QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State of other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Large accelerated filer | ☐ | Accelerated filer | ¨ | ☒ | |||||||||||||||||||
Smaller reporting company | Emerging growth company |
Class of Stock | Shares Outstanding as of October 21, 2020 | |||||||
Class A Common Stock, par value $0.00001 per share | ||||||||
Class B Common Stock, par value $0.00001 per share | ||||||||
Class C Common Stock, par value $0.00001 per share | ||||||||
Class D Common Stock, par value $0.00001 per share |
Page | ||||||||
September 30, 2020 | December 31, 2019 | ||||||||||
Assets | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash | |||||||||||
Receivable from brokers and dealers and clearing organizations | |||||||||||
Deposits with clearing organizations | |||||||||||
Accounts receivable, net of allowance for credit losses of $ | |||||||||||
Furniture, equipment, purchased software and leasehold improvements, net of accumulated depreciation and amortization | |||||||||||
Right-of-use assets | |||||||||||
Software development costs, net of accumulated amortization | |||||||||||
Goodwill | |||||||||||
Intangible assets, net of accumulated amortization | |||||||||||
Receivable from affiliates | |||||||||||
Deferred tax asset | |||||||||||
Other assets | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities and Stockholders' Equity | |||||||||||
Liabilities | |||||||||||
Payable to brokers and dealers and clearing organizations | $ | $ | |||||||||
Accrued compensation | |||||||||||
Deferred revenue | |||||||||||
Accounts payable, accrued expenses and other liabilities | |||||||||||
Employee equity compensation payable | |||||||||||
Lease liability | |||||||||||
Payable to affiliates | |||||||||||
Deferred tax liability | |||||||||||
Tax receivable agreement liability | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies (Note 14) | |||||||||||
Preferred stock, $ | |||||||||||
Class A common stock, $ | |||||||||||
Class B common stock, $ | |||||||||||
Class C common stock, $ | |||||||||||
Class D common stock, $ | |||||||||||
Additional paid-in capital | |||||||||||
Accumulated other comprehensive income | |||||||||||
Retained earnings | |||||||||||
Total stockholders' equity attributable to Tradeweb Markets Inc. | |||||||||||
Non-controlling interests | |||||||||||
Total equity | |||||||||||
Total liabilities and stockholders' equity | $ | $ |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||||||||||||||||||||
Revenues | |||||||||||||||||||||||||||||||||||||||||||||||
Transaction fees | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
Subscription fees | |||||||||||||||||||||||||||||||||||||||||||||||
Commissions | |||||||||||||||||||||||||||||||||||||||||||||||
Refinitiv market data fees | |||||||||||||||||||||||||||||||||||||||||||||||
Other | |||||||||||||||||||||||||||||||||||||||||||||||
Gross revenue | |||||||||||||||||||||||||||||||||||||||||||||||
Expenses | |||||||||||||||||||||||||||||||||||||||||||||||
Employee compensation and benefits | |||||||||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||||||||||||||||||||||||||
Technology and communications | |||||||||||||||||||||||||||||||||||||||||||||||
General and administrative | |||||||||||||||||||||||||||||||||||||||||||||||
Professional fees | |||||||||||||||||||||||||||||||||||||||||||||||
Occupancy | |||||||||||||||||||||||||||||||||||||||||||||||
Total expenses | |||||||||||||||||||||||||||||||||||||||||||||||
Operating income | |||||||||||||||||||||||||||||||||||||||||||||||
Net interest income (expense) | ( | ||||||||||||||||||||||||||||||||||||||||||||||
Income before taxes | |||||||||||||||||||||||||||||||||||||||||||||||
Provision for income taxes | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
Net income | |||||||||||||||||||||||||||||||||||||||||||||||
Less: Pre-IPO net income attributable to Tradeweb Markets LLC | |||||||||||||||||||||||||||||||||||||||||||||||
Net income attributable to Tradeweb Markets Inc. and non-controlling interests | |||||||||||||||||||||||||||||||||||||||||||||||
Less: Net income attributable to non-controlling interests | |||||||||||||||||||||||||||||||||||||||||||||||
