Q3 2019 Earnings Call
Good morning, and welcome to trade <unk> third quarter 2019 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 U.S. corporate development and Investor Relations actually Sirona. Please go ahead.
Thank you and good morning.
Joining me today for the call, our Chief Executive Officer, Leo Laskey, who will review the highlights for the quarter and provide a business update.
Precedent, Billy Helms, who dive a little deeper into some of the growth opportunities and bump or show, our Chief Financial Officer will review our national yourself.
Third quarter earnings release accompanying presentation in October Onest reports are available on the Investor relations portion of our website.
I'd like to argue that certain statements in this presentation and during the Q and they may relate to future events and expectations and as such constitute forward looking statements within the meaning of the private Securities Litigation Reform Act or 1995.
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 FCC.
In addition on today's call, we will reference certain non-GAAP measures, including free cash flow adjusted EBIT adjusted EBITDA adjusted net income adjusted expenses and certain measures presented on a constant currency basis.
More information regarding these non-GAAP measures, including reconciliations to the most comparable GAAP measures acid Pluggable are included in our earnings release and earnings presentation posted on our website and will be included in the Form 10-Q to be filed with the FCC.
To recap this morning's results were consistent with our recent earnings Preannouncement, specifically, we reported GAAP earnings per diluted share of 20 cents.
Including certain noncash stock based compensation expense.
In addition, and refunding differently, DNA and certain FX items, and assuming an effective tax rate of 26.4% be reported adjusted net income per diluted share of 27 cents.
Please see the earnings release in the Form 10-Q to be filed with the FCC for additional information regarding the presentation of our historical results now let me turn the call originally.
Thanks, Ashley good morning, everyone and thank you for joining our third quarter earnings call turning to slide four we reported record third quarter results and set multiple new volume records as the secular drivers of our business and various investments continue to fuel growth.
Serial innovation has been a recurring theme at trade web since our inception.
We will continue to invest to drive growth and make it easier for our clients to enhance their workflows, specifically record gross revenues of 201 million during third quarter were up 22% year on year on a reported basis and 23% on a constant currency basis.
Supported by strong growth, both domestically and internationally, we're especially pleased by our international growth and see a lot of potential AD in both Europe and Asia.
This translated to improve profitability as our adjusted EBITDA margins expanded by over 600 basis points to 46.5% year over year and by a similar amount on a constant currency basis.
As we look ahead, we continue to be laser focused on balancing both investments to drive future revenue growth and margin expansion to create greater value for our shareholders.
Turning to slide five you can see the diversity of our revenue growth with all of our asset classes recording double digit top line growth.
That's on both reported and constant currency basis, our data business reported 7% and 8% growth on reported and constant currency basis, respectively.
Moving on to slide six let me provide a brief update on our four main growth areas global interest rate swaps U.S. treasuries, U.S. credit and global each yes, starting with our largest rates product by both volume and revenue interest rate swaps. Our total volumes were up over 100%.
A year on year during the third quarter with swaps greater than one year in duration growing by over 40%.
This is an exciting in fast growing area trade web as we believe there's lots of room for electronification to grow globally, especially in Europe over the next few years and across emerging markets over the long run.
We're very focused on driving electronification higher in this market by partnering with our clients to broaden our product set and answer features and functionality and improve workflows.
Beyond the treasuries are volumes were up 25% year on year during the third quarter.
We continue to take share here using a variety of trading protocols and both institutional and herself sectors. Our share today stands at over 12% of the market.
We hit a new record for direct streams as we continue to leverage our proprietary technology to innovate and create new ways for customers to source liquidity.
We also partnered with ice to introduce closing prices for us treasuries, adding to our successful closing price initiative with puts see for guild bonds in the UK.
The U.S. cash credit is another big focus for us our share for the third quarter in high grade and high yield increased to a record, 12.5% and 4.1% respectively.
We are building on what we believed to be a next generation credit marketplace powered by our integrated multi sector approach that is resonating with our clients.
Going forward, we will continue to invest aggressively to compete and differentiate our venue with our liquidity and ability to respond to client demands quickly.
Really will provide more color here momentarily.
Finally within institutional each yaps volumes were up 74% due to a combination of organic growth efforts and broader market volatility.
