Tradeweb Markets Inc 10-Q for FY2021 Q2

Tradeweb Markets Inc. (TW)

10-Q 2021-07-30 For: 2021-06-30

Added on April 10, 2026

About this 10-Q

Tradeweb Markets Inc filed this 10-Q on July 30, 2021, covering the quarter ended June 30, 2021 (FY2021 Q2).

Headline figures

Quarter ended June 30, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $260.84M; up 23.0% from $212.11M a year earlier
Net income: $55.32M; up 81.4% from net income of $30.5M a year earlier
Diluted EPS: $0.27; up 68.8% from $0.16 a year earlier

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Delaware						83-2456358
(State of other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


1177 Avenue of the Americas New York, New York						10036
(Address of principal executive offices)						(Zip Code)


Class of Stock						Shares Outstanding as of July 21, 2021
Class A Common Stock, par value $0.00001 per share						105,310,024
Class B Common Stock, par value $0.00001 per share						96,933,192
Class C Common Stock, par value $0.00001 per share						1,654,825
Class D Common Stock, par value $0.00001 per share						28,877,108


		Page
INTRODUCTORY NOTE		3

USE OF NON-GAAP FINANCIAL MEASURES		4

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		6

PART I — FINANCIAL INFORMATION

Item 1.	Financial Statements	8

	Condensed Consolidated Statements of Financial Condition as of June 30, 2021 and December 31, 2020	8

	Condensed Consolidated Statements of Income for the three and six months ended June 30, 2021 and 2020	9

	Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2021 and 2020	10

	Condensed Consolidated Statements of Changes in Equity for the three and six months ended June 30, 2021 and 2020	11

	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2021 and 2020	13

	Notes to Condensed Consolidated Financial Statements	14

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	65

Item 4.	Controls and Procedures	67

PART II — OTHER INFORMATION		68

Item 1.	Legal Proceedings	68

Item 1A.	Risk Factors	68

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	68

Item 3.	Defaults Upon Senior Securities	68

Item 4.	Mine Safety Disclosures	68

Item 5.	Other Information	69

Item 6.	Exhibits	69

	Signatures	70


	June 30,		December 31,
	2021		2020
Assets
Cash and cash equivalents	$	681,225	$	791,280
Restricted cash	1,000		1,000
Receivable from brokers and dealers and clearing organizations	37,436		368
Deposits with clearing organizations	21,799		11,671
Accounts receivable, net of allowance for credit losses of $158 and $243 at June 30, 2021 and December 31, 2020, respectively	141,903		105,286
Furniture, equipment, purchased software and leasehold improvements, net of accumulated depreciation and amortization	32,775		33,814
Right-of-use assets	24,898		29,437
Software development costs, net of accumulated amortization	163,770		168,030
Goodwill	2,782,779		2,694,797
Intangible assets, net of accumulated amortization	1,231,567		1,182,034
Receivable from affiliates	2,801		111
Deferred tax asset	659,274		579,562
Other assets	83,663		82,460
Total assets	$	5,864,890	$	5,679,850

Liabilities and Equity
Liabilities
Payable to brokers and dealers and clearing organizations	$	36,611	$	252
Accrued compensation	85,635		129,288
Deferred revenue	28,052		23,193
Accounts payable, accrued expenses and other liabilities	41,172		42,692
Employee equity compensation payable	—		1,900
Lease liability	28,772		34,463
Payable to affiliates	3,036		5,142
Deferred tax liability	18,134		19,425
Tax receivable agreement liability	425,150		404,332
Total liabilities	666,562		660,687

Commitments and contingencies (Note 13)

