Tradeweb Markets Inc.

Good morning and welcome to TradeWeb's third quarter 2022 earnings conference call. As a reminder, today's call is being recorded and will be available for playback. To begin, I'll turn the call over to Head of Treasury, FP&A, and Investor Relations, Ashley Sorrell. Please go ahead.

Thank you and good morning. Good morning. Joining me today for the call are our Chairman and CEO, Lee Oleski, who will review the highlights for the quarter and provide a brief business update. Our CEO-elect and President, Billy Hult, who will dive a little deeper into some growth initiatives, and our CFO, Sarah Ferber, who will review our financial results. We intend to use the website as a means of disclosing material, non-public information, and complying with disclosure obligations under SEC Regulation FD. I'd like to remind you that certain statements in this presentation and during the Q&A may relate to future events and expectations, and as such constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements related to, among other things, our guidance, our forward-looking statements. Actual results may differ materially from these forward-looking statements. Information concerning factors that could cause actual results to differ from forward-looking statements is contained in our earnings release and periodic reports filed with the SEC. In addition to today's call, we will reference certain non-GAAP measures. Information regarding these non-GAAP measures, including reconciliations to GAAP measures, are in our posted earnings release and presentation. To recap, this morning we reported GAAP earnings with diluted share of $0.33, excluding certain non-cash stock-based compensation expense, acquisition-related transaction costs, acquisition and refinance-related DNA, and certain FX items, And assuming an effective tax rate of 22%, we reported adjusted net income but diluted share of 45 cents. Please see the earnings release and the form 10-Q to be filed to the SEC for additional information regarding the presentation of our historical results. Now, let me turn the call over to Lee.

Thanks, Ashley. Good morning, everyone, and thank you for joining our third quarter earnings call. As I take part in my last TradeWeb earnings call, I sit back and reflect upon this startup that I co-founded over 25 years ago with 10 million in capital. The core approach was simple. Listen to our clients and build services, products, protocols, and functionalities that enhance their trading workflows. Over those 25 years, the talented TradeWeb employees have grown this institutional US treasury startup into a global multi-asset class, multi-client, and multi-protocol business. One of the crowning achievements was the 2019 IPO, followed by the tremendous growth the team has produced as a public company. In fact, from 2004 through 2021, we've averaged 12.9% annual revenue growth. In the first three quarters of 22, we generated revenues of 896 million, up 55% from the first three quarters of 2019, or an average growth of 16% per year, despite the material FX headwinds we're currently facing in 2022. The lion's share of this growth has been organic as a result of relentless focus on innovation and collaboration that continues to be the North Star of our company, as we help clients trade as efficiently as possible. This strategy sounds simple, yet success requires perseverance. Our team has dedicated the time and focus to link different liquidity pools and markets to deliver holistic, global, multi-asset class solutions, something we call connecting the dots. This incessant focus on moving markets forward has allowed us to develop a diversified business model that allows the company to drive strong revenue growth, even when facing a challenging macro environment in some of our products and client channels. I'm thrilled to pass the baton to my longtime friend and partner, Billy. I'm excited to see him, Tom, Sarah, Enrico Bruni, who's the head of Asia and Europe, Chris Bruner, who built our institutional US credit business, Justin Peterson, our chief technology officer, and the entire TradeWeb team as they continue to build upon our competitive advantage, our people, network, and technology. I'm excited to watch the team capitalize on the long-term growth runway ahead. and most of our markets still trading over the phone. Turning to slide four, record third quarter revenues of $287 million were up 8.2% year on year on a reported basis. The underlying strength in the business was even better. Stripping out the 490 basis points of FX headwinds that have been the most severe since we went public, we generated strong revenue growth. of 13.1% on a constant currency basis, and another double-digit revenue growth quarter. The revenue growth and the resulting scale translated into improved profitability relative to full year 2021, as our year-to-date adjusted EBITDA margin increased by 83 basis points to 51%. Adjusted earnings per share saw a healthy growth of 15% year-on-year. Turning to slide five, the diversity of our growth was on display once again this quarter, marked by double digit constant currency growth across all of our asset classes. Rates and credit continue to lead the way, accounting for 40% and 27% of our revenue growth, respectively, while equities provided 22% of the growth, a high watermark in terms of growth contribution. Specifically, Rates posted its best third quarter revenues ever, driven by our continued growth across global government bonds and swaps. In cash rates, U.S. Treasury revenues were up nearly 10% year on year, given the acceleration of our retail business due to the higher rate environment. Swaps produced another strong quarter with positive market share growth, while mortgage revenues declined given the challenging rate backdrop. Credit posted another strong quarter driven by strong munis, US corporate credit, and CDS trading. Equities posted its highest third quarter revenues ever driven by institutional ETFs and our effort to diversify and grow our other equity products. Money markets set a new record fueled by growth in our retail CD franchise and continued organic growth in institutional repos. Finally, Market data revenue growth was equally split across our Refinitiv contract and our proprietary data products, which continue to enjoy robust growth. Moving on to slide six, I will provide a brief update on two of our main focus areas, U.S. Treasuries and ETFs, and turn it over to Billy to dig deeper into U.S. credit and global interest rate swaps. Starting with U.S. Treasuries, our market share fell slightly to 19.6% of the U.S. Treasury market. The slowdown that we saw in the second quarter within our institutional asset manager and hedge fund clients as they moved to the sidelines and trimmed risk as volatility spiked persisted into July. Activity started to improve exiting July with both August and September registering month-over-month increases. The leading indicators of the institutional business remained strong. We gained market share versus Bloomberg, and client engagement was good, with the number of users increasing by 10% year-on-year and 3% quarter-on-quarter. On the other hand, our wholesale performance was mixed, as our legacy streaming offering saw positive revenue growth, while our club underperformed, as elevated volatility benefited the incumbents. Recall when we acquired NFI, the first phase of our integration plan was focused on expenses, consolidating broker-dealers and technology platforms, and migrating the data center. We will be consolidating the broker-dealers shortly and plan to migrate data centers during the first half of 23. After we migrate the data center, we expect that to be a catalyst for revenue growth as we rebuild the liquidity pool. On the whole, we believe the US Treasury business is in a unique position with deep retail, wholesale, and institutional liquidity pools, giving us the ability to continue to grow and capitalize on any potential market structure change. Finally, within equities, institutional ETFs produce strong quarterly revenue growth with average daily volume up 43% year-on-year, driven by new client wins and strong industry volumes. The client pipeline remains strong as the benefits of our electronic solutions continue to resonate. Structurally, we are seeing an increase in cross-asset trading, whereby ETF RFQs are being placed by both fixed income and equity trading desks. Our other initiatives to expand beyond our flagship ETF franchise are also bearing fruit, with momentum continuing in the equity options, convertibles, and ADRs. We look forward to crossing the $100 million annual revenue mark in the coming quarters, and we believe we remain well positioned to benefit from the secular growth in the ETFs and our other growth initiatives scaling. With that, I'll turn it over to Billy.