Income, Adjusted Diluted EPS and constant currency growth are non-GAAP financial measures. See "Non-GAAP Financial Measures" below and the attached schedules for additional information and reconciliations of such non-GAAP financial measures.

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

DISCUSSION OF RESULTS: FOURTH QUARTER 2021

Rates – Revenues of $146.5 million in the fourth quarter of 2021 increased 20.4% compared to prior year period (21.7% on a constant currency basis). Rates performance was led by record activity in swaps/swaptions ≥ 1-year and U.S. government bonds; the latter aided in part by the acquisition of NFI.

Credit – Revenues of $73.6 million in the fourth quarter of 2021 increased 24.2% compared to prior year period (25.1% on a constant currency basis). Credit performance was led by robust trading in U.S. credit, with record trading in U.S. High Yield, and supported by strong growth in European credit. Tradeweb's share of fully electronic TRACE volume for U.S. High Grade was 13.4% compared with 10.1% in the prior year period (+331 bps) and for U.S. High Yield was 7.3%, compared with 4.0% in the prior year period (+334 bps).

Equities – Revenues of $18.4 million in the fourth quarter of 2021 increased 22.3% compared to prior year period (25.4% on a constant currency basis). Equities performance reflected increased adoption of RFQ for electronic trading in ETFs globally.

Money Markets – Revenues of $10.9 million in the fourth quarter of 2021 increased 5.1% compared to prior year period (5.9% on a constant currency basis). Growth in Global Repo activity was supported by the continued addition of new clients and dealers on the platform and partially offset by lower revenue from certificates of deposit.

Market Data – Revenues of $21.6 million in the fourth quarter of 2021 increased 3.8% compared to prior year period (3.5% on a constant currency basis). The increase was derived from increased third party market data fees and revenue from our APA reporting service.

Other – Revenues of $5.8 million in the fourth quarter of 2021 decreased 0.8% compared to prior year period (decreased 0.8% on a constant currency basis).

Operating Expenses – Operating expenses of $185.7 million in the fourth quarter of 2021 increased 15.0% compared to $161.5 million in the prior year period. Adjusted expenses of $148.7 million increased 14.8% (16.0% on a constant currency basis) compared to the prior year period. Increases in both operating expenses and adjusted expenses were driven primarily by higher incentive compensation expenses tied to operating performance, as well as salaries and benefits resulting from increased employee headcount. Please see "Non-GAAP Financial Measures" below for additional information.

DISCUSSION OF RESULTS: FULL-YEAR 2021

Tradeweb recorded its 22^nd consecutive year of record revenues in 2021, as total revenue increased 20.6% (19.3% on a constant currency basis) to $1.1 billion compared to full year 2020. Revenue was driven by average daily trading volume of more than $1 trillion and record activity in: U.S. and European government bonds; swaps/swaptions ≥ 1-year; swaps/swaptions ≤ 1-year; Rates Futures; U.S. High Grade and High Yield credit; European credit; Chinese bonds; U.S. and European ETFs; equity convertibles/swaps/options; and Repurchase Agreements. Net income increased 25.1% to $273.1 million for the year ended December 31, 2021, compared to $218.4 million for the year ended December 31, 2020. Adjusted EBITDA margin increased to 50.8% for the year ended December 31, 2021 compared to 48.9% for the year ended December 31, 2020, representing an increase of 192 bps (211 bps on a constant currency basis). Diluted EPS increased 23.9% to $1.09 for the year ended December 31, 2021. Adjusted Diluted EPS increased 24.4% to $1.63 for the year ended December 31, 2021.

CAPITAL MANAGEMENT

• $972.0 million in cash and cash equivalents and an undrawn $500 million credit facility at December 31, 2021
• Capital expenditures and capitalization of software development in fourth quarter 2021 of $15.8 million and in full-year 2021 of $51.3 million
• Free cash flow for the year ended December 31, 2021 of $526.7 million, up 31.4% compared to prior year period. See “Non-GAAP Financial Measures” for additional information
• During the fourth quarter of 2021, as part of its Share Repurchase Program, Tradeweb purchased 144,155 shares of Class A common stock, at an average price of $83.24, for purchases totaling $12.0 million. For the full year 2021, Tradeweb purchased a total of 901,968 shares of Class A common stock, at an average price of $83.90, for annual purchases totaling $75.7 million. As of December 31, 2021, a total of $74.3 million remained available for repurchase pursuant to the Share Repurchase Program. In addition, $14.5 million in shares were withheld in the fourth quarter of 2021 and $71.0 million in shares were withheld in the full-year 2021 to satisfy tax obligations related to the exercise of stock options
• The Board of Directors of Tradeweb Markets Inc. declared a quarterly cash dividend of $0.08 per share of Class A common stock and Class B common stock. The dividend will be payable on March 15, 2022 to stockholders of record as of March 1, 2022

