Q1 2021 Tradeweb Markets Inc Earnings Call

Jake.

Nash.

Good morning and welcome to tradeweb first quarter 2021 earnings conference call. As a reminder, today's call is being recorded and will be available to begin. I'll turn the call over to head of corporate development and investor relations athletes. Please go ahead.

Thank you and good morning joining me today for the call our CEO. Who were you? The highlights for the quarter and provide a business update, our president who on a little deeper into some the growth initiatives and Bob warshaw CFO, who do you our financial results, our first quarter, earnings release prepared remarks, and accompanying presentation, Mobile on the investor relations portion of our website. 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 including full year, 2021 guidance, and the COVID-19, and emack the potential impacts of, which are you hearing loss of forward-looking statements actual results? May differ materially from these forward-looking statements information concerning factors that could cause actual results of the fur from forward-looking statements is contained in our earnings release and periodic reports filed with the SEC. In addition, on today's call Will reference certain non-gaap measures information. Regarding non-gaap measures, including reconciliations to gaap measures are now posted earnings release and presentation. Lastly, we provide certain market and Industry data, which is based on estimates. And in in various industry sources. Please see our posted Early Education for more details to recap this morning. We reported gaap earnings for the Luther's

Care of $0.33 excluding certain non-cash. Stock-based compensation expense, acquisition-related transaction costs acquisition and representative related DNA and stood in FX items and assuming an effective tax rate of 22%. We reported adjusted net income, per diluted, share of $0.43. Please see the earnings release and the form 10-q to be filed with the SEC for additional information, regarding the presentation of our historical results. Now, let me turn the call over to leave.

Thanks Ashley good morning, everyone and thank you for joining our first quarter earnings call for more than 20 years Trader has been driving and responding to changes in electronic trading across rates credit equities and money markets. We've done this by harnessing, the creativity of our people redefining the limits of our technology and collaborating with our customers to solve trading challenges that have only become more complex over time.

As a result we've developed a broad and Global Network that continues to grow and be Central to our connect, the dots strategy of linking, our markets with a goal of ultimately increasing efficiency for our customers.

The word unprecedented has been used, numerous times to describe the year that unfolded in 2020 not for a lack of imagination. But because a genuinely captures a. Change that made everyone re-evaluate. And in many cases reinvent, the way we think and operate at tradeweb, our response was once again, partially shaped by our peers and Technology as our team migrated to a virtual world largely persists. Even today, our response was also driven by the diversity of our Network that allows us to listen to and collaborate with our clients across the Spectrum. We believe the value of a multi asset class multi-sector, multi-protocol and Global Network box has never been greater

Historically has changes like the acceptance of the internet or the waves of Regulation and financial markets, have been unfolding globally. Have all proven to be catalog for digitization. We believe the behavioral changes induced by the pandemic have accelerated, the trajectory of electronification and digitization which continue to be multi-year secular Trends in the making.

It was only back in March of 2020. When tradeweb posted its first trillion-dollar average day volume up in an environment that we can say was extremely volatile across all asset classes.

Fast forward 12 months and we've started. Twenty Twenty-One by posting three consecutive record months of average daily volume in excess of 1 trillion months in an environment where volatility is still relatively subdued.

This is a testament to the growing adoption of our electronic Solutions and trading more generally by our clients turning to slide for the acceleration of digitization, I just described it was on display. As we recorded another record quarter with volumes climbing to new highs across many of our products.

Specifically record, gross. Revenues of $273 million during the first quarter of Twenty-One were up 16 and half percent year-on-year on a reported basis and 13.9% on a constant currency basis.

Revenue growth in the resulting scale translated into improved profitability. Year-on-year, as our first quarter adjusted ebitda margin expanded by 97 basis points to a record 52%.

Turning to slide five. This quarter was marked by strong performance across many of our asset classes with credit leading, the way accounting for more than 50% of our Revenue growth. Specifically credit posted another record quarter with revenues growing 37.8% year-over-year. As the business set, new quarterly records for us. Electronic investment-grade end up Trading.

Reis.

Revenues increased 13.4% as cash rates posted, its highest revenue and volume quarter driven by record. Central Bank, issuance wage continues to fuel, Global government bond trading, and the low interest rate environment, which drove record mortgage revenues.

Swap revenues hit a new record driven by continued market. Share gains equities fell by 2.9% as decline in our more volatility, sensitive wholesale ETF business more than offset institutional growth and our efforts to diversify Beyond ETFs.

Money market revenues were down 3.5% as continued, strong rate, headwinds, and Retail sector. More than offset, the organic growth and institutional repo am finally Market. Data was up 7.6% driven by growth in both our refinitiv redistribution license and proprietary data products.

Moving on to slide six. Let me provide a brief update on our four main focus areas Global interest rate swaps US Treasury income credit and Global ETFs.

Starting with interest rate swaps, which is our largest and fastest-growing rate product. A more challenging macro background relatives, the last year was more than offset by our organic growth efforts. We continue to attract new clients and deepen our client wallet share by driving higher engagement and introducing new products and protocols home. It's led to overall swaps volume growing by 15%.

As a result swaps market, share increased to a record 11.8% as measured by Claris.

We believe We continued to gain meaningful. Share versus our closest competitor Bloomberg in both, the US and Europe.

Longer-term. We remain excited by the multi-year opportunity here as the rate cycle, improves, and the market continues to electronic by Billy will give you an update on our strategies in a few minutes.

Moving onto us treasuries, another rates product that continues to set, records are volumes increased by 23% year-on-year, led by both the institutional, and wholesale business pushing market share to a record, 15.3% of the US Treasury Market.

The backdrop of heavy issuance continues to support the institutional Channel, whereas the return of debate surrounding the trajectory of interest rates was particularly beneficial wage wholesale Channel relative to the fourth quarter.

