tw_Current_Folio_10Q

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q

 

 

☒  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2019

or

 

☐  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission File Number: 001-38860

 

Tradeweb Markets Inc.

(Exact name of registrant as specified in its charter)

 


 

 

 

 

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)

 

(646) 430-6000

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

 

 

 

 

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Class A common stock, par value $0.00001

 

TW

 

Nasdaq Global Select Market

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

 

 

 

 

 

 

 

 

 

Large accelerated filer

 

Accelerated filer

 

Non-accelerated filer

 

Smaller reporting company

 

Emerging growth company

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒ No

 

 

 

 

 

 

 

Class of Stock

 

 

Shares Outstanding as of November 1, 2019

Class A Common Stock, par value $0.00001 per share

 

 

63,674,649

Class B Common Stock, par value $0.00001 per share

 

 

96,933,192

Class C Common Stock, par value $0.00001 per share

 

 

8,881,156

Class D Common Stock, par value $0.00001 per share

 

 

52,947,070

 

 

 

 

 

 

Table of Contents

TRADEWEB MARKETS INC.

 

TABLE OF CONTENTS

 

 

 

 

 

Page

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS 

4

 

 

PART I — FINANCIAL INFORMATION 

 

 

 

 

Item 1. 

Financial Statements

7

 

 

 

Consolidated Statements of Financial Condition 

7

 

 

Consolidated Statements of Income 

8

 

 

Consolidated Statements of Comprehensive Income 

9

 

 

Consolidated Statements of Changes in Equity 

10

 

 

Consolidated Statements of Cash Flows 

12

 

 

Notes to Consolidated Financial Statements 

13

 

 

Item 2. 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

39

 

 

 

Item 3. 

Quantitative and Qualitative Disclosures about Market Risk

73

 

 

 

Item 4. 

Controls and Procedures

75

 

 

 

PART II — OTHER INFORMATION 

76

 

 

 

Item 1. 

Legal Proceedings

76

 

 

 

Item 1A. 

Risk Factors

76

 

 

 

Item 2. 

Unregistered Sales of Equity Securities and Use of Proceeds

76

 

 

 

Item 3. 

Defaults Upon Senior Securities

76

 

 

 

Item 4. 

Mine Safety Disclosures

76

 

 

 

Item 5. 

Other Information

76

 

 

 

Item 6. 

Exhibits

77

 

 

 

 

Signatures

78

 

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INTRODUCTORY NOTE

 

The financial statements and other disclosures contained in this report include those of Tradeweb Markets Inc., which is the registrant, and those of its consolidating subsidiaries, including Tradeweb Markets LLC, which became the principal operating subsidiary of Tradeweb Markets Inc. on April 4, 2019 in a series of reorganization transactions (the “Reorganization Transactions”) that were completed in connection with Tradeweb Markets Inc.’s initial public offering (the “IPO”), which closed on April 8, 2019. For more information regarding the transactions described above, see Note 1—Organization to our unaudited consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

 

The financial statements and other disclosures contained in this Quarterly Report on Form 10-Q 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, Tradeweb Markets Inc. became a holding company whose only material assets consist of its equity interest in Tradeweb Markets LLC and related deferred tax assets. As the sole manager of Tradeweb Markets LLC, Tradeweb Markets Inc. operates and controls all of the business and affairs of Tradeweb Markets LLC and, through Tradeweb Markets LLC and its subsidiaries, conducts its business. As a result of this control, and because Tradeweb Markets Inc. has a substantial financial interest in Tradeweb Markets LLC, Tradeweb Markets Inc. consolidates the financial results of Tradeweb Markets LLC and its subsidiaries.