OTHER MATTERS

Full-Year 2022 Guidance*

• Adjusted Expenses: $620 - $655 million
• Acquisition and Refinitiv Transaction related depreciation and amortization expense: $127 million
• Assumed non-GAAP tax rate: 22.0%
• Capital expenditures and capitalization of software development: $62 - $68 million

*GAAP operating expenses and tax rate guidance are not provided due to the inherent difficulty in quantifying certain amounts due to a variety of factors including the unpredictability in the movement of foreign currency rates.

CONFERENCE CALL

Tradeweb Markets will hold a conference call to discuss fourth quarter and full-year 2021 results starting at 9:30 AM EST today, February 3, 2022. A live, audio webcast of the conference call along with related materials will be available at http://investors.tradeweb.com. Alternatively, interested parties can access the call by dialing 866-221-1629 (U.S.) or +1 470-495-9175 (international) and entering passcode 6480158. After the conference call, an archived recording will be available at http://investors.tradeweb.com.

ABOUT TRADEWEB MARKETS

Tradeweb Markets Inc. (Nasdaq: TW) is a leading, global operator of electronic marketplaces for rates, credit, equities and money markets. Founded in 1996, Tradeweb provides access to markets, data and analytics, electronic trading, straight-through-processing and reporting for more than 40 products to clients in the institutional, wholesale and retail markets. Advanced technologies developed by Tradeweb enhance price discovery, order execution and trade workflows while allowing for greater scale and helping to reduce risks in client trading operations. Tradeweb serves approximately 2,500 clients in more than 65 countries. On average, Tradeweb facilitated more than $1 trillion in notional value traded per day over the past four fiscal quarters. For more information, please go to www.tradeweb.com.

TRADEWEB MARKETS INC.

INCOME STATEMENT

Dollars in Thousands, Except Per Share Data

TRADEWEB MARKETS INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED)

Dollars in Thousands, Except per Share Data

(1) Represents transaction and other costs related to the NFI Acquisition, which closed in June 2021. Acquisition-related costs primarily include legal, consulting and advisory fees and severance costs incurred that relate to the acquisition transaction.

(2) Represents non-cash stock-based compensation expense associated with the Special Option Award and post-IPO options awarded in 2019 and payroll taxes associated with exercises of such options during the applicable period. Beginning on August 30, 2021, this adjustment also includes the non-cash Former CFO Accelerated Stock-Based Compensation Expense, and related payroll taxes, which totaled $1.7 million during the year ended December 31, 2021.

(3) Represents unrealized gain or loss recognized on foreign currency forward contracts and foreign exchange gain or loss from the revaluation of cash denominated in a different currency than the entity’s functional currency.

(4) Represents income recognized during the applicable period due to changes in the tax receivable agreement liability recorded in the statement of financial condition as a result of changes in the mix of earnings, tax legislation and tax rates in various jurisdictions which impacted our tax savings.

(5) Represents intangible asset and acquired software amortization resulting from the NFI Acquisition and intangible asset amortization and increased tangible asset and capitalized software depreciation and amortization resulting from the application of pushdown accounting to the Refinitiv Transaction (where all assets were marked to fair value as of the closing date of the Refinitiv Transaction).

(6) Adjusted EBITDA margin and Adjusted EBIT margin are defined as Adjusted EBITDA and Adjusted EBIT, respectively, divided by revenue for the applicable period.

(1) For post-IPO periods, represents the reallocation of net income attributable to non-controlling interests from the assumed exchange of all outstanding LLC Interests held by non-controlling interests for shares of Class A or Class B common stock.

