Tradeweb Markets Inc.

Good morning, and welcome to TradeWeb's first quarter 2026 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 our CEO, Billy Hult, who will review our business results and key 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, earnings 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 earnings 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 first quarter earnings call. We delivered another record quarter, surpassing $600 million in quarterly revenue for the first time in our history. As I noted last quarter, we entered the year with a constructive macro backdrop featuring strong private sector intermediation, robust global issuance, and elevated levels of market debate alongside early signs of diversification away from US assets. That backdrop evolved quickly. What began as a market conversation centered on the pace of rate cuts in 2026 shifted meaningfully as geopolitical tensions in the Middle East drove an increase in oil prices and renewed concerns around inflation across the global economy. Our clients actively repositioned risk and navigated this dynamic environment, driving record quarterly average daily volumes on the platform, including 17 of our 22 products that we report in our monthly activity report. While periods of elevated volatility tend to naturally drive wider bid-ask spreads, markets remained orderly throughout the quarter. our clients engaged with the platform at record levels and increasingly capitalized on our automation solution, AIX. Equally important, our dealer partners flourished as their continued investment in consistent two-way electronic liquidity benefited clients during heightened market stress. As we move into the aftermath of the volatility spike, history has shown that activity can moderate as clients digest the forward outlook. More importantly, this macro shock has left our clients in a healthy position. and we expect them to resume trading actively across our global franchise. Diving into the first quarter, strong client activity and a risk-on environment drove 21.2% year-over-year revenue growth on a reported basis. Our international business continued to set new records with 29% revenue growth as our strategic initiatives across Europe, APAC and EM continued to pay off. We continued to balance investing for growth and profitability as adjusted EBITDA margins expanded by 40 basis points relative to the first quarter of 2025. Our international business really continued to fire on all cylinders for us this quarter, contributing to nearly 60% of our overall revenue growth. And importantly, that strength was broad-based as we saw double-digit growth across all four asset classes with our international clients. Even though international clients are naturally focused on non-US products, they're increasingly trading outside their home markets. That really speaks to the strength of our platform. To put some numbers around it, our international clients drove 60% of our dollar swaps growth, and we also saw double-digit contributions from them across U.S. Treasuries, cash credit, CDS, and ETFs. On the product side internationally, we had double-digit growth across European, Aussie, and Japanese government bonds. European swaps was a standout. But we also saw very strong performance across APAC and EM swaps. And it wasn't just rates, as our European credit and CDS produced strong revenue growth. Not to be overshadowed, we also saw over 20% growth in both our European ETF and repo businesses. And then, on the flip side, it's not just international clients driving this activity. Our U.S. clients are increasingly active in international products, contributing over 20% of our international product revenue growth. So when you step back, what you're really seeing is the flywheel of the platform at work, where our global clients are trading across regions and asset classes, and we believe this advantage will only grow as we expand our presence across regions. Turning to slide five, our rates business produced a record revenue quarter driven by continued organic growth across swaps, global government bonds, and mortgages. Record credit revenues were led by strength across global corporate bonds and credit derivatives. Money markets revenue growth was led by record quarterly revenues across global repos and ICD. Equities also produced record revenues, led by growth in global ETFs and equity derivatives. Other revenues grew over 56% year over year, driven by our digital assets initiatives. Finally, market data revenues were down approximately 5% year over year, driven by a timing shift in how certain historical datasets are delivered under our amended LSEG agreement. Recall, we recorded $8 million in January of 2025 tied to the delivery of datasets to LSEG. The revenue recognition of these datasets in 2026 shifted to $2 million being recognized in the first month of every quarter. Adjusting for the timing difference, market data revenues grew 13% year-over-year driven by growth in our recently renewed LSEG market data contract and proprietary data products. Turning to slide six, I will provide a brief update on two of our focus areas, U.S. Treasuries and