In conjunction with this offering,
Tradeweb intends to use the net proceeds from the offering to purchase equity interests from certain existing owners. Refinitiv will continue to own a controlling interest in Tradeweb following the offering. J.P. Morgan, Barclays, Citigroup,
Preliminary First Quarter 2020 Financial Results
The preliminary prospectus included in the registration statement filed by Tradeweb in connection with the proposed offering contains Tradeweb’s preliminary unaudited financial results for the three months ended
Set forth below are management’s estimates for expected gross revenue, total expenses, net income, net income attributable to
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Three Months |
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Three Months |
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Ended |
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Ended |
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$ Change |
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% Change |
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(dollars in thousands, except per share data) |
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Revenue |
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Rates |
|
$ |
126,039 |
|
$ |
104,090 |
|
$ |
21,949 |
|
21.1 |
% |
Credit |
|
|
53,978 |
|
|
39,435 |
|
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14,543 |
|
36.9 |
|
Equities |
|
|
19,434 |
|
|
11,798 |
|
|
7,636 |
|
64.7 |
|
Money Markets |
|
|
11,208 |
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|
9,562 |
|
|
1,646 |
|
17.2 |
|
Market Data |
|
|
18,562 |
|
|
16,903 |
|
|
1,659 |
|
9.8 |
|
Other |
|
|
5,385 |
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|
5,004 |
|
|
381 |
|
7.6 |
|
Gross Revenue |
|
|
234,606 |
|
|
186,792 |
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|
47,814 |
|
25.6 |
|
Total Expenses |
|
|
156,991 |
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|
140,515 |
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|
16,476 |
|
11.7 |
|
Net income |
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|
62,485 |
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|
42,352 |
|
|
20,133 |
|
47.5 |
|
Net income attributable to |
|
$ |
43,928 |
|
$ |
— |
|
$ |
— |
|
— |
|
Diluted earnings per share(1) |
|
$ |
0.25 |
(a) |
$ |
0.19 |
(b) |
$ |
0.06 |
|
31.6 |
% |
Non-GAAP Financial Measures |
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|
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|
|
Adjusted EBITDA(2) |
|
$ |
119,650 |
|
$ |
80,347 |
|
$ |
39,303 |
|
48.9 |
% |
Adjusted EBITDA margin(2) |
|
|
51.0 |
% |
|
43.0 |
% |
|
+799bps |
|
— |
|
Adjusted EBIT(2) |
|
$ |
108,747 |
|
$ |
70,053 |
|
$ |
38,694 |
|
55.2 |
% |
Adjusted EBIT margin(2) |
|
|
46.4 |
% |
|
37.5 |
% |
|
+885bps |
|
— |
|
Adjusted Net Income(2) |
|
$ |
85,368 |
|
$ |
52,190 |
|
$ |
33,178 |
|
63.6 |
% |
Adjusted Diluted EPS (1)(2)(3) |
|
$ |
0.37 |
(a) |
$ |
0.23 |
(b) |
$ |
0.14 |
|
60.9 |
% |
(1) |
As a result of the Reorganization Transactions and the IPO completed in |
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(a) Presents information for |
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(b) Presents information for |
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|
See “Basis of Presentation” in Appendix A attached hereto and “Note 18 — Earnings Per Share” to the audited consolidated financial statements of |
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(2) |
For the definitions of Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT, Adjusted EBIT margin, Adjusted Net Income and Adjusted Diluted EPS and for reconciliations to their most directly comparable financial measures presented in accordance with GAAP, see the tables included in Appendix A attached hereto. |
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(3) |
Adjusted Diluted EPS includes certain tax related adjustments to reflect an assumed effective tax rate for all periods presented and, for the three months ended |
The issuer has filed a registration statement (including a prospectus) with the
Alternatively, copies of the preliminary prospectus may be obtained from:
These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This news release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
Forward-Looking Statements
This release contains forward-looking statements within the meaning of the federal securities laws. Statements related to, among other things, the proposed offering and plans regarding the use of proceeds therefrom, our outlook and future performance, the industry and markets in which we operate, our expectations, beliefs, plans, strategies, objectives, prospects and assumptions and future events are forward-looking statements.
