Tradeweb Markets Inc.

Good morning, and welcome to TradeWeb's fourth 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 Sarau. Please go ahead.

Thank you, and good morning. Joining me today for the call, our CEO, Billy Holt, 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, non-public 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 fourth quarter earnings call. I am extremely proud of our TradeWeb team that generated the best revenue quarter in our history and again showcased the diversity of our revenue growth. We entered 2024 with strong momentum across our businesses. Many of you heard me in the past talk about the battle against the phone as a one-way train. And in many of our businesses, that train has a long way to go. While the secular tailwinds are powerful, we also need to be focused on making a difference in creating our own waves. Relationship building is a priority, and in the past year as CEO, I've stressed the importance of engaging regularly with our customers to understand how we can work together to move markets forward and improve their trading experience. Our customer skill sets are evolving as they continue to become more tech savvy and sophisticated in how they want to interact with the markets. We believe the world is moving towards a more algorithmic and multi-asset class ecosystem. This puts the spotlight directly on our one-stop-shop value proposition in a good way, which we continue to take to the next level by investing in technology and adding and linking products and geographies. Diving into the fourth quarter, client activity and risk appetite continued to grow, which drove strong double-digit revenue growth. Specifically on slide four, record revenues of $370 million were up 26.3%, year over year on a reported basis and 24.6% on a constant currency basis and adjusted EBITDA margins expanded by 15 basis points on a reported basis and 122 basis points on a constant currency basis relative to the fourth quarter of 2022. Turning to slide five, rates and credit led the way, accounting for 60% and 27% of our revenue growth respectively. Record revenues across rates were driven by a double-digit revenue growth across global government bonds, swaps, and mortgages. Similarly, the record revenues across credit were led by strong U.S. and European corporate credit and muni trading, including record quarterly market share and electronic U.S. investment grade. Money markets also had a record fueled by growth in our retail certificate of deposit franchise and continued organic growth in institutional repos. equities was driven by institutional ETFs and our efforts to diversify and grow our other equity products. Finally, market data revenues were driven by our LSEG contract and our proprietary data products, which continue to enjoy robust growth. Turning to slide six, our record fourth quarter capped off a record year in 2023. Record volumes across most asset classes translated into 12.6% and 12.2% revenue growth on a reported and constant currency basis, respectively. The scale generated by our strong top line results drove approximately 49 basis points of adjusted EBITDA margin expansion and 19% adjusted earnings growth. As our growth initiatives continue to scale, we maintain our tradition of constant and focused organic investment. 2023 was a very productive year with numerous accomplishments to highlight. Broadly, they can be summed up as enhancing our existing product capabilities, adding new clients, forging new partnerships, and placing more bets on the table. On the capability front, we completed our integration of the NASDAQ fixed income acquisition, made meaningful progress across our mortgage-specified pool platform, and expanded our product suite across global swaps. On the client side, we continue to scale our credit, mortgage, and swaps platform as we make inroads with our largest clients. On the collaboration front, we completed the first phase of our integration with BlackRock's Aladdin, expanded our partnership with FTSE Indices, went live with our FX All link for FX hedging, and announced our new data licensing agreement with LSEG. Finally, we spent $205 million in a mix of cash and equity on our acquisitions of YieldBroker in August of 2030 and RateFit in January 2024. We believe our investments have not only positioned us well for the future, but also helped make 2023 another banner year for TradeWeb. Moving to slide seven, 2023 continued the streak of robust revenue growth that we have worked hard to deliver for multiple years now. Specifically, while the majority of our revenues still come from rates, 40% of our revenue growth came from our other businesses. In fact, over the last five years, we have nearly doubled our overall revenues. Over 50% of that revenue growth coming from our non-rates businesses, with nearly 40% of the revenue growth coming from our international business, which has averaged 18% since 2016. Our international revenues are anchored by our European business, but our Asian business produced fourth quarter revenue growth in excess of 50% year over year. Looking ahead, we believe Asia Pacific and more broadly emerging markets will continue to become a larger component of our international growth story over the next few years. We are focused on expanding our client footprint across domestic markets and protocols and cross-selling our leading products. Our cross-selling initiatives continue to pay dividends with the recent yield broker acquisition, which we believe will unlock more opportunities. Relentless innovation has been critical to our success. Throughout our history, we have prioritized being first to market, which requires constant investment. In the last eight years, we have invested over $630 million in technology to help shape the future of electronic markets, growing those investments at an average of 13% since 2016. And as our investments bear fruit, adjusted EBITDA margins have expanded methodically. Looking ahead, we expect 2024 to be another investment year. Our investments remain heavily concentrated in rates and credit, and we are in the early stages of building out our emerging markets franchise. We are optimistic about the long-term durability of our growth across the business, given our market share gains and pipeline of innovations. Turning to slide eight, 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, fourth quarter revenues achieved This was driven by our institutional business that had its best revenue quarter ever led by record ADV across our institutional streaming protocol and growing adoption of our RFQ plus offering. The high rate environment continued to propel our retail business where fourth quarter revenues grew 10% year over year. The leading indicators of the institutional business remained strong. We gained share and we achieved record quarterly market share of long dated US Treasuries versus Bloomberg. Client engagement was healthy with institutional average daily trades of 55% year over year. Automation continues to be an important theme with institutional US Treasury AIX average daily trades increasing by more than 120% year over year and over 50% of our institutional tickets utilizing our AIX functionality. Our U.S. Treasury's wholesale business produced its best revenue quarter in our history, led by record volumes across our sessions protocol and the second best quarter for our streaming protocol. Our central limit order book, ADV, was down 1% year over year given tougher CLOB market conditions though the team remains focused on onboarding more liquidity providers over the coming quarters as they deliver on a holistic strategy across our wholesale protocols. Within equities, our ETF business outperformed the overall market with fourth quarter revenues up 10% year over year with industry activity picking up. Other initiatives to expand our equity brand beyond our flagship ETF franchise continue to bear fruit. Fourth quarter institutional equity derivative revenues were up nearly 30% year-on-year, driven by strong double-digit growth across options and convertibles. 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. With that, I will turn it over to Tom.