Tradeweb Markets (TW) Q4 2023 earnings summary

Executive summary

• Q4 revenue was $370.0M, up 26.3% YoY (24.6% constant currency); average daily volume reached $1,676.8B, up 56.9%.

• FY23 revenue was $1,338M, up 12.6% (12.2% constant currency), marking a 24th consecutive year of record revenue.

• Q4 adjusted net income was $151.9M; adjusted EBITDA was $195.9M at a 53.0% margin, and adjusted diluted EPS was $0.64, up 30.6%.

Financial highlights

• Q4 total trading revenue rose 27.1% to $344.1M; variable trading revenue grew 34.6% to $265.2M and fixed trading revenue rose 7.0% to $78.9M.

• FY23 net income was $419.5M, up 16.7%; adjusted net income was $535.5M versus $450.1M, and adjusted diluted EPS was $2.26 versus $1.90.

• Q4 operating expenses rose 13.3% to $228.4M; adjusted expenses increased 24.7% to $189.0M (20.7% constant currency), primarily on compensation and benefits.

• FY23 free cash flow was $684.3M, up 19.5%; adjusted expenses increased 11.3% (9.9% constant currency).

Outlook and guidance

• FY24 adjusted expense guidance was $755M–$805M; acquisition- and Refinitiv-related D&A was $142M, and the assumed non-GAAP tax rate was 24.5%–25.5%.

• FY24 cash costs for non-acquisition capital expenditures and capitalized software development were guided at $75M–$83M; assumptions include completed acquisitions and GBP/USD of 1.24.

• LSEG market data contract revenue was expected to be a headwind of $80M in FY24 and $90M in FY25.