Tradeweb(US:TW)2020-10-28 17:35Financial Data and Key Metrics Changes - The company reported GAAP earnings per diluted share of $0.19, with adjusted net income per diluted share of $0.30, reflecting a year-over-year increase [6][52] - Gross revenues for Q3 2020 were $213 million, up 5.9% year-on-year on a reported basis and 4.7% on a constant currency basis [12][51] - Adjusted EBITDA margin expanded by 91 basis points to 47.4% compared to the previous year [12][52] Business Line Data and Key Metrics Changes - Credit business grew by 26.9%, while rates and money markets showed organic growth consistent with the previous year [16] - Cash rates achieved their second-highest revenue and volume quarter, driven by central bank issuance and refinancing activity [17] - Interest rate swaps volumes fell 36% year-on-year, but the company gained market share, reaching a record of 10.2% [18][31] Market Data and Key Metrics Changes - Total average daily volumes were $780 billion, down 4.5%, but up 5.4% when excluding short tenure swaps [50] - Market data revenue increased by 10% year-over-year, led by Refinitiv and proprietary data products [51] - The company derived approximately 36% of revenues from international customers, with 30% of revenue denominated in currencies other than dollars [51] Company Strategy and Development Direction - The company remains focused on capitalizing on secular tailwinds to drive revenue growth and margin expansion [11] - Continued investment in technology and innovation is emphasized, with new initiatives in specified pool platforms and electronic access to the China interbank bond market [13][14] - The company is evaluating potential M&A opportunities to augment growth as cash builds on the balance sheet [68] Management's Comments on Operating Environment and Future Outlook - Management acknowledged macro challenges but highlighted encouraging secular growth across various asset classes [9][10] - The company is optimistic about future growth, particularly in the rates business, despite current low volatility [92] - Management noted that October is trending towards double-digit revenue growth compared to the previous year [114] Other Important Information - The company ended Q3 with $677 million in cash and cash equivalents, with free cash flow reaching $280 million for the trailing 12 months [62] - Capital expenditures for the quarter were $10.2 million, with expectations for full-year CapEx in the range of $45 million to $50 million [63][64] Q&A Session Summary Question: Discussion on structural deal wins and new initiatives in the rates business - Management highlighted the ongoing electrification of products and the diversity of offerings as key growth drivers, despite macro challenges [73][79] Question: Impact of recent revenue growth slowdown on growth opportunities - Management noted that while there are periods of slowdown, the diversity of the business allows for growth in different sectors, particularly in credit [89][90] Question: Update on portfolio trading and net spotting - Management expressed confidence in the growth of portfolio trading and net spotting, emphasizing their alignment with current market needs [100][102] Question: Correlation between MBS prepayments and trading volume - Management indicated strong connections with the originator community and confidence in the specified pool platform's future success [110][111] Question: October performance by asset class - Management reported that October is trending towards double-digit revenue growth, with strong performance in credit and government bonds [114]