QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State of other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
☒ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | |||||||||||||||||||
Smaller reporting company | Emerging growth company |
Class of Stock | Shares Outstanding as of April 20, 2023 | |||||||
Class A Common Stock, par value $0.00001 per share | ||||||||
Class B Common Stock, par value $0.00001 per share | ||||||||
Class C Common Stock, par value $0.00001 per share | ||||||||
Class D Common Stock, par value $0.00001 per share |
Page | ||||||||
Condensed Consolidated Statements of Financial Condition as of March 31, 2023 and December 31, 2022 | ||||||||
Condensed Consolidated Statements of Income for the three months ended March 31, 2023 and 2022 | ||||||||
Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2023 and 2022 | ||||||||
Condensed Consolidated Statements of Changes in Equity for the three months ended March 31, 2023 and 2022 | ||||||||
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022 | ||||||||
March 31, | December 31, | |||||||||||||
2023 | 2022 | |||||||||||||
Assets | ||||||||||||||
Cash and cash equivalents | $ | $ | ||||||||||||
Restricted cash | ||||||||||||||
Receivable from brokers and dealers and clearing organizations | ||||||||||||||
Deposits with clearing organizations | ||||||||||||||
Accounts receivable, net of allowance for credit losses of $ | ||||||||||||||
Furniture, equipment, purchased software and leasehold improvements, net of accumulated depreciation and amortization | ||||||||||||||
Lease right-of-use assets | ||||||||||||||
Software development costs, net of accumulated amortization | ||||||||||||||
Goodwill | ||||||||||||||
Intangible assets, net of accumulated amortization | ||||||||||||||
Receivable and due from affiliates | ||||||||||||||
Deferred tax asset | ||||||||||||||
Other assets | ||||||||||||||
Total assets | $ | $ | ||||||||||||
Liabilities and Equity | ||||||||||||||
Liabilities | ||||||||||||||
Payable to brokers and dealers and clearing organizations | $ | $ | ||||||||||||
Accrued compensation | ||||||||||||||
Deferred revenue | ||||||||||||||
Accounts payable, accrued expenses and other liabilities | ||||||||||||||
Lease liabilities | ||||||||||||||
Payable and due to affiliates | ||||||||||||||
Deferred tax liability | ||||||||||||||
Tax receivable agreement liability | ||||||||||||||
Total liabilities | ||||||||||||||
Commitments and contingencies (Note 12) | ||||||||||||||
Preferred stock, $ | ||||||||||||||
Class A common stock, $ | ||||||||||||||
Class B common stock, $ | ||||||||||||||
Class C common stock, $ | ||||||||||||||
Class D common stock, $ | ||||||||||||||
Additional paid-in capital | ||||||||||||||
Accumulated other comprehensive income (loss) | ( | ( | ||||||||||||
Retained earnings | ||||||||||||||
Total stockholders’ equity attributable to Tradeweb Markets Inc. | ||||||||||||||
Non-controlling interests | ||||||||||||||
Total equity | ||||||||||||||
Total liabilities and equity | $ | $ |
Three Months Ended | ||||||||||||||
March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
Revenues | ||||||||||||||
Transaction fees and commissions | $ | $ | ||||||||||||
Subscription fees | ||||||||||||||
Refinitiv market data fees | ||||||||||||||
Other | ||||||||||||||
Total revenue | ||||||||||||||
Expenses | ||||||||||||||
Employee compensation and benefits | ||||||||||||||
Depreciation and amortization | ||||||||||||||
Technology and communications | ||||||||||||||
General and administrative | ||||||||||||||
Professional fees | ||||||||||||||
Occupancy | ||||||||||||||
Total expenses | ||||||||||||||
Operating income | ||||||||||||||
Net interest income (expense) | ( | |||||||||||||
Other income (loss), net | ||||||||||||||
Income before taxes | ||||||||||||||
Provision for income taxes | ( | ( | ||||||||||||
Net income | ||||||||||||||
Less: Net income attributable to non-controlling interests | ||||||||||||||
Net income attributable to Tradeweb Markets Inc. | $ | $ | ||||||||||||
Earnings per share attributable to Tradeweb Markets Inc. Class A and B common stockholders: | ||||||||||||||
Basic | $ | $ | ||||||||||||
Diluted | $ | $ | ||||||||||||
Weighted average shares outstanding: | ||||||||||||||
Basic | ||||||||||||||
Diluted |
Three Months Ended | ||||||||||||||
March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
Net income | $ | $ | ||||||||||||
Other comprehensive income (loss), net of tax: | ||||||||||||||
Foreign currency translation adjustments, with | ( | |||||||||||||
Other comprehensive income (loss), net of tax | ( | |||||||||||||
Comprehensive income | ||||||||||||||
Less: Net income attributable to non-controlling interests | ||||||||||||||
Less: Foreign currency translation adjustments attributable to non-controlling interests | ( | |||||||||||||
Comprehensive income attributable to Tradeweb Markets Inc. | $ | $ |
Tradeweb Markets Inc. Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Par Value | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class A Common Stock | Class B Common Stock | Class C Common Stock | Class D Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Non- Controlling Interests | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2022 | $ | $ | $ | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock from equity incentive plans | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Share repurchases pursuant to share repurchase programs | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
Tax receivable agreement liability and deferred taxes arising from LLC Interest ownership exchanges and the issuance of common stock from equity incentive plans | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Adjustments to non-controlling interests | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Distributions to non-controlling interests | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
Dividends ($ | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense under the PSU Plan | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense under the PRSU Plan | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense under the RSU Plan | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense under the Option Plan | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Payroll taxes paid for stock-based compensation | — | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2023 | $ | $ | $ | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||
Tradeweb Markets Inc. Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Par Value | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class A Common Stock | Class B Common Stock | Class C Common Stock | Class D Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Non- Controlling Interests | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2021 | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock from equity incentive plans | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Share repurchases pursuant to share repurchase programs | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
Tax receivable agreement liability and deferred taxes arising from LLC Interest ownership exchanges and the issuance of common stock from equity incentive plans | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Adjustments to non-controlling interests | — | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Distributions to non-controlling interests | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
Dividends ($ | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense under the PRSU Plan | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense under the RSU Plan | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense under the Option Plan | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Payroll taxes paid for stock-based compensation | — | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | — | — | ( | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2022 | $ | $ | $ | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended | ||||||||||||||
March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
Cash flows from operating activities | ||||||||||||||
Net income | $ | $ | ||||||||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||||||||
Depreciation and amortization | ||||||||||||||
Stock-based compensation expense | ||||||||||||||
Deferred taxes | ||||||||||||||
Other (income) loss, net | ( | |||||||||||||
(Increase) decrease in operating assets: | ||||||||||||||
Receivable from/payable to brokers and dealers and clearing organizations, net | ( | |||||||||||||
Deposits with clearing organizations | ( | ( | ||||||||||||
Accounts receivable | ( | ( | ||||||||||||
Receivable and due from affiliates/payable and due to affiliates, net | ||||||||||||||
Other assets | ( | ( | ||||||||||||
Increase (decrease) in operating liabilities: | ||||||||||||||
Securities sold under agreements to repurchase | ||||||||||||||
Accrued compensation | ( | ( | ||||||||||||
Deferred revenue | ||||||||||||||
Accounts payable, accrued expenses and other liabilities | ||||||||||||||
Net cash provided by operating activities | ||||||||||||||
Cash flows from investing activities | ||||||||||||||
Purchases of furniture, equipment, software and leasehold improvements | ( | ( | ||||||||||||
Capitalized software development costs | ( | ( | ||||||||||||
Net cash used in investing activities | ( | ( | ||||||||||||
Cash flows from financing activities | ||||||||||||||
Share repurchases pursuant to share repurchase programs | ( | ( | ||||||||||||
Proceeds from stock-based compensation exercises | ||||||||||||||
Dividends | ( | ( | ||||||||||||
Distributions to non-controlling interests | ( | ( | ||||||||||||
Payroll taxes paid for stock-based compensation | ( | ( | ||||||||||||
Payments on tax receivable agreement liability | ( | ( | ||||||||||||
Net cash used in financing activities | ( | ( | ||||||||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | ( | |||||||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | ( | ( | ||||||||||||
Cash, cash equivalents and restricted cash | ||||||||||||||
Beginning of period | ||||||||||||||
End of period | $ | $ |
Three Months Ended | ||||||||||||||
March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
Supplemental disclosure of cash flow information | ||||||||||||||
Income taxes paid, net of (refunds) | $ | $ | ||||||||||||
Non-cash investing and financing activities | ||||||||||||||
Furniture, equipment, software and leasehold improvement additions included in accounts payable | $ | $ | ||||||||||||
Unsettled stock-based compensation exercises included in other assets | $ | $ | ||||||||||||
Unsettled share repurchases included in other liabilities | $ | $ | ||||||||||||
Withholding taxes payable relating to stock-based compensation settlements included in accrued compensation | $ | $ | ||||||||||||
Items arising from LLC Interest ownership changes: | ||||||||||||||
Establishment of liabilities under tax receivable agreement | $ | $ | ||||||||||||
Deferred tax asset | $ | $ | ||||||||||||
March 31, | December 31, | |||||||||||||
Reconciliation of cash, cash equivalents and restricted cash as shown on the statements of financial condition: | 2023 | 2022 | ||||||||||||
Cash and cash equivalents | $ | $ | ||||||||||||
Restricted cash | ||||||||||||||
Cash, cash equivalents and restricted cash shown in the statement of cash flows | $ | $ |
Three Months Ended | Three Months Ended | |||||||||||||||||||||||||
March 31, 2023 | March 31, 2022 | |||||||||||||||||||||||||
(in thousands) | (in thousands) | |||||||||||||||||||||||||
Variable | Fixed | Variable | Fixed | |||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||
Transaction fees and commissions | $ | $ | $ | $ | ||||||||||||||||||||||
Subscription fees | ||||||||||||||||||||||||||
Refinitiv market data fees | ||||||||||||||||||||||||||
Other | ||||||||||||||||||||||||||
Total revenue | $ | $ | $ | $ |
Amount | ||||||||
(in thousands) | ||||||||
Deferred revenue balance - December 31, 2022 | $ | |||||||
New billings | ||||||||
Revenue recognized | ( | |||||||
Effect of foreign currency exchange rate changes | ||||||||
Deferred revenue balance - March 31, 2023 | $ |
March 31, 2023 | March 31, 2022 | |||||||||||||||||||||||||
LLC Interests | Ownership % | LLC Interests | Ownership % | |||||||||||||||||||||||
Number of LLC Interests held by Tradeweb Markets Inc. | % | % | ||||||||||||||||||||||||
Number of LLC Interests held by non-controlling interests | % | % | ||||||||||||||||||||||||
Total LLC Interests outstanding | % | % |
Net Income Attributable to Tradeweb Markets Inc. and Transfers (to) from the Non-Controlling Interests | Three Months Ended | |||||||||||||
March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
(in thousands) | ||||||||||||||
Net income attributable to Tradeweb Markets Inc. | $ | $ | ||||||||||||
Transfers (to) from non-controlling interests: | ||||||||||||||
Increase/(decrease) in Tradeweb Markets Inc.’s additional paid-in capital as a result of ownership changes in TWM LLC | ||||||||||||||
Net transfers (to) from non-controlling interests | ||||||||||||||
Change from net income attributable to Tradeweb Markets Inc. and transfers (to) from non-controlling interests | $ | $ |
Three Months Ended March 31, 2023 | ||||||||||||||||||||||||||||||||
Class A | Class B | Class C | Class D | Total | ||||||||||||||||||||||||||||
Balance at December 31, 2022 | ||||||||||||||||||||||||||||||||
Activities related to exchanges of LLC Interests | — | — | ( | |||||||||||||||||||||||||||||
Issuance of common stock from equity incentive plans | — | — | — | |||||||||||||||||||||||||||||
Share repurchases pursuant to share repurchase programs | ( | — | — | — | ( | |||||||||||||||||||||||||||
Balance at March 31, 2023 |
Three Months Ended March 31, 2022 | ||||||||||||||||||||||||||||||||
Class A | Class B | Class C | Class D | Total | ||||||||||||||||||||||||||||
Balance at December 31, 2021 | ||||||||||||||||||||||||||||||||
Activities related to exchanges of LLC Interests | — | — | ( | |||||||||||||||||||||||||||||
Issuance of common stock from equity incentive plans | — | — | — | |||||||||||||||||||||||||||||
Share repurchases pursuant to share repurchase programs | ( | — | — | — | ( | |||||||||||||||||||||||||||
Balance at March 31, 2022 |
Three Months Ended | ||||||||||||||
March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
(in thousands) | ||||||||||||||
Total stock-based compensation expense | $ | $ |
March 31, | December 31, | |||||||||||||
2023 | 2022 | |||||||||||||
(in thousands) | ||||||||||||||
Accounts receivable | $ | $ | ||||||||||||
Receivable and due from affiliates | ||||||||||||||
Other assets | ||||||||||||||
Accounts payable, accrued expenses and other liabilities | ||||||||||||||
Deferred revenue | ||||||||||||||
Payable and due to affiliates |
Three Months Ended | ||||||||||||||
March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
(in thousands) | ||||||||||||||
Revenue: | ||||||||||||||
Subscription fees | $ | $ | ||||||||||||
Refinitiv market data fees (1) | ||||||||||||||
Other fees | ||||||||||||||
Expenses: (2) | ||||||||||||||
Employee compensation and benefits | ||||||||||||||
Technology and communications | ||||||||||||||
General and administrative | ||||||||||||||
Professional fees | ||||||||||||||
Quoted Prices in active Markets for Identical Assets (Level 1) | Significant Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | |||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||
As of March 31, 2023 | ||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||
Cash equivalents – Money market funds | $ | $ | $ | $ | ||||||||||||||||||||||
Total assets measured at fair value | $ | $ | $ | $ | ||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||
Payable and due to affiliates – Foreign currency forward contracts | $ | $ | $ | $ | ||||||||||||||||||||||
Total liabilities measured at fair value | $ | $ | $ | $ | ||||||||||||||||||||||
As of December 31, 2022 | ||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||
Cash equivalents – Money market funds | $ | $ | $ | $ | ||||||||||||||||||||||
Total assets measured at fair value | $ | $ | $ | $ | ||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||
Payable and due to affiliates – Foreign currency forward contracts | $ | $ | $ | $ | ||||||||||||||||||||||
Total liabilities measured at fair value | $ | $ | $ | $ |
March 31, | December 31, | |||||||||||||
2023 | 2022 | |||||||||||||
(in thousands) | ||||||||||||||
Foreign currency forward contracts – Gross notional amount | $ | $ |
Three Months Ended | ||||||||||||||
March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
(in thousands) | ||||||||||||||
Foreign currency forward contracts not designated in accounting hedge relationship | $ | ( | $ |
Carrying Value | Quoted Prices in active Markets for Identical Assets (Level 1) | Significant Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total Fair Value | ||||||||||||||||||||||||||||
As of March 31, 2023 | (in thousands) | |||||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||
