Tradeweb(US:TW)2022-02-03 19:40Financial Data and Key Metrics Changes - The company reported GAAP earnings per diluted share of $0.23, with adjusted net income per diluted share of $0.42, reflecting a strong performance [4] - Revenues for Q4 2021 reached nearly $277 million, up 18.8% year-on-year on a reported basis and 19.9% on a constant currency basis [8] - Adjusted EBITDA margin expanded by 144 basis points to 50.6% [8][24] - The company achieved record revenues for the year, surpassing $1 billion for the first time, with 22 consecutive years of revenue growth [6][10] Business Line Data and Key Metrics Changes - Rates and credit accounted for 57% and 33% of revenue growth respectively, with rates driven by U.S. treasuries and swaps [8] - Equities revenue growth was supported by institutional ETFs, with average daily volumes up 32% year-on-year [13] - Portfolio trading volumes increased by over 35% year-on-year, reaching $78 billion in Q4 2021 [17] - The swaps business saw a 20% year-on-year increase in industry volumes, with variable swaps revenue growing over 40% [19] Market Data and Key Metrics Changes - International revenues grew at an average of 21% since 2016, accelerating to 25% in 2021, with European business being a significant contributor [10] - The company reported a market share of 18.7% in the U.S. treasury market, with volumes up 47% year-on-year [12] - The company’s market share in electronic U.S. high yield reached 8.2%, with high-grade share increasing by over 200 basis points year-on-year [35] Company Strategy and Development Direction - The company focuses on a diversified business model, leveraging investments across asset classes and protocols to enhance market structure [7] - Continued investment in technology, with over $400 million spent in the last six years to drive innovation [11] - The strategy includes expanding into emerging markets and enhancing client engagement through innovative solutions [10][12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the potential for increased volatility and activity in the market due to anticipated rate hikes [40] - The company is focused on innovation and collaboration to meet client needs and navigate regulatory changes [33][34] - Management highlighted the importance of adapting to market changes and the ongoing digitization of trading [41] Other Important Information - The company ended Q4 with $972 million in cash and cash equivalents, and free cash flow reached nearly $527 million for the trailing 12 months [30] - The Board declared a quarterly dividend of $0.08 per share and plans to continue share repurchase programs to offset dilution [30] Q&A Session All Questions and Answers Question: Outlook for the rate franchise with higher rates - Management indicated that higher rates typically lead to increased volatility and activity, which is positive for the business, particularly in cash and derivatives markets [40] Question: Market share gains in the credit business - Management noted that market share gains are driven by both clients switching from other platforms and the transition from manual trading methods, emphasizing the importance of innovation over pricing [45] Question: Interest rate swaps volume concerns - Management reassured that January volumes were up double-digit year-on-year, despite a seasonal dip, and emphasized the long-term focus on expanding functionality and client engagement [52] Question: Portfolio trading market share outlook - Management expressed confidence in the continued growth of portfolio trading, highlighting its acceptance in the market and the strong investments being made by sell-side firms [60] Question: Non-U.S. opportunity in rate swaps - Management acknowledged that while the U.S. market is ahead in digitization, there is significant potential for growth in Europe, with ongoing efforts to expand client networks [65]