 

The unaudited consolidated financial statements and other financial disclosures included elsewhere in this Quarterly Report on Form 10-Q relating to periods prior to and including March 31, 2019, which we sometimes refer to as the “pre-IPO period,” reflect the results of operations, financial position and cash flows of Tradeweb Markets LLC, the predecessor of Tradeweb Markets Inc. for financial reporting purposes, and its subsidiaries. The unaudited consolidated financial statements and other financial disclosures included elsewhere in this Quarterly Report on Form 10-Q relating to periods beginning on April 1, 2019, and through and including September 30, 2019, which we sometimes refer to as the “post-IPO period,” reflect the results of operations, financial position and cash flows of Tradeweb Markets Inc. and its subsidiaries, including the consolidation of its investment in Tradeweb Markets LLC. As a result, for financial reporting purposes, the pre-IPO period excludes, and the post-IPO period includes, our financial results from April 1, 2019 through April 3, 2019, which are not material. The unaudited consolidated financial statements and other financial disclosures included elsewhere in this Quarterly Report on Form 10-Q do not reflect what the results of operations, financial position or cash flows would have been had the Reorganization Transactions and the IPO taken place at the beginning of the periods presented.

 

As used in this Quarterly Report on Form 10-Q, unless the context otherwise requires, references to:

 

                  “We,” “us,” “our,” the “Company,” “Tradeweb” and similar references refer: (i) on or prior to the completion of the Reorganization Transactions to Tradeweb Markets LLC, which we refer to as “TWM LLC,” and, unless otherwise stated or the context otherwise requires, all of its subsidiaries and any predecessor entities, and (ii) following the completion of the Reorganization Transactions to Tradeweb Markets Inc., and, unless otherwise stated or the context otherwise requires, TWM LLC and all of its subsidiaries and any predecessor entities.

 

·

“Bank Stockholders” refer collectively to entities affiliated with the following clients: Barclays Capital Inc., BofA Securities Inc. (a subsidiary of Bank of America Corporation), Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, RBS Securities Inc., UBS Securities LLC and Wells Fargo Securities, LLC. Following the IPO and the application of the net proceeds therefrom, entities affiliated with BofA Securities, Inc., RBS Securities Inc. and UBS Securities LLC no longer hold LLC Interests and, except as otherwise indicated, are not considered Bank Stockholders for post-IPO periods.

 

                  “Continuing LLC Owners” refer collectively to (i) those Original LLC Owners, including an indirect subsidiary of Refinitiv (as defined below), certain of the Bank Stockholders and members of management, that continue to own LLC Interests after the completion of the IPO and Reorganization Transactions, that received shares of our Class C common stock, shares of our Class D common stock or a combination of both, as the case may be, in

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connection with the completion of the Reorganization Transactions, and that may redeem or exchange their LLC Interests for shares of our Class A common stock or Class B common stock and (ii) solely with respect to the Tax Receivable Agreement (as defined below), also includes those Original LLC Owners, including certain Bank Stockholders, that disposed of all of their LLC Interests for cash in connection with the IPO.

 

                  “Investor Group” refer to certain investment funds affiliated with The Blackstone Group Inc. (f/k/a The Blackstone Group L.P.), an affiliate of Canada Pension Plan Investment Board, an affiliate of GIC Special Investments Pte. Ltd. and certain co-investors, which collectively hold indirectly a 55% ownership interest in Refinitiv (as defined below).

 

                  “LLC Interests” refer to the single class of common membership interests of TWM LLC issued in connection with the Reorganization Transactions.

 

                  “LSEG Transaction” refer to the acquisition of the Refinitiv business by London Stock Exchange Group plc in an all share transaction for a total enterprise value of approximately $27 billion.

 

                  “Original LLC Owners” refer to the owners of TWM LLC prior to the Reorganization Transactions.

 

                  “Refinitiv” refer to Refinitiv Holdings Limited, and unless otherwise stated or the context otherwise requires, all of its subsidiaries, which owns substantially all of the former financial and risk business of Thomson Reuters (as defined below), including, prior to and following the completion of the Reorganization Transactions, an indirect majority ownership interest in Tradeweb, and is controlled by the Investor Group.

 

                  “Refinitiv Transaction” refer to the transaction pursuant to which Refinitiv indirectly acquired on October 1, 2018 substantially all of the financial and risk business of Thomson Reuters and Thomson Reuters indirectly acquired a 45% ownership interest in Refinitiv.