Focusing on what we can control. Institutional share games have been driven by existing clients doing more business competitive share, gains vs Bloomberg and further inroads into the TV off capitalizing on the recent wave of short-dated issuance.

Looking ahead.

We are also investing in driving the adoption of early-stage streaming, protocols like tradeweb plus volumes here. Rose substantially versus last year.

Our wholesale US Treasury offering, which today is centered on disclose streams in session trading. Posted another record quarter following a string of new client wins. Thursday, we have now become a leading streaming venue as our efforts to lead with proprietary technology. And really understand what our clients want pays off.

While streams continue to see rapid adoption. We believe the central limit order book or Club will remain an important protocol in response to client demand for more protocol Choice competition in the club Arena. We announced the acquisition of NASDAQ fixed income platform, which we expect to close later this quarter.

As a result, our clients will have the ability to complement the streaming activity with a liquid cloth.

We will also be able to lower their connectivity costs and enhance, our US Treasury data offering with a depth of book data.

As a reminder, we believe we can improve ebitda margin to trade drugs, adjusted ebitda margin or higher.

Exiting the first year of a two-year integration.

Well, being immediately accretive to adjusted earnings on closing.

Looking ahead, we believe the mix of our organic and inorganic growth initiatives, and the growing pool of US Treasury outstanding courtesy of the fed's ever-expanding deficit. Well, for earnings power. As we continue to emerge from this pandemic into an increasingly higher and more volatile interest rate environment.

Shifting to credit. This was another great quarter as our business continues, to Surge ahead generating more than $74 billion in revenues to start the year.

As I wrote in my recent shareholder letter, it's amazing to see us hit the 10%. Electronic share Milestone. Consistently in investment-grade credit, six years into our journey.

And now, it's encouraging to see the progress being made in high-yield as well.

Our differentiated approach.

Well we not only continue to redefine institutional electronic trading with Innovations like portfolio trading alltrade and that spotting. But also focus on the entire credit Market with other Arab Nations like session trading and rematch is resonating strongly with clients.

Looking at.

had we continued to see a lot of Opportunity credit as our platform continues to scale and as the retail business recovers

Billy will give you an update on our strategy momentarily.

Finally with inequities institutional ETFs, produced a record quarter with average daily volume up, 13% year-on-year, as new client wins more than offset. The substantial go back and us and European ETF industry activity. During the quarter Equity, ETFs comprise 63% of our Global volume with fixed income, contributing Thursday percent fundamentally. We continue to add your clients globally and remain excited about the prospects for the business.

Our other initiatives to expand beyond our Flagship franchise are also bearing fruit with momentum continuing in equity options, converts NAD ours.

Looking ahead. We believe We were well-positioned to benefit from the continued growth and ETFs globally with our newer product additions expanding client footprint and further south ex product enhancements

And together with portfolio trading index, CBS and most recently total return swaps are passive trading electronic solution. Set, allows clients to 6 Mac, reviews in an efficient manner across asset classes and products.

With that.

I'm going to turn it over to Billy.

Thankfully trying to slide seven for a closer. Look at credit, we produced another record-breaking quarter, driven primarily by a continued rapid growth of our us. Institutional corporate credit. Rating, business clients are voting for The liquidity and Innovation, we have brought to the market by increasing their trading on tradeweb. Well, the past few quarters has has been about the rapid progress. We have made in our country. The Tide is not turning in high heeled where we also had a recorder, our fast-growing, wholesale, and Retail middle-market. Businesses were also important. Contributors recall. Middle name is an important business where institutional Traders trade in smaller sizes conditions. In our core, retail business have improved slightly with the recent deepening of the yield curve. However they still remained change relative to the first quarter. 2020s financial advisors remained reluctant to add lower-yielding Municipal and corporate bonds to their clients portfolios looking back.

When we set out to bring meaningful competition to the corporate credit Market, we had a clear strategy centred around creating a powerful feedback loop LED by serial Innovation converging different sectors in the credit market and creating novel. Electronic and digital solutions for our clients, we believe our strategy, our strategy is resonating loudly with clients long as our market share continues to set new records. While we are pleased with the progress made so far. We strongly believe we have the potential to do even better.

We Believe.

Our technological innovation is permanently influencing client trading Behavior. The latest example, being portfolio trading a light bulb solution which continues to attract more clients Club tradeweb. Facilitated a record, $70 billion portfolio trades in the first quarter 2021, with average daily volume up, more than 150% year-over-year, affected by record activity, both in the US, and internationally in the US, we estimate that the industry portfolio trading. Now, regularly comprises four to five percent of Trace versus 2%. At the beginning of 2019, the number show portfolio trading has quickly become the next big protocol in credit after our queue and all to all clients are increasingly turning a portfolio trading to discover prices for bonds with low liquidity scores and move large amounts of risk, and take advantage of hit rates and quote rates in excess of 90% off.

Warranty and speed of execution has been game-changing. Behaviorally clients are increasingly putting dealers and competition are in, portfolio. Trading volumes have track from the last year. More over the size of the trades is growing with the number of line items increasing to record levels. The demand continues to Surge and we will soon be rolling our next generation of portfolio trading. Alltrade the broadest sweet of anonymous protocols in the market today, connecting liquidity, between our three clients. Actors also had a new record clients trade traded over $82 billion an increase of nearly 100% year-over-year as our investments to grow are all too old Network integrate AIX and improve responding functionality continues to pay off.