We have based these forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. These and other important factors, including those discussed under the heading “Risk Factors” in documents of
About
Appendix A
Basis of Presentation
“We,” “us,” “our,” the “Company,” “Tradeweb” and similar references refer: (i) on or prior to the completion of a series of reorganization transactions that were completed (the “Reorganization Transactions”) in connection with Tradeweb Markets Inc.’s initial public offering (“IPO”), which was completed on
“Refinitiv” refers to
The historical financial information and other disclosures contained herein relate to periods that ended both prior to and after the completion of the Reorganization Transactions and the IPO. As a result of the Reorganization Transactions completed in connection with the IPO, on
Unless otherwise indicated, revenue is presented on a gross revenue basis. For certain periods, our gross revenue is offset by contingent consideration, a contra-revenue adjustment related to the achievement of specific revenue earnout milestones for certain credit products. We believe that gross revenue is the key driver of our operating performance and therefore is the revenue measure we utilize to assess our business on a period by period basis.
Non-GAAP Financial Measures
In addition to net income and net income attributable to
Adjusted EBITDA margin and Adjusted EBIT margin are defined as Adjusted EBITDA and Adjusted EBIT, respectively, divided by gross revenue for the applicable period. We present Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT and Adjusted EBIT margin because we believe they assist investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. For example, we exclude contingent consideration because it is equity settled and its balance is based on our value at a certain time and may not reflect our actual operating performance. We also exclude non-cash stock-based compensation expense associated with options awarded to management and other employees prior to the IPO (the “Special Option Award”) and options awarded to management and other employees following the IPO during 2019, as well as payroll taxes associated with exercises of such options during the applicable period. We believe it is useful to exclude this stock-based compensation expense and associated payroll taxes because the amount of expense associated with the Special Option Award and the post-IPO option awards in 2019 may not directly correlate to the underlying performance of our business and will vary across periods. We do not expect to exclude any non-cash stock-based compensation expense associated with options that may be awarded to management and other employees during 2020. In addition, we exclude the tax receivable agreement liability adjustments, because we believe it is useful to exclude the recognition of income during a period due to changes in the tax receivable agreement liability recorded in our consolidated statement of financial condition as a result of changes in the mix of earnings, tax legislation and tax rates in various jurisdictions, or other factors that may impact our tax savings, which may not directly correlate to the underlying performance of our business and will vary across periods. With respect to Adjusted EBIT and Adjusted EBIT margin, we believe it is useful to exclude the depreciation and amortization of acquisition related tangible and intangible assets resulting from certain acquisitions, the Refinitiv Transaction and the application of pushdown accounting in order to facilitate a period-over-period comparison of our financial performance.
Management and our board of directors use Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT and Adjusted EBIT margin to assess our financial performance and believe it is helpful in highlighting trends in our core operating performance, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate and capital investments. Further, our executive incentive compensation is based in part on components of Adjusted EBITDA and Adjusted EBITDA margin. We present Adjusted Net Income and Adjusted Diluted EPS for
Adjusted Net Income is defined as net income attributable to
Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT, Adjusted EBIT margin, Adjusted Net Income and Adjusted Diluted EPS have limitations as analytical tools, and you should not consider these non-GAAP financial measures in isolation or as alternatives to net income attributable to
The table set forth below presents a reconciliation of net income to Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT and Adjusted EBIT margin for the three months ended
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Three Months Ended |
|
Three Months Ended |
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(dollars in thousands) |
|
||||
Net income |
|
$ |
62,485 |
|
$ |
42,352 |
|
Net interest income |
|
|
(699) |
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|
(858) |
|
Depreciation and amortization |
|
|
37,176 |
|
|
33,503 |
|
Stock-based compensation expense(1) |
|
|
3,497 |
|
|
— |
|
Provision for income taxes |
|
|
15,829 |
|
|
4,783 |
|
Unrealized foreign exchange (gains) / losses |
|
|
1,164 |
|
|
(293) |
|
Loss from revaluation of foreign denominated cash(2) |
|
|
198 |
|
|
860 |
|
Adjusted EBITDA |