Equity
Preferred stock, $0.00001 par value; 250,000,000 shares authorized; none issued or outstanding	—		—
Class A common stock, $0.00001 par value; 1,000,000,000 shares authorized; 105,153,208 and 98,075,465 shares issued and outstanding as of June 30, 2021 and December 31, 2020 respectively	1		1
Class B common stock, $0.00001 par value; 450,000,000 shares authorized; 96,933,192 and 96,933,192 shares issued and outstanding as of June 30, 2021 and December 31, 2020 respectively	1		1
Class C common stock, $0.00001 par value; 350,000,000 shares authorized; 1,654,825 and 3,139,821 shares issued and outstanding as of June 30, 2021 and December 31, 2020 respectively	—		—
Class D common stock, $0.00001 par value; 300,000,000 shares authorized; 28,877,108 and 30,871,381 shares issued and outstanding as of June 30, 2021 and December 31, 2020 respectively	—		—
Additional paid-in capital	4,347,884		4,143,094
Accumulated other comprehensive income (loss)	4,714		4,314
Retained earnings	195,368		156,041
Total stockholders' equity attributable to Tradeweb Markets Inc.	4,547,968		4,303,451
Non-controlling interests	650,360		715,712
Total equity	5,198,328		5,019,163
Total liabilities and equity	$	5,864,890	$	5,679,850


☒			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


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Revenues
Transaction fees and commissions	$	205,381	$	160,261	$	423,197	$	343,578
Subscription fees	37,883		35,006		75,751		69,489
Refinitiv market data fees	14,926		14,565		30,043		29,193
Other	2,650		2,275		5,248		4,453
Total revenue	260,840		212,107		534,239		446,713

Expenses
Employee compensation and benefits	98,449		88,866		202,071		179,386
Depreciation and amortization	41,867		37,919		82,833		75,095
Technology and communications	13,957		12,042		27,501		22,360
General and administrative	8,789		7,523		12,248		15,863
Professional fees	10,368		6,609		20,096		13,520
Occupancy	3,618		3,509		7,371		7,235
Total expenses	177,048		156,468		352,120		313,459
Operating income	83,792		55,639		182,119		133,254
Net interest income (expense)	(325)		(286)		(818)		413
Income before taxes	83,467		55,353		181,301		133,667
Provision for income taxes	(17,234)		(12,945)		(33,503)		(28,774)
Net income	66,233		42,408		147,798		104,893
Less: Net income attributable to non-controlling interests	10,917		11,912		24,623		30,469
Net income attributable to Tradeweb Markets Inc.	$	55,316	$	30,496	$	123,175	$	74,424

Earnings per share attributable to Tradeweb Markets Inc. Class A and B common stockholders:
Basic	$	0.27	$	0.17	$	0.61	$	0.43
Diluted	$	0.27	$	0.16	$	0.60	$	0.41
Weighted average shares outstanding:
Basic	201,749,985		177,649,501		200,414,714		171,942,125
Diluted	207,463,960		185,489,824		206,253,756		180,008,891


	Tradeweb Markets Inc. Stockholders' Equity
	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
	Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount

Balance at December 31, 2020	98,075,465	$	1	96,933,192	$	1	3,139,821	$	—	30,871,381	$	—	$	4,143,094	$	4,314	$	156,041	$	715,712	$	5,019,163
Activities related to exchanges of LLC Interests	3,479,269	—		—	—		(1,484,996)	—		(1,994,273)	—		—		—		—		—		—
Tax receivable agreement liability and deferred taxes arising from LLC Interest ownership exchanges	—	—		—	—		—	—		—	—		65,177		—		—		—		65,177
Issuance of common stock from equity incentive plans	3,088,545	—		—	—		—	—		—	—		46,397		—		—		—		46,397
Deferred taxes arising from issuance of common stock from equity incentive plans	—	—		—	—		—	—		—	—		6,417		—		—		—		6,417
Adjustments to non-controlling interests	—	—		—	—		—	—		—	—		80,665		85		—		(80,750)		—
Distributions to non-controlling interests	—	—		—	—		—	—		—	—		—		—		—		(2,504)		(2,504)
Dividends ($0.08 per share)	—	—		—	—		—	—		—	—		—		—		(16,030)		—		(16,030)
Stock-based compensation expense under the PRSU Plan	—	—		—	—		—	—		—	—		5,997		—		—		—		5,997
Stock-based compensation expense under the RSU Plan	—	—		—	—		—	—		—	—		2,523		—		—		—		2,523
Stock-based compensation expense under the Option Plan	—	—		—	—		—	—		—	—		2,240		—		—		—		2,240
Payroll taxes paid for stock-based compensation exercises	—	—		—	—		—	—		—	—		(45,464)		—		—		—		(45,464)
Net income	—	—		—	—		—	—		—	—		—		—		67,859		13,706		81,565
Foreign currency translation adjustments	—	—		—	—		—	—		—	—		—		(297)		—		(46)		(343)
Balance at March 31, 2021	104,643,279	$	1	96,933,192	$	1	1,654,825	$	—	28,877,108	$	—	$	4,307,046	$	4,102	$	207,870	$	646,118	$	5,165,138
Issuance of common stock from equity incentive plans	1,127,573	—		—	—		—	—		—	—		21,139		—		—		—		21,139
Deferred taxes arising from issuance of common stock from equity incentive plans	—	—		—	—		—	—		—	—		23,281		—		—		—		23,281
Adjustments to non-controlling interests	—	—		—	—		—	—		—	—		4,797		1		—		(4,798)		—
Distributions to non-controlling interests	—	—		—	—		—	—		—	—		—		—		—		(1,969)		(1,969)
Dividends ($0.08 per share)	—	—		—	—		—	—		—	—		—		—		(16,142)		—		(16,142)
Share repurchases pursuant to the Share Repurchase Program	(617,644)	—		—	—		—	—		—	—		—		—		(51,676)		—		(51,676)
Deferred taxes arising from share repurchases	—	—		—	—		—	—		—	—		(12,816)		—		—		—		(12,816)
Stock-based compensation expense under the PRSU Plan	—	—		—	—		—	—		—	—		7,826		—		—		—		7,826
Stock-based compensation expense under the RSU Plan	—	—		—	—		—	—		—	—		3,815		—		—		—		3,815
Stock-based compensation expense under the Option Plan	—	—		—	—		—	—		—	—		766		—		—		—		766
Payroll taxes paid for stock-based compensation exercises	—	—		—	—		—	—		—	—		(7,970)		—		—		—		(7,970)
Net income	—	—		—	—		—	—		—	—		—		—		55,316		10,917		66,233
Foreign currency translation adjustments	—	—		—	—		—	—		—	—		—		611		—		92		703
Balance at June 30, 2021	105,153,208	$	1	96,933,192	$	1	1,654,825	$	—	28,877,108	$	—	$	4,347,884	$	4,714	$	195,368	$	650,360	$	5,198,328


		Page
Note 1	Organization	15
Note 2	Significant Accounting Policies	17
Note 3	Restricted Cash	22
Note 4	Acquisitions	2 2
Note 5	Revenue	23
Note 6	Income Taxes	25
Note 7	Tax Receivable Agreement	26
Note 8	Non-Controlling Interests	26
Note 9	Stockholders' Equity and Stock-Based Compensation Plans	27
Note 10	Related Party Transactions	29
Note 11	Fair Value of Financial Instruments	30
Note 12	Credit Risk	32
Note 13	Commitments and Contingencies	33
Note 14	Earnings Per Share	34
Note 15	Regulatory Capital Requirements	34
Note 16	Business Segment and Geographic Information	35
Note 17	Subsequent Events	36


	Purchase Price Allocation

	(in thousands)
Cash and cash equivalents	$	33,806
Deposits with clearing organizations	18,147
Accounts receivable	2,779
Equipment	1,498
Software development costs	820
Goodwill	87,981
Intangible assets – customer relationships	99,236
Other assets	897
Accrued compensation	(1,289)
Deferred revenue	(620)
Accounts payable, accrued expenses and other liabilities	(592)
Total	242,663
Less: Cash acquired	(33,806)
Less: Deposits with clearing organizations acquired	(18,147)
Less: Preliminary working capital adjustments	(710)
Purchase price, net of cash and deposits acquired and excluding working capital adjustments	$	190,000