Stephen trading. Another key alltrade protocol also had a new record our newest Innovation rematch, which enables unmatched inquiries at the end of a wholesale session to be mad institutional, alter all platform as well. By as well as by offsetting retail liquidity is still early in a troll out, but the progress has been encouraging

Our net spotting offering. So, another record quarter with over $170 billion in volume up 73% year-over-year, we rolled out our multi-client spotting offering the first quarter which we believe generally advances our existing offering and our and our end, our onboarding, a strong pipeline of clients clients will now be able to gain for hedging activity. Not only across dealers but also across other clients at the same time. Enhancing savings trading and operational efficiency. This is the fourth iteration of our life spotting offering. And we believe that further extends argued against competitors today, with basic spotting functionality, turning to the rest of our credit business. We believe one of our strategic advantages lies in the diversity of our product set. We achieved record revenues across European credit, China, bonds and institutional movies.

RCB vs business posters.

Second strongest quarter on record the volume fell. 35% year-over-year as volatility subsided from the extraordinary levels that we saw last year. We remain focused on driving, our share Higher. By expanding our products that was strong growth in our Sovereign and single-name CVS. We also recently expanded our product offering with the first-ever electronic Market. I bought a total return, swap trade. This is just another example of us. Collaborating with our clients to bring needed efficiency, and transparency to the fixed-income ecosystem in summer. We believe our credit business has tremendous room for growth and we have an exciting road map to lead the Innovation across the credit markets. We are arming Traders across the marketplace with over IP protocols to intelligently. Find liquidity and optimize their execution objectives.

Moving on to swaps the multi-year. Growth story continued with a record, first-quarter results variable revenues, grew by 30% driven by market share climbing to a record 11.8% from about 7% last year. This is a remarkable accomplishment by the team of tradeweb in light of the first quarter last year. When volatility back then couldn't have been much sort of the success. In swaps, is another example of the non-stop Innovation, that has become a Hallmark of our culture.

The low interest rate and volatility environment, pressured industry volumes in the quarter which were down 29% year-over-year, the lower industry volume for primarily driven by a decline and lower fee per month. Overnight index, swaps goal is however client debate has returned regarding inflation expectations and the shape of the yield curve which has injected life in two volumes relative to the fourth quarter of 2018. What were the last few calls we have talked about focusing on things in our control, specifically driving market, share Higher by innovating to expand across products. Protocols in geography wage, our record market share was driven by gains within core IRS our main Market of focus and fras were a combined share across poor IRS and fras Rose to 12% from 6.9% off. We continue to innovate are responding to structural changes in the swaps Market. It's a growth of the M swapped clearing or the transition to Alternative reference rates and introducing new products and New Jersey.

Products and protocols. In fact, in the first quarter you saw record em and rfm activity. The first electronic cross-currency swap executed at the lch Palm Beach and and the first automated Euro swop vs. Bond, Futures trade. And last week, we added Brazilian IRS as the continued to attack the growing e m opportunity. I'm looking ahead, recall, the swaps Market was the last big race market after the government bonds and TV. A market started to go electronic in a meaningful way and not only happened a few years ago at a time, the corporate credit Market was well and truly on his way to being more electronic. Since then the market has quickly electronic like to approximately 25% today. There Still Remains a considerable amount of business done via voice and that's our opportunity innovating to digital digitized manual flow, while the global fixed-income markets and broader swap Market continues to grow,

finally, we continue to

Invest in our leading automated trading capability, AIX adoption continues to increase as clients. Get increasingly comfortable with low. To no touch trading. The number of AIX trade-off by 56% your rear in the first quarter with record usage, across rates credit and equities.

Client. Loved the data-driven intelligence that was able to to provide especially when it comes to counterparty selection post trade. They can use it as a series of metrics to assess the performance of their counterparties and continue to fine-tune their trading strategies. This is really resonating with minds and as clients become more comfortable with automation. We believe them increasingly automate more of their trades and focus on more complex trades and managing client relationships. And with that, let me turn it over to Bob to discuss our financials and Monday tail.

Thanks Billy and good morning. It's like go through the numbers. All comparisons will be to the prior-year. Unless otherwise noted, let me begin with an overview of our volumes. I'll slide nine, we would not record quarterly average, daily volume in excess of one trillion dollars of 18%, both including and excluding short tender swaps along the twenty product categories publicly disclosed in our monthly activity report. Thirteen hit quarterly records while another five achieved their second highest quarterly a TV

Areas of notable growth include us and European government bonds, mortgages us and European corporate credit Chinese bonds European ETF and institutional repo.

So I tend provides a summary of our quarterly earnings performance. The record first quarter volumes, translated into gross revenues increasing by $16 and 5% on a reported and Thursday, 9%, on a constant currency basis. We drive approx 39% of our revenues from International customers and recall that approximately 30% of our Revenue base is denomination. Currencies other dollars predominantly in euros.

Are variable revenues increased by Twenty 1.6%, and our total trading Revenue, increased by 17.3% total fixed revenues related to our four major asset classes, continue to grow up 6.9%, and 3.6% on a constant currency basis credit, fixed Revenue growth was primarily driven by the addition of new dealers in credit and additional clients. I'm trying to Chinese bonds

Equities fixed Revenue growth was driven by the addition of new dealers and the impact of FX.

Other trading revenues 19.8%, primarily driven by periodic revenues tied to technology enhancements performed. For our retail clients.

Market data increased by 7.6% due to growth and refinitiv and private area data products. Adjusted ebitda margin came in at a record of 52% and expanded in a sleep. Now, you seven basic points wrote the first quarter 2020, as we continue to benefit from scale,

All in, we reported adjusted net income per diluted, share of $0.43.

Who had two fees per million slide 11?

You're trying to find that subscriber given by a mix of various products. We're going to we're asset classes and some are Blended feed familiar increased 5% primarily as a result of struggling with a higher wage million greater than one year swaps credit and institutional ETFs excluding lower fee per million short ten or swaps and Futures are Blended FIFA million was up 4%.