(2) Represents transaction and other costs related to the NFI Acquisition, which closed in June 2021. During the year ended December 31, 2021, Acquisition-related costs primarily include legal, consulting and advisory fees and severance costs incurred that relate to the acquisition transaction.

(3) Represents intangible asset and acquired software amortization resulting from the NFI Acquisition and intangible asset amortization and increased tangible asset and capitalized software depreciation and amortization resulting from the application of pushdown accounting to the Refinitiv Transaction (where all assets were marked to fair value as of the closing date of the Refinitiv Transaction).

(4) Represents non-cash stock-based compensation expense associated with the Special Option Award and post-IPO options awarded in 2019 and payroll taxes associated with exercises of such options during the applicable period. Beginning on August 30, 2021, this adjustment also includes the non-cash Former CFO Accelerated Stock-Based Compensation Expense, and related payroll taxes, which totaled $1.7 million during the year ended December 31, 2021.

(5) Represents unrealized gain or loss recognized on foreign currency forward contracts and foreign exchange gain or loss from the revaluation of cash denominated in a different currency than the entity’s functional currency.

(6) Represents income recognized during the applicable period due to changes in the tax receivable agreement liability recorded in the statement of financial condition as a result of changes in the mix of earnings, tax legislation and tax rates in various jurisdictions which impacted our tax savings.

(7) Represents corporate income taxes at an assumed effective tax rate of 22% applied to Adjusted Net Income before income taxes for the years ended December 31, 2021 and 2020 and 26.4% applied to Adjusted Net Income before income taxes for the year ended December 31, 2019. For pre-IPO periods, this adjustment assumes Tradeweb Markets LLC was subject to a corporate tax rate for the periods presented December 31, 2021 and 2020.

(8) For a summary of the calculation of Adjusted Diluted EPS, see “Reconciliation of Diluted Weighted Average Shares Outstanding to Adjusted Diluted Weighted Average Shares Outstanding” below.

The following table summarizes the calculation of Adjusted Diluted EPS for the periods presented:

(1) Assumes the full exchange of the weighted average of all outstanding LLC Interests held by non-controlling interests for shares of Class A or Class B common stock, resulting in the elimination of the non-controlling interests and recognition of the net income attributable to non-controlling interests.

(1) Represents transaction and other costs related to the NFI Acquisition, which closed in June 2021. Acquisition-related costs primarily include legal, consulting and advisory fees and severance costs incurred that relate to the acquisition transaction.

(2) Represents intangible asset and acquired software amortization resulting from the NFI Acquisition and intangible asset amortization and increased tangible asset and capitalized software depreciation and amortization resulting from the application of pushdown accounting to the Refinitiv Transaction (where all assets were marked to fair value as of the closing date of the Refinitiv Transaction).

(3) Represents non-cash stock-based compensation expense associated with the Special Option Award and post-IPO options awarded in 2019 and payroll taxes associated with exercises of such options during the applicable period. Beginning on August 30, 2021, this adjustment also includes the non-cash Former CFO Accelerated Stock-Based Compensation Expense, and related payroll taxes, which totaled $1.7 million during the year ended December 31, 2021.

(4) Represents unrealized gain or loss recognized on foreign currency forward contracts and foreign exchange gain or loss from the revaluation of cash denominated in a different currency than the entity’s functional currency.

TRADEWEB MARKETS INC.

BASIC AND DILUTED EPS CALCULATIONS (UNAUDITED)

Dollars in Thousands, Except per Share Data

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

TRADEWEB MARKETS INC.

REVENUES BY ASSET CLASS (UNAUDITED)

TRADEWEB MARKETS INC.

AVERAGE VARIABLE FEES PER MILLION DOLLARS OF VOLUME (UNAUDITED)

(1) Includes Swaps/Swaptions of tenor less than 1 year and Rates Futures.

(2) The “cash credit” category represents the “credit” asset class excluding (1) credit derivatives and (2) U.S. High Grade and High Yield electronically processed (“EP”) activity.

(3) Included to contextualize the impact of short-tenored Swaps/Swaptions and Rates Futures on totals for all periods presented.

TRADEWEB MARKETS INC.

AVERAGE DAILY VOLUME (UNAUDITED)

To access historical traded volumes, go to https://www.tradeweb.com/newsroom/monthly-activity-reports/.

FORWARD-LOOKING STATEMENTS

This release contains forward-looking statements within the meaning of the federal securities laws. Statements related to, among other things, our guidance, including full-year 2022 guidance, and future performance, the industry and markets in which we operate, our expectations, beliefs, plans, strategies, objectives, prospects and assumptions and future events are forward-looking statements.

We have based these forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. These and other important factors, including those discussed under the heading “Risk Factors” in documents of Tradeweb Markets Inc. on file with or furnished to the SEC, may cause our actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements. Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements contained in this release are not guarantees of future performance and our actual results of operations, financial condition or liquidity, and the development of the industry and markets in which we operate, may differ materially from the forward-looking statements contained in this release. In addition, even if our results of operations, financial condition, or liquidity, and events in the industry and markets in which we operate, are consistent with the forward-looking statements contained in this release, they may not be predictive of results or developments in future periods. Any forward-looking statement that we make in this release speaks only as of the date of such statement. Except as required by law, we do not undertake any obligation to update or revise, or to publicly announce any update or revision to, any of the forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this release.

BASIS OF PRESENTATION

Tradeweb Markets Inc. (unless the context otherwise requires, together with its subsidiaries, referred to as “we,” “our,” “Tradeweb,” “Tradeweb Markets” or the “Company”) closed its IPO on April 8, 2019. As a result of certain reorganization transactions (the “Reorganization Transactions”) completed in connection with the IPO, on April 4, 2019, Tradeweb Markets Inc. became a holding company whose only material assets consist of its equity interest in Tradeweb Markets LLC (“TWM LLC”) and related deferred tax assets. As the sole manager of TWM LLC, Tradeweb Markets Inc. operates and controls all of the business and affairs of TWM LLC and, through TWM LLC and its subsidiaries, conducts its business. As a result of this control, and because Tradeweb Markets Inc. has a substantial financial interest in TWM LLC, Tradeweb Markets Inc. consolidates the financial results of TWM LLC and its subsidiaries.

TRADEWEB SOCIAL MEDIA

Investors and others should note that Tradeweb Markets announces material financial and operational information using its investor relations website, press releases, SEC filings and public conference calls and webcasts. Information about Tradeweb Markets, its business and its results of operations may also be announced by posts on the Company’s accounts on the following social media channels: Instagram, LinkedIn and Twitter. The information that we post through these social media channels may be deemed material. As a result, we encourage investors, the media, and others interested in Tradeweb Markets to monitor these social media channels in addition to following our press releases, SEC filings and public conference calls and webcasts. These social media channels may be updated from time to time on our investor relations website.

NON-GAAP FINANCIAL MEASURES

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

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

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

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

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

See the attached schedules for reconciliations of the non-GAAP financial measures contained in this release to their most comparable GAAP financial measure. Non-GAAP financial measures have limitations as analytical tools, and you should not consider these non-GAAP financial measures in isolation or as alternatives to net income attributable to Tradeweb Markets Inc., net income, earnings per share, operating income, operating expenses or cash flow from operating activities or any other financial measure derived in accordance with GAAP. You are encouraged to evaluate each adjustment included in the reconciliations. In addition, in evaluating Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT, Adjusted EBIT margin, Adjusted Net Income, Adjusted Diluted EPS, Adjusted Expenses and Free Cash Flow, you should be aware that in the future, we may incur expenses similar to the adjustments in the presentation of these non-GAAP financial measures. Our presentation of non-GAAP financial measures should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. In addition, the non-GAAP financial measures contained in this release may not be comparable to similarly titled measures used by other companies in our industry or across different industries.

We present certain growth information on a “constant currency” basis. Since our consolidated financial statements are presented in U.S. dollars, we must translate non-U.S. dollar revenues and expenses into U.S. dollars. Constant currency growth, which is a non-GAAP financial measure, is defined as growth excluding the effects of foreign currency fluctuations. Constant currency information is calculated by translating the current period and prior period’s results using the average exchange rates for the prior period. We use constant currency growth as a supplemental metric to evaluate our underlying performance between periods by removing the impact of foreign currency fluctuations. We present certain constant currency growth information because we believe it provides investors and analysts a useful comparison of our results and trends between periods. This information should be considered in addition to, not as a substitute for, results reported in accordance with GAAP, and may not be comparable to similarly titled measures used by other companies.

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