ETFs, and then I will dig deeper into U.S. credit and global interest rate swaps. Starting with U.S. Treasuries, after eight months of below average intraday volatility, we saw a significant pickup in March intraday volatility. While March volatility rose over 50% from the December lows, it was still nearly 40% below what we saw in April of 2025. Our first quarter market share of 22% drove record revenues, up nearly 10% year-over-year, as double-digit revenue growth in our institutional channel was partially offset by weaker retail trends. While market share was down year-over-year mainly due to lower wholesale market share, we remain optimistic on a reacceleration in our US Treasury business as we penetrate additional parts of the voice market coupled with continued strong government debt issuance. Our competitive position remains strong. On a relative basis, we exceeded 50% share for the eighth consecutive quarter in electronic institutional US Treasuries versus our main electronic competitor. Wholesale remains a strategic priority with continued focus on expanding our liquidity network, deepening client relationships, and driving growth through differentiated protocols and products across our integrated platform. Turning to equities, this year marks the 10-year anniversary of our institutional US ETF platform, an important milestone that reflects both the evolution of the ETF ecosystem and TradeWeb's role at its center. Since launch, our platform has scaled significantly, surpassing $4 trillion in notional traded, including more than $1 trillion in the past 12 months alone. What began with just a handful of participants a decade ago has grown into a broad and diverse global network of close to 200 institutional clients and over 20 dealers. Our ETF business posted revenue growth in excess of 35% year over year as we continue to deepen integration with our clients, coupled with a pickup in market volatility. Our AIX automation solution continues to be a key differentiator with our ETF clients. with average daily trades increasing over 70% year-over-year with double-digit growth across European and U.S. ETFs. Our efforts to broaden our equity presence beyond our flagship ETF franchise continue to pay off with record institutional equity derivative revenues up nearly 20% year-over-year. Looking ahead, the pipeline remains strong as the benefits of our electronic solutions continue to resonate with our clients. 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. Shifting to global credit on slide seven, double-digit revenue growth for global credit was driven by strong double-digit revenue growth in European credit, EM credit, and credit derivatives, which more than offset weakness in municipal bonds. U.S. credit produced low single-digit revenue growth led by strong double-digit revenue growth in our institutional business, but partially offset by continued weakness in our retail corporate credit channel, where revenues were down over 20% year-over-year, primarily reflecting the better relative yields our clients were getting outside of U.S. credit. U.S. credit remains a key growth priority and we are focused on expanding our penetration within RFQ markets to complement our leadership in portfolio and session-based trading. Despite more than a decade of innovation, RFQ continues to be the primary execution protocol for institutional clients in U.S. credit, driven by its transparency and competitive pricing dynamics. However, Clients are often reluctant to expose larger trades broadly, given the trade-off between minimizing information leakage and achieving optimal pricing. In response, we are focused on enhancing workflows that better align with client needs. To that end, we have continued to invest in our enhanced dealer selection tool, SNAP+, which enables our clients to dynamically target dealers most likely to engage and win a given inquiry. based on both historical and real-time trading data. This innovation builds on our broader strategy of expanding the range of pre-trade execution and post-trade solutions we offer. We remain focused on the block market, with overall U.S. credit block share up 20 basis points year-over-year in the first quarter, with block average daily volume growth of over 30% year-over-year across IG and high yield. Our volume growth was driven by continued adoption of our portfolio trading, RFQ, and sessions protocols. Institutional RFQ average daily volume grew over 30% year over year, with double digit growth in both IG and high yield. Our efforts to expand into RFQ are seeing continued signs of success, with our RFQ share of overall trace up over 50 basis points year over year. Portfolio trading produced record average daily volume, increasing over 30% year-over-year with double-digit growth across both U.S. and international PT. All trade had a strong quarter with over $230 billion in volume with average daily volume up over 5% year-over-year. Our all-to-all average daily volume grew over 65% year-over-year, and our dealer RFQ average daily volume grew over 40% year-over-year. We saw record responder rates in high yield as the team remains focused on expanding our network and increasing