Cash and restricted cash | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Receivable from brokers and dealers and clearing organizations | ||||||||||||||||||||||||||||||||
Deposits with clearing organizations | ||||||||||||||||||||||||||||||||
Accounts receivable | ||||||||||||||||||||||||||||||||
Other assets – Memberships in clearing organizations | ||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||
Payable to brokers and dealers and clearing organizations | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
As of December 31, 2022 | ||||||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||
Cash and restricted cash | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Receivable from brokers and dealers and clearing organizations | ||||||||||||||||||||||||||||||||
Deposits with clearing organizations | ||||||||||||||||||||||||||||||||
Accounts receivable | ||||||||||||||||||||||||||||||||
Other assets – Memberships in clearing organizations | ||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||
Payable to brokers and dealers and clearing organizations | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ |
Amount | ||||||||
(in thousands) | ||||||||
Remainder of 2023 | $ | |||||||
2024 | ||||||||
2025 | ||||||||
2026 | ||||||||
2027 | ||||||||
Thereafter | ||||||||
Total future lease payments | ||||||||
Less imputed interest | ( | |||||||
Lease liability | $ |
Three Months Ended | ||||||||||||||
March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
(in thousands, except share and per share amounts) | ||||||||||||||
Numerator: | ||||||||||||||
Net income attributable to Tradeweb Markets Inc. | $ | $ | ||||||||||||
Less: Distributed and undistributed earnings allocated to unvested RSUs and unsettled vested PRSUs (1) | ( | ( | ||||||||||||
Net income attributable to outstanding shares of Class A and Class B common stock - Basic and Diluted | $ | $ | ||||||||||||
Denominator: | ||||||||||||||
Weighted average shares of Class A and Class B common stock outstanding - Basic | ||||||||||||||
Dilutive effect of PRSUs | ||||||||||||||
Dilutive effect of options | ||||||||||||||
Dilutive effect of RSUs | ||||||||||||||
Dilutive effect of PSUs | ||||||||||||||
Weighted average shares of Class A and Class B common stock outstanding - Diluted | ||||||||||||||
Earnings per share - Basic | $ | $ | ||||||||||||
Earnings per share - Diluted | $ | $ |
Three Months Ended | ||||||||||||||
March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
Anti-dilutive Shares: | ||||||||||||||
PRSUs | ||||||||||||||
Options | ||||||||||||||
RSUs | ||||||||||||||
PSUs | ||||||||||||||
LLC Interests |
As of March 31, 2023 | TWL | DW | TWD | TEL | TWJ | TWEU | TESL | TESBV | ||||||||||||||||||||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Regulatory Capital | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
Regulatory Capital Requirement | ||||||||||||||||||||||||||||||||||||||||||||||||||
Excess Regulatory Capital | $ | $ | $ | $ | $ | $ | $ | $ |
As of December 31, 2022 | TWL | DW | TWD | TEL | TWJ | TWEU | TESL | TESBV | ||||||||||||||||||||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Regulatory Capital | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
Regulatory Capital Requirement | ||||||||||||||||||||||||||||||||||||||||||||||||||
Excess Regulatory Capital | $ | $ | $ | $ | $ | $ | $ | $ |
As of March 31, 2023 | As of December 31, 2022 | |||||||||||||||||||||||||
TW SEF | DW SEF | TW SEF | DW SEF | |||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||
Financial Resources | $ | $ | $ | $ | ||||||||||||||||||||||
Required Financial Resources | ||||||||||||||||||||||||||
Excess Financial Resources | $ | $ | $ | $ | ||||||||||||||||||||||
Liquid Financial Assets | $ | $ | $ | $ | ||||||||||||||||||||||
Required Liquid Financial Assets | ||||||||||||||||||||||||||
Excess Liquid Financial Assets | $ | $ | $ | $ |
Three Months Ended | ||||||||||||||
March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
(in thousands) | ||||||||||||||
Revenues | ||||||||||||||
Institutional | $ | $ | ||||||||||||
Wholesale | ||||||||||||||
Retail | ||||||||||||||
Market Data | ||||||||||||||
Total revenue | ||||||||||||||
Operating expenses | ||||||||||||||
Operating income | $ | $ |
Three Months Ended | ||||||||||||||
March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
(in thousands) | ||||||||||||||
Revenues | ||||||||||||||
U.S. | $ | $ | ||||||||||||
International | ||||||||||||||
Total revenue | $ | $ |
March 31, | December 31, | |||||||||||||
2023 | 2022 | |||||||||||||
(in thousands) | ||||||||||||||
Long-lived assets | ||||||||||||||
U.S. | $ | $ | ||||||||||||
International | ||||||||||||||
Total | $ | $ |
Three Months Ended | ||||||||||||||||||||||||||
March 31, | ||||||||||||||||||||||||||
2023 | 2022 | $ Change | % Change | |||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||
Total revenue | $ | 329,249 | $ | 311,486 | $ | 17,763 | 5.7 | % | ||||||||||||||||||
Total expenses | 206,683 | 199,884 | 6,799 | 3.4 | % | |||||||||||||||||||||
Operating income | 122,566 | 111,602 | 10,964 | 9.8 | % | |||||||||||||||||||||
Net interest income (expense) | 12,491 | (447) | 12,938 | N/M | ||||||||||||||||||||||
Other income (loss), net | 341 | — | 341 | N/M | ||||||||||||||||||||||
Income before taxes | 135,398 | 111,155 | 24,243 | 21.8 | % | |||||||||||||||||||||
Provision for income taxes | (33,205) | (13,710) | (19,495) | 142.2 | % | |||||||||||||||||||||
Net income | 102,193 | 97,445 | 4,748 | 4.9 | % | |||||||||||||||||||||
Less: Net income attributable to non-controlling interests | 14,337 | 14,480 | (143) | (1.0) | % | |||||||||||||||||||||
Net income attributable to Tradeweb Markets Inc. | $ | 87,856 | $ | 82,965 | $ | 4,891 | 5.9 | % |
Three Months Ended | ||||||||||||||||||||||||||||||||||||||
March 31, | ||||||||||||||||||||||||||||||||||||||
2023 | 2022 | |||||||||||||||||||||||||||||||||||||
$ | % of Total Revenue | $ | % of Total Revenue | $ Change | % Change | |||||||||||||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||||||||
Transaction fees and commissions | $ | 266,598 | 81.0 | % | $ | 251,805 | 80.8 | % | $ | 14,793 | 5.9 | % | ||||||||||||||||||||||||||
Subscription fees (1) | 59,968 | 18.2 | 57,013 | 18.3 | 2,955 | 5.2 | % | |||||||||||||||||||||||||||||||
Other | 2,683 | 0.8 | 2,668 | 0.9 | 15 | 0.6 | % | |||||||||||||||||||||||||||||||
Total revenue | $ | 329,249 | 100.0 | % | $ | 311,486 | 100.0 | % | $ | 17,763 | 5.7 | % | ||||||||||||||||||||||||||
Components of total revenue growth: | ||||||||||||||||||||||||||||||||||||||
Constant currency growth (2) | 7.5 | % | ||||||||||||||||||||||||||||||||||||
Foreign currency impact | (1.8) | % | ||||||||||||||||||||||||||||||||||||
Total revenue growth | 5.7 | % |
Three Months Ended | ||||||||||||||||||||||||||
March 31, | ||||||||||||||||||||||||||
2023 | 2022 | $ Change | % Change | |||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||
Rates | $ | 170,505 | $ | 160,339 | $ | 10,166 | 6.3 | % | ||||||||||||||||||
Credit | 89,017 | 86,318 | 2,699 | 3.1 | % | |||||||||||||||||||||
Equities | 26,203 | 26,535 | (332) | (1.3) | % | |||||||||||||||||||||
Money Markets | 14,807 | 11,524 | 3,283 | 28.5 | % | |||||||||||||||||||||
Market Data | 22,434 | 21,366 | 1,068 | 5.0 | % | |||||||||||||||||||||
Other | 6,283 | 5,404 | 879 | 16.3 | % | |||||||||||||||||||||
Total revenue | $ | 329,249 | $ | 311,486 | $ | 17,763 | 5.7 | % |
Three Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
March 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | 2022 | $ Change | % Change | |||||||||||||||||||||||||||||||||||||||||||||||
Variable | Fixed | Variable | Fixed | Variable | Fixed | Variable | Fixed | |||||||||||||||||||||||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||||||||||||||||||||
Rates | $ | 114,168 | $ | 56,337 | $ | 103,389 | $ | 56,950 | $ | 10,779 | $ | (613) | 10.4 | % | (1.1) | % | ||||||||||||||||||||||||||||||||||
Credit | 82,364 | 6,653 | 79,648 | 6,670 | 2,716 | (17) | 3.4 | % | (0.3) | % | ||||||||||||||||||||||||||||||||||||||||
Equities | 23,897 | 2,306 | 24,151 | 2,384 | (254) | (78) | (1.1) | % | (3.3) | % | ||||||||||||||||||||||||||||||||||||||||
Money Markets | 10,414 | 4,393 | 7,274 | 4,250 | 3,140 | 143 | 43.2 | % | 3.4 | % | ||||||||||||||||||||||||||||||||||||||||
Market Data | — | 22,434 | — | 21,366 | — | 1,068 | — | 5.0 | % | |||||||||||||||||||||||||||||||||||||||||
Other | — | 6,283 | — | 5,404 | — | 879 | — | 16.3 | % | |||||||||||||||||||||||||||||||||||||||||
Total revenue | $ | 230,843 | $ | 98,406 | $ | 214,462 | $ | 97,024 | $ | 16,381 | $ | 1,382 | 7.6 | % | 1.4 | % |
Three Months Ended | ||||||||||||||||||||||||||||||||
March 31, | ||||||||||||||||||||||||||||||||
2023 | 2022 | ADV | ||||||||||||||||||||||||||||||
ADV | Volume | ADV | Volume | % Change | ||||||||||||||||||||||||||||
(dollars in millions) | ||||||||||||||||||||||||||||||||
Rates | $ | 871,293 | $ | 54,558,452 | $ | 748,546 | $ | 46,592,263 | 16.4 | % | ||||||||||||||||||||||
Rates Cash | 362,618 | 22,568,694 | 387,505 | 24,060,508 | (6.4) | % | ||||||||||||||||||||||||||
Rates Derivatives | 508,675 | 31,989,758 | 361,041 | 22,531,755 | 40.9 | % | ||||||||||||||||||||||||||
Swaps / Swaptions Tenor (greater than 1 year) | 285,896 | 17,965,246 | 210,550 | 13,143,966 | 35.8 | % | ||||||||||||||||||||||||||
Other Rates Derivatives (1) | 222,779 | 14,024,511 | 150,490 | 9,387,789 | 48.0 | % | ||||||||||||||||||||||||||
Credit | 32,303 | 2,021,369 | 33,227 | 2,069,127 | (2.8) | % | ||||||||||||||||||||||||||
Cash Credit (2) | 7,988 | 497,313 | 7,559 | 465,829 | 5.7 | % | ||||||||||||||||||||||||||
Credit Derivatives and U.S. Cash “EP” | 24,315 | 1,524,056 | 25,668 | 1,603,297 | (5.3) | % | ||||||||||||||||||||||||||
Equities | 19,533 | 1,218,547 | 21,449 | 1,334,373 | (8.9) | % | ||||||||||||||||||||||||||
Equities Cash | 10,491 | 656,069 | 12,766 | 795,184 | (17.8) | % | ||||||||||||||||||||||||||
Equities Derivatives | 9,043 | 562,478 | 8,683 | 539,189 | 4.1 | % | ||||||||||||||||||||||||||
Money Markets | 441,607 | 27,534,565 | 371,578 | 23,107,647 | 18.9 | % | ||||||||||||||||||||||||||
Total | $ | 1,364,737 | $ | 85,332,933 | $ | 1,174,801 | $ | 73,103,409 | 16.2 | % | ||||||||||||||||||||||
Total excluding Other Rates Derivatives (3) | $ | 1,141,958 | $ | 71,308,422 | $ | 1,024,311 | $ | 63,715,620 | 11.5 | % |
Three Months Ended | ||||||||||||||||||||||||||
March 31, | ||||||||||||||||||||||||||
2023 | 2022 | $ Change | % Change | |||||||||||||||||||||||
Rates | $ | 2.09 | $ | 2.22 | $ | (0.13) | (5.7) | % | ||||||||||||||||||
Rates Cash | $ | 2.54 | $ | 2.05 | $ | 0.49 | 24.0 | % | ||||||||||||||||||
Rates Derivatives | $ | 1.78 | $ | 2.40 | $ | (0.62) | (26.0) | % | ||||||||||||||||||
Rates Derivatives (greater than 1 year) | $ | 3.03 | $ | 3.96 | $ | (0.93) | (23.5) | % | ||||||||||||||||||
Other Rates Derivatives (1) | $ | 0.17 | $ | 0.21 | $ | (0.04) | (21.0) | % | ||||||||||||||||||
Credit | $ | 40.75 | $ | 38.51 | $ | 2.24 | 5.8 | % | ||||||||||||||||||
Cash Credit (2) | $ | 146.32 | $ | 147.49 | $ | (1.17) | (0.8) | % | ||||||||||||||||||
Credit Derivatives and U.S. Cash “EP” | $ | 6.32 | $ | 6.91 | $ | (0.59) | (8.4) | % | ||||||||||||||||||
Equities | $ | 19.64 | $ | 18.10 | $ | 1.54 | 8.5 | % | ||||||||||||||||||
Equities Cash | $ | 30.33 | $ | 26.18 | $ | 4.15 | 15.9 | % | ||||||||||||||||||
Equities Derivatives | $ | 7.21 | $ | 6.18 | $ | 1.03 | 16.6 | % | ||||||||||||||||||
Money Markets | $ | 0.38 | $ | 0.31 | $ | 0.07 | 20.2 | % | ||||||||||||||||||
Total | $ | 2.71 | $ | 2.93 | $ | (0.22) | (7.8) | % | ||||||||||||||||||
Total excluding Other Rates Derivatives (3) | $ | 3.20 | $ | 3.33 | $ | (0.13) | (3.9) | % |
Three Months Ended | ||||||||||||||||||||||||||
March 31, | ||||||||||||||||||||||||||
2023 | 2022 | $ Change | % Change | |||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||
Institutional | $ | 198,852 | $ | 197,210 | $ | 1,642 | 0.8 | % | ||||||||||||||||||
Wholesale | 76,100 | 72,938 | 3,162 | 4.3 | % | |||||||||||||||||||||
Retail | 31,863 | 19,972 | 11,891 | 59.5 | % | |||||||||||||||||||||
Market Data | 22,434 | 21,366 | 1,068 | 5.0 | % | |||||||||||||||||||||
Total revenue | $ | 329,249 | $ | 311,486 | $ | 17,763 | 5.7 | % |
Three Months Ended | ||||||||||||||||||||||||||
March 31, | ||||||||||||||||||||||||||
2023 | 2022 | $ Change | % Change | |||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||
U.S. | $ | 208,702 | $ | 190,293 | $ | 18,409 | 9.7 | % | ||||||||||||||||||
International | 120,547 | 121,193 | (646) | (0.5) | % | |||||||||||||||||||||
Total revenue | $ | 329,249 | $ | 311,486 | $ | 17,763 | 5.7 | % |
Three Months Ended | ||||||||||||||||||||||||||
March 31, | ||||||||||||||||||||||||||
2023 | 2022 | $ Change | % Change | |||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||
Employee compensation and benefits | $ | 114,493 | $ | 117,991 | $ | (3,498) | (3.0) | % | ||||||||||||||||||
Depreciation and amortization | 45,404 | 44,450 | 954 | 2.1 | % | |||||||||||||||||||||
Technology and communications | 17,567 | 15,776 | 1,791 | 11.4 | % | |||||||||||||||||||||
General and administrative | 13,920 | 10,313 | 3,607 | 35.0 | % | |||||||||||||||||||||
Professional fees | 11,176 | 7,857 | 3,319 | 42.2 | % | |||||||||||||||||||||
Occupancy | 4,123 | 3,497 | 626 | 17.9 | % | |||||||||||||||||||||
Total expenses | $ | 206,683 | $ | 199,884 | $ | 6,799 | 3.4 | % |
March 31, | December 31, | |||||||||||||
2023 | 2022 | |||||||||||||
(in thousands) | ||||||||||||||
Cash and cash equivalents | $ | 1,232,675 | $ | 1,257,229 | ||||||||||
Restricted cash | 1,000 | 1,000 | ||||||||||||
Receivable from brokers and dealers and clearing organizations | 14,216 | 11,632 | ||||||||||||
Deposits with clearing organizations | 34,190 | 23,906 | ||||||||||||
Accounts receivable | 171,244 | 142,676 | ||||||||||||
Receivable and due from affiliates | 3,863 | 2,728 | ||||||||||||
Total current assets | 1,457,188 | 1,439,171 | ||||||||||||
Payable to brokers and dealers and clearing organizations | 14,215 | 11,264 | ||||||||||||
Accrued compensation | 65,035 | 150,884 | ||||||||||||
Deferred revenue | 30,577 | 22,827 | ||||||||||||
Payable and due to affiliates | 9,933 | 7,232 | ||||||||||||
Current portion of: | ||||||||||||||
Accounts payable, accrued expenses and other liabilities | 52,760 | 51,917 | ||||||||||||
Lease liabilities | 11,183 | 11,265 | ||||||||||||
Tax receivable agreement liability | 25,716 | 5,791 | ||||||||||||
Total current liabilities | 209,419 | 261,180 | ||||||||||||
Total working capital | $ | 1,247,769 | $ | 1,177,991 |
Three Months Ended | ||||||||||||||
March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
(in thousands) | ||||||||||||||
Net cash provided by operating activities | $ | 70,840 | $ | 45,243 | ||||||||||
Net cash used in investing activities | (16,714) | (18,040) | ||||||||||||
Net cash used in financing activities | (80,456) | (168,081) | ||||||||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 1,776 | (3,109) | ||||||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | $ | (24,554) | $ | (143,987) |
Three Months Ended | ||||||||||||||
March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
(in thousands) | ||||||||||||||
Cash flow from operating activities | $ | 70,840 | $ | 45,243 | ||||||||||
Less: Capitalization of software development costs | (9,835) | (8,979) | ||||||||||||
Less: Purchases of furniture, equipment and leasehold improvements | (6,879) | (9,061) | ||||||||||||
Free Cash Flow | $ | 54,126 | $ | 27,203 |
Three Months Ended | ||||||||||||||
March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
(dollars in thousands) | ||||||||||||||
Net income | $ | 102,193 | $ | 97,445 | ||||||||||
Merger and acquisition transaction and integration costs (1) | 585 | (18) | ||||||||||||
Net interest (income) expense | (12,491) | 447 | ||||||||||||
Depreciation and amortization | 45,404 | 44,450 | ||||||||||||
Stock-based compensation expense (2) | 850 | 3,869 | ||||||||||||
Provision for income taxes | 33,205 | 13,710 | ||||||||||||
Foreign exchange (gains) / losses (3) | 2,798 | 732 | ||||||||||||
Tax receivable agreement liability adjustment (4) | — | — | ||||||||||||
Other (income) loss, net | (341) | — | ||||||||||||
Adjusted EBITDA | $ | 172,203 | $ | 160,635 | ||||||||||
Less: Depreciation and amortization | (45,404) | (44,450) | ||||||||||||
Add: D&A related to acquisitions and the Refinitiv Transaction (5) | 31,617 | 31,769 | ||||||||||||
Adjusted EBIT | $ | 158,416 | $ | 147,954 | ||||||||||
Net income margin | 31.0 | % | 31.3 | % | ||||||||||
Adjusted EBITDA margin | 52.3 | % | 51.6 | % | ||||||||||
Adjusted EBIT margin | 48.1 | % | 47.5 | % |
Three Months Ended | ||||||||||||||||||||||||||
March 31, | ||||||||||||||||||||||||||
2023 | 2022 | Basis Point Change | Constant Currency Basis Point Change (1) | |||||||||||||||||||||||
Adjusted EBITDA margin | 52.3 | % | 51.6 | % | +73 bps | +64 bps | ||||||||||||||||||||
Adjusted EBIT margin | 48.1 | % | 47.5 | % | +61 bps | +56 bps |
Three Months Ended | ||||||||||||||
March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
(in thousands except per share amounts) | ||||||||||||||