|
$ |
119,650 |
|
$ |
80,347 |
|
Less: Depreciation and amortization |
|
|
(37,176) |
|
|
(33,503) |
|
Add: Acquisition and Refinitiv Transaction related D&A(3) |
|
|
26,273 |
|
|
23,209 |
|
Adjusted EBIT |
|
$ |
108,747 |
|
$ |
70,053 |
|
Adjusted EBITDA margin(4) |
|
|
51.0 |
% |
|
43.0 |
% |
Adjusted EBIT margin(4) |
|
|
46.4 |
% |
$ |
37.5 |
% |
(1) |
|
Represents non-cash stock-based compensation expense associated with the Special Option Award discussed under “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates — Stock-Based Compensation” in the 2019 Form 10-K, and post-IPO options awarded in 2019 and payroll taxes associated with exercises of such options during the applicable period. |
(2) |
|
Represents foreign exchange gain or loss from the revaluation of cash denominated in a different currency than the entity’s functional currency. |
(3) |
|
Represents acquisition-related intangibles amortization and increased tangible asset and capitalized software depreciation and amortization resulting from the Refinitiv Transaction and the application of pushdown accounting (where all assets were marked to fair value as of the closing date of the Refinitiv Transaction). |
(4) |
|
For the three months ended |
The table set forth below presents a reconciliation of net income attributable to
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Three Months Ended |
|
||
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||
|
|
(dollars in thousands, except per share data) |
|
||||
Earnings per diluted share(1) |
|
$ |
0.25 |
(a) |
$ |
0.19 |
(b) |
Pre-IPO net income attributable to |
|
$ |
- |
|
$ |
42,352 |
|
Net income attributable to |
|
|
43,928 |
|
|
- |
|
Net income attributable to non-controlling interests (1)(2) |
|
|
18,557 |
|
|
- |
|
Net income |
|
|
62,485 |
|
|
42,352 |
|
Provision for income taxes |
|
|
15,829 |
|
|
4,783 |
|
Acquisition and Refinitiv Transaction related D&A(3) |
|
|
26,273 |
|
|
23,209 |
|
Stock-based compensation expense(4) |
|
|
3,497 |
|
|
- |
|
Unrealized foreign exchange (gains) / losses |
|
|
1,164 |
|
|
(293) |
|
Loss from revaluation of foreign denominated cash(5) |
|
|
198 |
|
|
860 |
|
Adjusted Net Income before income taxes |
|
|
109,446 |
|
|
70,911 |
|
Adjusted income taxes(6) |
|
|
(24,078) |
|
|
(18,721) |
|
Adjusted Net Income |
|
$ |
85,368 |
|
$ |
52,190 |
|
Adjusted Diluted EPS(1)(7) |
|
$ |
0.37 |
(a) |
$ |
0.23 |
(b) |
(1) |
As a result of the Reorganization Transactions and the IPO completed in |
|||
|
(a) Presents information for |
|||
(b) Presents information for |
|
|||
|
See “Basis of Presentation” above and “Note 18 — Earnings Per Share” to the audited consolidated financial statements of |
|||
(2) |
For post-IPO periods, represents the reallocation of net income attributable to non-controlling interests from the assumed exchange of all outstanding LLC Interests held by non-controlling interests for shares of Class A or Class B common stock. |
|||
(3) |
Represents acquisition-related intangibles amortization and increased tangible asset and capitalized software depreciation and amortization resulting from the Refinitiv Transaction and the application of pushdown accounting (where all assets were marked to fair value as of the closing date of the Refinitiv Transaction). |
|||
(4) |
Represents non-cash stock-based compensation expense associated with the Special Option Award discussed under “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates — Stock-Based Compensation” in the 2019 Form 10-K, and post-IPO options awarded in 2019 and payroll taxes associated with exercises of such options during the applicable period. |
|||
(5) |
Represents foreign exchange gain or loss from the revaluation of cash denominated in a different currency than the entity’s functional currency. |
|||
(6) |
Represents corporate income taxes at an assumed effective tax rate of 22.0% and 26.4% applied to Adjusted Net Income before income taxes for the three months ended |
|||
(7) |
Due to the Reorganization Transactions and the IPO completed in |
The following table summarizes the calculation of Adjusted Diluted EPS for the three months ended
|
|
|
|
|
|
|
|
|
Post-IPO Period |
|
Pre-IPO Period |
||
Three Months |
Three Months |
|||||
Reconciliation of Diluted Weighted Average Shares Outstanding to |
Ended |
Ended |
||||
Adjusted Diluted Weighted Average Shares Outstanding |
|
|
|
|
||
Diluted weighted average |
|
|
— |
|
|
223,320,457 |
Diluted weighted average shares of Class A and Class B common stock outstanding |
|
|
174,517,244 |
|
|
— |
Assumed exchange of LLC interests for shares of Class A or Class B common stock (1) |
|
|
57,644,547 |
|
|
— |
Adjusted diluted weighted average shares outstanding |
|
|
232,161,791 |
|
|
223,320,457 |
Adjusted Net Income (in thousands) |
|
$ |
85,368 |
|
$ |
52,190 |
Adjusted Diluted EPS |
|
$ |
0.37 |
|
$ |
0.23 |
(1) |
Assumes the full exchange of all outstanding LLC Interests held by non-controlling interests for shares of Class A or Class B common stock, resulting in the elimination of the non-controlling interests and recognition of the net income attributable to non-controlling interests. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20200420005944/en/
Investor Contact
Ashley.Serrao@Tradeweb.com
Media Contact
Daniel.Noonan@Tradeweb.com
Source: