Tradeweb Markets Inc.

Good morning, and welcome to TradeWeb's third quarter 2023 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. Joining me today for the call are CEO Billy Holt, who will review the highlights for the quarter and provide a brief business update. Our President, Tom Pluta, 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, nonpublic information, and complying with our disclosure obligations under 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 are 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, presentation, and periodic reports filed with the SEC. In addition, on today's call, we will reference certain non-GAAP measures, as well as certain market and industry data. Information regarding these non-GAAP measures, including reconciliations to GAAP measures, is in our earnings release and presentation. Information regarding market and industry data, including sources, is in our earnings presentation. Now, let me turn the call over to Billy.

Thanks, Ashley. Good morning, everyone, and thank you for joining our third quarter earnings call. I am extremely proud of our TradeWeb team that generated the second best revenue quarter in our history. This quarter continued to showcase profitable share gains across many of our markets. While our business is not immune to the macro backdrop, we believe we are increasingly building an all-weather platform that helps our clients manage risk in a variety of environments. We're also laser focused on enhancing our one-stop shop value proposition for our clients by continuing to add and link products electronically. Diving into the third quarter, client activity and risk appetite continued to grow, which drove a return to double-digit revenue growth despite an uncertain macro backdrop. Specifically on slide four, record revenues for any third quarter in our history of $328 million were up 14.4% year-over-year on a reported basis and 12.5% on a constant currency basis. and adjusted EBITDA margins expanded by 92 basis points relative to the third quarter of 2022. We continue to balance revenue growth and expenses on an annual basis with revenue growth of 8% during the first nine months of 2023, translating to a 58 basis point increase in our adjusted EBITDA margin to 52.2% relative to the first nine months of 2022. Turning to slide five, Rates and credit led the way, accounting for 60% and 29% of our revenue growth, respectively. Specifically, the record revenues across our rates business were driven by continued growth across global government bonds and swaps and returning growth across our mortgage business. Similarly, the record revenues across credit were led by strong US and European corporate credit, including record quarterly market share and electronic US investment grade and high-yield credit. Money markets produced its second-highest quarterly revenues ever, fueled by growth in our retail certificate of deposit franchise and continued organic growth in institutional repos. Equities revenue fell 2% due to a double-digit decline in industry ETF volumes, which were partially offset by a strong equity derivatives revenue growth. Finally, market data revenues were driven by our proprietary third-party data products, which continue to enjoy robust growth and a strong product pipeline, as well as by APA reporting revenues. Turning 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 Tom to dig deeper into U.S. credit and global interest rate swaps. Starting with U.S. Treasuries, revenues achieved a new record, increasing by 17% year over year and eclipsing industry volume growth of 15%. This was driven by our institutional business that had its best revenue quarter ever, led by record average daily volume across our institutional streaming protocol and growing adoption of our RFQ Plus offering. The high rate environment continued to propel our retail business, where revenues grew over 60% year over year. The leading indicators of the institutional business remain strong. We achieved record quarterly market share of longer dated US Treasuries versus Bloomberg. Client engagement was healthy with institutional average daily trades up over 60% year over year. Automation continues to be an important theme with institutional US Treasury AIX average daily trades increasing by more than 150% year over year. Our U.S. Treasury's wholesale business produced its best revenue quarter in our history, led by record volumes across our sessions protocols and strong growth across our streaming protocol. While our central limit order book protocol faced tough market conditions, the team has made initial progress in deepening client wallet share with average daily volume up 20% quarter over quarter. and we expect to onboard more liquidity providers over the coming quarters. Within equities, our ETF business outperformed the overall market but faced a tough industry backdrop given lower equity market volatility and a lack of price dispersion that minimized portfolio rebalance activity. During the quarter, we added notional-based trading for ETFs to complement our legacy share-based trading, responding to increased demand from asset managers, retail aggregators, and the wealth management community. Other initiatives to expand our equity brand beyond our flagship ETF franchise continue to bear fruit. Institutional equity derivatives revenues were up nearly 30% year-over-year driven by strong double-digit growth across options and convertibles. ADR volumes also saw a dramatic year-over-year increase. Looking ahead, the client pipeline remains strong as the benefits of our electronic solutions continue to resonate. We believe we are well positioned to capitalize on the long-term secular ETF growth story, not just in equities, but across our fixed income business. Moving on to our international business, which is another component of our growth, revenues grew 18.1% year-over-year on a reported basis and 13% on a constant currency basis. The growth was driven by strong performance across European government bonds, European swaps, emerging market swaps, European credit, and market data. Revenue growth was driven in part by growing adoption across Asian and North American clients trading non-US products. Looking forward, we're excited to broaden our international presence with the closing of the yield broker acquisition, which complements our existing rate business deepens our product presence and expands our client footprint deeper into the APAC region. Similar to TradeWeb, YieldBroker has a comprehensive product offering across Australian and New Zealand debt capital markets and a diverse set of clients and protocols. We have hit the ground running with the integration and will be focusing on consolidating technology over the next 18 months. Additionally, we are spending significant time with the talented Yield Broker employees that we welcome to TradeWeb, and with local clients to set the stage for further collaboration. Finally, today, we announced our new market data agreement with Refinitiv, who will distribute our data to their clients for a period of two years. This contract not only generates significantly more revenue for TradeWeb, which Sarah will touch on later, but also provides more flexibility to grow our proprietary data business. We also see additional upside as we build more products to enhance the trading experience of our clients. Separately, we also announced a strategic partnership with FTSE Russell to expand benchmark pricing, broaden index inclusion, and enhance trading functionality across fixed income products. We'll update you on that initiative as we make progress. With that, I will turn it over to Tom.