This would be getting a line. Transfer request, starting with rates, averaged FIFA million for rates, was up 7% overall for cash rates products, which include government bonds and TV box recently, described as both of longer-dated to hire. People million us, treasuries, was offset by growth in institutional mortgages, which carry a lower fee per million.

So long, ten or swaps peaceful million was up 14%. Primarily going to growth in international clients, emerging-market swaps and rfm.

In other rates, derivatives which includes rates, Futures in short-term swaps average speed. Familia increased 59% due to growth in fras which carry a higher fee per million than overnight index drops off.

Can you hear me to credit Irish, FIFA million for credit? Increased 74% is higher FIFA million cash credit projects, such as volumes wage lower, people million, CVS activity, declined, compared to a very volatile, first quarter in 2020.

Julie tallent Cash credit average fee Familia. Increase 2% to the stronger growth in us. High-grade and us high-yield both of which carry a higher fever million than overall cash credit.

Looking at the credit unions electronically processed us cash credit category featuring increased 2% driven by growth in electronically processed by him which carries a higher fee familiar than the credit is average. Continuing is equities. I received familiar for equities was up 4% overall,

The cash equities average FIFA Million by 1% due to a decline in FIFA million within. This was driven by Rising asset values, inflating notional traded. In a recall in the US we charge per trade and not promotional value trade.

Equities derivatives, average speed. Four million four-per-cent do the growth in European convertibles which carry a higher per million than the equity derivatives average.

Simon was in money markets, Keith million decreased 30%. This is primarily driven by growth and institutional repo which reached record levels and continues to grow institutional wage carries, a lower fee, Vermilion than other money market products, retail money, markets activity, remained pressured by the low interest rate environment.

Flight, 12 details are expenses at a high level. We need to invest for growth. There's been no change to our philosophy here.

Just to expenses for first quarter, decreased 13.4% and 8.8%. On a constant currency basis, we call approximately, 15% of our expense basis, denominated currency is under $30, predominantly in Sterling.

First of all, your 2021 adjusted operating expenses were higher as compared to first quarter 2020 due to increased employee compensation technology, and communication and professional life which were partially offset by lower TNT compensation costs, increased 11.7% or higher headcount as well as higher performance-related compensation and payroll related tax, wage adjusted nonprofit expense. Please 17% on a reported basis primarily due to technology and Communications and unfavorable movements in FX

Justin on comp expense on a constant currency basis, increased 5.5%.

Specifically technology and communication costs, increased primarily due to higher clearing data fees as a result of higher alltrade volumes and credit and streaming US Treasury guards which continues to grow in addition. This quarter also saw the continued impact of our previously, communicated Investments and data strategy and infrastructure.

Just in general and administrative increased primarily due to unfavorable movements and FX which which resulted in a 1.5 million realized lost in first quarter 2021, versus a 2.5 million realized gain interest 2020. We call, we adjust out, unrealised FX hedging gains or losses and the impact of FX on our cash balances.

GNA on a constant currency basis, decreased 23.4% even less travel and entertainment expense.

Professional fees increased 15.3%, due to increased Consulting, fees related to our investment and data strategy and infrastructure technology.

So I thirteen details Capital Management and our guidance, first our cash position and capital return policy.

We is it first quarter in a strong position holding $809 in cash and cash equivalents and free cash flow. Reached four hundred seven hundred thousand dollars for the trailing-twelve-month we have access to a $500 revolver The Remains and wrong as of quarter in

FX and capitalized software development for the quarter was 12.6 million. An increase of 51% year-over-year, primarily due to the timing of Investments, spend, we continue to expect cap and capitalized software to be in the range of 45 to fifty million for the full year.

We this quarter's earnings the board declared a quarterly dividend of eight cents per class A and Class B share.

We did not repurchase any shares in the quarter because the lack between approval and filing quotation. We expect the plan to begin the second quarter as a reminder, we authorized 150 million dollars a share repurchase program which we plan to use primarily the office annual Equity grants

Please other guys.

Inside, and for 2021, we expect adjusted expenses to Trend in the higher half. Our previous 532 560 million range for 2021. I believe we can drive operating expansion compared to 2020 at either end of this range for forecasting purposes. We continue to use in as soon. Non-gaap tax rate of 22% a year

Finally, on slide 14, we have updated our quarterly share count since 2021 to help you calibrate your models for fluctuations in our share price.

No, turn it back to lie for concluding remarks.

Thanks Bob, the operating environment still remain subdued, especially across retail get organic market share gains, and volume increases continue to drive growth.

We believe the multi-year secular Trends powering electronification and automation remain intact, the regional product and asset class. Diversity of our revenues was on full display with another strong quarter for credit rates and institutional equities. While money markets have multiple growth, levers wrong, despite the noted macro challenges,

Our Network continues to deepen as we innovate and connect the dots.

Between different asset classes, sectors. Protocols regions and customers.

We believe is this diversity, that positions as well to both participate in and read the next generation of progress in addition to organic growth and our pre-owned not announced NASDAQ fixed income acquisition. We continue to spend time evaluating potential m&a opportunities that we believe would further augment our network name, given our cash position.

with a couple of important month and trading days left in April, momentum from the first quarter has continued with overall revenues and volumes up double-digits relative of April 2020,

We are seeing strong Revenue growth across Global interest rate, swaps and corporate credit. Both electronic investment-grade and high-yield credit market shares are running off in the last quarter with notable strength across portfolio trading and alltrade

Before I conclude, I would like to welcome Marie ruse and bond, use to our board of directors. We are excited to leverage their voices and experience with the operators and strategists and we believe they will be immensely helpful to the board and our management team.

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 efforts that contributed to the record quarterly revenues in volumes tradeweb.

With that, I'll turn it back to Ashley or your questions.

Thanks sweet. As a reminder, please limit yourself to one question. Only feel free to hop back in the queue and ask additional questions at the end. Q&A will end at 10:30 a.m. eastern time zone. Operator you can now take our first question.

Thank you. And our first question comes from Chris Harris from Wells, Fargo is open.

Thanks guys. So, you know, another quarter of obviously very solid growth for tradeweb. What do you think the normalized level of growth of this business is putting a side macro factors like interest rates and related to that? Can you give us an update on where you think we might be maybe in terms of an inning with respect to the digitization fixed-income market?

Okay, I'll take that one. Thanks. Thanks Chris for the question. It's good one. I think like, when you when you think about, I think about responding to the page. Really. The best answer is to look at the history of our double-digit Revenue growth on average that we've delivered for for many, many years across different Cycles as as a real indicator of where we're headed. You know, the reality is that the secular drivers powering. The growth are intact across all of our asset class. The most important thing though, for us, we'll be continuing our culture of innovation and creativity where we you know, on Earth the new opportunities working with our customers around the world that that's really critical. It's it's the network that we built over the last twenty years that allows

The dryers and respond to changes, did it really Drive growth in response to changes in client Behavior? You know by providing them with with better tools than they currently have to prove their their work flow and, you know, reduce their cost. So it's the, you know, the acceleration and the digitization of financial markets is I'm happy right before our eyes. I mean, this this year was quite extraordinary, you know, we had a record-breaking first quarter in an environment where, you know, volatility was was relatively more subdued than than last year's first quarter. So this this is, this is a function of our Innovation and our execution that allows us to get these market share gains, but also $1,000, increase and electronification. You know if you look at the you know just the u s, i g sector.

That's a, you know.

Six hundred basis points in electronic activity from the first quarter of last year. High heels even more, you know, seven hundred or so basis points of growth. And and swaps off is is two or three hundred basis points of growth from the first quarter. So we believe these Trends suggest, you know, the behavior is is changing and perhaps accelerating a bit long. We've been on the Forefront of this behavioral change. The success of our Innovations is allowed us to account for from more than half of the incremental percentages that have gone electronic in in isg, in the swaps Market. The electronic pie is growing, you know? We we firmly believe this is a a multi-year trend. We still have as, you know, one of our main competitors is the the phone. So you know, there's there's there's so many parts of our business that are primed for for more Innovation and more advances in technology that Ali dead.

Or electronic execution, you know, if you look at just some of our recent current Innovations, streaming protocols and treasuries rfm and IRS the great success that we've had with the portfolio trading. You know, we were on The Cutting Edge with that. The first ones out with that net spotting. We've got rematch and credit things we're doing in repo with a few Solutions and equities. So, you know, we believe the, the, the world is, you know, the new rules going to be more flexible work environment with employees working from home and satellite office says, that's going to amplify the importance of technology and efficiency. And and we kind of feel like this is a, this is a new era, you know, is it's a real changing point. So lots of opportunities sales force is very engaged. We're ramping up our marketing expenditure to further that to broaden the network. And we're, you know, we're real excited about the Dead.

The opportunities ahead of us.

So in Innings, so I don't know, you know, the innings are different depending on where you are in the world and what the asset class is. So you know, certain rates products are are further along but you know, even to them that you perhaps the furthest along the treasury market in in the D. C spaces is only at you know forcing it maybe maybe going into V in it, you know, faith and credit. Uh, thirty seven percent electronic. So I don't know that's third or fourth Innings swaps is even earlier, right? IRS is only 25% electronic. So that's Thursday. No. Second inning surging. So it really, it really depends on where you are in the world and and, and the asset class

Thank you and our next question comes from from Credit. Suisse is open.

Hey, good morning everyone. So maybe once a Billy on the mortgage business, for the mortgage business, is done really well in a low-rate environment setting new records last but volume down a bit more muted recently you know, going around 5% in 1 q and lagging growth and other products. So really, just how should we think about the impact of rising yields off. Webb's mortgage payments? Thanks so much. Sure. Hey, how are you? Good question, you know, I'm going to sort of date myself with this and kind of make lead chuckle at the same time. I think it was like the second or third business that tradeweb got into like way back when. And we've been an industry leader in the mortgage space from very early on moment and have had, you know, very strong market share and a really strong brand attached to that business. A lot of good stuff is always happened with us in the mortgage business. In general, it was a really good quarter for us, you know, are a, you know, a record, a record.

Quarter for us, you know, really?

Wrong things happening, with our new initiatives, around, specified pool trading, so lots of good kind of highlights for us. Um, what I would highlight around just the first quarter was, you know, you know, really strong activities, specifically around convexity trading in the market. There was kind of good mortgage volatility happening. I always ask myself when I think about how a business is going to perform in different settings off. It's a little bit, too least point where are you with your network right? It's not just about like do we have all of the customers on? Do we have the right customers on? Do we have the right users on? Write the mortgage Market is interesting unique because in different settings, different types of companies will do the bulk of the volume. So, very low rate volumes, typically come from mortgage. Originators, you guys know that well off in a higher yield environment, you get different types of customers that tend to enter The Fray, right? There's Delta hedging. There's relative value, trades. The asset. Managers can get more active. So a table.

Of the day around things that we can control. We have this wonderful Network and mortgages. We feel really confident that business will perform in a variety of different settings. And the other thing I would just add is there's, you know, a loud environment and there's a rising moment in a low-rate environment but that's a long way from a high rate environment. So we always have to keep where we are in the yield curve kind of in perspective and thank you a question, all right?

