Tradeweb(US:TW)2023-02-02 21:31Financial Data and Key Metrics Changes - The company reported GAAP earnings per diluted share of $0.42, with adjusted net income per diluted share of $0.49 after excluding certain non-cash expenses and assuming an effective tax rate of 22% [4][31] - Fourth quarter revenues reached $293 million, up 5.8% year-over-year, and 9.3% on a constant currency basis, driven by strong performance across various asset classes [8][32] - Adjusted EBITDA margin increased by approximately 221 basis points to 52.8% for the fourth quarter, reflecting improved profitability [33] Business Line Data and Key Metrics Changes - Rates revenues decreased by 1%, while credit and equities contributed significantly to revenue growth, accounting for 61% and 29% of the fourth quarter revenue growth respectively [8][9] - Credit business saw a 16% year-over-year revenue growth on a constant currency basis, with strong performance in U.S. corporate credit and munis [19][25] - Equities achieved its highest fourth quarter revenues ever, driven by institutional ETFs and diversification efforts [9][16] Market Data and Key Metrics Changes - The international business grew revenues at an average of 19% since 2016, with 2022 growth of 15% on a constant currency basis, primarily driven by the European market [12] - U.S. Treasuries recorded a 10% year-over-year revenue increase, supported by a 20% market share [14] - The global swaps business achieved a record 2022 with constant currency revenue growth of 18% year-over-year, despite a 5% decline in fourth quarter revenues [27][30] Company Strategy and Development Direction - The company is focused on continuous innovation and enhancing client experience across the trading lifecycle, with a three-year plan emphasizing product and geographic expansion [7][18] - Investments in technology have exceeded $500 million over the past seven years, with a commitment to further innovation in 2023 [13][40] - The company aims to capitalize on the shift from phone and chat-based execution to electronic mediums, positioning itself as a leader in the market [6][12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, highlighting the strong performance in fixed income markets and the potential for growth in emerging markets [7][12] - The company anticipates continued revenue growth driven by strategic investments in credit and rates, despite a challenging macroeconomic environment [40][45] - Management noted that January 2023 volumes showed a return to normal market conditions, with revenue growth outpacing volume growth [54] Other Important Information - The company ended the fourth quarter with $1.3 billion in cash and cash equivalents, and free cash flow reached approximately $573 million for the trailing 12 months [38] - A quarterly dividend of $0.09 per share was declared, representing a 12.5% year-over-year increase [39] - The company authorized a new $300 million share buyback program after completing a previous $150 million program [39] Q&A Session Questions and Answers Question: Transition of Leadership and Focus Areas - The new CEO emphasized setting the strategic direction and enhancing client feedback, with Tom Pluta focusing on the U.S. business and regulatory matters [48][49] Question: January Performance and Revenue Outlook - The CEO noted that January 2023 saw revenue growth close to double digits, with rates and credit accounting for 75% of that growth, indicating a strong start to the year [54] Question: Portfolio Trading Dynamics - The President highlighted the growing importance of portfolio trading in credit markets, noting its benefits in execution certainty and risk management, with expectations for further market share growth [57][59]