 

                  “Thomson Reuters” refer to Thomson Reuters Corporation, which indirectly holds a 45% ownership interest in Refinitiv.

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). You can generally identify forward-looking statements by our use of forward-looking terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “projection,” “seek,” “should,” “will” or “would,” or the negative thereof or other variations thereon or comparable terminology. In particular, statements about the markets in which we operate, including our expectations about market trends, our market opportunity and the growth of our various markets, our expansion into new markets, any potential tax savings we may realize as a result of our organizational structure, our dividend policy and our expectations, beliefs, plans, strategies, objectives, prospects or assumptions regarding future events, including the pending LSEG Transaction, our performance or otherwise, contained in this Quarterly Report on Form 10-Q 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 may cause our actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements, or could affect our share price. Some of the factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements include:

 

                    changes in economic, political, social and market conditions and the impact of these changes on trading volumes;

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                    our failure to compete successfully;

 

                    our failure to adapt our business effectively to keep pace with industry changes;

 

                    consolidation and concentration in the financial services industry;

 

                    our dependence on dealer clients that are also stockholders;

 

                    our inability to maintain and grow the capacity of our trading platforms, systems and infrastructure;

 

                    design defects, errors, failures or delays with our platforms or solutions;

 

                    systems failures, interruptions, delays in services, cybersecurity incidents, catastrophic events and any resulting interruptions;

 

                    our dependence on third parties for certain market data and certain key functions;

 

                    our ability to implement our business strategies profitably;

 

                    our ability to successfully integrate any acquisition or to realize benefits from any strategic alliances, partnerships or joint ventures;

 

                    our ability to retain the services of certain members of our management;

 

                    inadequate protection of our intellectual property;

 

                    extensive regulation of our industry;

 

                    limitations on operating our business and incurring additional indebtedness as a result of covenant restrictions under our $500.0 million senior secured revolving credit facility (the “Revolving Credit Facility”) with Citibank, N.A., as administrative agent and collateral agent, and the other lenders party thereto, and certain Refinitiv indebtedness;

 

                    our dependence on distributions from TWM LLC to fund our expected dividend payments and to pay our taxes and expenses, including payments under the tax receivable agreement (the “Tax Receivable Agreement”) entered into in connection with the IPO;

 

                    our ability to realize any benefit from our organizational structure;

 

                    Refinitiv’s control of us and our status as a controlled company; and

 

·

other risks and uncertainties, including those listed under “Risk Factors” in our final prospectus, dated October 17, 2019 (the “October Prospectus”), filed with the Securities and Exchange Commission (“SEC”) pursuant to Rule 424(b) under the Securities Act, relating to our follow-on offering, and in other filings we may make from time to time with the SEC.

 

Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements contained in this Quarterly Report on Form 10-Q are not guarantees of future performance and our actual results of operations, financial condition or liquidity, and the development of the industry and markets in which we operate, may differ materially from the forward-looking statements contained in this Quarterly Report on Form 10-Q. In addition, even if our results of operations, financial condition or liquidity, and events

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in the industry and markets in which we operate, are consistent with the forward-looking statements contained in this Quarterly Report on Form 10-Q, they may not be predictive of results or developments in future periods.

 

Any forward-looking statement that we make in this Quarterly Report on Form 10-Q speaks only as of the date of such statement. Except as required by law, we do not undertake any obligation to update or revise, or to publicly announce any update or revision to, any of the forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this Quarterly Report on Form 10-Q.

 

Investors and others should note that we announce material financial and operational information using our investor relations website, press releases, SEC filings and public conference calls and webcasts. Information about Tradeweb, our business and our results of operations may also be announced by posts on Tradeweb’s accounts on the following social media channels: Instagram, LinkedIn and Twitter. The information that we post through these social media channels may be deemed material. As a result, we encourage investors, the media and others interested in Tradeweb to monitor these social media channels in addition to following our press releases, SEC filings and public conference calls and webcasts. These social media channels may be updated from time to time on our investor relations website.