Thank you. My next question comes from from Piper. Sandler is open. Good morning Lee and thanks for the the baseball game. Any analogies I want to know whether Billy is the starter the long, reliever closer, you know, all this stuff. I think he's all of them you can you can tell us after office. Anyway my question like you've highlighted over all these calls on an ongoing basis. You know the different electronic and digitization off making, you know whether it's you know, portfolio trading or even passive investing sorta last time last quarter this quarter at least this all to all alltrade was off a bit at least a little bit new to me and I guess the question is you know your alltrade or all to all trading seems like it has more wage

From different Platforms in it. It's not just the altar all session-based can rematch as well, so I I guess the two questions on the all tall. Do you have enough liquidity Edge? At this point? Say in credit if there was something like we had last year that that now it would hold up you know pretty much in any Market environment and then the second is related still to all the all is you know it doesn't appear. Like you're taking share of all to all of them. Other from your P if I have it. Correct, what? You just bringing more customers into this, you know, automated trading environment.

Yeah, so let me, let me just start off by saying Billy is an amazing athlete. He can play any position. I wouldn't even I wouldn't even just keep him in picture. We could put off third base if we need to. I'll, I'll take it off and feel free to jump in. Yeah, look, I, I think what we've been doing in this whole sort of connected dots strategy, and, and linking in different customer segments of the market. With lots of different technology tools wage is, is going to continue to really serve us well, as it responds to customer demand, so, you know, whether or not there's a, I guess there always will be another crisis bucks in in response to, you know, is there enough liquidity? I think with what we're really starting to see here is well the answer is yes to that in terms of the scope of our Network and the different wage.

We're bringing to Bear, but but the uh, look at the functionality, right? So we're attracting more and more customers particularly when we're talking about credit app, all as a result of the different tools were offering. So whether its portfolio trading or linking what we're doing in session-based, trading into RFQ or what we did previously, with retention into responding to institutional. Now we've got wholesale, retail institutional, all somewhat linked together with different waterfalls. We we think that these these advances will assist in any sort of, you know, time of stress with respect to liquidity. So it's, it's going to all be about, you know, the innovation of these tools and stitching them together nicely. And then at the same time, you know, kind of having this, you know, very broad expanse of network that is, you know, a very efficient tool for customers, you know, birth.

Interactive price. I mean, that's that's what we're doing. We're in a battle to, you know, attract the clients to use our system to search for liquidity. And, you know, that's going to be a bit of an arms race. In terms of the kind of Technology you can bring to bear and, you know, applying to the market as you responding to customer needs. So I think we're off we're very well positioned for that. And and and really, the proof is in the kind of proof in the pudding, right? Look at the numbers across the board over the last several years, since we've been public and if you were to go back a lot further and see that we just continue to grow. So, um, you know, we're very, we're very positive about being able to handle, you know, different situations. I mean, that that situation out with in March of last year and not just us, the whole Market was so unprecedented in to, to really a great extent with the help of the the FED, obviously big help of a Fed.

um, you know, things kind of

Performed quite well. You know, it was it was challenging in those first couple of months but you know we're very pleased with how we've kind of been riding out the storm. And in fact of just accelerating things

Thank you. Next question comes from Alex. Hey guys. Good morning everybody, thanks for checking the question. I was hoping it's been a couple more minutes on credit as well and definitely encouraging to hear your comments around market share and I filled up from in April from the last quarter. From first course, it sounds like portfolio, trading continues to be a good contributor to that girl. So I was hoping to dig into that a little bit more. Obviously we've seen industry-wide momentum and portfolio trading growing. But can you spend a minute on sort of differentiate it features of your offering relative to the competition? It seems like it's getting a little bit more momentum versus what we've seen for birth mothers. And then, um, any sense, in terms of the revenue contribution from portfolio trading that you could have that you could help us with as well. Thanks.

Yeah, it's Billy. Yeah so I would you know listen I would not to be a technocrat I would you know just slightly change the words from good to great. Right. Portfolio trading is becoming you know fundamentally important to the mom and and the reality is particularly in and you guys can understand, that's really well, particularly in the environment that we are in, you know, what do customers care about, they care about saving money, and they care about finding time to care about efficiency. And I think, in just a very, very specific way portfolio trading has absolutely resonated with clients worked, well, kind of. Instead of, you know, sort of going through the actual sort of workflow and kind of highlighting, like, what we do differently because obviously, we're sort of protective of how we build, you know, build out our functionality. I would say, life is complex. It's a complex work flow but the end result is is simplified to the customer and I think that's one of the most important kind of principals around it and I would also highlight something. Yep.

We just mentioned, which was, we were sort of like first around this, and I think that gave us a sort of inherent Advantage around it and we, you know, we paid very specific attention to them very early on and the moment has kind of arrived in a significant way around portfolio Trading.

Yeah, you know, and I, I would just, I mean, Billy just nailed it, but I would just really emphasized the last point, which is most of the time our Innovations are cognitive, right? So just about everything we've done from the very beginning, you know? You you re do you improve, you improve. So being first is super important and not being able to deliver on the technology enhancements and portfolios. Just a great example that we've done in a lot of other places. But portfolio, is a great example of multi-year effort already. You know, we're on our way, no emptiness version of this that we're putting out and it's really sentis. This is complex, so we are constantly improving it and making it more user-friendly. I remember, when we first took it off, it was like, okay, let's have a hundred bombs in the, you know, in the list for the portfolio trade. Then it was 205. I don't even know what number were up to right now, but you know, that just continues to grow and that's that's complex stop.

To make sure you're getting that right and tweaking it. And and enhancing the functionality is really super important.

Lee. I just had one other thing which is in portfolio trading, one of the big changes we've seen over the last two years is, how much now is in 2/3 of. It's now in 35 or two years ago 13%. So that's incredibly important cuz it means there's a lot more price. Discovery be going on and being used for that purpose. And as a matter of sort of side helped us off income trading portfolio have a slightly higher fee per million. And so it's sort of all good in terms of how it's being used and its impact and, and on revenues and on on what clients. Yeah, that's a great. That's a great Point. Bob,

Thank you. Our next question comes from UVS yeah hey good morning everyone. Just actually stay off topic of credit and maybe turning the question around a little bit. Clearly you've made a lot of traction and and that's exciting but maybe you can help us talk about wage where you're not gaining traction or whether it's still the largest area of untapped opportunities. Maybe that's, you know, certain certain clients certain regions certain types of Trades. So and then of course related to that it is is is that something missing that you're doing? Is it just about you know, sales efforts or is there anything else that you see in the same place? And somebody else is doing that it actually would make sense to maybe an organically, add to the, to the, to the war chest. Thank you.

We're competing in credit, you know, we talked about this a lot, the market really wants competition. And I think we're showing you guys through our market share gains that were a real force, and we're competing a credit when you compete. There's never an area where you, you don't have anything else to work on, right? So we're always kind of trying to figure out what our soft spots are and how we can improve. I think I would probably highlight, you know, maybe high-yield as an area where we've we've where we've made, you know, a lot of improvements and we've had some very recent success, but we feel like we can get even stronger and high-yield and obviously one of the big areas that we're always kind of after our the block trades, right? And and I think one of the a little bit back to Alex is point, Alex is question. One of the real kind of important realities around portfolio trading is it's become a real kind of risk transfer mechanism now. And so I think you know the thing that we talked about a lot is dead

How are we going after these block trades? And how are we getting sort of more voice business coming our way? And that is our kind of singular, Focus, always around credit.

Thank you. Our next question comes from Ken Worthington from JPMorgan. Hi. Good morning. So Emerging Markets, I think continues to be a priority for you. Can you talk about the success you know, building on the success you've had in China? Can you talk about moving the ball forward to grow are emerging market trading? Maybe what is wrong dating most with clients? And actually how big e m is relative to the broader business at this point?

Work. Thanks for that can look. It just said, just a hit on China for a second. We obviously see that as a very large opportunity and we've been making investment there. We've announced some hires that we made. We hired James son, to run the business out of Shanghai. We've made some minority investments in the data company. Sumscope and we, you know, we continue to see really great growth coming out of China. The the Emerging Markets side of things has been we start kind of where with our strength in in the derivatives area. So you see us reporting on new types of Trades that were instituting and we are you know investing in the space wage. Um you know, you've got, you've got the, the China side, you got the derivative side, you've got the cash side, which is an opening for us, which we're studying and um, you know, putting more time energy into so well.

We see a lot of opportunity in GM, but you'll see us coming at it, you know, with our strengths, which is tapping into the network. Doing some clever Thursday, on the technology, strengthen, derivatives Geographic diversity that. We, we have, you know, I think we're pretty unique. We were the first firm actually, uh, into China. Along you access into the domestic Market there. That was, I don't know. Three years or so ago already at least and we've had steady growth coming out and are so exciting area. I think it's a great, great, great question cannon in an area that you know, you'll be hearing more from us about in the future.

Thank you. Our next question comes from Michael Cypress from Morgan. Stanley is open.

Hey, good morning. Thanks for taking the question. Just be curious to hear your outlook on the medium Market. Just how you're thinking about the opportunities that there any new protocols that you think it makes sense. And as we look at your job market business, I think the retail business is bigger for you and Mooney's than institutional some, right? So I guess there's any color on the channels would be helpful and how you're navigating bringing the different liquidity pulls together from the office and institutional side that have different needs. Yeah, so the muni Market is really kind of you know it's still in in kind of April of April of 2021. It's still just really kind of a little bit of a old school kind of old-school market, right? And so we feel like we're in a really good position around Muniz because obviously the role that Muniz play in our retail business, we have a month sale Muni business and there has been to your question a lot more. Kind of conversation and engagement around. Is this the right time around a real kind of institutional Muni platform that wage

Feels a lot like how we've electronification and so what we are going to do is we're going to do kind of I think something that we've historically done well which is collaborate with the community and figure out whether or not. This is the right moment to pull kind of go after this space in a strong way. There are some absolutely interesting signs kind of pointing in that direction now. And we are kind of again, kind of sitting back a little bit off the fact that we have the muni business on the retail side. The fact that we're in the wholesale business in Muni, is kind of, gives us a little bit of this kind of edge that we always look for. And the next step is going to be this real engagement collaboration with the external Community, which is kind of always our kind of lead Point as we kind of push these different business developments forward.

Thank you. Next question.

Thanks my questions on, you know, the fixed revenues, you know, they continue to grow and you talk about new kind of customer ads across the host of your businesses. So, just trying to get a sense of the outlaw to think about this year, the trajectory of growth and kind of the fixed Revenue, how we should think about that. Let me, let me is this, a separate components to it. So, let me talk about the, the components and, and we really comes into Parts. One is six revenues associated with our trading businesses. In that particular area, we threw see kind of consistent growth year-over-year, which has been lower single digits, and we expect that to continue and that comes from adding new dealers, in some cases, new projects, sometimes raise changing slightly low way. The mix between fiction and variable works for certain clients as they have choices to make related to that. As I can determine some wage

So that's that's the trading side of it. The other piece of it is our Information Services. Uh, is is a big part and there we expect the growth to be more in the mid, single-digits in a least in the short-term and that's related to continuing add new product to, to, uh, also have some customers right to reporting Europe and also the contract that we do have. So, really all the parts kind of contribute to that piece of it. And I think a key other thing to think about when you're thinking about these things is particularly for the office uh the growth in our in Information Services. We are investing in that area and all that Investments included in our projections on expenses. So it's all sort of part of how we're operating business at this point. And that's that's important because, uh, we we are focusing in that area. So, so it's, it's those two pieces and somewhat consistent. What you're what you've been seeing Focus.

Thank you. Our next question comes from Kyle Voigt, from KBW is open

Hi, good morning. You mentioned in the prepared remarks about gaining share versus Bloomberg. I think it was related to IRS specifically. We look at that market wage and you know your market share gains from 7.2% to 11.8% year-on-year. Could you help us frame? What proportion of that you think is related to market share shifts versus Bloomberg relative to just electronification of voice brokerage? And then then secondly do you think you're seeing any benefit from the the trading of changes, more broadly? At that proposed that Bloomberg? Thank you me, take a crack at that. Thanks for asking the question. I think, just contact IRS holistically we put at about twenty-five percent. Electronic, these dead.

so, let's just

First quarter of 21 if we go back to first quarter of twenty, we had it in about 20%. So, you know, it's a pretty significant percentage, uh, you know, five hundred basis points. So, we've got, we've had meaningful growth there and you can look at our numbers and we think we're picking up, you know, the majority of that movement that I'm coming more Electronics. So, you know, that's always a big, that's a big component depending on where, yeah, it's like classes and the life cycle of electronification. So we're picking up a lot there. We're all sick, you know, this is a tough one to nail down because it's not all publicly disclosed stuff, but we do think we're picking up marketshare as as we pointed out in our recorded comments and and historically, I don't know what the exact number is, but you know, we're gaining there, I wouldn't, it's hard to comment on whether that's the Dead.

You know, the talk of pricing at our competitor. I think it's always down to, you know, liquidity, first and foremost, functionality responsiveness, you know, the, the dead clients come to our system because because of our our interface because of the, the main desire is to find the best possible price and wage. I think we've been Leading The Way with respect to that in the swap space. In addition to, you know, Innovation, I don't, I wouldn't say it's a, you know, it's a fee-based thing per se, but costs are critical Billy said this. Before, you know, it's all about, you know, efficiency time efficiency, first and foremost, liquidity time efficiency and costs reducing costs of, you know, those are those are big big issue across our customer base that we're very mindful of. And I think it's, you know, we played well to that as you can see, from the results that we had in the first quarter.

Thank you. Our next question comes from Brian Bedell from Deutsche Bank is open. Thanks, good morning. Thanks for letting the cargo a little past 10:30. I appreciate it. Just a real quick. One, a lot of these have been asked and answered on credit, but if you can just talk about the net, spotting contribution to four q and and then one off the shares were flat overall and credit for key to one key and there's a lot of different Dynamics going on underneath that. And you talk about portfolio trading in all trading but so maybe just talk about the net spotting contributions and uh from 14 to 1 q and then in into April, as you mentioned, the share improved and Credit in April versus one Q. So you've met spotting a major force behind with that and expect that to improve giving your. Um, I think, they'll you mentioned the next generation of that is being ruled out. Yeah, it's it's critical right, cuz it, it absolutely kind of channels into exact birth.

we were talking about before, which is like,

Save me time, save me money and it it it absolutely accomplishes. Both of those things, we get asked a lot, like, where is your kind of competitive mode around this, and we feel really strong about it. Obviously, we feel like, you know, the workflow just absolutely sinks in with the biggest participants in the market and we feel like our rates franchise obviously, is the kind of engine, you know, around the pricing, that gives so much comfort and credibility to what we've done. So we feel as kind of confident about this functionality as we did. When we first started, talking about it with you guys, you know what year ago or, you know, 18 months ago, really it is an absolutely fundamentally important and critical component to the biggest kind of credit consumers in the marketplace. And that's a strong statement wage makes us feel like we've accomplished something significant.

Thank you.

And our next question comes from Sean Horgan from rosenblatt Securities. Your line is open. All right guys. Good morning and thanks for taking my question. I just had one more on the market data scientist things. Can you give us an update on Market data solution? Where are you seeing traction versus a year ago and I think you already touched on growth. So anything more there? Be great.

Hey, Shawn. I think everyone's getting worn out. Thank you. Thanks for for the question. Yeah, look Market data is a combination for us of growth that we've got with our redistribution agreement with refinitiv and off on focus on things that we're doing from a proprietary standpoint that we're delivering out to the market. You know. It's it's it's it's an area of, you know, of of a great opportunity. We think especially in light of the, you know, the work from home environment data. Just becomes that much more essential but also just the way, the electronification of the market wage. So we, we, you know, we've started this journey with Market data, thinking about, how can we enhance the experience for our clients in terms of execution? So we've got, you know, focuses on Thursday,

Yeah, the AI pricing so we're you know we're driving prices now and tens of thousands of different bonds across the Spectrum, obviously in credit and other areas. Now that we're looking in actually implementing on so we think, you know, we have opportunity there, we're focusing on closing prices. So we've got a number of initiatives where we've launched closing prices and wage earner ship with different firms and ourselves. Um, to establish that debt closing price. There's so much activity that occurs on the closing and that's just increasing. So, overall, it's it's a big area, Focus. We've we've invested and and recruited some tremendous talent in both the data science side that the tech side and also on a product leadership side, we've got new leadership in place there. Now, for a little over a year. Although, I'm reminded that's one of the people who's probably only spent about a month, actually, in the office wage,

So it's uh it's it's amazing.

What we've been able to accomplish in this, in this remote kind of setting? Yes, an exciting area and I, and I think one where we, you know, expect to have continued growth. Along those two lines that.

Thank you. And that does conclude the question-and-answer session for today's conference. And I'd like to turn the call back over to Lee olesky for any closing remarks. Oh, thank you. Let me check quickly. Thanks everyone for, for joining us this morning. We, you know, we started twenty one on a very strong note, we remain excited about the rest of the year, and tackling the multiple opportunities in front of us. And obviously, if you have any, you know, follow-up questions, please feel free to reach out to Ashley or anyone on the team. So thanks a lot for joining us and we look forward to talking to you next quarter. Thanks. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation and you may now disconnect everyone have a wonderful day.

POC.