Going ahead, we remain well positioned to benefit from more continued growth of Bts globally.
We recently announced a partnership with Euro CCP, which we believe will help reduce settlement risk for European EG apps help our clients navigate new settlement discipline rules and make the product accessible to new customers. We expect us to go live in the coming months.
With that I will turn it to believe to give you some more color on a few of our growth initiatives and trading automation.
Thank you Lee.
So moving to slide seven the increased adoption of automated trading solution AI ex continues we have paired acts with their market, leading composite pricing benchmarks and evaluated pricing tools like AI price in credit, which prices over 18000 box our volumes and client counts are up nicely and it's encouraging to note that.
There is plenty of room to grow even within our top 100, and most sophisticated clients.
Moving to slide eight another key growth area for us as global interest rate swap for market share continues to increase and we believe offering our offering is resonating across currencies is important to note that EGD growth is not just confined to European currencies. We are seeing broad based growth and we continue to invest in this platform.
We recently linked to the interest rate swaps market to the government bond market, thereby electronifying the complex and traditionally which traded asset swaps market. We also integrated interest rate swap collateral optimization analytics from open gamma and Cassini to help clients satisfy their margin and best ex margin requirements in advance.
Upcoming unclear and margin rules.
Turning to credit the message here is clear our strategy to build a differentiated credit platform is working our network is growing and we believe we have significant runway to add more clients as our market share growth across both high grade and high yield leading advances in technology and getting clients to form new habit.
On our platform has been our mantra across all of our products and credit is obviously no different a few years ago, we innovated with net spotting and today. We're now the leading platform for portfolio trading it's encouraging to see clients increasingly turn to our platform to not just electronified processing their trades, but also electronically execute.
They're trades using a variety of protocol spanning traditional our views to more recent innovations like streams session trading at all to all.
We're also encouraged by the fact that clients are increasingly using our platform to Electronified transacting blocks. We believe this speaks volumes about the progress, we're making and taking our platform to the next level.
With that let me turn it over to Bob to discuss our financials in more detail.
Thanks, Billy and good morning.
All comparisons will be to the prior year period, unless otherwise noted.
Let me begin with an overview of our volumes on slide nine.
We reported record quarterly average daily volumes of $815 billion up 53%.
You can see the growth was broad based our investments led to new Eightv Records in European government bonds swaps mortgages Chinese bonds credit derivatives and European EPS.
Slide 10 provides a summary of our quarterly earnings performance. The strong volume growth I, just described translate into gross revenues, increasing by nearly 22% and by 23% on a constant currency basis, we derived 37% of our revenues from international customers and approximately 30% of our revenue basis.
Denominated in currencies other than dollars predominantly in euros.
Pretty revenue increased by 23% and 25% on a constant currency basis as well.
Fixed revenues related to our four major asset classes continue to grow as expected.
Continue to expect a low single digit growth rate going forward.
Refinish market data grew by 6% primarily due to the renewed market data license agreement.
Other information services increased by 18% due to growth in our EPA reporting business.
Adjusted EBITDA margin came in at 46.5% expanded by nearly 700 basis points on a constant currency basis.
The increase margin was a result, and continuing to benefit from scale.
All in we reported adjusted net income per diluted share of 27 cents.
Slide 11 lays out the trends and fees per million.
In sum our blended fee per million declined.
Year over year, excluding lower fees per million short duration tenor swaps, our blended fee per million was actually stable year over year, let's spend a minute reviewing the underlying trends by asset class.
Starting with rates average fees per million for rates decreased 9% due to volume of short duration tender swaps, excluding short duration tenor swaps people really was up year over year, primarily due to elevated mortgage activity and increase in duration in government bonds.
Continuing to credit average fees per million for credit decreased 18%.
This was primarily driven by higher concentration of CBS activity, which carries a much lower fee per million and a decline in municipal trading volumes recall first quarter and third quarter tend to see seasonally higher cts activity through the timing of roll activity.
Continuing effect.
Average fee familiar increased 8%.
There is continued to be a slate trend due to the growth institutional each yes.
Finally within money market fee per million decreased 2%.
He familiar and has been hovering this range for a while in the quarterly decline was driven by mix shift within repo from wholesale to institutional.