	Three Months Ended				Three Months Ended
	June 30, 2021				June 30, 2020
	(in thousands)				(in thousands)
	Variable		Fixed		Variable		Fixed
Revenues
Transaction fees and commissions	$	166,655	$	38,726	$	124,530	$	35,731
Subscription fees (1)	460		52,349		415		49,156
Other	217		2,433		237		2,038
Total revenue	$	167,332	$	93,508	$	125,182	$	86,925


	Amount

	(in thousands)
Deferred revenue balance - December 31, 2020	$	23,193
New billings	59,970
Revenue recognized	(55,731)
Deferred revenue acquired in connection with the NFI Acquisition	620
Deferred revenue balance - June 30, 2021	$	28,052


	June 30, 2021			June 30, 2020
	LLC Interests	Ownership %		LLC Interests	Ownership %
Number of LLC Interests held by Tradeweb Markets Inc.	202,086,400	86.9	%	187,575,300	82.6	%
Number of LLC Interests held by non-controlling interests	30,531,933	13.1	%	39,513,246	17.4	%
Total LLC Interests outstanding	232,618,333	100.0	%	227,088,546	100.0	%


	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 June 30, 2021
Assets
Cash equivalents – Money market funds	$	316,335	$	—	$	—	$	316,335
Receivable from affiliates – Foreign currency forward contracts	—		2,839		—		2,839
Total assets measured at fair value	$	316,335	$	2,839	$	—	$	319,174

Liabilities
Payable to affiliates – Foreign currency forward contracts	$	—	$	482	$	—	$	482
Total liabilities measured at fair value	$	—	$	482	$	—	$	482

As of December 31, 2020
Assets
Cash equivalents – Money market funds	$	541,790	$	—	$	—	$	541,790
Total assets measured at fair value	$	541,790	$	—	$	—	$	541,790

Liabilities
Payable to affiliates – Foreign currency forward contracts	$	—	$	3,409	$	—	$	3,409
Total liabilities measured at fair value	$	—	$	3,409	$	—	$	3,409


As of June 30, 2021	TWL		DW		TWD		TEL		TWJ		TWEU		TESL		EA

	(in thousands)
Regulatory Capital	$	27,961	$	53,647	$	20,483	$	73,658	$	8,648	$	6,527	$	760	$	214,499
Regulatory Capital Requirement	1,961		1,928		562		34,417		4,334		2,483		741		88
Excess Regulatory Capital	$	26,000	$	51,719	$	19,921	$	39,241	$	4,314	$	4,044	$	19	$	214,411


As of December 31, 2020	TWL		DW		TWD		TEL		TWJ		TWEU

	(in thousands)
Regulatory Capital	$	49,254	$	58,026	$	20,577	$	59,238	$	11,066	$	19,102
Regulatory Capital Requirement	2,438		2,147		731		33,742		3,799		2,562
Excess Regulatory Capital	$	46,816	$	55,879	$	19,846	$	25,496	$	7,267	$	16,540


	As of June 30, 2021				As of December 31, 2020
	TW SEF		DW SEF		TW SEF		DW SEF

	(in thousands)
Financial Resources	$	32,682	$	16,631	$	28,476	$	15,298
Required Financial Resources	13,500		6,071		13,500		6,223
Excess Financial Resources	$	19,182	$	10,560	$	14,976	$	9,075

Liquid Financial Assets	$	16,060	$	9,551	$	15,662	$	8,610
Required Liquid Financial Assets	6,750		3,036		6,750		3,112
Excess Liquid Financial Assets	$	9,310	$	6,515	$	8,912	$	5,498


	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 June 30, 2021	(in thousands)
Assets
Cash and restricted cash	$	365,890	$	365,890	$	—	$	—	$	365,890
Receivable from brokers and dealers and clearing organizations	37,436		—		37,436		—		37,436
Deposits with clearing organizations	21,799		21,799		—		—		21,799
Accounts receivable	141,903		—		141,903		—		141,903
Other assets – Memberships in clearing organizations	2,395		—		—		2,395		2,395
Total	$	569,423	$	387,689	$	179,339	$	2,395	$	569,423

Liabilities
Payable to brokers and dealers and clearing organizations	$	36,611	$	—	$	36,611	$	—	$	36,611
Total	$	36,611	$	—	$	36,611	$	—	$	36,611

As of December 31, 2020
Assets
Cash and restricted cash	$	250,490	$	250,490	$	—	$	—	$	250,490
Receivable from brokers and dealers and clearing organizations	368		—		368		—		368
Deposits with clearing organizations	11,671		11,671		—		—		11,671
Accounts receivable	105,286		—		105,286		—		105,286
Other assets – Memberships in clearing organizations	1,586		—		—		1,586		1,586
Total	$	369,401	$	262,161	$	105,654	$	1,586	$	369,401

Liabilities
Payable to brokers and dealers and clearing organizations	$	252	$	—	$	252	$	—	$	252
Total	$	252	$	—	$	252	$	—	$	252


Reconciliation of Diluted Weighted Average Shares Outstanding to Adjusted Diluted Weighted Average Shares Outstanding	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020

Diluted weighted average shares of Class A and Class B common stock outstanding	207,463,960		185,489,824		206,253,756		180,008,891
Assumed exchange of LLC Interests for shares of Class A or Class B common stock (1)	30,531,933		48,132,630		30,871,285		52,888,588
Adjusted diluted weighted average shares outstanding	237,995,893		233,622,454		237,125,041		232,897,479
Adjusted Net Income (in thousands)	$	93,558	$	70,383	$	195,136	$	155,751
Adjusted Diluted EPS	$	0.39	$	0.30	$	0.82	$	0.67


	Three Months Ended				Six Months Ended
Impact of Foreign Currency Rate Fluctuations (amounts in thousands)	June 30,				June 30,
	2021		2020		2021		2020
Increase (decrease) in revenue	$	4,100	$	(500)	$	7,900	$	(1,200)
Increase (decrease) in operating income	$	2,100	$	100	$	4,300	$	(700)


	Three Months Ended						Six Months Ended
Hypothetical 10% Change in Value of U.S. Dollar (amounts in thousands)	June 30,						June 30,
		2021			2020			2021			2020
Effect of 10% change on revenue	+/-	$	8,500	+/-	$	6,400	+/-	$	17,700	+/-	$	14,500
Effect of 10% change on operating income	+/-	$	5,400	+/-	$	3,900	+/-	$	11,700	+/-	$	9,400


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)
April 1, 2021 – April 30, 2021	—	$	—	—	$	150,000
May 1, 2021 – May 31, 2021	—	—		—	$	150,000
June 1, 2021 – June 30, 2021	617,644	83.67		617,644	$	98,324
Total	617,644	$	83.67	617,644


Exhibit Number						Description of Exhibit

31.1*						Certification of Chief Executive Officer pursuant to Rule 13a‑14(a) or 15d‑14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*						Certification of Chief Financial Officer pursuant to Rule 13a‑14(a) or 15d‑14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*						Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*						Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*						XBRL Instance Document.

101.SCH*						XBRL Taxonomy Extension Schema Document.

101.CAL*						XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF*						XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB*						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.


July 30, 2021	/s/ Lee Olesky
	By:	Lee Olesky
		Chief Executive Officer (Principal Executive Officer)


July 30, 2021	/s/ Robert Warshaw
	By:	Robert Warshaw
		Chief Financial Officer (Principal Financial Officer)