the number of responders on the All Trade platform. Electronification remains a key focus, especially in U.S. credit where underlying trends are strong. However, investment grade volumes have been increasingly impacted by affiliate trades, which are internal transfers within a dealer that occur after a transaction in the institutional market. These are double-counted, non-economic trades that don't interact with electronic platforms, distorting reported market share and electronification and creating artificial pressure on both. If you adjust for that activity, the underlying picture looks better. Based on our estimates, first quarter market share in IG would have increased five basis points versus our reported decline of 33 basis points and electronification also would have moved higher. The core trend hasn't changed. And electronification in U.S. credit is continuing to build, and we feel very good about our positioning as that plays out. Looking ahead, global credit remains a key area of focus with a long runway for growth. While U.S. credit continues to anchor performance through ongoing innovation, differentiated liquidity, and investment in our platform, we are also scaling European credit by expanding RFQ adoption and liquidity, and advancing munis through increased electronification, transparency, and connectivity in a fragmented market. Finally, in EM credit, where we are still early in our expansion, we are building momentum by leveraging our established presence in developed markets alongside a holistic EM product offering across rates and credit. Our EM credit revenues grew over 40% year over year in the first quarter, signaling strong momentum. Moving to slide eight, over the past two decades, electronic interest rate swaps trading has evolved from an emerging concept into an ecosystem defined by transparency, efficiency, and ongoing innovation. That continued evolution was evident this quarter, including in moments of heightened volatility where clients leaned further into electronic workflows. Global swaps delivered record quarterly revenues up over 45% year-over-year driven by strong client engagement across our global suite of currencies. Our quarterly core risk market share, which drives revenues and excludes compression trading, reached the record, rising 190 basis points year-over-year. Total market share increased from 21% in the first quarter of 2025 to 24.1% in the first quarter of 2026. reflecting a combination of strong risk and compression volume growth. During the quarter, we achieved record share across sterling and other G11 currencies and our second highest share across EM denominated currencies. First quarter performance was driven by record revenues across US, Europe, APAC, and emerging markets. This quarter underscored the value of our breadth across the swaps market. particularly as clients' interest can ebb and flow across products over time. Specifically, as inflation concerns reemerged and rate expectations shifted this quarter, activity picked up in our inflation swaps business, driving record volumes. It is a product area we entered in 2017 where adoption was initially gradual, but where the opportunity in the market expanded materially after 2020, and we currently hold over 95% electronic market share. That trajectory makes periods like this especially meaningful as they reinforce the value of our continuous investments towards building a more holistic swaps offering across products and geographies over time. Beyond inflation swaps, the nature of trading we saw in March evidenced a broader pattern in how electronic trading continues to evolve. Even as market conditions became more challenging, automation remained robust and we saw clients not only lean into inherently electronic protocols, but use them in a more sophisticated way through sending their trades out to multiple dealers amidst an environment where we have historically seen that pullback. It's a testament to the sophistication clients have built into their workflows and to the growing value of electronic trading across market conditions. Overall, Our RFM protocol saw average daily volume growth of over 150% year-over-year in the first quarter, with growth accelerating in March. Additionally, we continue to make progress across emerging market swaps. Our first quarter EM swaps revenues delivered another strong growth period, delivering another record, and we believe there remains significant runway given the still relatively low levels of electronification. Looking ahead, We continue to see significant long-term growth potential in swaps. On a DV01 basis, electronification has grown at an average annual rate of 160 basis points since the first quarter 2020, as dealers and clients move a greater share of their workflows electronically. That progress is reflected in the continued strong revenue performance of our swaps business, and we see substantial opportunity to further digitize workflows alongside our clients. In collaboration with them, we expect to drive continued workflow innovation across both cleared and bilateral swaps markets. And with that, let me turn it over to Sarah to discuss our financials in more detail.