Slide 12 details our expenses.
At a high level, we continue to invest for growth Theres been no change to our philosophy here adjusted operating expenses, excluding noncash stock based compensation expense relating to the special option Award acquisition repetitive related DNA in certain FX related gains and losses grew at about 9% on both reported and constant currency basis recall approximately.
15% of our expense base is denominated in currencies other than dollars.
Predominantly in story.
Compensation and benefits expense grew 12.4%, primarily due to performance based compensation as well as an increase in headcount to 926 employees from 896 a year ago.
Adjusted non comp expense grew 2% or 1% on a constant currency basis.
Typically technology communications expense increased due to increased third party fees associated with higher trading volumes.
Depreciation and amortization increased due to capital expenditures related mostly to cyber security investments.
Professional fees decreased slightly as we incurred higher fees in 2018 associated with clearly work for our initial public offering.
Slide 13 details capital management and our guidance.
First on our dividend policy in cash position.
With this quarter's earnings the board declared a quarterly dividend of eight cents per class a in class B share.
We ended third quarter, holding about 390 million unrestricted cash and cash equivalents and trailing 12 month free cash flow reached $257 million.
We still expect fin $40 million to $48 million on Capex in 2019.
Turning to our revolver and interest income recall in conjunction with the IPO, we installed a 500 million revolver. The currently remains undrawn.
Net interest income remained relatively flat year over year is higher interest income was offset by fees incurred due to our revolving credit facility.
With respect to our other guidance of note. Our adjusted operating expense guidance is unchanged. We continue to expect adjusted expenses to trend to lower end of our 460 million to 475 million range.
We are forecasting purposes, we're using as soon as non-GAAP tax rate of 26.4% for the year.
Finally, let me discuss our share count we've updated our quarterly share count sensitivity for the balance of 2019 to help you calibrate your models for fluctuations in our share price now I'll turn it back to Lee. Thanks, Bob We are pleased with the progress trade was making our results demonstrate that theres a lot of opportunity across our asset class.
So.
We really start tober volumes this morning.
Average daily volume of 705 billion increased 21% year on year, despite tougher comparisons given the slower trading environment versus an exceptionally volatile period in October 20 team.
Of note, we've set new records for overall share and use high grade credit exceeding 14% of the market for the first time.
We also set records for electronic share and high yield.
Looking ahead, we're focused on capitalizing on the various growth opportunities across our business and continuing to strike the right balance between investing for the future and margin expansion I'd like to conclude my remarks by thanking our clients for their business and partnership.
In the quarter and I want to thank my colleagues for their effort that contributed to another record quarter portrayed web.
With that I'll turn it back to Ashley for your questions.
Thanks, Lee as a reminder, please limit yourself to one question only feel free to hop back into queue and ask additional questions at the end.
Q enable end at 930 Eastern time, operator, you can now take our first question.
Thank you and as a reminder, ladies and gentlemen to ask a question. Please press Star then one on your touched on telephone.
Our first question comes from the line of Ari Ghosh with credit Suisse.
Hey, good morning, everyone. So maybe you can take my first question. So given that it's been a few months since the let's see announcement now I was hoping you could update us on how the potential ownership change has impacted decision, making a trade web and then also if there any restrictions or limitations with rig.
Got to capital deployment in future M&A as the result of this change thanks.
So how does the ownership a change with LLC affect us I think.
We've said this before it's it's business as usual for us and trade web we're continuing to act in the best interest of trade web and maximize value for all our shareholders.
We have a history of partnering with the marketplace to improve outcomes for our customers irrespective of our ownership. So lses acquisition to repetitive doesn't change that philosophy or at all change our strategy of course, our board has a fiduciary responsibility to evaluate all avenues to.
To maximize value.
Irrespective of of our ownership.
In terms of any restrictions that are there are no restrictions.
I think thats, the easiest way to characterize things we continue to operate as usual.
Appreciate the color. Thank you Sir thanks.
Thank you and our next question comes from the line of Richard Repetto with Sandler O'neill.
Yes, good morning, Lee Billy and Robert.
Yes. My question is on margin expansion, it's sorta has played out.
Pretty much as you plan to laid out that looks like revenue growth is.