Earnings per diluted share | $ | 0.42 | $ | 0.40 | ||||||||||
Net income attributable to Tradeweb Markets Inc. | $ | 87,856 | $ | 82,965 | ||||||||||
Net income attributable to non-controlling interests (1) | 14,337 | 14,480 | ||||||||||||
Net income | 102,193 | 97,445 | ||||||||||||
Provision for income taxes | 33,205 | 13,710 | ||||||||||||
Merger and acquisition transaction and integration costs (2) | 585 | (18) | ||||||||||||
D&A related to acquisitions and the Refinitiv Transaction (3) | 31,617 | 31,769 | ||||||||||||
Stock-based compensation expense (4) | 850 | 3,869 | ||||||||||||
Foreign exchange (gains) / losses (5) | 2,798 | 732 | ||||||||||||
Tax receivable agreement liability adjustment (6) | — | — | ||||||||||||
Other (income) loss, net | (341) | — | ||||||||||||
Adjusted Net Income before income taxes | 170,907 | 147,507 | ||||||||||||
Adjusted income taxes (7) | (41,872) | (32,452) | ||||||||||||
Adjusted Net Income | $ | 129,035 | $ | 115,055 | ||||||||||
Adjusted Diluted EPS (8) | $ | 0.54 | $ | 0.48 |
Reconciliation of Diluted Weighted Average Shares Outstanding to Adjusted Diluted Weighted Average Shares Outstanding and Adjusted Diluted EPS | Three Months Ended | |||||||||||||
March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
Diluted weighted average shares of Class A and Class B common stock outstanding | 210,143,734 | 207,497,102 | ||||||||||||
Weighted average of other participating securities (1) | 291,772 | 53,756 | ||||||||||||
Assumed exchange of LLC Interests for shares of Class A or Class B common stock (2) | 26,340,754 | 30,296,879 | ||||||||||||
Adjusted diluted weighted average shares outstanding | 236,776,260 | 237,847,737 | ||||||||||||
Adjusted Net Income (in thousands) | $ | 129,035 | $ | 115,055 | ||||||||||
Adjusted Diluted EPS | $ | 0.54 | $ | 0.48 |
Three Months Ended | ||||||||||||||
March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
% of revenue denominated in foreign currencies (1) | 28% | 30% | ||||||||||||
% of operating expenses denominated in foreign currencies (2) | 14% | 14% |
Three Months Ended | ||||||||||||||
March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
Euros | $ | 1.07 | $ | 1.12 | ||||||||||
British pound sterling | $ | 1.21 | $ | 1.34 |
Three Months Ended | ||||||||||||||
Impact of Foreign Currency Rate Fluctuations (amounts in thousands) | March 31, | |||||||||||||
2023 | 2022 | |||||||||||||
Increase (decrease) in revenue | $ | 1,000 | $ | (4,600) | ||||||||||
Increase (decrease) in operating income | $ | 1,400 | $ | (4,200) |
Three Months Ended | ||||||||||||||||||||
Hypothetical 10% Change in Value of U.S. Dollar (amounts in thousands) | March 31, | |||||||||||||||||||
2023 | 2022 | |||||||||||||||||||
All currencies | ||||||||||||||||||||
Effect of 10% change on revenue | +/- | $ | 10,300 | +/- | $ | 10,400 | ||||||||||||||
Effect of 10% change on operating income | +/- | $ | 7,200 | +/- | $ | 7,400 | ||||||||||||||
Euros | ||||||||||||||||||||
Effect of 10% change on revenue | +/- | $ | 9,500 | +/- | $ | 9,600 | ||||||||||||||
Effect of 10% change on operating income | +/- | $ | 9,200 | +/- | $ | 9,300 | ||||||||||||||
British pound sterling | ||||||||||||||||||||
Effect of 10% change on revenue | +/- | $ | 400 | +/- | $ | 400 | ||||||||||||||
Effect of 10% change on operating income | +/- | $ | 2,000 | +/- | $ | 2,000 |
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (1) | ||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||
January 1, 2023 - January 31, 2023 | — | $ | — | — | $ | 275,000 | ||||||||||||||||||||
February 1, 2023 - February 28, 2023 | 32,467 | 71.57 | 32,467 | $ | 272,676 | |||||||||||||||||||||
March 1, 2023 - March 31, 2023 | 280,844 | 72.58 | 280,844 | $ | 252,294 | |||||||||||||||||||||
Total | 313,311 | $ | 72.47 | 313,311 |
Exhibit Number | Description of Exhibit | |||||||
10.1 | ||||||||
10.2† | ||||||||
10.3† | ||||||||
10.4*† | ||||||||
10.5*† | ||||||||
10.6*† | ||||||||
10.7*† | ||||||||
10.8*† | ||||||||
31.1* | ||||||||
31.2* | ||||||||
32.1** | ||||||||
32.2** | ||||||||
101.INS* | XBRL Instance Document. | |||||||
101.SCH* | Inline XBRL Taxonomy Extension Schema Document. | |||||||
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |||||||
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |||||||
101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document. | |||||||
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document. | |||||||
104 | Cover page formatted as Inline XBRL and contained in Exhibit 101. |
TRADEWEB MARKETS INC. | ||||||||
April 27, 2023 | /s/ William Hult | |||||||
By: | William Hult | |||||||
Chief Executive Officer (Principal Executive Officer) | ||||||||
April 27, 2023 | /s/ Sara Furber | |||||||
By: | Sara Furber | |||||||
Chief Financial Officer (Principal Financial Officer) |
Performance Level | Cumulative Absolute TSR for the Performance Period (1) | TSR Performance Modifier (1) | ||||||
Maximum | Equal to or Greater Than 50% | 250% | ||||||
Target | Equal to 30% | 100% | ||||||
Threshold | Equal to 15% | 50% | ||||||
Below Threshold | Less than 15% | 0% |
April 27, 2023 | /s/ William Hult | ||||
William Hult | |||||
Chief Executive Officer |
April 27, 2023 | /s/ Sara Furber | ||||
Sara Furber | |||||
Chief Financial Officer |
April 27, 2023 | /s/ William Hult | ||||
William Hult | |||||
Chief Executive Officer |
April 27, 2023 | /s/ Sara Furber | ||||
Sara Furber | |||||
Chief Financial Officer |
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | |
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Mar. 31, 2023 |
Mar. 31, 2022 |
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Statement of Comprehensive Income [Abstract] | ||
Net income | $ 102,193 | $ 97,445 |
Foreign currency translation adjustments, with no tax benefit for each of the three months ended March 31, 2023 and 2022 | 2,649 | (4,098) |
Other comprehensive income (loss), net of tax | 2,649 | (4,098) |
Comprehensive income | 104,842 | 93,347 |
Less: Net income attributable to non-controlling interests | 14,337 | 14,480 |
Less: Foreign currency translation adjustments attributable to non-controlling interests | 297 | (530) |
Comprehensive income attributable to Tradeweb Markets Inc. | $ 90,208 | $ 79,397 |
Condensed Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) |
3 Months Ended | |
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Mar. 31, 2023 |
Mar. 31, 2022 |
|
Statement of Comprehensive Income [Abstract] | ||
Foreign currency translation adjustment, tax benefit | $ 0 | $ 0 |
Condensed Consolidated Statements of Changes in Equity (Parenthetical) - $ / shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
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Limited Liability Company (LLC) Members' Equity [Abstract] | ||
Dividends (in dollars per share) | $ 0.09 | $ 0.08 |
Organization |
3 Months Ended |
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Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Organization Tradeweb Markets Inc. (the “Corporation”) was incorporated as a Delaware corporation on November 7, 2018 to carry on the business of Tradeweb Markets LLC (“TWM LLC”) following the completion of a series of reorganization transactions on April 4, 2019 (the “Reorganization Transactions”), in connection with Tradeweb Markets Inc.’s initial public offering (the “IPO”), which closed on April 8, 2019. Following the Reorganization Transactions, Refinitiv (as defined below) owned an indirect majority ownership interest in the Company (as defined below). On January 29, 2021, London Stock Exchange Group plc (“LSEG”) completed its acquisition of the Refinitiv business from a consortium, including certain investment funds affiliated with The Blackstone Group Inc. (f/k/a The Blackstone Group L.P.) (“Blackstone”) as well as Thomson Reuters Corporation (“TR”), in an all share transaction (the “LSEG Transaction”). In connection with the LSEG Transaction, the Corporation became a consolidating subsidiary of LSEG. Prior to the LSEG Transaction, the Corporation was a consolidating subsidiary of BCP York Holdings (“BCP”), a company owned by certain investment funds affiliated with Blackstone, through BCP’s previous majority ownership interest in Refinitiv. As used herein, “Refinitiv,” prior to the LSEG Transaction, means Refinitiv Holdings Limited, and unless otherwise stated or the context otherwise requires, all of its direct and indirect subsidiaries, and subsequent to the LSEG Transaction, refers to Refinitiv Parent Limited, and unless otherwise stated or the context otherwise requires, all of its subsidiaries. Refinitiv owns substantially all of the former financial and risk business of Thomson Reuters (as defined below), including, prior to and following the completion of the Reorganization Transactions, an indirect majority ownership interest in the Company. The Corporation is a holding company whose principal asset is LLC Interests (as defined below) of TWM LLC. As the sole manager of TWM LLC, the Corporation operates and controls all of the business and affairs of TWM LLC and, through TWM LLC and its subsidiaries, conducts the Corporation’s business. As a result of this control, and because the Corporation has a substantial financial interest in TWM LLC, the Corporation consolidates the financial results of TWM LLC and reports a non-controlling interest in the Corporation’s condensed consolidated financial statements. As of March 31, 2023, Tradeweb Markets Inc. owned 88.8% of TWM LLC and the non-controlling interest holders own the remaining 11.2% of TWM LLC. As of December 31, 2022, Tradeweb Markets Inc. owned 88.7% of TWM LLC and the non-controlling interest holders owned the remaining 11.3% of TWM LLC. Unless the context otherwise requires, references to the “Company” refer to Tradeweb Markets Inc. and its consolidated subsidiaries, including TWM LLC, following the completion of the Reorganization Transactions, and TWM LLC and its consolidated subsidiaries prior to the completion of the Reorganization Transactions. The Company is a leader in building and operating electronic marketplaces for a global network of clients across the institutional, wholesale and retail client sectors. The Company’s principal subsidiaries include: •Tradeweb LLC (“TWL”), a registered broker-dealer under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), a member of the Financial Industry Regulatory Authority (“FINRA”), a member of the Municipal Securities Rulemaking Board (“MSRB”), a registered independent introducing broker with the Commodities Future Trading Commission (“CFTC”) and a member of the National Futures Association (“NFA”). •Dealerweb Inc. (“DW”) (formerly known as Hilliard Farber & Co., Inc.), a registered broker-dealer under the Exchange Act and a member of FINRA and MSRB. DW is also registered as an introducing broker with the CFTC and a member of the NFA. •Tradeweb Direct LLC (“TWD”) (formerly known as BondDesk Trading LLC), a registered broker-dealer under the Exchange Act and a member of FINRA and MSRB. •Tradeweb Europe Limited (“TEL”), a MiFID Investment Firm regulated by the Financial Conduct Authority (the “FCA”) in the UK and certain other global regulators and maintains branches in Asia. •TW SEF LLC (“TW SEF”), a Swap Execution Facility (“SEF”) regulated by the CFTC and certain other global regulators. •DW SEF LLC (“DW SEF”), a SEF regulated by the CFTC and certain other global regulators. •Tradeweb Japan K.K. (“TWJ”), a security house regulated by the Japanese Financial Services Agency (“JFSA”) and the Japan Securities Dealers Association (“JSDA”). •Tradeweb EU B.V. (“TWEU”), a MiFID Investment Firm regulated by the Netherlands Authority for the Financial Markets (“AFM”), the De Nederlandsche Bank (“DNB”) and certain other global regulators and maintains a branch in France. •Tradeweb Execution Services Limited (“TESL”), an Investment Firm (“BIPRU Firm”) regulated by the FCA in the UK. •Tradeweb Commercial Information Consulting (Shanghai) Co., Ltd. a wholly-owned foreign enterprise (WOFE) for the purpose of providing consulting and marketing activities in China. The offshore electronic trading platform is recognized by the People’s Bank of China for the provision of Bond Connect and CIBM Direct. •Tradeweb Execution Services B.V. (“TESBV”), a MiFID investment firm authorized and regulated by the AFM, with permission to trade on a matched principal basis. In June 2021, the Company acquired Nasdaq’s U.S. fixed income electronic trading platform, formerly known as eSpeed (the “NFI Acquisition”), which is a fully executable central order limit book (CLOB) for electronic trading in on-the-run (OTR) U.S. government bonds. The NFI Acquisition included the acquisition of Execution Access, LLC, (“EA”), a registered broker-dealer under the Exchange Act and a member of FINRA. In November 2022, EA merged with and into DW with DW being the surviving entity. A majority interest of Refinitiv (formerly the Thomson Reuters Financial & Risk Business) was acquired by BCP on October 1, 2018 (the “Refinitiv Transaction”) from TR. The Refinitiv Transaction resulted in a new basis of accounting for certain of the Company’s assets and liabilities beginning on October 1, 2018. See Note 2 – Significant Accounting Policies for a description of pushdown accounting applied as a result of the Refinitiv Transaction. In connection with the Reorganization Transactions, TWM LLC’s limited liability company agreement (the “TWM LLC Agreement”) was amended and restated to, among other things, (i) provide for a new single class of common membership interests in TWM LLC (the “LLC Interests”), (ii) exchange all of the then existing membership interests in TWM LLC for LLC Interests and (iii) appoint the Corporation as the sole manager of TWM LLC. LLC Interests, other than those held by the Corporation, are redeemable or exchangeable in accordance with the TWM LLC Agreement for shares of Class A common stock, par value $0.00001 per share, of the Corporation (the “Class A common stock”) or Class B common stock, par value $0.00001 per share, of the Corporation (the “Class B common stock”), as the case may be, on a one-for-one basis. As used herein, references to “Continuing LLC Owners” refer collectively to (i) those owners of TWM LLC prior to the Reorganization Transactions (the “Original LLC Owners”), including an indirect subsidiary of Refinitiv, certain investment and commercial banks (collectively, the “Bank Stockholders”), and members of management, that continued to own LLC Interests after the completion of the IPO and Reorganization Transactions and that received shares of Class C common stock, par value $0.00001 per share, of the Corporation (the “Class C common stock”), shares of Class D common stock, par value $0.00001 per share, of the Corporation (the “Class D common stock”) or a combination of both, as the case may be, in connection with the completion of the Reorganization Transactions, (ii) any subsequent transferee of any Original LLC Owner that has executed a joinder agreement to the TWM LLC Agreement and (iii) solely with respect to the Tax Receivable Agreement (as defined in Note 6 – Tax Receivable Agreement), (x) those Original LLC Owners, including certain of the Bank Stockholders, that disposed of all of their LLC Interests for cash in connection with the IPO and (y) any party that has executed a joinder agreement to the Tax Receivable Agreement in accordance with the Tax Receivable Agreement. As of March 31, 2023: •The public investors collectively owned 111,428,118 shares of Class A common stock, representing 8.5% of the combined voting power of Tradeweb Markets Inc.’s issued and outstanding common stock and indirectly, through Tradeweb Markets Inc., owned 47.5% of the economic interest in TWM LLC; •Refinitiv collectively owned 96,933,192 shares of Class B common stock and 22,988,329 shares of Class D common stock, representing 91.2% of the combined voting power of Tradeweb Markets Inc.’s issued and outstanding common stock and directly and indirectly, through Tradeweb Markets Inc., owned 51.1% of the economic interest in TWM LLC; and •Other stockholders that continued to own LLC Interests also collectively owned 3,251,177 shares of Class C common stock and 95,642 shares of Class D common stock, representing 0.3% of the combined voting power of Tradeweb Markets Inc.’s issued and outstanding common stock. Collectively, these stockholders directly owned 1.4% of the economic interest in TWM LLC. In addition, for the three months ended March 31, 2023, the Company’s basic and diluted earnings per share calculation is impacted by 291,772 of weighted average shares resulting from unvested restricted stock units and unsettled vested performance-based restricted stock units that were considered participating securities for purposes of calculating earnings per share in accordance with the two-class method, and for the three months ended March 31, 2023 the Company’s diluted earnings per share calculation also includes 2,038,297 of weighted average shares resulting from the dilutive effect of its equity incentive plans. See Note 13 – Earnings Per Share for additional details.