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PART I — FINANCIAL INFORMATION

ITEM 1. - FINANCIAL STATEMENTS

 

Tradeweb Markets Inc. and Subsidiaries

Consolidated Statements of Financial Condition

(in thousands, except share and per share data)

(Unaudited)

 

 

 

 

 

 

 

 

 

    

Successor

    

Successor

 

 

September 30, 

 

December 31,

 

 

2019

 

2018

Assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

389,930

 

$

410,104

Restricted cash

 

 

1,200

 

 

1,200

Receivable from brokers and dealers and clearing organizations

 

 

747,660

 

 

174,591

Deposits with clearing organizations

 

 

12,101

 

 

11,427

Accounts receivable, net of allowance

 

 

95,398

 

 

87,192

Furniture, equipment, purchased software and leasehold improvements, net of accumulated depreciation and amortization

 

 

36,879

 

 

38,128

Right-of-use assets

 

 

29,038

 

 

 —

Software development costs, net of accumulated amortization

 

 

173,066

 

 

170,582

Intangible assets, net of accumulated amortization

 

 

1,306,293

 

 

1,380,848

Goodwill

 

 

2,694,797

 

 

2,694,797

Receivable from affiliates

 

 

3,515

 

 

3,243

Deferred tax asset

 

 

103,153

 

 

 —

Other assets

 

 

29,650

 

 

25,027

Total assets

 

$

5,622,680

 

$

4,997,139

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity/Members' Capital

 

 

  

 

 

  

Liabilities

 

 

  

 

 

  

Securities sold under agreements to repurchase

 

$

24,938

 

$

 —

Payable to brokers and dealers and clearing organizations

 

 

713,020

 

 

171,214

Accrued compensation

 

 

94,652

 

 

120,158

Deferred revenue

 

 

28,557

 

 

27,883

Accounts payable, accrued expenses and other liabilities

 

 

44,650

 

 

42,548

Employee equity compensation payable

 

 

714

 

 

24,187

Lease liability

 

 

33,130

 

 

 —

Payable to affiliates

 

 

3,737

 

 

5,009

Deferred tax liability

 

 

20,620

 

 

19,627

Tax receivable agreement liability

 

 

171,426

 

 

 —

Total liabilities

 

 

1,135,444

 

 

410,626

 

 

 

 

 

 

 

Commitments and contingencies (Note 17)

 

 

  

 

 

  

 

 

 

 

 

 

 

Mezzanine Capital

 

 

 

 

 

 

Class C Shares and Class P(C) Shares

 

 

 —

 

 

14,179

 

 

 

 

 

 

 

Stockholders' Equity/Members' Capital

 

 

  

 

 

  

Members' capital

 

 

 —

 

 

4,573,200

Preferred stock, $.00001 par value; 250,000,000 shares authorized; none issued or outstanding

 

 

 —

 

 

 —

Class A common stock, $.00001 par value; 1,000,000,000 shares authorized; 46,009,753 shares issued and outstanding as of September 30, 2019

 

 

 —

 

 

 —

Class B common stock, $.00001 par value; 450,000,000 shares authorized; 96,933,192 shares issued and outstanding as of September 30, 2019

 

 

 1

 

 

 —

Class C common stock, $.00001 par value; 350,000,000 shares authorized; 10,006,269 shares issued and outstanding as of September 30, 2019

 

 

 —

 

 

 —

Class D common stock, $.00001 par value; 300,000,000 shares authorized; 69,282,736 shares issued and outstanding as of September 30, 2019

 

 

 1

 

 

 —

Additional paid-in capital

 

 

2,855,885

 

 

 —

Accumulated other comprehensive income (loss)

 

 

(1,854)

 

 

(866)

Retained earnings

 

 

19,570

 

 

 —

Total stockholders' equity attributable to Tradeweb Markets Inc./members' capital

 

 

2,873,603

 

 

4,572,334

Non-controlling interests

 

 

1,613,633

 

 

 —

Total equity

 

 

4,487,236

 

 

4,572,334

Total liabilities and stockholders' equity/members' capital

 

$

5,622,680

 

$

4,997,139

 

The accompanying notes are an integral part of these consolidated financial statements.