You know overcoming expenses and the margins through nine months has grown by 300 basis points, but anyway. My question is when you look at the comp ratio that has come down more than sort of a non comp ratio and is that is there anything more we should read into that is that the scale.
You know it seemed like you're benefiting there on the comp basis, and then also what would happen Lee if revenue slow down could you do you are very conservative on the rep revenue guidance.
Sure Good morning, rich. Thanks for so thanks for the question, Yes, we've had a we had a very strong obviously first nine months the last quarter.
In particular, and I think it's a bit related to the answer is really related to the business model that we have right. We're we're always investing for new opportunities, there's a cost associated that with respect to compensation and people.
In deployment of our assets around the world.
But as our markets start to take off we the margins improve and I think the you know the revenue growth really here is the thing that's that's driving the earnings growth most directly but Bob go ahead.
I think the other thing I add to what we said is that.
Side that we also have been.
Pretty closely mountain managing this year, the increase and number of hires and employees and so while we haven't done that its cost of any of our investment objectives.
It's been a sort of active efforts years going on to make sure that we hire for purpose and so we've only added.
Thanks, 30, some people for the year at this point.
And that's sort of 926 have between 96 years, some some numbers like that and that's been a pretty core part of it as well and the only last that adds that we also are pretty closely looking at the third party costs and how we engage with third parties. So we've been watching things like our clearing costs.
First and making sure that we make adjustments, where we can between the things consolidating third parties and.
Looking continuing to examine what we might do internally or not to being the most efficient okay and that's been a part as well.
Okay. Thank you.
Thank you. Our next question comes from the line of Ken Worthington with JP Morgan.
Hi, good morning.
Can you talk about the U.S. rate environment and industry wide activity levels and how it impacts the pace at which you can further penetrate the swaps or the U.S. credit markets business. If the fed is on hold for the next year, maybe what has a pause falling rising rates meant for industry activity levels in the U.S.
Products in the past and maybe how do you higher or lower activity levels help or hurt new traders willingness to use trade web systems or existing traders to use the systems more thanks.
Good morning, Ken Thank you for a for the question.
Yes look you know trading levels.
We've been doing this a while trading levels.
Very a different points in time, and we witness that in the month of October while we did have 20% year on year growth. It was a less of a blazing month in the macro environment.
Produce a slower trading environment really across a lot of platforms not not just trade web having said that we have this secular wind at our back in terms of the move towards more efficient.
Interaction and automation and Electronification Digitization all those those themes those are Constance, we don't see any of that changing too to any great extent in fact, if anything they continue to.
Accelerate a they accelerate for a number of reasons one is that the drive by all market participants to reduce their costs.
And to create more profitable environments in that immediately leads people to trying to undertake more digitization more autumn automation.
It's really true across the board, it's not that different in credit and with respect to swaps, what we what we see a in different segments of our business different asset classes. If you will.
They do tend to have a slightly different trajectory the swap market in particular as a result of some regulatory changes U.S. and Europe with method to.
I've really been accelerating aggressively now having said that you are still in the in the swaps market just as an example, roughly 2020, 5% of that market is electronic to date.
So we expect to continue to see.
More of that occur.
More digitization or car regardless of.
A slower or faster trading environment.
What I would say anecdotally it looks like November has picked up a little bit more steam than than October October was was it was slower really across the board as a result of just the number of macro factors that we're all.
Pretty pretty well aware of but we try not to get too caught up on.
The day to day week to week given quarter to quarter.
Volumes in the market, we're much more focused on investing two to move markets forward to to digitize things and most importantly to respond to clients needs to further automate their processes. So they can have a more efficient to more efficient business.
Great. Thank you very much sure.
Thank you. Our next question comes from the line of Michael Carrier with Bank of America.
Hey, good morning. This is actually a severe market low on for Michael Thanks for taking my question.
You know you continue to see healthy client growth across the IRS said.
Well business.
Give us more details on what kind of volumes you're seeing from these new users.
Products are growing faster or slower seeing onto adopt inside and then I guess.
Look historically, what does the usual timeline from client Onboarding too.
Fully transacting across the franchise.
Sorry, I didn't I didn't hear the last part of what you're asking sooner. Yes, just historically has as youve onboarded clients generally how long have taken from when they first get on the product where they're fully transacting across the franchise.
Oh, Okay, well, let me, let me answer that one first because it does that's a tough one because it really does very it's very dangerous to.
Generalize right, we have thousands of institutions that are connected to us around the world and they come in a variety of.
Shapes and sizes with different resources to invest in different components.
And so and some are not as broad as others. Some summer, obviously doing everything and pushing aggressively to do things like Hey, I acts, which just further automates. The process you could see in our deck the the pace of.
Growth with respect to the.
Our next trading activity, it's been going on for several years. It just continues to to ramp up in terms of the volumes that are being done in the percentages of trading activity and the number of clients that are using it it tends to be the.
You know the slightly more sophisticated clients that we'll move to these levels of automation first those with more resource to focus on at those that are looking to save more costs right, Hey, I axis in automation of further automation.
Of of.
The workflow and.
So so for apex really what we've done as we've given these clients that are very active.
In the markets.
The tool to eliminate the clicks.
All these believes fond of saying this thing it's a great way to think about it which is.
When we first started doing as it was hard enough just to get people to click the mouse too to do the our Q and how to make a few clicks select dealers and.
Click a few buttons and fill in the size with automation now, we've basically giving clients.
Rules based algorithm where their programming.
Across the.
The characteristics that they care about to completely automate this process based on.
A number of different criteria that.
They can use I expect that that will continue to grow in terms of the the take up but also the sophistication.
That goes into these automated tools, it's like everything else with.
That we see with technology.
We sort of start in one place and we continue to invest in.
It leads to the next thing and the next thing. So we're very very pleased with the rise in our automated trading really across across the globe. We've got very active.
Next activity in Europe in credit markets, we've got it rates markets.
Obviously and credit markets in the U.S. as well, we just expect that to continue overtime.
And actually to become more sophisticated.
Thanks again.
Thank you.
Next question comes from the line of Alex Kramm.
Yes.
Hey, good morning, everyone.
Just wanted to shift to credit for second I mean, the market share gains here in the third quarter, but also.
To date in the fourth quarter continued to be really good in particular on the fully electronic side I mean, I I know you have to slide on the institutional penetration, which also just talked about but can you also talk about some other areas and that business like how much is the way it's the retail business contributing to that growth and then anything on the dealer side you would point out are they still.
Dealers it maybe much less active than others or do you feel pretty good in terms of the participation depth. So any color would be helpful. Thanks.
Sure Yes were.
When you look at October .
We had significant outperformance in credit the.
Volume growth a year on year was 36% naji, 18% in high yield our market share.
For October was nearly 15% of the trace market, which a 6.7% was.
Pure electronic activity, some great growth in high yield as well.
To 2.6% of that reported market. So we are making gains in credit our network is growing I think our technology is resonating it's not just one thing though right. So this is.
We have very complete focus on on this market. It's it's all to all it's the portfolio trading, which we were the first to introduce over a year ago. We're already on our second it duration of that we just rolled it out in Europe , we still have meaningful traditional RF Q business.
We have a sweep business that's a that's growing very nicely. So we're focused on building our franchise really in response to the markets desire for competition.
There isn't there isn't one particular driver.
We would highlight.
We're really doing everything you'd expect us to do to continue to close the gap versus the incumbent.
And in some cases.
Playing a leadership role in terms of innovating and introducing the next bit of functionality to the market.
Portfolio being a great example that but.
Yes.
It's really across the board I I think.
The latest thing that we just rolled out is is our.
In comp portfolio trading.
Which we believe will play a leadership role in in bringing portfolio trading to to the industry. But this is a very comprehensive approach that we have across all the client segments we have.
Retail client segment, which is providing liquidity into the institutional space the wholesale market, which is taking.
Price generation from other markets and setting a midpoint to allow for significant growth in.
The automation of that or electronification of that kind of session based trading.
It's really it's really across the board, it's not any one particular.
Saying or any one particular liquidity provider or group of liquidity providers.
All right helpful. Thank you sure.
Thank you. Our next question comes from the line of Kyle Voigt with KBW.
Hey, good morning, Thanks for taking my question.
Maybe just a question for Billy So market access is playing launch its liquidity edge cash treasury offering into that D to C segment of the market in the first half for next year.
Just wondering is there anything unique about that offering or the protocol. They offer that trades that doesn't offer to that segment today, just trying to get a sense of any differentiation versus your offering that launch.
Sure shows.
Hi, This is a good question.
We've been talking on this call for a little bit about the fact that the government market and the great.
Right.
On some very basic level, obviously, we look at this as sort of a validation of our strategy all along.
The reality is we've done a tremendous amount of work behind the scenes to nail this work flow with our most important clients, we're saving them money and we're creating efficiency for them and we feel really good about what we've done in this space I can't exactly speak to sort of what their timing is and kind of what they may do.
But we know that we we are kind of leading around innovation and credit now and we think that this is a work flow that we have 100% nails.
Thank you.
Thank you. Our next question comes from a line of Ken Hill with Rosenblatt. Your line is now open.
Hey, good morning, So wonder I wanted to dig in on from the volume released. This morning, you guys saw some nice growth month over month on European credit and in Chinese bond, so kind of first hoping to get a broader understanding what you're seeing in those markets currently versus the U.S. and then.
Second for China overall, just really can you outline the strategy again, how you're continuing to differentiate yourself, there and maybe any barriers to entry for competitors and then lastly, anything to keep in mind from a pricing.
Perspective, as we continue to increase does that kind of portion of your portfolio.
Short what we Ah. Thanks for thanks for the question can we Oh, we were the first.
To connect into China.
Back in 2017.
Obviously, it's an appealing market, it's a very large bond market.
Our account the third largest in the world with 13 trillion of debt outstanding.
I always like to throughout the caution that we are still in a very very early stages of the evolution of this market.
As more foreign institutions connect to bond connect but also more importantly, as they assess their decisions to invest in.
In assets in Chinese debt.
So.
With that said, though we're already profitable in China today, we've obviously seen very.
Strong interest in momentum in recent months.
Investor interest in China grows we do take a long term outlook with respect to our business.
Growth opportunities in particular, so we've invested with the boots on the ground with people in Shanghai we.
Opened our office up there to capitalize on our first mover advantage.
Clearly the.
In the recent term we've got index inclusion as a catalyst.
This is happening in a in a phase in approach.
And we'll continue.
But we just continue to invest over there, where we rolled out streaming prices to enhance pre trade transparency, we've integrated with the ideal messaging tool developed by sea fat. So that's very popular with.
Onshore dealers.
We're continuing to expand our network.
Where we can into China, and the bigger opportunity will calm when China, Liberalizes and allows more money to move offshore those sort of sort referred to a southbound trading but that's a that's a timeline that's really entirely up to.
To the government authorities I think what we're doing is making sure that we are incredibly well positioned.
To continue to just be a first mover.
In respect of these markets as they as they come online as they digitizing, perhaps with China. The comment as they can is as they connect with the rest of the markets around the world and market participants.
In electronic trading.
Thanks for all the detail there.
Sure.
Thank you. Our next question comes from the line of Ari Ghosh with credit Suisse.
Hi, Thanks for taking my follow up just a quick one on.
Hi acts and ill defined growth ramp that that you have on slide seven.
Most of that growth primarily from U.S. lines are you seeing greater adoption in overseas markets well either from the Asian and European customers any any color stop sale would be really helpful. Thanks, Yeah, I think thats. Good question I would say its listen this is at Axis again and lead described this well, it's just like light bulb moment.
With our most sophisticated most important clients and its global.
And I think the most important thing when you think about AI access. This is now a moment in the market where when markets get volatile there was a point in time, where maybe they would reverse from traded electronically onto the phone through innovation Lake AI ex now they're trading more electronically in the more volatile market.
And this is a trend that sort of touches across all the regions.
Thanks again.
Thank you. Our next question comes from the line of Richard Repetto with Sandler O'neill.
Hey, Lee I got to a follow up question. Since this is the second round here I'm not sure you'll answer this but I'll still asking the.
It's on the secondary.
The banks out of the I think was 19.
Out of the secondary our 17.2 or somewhere around there the banks so that when we calculate 16.8, but they only sold about 60% of what they could have sold.
By our calculations are somewhere around there and I guess the quote what did that tells you I know, there's a few that didnt sell at all.
And I guess my question is what did it tell you what the issue of just the size of the overall deal or.
Any other takeaways from them not selling the full amount.
Thanks, Rich yeah, that's a that as you a sort of preface things that's a tough one.
For for Us to answer.
You know we.
I I I'd say the best to the best answer is it's always a.
It's nice to know that we have a investors that have been with us for a very long time that continue to be with US we had the secondary offering.
It's been a challenging market from what I see on my screens in the equity world with respect to Ipos This year.
And secondary offerings and.
At the end of Lockups and that sort of thing so I do think were.
As well as we have performed and we're quite proud of the results that we've achieved.
For our investors from the IPO at 27 to whatever we're going to open up at today.
Going through this a secondary where we sold another 17 million or show or so shares.
At a at 42.
You know every from makes its own decision in terms of how they view their investments with respect to everything let alone trade web so it's really hard to.
You know to comment.
On on why particular banks or do I think the numbers you have are correct.
They are public its public information.
I've got roughly 60% is the right ballpark I don't know at the top my added Thats exactly right, but.
It's in the right range I know, we sold 70 million little over 17 million shares so.
You know it was a.
Offering that occurred at a time of.
Modest to a decent amount of stress in the equity markets.
That went off quite well.
We're still only a few weeks out of it.
And we like where we are we like how the stock is trading.
But.
Ones, making their own decision speeds and.
Glenn to their investment boat.
Old investors new investors.
It's hard to really comment much more than that on it.
Yes.
Got it thanks very much like <unk>.
<unk>.
Thank you. Our next question comes from the lineup Alex Kramm.
Yes.
Hey, Hello, again, just another follow up on on credits.
Seems like I keep on reading or hearing more and more about the proprietary market, making crowd, that's kind of evaluating created more hiring teams et cetera. So just wondering to what degree you are seeing those guys as well I don't know if it's just conversations all of you actually 10 showing up.
If that if that does anything for the marketplace in your opinion and maybe just some general across your business how much business you actually do with that.
That's part of the market all customer based thank you.
That's a great question. So obviously they are sort of fundamentally important clients in the treasury active some market and so we identified.
The need to have them.
The important clients of ours, a bunch of years ago and.
Without without question they are going to play a rising role in a variety of markets.
I think we can all kind of understand based on the nature of how credit trades, they're going to have an influence in terms of the direction of market structure in credit going forward, we feel really good about our connectivity with these types of of clients.
And our overall relationship with them over the years has developed and grown and we think they're going to play an important role with us going forward.
Okay, and then secondarily since we had just a follow up mode here.
Maybe just on on the October volume release, I think like you made this comment that October felt a little slower, but when I look at the release. This morning in terms of the volume I know the op decent amount, but seems like the mix shift seems to be pretty positive two so anything that maybe getting wrong here why this may have not been a pretty solid revenue.
It's actually and maybe how you think about the remainder of the other quarter. Thank you.
I think you're right in.
Assessing what the volumes were relative to mix and.
How it impacts us.
I think Thats correct assessment.
My comments on the slower trading environment before we're general comments right up plus the fact you see the.
Rub, 20% plus 700 billion versus 800 million. So we've clearly gone down a little bit from where the third quarter route to where where we are in October that's a macro thing that's happening across you know across all markets really with the you know the fed and Fracs in a number of number of things that have just.
Slowed volatility and as a result brought brought volumes down I think.
For us as I said before we're kinda enough for the long haul here, we know we're gonna have times when there's a.
Macro environment changes is less trading and then it swings back and there's more trading.
We're focused on though is innovating rolling out new products and I think probably the most interesting thing about October us as you have some slow to train avant volumes, but we're going to market share right. So not only is a year on year growth, which which is great. That's kind of a more reasonable measure verse.
This month to month, so the year on year growth was great, but we're also gaining market share.
Almost across the board. So it was a it was a strong month for us from a revenue standpoint, it's a good month for us from a revenue standpoint, it was a slower month in terms of the trading environment Holistically.
You see that in our volumes and I'm sure as you look at the competitive landscape amongst other exchanges and platforms.
Our relative performance actually was I think quite good.
Relative to ever Melton relative to the market. So we're pleased we're pleased with it we're just making the observation yes. It was a slower market in October .
Fair enough. Thank you.
Yep.
Thank you next question comes from the line of Michael Carrier with Bank of America.
Hi, David Miller again, thanks for taking the follow up a question related to M&A I think you've close around five transactions.
Thousand eight I think coldstream being the most recent.
So when you look at the current stayed at the franchise can you give us more details on any product.
The call workflow distribution gaps that you think could be enhance via M&A.
Sure. Thanks, Michael.
Yes look with M&A, we Oh, we have a very active team and our business development group. That's you know based in our offices around the world that are constantly reviewing options for us with the management team around the world and its and its a place where.
We are staying sharp.
And and as we are in you know a business that is such a growth business.
What I like to say is rather than you know tell you what our next great idea is which we're not gonna do.
Look look at what we've done historically, we focus on.
Expanding into different regions, we focus on tackling different.
Segments of the market that will expand our network right. So network expansion a big part of the strategy that we've had a trade web for these 20 odd years that we've been doing this.
If there is some technology.
No because she was a technology plays if theres some technology out there that might fit in to our overall work flow and assist our clients always with an eye towards how does the salva clients problem.
Well, we'll move will pounce on those things.
But we're constantly assessing.
Market opportunities for.
Non organic growth M&A.
Thank you.
Thank you.
Next question comes from the line of Richard Repetto with Sandler O'neill.
I guess I get to keep asking questions early.
So.
Just for a check out [laughter], so I hope it doesn't come out from a future quarters here, but anyway, one for one.
One on.
Well it to do with portfolio trading.
And Bill you mentioned it.
And I know you're excited about it and it's sort of like the new.
The new movement of the new.
Phase of electronics and the credit market. So could you expand on why why you think it's so important what will sort of spurred on and also ice is.
As Paul, but I know ETF certainly.
Could add to portfolio trading as well what what's your views on.
The TF hub and we'll use connect to it eventually or do you view it as a competitor.
So good question rich on sort of portfolio trading, let's think about just wanted for one second which is.
For a long time with the most important buy side clients. There has been a fundamental problem or an issue around how they would send out being offered lifts in the credit market and when we and I would go to visit those big clients. They would express that to us a frustration around the fact that you know on the other side of those trades dealers would tend to pick and choose.
Which items they wanted to respond to.
So one of the innovations that came out of that Oh thats fundamental reality was something that we could describe around the move towards all tall trading and the need for more liquidity in the marketplace. This is almost like think about portfolio trading is almost like a two dot all.
Innovation in credit around solving for that need okay. Because now obviously the list as being priced as one okay. So as we kind of gone out there and kind of led the way around portfolio trading I come back to this reality that we have solved and inefficiency in the market and the buy side is feeling the benefits of how.
We've kind of work just worked out this workflow any kind of complicated an important way. So it's really kind of fundamentally resonated with the most important clients and credit I think that's why you're hearing so much about it.
Any comments on the yes, hi, CTF hub.
Yes.
Not not a lot at this stage. We're we're not currently engaged there were keeping an eye on it as it's a new tool that I think will help in that create redeem space with respect to confirmation.
It's something we'll have a look at we don't see it as a direct competitive issue today, but weve you know, we obviously have our eye on it.
Space is one where we've been.
Leading innovation.
In terms of the arc you a block capacity that we introduced years ago person Europe and now we have in the U.S.
The role of each Yepsen now, it's a linking into portfolio trading in the credit markets is I think quite an interesting.
Evolution that we have going on and fundamentally it's a market that's growing so we are.
Laser focused on where we can add value, it's always a where can we step in and provide some technology into our network that solves for some of our clients problems that.
Something that we can get paid for.
Okay.
Thank you.
Thank you and I'm showing no further questions at this time I will now turn the call back over to ahead of US corporate development Investor Relations Ashley So ROE for closing remarks.
Okay.
Thank you all FARA dialing in today, we appreciate the time feel free to follow up it either Bob I myself.
Now with questions. Thanks, Thanks, everyone.
Thank you.
We all.
Thanks.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating and you may now disconnect.
[noise] sure about that.
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