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Significant Accounting Policies |
3 Months Ended |
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Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies The following is a summary of significant accounting policies: Basis of Presentation The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. As discussed in Note 1 – Organization, as a result of the Reorganization Transactions, Tradeweb Markets Inc. consolidates TWM LLC and its subsidiaries and TWM LLC is considered to be the predecessor to Tradeweb Markets Inc. for financial reporting purposes. Tradeweb Markets Inc. had no business transactions or activities and no substantial assets or liabilities prior to the Reorganization Transactions. The condensed consolidated financial statements represent the financial condition and results of operations of the Company and report a non-controlling interest related to the LLC Interests held by Continuing LLC Owners. These condensed consolidated financial statements are unaudited and should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. The consolidated financial information as of December 31, 2022 has been derived from audited financial statements not included herein. These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) with respect to interim financial reporting and Form 10-Q. In accordance with such rules and regulations, certain disclosures that are normally included in annual financial statements have been omitted. These unaudited condensed consolidated financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and the difference may be material to the condensed consolidated financial statements. Reclassifications Certain reclassifications have been made to the December 31, 2022 consolidated statement of financial condition, and related financial information, to conform to the current period presentation. These primarily include reclassifying approximately $2.7 million of related party balances from other assets to receivable and due from affiliates and $5.8 million of related party balances from accounts payable, accrued expenses and other liabilities to payable and due to affiliates. These reclassifications had no impact on total assets, total liabilities or total equity on the consolidated statement of financial condition, nor did they have any impact on the consolidated statements of income, comprehensive income, changes in equity or cash flows. Business Combinations Business combinations are accounted for under the purchase method of accounting pursuant to Accounting Standards Codification (“ASC”) 805, Business Combinations (“ASC 805”). The total cost of an acquisition is allocated to the underlying net assets based on their respective estimated fair values. The excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill. The fair value of assets acquired and liabilities assumed is determined based on assumptions that reasonable market participants would use in the principal (or most advantageous) market for the asset or liability. Determining the fair value of certain assets acquired and liabilities assumed is judgmental in nature and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash flows, discount rates, growth rates, customer attrition rates and asset lives. Transaction costs incurred to effect a business combination are expensed as incurred and are included as a component of professional fees in the condensed consolidated statements of income. Pushdown Accounting In connection with the Refinitiv Transaction, a majority interest of Refinitiv was acquired by BCP on October 1, 2018 from TR. The Refinitiv Transaction was accounted for by Refinitiv in accordance with the acquisition method of accounting pursuant to ASC 805, and pushdown accounting was applied to Refinitiv to record the fair value of the assets and liabilities of Refinitiv as of October 1, 2018, the date of the Refinitiv Transaction. The Company, as a consolidating subsidiary of Refinitiv, also accounted for the Refinitiv Transaction using pushdown accounting which resulted in a new fair value basis of accounting for certain of the Company’s assets and liabilities beginning on October 1, 2018. Under the pushdown accounting applied, the excess of the fair value of the Company above the fair value accounting basis of the net assets and liabilities of the Company as of October 1, 2018 was recorded as goodwill. The fair value of assets acquired and liabilities assumed was determined based on assumptions that reasonable market participants would use in the principal (or most advantageous) market for the asset or liability. The adjusted valuations primarily affected the values of the Company’s long-lived and indefinite-lived intangible assets, including software development costs. Cash and Cash Equivalents Cash and cash equivalents consists of cash and highly liquid investments (such as short-term money market instruments) with remaining maturities at the time of purchase of three months or less. Allowance for Credit Losses The Company continually monitors collections and payments from its clients and maintains an allowance for credit losses. The allowance for credit losses is based on an estimate of the amount of potential credit losses in existing accounts receivable, as determined from a review of aging schedules, past due balances, historical collection experience and other specific account data. Careful analysis of the financial condition of the Company’s counterparties is also performed. Additions to the allowance for credit losses are charged to credit loss expense, which is included in general and administrative expenses in the condensed consolidated statements of income. Aged balances that are determined to be uncollectible are written off against the allowance for credit losses. See Note 11 – Credit Risk for additional information. Receivable from and Payable to Brokers and Dealers and Clearing Organizations Receivable from and payable to brokers and dealers and clearing organizations consists of proceeds from transactions executed on the Company’s wholesale platform which failed to settle due to the inability of a transaction party to deliver or receive the transacted security. These securities transactions are generally collateralized by those securities. Until the failed transaction settles, a receivable from (and a matching payable to) brokers and dealers and clearing organizations is recognized for the proceeds from the unsettled transaction. Deposits with Clearing Organizations Deposits with clearing organizations are comprised of cash deposits. Furniture, Equipment, Purchased Software and Leasehold Improvements Furniture, equipment, purchased software and leasehold improvements are carried at cost less accumulated depreciation. Depreciation for furniture, equipment and purchased software is computed on a straight-line basis over the estimated useful lives of the related assets, ranging from to seven years. Leasehold improvements are amortized over the lesser of the estimated useful lives of the leasehold improvements or the remaining term of the lease for office space. Furniture, equipment, purchased software and leasehold improvements are tested for impairment whenever events or changes in circumstances suggest that an asset’s carrying value may not be fully recoverable. As of March 31, 2023 and December 31, 2022, accumulated depreciation related to furniture, equipment, purchased software and leasehold improvements totaled $79.3 million and $73.8 million, respectively. Depreciation expense for furniture, equipment, purchased software and leasehold improvements was $5.1 million and $4.7 million for the three months ended March 31, 2023 and 2022, respectively. Software Development Costs The Company capitalizes costs associated with the development of internal use software at the point at which the conceptual formulation, design and testing of possible software project alternatives have been completed. The Company capitalizes employee compensation and related benefits and third party consulting costs incurred during the application development stage which directly contribute to such development. Such costs are amortized on a straight-line basis over three years. Software development costs acquired as part of the NFI Acquisition were amortized over one year. Costs capitalized as part of the Refinitiv Transaction pushdown accounting allocation are amortized over nine years. The Company reviews the amounts capitalized for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable, or that their useful lives are shorter than originally expected. Non-capitalized software costs and routine maintenance costs are expensed as incurred. As of March 31, 2023 and December 31, 2022, accumulated amortization related to software development costs totaled $180.1 million and $166.6 million, respectively. Amortization expense for software development costs was $13.5 million and $12.9 million for the three months ended March 31, 2023 and 2022, respectively. Goodwill Goodwill includes the excess of the fair value of the Company above the fair value accounting basis of the net assets and liabilities of the Company as previously applied under pushdown accounting in connection with the Refinitiv Transaction. Goodwill also includes the cost of acquired companies in excess of the fair value of identifiable net assets at the acquisition date, including the NFI Acquisition. Goodwill is not amortized, but is tested for impairment annually on October 1st and between annual tests, whenever events or changes in circumstances indicate that the carrying amount may not be fully recoverable. Goodwill is tested at the reporting unit level, which is defined as an operating segment or one level below the operating segment. The Company consists of one reporting unit for goodwill impairment testing purposes. An impairment loss is recognized if the estimated fair value of a reporting unit is less than its net book value. Such loss is calculated as the difference between the estimated fair value of goodwill and its carrying value. Goodwill was last tested for impairment on October 1, 2022 and no impairment of goodwill was identified. Intangible Assets Intangible assets with a finite life are amortized over the estimated lives, ranging from to thirteen years. These intangible assets subject to amortization are tested for impairment whenever events or changes in circumstances suggest that an asset’s or asset group’s carrying value may not be fully recoverable. Intangible assets with an indefinite useful life are tested for impairment at least annually. An impairment loss is recognized if the sum of the estimated discounted cash flows relating to the asset or asset group is less than the corresponding book value. As of March 31, 2023 and December 31, 2022, accumulated amortization related to intangible assets totaled $461.0 million and $434.2 million, respectively. Amortization expense for definite-lived intangible assets was $26.8 million for both the three months ended March 31, 2023 and 2022. Equity Investments Without Readily Determinable Fair Values Equity Investments without a readily determinable fair value are measured at cost, less impairment, plus or minus observable price changes (in orderly transactions) of an identical or similar investment of the same issuer. If the Company determines that the equity investment is impaired on the basis of a qualitative assessment, the Company will recognize an impairment loss equal to the amount by which the investment’s carrying amount exceeds its fair value. Equity investments are included as a component of other assets on the condensed consolidated statements of financial condition. Securities Sold Under Agreements to Repurchase From time to time, the Company sells securities under agreements to repurchase in order to facilitate the clearance of securities. Securities sold under agreements to purchase are treated as collateralized financings and are presented in the condensed consolidated statements of financial condition at the amounts of cash received. Receivables and payables arising from these agreements are not offset in the condensed consolidated statements of financial condition. Leases At lease commencement, a right-of-use asset and a lease liability are recognized for all leases with an initial term in excess of 12 months based on the initial present value of the fixed lease payments over the lease term. The lease right-of-use asset also reflects the present value of any initial direct costs, prepaid lease payments and lease incentives. The Company’s leases do not provide a readily determinable implicit discount rate. Therefore, management estimates the Company’s incremental borrowing rate used to discount the lease payments based on the information available at lease commencement. The Company includes the term covered by an option to extend a lease when the option is reasonably certain to be exercised. The Company has elected not to separate non-lease components from lease components for all leases. Significant assumptions and judgments in calculating the lease right-of-use assets and lease liabilities include the determination of the applicable borrowing rate for each lease. Operating lease expense is recognized on a straight-line basis over the lease term and included as a component of occupancy expense in the consolidated statements of income. Deferred Offering Costs Deferred offering costs consist of legal, accounting and other costs directly related to the Company’s efforts to raise capital. These costs are recognized as a reduction in additional paid-in capital within the condensed consolidated statements of financial condition when the offering is effective. No offering costs were incurred during either of the three months ended March 31, 2023 and 2022. Revenue Recognition The Company’s classification of revenues in the condensed consolidated statements of income represents revenues from contracts with customers disaggregated by type of revenue. See Note 4 – Revenue for additional details regarding revenue types and the Company’s policies regarding revenue recognition. Translation of Foreign Currency and Foreign Currency Forward Contracts Revenues, expenses, assets and liabilities denominated in non-functional currencies are recorded in the appropriate functional currency for the legal entity at the rate of exchange prevailing at the transaction date. Monetary assets and liabilities that are denominated in non-functional currencies are then remeasured at the end of each reporting period at the exchange rate prevailing at the end of the reporting period. Foreign currency remeasurement gains or losses on monetary assets and liabilities in nonfunctional currencies are recognized in the condensed consolidated statements of income within general and administrative expenses. The realized and unrealized losses totaled $0.4 million and $0.3 million during the three months ended March 31, 2023 and 2022, respectively. Since the condensed consolidated financial statements are presented in U.S. dollars, the Company also translates all non-U.S. dollar functional currency revenues, expenses, assets and liabilities into U.S. dollars. All non-U.S. dollar functional currency revenue and expense amounts are translated into U.S. dollars monthly at the average exchange rate for the month. All non-U.S. dollar functional currency assets and liabilities are translated at the rate prevailing at the end of the reporting period. Gains or losses on translation in the financial statements, when the functional currency is other than the U.S. dollar, are included as a component of other comprehensive income. The Company enters into foreign currency forward contracts to mitigate its U.S. dollar and British pound sterling versus euro exposure, generally with a duration of less than 12 months. The Company’s foreign currency forward contracts are not designated as hedges for accounting purposes and changes in the fair value of these contracts during the period are recognized in the condensed consolidated statements of income within general and administrative expenses. The Company does not use derivative instruments for trading or speculative purposes. Realized and unrealized gains/losses on foreign currency forward contracts totaled a $1.2 million loss and a $0.7 million gain during the three months ended March 31, 2023 and 2022, respectively. See Note 10 – Fair Value of Financial Instruments for additional details on the Company’s derivative instruments. Income Tax The Corporation is subject to U.S. federal, state and local income taxes with respect to its taxable income, including its allocable share of any taxable income of TWM LLC, and is taxed at prevailing corporate tax rates. TWM LLC is a multiple member limited liability company taxed as a partnership and accordingly any taxable income generated by TWM LLC is passed through to and included in the taxable income of its members, including the Corporation. Income taxes also include unincorporated business taxes on income earned or losses incurred for conducting business in certain state and local jurisdictions, income taxes on income earned or losses incurred in foreign jurisdictions on certain operations and federal and state income taxes on income earned or losses incurred, both current and deferred, on subsidiaries that are taxed as corporations for U.S. tax purposes. The Company records deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities. The Company measures deferred taxes using the enacted tax rates and laws that will be in effect when such temporary differences are expected to reverse. The Company evaluates the need for valuation allowances based on the weight of positive and negative evidence. The Company records valuation allowances wherever management believes it is more likely than not that the Company will not be able to realize its deferred tax assets in the foreseeable future. The Company records uncertain tax positions on the basis of a two-step process whereby (i) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (ii) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company recognizes interest and penalties related to income taxes within the provision for income taxes in the condensed consolidated statements of income. Accrued interest and penalties are included within accounts payable, accrued expenses and other liabilities in the condensed consolidated statements of financial condition. The Company has elected to treat taxes due on future U.S. inclusions in taxable income under the global intangible low-taxed income (“GILTI”) provision of the Tax Cuts and Jobs Act as a current period expense when incurred. On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (“IRA”) into law. The IRA establishes a 15% corporate minimum tax effective for taxable years beginning after December 31, 2022, and imposes a 1% excise tax on the repurchase after December 31, 2022 of stock by publicly traded U.S. corporations. The Company has evaluated the impact of the IRA and concluded it did not have a material impact to our financial condition, results of operations and cash flows as of and for the three months ended March 31, 2023. The Company will continue to evaluate the impact of the IRA on subsequent periods. On October 8, 2021, the Organization for Economic Cooperation and Development announced an accord endorsing and providing an implementation plan focused on global profit allocation, and implementing a global minimum tax rate of at least 15% for large multinational corporations on a jurisdiction-by-jurisdiction basis, known as the “Two Pillar Plan.” On December 15, 2022, the European Council formally adopted a European Union directive on the implementation of the plan by January 1, 2024. The Company is currently evaluating whether it will be subject to the provisions of the Two Pillar Plan, and related tax impacts per local country adoption, as it is a consolidating subsidiary of LSEG, and is evaluating its impact. Stock-Based Compensation The stock-based payments received by the employees of the Company are accounted for as equity awards. The Company measures and recognizes the cost of employee services received in exchange for awards of equity instruments based on their estimated fair values measured as of the grant date. These costs are recognized as an expense over the requisite service period, with an offsetting increase to additional paid-in capital. The grant-date fair value of stock-based awards that do not require future service (i.e., vested awards) are expensed immediately. Forfeitures of stock-based compensation awards are recognized as they occur. For grants made during the post-IPO period, the fair value of the equity instruments is determined based on the price of the Class A common stock on the grant date. Prior to the IPO, the Company awarded options to management and other employees (collectively, the “Special Option Award”) under the Amended and Restated Tradeweb Markets Inc. Option Plan (the “Option Plan”). The significant assumptions used to estimate the fair value as of grant date of the options awarded prior to the IPO did not reflect changes that would have occurred to these assumptions as a result of the IPO. The non-cash stock-based compensation expense associated with the Special Option Award began being expensed in the second quarter of 2019. The Company uses the Black-Scholes pricing model to value some of its option awards. Determining the appropriate fair value model and calculating the fair value of the option awards requires the input of highly subjective assumptions, including the expected life of the option awards and the stock price volatility. For performance-based restricted stock units that vest based on market conditions, the Company recognizes stock-based compensation based on the estimated grant date fair value of the awards computed with the assistance of a valuation specialist using a Monte Carlo simulation on a binomial model. The significant assumptions used to estimate the fair value of the performance-based restricted stock units that vest based on market conditions are years of maturity, annualized volatility and the risk-free interest rate. The maturity period represents the period of time that the award granted was modeled into the future, the risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of measurement corresponding with the maturity period of the award and the expected volatility is based upon historical volatility of the Company’s Class A common stock. Earnings Per Share Basic and diluted earnings per share are computed in accordance with the two-class method as unvested restricted stock units and unsettled vested performance-based restricted stock units issued to certain retired executives are entitled to non-forfeitable dividend equivalent rights and are considered participating securities prior to being issued and outstanding shares of common stock. The two-class method is an earnings allocation formula that treats a participating security as having rights to earnings that otherwise would have been available to common shareholders. Basic earnings per share is computed by dividing the net income attributable to the Company’s outstanding shares of Class A and Class B common stock by the weighted-average number of the Company’s shares outstanding during the period. For purposes of computing diluted earnings per share, the weighted-average number of the Company’s shares reflects the dilutive effect that could occur if all potentially dilutive securities were converted into or exchanged or exercised for the Company’s Class A or Class B common stock. The dilutive effect of stock options and other stock-based payment awards is calculated using the treasury stock method, which assumes the proceeds from the exercise of these instruments are used to purchase common shares at the average market price for the period. The dilutive effect of LLC Interests is evaluated under the if-converted method, where the securities are assumed to be converted at the beginning of the period, and the resulting common shares are included in the denominator of the diluted earnings per share calculation for the entire period presented. Performance-based awards are considered contingently issuable shares and their dilutive effect is included in the denominator of the diluted earnings per share calculation for the entire period, if those shares would be issuable as of the end of the reporting period, assuming the end of the reporting period was also the end of the contingency period. Shares of Class C and Class D common stock do not have economic rights in Tradeweb Markets Inc. and, therefore, are not included in the calculation of basic earnings per share. Fair Value Measurement The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). Instruments that the Company owns (long positions) are marked to bid prices, and instruments that the Company has sold, but not yet purchased (short positions) are marked to offer prices. Fair value measurements do not include transaction costs. The fair value hierarchy under ASC 820, Fair Value Measurement (“ASC 820”), prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under ASC 820 are described below. Basis of Fair Value Measurement A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. •Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; •Level 2: Quoted prices in markets that are not considered to be active or financial instruments for which all significant inputs are observable, either directly or indirectly; •Level 3: Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. Recent Accounting Pronouncements In June 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”), which clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value and that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. ASU 2022-03 also requires the disclosure of the fair value, as reflected in the statement of financial condition, of equity securities subject to contractual sale restrictions and the nature and the disclosure of the remaining duration of those restrictions. ASU 2022-03 is effective for the Company beginning on January 1, 2024 and early adoption is permitted for both interim and annual financial statements that have not yet been issued. The ASU is to be applied prospectively, with any adjustments from the adoption recognized in earnings on the date of adoption. As of March 31, 2023, the Company has not yet adopted ASU 2022-03 and does not expect that the adoption of this ASU will have a material impact on the Company’s consolidated financial statements.
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Restricted Cash |
3 Months Ended |
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Mar. 31, 2023 | |
Restricted Cash Equivalents [Abstract] | |
Restricted Cash | Restricted CashCash has been segregated in a special reserve bank account for the benefit of brokers and dealers under SEC Rule 15c3-3. The Company computes the proprietary accounts of broker-dealers (“PAB”) reserve, which requires the Company to maintain minimum segregated cash in the amount of excess total credits per the reserve computation. As of both March 31, 2023 and December 31, 2022, cash in the amount of $1.0 million has been segregated in the PAB reserve account, exceeding the requirements pursuant to SEC Rule 15c3-3. |
Revenue |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | Revenue Revenue Recognition The Company enters into contracts with its clients to provide a stand-ready connection to its electronic marketplaces, which facilitates the execution of trades by its clients. The access to the Company’s electronic marketplaces includes market data, continuous pricing data refreshes and the processing of trades thereon. The stand-ready connection to the electronic marketplaces is considered a single performance obligation satisfied over time as the client simultaneously receives and consumes the benefit from the Company’s performance as access is provided (that is, the performance obligation constitutes a series of services that are substantially the same in nature and are provided over time using the same measure of progress). For its services, the Company earns subscription fees for granting access to its electronic marketplaces. Subscription fees, which are generally fixed fees, are recognized as revenue on a monthly basis, in the period that access is provided. The frequency of subscription fee billings varies from monthly to annually, depending on contract terms. Fees received by the Company which are not yet earned are included in deferred revenue on the condensed consolidated statements of financial condition until the revenue recognition criteria have been met. The Company also earns transaction fees and/or commissions from transactions executed on the Company’s electronic marketplaces. The Company earns commission revenue from its electronic and voice brokerage services on a riskless principal basis. Riskless principal revenues are derived on matched principal transactions where revenues are earned on the spread between the buy and sell price of the transacted product. Transaction fees and commissions are generated both on a variable and fixed price basis and vary by geographic region, product type and trade size. Fixed monthly transaction fees or commissions, or monthly transaction fees or commission minimums, are earned on a monthly basis in the period the stand-ready trading services are provided and are generally billed monthly. For variable transaction fees or commissions, the Company charges its clients amounts calculated based on the mix of products traded and the volume of transactions executed. Variable transaction fee or commission revenue is recognized and recorded on a trade-date basis when the individual trade occurs and is generally billed when the trade settles or is billed monthly. Variable discounts or rebates on transaction fees or commissions are earned and applied monthly or quarterly, resolved within the same reporting period and are recorded as a reduction to revenue in the period the relevant trades occur. The Company earns fees from Refinitiv relating to the sale of market data to Refinitiv, which redistributes that data. Included in these fees, which are billed quarterly, are real-time market data fees which are recognized monthly on a straight-line basis, as Refinitiv receives and consumes the benefit evenly over the contract period, as the data is provided. Also included in these fees are fees for historical data sets which are recognized when the historical data set is provided to Refinitiv. Significant judgments used in accounting for this contract include the following determinations: •The provision of real-time market data feeds and annual historical data sets are distinct performance obligations. •The performance obligations under this contract are recognized over time from the initial delivery of the data feeds or each historical data set until the end of the contract term. •The transaction price for the performance obligations is determined by using a market assessment analysis. Inputs in this analysis include a consultant study which determined the overall value of the Company’s market data and pricing information for historical data sets provided by other companies. Some revenues earned by the Company have fixed fee components, such as monthly minimums or fixed monthly fees, and variable components, such as transaction-based fees. The breakdown of revenues between fixed and variable revenues for the three months ended March 31, 2023 and 2022 is as follows:
Deferred Revenue The Company records deferred revenue when cash payments are received or due in advance of services to be performed. The revenue recognized and the remaining deferred revenue balances are shown below:
During the three months ended March 31, 2023, the Company recognized $13.5 million in total revenue that was deferred as of December 31, 2022. During the three months ended March 31, 2022, the Company recognized $14.1 million in total revenue that was deferred as of December 31, 2021.
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Income Taxes |
3 Months Ended |
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Mar. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Corporation is subject to U.S. federal, state and local income taxes with respect to its taxable income, including its allocable share of any taxable income of TWM LLC, and is taxed at prevailing corporate tax rates. The Company’s actual effective tax rate will be impacted by the Corporation’s ownership share of TWM LLC, which is expected to continue to increase over time as Continuing LLC Owners redeem or exchange their LLC Interests for shares of Class A common stock or Class B common stock, as applicable, or the Corporation purchases LLC Interests from Continuing LLC Owners. The Company’s consolidated effective tax rate will also vary from period to period depending on changes in the mix of earnings, tax legislation and tax rates in various jurisdictions. The Company’s provision for income taxes includes U.S., federal, state, local and foreign taxes. The Company’s effective tax rate for the three months ended March 31, 2023 and 2022 was approximately 24.5% and 12.3%, respectively. The effective tax rate for the three months ended March 31, 2023 differed from the U.S. federal statutory rate of 21.0% primarily due to the disallowance of compensation expense tax deductions and state, local and foreign taxes, partially offset by the effect of non-controlling interests. The effective tax rate for the three months ended March 31, 2022 differed from the U.S. federal statutory rate of 21.0% primarily due to the tax impact of the exercise of equity compensation, return-to-provision adjustments and the effect of non-controlling interests, partially offset by state, local and foreign taxes. The Company expects to obtain an increase in its share of the tax basis of the assets of TWM LLC when LLC Interests are redeemed or exchanged by Continuing LLC Owners and in connection with certain other qualifying transactions. This increase in tax basis may have the effect of reducing the amounts that the Corporation would otherwise pay in the future to various tax authorities. Pursuant to the Tax Receivable Agreement, the Corporation is required to make cash payments to the Continuing LLC Owners equal to 50% of the amount of U.S. federal, state and local income or franchise tax savings, if any, that the Corporation actually realizes (or in some circumstances are deemed to realize) as a result of certain future tax benefits to which the Corporation may become entitled. The Corporation expects to benefit from the remaining 50% of tax benefits, if any, that the Corporation may actually realize. See Note 6 – Tax Receivable Agreement for further details. The tax benefit has been recognized in deferred tax assets on the condensed consolidated statement of financial condition. In connection with the Reorganization Transactions, a Refinitiv entity was contributed to the Corporation, pursuant to which the Corporation received 96,933,192 LLC Interests and Refinitiv received 96,933,192 shares of Class B common stock (“Refinitiv Contribution”). As a result of the Refinitiv Contribution, the Company assumed the tax liabilities of the contributed entity. The contributed entity is under audit by the State of New Jersey for the tax years 2012 - 2015 and is appealing a tax assessment from an audit by the State of New Jersey for the tax years 2008 - 2011. As of March 31, 2023 and December 31, 2022, the tax liability related to the Refinitiv Contribution was $3.0 million and $2.7 million, respectively, included within accounts payable, accrued expenses and other liabilities on the condensed consolidated statements of financial condition. The Company is indemnified by Refinitiv for these tax liabilities that were assumed by the Company as a result of the Refinitiv Contribution. As of March 31, 2023 and December 31, 2022, $3.0 million and $2.7 million, respectively, is included in receivable and due from affiliates on the condensed consolidated statements of financial condition related to this related party indemnification.
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Tax Receivable Agreement |
3 Months Ended |
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Mar. 31, 2023 | |
Tax Receivable Agreement | |
Tax Receivable Agreement | Tax Receivable Agreement In connection with the Reorganization Transactions, the Corporation entered into a tax receivable agreement (the “Tax Receivable Agreement”) with TWM LLC and the Continuing LLC Owners, which provides for the payment by the Corporation to a Continuing LLC Owner of 50% of the amount of U.S. federal, state and local income or franchise tax savings, if any, that the Corporation actually realizes (or in some circumstances is deemed to realize) as a result of (i) increases in the tax basis of TWM LLC’s assets resulting from (a) the purchase of LLC Interests from such Continuing LLC Owner, including with the net proceeds from the IPO and any subsequent offerings or (b) redemptions or exchanges by such Continuing LLC Owner of LLC Interests for shares of Class A common stock or Class B common stock or for cash, as applicable, and (ii) certain other tax benefits related to the Corporation making payments under the Tax Receivable Agreement. Payments under the Tax Receivable Agreement are made within 150 days after the filing of the tax return based on the actual tax savings realized by the Corporation. The first payment of the Tax Receivable Agreement was made in January 2021. Substantially all payments due under the Tax Receivable Agreement are payable over fifteen years following the purchase of LLC Interests from Continuing LLC Owners or redemption or exchanges by Continuing LLC Owners of LLC Interests. The Corporation accounts for the income tax effects resulting from taxable redemptions or exchanges of LLC Interests by Continuing LLC Owners for shares of Class A common stock or Class B common stock or cash, as the case may be, and purchases by the Corporation of LLC Interests from Continuing LLC Owners by recognizing an increase in deferred tax assets, based on enacted tax rates at the date of each redemption, exchange, or purchase, as the case may be. Further, the Corporation evaluates the likelihood that it will realize the benefit represented by the deferred tax asset, and, to the extent that the Corporation estimates that it is more likely than not that it will not realize the benefit, it reduces the carrying amount of the deferred tax asset with a valuation allowance. The impact of any changes in the total projected obligations recorded under the Tax Receivable Agreement as a result of actual changes in the mix of the Company’s earnings, tax legislation and tax rates in various jurisdictions, or other factors that may impact the Corporation’s actual tax savings realized, are reflected in income before taxes on the condensed consolidated statements of income in the period in which the change occurs. As of March 31, 2023 and December 31, 2022, the tax receivable agreement liability on the condensed consolidated statements of financial condition totaled $420.1 million and $425.7 million, respectively. During each of the three months ended March 31, 2023 and 2022, no tax receivable agreement liability adjustment was recognized in the condensed consolidated statements of income.
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Non-Controlling Interests |
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Noncontrolling Interest [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-Controlling Interests | Non-Controlling Interests In connection with the Reorganization Transactions, Tradeweb Markets Inc. became the sole manager of TWM LLC and, as a result of this control, and because Tradeweb Markets Inc. has a substantial financial interest in TWM LLC, consolidates the financial results of TWM LLC into its condensed consolidated financial statements. The non-controlling interests balance reported on the condensed consolidated statements of financial condition represents the economic interests of TWM LLC held by the holders of LLC Interests other than Tradeweb Markets Inc. Income or loss is attributed to the non-controlling interests based on the relative ownership percentages of LLC Interests held during the period by Tradeweb Markets Inc. and the other holders of LLC Interests. The following table summarizes the ownership interest in Tradeweb Markets LLC:
LLC Interests held by the Continuing LLC Owners are redeemable in accordance with the TWM LLC Agreement at the election of the members for shares of Class A common stock or Class B common stock, as applicable, on a one-for-one basis or, at the Company’s option, a cash payment in accordance with the terms of the TWM LLC Agreement. The following table summarizes the impact on Tradeweb Market Inc.’s equity due to changes in the Corporation’s ownership interest in TWM LLC:
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Stockholders' Equity and Stock-Based Compensation Plans |
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Share-Based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity and Stock-Based Compensation Plans | Stockholders’ Equity and Stock-Based Compensation Plans The rights and privileges of the Company’s stockholders’ equity and LLC Interests are described in the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 and there have been no changes to those rights and privileges during the three months ended March 31, 2023. Common Stock The following table details the movement in the Company’s outstanding shares of common stock during the period:
Stock-Based Compensation Plans Under the Tradeweb Markets Inc. 2019 Omnibus Equity Incentive Plan, the Company is authorized to issue up to 8,841,864 new shares of Class A common stock to employees, officers and non-employee directors. Under this plan, the Company may grant awards in respect of shares of Class A common stock, including performance-based restricted stock units, stock options, restricted stock units (“RSUs”) and dividend equivalent rights. The awards may have performance-based and/or time-based vesting conditions. RSUs and performance-based restricted stock units each represent promises to issue actual shares of Class A common stock at the end of a vesting period. Stock options have a maximum contractual term of 10 years. On February 16, 2022, the Company announced that Mr. Olesky would retire as Chief Executive Officer (“CEO”) of the Company, effective December 31, 2022, resulting in an acceleration of the total unamortized stock-based compensation associated with equity awards granted to him. The unamortized expense was accelerated over a revised estimated service period that ended on August 11, 2022, representing Mr. Olesky’s required six month notice period under the Company’s 2019 Omnibus Equity Incentive Plan. In addition, in December 2022, $5.5 million in stock-based compensation awards, relating to 2022 performance, were granted to Mr. Olesky and immediately recognized into expense upon grant. During the year ended December 31, 2022, the Company recorded a total of $15.0 million in accelerated stock-based compensation expenses (“CEO Retirement Accelerated Stock-Based Compensation Expense”) and related payroll that would not have been recognized if Mr. Olesky had not announced his retirement, including $1.7 million recognized during the three months ended March 31, 2022. In addition to the performance-based restricted stock units previously awarded pursuant to the 2019 Omnibus Equity Incentive Plan, which vest based on the financial performance of the Company (“PRSUs”), on March 15, 2023, the Company granted to certain executives, an aggregate of 251,113 performance-based restricted stock units that vest based on market conditions (“PSUs”). PSUs are promises to issue actual shares of Class A common stock which cliff vest on January 1 of the third calendar year from the calendar year of the date of grant. The number of shares a participant will receive upon vesting is determined by a performance modifier, which is adjusted as a result of the Company’s total shareholder return over a three-year performance period. The performance modifier can vary between 0% (minimum) and 250% (maximum) of the target (100%) award amount. The PSUs granted on March 15, 2023 had a grant date fair value of $98.33 per share, or $24.7 million in total, which will be expensed on a straight-line basis through December 31, 2025, the end of the three-year performance period. The grant date fair value of the March 2023 PSUs was estimated using the Monte Carlo simulation model and the significant valuation assumptions used in the valuation were a maturity of 2.8 years annualized volatility of 28.81% and a risk-free interest rate of 3.77%. During the three months ended March 31, 2023, the Company also granted 554,917 RSUs and 326,050 PRSUs at a weighted-average grant-date fair value of $69.52 and $69.56, respectively. RSU awards granted to employees will generally vest one-third each year over a three-year period, and RSU awards granted to non-employee directors will vest after one year. PRSUs generally cliff vest on January 1 of the third calendar year from the calendar year of the date of grant and the number of shares a participant will receive upon vesting is determined by a performance modifier, which is adjusted as a result of the financial performance of the Company in the grant year. The performance modifier can vary between 0% (minimum) and 200% (maximum) of the target (100%) award amount for awards granted during 2022 and prior years. PRSUs granted during 2023 have a 250% maximum performance modifier. A summary of the Company’s total stock-based compensation expense, including the CEO Retirement Accelerated Stock-Based Compensation Expense, is presented below:
The stock-based compensation expense above excludes $0.3 million of stock-based compensation expense capitalized to software development costs during the three months ended March 31, 2023. Share Repurchase Program On December 5, 2022, the Company announced that its board of directors authorized a new share repurchase program (the “2022 Share Repurchase Program”), after completing in October 2022, the $150.0 million of total repurchases of the Company’s Class A common stock previously authorized in February 2021 (the “2021 Share Repurchase Program”). The 2022 Share Repurchase Program was authorized to continue to offset annual dilution from stock-based compensation plans, as well as to opportunistically repurchase the Company’s Class A common stock. The 2022 Share Repurchase Program authorizes the purchase of up to $300.0 million of the Company’s Class A common stock at the Company’s discretion and has no termination date. The 2022 Share Repurchase Program can be effected through regular open-market purchases (which may include repurchase plans designed to comply with Rule 10b5-1), through privately negotiated transactions or through accelerated share repurchases, each in accordance with applicable securities laws and other restrictions. The amounts, timing and manner of the repurchases will be subject to general market conditions, the prevailing price and trading volumes of the Company’s Class A common stock and other factors. The 2022 Share Repurchase Program does not require the Company to acquire a specific number of shares and may be suspended, amended or discontinued at any time. During the three months ended March 31, 2023, the Company acquired a total of 313,311 shares of Class A common stock, at an average price of $72.47, for purchases totaling $22.7 million. During the three months ended March 31, 2022, the Company acquired a total of 559,428 shares of Class A common stock, at an average price of $84.59, for purchases totaling $47.3 million. Each share of Class A common stock repurchased pursuant to the 2021 and 2022 Share Repurchase Programs was funded with the proceeds, on a dollar-for-dollar basis, from the repurchase by Tradeweb Markets LLC of an LLC Interest from the Corporation in order to maintain the one-to-one ratio between outstanding shares of the Class A common stock and Class B common stock and the LLC Interests owned by the Corporation. Subsequent to their repurchase, the shares of Class A common stock and the LLC Interests were all cancelled and retired. As of March 31, 2023, a total of $252.3 million remained available for repurchase pursuant to the 2022 Share Repurchase Program. For shares repurchased pursuant to the 2021 and 2022 Share Repurchase Programs, the excess of the repurchase price paid over the par value of the Class A common stock is be recorded as a reduction to retained earnings. Other Share Repurchases During the three months ended March 31, 2023 and 2022, the Company withheld 574,824 and 985,959 shares, respectively, of common stock from employee stock option, PRSU and RSU awards, at an average price per share of $69.34 and $97.13, respectively, and an aggregate value of $39.9 million and $95.8 million, respectively, based on the price of the Class A common stock on the date the relevant withholding occurred. These shares are withheld in order for the Company to cover the payroll tax withholding obligations upon the exercise of stock options and settlement of RSUs and PRSUs and such shares were not withheld in connection with the share repurchase programs discussed above.
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Related Party Transactions |
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Related Party Transactions | Related Party Transactions The Company enters into transactions with its affiliates from time to time which are considered to be related party transactions. As of March 31, 2023 and December 31, 2022, the following balances with such affiliates were included in the condensed consolidated statements of financial condition in the following line items:
The following balances with such affiliates were included in the condensed consolidated statements of income in the following line items:
(1)The Company maintains a market data license agreement with Refinitiv. Under the agreement, the Company delivers to Refinitiv certain market data feeds which Refinitiv redistributes to its customers. The Company earns license fees and royalties for these feeds. (2)The Company maintains agreements with Refinitiv to provide the Company with certain real estate, payroll, benefits administration and other administrative services.
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Fair Value of Financial Instruments |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments Financial Instruments Measured at Fair Value The Company’s financial instruments measured at fair value on the condensed consolidated statements of financial condition as of March 31, 2023 and December 31, 2022 have been categorized based upon the fair value hierarchy as follows:
The Company’s money market funds are classified within level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets. The valuation for the Company’s foreign currency forward contracts is primarily based on the difference between the exchange rate associated with the forward contract and the exchange rate at the current period end. Foreign currency forward contracts are categorized as Level 2 in the fair value hierarchy. The Company enters into foreign currency forward contracts to mitigate its U.S. dollar and British pound sterling versus euro exposure, generally with a duration of less than 12 months. As of March 31, 2023 and December 31, 2022, the counterparty on each of the foreign currency forward contracts was an affiliate of Refinitiv and therefore the corresponding liabilities on such contracts were included in payable and due to affiliates on the accompanying condensed consolidated statements of financial condition. The following table summarizes the aggregate U.S. dollar equivalent notional amount of the Company’s foreign currency forward contracts not designated as hedges for accounting purposes:
The Company’s foreign currency forward contracts are not designated as hedges for accounting purposes and changes in the fair value of these contracts during the period are recognized in the condensed consolidated statements of income within general and administrative expenses. The total realized and unrealized gains (losses) on foreign currency forward contracts recorded within general and administrative expenses in the condensed consolidated statements of income are as follows:
Financial Instruments Not Measured at Fair Value The Company’s financial instruments not measured at fair value on the condensed consolidated statements of financial condition as of March 31, 2023 and December 31, 2022 have been categorized based upon the fair value hierarchy as follows:
The carrying value of financial instruments not measured at fair value classified within level 1 or level 2 of the fair value hierarchy approximates fair value because of the relatively short term nature of the underlying assets or liabilities. The memberships in clearing organizations, which are included in other assets on the condensed consolidated statements of financial condition, are classified within level 3 of the fair value hierarchy because the valuation requires assumptions that are both significant and unobservable. Financial Instruments Without Readily Determinable Fair Values Included in other assets on the condensed consolidated statements of financial condition are equity investments without readily determinable fair values of $20.0 million as of both March 31, 2023 and December 31, 2022.
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Credit Risk |
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Mar. 31, 2023 | |
Risks and Uncertainties [Abstract] | |
Credit Risk | Credit Risk Cash and cash equivalents includes cash and money market instruments held by a limited number of global financial institutions, including cash amounts in excess of federally insured limits. To mitigate this concentration of credit risk, the Company invests through high-credit-quality financial institutions, monitors the concentration of credit exposure of investments with any single obligor and diversifies as determined appropriate. In the normal course of business the Company, as agent, executes transactions with, and on behalf of, other brokers and dealers. If the agency transactions do not settle because of failure to perform by either counterparty, the Company will recognize a receivable from (and a matching payable to) brokers and dealers and clearing organizations for the proceeds from the unsettled transaction, until the failed transaction settles. The Company may be obligated to discharge the obligation of the non-performing party and, as a result, may incur a loss if the market value of the security is different from the contract amount of the transaction. However, from time to time, the Company enters into repurchase and/or reverse repurchase agreements to facilitate the clearance of securities relating to fails to deliver or receive. We seek to manage credit exposure related to these agreements to repurchase (or reverse repurchase), including the risk related to a decline in market value of collateral (pledged or received), by entering into agreements to repurchase with overnight or short-term maturity dates and only entering into repurchase transactions with netting members of the Fixed Income Clearing Corporation (“FICC”). The FICC operates a continuous net settlement system, whereby as trades are submitted and compared, the FICC becomes the counterparty. A substantial number of the Company’s transactions are collateralized and executed with, and on behalf of, a limited number of broker-dealers. The Company’s exposure to credit risk associated with the nonperformance of these clients in fulfilling their contractual obligations pursuant to securities transactions can be directly impacted by volatile trading markets which may impair the clients’ ability to satisfy their obligations to the Company. The Company does not expect nonperformance by counterparties in the above situations. However, the Company’s policy is to monitor its market exposure and counterparty risk. In addition, the Company has a policy of reviewing, as considered necessary, the credit standing of each counterparty with which it conducts business. Allowance for Credit Losses The Company may be exposed to credit risk regarding its receivables, which are primarily receivables from financial institutions, including investment managers and broker-dealers. The Company maintains an allowance for credit losses based upon an estimate of the amount of potential credit losses in existing accounts receivable, as determined from a review of aging schedules, past due balances, historical collection experience and other specific account data. Careful analysis of the financial condition of the Company’s counterparties is also performed. Account balances are pooled based on the following risk characteristics: 1.Geographic location 2.Transaction fee type (billing type) 3.Legal entity Write-Offs Once determined uncollectible, aged balances are written off against the allowance for credit losses. This determination is based on careful analysis of individual receivables and aging schedules, which are disaggregated based on the risk characteristics described above. Based on current policy, this generally occurs when the receivable is 360 days past due. As of March 31, 2023 and December 31, 2022, the Company maintained an allowance for credit losses with regard to these receivables of $0.2 million and $0.1 million, respectively. Credit loss expense was $26,000 for the three months ended March 31, 2023. For the three months ended March 31, 2022, recoveries resulted in a reversal of credit loss expense of $74,000.
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Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and ContingenciesFrom time to time, the Company is subject to various claims, lawsuits and other legal proceedings, including reviews, investigations and proceedings by governmental and self-regulatory agencies regarding its business. While the ultimate resolution of these matters cannot presently be determined, the Company does not believe that, taking into account any applicable insurance coverage, any of the pending legal proceedings, including the matters set forth below, could reasonably be expected to have a material adverse effect on its business, financial condition or results of operations. In the normal course of business, the Company enters into agreements with its customers which provide the customers with indemnification rights, including in the event that the electronic marketplaces of the Company infringe upon the intellectual property or other proprietary right of a third party. The Company’s exposure under these agreements is unknown as this would involve estimating future claims against the Company which have not yet occurred. However, based on its experience, the Company expects the risk of a material loss to be remote. The Company has been named as a defendant, along with other financial institutions, in two consolidated antitrust class actions relating to trading practices in United States Treasury securities auctions. The cases were dismissed in March 2021, with the Court granting the Plaintiffs leave to further amend the complaint by no later than May 14, 2021. The plaintiffs filed an amended complaint on or about May 14, 2021, and the Company moved to dismiss the amended complaint on June 14, 2021. By order dated March 31, 2022, the Court granted the Company’s motion and dismissed all of the claims against it in the amended complaint. The Court also denied the plaintiffs’ request for leave to file a further amended complaint. On April 28, 2022, the Plaintiffs filed a Notice of Appeal of the decision and filed their opening brief on the appeal in the United States Court of Appeals for the Second Circuit on August 18, 2022. The Company filed its brief in response on November 17, 2022. Plaintiffs filed their brief in reply in further support of their appeal on December 14, 2022. The parties have requested oral argument on the appeal, which request is currently pending, and no date for oral argument has yet been set. The Company intends to vigorously defend the District Court’s decision on appeal and assert its meritorious defenses to the allegations. Additionally, the Company was dismissed from a class action relating to an interest rate swaps matter in 2017, but that matter continues against the remaining defendant financial institutions. The Company records its best estimate of a loss, including estimated defense costs, when the loss is considered probable and the amount of such loss can be reasonably estimated. Based on its experience, the Company believes that the amount of damages claimed in a legal proceeding is not a meaningful indicator of the potential liability. At this time, the Company cannot reasonably predict the timing or outcomes of, or estimate the amount of loss, or range of loss, if any, related to its pending legal proceedings, including the matters described above, and therefore does not have any contingency reserves established for any of these matters. Revolving Credit Facility On April 8, 2019, the Company entered into a five year, $500.0 million senior secured revolving credit facility (“Credit Facility”) with a syndicate of banks. The Credit Facility was subsequently amended on November 7, 2019 and March 31, 2023. The Credit Facility provides additional borrowing capacity to be used to fund ongoing working capital needs, letters of credit and for general corporate purposes, including potential future acquisitions and expansions. Under the terms of the credit agreement that governs the Credit Facility, borrowings under the Credit Facility bear interest at a rate equal to, at the Company’s option, either (a) a base rate equal to the greatest of (i) the administrative agent’s prime rate, (ii) the federal funds effective rate plus ½ of 1.00% and (iii) one month Term SOFR plus 1.00% plus a credit adjustment spread of 0.10%, in each case plus 0.75%, (b) Term SOFR plus 1.75% plus a credit adjustment spread of 0.10%, subject to a 0.00% floor, (c) SONIA plus 1.75%, subject to a 0.00% floor or (d) EURIBOR plus 1.75%, subject to a 0.00% floor. The credit agreement also includes a commitment fee of 0.25% for available but unborrowed amounts and other administrative fees that are payable quarterly. The Credit Facility is available until April 2024, provided the Company is in compliance with all covenants. Financial covenant requirements include maintaining minimum ratios related to interest coverage and leverage. As of March 31, 2023 and December 31, 2022, there were $0.5 million in letters of credit issued under the Revolving Credit Facility and no borrowings outstanding. Leases The Company has operating leases for corporate offices and data centers with initial lease terms ranging from to ten years. The following table presents the future minimum lease payments and the maturity of lease liabilities as of March 31, 2023:
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Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share The following table summarizes the calculations of basic and diluted earnings per share of Class A and Class B common stock for Tradeweb Markets Inc.:
(1)During the three months ended March 31, 2023 and 2022, there was a total of 291,772 and 53,756, respectively, weighted average unvested RSUs and unsettled vested PRSUs that were considered a participating security for purposes of calculating earnings per share in accordance with the two-class method. LLC Interests held by Continuing LLC Owners are redeemable in accordance with the TWM LLC Agreement, at the election of such holders, for shares of Class A or Class B common stock, as applicable, of Tradeweb Markets Inc. The potential dilutive effect of LLC Interests are evaluated under the if-converted method. The potential dilutive effect of PRSUs, shares underlying options, RSUs and PSUs are evaluated under the treasury stock method. The following table summarizes the PRSUs, shares underlying options, RSUs, PSUs and weighted-average LLC Interests that were anti-dilutive for the periods indicated. As a result, these shares, which were outstanding, were excluded from the computation of diluted earnings per share for the periods indicated:
Shares of Class C and Class D common stock do not have economic rights in Tradeweb Markets Inc. and, therefore, are not included in the calculation of basic earnings per share and are not participating securities for purposes of the computation of diluted earnings per share.
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Regulatory Capital Requirements |
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Broker-Dealer, Net Capital Requirement, SEC Regulation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Regulatory Capital Requirements | Regulatory Capital Requirements TWL, DW and TWD are subject to the Uniform Net Capital Rule 15c3-1 under the Exchange Act. TEL and TESL are subject to certain financial resource requirements with the FCA in the UK, TWJ is subject to certain financial resource requirements with the FCA in Japan and TWEU and TESBV are subject to certain finance resource requirements with the AFM in the Netherlands. At March 31, 2023 and December 31, 2022, the regulatory capital requirements and regulatory capital for TWL, DW, TWD, TEL, TWJ, TWEU, TESL and TESBV are as follows:
As SEFs, TW SEF and DW SEF are required to maintain adequate financial resources and liquid financial assets in accordance with CFTC regulations. The required and maintained financial resources and liquid financial assets at March 31, 2023 and December 31, 2022 are as follows:
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Business Segment and Geographic Information |
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Business Segment and Geographic Information | Business Segment and Geographic Information The Company operates electronic marketplaces for the trading of products across the rates, credit, equities and money markets asset classes and provides related pre-trade and post-trade services. The Company’s operations constitute a single business segment because of the integrated nature of these marketplaces and services. Information regarding revenue by client sector is as follows:
The Company operates in the U.S. and internationally, primarily in the Europe and Asia regions. Revenues are attributed to geographic area based on the jurisdiction where the underlying transactions take place. The results by geographic region are not meaningful in understanding the Company’s business. Long-lived assets are attributed to the geographic area based on the location of the particular subsidiary. The following table provides revenue by geographic area:
The following table provides information on the attribution of long-lived assets by geographic area:
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Subsequent Events |
3 Months Ended |
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Mar. 31, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On April 27, 2023, the board of directors of Tradeweb Markets Inc. declared a cash dividend of $0.09 per share of Class A common stock and Class B common stock for the second quarter of 2023. This dividend will be payable on June 15, 2023 to stockholders of record as of June 1, 2023. On April 27, 2023, Tradeweb Markets Inc., as the sole manager, approved a distribution by TWM LLC to its equityholders, including Tradeweb Markets Inc., in an aggregate amount of $29.3 million, as adjusted by required state and local tax withholdings that will be determined prior to the record date of June 1, 2023, payable on June 13, 2023. On April 3, 2023, the stockholder that owned 3,251,177 LLC Interests and 3,251,177 shares of Class C common stock, redeemed its LLC Interests for 3,251,177 shares of Class A common stock and the shares of Class C common stock previously held by the stockholder were cancelled.
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Significant Accounting Policies (Policies) |
3 Months Ended |
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Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. As discussed in Note 1 – Organization, as a result of the Reorganization Transactions, Tradeweb Markets Inc. consolidates TWM LLC and its subsidiaries and TWM LLC is considered to be the predecessor to Tradeweb Markets Inc. for financial reporting purposes. Tradeweb Markets Inc. had no business transactions or activities and no substantial assets or liabilities prior to the Reorganization Transactions. The condensed consolidated financial statements represent the financial condition and results of operations of the Company and report a non-controlling interest related to the LLC Interests held by Continuing LLC Owners. These condensed consolidated financial statements are unaudited and should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. The consolidated financial information as of December 31, 2022 has been derived from audited financial statements not included herein. These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) with respect to interim financial reporting and Form 10-Q. In accordance with such rules and regulations, certain disclosures that are normally included in annual financial statements have been omitted. These unaudited condensed consolidated financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year.
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Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and the difference may be material to the condensed consolidated financial statements.
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Reclassifications | Reclassifications Certain reclassifications have been made to the December 31, 2022 consolidated statement of financial condition, and related financial information, to conform to the current period presentation. These primarily include reclassifying approximately $2.7 million of related party balances from other assets to receivable and due from affiliates and $5.8 million of related party balances from accounts payable, accrued expenses and other liabilities to payable and due to affiliates. These reclassifications had no impact on total assets, total liabilities or total equity on the consolidated statement of financial condition, nor did they have any impact on the consolidated statements of income, comprehensive income, changes in equity or cash flows.
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Business Combinations | Business Combinations Business combinations are accounted for under the purchase method of accounting pursuant to Accounting Standards Codification (“ASC”) 805, Business Combinations (“ASC 805”). The total cost of an acquisition is allocated to the underlying net assets based on their respective estimated fair values. The excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill. The fair value of assets acquired and liabilities assumed is determined based on assumptions that reasonable market participants would use in the principal (or most advantageous) market for the asset or liability. Determining the fair value of certain assets acquired and liabilities assumed is judgmental in nature and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash flows, discount rates, growth rates, customer attrition rates and asset lives. Transaction costs incurred to effect a business combination are expensed as incurred and are included as a component of professional fees in the condensed consolidated statements of income.
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Pushdown Accounting | Pushdown Accounting In connection with the Refinitiv Transaction, a majority interest of Refinitiv was acquired by BCP on October 1, 2018 from TR. The Refinitiv Transaction was accounted for by Refinitiv in accordance with the acquisition method of accounting pursuant to ASC 805, and pushdown accounting was applied to Refinitiv to record the fair value of the assets and liabilities of Refinitiv as of October 1, 2018, the date of the Refinitiv Transaction. The Company, as a consolidating subsidiary of Refinitiv, also accounted for the Refinitiv Transaction using pushdown accounting which resulted in a new fair value basis of accounting for certain of the Company’s assets and liabilities beginning on October 1, 2018. Under the pushdown accounting applied, the excess of the fair value of the Company above the fair value accounting basis of the net assets and liabilities of the Company as of October 1, 2018 was recorded as goodwill. The fair value of assets acquired and liabilities assumed was determined based on assumptions that reasonable market participants would use in the principal (or most advantageous) market for the asset or liability. The adjusted valuations primarily affected the values of the Company’s long-lived and indefinite-lived intangible assets, including software development costs.
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Cash and Cash Equivalents | Cash and Cash EquivalentsCash and cash equivalents consists of cash and highly liquid investments (such as short-term money market instruments) with remaining maturities at the time of purchase of three months or less. |
Allowance for Credit Losses | Allowance for Credit Losses The Company continually monitors collections and payments from its clients and maintains an allowance for credit losses. The allowance for credit losses is based on an estimate of the amount of potential credit losses in existing accounts receivable, as determined from a review of aging schedules, past due balances, historical collection experience and other specific account data. Careful analysis of the financial condition of the Company’s counterparties is also performed. Additions to the allowance for credit losses are charged to credit loss expense, which is included in general and administrative expenses in the condensed consolidated statements of income. Aged balances that are determined to be uncollectible are written off against the allowance for credit losses.
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Receivable from and Payable to Broker and Dealers and Clearing Organizations | Receivable from and Payable to Brokers and Dealers and Clearing Organizations Receivable from and payable to brokers and dealers and clearing organizations consists of proceeds from transactions executed on the Company’s wholesale platform which failed to settle due to the inability of a transaction party to deliver or receive the transacted security. These securities transactions are generally collateralized by those securities. Until the failed transaction settles, a receivable from (and a matching payable to) brokers and dealers and clearing organizations is recognized for the proceeds from the unsettled transaction.
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Deposits with Clearing Organizations | Deposits with Clearing OrganizationsDeposits with clearing organizations are comprised of cash deposits. |
Furniture, Equipment, Purchased Software and Leasehold Improvements | Furniture, Equipment, Purchased Software and Leasehold Improvements Furniture, equipment, purchased software and leasehold improvements are carried at cost less accumulated depreciation. Depreciation for furniture, equipment and purchased software is computed on a straight-line basis over the estimated useful lives of the related assets, ranging from to seven years. Leasehold improvements are amortized over the lesser of the estimated useful lives of the leasehold improvements or the remaining term of the lease for office space. Furniture, equipment, purchased software and leasehold improvements are tested for impairment whenever events or changes in circumstances suggest that an asset’s carrying value may not be fully recoverable.
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Software Development Costs | Software Development Costs The Company capitalizes costs associated with the development of internal use software at the point at which the conceptual formulation, design and testing of possible software project alternatives have been completed. The Company capitalizes employee compensation and related benefits and third party consulting costs incurred during the application development stage which directly contribute to such development. Such costs are amortized on a straight-line basis over three years. Software development costs acquired as part of the NFI Acquisition were amortized over one year. Costs capitalized as part of the Refinitiv Transaction pushdown accounting allocation are amortized over nine years. The Company reviews the amounts capitalized for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable, or that their useful lives are shorter than originally expected. Non-capitalized software costs and routine maintenance costs are expensed as incurred.
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Goodwill | Goodwill Goodwill includes the excess of the fair value of the Company above the fair value accounting basis of the net assets and liabilities of the Company as previously applied under pushdown accounting in connection with the Refinitiv Transaction. Goodwill also includes the cost of acquired companies in excess of the fair value of identifiable net assets at the acquisition date, including the NFI Acquisition. Goodwill is not amortized, but is tested for impairment annually on October 1st and between annual tests, whenever events or changes in circumstances indicate that the carrying amount may not be fully recoverable. Goodwill is tested at the reporting unit level, which is defined as an operating segment or one level below the operating segment. The Company consists of one reporting unit for goodwill impairment testing purposes. An impairment loss is recognized if the estimated fair value of a reporting unit is less than its net book value. Such loss is calculated as the difference between the estimated fair value of goodwill and its carrying value.
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Intangible Assets | Intangible Assets Intangible assets with a finite life are amortized over the estimated lives, ranging from to thirteen years. These intangible assets subject to amortization are tested for impairment whenever events or changes in circumstances suggest that an asset’s or asset group’s carrying value may not be fully recoverable. Intangible assets with an indefinite useful life are tested for impairment at least annually. An impairment loss is recognized if the sum of the estimated discounted cash flows relating to the asset or asset group is less than the corresponding book value.
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Equity Investments Without Readily Determinable Fair Values | Equity Investments Without Readily Determinable Fair Values Equity Investments without a readily determinable fair value are measured at cost, less impairment, plus or minus observable price changes (in orderly transactions) of an identical or similar investment of the same issuer. If the Company determines that the equity investment is impaired on the basis of a qualitative assessment, the Company will recognize an impairment loss equal to the amount by which the investment’s carrying amount exceeds its fair value. Equity investments are included as a component of other assets on the condensed consolidated statements of financial condition.
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Securities Sold Under Agreements to Repurchase | Securities Sold Under Agreements to Repurchase From time to time, the Company sells securities under agreements to repurchase in order to facilitate the clearance of securities. Securities sold under agreements to purchase are treated as collateralized financings and are presented in the condensed consolidated statements of financial condition at the amounts of cash received. Receivables and payables arising from these agreements are not offset in the condensed consolidated statements of financial condition.
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Leases | Leases At lease commencement, a right-of-use asset and a lease liability are recognized for all leases with an initial term in excess of 12 months based on the initial present value of the fixed lease payments over the lease term. The lease right-of-use asset also reflects the present value of any initial direct costs, prepaid lease payments and lease incentives. The Company’s leases do not provide a readily determinable implicit discount rate. Therefore, management estimates the Company’s incremental borrowing rate used to discount the lease payments based on the information available at lease commencement. The Company includes the term covered by an option to extend a lease when the option is reasonably certain to be exercised. The Company has elected not to separate non-lease components from lease components for all leases. Significant assumptions and judgments in calculating the lease right-of-use assets and lease liabilities include the determination of the applicable borrowing rate for each lease. Operating lease expense is recognized on a straight-line basis over the lease term and included as a component of occupancy expense in the consolidated statements of income.
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Deferred Offering Costs | Deferred Offering CostsDeferred offering costs consist of legal, accounting and other costs directly related to the Company’s efforts to raise capital. These costs are recognized as a reduction in additional paid-in capital within the condensed consolidated statements of financial condition when the offering is effective. |
Revenue Recognition | Revenue RecognitionThe Company’s classification of revenues in the condensed consolidated statements of income represents revenues from contracts with customers disaggregated by type of revenue. |
Translation of Foreign Currency and Foreign Currency Forward Contracts | Translation of Foreign Currency and Foreign Currency Forward Contracts Revenues, expenses, assets and liabilities denominated in non-functional currencies are recorded in the appropriate functional currency for the legal entity at the rate of exchange prevailing at the transaction date. Monetary assets and liabilities that are denominated in non-functional currencies are then remeasured at the end of each reporting period at the exchange rate prevailing at the end of the reporting period. Foreign currency remeasurement gains or losses on monetary assets and liabilities in nonfunctional currencies are recognized in the condensed consolidated statements of income within general and administrative expenses. The realized and unrealized losses totaled $0.4 million and $0.3 million during the three months ended March 31, 2023 and 2022, respectively. Since the condensed consolidated financial statements are presented in U.S. dollars, the Company also translates all non-U.S. dollar functional currency revenues, expenses, assets and liabilities into U.S. dollars. All non-U.S. dollar functional currency revenue and expense amounts are translated into U.S. dollars monthly at the average exchange rate for the month. All non-U.S. dollar functional currency assets and liabilities are translated at the rate prevailing at the end of the reporting period. Gains or losses on translation in the financial statements, when the functional currency is other than the U.S. dollar, are included as a component of other comprehensive income. The Company enters into foreign currency forward contracts to mitigate its U.S. dollar and British pound sterling versus euro exposure, generally with a duration of less than 12 months. The Company’s foreign currency forward contracts are not designated as hedges for accounting purposes and changes in the fair value of these contracts during the period are recognized in the condensed consolidated statements of income within general and administrative expenses. The Company does not use derivative instruments for trading or speculative purposes.
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Income Tax | Income Tax The Corporation is subject to U.S. federal, state and local income taxes with respect to its taxable income, including its allocable share of any taxable income of TWM LLC, and is taxed at prevailing corporate tax rates. TWM LLC is a multiple member limited liability company taxed as a partnership and accordingly any taxable income generated by TWM LLC is passed through to and included in the taxable income of its members, including the Corporation. Income taxes also include unincorporated business taxes on income earned or losses incurred for conducting business in certain state and local jurisdictions, income taxes on income earned or losses incurred in foreign jurisdictions on certain operations and federal and state income taxes on income earned or losses incurred, both current and deferred, on subsidiaries that are taxed as corporations for U.S. tax purposes. The Company records deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities. The Company measures deferred taxes using the enacted tax rates and laws that will be in effect when such temporary differences are expected to reverse. The Company evaluates the need for valuation allowances based on the weight of positive and negative evidence. The Company records valuation allowances wherever management believes it is more likely than not that the Company will not be able to realize its deferred tax assets in the foreseeable future. The Company records uncertain tax positions on the basis of a two-step process whereby (i) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (ii) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company recognizes interest and penalties related to income taxes within the provision for income taxes in the condensed consolidated statements of income. Accrued interest and penalties are included within accounts payable, accrued expenses and other liabilities in the condensed consolidated statements of financial condition. The Company has elected to treat taxes due on future U.S. inclusions in taxable income under the global intangible low-taxed income (“GILTI”) provision of the Tax Cuts and Jobs Act as a current period expense when incurred. On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (“IRA”) into law. The IRA establishes a 15% corporate minimum tax effective for taxable years beginning after December 31, 2022, and imposes a 1% excise tax on the repurchase after December 31, 2022 of stock by publicly traded U.S. corporations. The Company has evaluated the impact of the IRA and concluded it did not have a material impact to our financial condition, results of operations and cash flows as of and for the three months ended March 31, 2023. The Company will continue to evaluate the impact of the IRA on subsequent periods. On October 8, 2021, the Organization for Economic Cooperation and Development announced an accord endorsing and providing an implementation plan focused on global profit allocation, and implementing a global minimum tax rate of at least 15% for large multinational corporations on a jurisdiction-by-jurisdiction basis, known as the “Two Pillar Plan.” On December 15, 2022, the European Council formally adopted a European Union directive on the implementation of the plan by January 1, 2024. The Company is currently evaluating whether it will be subject to the provisions of the Two Pillar Plan, and related tax impacts per local country adoption, as it is a consolidating subsidiary of LSEG, and is evaluating its impact.
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Stock-Based Compensation | Stock-Based Compensation The stock-based payments received by the employees of the Company are accounted for as equity awards. The Company measures and recognizes the cost of employee services received in exchange for awards of equity instruments based on their estimated fair values measured as of the grant date. These costs are recognized as an expense over the requisite service period, with an offsetting increase to additional paid-in capital. The grant-date fair value of stock-based awards that do not require future service (i.e., vested awards) are expensed immediately. Forfeitures of stock-based compensation awards are recognized as they occur. For grants made during the post-IPO period, the fair value of the equity instruments is determined based on the price of the Class A common stock on the grant date. Prior to the IPO, the Company awarded options to management and other employees (collectively, the “Special Option Award”) under the Amended and Restated Tradeweb Markets Inc. Option Plan (the “Option Plan”). The significant assumptions used to estimate the fair value as of grant date of the options awarded prior to the IPO did not reflect changes that would have occurred to these assumptions as a result of the IPO. The non-cash stock-based compensation expense associated with the Special Option Award began being expensed in the second quarter of 2019. The Company uses the Black-Scholes pricing model to value some of its option awards. Determining the appropriate fair value model and calculating the fair value of the option awards requires the input of highly subjective assumptions, including the expected life of the option awards and the stock price volatility. For performance-based restricted stock units that vest based on market conditions, the Company recognizes stock-based compensation based on the estimated grant date fair value of the awards computed with the assistance of a valuation specialist using a Monte Carlo simulation on a binomial model. The significant assumptions used to estimate the fair value of the performance-based restricted stock units that vest based on market conditions are years of maturity, annualized volatility and the risk-free interest rate. The maturity period represents the period of time that the award granted was modeled into the future, the risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of measurement corresponding with the maturity period of the award and the expected volatility is based upon historical volatility of the Company’s Class A common stock.
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Earnings Per Share | Earnings Per Share Basic and diluted earnings per share are computed in accordance with the two-class method as unvested restricted stock units and unsettled vested performance-based restricted stock units issued to certain retired executives are entitled to non-forfeitable dividend equivalent rights and are considered participating securities prior to being issued and outstanding shares of common stock. The two-class method is an earnings allocation formula that treats a participating security as having rights to earnings that otherwise would have been available to common shareholders. Basic earnings per share is computed by dividing the net income attributable to the Company’s outstanding shares of Class A and Class B common stock by the weighted-average number of the Company’s shares outstanding during the period. For purposes of computing diluted earnings per share, the weighted-average number of the Company’s shares reflects the dilutive effect that could occur if all potentially dilutive securities were converted into or exchanged or exercised for the Company’s Class A or Class B common stock. The dilutive effect of stock options and other stock-based payment awards is calculated using the treasury stock method, which assumes the proceeds from the exercise of these instruments are used to purchase common shares at the average market price for the period. The dilutive effect of LLC Interests is evaluated under the if-converted method, where the securities are assumed to be converted at the beginning of the period, and the resulting common shares are included in the denominator of the diluted earnings per share calculation for the entire period presented. Performance-based awards are considered contingently issuable shares and their dilutive effect is included in the denominator of the diluted earnings per share calculation for the entire period, if those shares would be issuable as of the end of the reporting period, assuming the end of the reporting period was also the end of the contingency period. Shares of Class C and Class D common stock do not have economic rights in Tradeweb Markets Inc. and, therefore, are not included in the calculation of basic earnings per share.
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Fair Value Measurement | Fair Value Measurement The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). Instruments that the Company owns (long positions) are marked to bid prices, and instruments that the Company has sold, but not yet purchased (short positions) are marked to offer prices. Fair value measurements do not include transaction costs. The fair value hierarchy under ASC 820, Fair Value Measurement (“ASC 820”), prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under ASC 820 are described below. Basis of Fair Value Measurement A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. •Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; •Level 2: Quoted prices in markets that are not considered to be active or financial instruments for which all significant inputs are observable, either directly or indirectly; •Level 3: Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.
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Recent Accounting Pronouncements | Recent Accounting PronouncementsIn June 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”), which clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value and that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. ASU 2022-03 also requires the disclosure of the fair value, as reflected in the statement of financial condition, of equity securities subject to contractual sale restrictions and the nature and the disclosure of the remaining duration of those restrictions. ASU 2022-03 is effective for the Company beginning on January 1, 2024 and early adoption is permitted for both interim and annual financial statements that have not yet been issued. The ASU is to be applied prospectively, with any adjustments from the adoption recognized in earnings on the date of adoption. As of March 31, 2023, the Company has not yet adopted ASU 2022-03 and does not expect that the adoption of this ASU will have a material impact on the Company’s consolidated financial statements. |
Revenue (Tables) |
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Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Breakdown of Revenues Between Fixed and Variable Revenues | The breakdown of revenues between fixed and variable revenues for the three months ended March 31, 2023 and 2022 is as follows:
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Schedule of Recognized Revenue and Remaining Deferred Revenue Balance | The revenue recognized and the remaining deferred revenue balances are shown below:
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Non-Controlling Interests (Tables) |
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Noncontrolling Interest [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of the Ownership Interest in Noncontrolling Interest | The following table summarizes the ownership interest in Tradeweb Markets LLC:
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Schedule of the Impact on Equity Due to Changes in the Company’s Ownership Interest in Noncontrolling Interest | The following table summarizes the impact on Tradeweb Market Inc.’s equity due to changes in the Corporation’s ownership interest in TWM LLC:
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Stockholders' Equity and Stock-Based Compensation Plans (Tables) |
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Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Total Stock-based Compensation Expense | A summary of the Company’s total stock-based compensation expense, including the CEO Retirement Accelerated Stock-Based Compensation Expense, is presented below:
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Schedule of Outstanding Shares Of Common Stock | The following table details the movement in the Company’s outstanding shares of common stock during the period:
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Related Party Transactions (Tables) |
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Balances From Transactions with Affiliates Included in the Consolidated Statements | As of March 31, 2023 and December 31, 2022, the following balances with such affiliates were included in the condensed consolidated statements of financial condition in the following line items:
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Schedule of Affiliates were Included in the Consolidated Statements of Income | The following balances with such affiliates were included in the condensed consolidated statements of income in the following line items:
(1)The Company maintains a market data license agreement with Refinitiv. Under the agreement, the Company delivers to Refinitiv certain market data feeds which Refinitiv redistributes to its customers. The Company earns license fees and royalties for these feeds. (2)The Company maintains agreements with Refinitiv to provide the Company with certain real estate, payroll, benefits administration and other administrative services.
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Fair Value of Financial Instruments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value Measurement | The Company’s financial instruments measured at fair value on the condensed consolidated statements of financial condition as of March 31, 2023 and December 31, 2022 have been categorized based upon the fair value hierarchy as follows:
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Schedule of Derivative Values | The following table summarizes the aggregate U.S. dollar equivalent notional amount of the Company’s foreign currency forward contracts not designated as hedges for accounting purposes:
The total realized and unrealized gains (losses) on foreign currency forward contracts recorded within general and administrative expenses in the condensed consolidated statements of income are as follows:
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Schedule of Financial Instruments Not Measured at Fair Value | The Company’s financial instruments not measured at fair value on the condensed consolidated statements of financial condition as of March 31, 2023 and December 31, 2022 have been categorized based upon the fair value hierarchy as follows:
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Commitments and Contingencies (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Maturity of Lease Liabilities and Future Minimum Lease Payments | The following table presents the future minimum lease payments and the maturity of lease liabilities as of March 31, 2023:
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Earnings Per Share (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Basic and Diluted Earnings Per Share | The following table summarizes the calculations of basic and diluted earnings per share of Class A and Class B common stock for Tradeweb Markets Inc.:
(1)During the three months ended March 31, 2023 and 2022, there was a total of 291,772 and 53,756, respectively, weighted average unvested RSUs and unsettled vested PRSUs that were considered a participating security for purposes of calculating earnings per share in accordance with the two-class method.
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Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following table summarizes the PRSUs, shares underlying options, RSUs, PSUs and weighted-average LLC Interests that were anti-dilutive for the periods indicated. As a result, these shares, which were outstanding, were excluded from the computation of diluted earnings per share for the periods indicated:
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Regulatory Capital Requirements (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Broker-Dealer, Net Capital Requirement, SEC Regulation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Regulatory Capital Requirements | At March 31, 2023 and December 31, 2022, the regulatory capital requirements and regulatory capital for TWL, DW, TWD, TEL, TWJ, TWEU, TESL and TESBV are as follows:
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Schedule of Financial Resources and Liquid Financial Resources | The required and maintained financial resources and liquid financial assets at March 31, 2023 and December 31, 2022 are as follows:
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Business Segment and Geographic Information (Tables) |
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Information Regarding Revenue by Client Sector | Information regarding revenue by client sector is as follows:
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Schedule of Revenue and Long-Lived Assets by Geographic Location | The following table provides revenue by geographic area:
The following table provides information on the attribution of long-lived assets by geographic area:
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Significant Accounting Policies - Reclassifications (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Reclassification [Line Items] | ||
Receivable and due from affiliates | $ 3,863 | $ 2,728 |
Payable and due to affiliates | $ 9,933 | 7,232 |
Revision of Prior Period, Reclassification, Adjustment | ||
Reclassification [Line Items] | ||
Receivable and due from affiliates | 2,700 | |
Payable and due to affiliates | $ 5,800 |
Significant Accounting Policies - Goodwill (Details) |
3 Months Ended | |
---|---|---|
Oct. 01, 2022
USD ($)
|
Mar. 31, 2023
reporting_unit
|
|
Accounting Policies [Abstract] | ||
Number of reporting units | reporting_unit | 1 | |
Impairment of goodwill | $ | $ 0 |
Significant Accounting Policies - Intangible Assets (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
Dec. 31, 2022 |
|
Intangible Assets | |||
Accumulated amortization | $ 461.0 | $ 434.2 | |
Amortization expense | $ 26.8 | $ 26.8 | |
Minimum | |||
Intangible Assets | |||
Useful life of intangible assets | 7 years | ||
Maximum | |||
Intangible Assets | |||
Useful life of intangible assets | 13 years |
Significant Accounting Policies - Deferred Offering Costs (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Accounting Policies [Abstract] | ||
Offering costs incurred | $ 0 | $ 0 |
Significant Accounting Policies - Translation of Foreign Currency and Foreign Currency Forward Contracts (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Derivative [Line Items] | ||
Foreign currency transaction loss, before tax | $ 400 | $ 300 |
Foreign currency forward contracts – Gross notional amount | Selling, General and Administrative Expenses | ||
Derivative [Line Items] | ||
Realized and unrealized gains (losses) on derivative contracts | $ (1,160) | $ 682 |
Restricted Cash (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Restricted Cash Equivalents [Abstract] | ||
Restricted cash | $ 1,000 | $ 1,000 |
Revenue - Breakdown of Revenues Between Fixed and Variable (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Revenues | ||
Total revenue | $ 329,249 | $ 311,486 |
Transaction fees and commissions | ||
Revenues | ||
Total revenue | 266,598 | 251,805 |
Refinitiv market data fees | ||
Revenues | ||
Total revenue | 15,594 | 15,558 |
Other | ||
Revenues | ||
Total revenue | 2,683 | 2,668 |
Variable | ||
Revenues | ||
Total revenue | 230,843 | 214,462 |
Variable | Transaction fees and commissions | ||
Revenues | ||
Total revenue | 230,181 | 213,736 |
Variable | Subscription fees | ||
Revenues | ||
Total revenue | 460 | 475 |
Variable | Refinitiv market data fees | ||
Revenues | ||
Total revenue | 0 | 0 |
Variable | Other | ||
Revenues | ||
Total revenue | 202 | 251 |
Fixed | ||
Revenues | ||
Total revenue | 98,406 | 97,024 |
Fixed | Transaction fees and commissions | ||
Revenues | ||
Total revenue | 36,417 | 38,069 |
Fixed | Subscription fees | ||
Revenues | ||
Total revenue | 43,914 | 40,980 |
Fixed | Refinitiv market data fees | ||
Revenues | ||
Total revenue | 15,594 | 15,558 |
Fixed | Other | ||
Revenues | ||
Total revenue | $ 2,481 | $ 2,417 |
Revenue - Recognized Revenue and Remaining Balances (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2023
USD ($)
| |
Change in Contract with Customer | |
Deferred revenue balance - beginning of period | $ 22,827 |
New billings | 38,091 |
Revenue recognized | (30,360) |
Effect of foreign currency exchange rate changes | 19 |
Deferred revenue balance - ending of period | $ 30,577 |
Revenue - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Revenue from Contract with Customer [Abstract] | ||
Revenue recognized that was previously deferred | $ 13.5 | $ 14.1 |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | |||
---|---|---|---|---|
Apr. 08, 2019 |
Mar. 31, 2023 |
Mar. 31, 2022 |
Dec. 31, 2022 |
|
Income Tax Disclosure [Line Items] | ||||
Effective tax rate | 24.50% | 12.30% | ||
Remaining percentage of tax benefits | 50.00% | |||
Other assets | $ 79,177 | $ 74,262 | ||
Refinitiv | ||||
Income Tax Disclosure [Line Items] | ||||
Other assets | 3,000 | 2,700 | ||
Accounts Payable and Accrued Liabilities | ||||
Income Tax Disclosure [Line Items] | ||||
Tax liability | $ 3,000 | $ 2,700 | ||
Class B Common Stock | ||||
Income Tax Disclosure [Line Items] | ||||
Common stock, shares issued (in shares) | 96,933,192 | 96,933,192 | ||
Refinitiv Direct Owner | ||||
Income Tax Disclosure [Line Items] | ||||
Shares contributed by refinitiv owner (in shares) | 96,933,192 | |||
Refinitiv Direct Owner | Class B Common Stock | ||||
Income Tax Disclosure [Line Items] | ||||
Common stock, shares issued (in shares) | 96,933,192 |
Tax Receivable Agreement (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
Dec. 31, 2022 |
|
Tax Receivable Agreement | |||
Percentage of amount of U.S. federal, state and local income or franchise tax savings | 50.00% | ||
Tax receivable agreement, payment term | 15 years | ||
Tax receivable agreement liability | $ 420,070,000 | $ 425,724,000 | |
Tax receivable agreement liability adjustment | $ 0 | $ 0 |
Non-Controlling Interests -Schedule of the Ownership Interest in Noncontrolling Interest (Details) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2023
shares
|
Mar. 31, 2022
shares
|
Dec. 31, 2022 |
|
Class A Common Stock | |||
Non-Controlling Interests | |||
Conversion ratio | 1 | ||
Class B Common Stock | |||
Non-Controlling Interests | |||
Conversion ratio | 1 | ||
Tradeweb Markets LLC | |||
Non-Controlling Interests | |||
Number of LLC Interests held by Tradeweb Markets Inc. (in shares) | 208,361,310 | 204,281,271 | |
Number of LLC Interests held by non-controlling interests (in shares) | 26,335,148 | 29,975,358 | |
Total LLC Interests outstanding (in shares) | 234,696,458 | 234,256,629 | |
Number of LLC Interests held by Tradeweb Markets Inc. | 88.80% | 87.20% | 88.70% |
Number of LLC Interests held by non-controlling interests | 11.20% | 12.80% | 11.30% |
Total LLC Interests outstanding | 100.00% | 100.00% |
Non-Controlling Interests -Schedule of the Impact on Equity Due to Changes in the Company’s Ownership Interest in Noncontrolling Interest (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Noncontrolling Interest [Abstract] | ||
Net income attributable to Tradeweb Markets Inc. | $ 87,856 | $ 82,965 |
Increase/(decrease) in Tradeweb Markets Inc.’s additional paid-in capital as a result of ownership changes in TWM LLC | 6,910 | 30,005 |
Net transfers (to) from non-controlling interests | 6,910 | 30,005 |
Change from net income attributable to Tradeweb Markets Inc. and transfers (to) from non-controlling interests | $ 94,766 | $ 112,970 |
Stockholders' Equity and Stock-Based Compensation Plans - Schedule of Outstanding Shares of Common Stock (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Share-Based Payment Arrangement [Abstract] | ||
Total stock-based compensation expense | $ 11,610 | $ 13,712 |
Related Party Transactions - Balances - Schedule of Balances From Transactions with Affiliates Included in the Consolidated Statements (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Related Party Transactions | ||
Receivable and due from affiliates | $ 3,863 | $ 2,728 |
Payable and due to affiliates | 9,933 | 7,232 |
Affiliated Entity | ||
Related Party Transactions | ||
Accounts receivable | 97 | 70 |
Receivable and due from affiliates | 3,863 | 2,728 |
Other assets | 174 | 261 |
Accounts payable, accrued expenses and other liabilities | 673 | 335 |
Deferred revenue | 5,145 | 5,076 |
Payable and due to affiliates | $ 9,933 | $ 7,232 |
Related Party Transactions - Schedule of Affiliates were Included in the Consolidated Statements of Income (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Revenue: | ||
Total revenue | $ 329,249 | $ 311,486 |
Expenses | ||
Employee compensation and benefits | 114,493 | 117,991 |
Technology and communications | 17,567 | 15,776 |
General and administrative | 13,920 | 10,313 |
Professional fees | 11,176 | 7,857 |
Affiliated Entity | ||
Expenses | ||
Employee compensation and benefits | 0 | 613 |
Technology and communications | 1,164 | 1,116 |
General and administrative | 46 | 143 |
Professional fees | 1 | 12 |
Subscription fees | ||
Revenue: | ||
Total revenue | 44,374 | 41,455 |
Subscription fees | Affiliated Entity | ||
Revenue: | ||
Total revenue | 833 | 200 |
Refinitiv market data fees | ||
Revenue: | ||
Total revenue | 15,594 | 15,558 |
Refinitiv market data fees | Affiliated Entity | ||
Revenue: | ||
Total revenue | 15,594 | 15,558 |
Other fees | ||
Revenue: | ||
Total revenue | 2,683 | 2,668 |
Other fees | Affiliated Entity | ||
Revenue: | ||
Total revenue | $ 114 | $ 117 |
Fair Value of Financial Instruments - Schedule of Foreign Currency Forward Contracts (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Foreign currency forward contracts – Gross notional amount | Not Designated as Hedging Instrument | ||
Derivative [Line Items] | ||
Gross notional amount | $ 179,156 | $ 162,845 |
Fair Value of Financial Instruments - Schedule of Unrealized Gains(Losses) on Foreign Currency Forwards (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Foreign currency forward contracts – Gross notional amount | Selling, General and Administrative Expenses | ||
Derivative [Line Items] | ||
Realized and unrealized gains (losses) on derivative contracts | $ (1,160) | $ 682 |
Credit Risk (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
Dec. 31, 2022 |
|
Risks and Uncertainties [Abstract] | |||
Allowance for doubtful accounts | $ 152 | $ 129 | |
Credit loss expense (reversal) | $ 26 | $ (74) |
Commitments and Contingencies -Schedule of Maturity of Lease Liabilities and Future Minimum Lease Payments (Details) - USD ($) $ in Thousands |
Apr. 08, 2019 |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|---|
Commitments and Contingencies Disclosure [Abstract] | |||
Remainder of 2023 | $ 9,413 | ||
2024 | 8,293 | ||
2025 | 3,515 | ||
2026 | 2,833 | ||
2027 | 2,841 | ||
Thereafter | 152 | ||
Total future lease payments | 27,047 | ||
Less imputed interest | (1,241) | ||
Lease liabilities | $ 25,806 | $ 27,943 | |
Revolving credit facility | Fed Funds Effective Rate | |||
Commitments and Contingencies | |||
Debt Instrument, Basis Spread on Variable Rate | 0.50% |
Earnings Per Share - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Equity Settled Performance Based Restricted Stock Units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive shares (in shares) | 0 | 0 |
Options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive shares (in shares) | 0 | 0 |
RSUs | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive shares (in shares) | 360,193 | 61,260 |
PSUs | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive shares (in shares) | 0 | 0 |
LLC Interests | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive shares (in shares) | 26,340,754 | 30,296,879 |
Business Segment and Geographic Information - Schedule of Information Regarding Revenue by Client Sector (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Business Segment and Geographic Information | ||
Total revenue | $ 329,249 | $ 311,486 |
Operating expenses | 206,683 | 199,884 |
Operating income | 122,566 | 111,602 |
Institutional | ||
Business Segment and Geographic Information | ||
Total revenue | 198,852 | 197,210 |
Wholesale | ||
Business Segment and Geographic Information | ||
Total revenue | 76,100 | 72,938 |
Retail | ||
Business Segment and Geographic Information | ||
Total revenue | 31,863 | 19,972 |
Market Data | ||
Business Segment and Geographic Information | ||
Total revenue | $ 22,434 | $ 21,366 |
Business Segment and Geographic Information - Schedule of Revenue and Long-Lived Assets by Geographic Location (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
Dec. 31, 2022 |
|
Business Segment and Geographic Information | |||
Revenues | $ 329,249 | $ 311,486 | |
Long-lived assets | 4,024,243 | $ 4,057,256 | |
U.S. | |||
Business Segment and Geographic Information | |||
Revenues | 208,702 | 190,293 | |
Long-lived assets | 4,011,330 | 4,044,230 | |
International | |||
Business Segment and Geographic Information | |||
Revenues | 120,547 | $ 121,193 | |
Long-lived assets | $ 12,913 | $ 13,026 |
Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | |||
---|---|---|---|---|
Apr. 27, 2023 |
Apr. 03, 2023 |
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Subsequent Event [Line Items] | ||||
Dividends (in dollars per share) | $ 0.09 | $ 0.08 | ||
Subsequent Event | TWM LLC | ||||
Subsequent Event [Line Items] | ||||
Dividends payable | $ 29.3 | |||
Class A Common Stock | Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Dividends (in dollars per share) | $ 0.09 | |||
Class A Common Stock | Subsequent Event | Tradeweb Markets Inc | Bank Stockholders | ||||
Subsequent Event [Line Items] | ||||
Shares redeemed (in shares) | 3,251,177 | |||
Class B Common Stock | Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Dividends (in dollars per share) | $ 0.09 | |||
Class C Common Stock | Tradeweb Markets Inc | Bank Stockholders | ||||
Subsequent Event [Line Items] | ||||
Number of share owned (in shares) | 3,251,177 | |||
Class C Common Stock | Subsequent Event | Tradeweb Markets Inc | Bank Stockholders | ||||
Subsequent Event [Line Items] | ||||
Number of share owned (in shares) | 3,251,177 |
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