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Tradeweb Markets Inc. and Subsidiaries

Consolidated Statements of Income

(in thousands, except share and per share data)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Successor

    

Successor

  

  

Predecessor

  

Predecessor

 

 

Three Months

 

Nine Months

 

 

Three Months

 

Nine Months

 

 

Ended

 

Ended

 

 

Ended

 

Ended

 

 

September 30, 

 

September 30, 

 

 

September 30, 

 

September 30, 

 

 

2019

 

2019

 

 

2018

 

2018

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

Transaction fees

 

$

112,746

 

$

319,338

 

 

$

92,582

 

$

273,751

Subscription fees

 

 

35,387

 

 

104,398

 

 

 

33,157

 

 

107,130

Commissions

 

 

37,590

 

 

108,200

 

 

 

24,394

 

 

79,830

Refinitiv market data fees

 

 

13,251

 

 

40,252

 

 

 

12,533

 

 

36,851

Other

 

 

2,007

 

 

6,070

 

 

 

2,587

 

 

8,209

Gross revenue

 

 

200,981

 

 

578,258

 

 

 

165,253

 

 

505,771

Contingent consideration

 

 

 —

 

 

 —

 

 

 

2,537

 

 

(26,830)

Net revenue

 

 

200,981

 

 

578,258

 

 

 

167,790

 

 

478,941

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

  

 

 

  

 

 

 

  

 

 

  

Employee compensation and benefits

 

 

79,644

 

 

252,912

 

 

 

69,076

 

 

209,053

Depreciation and amortization

 

 

35,133

 

 

102,928

 

 

 

16,362

 

 

48,808

Technology and communications

 

 

9,527

 

 

29,086

 

 

 

9,112

 

 

26,598

General and administrative

 

 

7,507

 

 

25,961

 

 

 

9,386

 

 

23,056

Professional fees

 

 

7,272

 

 

20,981

 

 

 

7,546

 

 

20,360

Occupancy

 

 

3,640

 

 

10,900

 

 

 

3,491

 

 

10,732

Total expenses

 

 

142,723

 

 

442,768

 

 

 

114,973

 

 

338,607

Operating income

 

 

58,258

 

 

135,490

 

 

 

52,817

 

 

140,334

Net interest income

 

 

636

 

 

1,669

 

 

 

673

 

 

1,726

Income before taxes

 

 

58,894

 

 

137,159

 

 

 

53,490

 

 

142,060

Provision for income taxes

 

 

(10,316)

 

 

(21,413)

 

 

 

(7,535)

 

 

(11,900)

Net income

 

$

48,578

 

$

115,746

 

 

$

45,955

 

$

130,160

Less: Pre-IPO net income attributable to Tradeweb Markets LLC

 

 

 —

 

 

42,352

 

 

 

 

 

 

 

Net income attributable to Tradeweb Markets Inc. and non-controlling interests

 

 

48,578

 

 

73,394

 

 

 

 

 

 

 

Less: Net income attributable to non-controlling interests

 

 

18,966

 

 

30,954

 

 

 

 

 

 

 

Net income attributable to Tradeweb Markets Inc.

 

$

29,612

 

$

42,440

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EPS calculations for pre-IPO and post-IPO periods (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share

 

 

  

 

 

  

 

 

 

 

 

 

 

Basic

 

$

0.21 (b)

 

$

0.19 (a) /
0.30
(b) 

 

 

$

0.21 (a) 

 

$

0.60 (a)

Diluted

 

$

0.20 (b)

 

$

0.19 (a) /
0.28
(b) 

 

 

$

0.21 (a)

 

$

0.60 (a)

Weighted average shares outstanding

 

 

  

 

 

  

 

 

 

 

 

 

 

Basic

 

 

142,935,206 (b)

 

 

222,222,197 (a) /
142,934,221
(b) 

 

 

 

219,165,997 (a)

 

 

215,365,920 (a)

Diluted

 

 

151,362,643 (b)

 

 

223,320,457 (a) /
151,158,760
(b) 

 

 

 

219,165,997 (a)

 

 

215,365,920 (a)

 

(1)

In April 2019, the Company completed the Reorganization Transactions and the IPO, which, among other things, resulted in Tradeweb Markets Inc. becoming the successor of Tradeweb Markets LLC for financial reporting purposes. As a result, earnings per share information for the pre-IPO period is not comparable to the earnings per share information for the post-IPO period. Therefore, earnings per share information is being presented separately for the pre-IPO and post-IPO periods. See Note 18 – Earnings Per Share for additional information.

a)

Presents information for Tradeweb Markets LLC (pre-IPO period).

b)

Presents information for Tradeweb Markets Inc. (post-IPO period).

 

The accompanying notes are an integral part of these consolidated financial statements.

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Tradeweb Markets Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(in thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Successor

    

Successor

  

  

Predecessor

  

Predecessor

 

 

Three Months

 

Nine Months

 

 

Three Months

 

Nine Months

 

 

Ended

 

Ended

 

 

Ended

 

Ended

 

 

September 30, 

 

September 30, 

 

 

September 30, 

 

September 30, 

 

 

2019

 

2019

 

 

2018

 

2018

Comprehensive income - Pre-IPO attributable to Tradeweb Markets LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-IPO net income attributable to Tradeweb Markets LLC

 

$

 —

 

$

42,352

 

 

$

45,955

 

$

130,160

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments attributable to Tradeweb Markets LLC

 

 

 —

 

 

988

 

 

 

(1,006)

 

 

(3,064)

Pre-IPO comprehensive income attributable to Tradeweb Markets LLC

 

$

 —

 

$

43,340

 

 

$

44,949

 

$

127,096

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income - Tradeweb Markets Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Tradeweb Markets Inc.

 

$

29,612

 

$

42,440

 

 

 

 

 

 

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments attributable to Tradeweb Markets Inc.

 

 

(1,329)

 

 

(1,976)

 

 

 

 

 

 

 

Comprehensive income attributable to Tradeweb Markets Inc.

 

$

28,283

 

$

40,464

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income - Non-controlling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to non-controlling interests

 

$

18,966

 

$

30,954

 

 

 

 

 

 

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments attributable to non-controlling interests

 

 

(737)

 

 

(1,096)

 

 

 

 

 

 

 

Comprehensive income attributable to non-controlling interests

 

$

18,229

 

$

29,858

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

9

Table of Contents

 

Tradeweb Markets Inc. and Subsidiaries

Consolidated Statements of Changes in Equity

(in thousands, except share and per share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Members'
Capital

    

Class A
Common Stock

    

Class B
Common Stock

    

Class C
Common Stock

    

Class D
Common Stock

    

Additional
Paid-In
Capital

    

Accumulated
Other
Comprehensive
Income

    

Retained
Earnings

    

Non-Controlling
Interests

    

Total
Stockholders'
Equity

Successor

 

 

 

 

Shares

   

Amount

 

Shares

   

Amount

 

Shares

   

Amount

 

Shares

   

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2018

 

$

4,573,200

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

$

 —

 

$

(866)

 

$

 —

 

$

 —

 

$

4,572,334

Adjustment to Class C Shares and Class P(C) shares in mezzanine capital

 

 

(2,369)

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(2,369)

Capital distributions

 

 

(20,000)

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(20,000)

Stock-based compensation

 

 

4,674

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

4,674

Net income

 

 

42,352

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

42,352

Foreign currency translation adjustments

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 

 —

 

 

988

 

 

 —

 

 

 —

 

 

988

Balance at March 31, 2019

 

$

4,597,857

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

$

 —

 

$

122

 

$

 —

 

$

 —

 

$

4,597,979

Capital distributions

 

 

(100,000)

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(100,000)

Effect of the reorganization transactions

 

 

(4,497,857)

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 

4,521,132

 

 

 —

 

 

 —

 

 

 —

 

 

23,275

Issuance of common stock, net of offering costs and cancellations

 

 

 —

 

46,000,000

 

 —

 

96,933,192

 

 1

 

10,006,269

 

 —

 

69,282,736

 

 1

 

 

(15,856)

 

 

 —

 

 

 —

 

 

 —

 

 

(15,854)

Tax receivable agreement liability and deferred taxes arising from the reorganization transactions and IPO

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 

(78,232)

 

 

 —

 

 

 —

 

 

 —

 

 

(78,232)

Allocation of equity to non-controlling interests

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 

(1,607,529)

 

 

 —

 

 

 —

 

 

1,607,529

 

 

 —

Adjustments to non-controlling interests

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

Distributions to non-controlling interests

    

 

 —

    

 —

 

 —

    

 —

 

 —

    

 —

 

 —

    

 —

 

 —

    

 

 —

    

 

 —

    

 

 —

    

 

(11,909)

    

 

(11,909)

Dividends ($0.08 per share)

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 

 —

 

 

 —

 

 

(11,435)

 

 

 —

 

 

(11,435)

Stock-based compensation expense under the PRSU Plan

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 

6,763

 

 

 —

 

 

 —

 

 

 —

 

 

6,763

Stock-based compensation expense under the Option Plan

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 

20,403

 

 

 —

 

 

 —

 

 

 —

 

 

20,403

Net income

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 

 —

 

 

 —

 

 

12,828

 

 

11,988

 

 

24,816

Foreign currency translation adjustments

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 

 —

 

 

(647)

 

 

 —

 

 

(359)

 

 

(1,006)

Balance at June 30, 2019

 

$

 —

 

46,000,000

 

 —

 

96,933,192

 

 1

 

10,006,269

 

 —

 

69,282,736

 

 1

 

$

2,846,681

 

$

(525)

 

$

1,393

 

$

1,607,249

 

$

4,454,800

Issuance of common stock from equity incentive plans

 

 

 —

 

9,753

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

Adjustments to non-controlling interests

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 

73

 

 

 —

 

 

 —

 

 

(73)

 

 

 —

Distributions to non-controlling interests

    

 

 —

    

 —

 

 —

    

 —

 

 —

    

 —

 

 —

    

 —

 

 —

    

 

 —

    

 

 —

    

 

 —

    

 

(11,772)

    

 

(11,772)

Dividends ($0.08 per share)

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 

 —

 

 

 —

 

 

(11,435)

 

 

 —

 

 

(11,435)

Stock-based compensation expense under the PRSU Plan

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 

7,136

 

 

 —

 

 

 —

 

 

 —

 

 

7,136

Stock-based compensation expense under the Option Plan

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 

1,995

 

 

 —

 

 

 —

 

 

 —

 

 

1,995

Net income

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 

 —

 

 

 —

 

 

29,612

 

 

18,966

 

 

48,578

Foreign currency translation adjustments

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 

 —

 

 

(1,329)

 

 

 —

 

 

(737)

 

 

(2,066)

Balance at September 30, 2019

 

$

 —

 

46,009,753

 

 —

 

96,933,192

 

 1

 

10,006,269

 

 —

 

69,282,736

 

 1

 

$

2,855,885

 

$

(1,854)

 

$

19,570

 

$

1,613,633

 

$

4,487,236

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

10

Table of Contents

Tradeweb Markets Inc. and Subsidiaries

Consolidated Statements of Changes in Equity – (Continued)

(in thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

Accumulated

    

 

 

 

 

 

 

 

Other

 

Total

 

 

Members'

 

Comprehensive

 

Members'

 

 

Capital

 

Loss

 

Capital

Predecessor

 

 

  

 

 

  

 

 

  

Members' capital at December 31, 2017

 

$

999,735

 

$

(13,267)

 

$

986,468

Comprehensive income: