Yahoo Finance Tradeweb Markets Inc (TW) (Q1 2024) Earnings Call Transcript Highlights: Robust Growth and ...
Quarterly Revenue: $409 million, up 24.1% year-over-year
Adjusted EBITDA Margin: Expanded by 141 basis points from Q1 2023
U.S. Treasury Revenue: Increased by 22% year-over-year
U.S. and European Corporate Credit Revenue: Grew 37% and 46% year-over-year, respectively
Equity Derivatives Revenue: Up 10% year-over-year
Global Swaps Revenue: Grew 35% year-over-year
Free Cash Flow: Approximately $651 million for trailing 12 months
Net Interest Income: $19.3 million, increased due to higher cash balances and interest yields
Dividend: Quarterly dividend declared at $0.10 per Class A and Class B shares
Release Date: April 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you discuss the key drivers of recent growth in the interest rate swap business and your outlook for the rest of the year? A: William E. Hult - CEO & Director, Tradeweb Markets Inc.: The growth in the interest rate swap business is largely attributed to leveraging our extensive network of mortgage and government bond clients, and investing in emerging markets. The protocol request for market has been a significant driver of revenue growth. With 70% of the swaps business still conducted via voice markets, there is substantial potential for further electronification and growth.
Q: How should we think about Tradeweb's M&A strategy going forward, especially with the recent acquisition of ICD? A: William E. Hult - CEO & Director, Tradeweb Markets Inc.: Our focus is on maximizing organic growth and integrating recent acquisitions. Future M&A will aim to expand growth across geographies, clients, and products, maintaining a strong cultural fit. Sara Hassan Furber, CFO, emphasized the importance of strategic fit and disciplined financial discipline in our M&A strategy.
Q: What kind of margin expansion opportunity do you see for Tradeweb given the current growth rates, and what could be the steady state for EBITDA margin? A: Sara Hassan Furber - CFO, Tradeweb Markets Inc.: While it's too early to define a steady-state margin, we are confident in our ability to grow margins from here. Our focus is on entering new markets and expanding the platform, with a commitment to profitability and margin expansion over time.
Q: Can you provide insights into the compression trading within interest rate swaps and its impact on risk trades? A: Thomas Pluta - President & Director, Tradeweb Markets Inc.: Compression trading is used efficiently by clients to manage old risks. Our most active compression clients tend to increase their volumes of more profitable risk trades as well. This correlation supports the overall growth of our swaps business.
Q: Could you discuss the success of RFQ trading in credit markets and what is driving its growth? A: William E. Hult - CEO & Director, Tradeweb Markets Inc.: RFQ trading is a significant opportunity in credit markets, particularly in institutional RFQ where we've seen a 30% increase in activity. Success is driven by deepening client relationships and enhancing our platform with functionalities that resonate with both institutional and dealer segments.
Q: What are the potential impacts and opportunities for Tradeweb with the upcoming regulations on the clearing of treasuries? A: Thomas Pluta - President & Director, Tradeweb Markets Inc.: The new clearing rules are generally positive for Tradeweb, as they align with the trend towards greater electronification. We are well-prepared to help our clients navigate these changes, similar to our approach with interest rate swaps regulation.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