Net income attributable to Tradeweb Markets Inc. | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
EPS calculations for post-IPO and pre-IPO periods (1) | |||||||||||||||||||||||||||||||||||||||||||||||
Earnings per share | |||||||||||||||||||||||||||||||||||||||||||||||
Basic | $ | (a) | $ | (a) | $ | (a) | $ | 0.19 / 0.30 | (b)/ (a) | ||||||||||||||||||||||||||||||||||||||
Diluted | $ | (a) | $ | (a) | $ | (a) | $ | 0.19 / 0.28 | (b)/ (a) | ||||||||||||||||||||||||||||||||||||||
Weighted average shares outstanding | |||||||||||||||||||||||||||||||||||||||||||||||
Basic | (a) | (a) | (a) | 222,222,197 / 142,934,221 | (b)/ (a) | ||||||||||||||||||||||||||||||||||||||||||
Diluted | (a) | (a) | (a) | 223,320,457 / 151,158,760 | (b)/ (a) |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Comprehensive income - Tradeweb Markets Inc. | |||||||||||||||||||||||
Net income attributable to Tradeweb Markets Inc. | $ | $ | $ | $ | |||||||||||||||||||
Other comprehensive income: | |||||||||||||||||||||||
Foreign currency translation adjustments attributable to Tradeweb Markets Inc. | ( | ( | ( | ||||||||||||||||||||
Comprehensive income attributable to Tradeweb Markets Inc. | $ | $ | $ | $ | |||||||||||||||||||
Comprehensive income - Non-controlling interests | |||||||||||||||||||||||
Net income attributable to non-controlling interests | $ | $ | $ | $ | |||||||||||||||||||
Other comprehensive income: | |||||||||||||||||||||||
Foreign currency translation adjustments attributable to non-controlling interests | ( | ( | ( | ||||||||||||||||||||
Comprehensive income attributable to non-controlling interests | $ | $ | $ | $ | |||||||||||||||||||
Comprehensive income - Pre-IPO attributable to Tradeweb Markets LLC | |||||||||||||||||||||||
Pre-IPO net income attributable to Tradeweb Markets LLC | $ | ||||||||||||||||||||||
Other comprehensive income: | |||||||||||||||||||||||
Foreign currency translation adjustments attributable to Tradeweb Markets LLC | |||||||||||||||||||||||
Pre-IPO comprehensive income attributable to Tradeweb Markets LLC | $ |
Class A Common Stock | Class B Common Stock | Class C Common Stock | Class D Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Non- Controlling Interests | Total Stockholders' Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2019 | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Activities related to exchanges of LLC Interests, net of offering costs and cancellations | — | — | — | ( | — | ( | ( | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock from equity incentive plans | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tax receivable agreement liability and deferred taxes arising from LLC Interest ownership exchanges | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjustments to non-controlling interests | — | — | — | — | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends ($ | — | — | — | — | — | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense under the PRSU Plan | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense under the RSU Plan | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense under the Option Plan | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payroll taxes paid for stock-based compensation exercises | — | — | — | — | — | — | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | — | — | — | — | — | — | ( | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2020 | $ | $ | $ | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Activities related to the follow-on offering and other exchanges of LLC Interests, net of offering costs and cancellations | — | — | — | ( | — | ( | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock from equity incentive plans | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tax receivable agreement liability and deferred taxes arising from LLC Interest ownership exchanges | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjustments to non-controlling interests | — | — | — | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Distributions to non-controlling interests | — | — | — | — | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends ($ | — | — | — | — | — | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense under the PRSU Plan | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense under the RSU Plan | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense under the Option Plan | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payroll taxes paid for stock-based compensation exercises | — | — | — | — | — | — | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | — | — | — | — | — | — | ( | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2020 | $ | $ | $ | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Activities related to the follow-on offering and other exchanges of LLC Interests, net of offering costs and cancellations | — | — | — | — | — | — | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock from equity incentive plans | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjustments to non-controlling interests | — | — | — | — | — | — | — | — | ( | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Distributions to non-controlling interests | — | — | — | — | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends ($ | — | — | — | — | — | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense under the PRSU Plan | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense under the RSU Plan | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense under the Option Plan | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payroll taxes paid for stock-based compensation exercises | — | — | — | — | — | — | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2020 | $ | $ | $ | $ | $ | $ | $ | $ | $ |
Members' Capital | Class A Common Stock | Class B Common Stock | Class C Common Stock | Class D Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Non- Controlling Interests | Total Stockholders' Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at Balance at December 31, 2018 | $ | $ | $ | $ | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjustment to Class C Shares and Class P(C) shares in mezzanine capital | ( | — | — | — | — | — | — | — | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capital distributions | ( | — | — | — | — | — | — | — | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2019 | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capital distributions | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Effect of the reorganization transactions | ( | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock, net of offering costs and cancellations | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tax receivable agreement liability and deferred taxes arising from the reorganization transactions and IPO | — | — | — | — | — | — | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allocation of equity to non-controlling interests | — | — | — | — | — | — | — | — | — | ( | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Distributions to non-controlling interests | — | — | — | — | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends ($ | — | — | — | — | — | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense under the PRSU Plan | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense under the Option Plan | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | — | — | — | — | — | — | — | ( | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2019 | $ | $ | $ | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock, net of offering costs and cancellations | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjustments to non-controlling interests | — | — | — | — | — | — | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Distributions to non-controlling interests | — | — | — | — | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends ($ | — | — | — | — | — | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense under the PRSU Plan | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense under the Option Plan | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | — | — | — | — | — | — | — | ( | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2019 | $ | $ | $ | $ | $ | $ | ( | $ | $ |
Nine Months Ended | |||||||||||
September 30, | |||||||||||
2020 | 2019 | ||||||||||
Cash flows from operating activities | |||||||||||
Net income | $ | $ | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Stock-based compensation expense | |||||||||||
Deferred taxes | ( | ||||||||||
(Increase) decrease in operating assets: | |||||||||||
Receivable from/payable to brokers and dealers and clearing organizations, net | ( | ( | |||||||||
Deposits with clearing organizations | ( | ( | |||||||||
Accounts receivable | ( | ( | |||||||||
Receivable from/payable to affiliates, net | ( | ||||||||||
Other assets | ( | ( | |||||||||
Increase (decrease) in operating liabilities: | |||||||||||
Securities sold under agreements to repurchase | |||||||||||
Accrued compensation | ( | ( | |||||||||
Deferred revenue | |||||||||||
Accounts payable, accrued expenses and other liabilities | |||||||||||
Employee equity compensation payable | ( | ||||||||||
Net cash provided by operating activities | |||||||||||
Cash flows from investing activities | |||||||||||
Purchase of furniture, equipment, software and leasehold improvements | ( | ( | |||||||||
Capitalized software development costs | ( | ( | |||||||||
Net cash used in investing activities | ( | ( | |||||||||
Cash flows from financing activities | |||||||||||
Pre-IPO capital distributions | ( | ||||||||||
Proceeds from stock-based compensation exercises | |||||||||||
Proceeds from issuance of Class A common stock in the IPO and follow-on offerings, net of underwriting discounts | |||||||||||
Purchase of LLC Interests | ( | ( | |||||||||
Offering costs from issuance of Class A common stock in the IPO and follow-on offerings | ( | ( | |||||||||
Dividends | ( | ( | |||||||||
Capital distributions to non-controlling interests | ( | ( | |||||||||
Payroll taxes paid for stock-based compensation exercises | ( | ||||||||||
Net cash used in financing activities | ( | ( | |||||||||
Effect of exchange rate changes on cash and cash equivalents | ( | ( | |||||||||
Net increase (decrease) in cash and cash equivalents | ( | ||||||||||
Cash and cash equivalents and restricted cash | |||||||||||
Beginning of period | |||||||||||
End of period | $ | $ | |||||||||
Supplemental disclosure of cash flow information | |||||||||||
Income taxes paid | $ | $ | |||||||||
Non-cash financing activities | |||||||||||
Items arising from LLC Interest ownership changes | |||||||||||
Establishment of liabilities under tax receivable agreement | $ | $ | |||||||||
Deferred tax asset | $ | $ | |||||||||
Reconciliation of cash, cash equivalents and restricted cash as shown on the statements of financial condition: | |||||||||||
September 30, 2020 | December 31, 2019 | ||||||||||
Cash and cash equivalents | |||||||||||
Restricted cash | |||||||||||
Cash, cash equivalents and restricted cash shown in the statement of cash flows | $ | $ |
Page | ||||||||
Amount | |||||
Licenses | $ | ||||
Tradename | |||||
Total | $ |
September 30, 2020 | December 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||
Amortization Period | Cost | Accumulated Amortization | Net Carrying Amount | Cost | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||||||||||||||||||||||
Customer relationships | $ | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||
Content and data | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
$ | $ | ( | $ | $ | $ | ( | $ |
Three Months Ended | Three Months Ended | ||||||||||||||||||||||
September 30, 2020 | September 30, 2019 | ||||||||||||||||||||||
(in thousands) | (in thousands) | ||||||||||||||||||||||
Variable | Fixed | Variable | Fixed | ||||||||||||||||||||
Revenues | |||||||||||||||||||||||
Transaction fees | $ | $ | $ | $ | |||||||||||||||||||
Subscription Fees including Refinitiv market data fees | |||||||||||||||||||||||
Commissions | |||||||||||||||||||||||
Other | |||||||||||||||||||||||
Gross revenue | $ | $ | $ | $ |
Nine Months Ended | Nine Months Ended | ||||||||||||||||||||||
September 30, 2020 | September 30, 2019 | ||||||||||||||||||||||
(in thousands) | (in thousands) | ||||||||||||||||||||||
Variable | Fixed | Variable | Fixed | ||||||||||||||||||||
Revenues | |||||||||||||||||||||||
Transaction fees | $ | $ | $ | $ | |||||||||||||||||||
Subscription Fees including Refinitiv market data fees | |||||||||||||||||||||||
Commissions | |||||||||||||||||||||||
Other | |||||||||||||||||||||||
Gross revenue | $ | $ | $ | $ |
Amount | |||||
Deferred revenue balance - December 31, 2019 | $ | ||||
New billings | |||||
Revenue recognized | ( | ||||
Deferred revenue balance - September 30, 2020 | $ |
Class of Common Stock | Par Value | Votes | Economic Rights | |||||||||||||||||
Class A common stock | $ | Yes | ||||||||||||||||||
Class B common stock | $ | Yes | ||||||||||||||||||
Class C common stock | $ | No | ||||||||||||||||||
Class D common stock | $ | No |
Shares | |||||
Class A | |||||
Class C | |||||
Class P (A) | |||||
Class P (C) | |||||
Class P-1 (A) | |||||
Class P-1 (C) |
September 30, 2020 | September 30, 2019 | ||||||||||||||||||||||
LLC Interests | Ownership % | LLC Interests | Ownership % | ||||||||||||||||||||
Number of LLC Interests held by Tradeweb Markets Inc. | % | % | |||||||||||||||||||||
Number of LLC Interests held by non-controlling interests | % | % | |||||||||||||||||||||
Total LLC Interests outstanding | % | % |
Net Income Attributable to Tradeweb Markets Inc. and Transfers (to) from the Non-Controlling Interests | Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||
Net income attributable to Tradeweb Markets Inc. | $ | $ | $ | $ | ||||||||||||||||||||||
Transfers (to) from non-controlling interests: | ||||||||||||||||||||||||||
Change in non-controlling interests as a result of ownership changes | ( | ( | ||||||||||||||||||||||||
Net transfers (to) from non-controlling interests | ( | ( | ||||||||||||||||||||||||
Change from net income attributable to Tradeweb Markets Inc. and transfers (to) from non-controlling interests | $ | $ | $ | $ | ( |
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||||||||
PRSUs (Equity-Settled) | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||
PRSUs (equity-settled) granted | ||||||||||||||||||||||||||
Weighted-average grant-date fair value | $ | $ | $ | $ | ||||||||||||||||||||||
PRSUs (equity-settled) compensation expense (in thousands) | $ | $ | $ | $ |
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||||||||
PRSUs (Cash-Settled) | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||
PRSUs (cash-settled) granted | ||||||||||||||||||||||||||
Weighted-average grant-date fair value | $ | $ | $ | $ | ||||||||||||||||||||||
PRSUs (cash-settled) compensation expense (in thousands) | $ | ( | $ | $ | $ |
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||||||||
Options | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||
Options granted | ||||||||||||||||||||||||||
Weighted-average grant-date fair value | $ | $ | $ | $ | ||||||||||||||||||||||
Option compensation expense (in thousands) | $ | $ | $ | $ |
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||||||||
RSUs | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||
RSUs granted | ||||||||||||||||||||||||||
Weighted-average grant-date fair value | $ | $ | $ | $ | ||||||||||||||||||||||
RSUs compensation expense (in thousands) | $ | $ | $ | $ |
September 30, 2020 | December 31, 2019 | ||||||||||
Accounts receivable | $ | $ | |||||||||
Receivable from affiliates | |||||||||||
Accounts payable, accrued expenses and other liabilities | |||||||||||
Deferred revenue | |||||||||||
Payable to affiliates |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Revenue: | |||||||||||||||||||||||
Transaction fees (1) | $ | $ | $ | $ | |||||||||||||||||||
Subscription fees (1) | |||||||||||||||||||||||
Commissions (1) | |||||||||||||||||||||||
Refinitiv market data fees (2) | |||||||||||||||||||||||
Other Income and Expenses:(3) | |||||||||||||||||||||||
Interest income | |||||||||||||||||||||||
Shared Services Fees: (4) | |||||||||||||||||||||||
Technology and communications | |||||||||||||||||||||||
General and administrative | ( | ||||||||||||||||||||||
Occupancy |
Successor | Quoted Prices in active Markets for Identical Assets (Level 1) | Significant Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | ||||||||||||||||||||||
As of September 30, 2020 | ||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||
Money market funds | $ | $ | $ | $ | ||||||||||||||||||||||
$ | $ | $ | $ | |||||||||||||||||||||||
As of December 31, 2019 | ||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||
Money market funds | $ | $ | $ | $ | ||||||||||||||||||||||
$ | $ | $ | $ |
Amount | |||||
Beginning balance, prior to adoption of ASC 326 - December 31, 2019 | $ | ||||
Current-period provision for expected credit losses | |||||
Write-offs charged against the allowance | ( | ||||
Recoveries collected | ( | ||||
Ending balance - September 30, 2020 | $ |
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||
EPS: Post-IPO net income attributable to Tradeweb Markets Inc. | (in thousands, except share and per share amounts) | |||||||||||||||||||||||||
Numerator: | ||||||||||||||||||||||||||
Post-IPO net income attributable to Tradeweb Markets Inc. | $ | $ | $ | $ | ||||||||||||||||||||||
Denominator: | ||||||||||||||||||||||||||
Weighted average shares of Class A and Class B common stock outstanding - Basic | ||||||||||||||||||||||||||
Dilutive effect of equity-settled PRSUs | ||||||||||||||||||||||||||
Dilutive effect of options | ||||||||||||||||||||||||||
Dilutive effect of RSUs | ||||||||||||||||||||||||||
Weighted average shares of Class A and Class B common stock outstanding - Diluted | ||||||||||||||||||||||||||
Earnings per share - Basic | $ | $ | $ | $ | ||||||||||||||||||||||
Earnings per share - Diluted | $ | $ | $ | $ |
Nine Months Ended | |||||||||||||||||||||||
September 30, 2019 | |||||||||||||||||||||||
EPS: Pre-IPO net income attributable to Tradeweb Markets LLC(1) | (in thousands, except share and per share amounts) | ||||||||||||||||||||||
Numerator: | |||||||||||||||||||||||
Pre-IPO net income attributable to Tradeweb Markets LLC | $ | ||||||||||||||||||||||
Denominator: | |||||||||||||||||||||||
Weighted average LLC Interests outstanding - Basic | |||||||||||||||||||||||
Dilutive effect of equity-settled PRSUs | |||||||||||||||||||||||
Weighted average LLC Interests outstanding - Diluted | |||||||||||||||||||||||
Earnings per share - Basic | $ | ||||||||||||||||||||||
Earnings per share - Diluted | $ |
As of September 30, 2020 | TWL | DW | TWD | TEL | TWJ | TWEU | ||||||||||||||||||||||||||||||||
Regulatory Capital | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Regulatory Capital Requirement | ||||||||||||||||||||||||||||||||||||||
Excess Regulatory Capital | $ | $ | $ | $ | $ | $ |
As of December 31, 2019 | TWL | DW | TWD | TEL | TWJ | TWEU | ||||||||||||||||||||||||||||||||
Regulatory Capital | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Regulatory Capital Requirement | ||||||||||||||||||||||||||||||||||||||
Excess Regulatory Capital | $ | $ | $ | $ | $ | $ |
As of September 30, 2020 | As of December 31, 2019 | ||||||||||||||||||||||
TW SEF | DW SEF | TW SEF | DW SEF | ||||||||||||||||||||
Financial Resources | $ | $ | $ | $ | |||||||||||||||||||
Required Financial Resources | |||||||||||||||||||||||
Excess Financial Resources | $ | $ | $ | $ | |||||||||||||||||||
Liquid Financial Assets | $ | $ | $ | $ | |||||||||||||||||||
Required Liquid Financial Assets | |||||||||||||||||||||||
Excess Liquid Financial Assets | $ | $ | $ | $ |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Gross revenue: | |||||||||||||||||||||||
Institutional | $ | $ | $ | $ | |||||||||||||||||||
Wholesale | |||||||||||||||||||||||
Retail | |||||||||||||||||||||||
Market Data | |||||||||||||||||||||||
Total revenue | |||||||||||||||||||||||
Operating expenses | |||||||||||||||||||||||
Operating income | $ | $ | $ | $ |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
U.S. | $ | $ | $ | $ | |||||||||||||||||||
International | |||||||||||||||||||||||
Gross Revenue | $ | $ | $ | $ |
September 30, 2020 | December 31, 2019 | ||||||||||
Long-lived assets | |||||||||||
U.S. | $ | $ | |||||||||
International | |||||||||||
Total | $ | $ |
Three Months Ended | |||||||||||||||||||||||
September 30, | |||||||||||||||||||||||
2020 | 2019 | $ Change | % Change | ||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||
Gross revenue | $ | 212,870 | $ | 200,981 | $ | 11,889 | 5.9 | % | |||||||||||||||
Total expenses | 154,349 | 142,723 | 11,626 | 8.1 | % | ||||||||||||||||||
Operating income | 58,521 | 58,258 | 263 | 0.5 | % | ||||||||||||||||||
Net interest income (expense) | (349) | 636 | (985) | (154.9) | % | ||||||||||||||||||
Income before taxes | 58,172 | 58,894 | (722) | (1.2) | % | ||||||||||||||||||
Provision for income taxes | (11,124) | (10,316) | (808) | 7.8 | % | ||||||||||||||||||
Net income | 47,048 | 48,578 | (1,530) | (3.1) | % | ||||||||||||||||||
Less: Net income attributable to non-controlling interests | 10,236 | 18,966 | (8,730) | (46.0) | % | ||||||||||||||||||
Net income attributable to Tradeweb Markets Inc. | $ | 36,812 | $ | 29,612 | $ | 7,200 | 24.3 | % |
Three Months Ended | |||||||||||||||||||||||||||||||||||
September 30, | |||||||||||||||||||||||||||||||||||
2020 | 2019 | ||||||||||||||||||||||||||||||||||
$ | % of Gross Revenue | $ | % of Gross Revenue | $ Change | % Change | ||||||||||||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||||||||||||||
Revenues | |||||||||||||||||||||||||||||||||||
Transaction fees | $ | 120,582 | 56.7 | % | $ | 112,746 | 56.1 | % | $ | 7,836 | 7.0 | % | |||||||||||||||||||||||
Subscription fees(1) | 50,490 | 23.7 | % | 48,638 | 24.2 | % | 1,852 | 3.8 | % | ||||||||||||||||||||||||||
Commissions | 39,593 | 18.6 | % | 37,590 | 18.7 | % | 2,003 | 5.3 | % | ||||||||||||||||||||||||||
Other | 2,205 | 1.0 | % | 2,007 | 1.0 | % | 198 | 9.9 | % | ||||||||||||||||||||||||||
Gross revenue | $ | 212,870 | 100.0 | % | $ | 200,981 | 100.0 | % | $ | 11,889 | 5.9 | % | |||||||||||||||||||||||
Components of gross revenue growth: | |||||||||||||||||||||||||||||||||||
Constant currency growth(2) | 4.7 | % | |||||||||||||||||||||||||||||||||
Foreign currency impact | 1.2 | % | |||||||||||||||||||||||||||||||||
Gross revenue growth | 5.9 | % |
Three Months Ended | |||||||||||||||||||||||
September 30, | |||||||||||||||||||||||
2020 | 2019 | $ Change | % Change | ||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||
Revenues | |||||||||||||||||||||||
Institutional | $ | 131,860 | $ | 120,858 | $ | 11,002 | 9.1 | % | |||||||||||||||
Wholesale | 44,959 | 43,040 | 1,919 | 4.5 | % | ||||||||||||||||||
Retail | 17,453 | 20,169 | (2,716) | (13.5) | % | ||||||||||||||||||
Market Data | 18,598 | 16,914 | 1,684 | 10.0 | % | ||||||||||||||||||
Gross revenue | $ | 212,870 | $ | 200,981 | $ | 11,889 | 5.9 | % |
Three Months Ended | |||||||||||||||||||||||
September 30, | |||||||||||||||||||||||
2020 | 2019 | $ Change | % Change | ||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||
Revenues | |||||||||||||||||||||||
Rates | $ | 115,766 | $ | 115,505 | $ | 261 | 0.2 | % | |||||||||||||||
Credit | 50,216 | 39,578 | 10,638 | 26.9 | % | ||||||||||||||||||
Equities | 11,857 | 12,333 | (476) | (3.9) | % | ||||||||||||||||||
Money Markets | 10,491 | 10,480 | 11 | 0.1 | % | ||||||||||||||||||
Market Data | 18,598 | 16,914 | 1,684 | 10.0 | % | ||||||||||||||||||
Other Fees | 5,942 | 6,171 | (229) | (3.7) | % | ||||||||||||||||||
Gross revenue | $ | 212,870 | $ | 200,981 | $ | 11,889 | 5.9 | % |
Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||
September 30, | |||||||||||||||||||||||||||||||||||||||||||||||
2020 | 2019 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||||||
Variable | Fixed | Variable | Fixed | Variable | Fixed | Variable | Fixed | ||||||||||||||||||||||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
Revenues | |||||||||||||||||||||||||||||||||||||||||||||||
Rates | $ | 64,139 | $ | 51,627 | $ | 64,885 | $ | 50,620 | $ | (746) | $ | 1,007 | (1.1) | % | 2.0 | % | |||||||||||||||||||||||||||||||
Credit | 44,278 | 5,938 | 34,417 | 5,161 | 9,861 | 777 | 28.7 | % | 15.1 | % | |||||||||||||||||||||||||||||||||||||
Equities | 9,329 | 2,528 | 9,896 | 2,437 | (567) | 91 | (5.7) | % | 3.7 | % | |||||||||||||||||||||||||||||||||||||
Money Markets | 6,390 | 4,101 | 6,743 | 3,737 | (353) | 364 | (5.2) | % | 9.7 | % | |||||||||||||||||||||||||||||||||||||
Market Data | — | 18,598 | — | 16,914 | — | 1,684 | — | 10.0 | % | ||||||||||||||||||||||||||||||||||||||
Other | — | 5,942 | — | 6,171 | — | (229) | — | (3.7) | % | ||||||||||||||||||||||||||||||||||||||
Gross revenue | $ | 124,136 | $ | 88,734 | $ | 115,941 | $ | 85,040 | $ | 8,195 | $ | 3,694 | 7.1 | % | 4.3 | % |
Three Months Ended | |||||||||||||||||||||||||||||
September 30, | |||||||||||||||||||||||||||||
2020 | 2019 | ADV | |||||||||||||||||||||||||||
ADV | Volume | ADV | Volume | % Change | |||||||||||||||||||||||||
(dollars in millions) | |||||||||||||||||||||||||||||
Rates | $ | 490,114 | $ | 31,563,939 | $ | 563,416 | $ | 36,307,193 | (13.0) | % | |||||||||||||||||||
Credit | 19,574 | 1,271,118 | 17,218 | 1,117,129 | 13.7 | % | |||||||||||||||||||||||
Equities | 9,032 | 582,772 | 7,345 | 476,130 | 23.0 | % | |||||||||||||||||||||||
Money Markets | 261,590 | 16,847,205 | 228,795 | 14,701,645 | 14.3 | % | |||||||||||||||||||||||
Total | $ | 780,311 | $ | 50,265,034 | $ | 816,774 | $ | 52,602,097 | (4.5) | % |
Three Months Ended | ||||||||||||||||||||||||||
September 30, | ||||||||||||||||||||||||||
2020 | 2019 | $ Change | % Change | |||||||||||||||||||||||
Rates | $ | 2.03 | $ | 1.79 | $ | 0.24 | 13.7 | % | ||||||||||||||||||
Cash Rates | $ | 1.83 | $ | 1.95 | $ | (0.12) | (6.0) | % | ||||||||||||||||||
Rates Derivatives | $ | 2.37 | $ | 1.62 | $ | 0.75 | 46.4 | % | ||||||||||||||||||
Swaps / Swaptions Tenor (greater than 1 year) | $ | 3.37 | $ | 3.00 | $ | 0.37 | 12.1 | % | ||||||||||||||||||
Other Rates Derivatives(1) | $ | 0.25 | $ | 0.05 | $ | 0.20 | 412.0 | % | ||||||||||||||||||
Credit | $ | 34.83 | $ | 30.81 | $ | 4.02 | 13.1 | % | ||||||||||||||||||
Cash Credit(2) | $ | 127.70 | $ | 117.59 | $ | 10.11 | 8.6 | % | ||||||||||||||||||
Credit Derivatives and U.S. Cash "EP" | $ | 6.01 | $ | 6.23 | $ | (0.22) | (3.7) | % | ||||||||||||||||||
Equities | $ | 16.01 | $ | 20.78 | $ | (4.77) | (23.0) | % | ||||||||||||||||||
Cash Equities | $ | 20.38 | $ | 28.09 | $ | (7.71) | (27.4) | % | ||||||||||||||||||
Equity Derivatives | $ | 9.46 | $ | 9.26 | $ | 0.20 | 2.2 | % | ||||||||||||||||||
Money Markets (Cash) | $ | 0.38 | $ | 0.46 | $ | (0.08) | (17.3) | % | ||||||||||||||||||
Total Fees per Million | $ | 2.47 | $ | 2.20 | $ | 0.27 | 12.0 | % | ||||||||||||||||||
Total Fees per Million excluding Other Rates Derivatives(3) | $ | 2.65 | $ | 2.62 | $ | 0.03 | 1.1 | % |
Three Months Ended | |||||||||||||||||||||||
September 30, | |||||||||||||||||||||||
2020 | 2019 | $ Change | % Change | ||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||
Revenues | |||||||||||||||||||||||
U.S. | $ | 136,785 | $ | 126,599 | $ | 10,186 | 8.0 | % | |||||||||||||||
International | 76,085 | 74,382 | 1,703 | 2.3 | % | ||||||||||||||||||
Gross revenue | $ | 212,870 | $ | 200,981 | $ | 11,889 | 5.9 | % |
Three Months Ended | |||||||||||||||||||||||
September 30, | |||||||||||||||||||||||
2020 | 2019 | $ Change | % Change | ||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Employee compensation and benefits | $ | 83,967 | $ | 79,644 | $ | 4,323 | 5.4 | % | |||||||||||||||
Depreciation and amortization | 38,857 | 35,133 | 3,724 | 10.6 | % | ||||||||||||||||||
Technology and communications | 12,037 | 9,527 | 2,510 | 26.3 | % | ||||||||||||||||||
General and administrative | 8,657 | 7,507 | 1,150 | 15.3 | % | ||||||||||||||||||
Professional fees | 7,388 | 7,272 | 116 | 1.6 | % | ||||||||||||||||||
Occupancy | 3,443 | 3,640 | (197) | (5.4) | % | ||||||||||||||||||
Total Expenses | $ | 154,349 | $ | 142,723 | $ | 11,626 | 8.1 | % |
Nine Months Ended | |||||||||||||||||||||||
September 30, | |||||||||||||||||||||||
2020 | 2019 | $ Change | % Change | ||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||
Gross revenue | $ | 659,583 | $ | 578,258 | $ | 81,325 | 14.1 | % | |||||||||||||||
Total expenses | 467,808 | 442,768 | 25,040 | 5.7 | % | ||||||||||||||||||
Operating income | 191,775 | 135,490 | 56,285 | 41.5 | % | ||||||||||||||||||
Net interest income | 64 | 1,669 | (1,605) | (96.2) | % | ||||||||||||||||||
Income before taxes | 191,839 | 137,159 | 54,680 | 39.9 | % | ||||||||||||||||||
Provision for income taxes | (39,898) | (21,413) | (18,485) | 86.3 | % | ||||||||||||||||||
Net income | 151,941 | 115,746 | 36,195 | 31.3 | % | ||||||||||||||||||
Less: Pre-IPO net income attributable to Tradeweb Markets LLC | — | 42,352 | (42,352) | (100.0) | % | ||||||||||||||||||
Net income attributable to Tradeweb Markets Inc. and non-controlling interests | 151,941 | 73,394 | 78,547 | 107.0 | % | ||||||||||||||||||
Less: Net income attributable to non-controlling interests | 40,705 | 30,954 | 9,751 | 31.5 | % | ||||||||||||||||||
Net income attributable to Tradeweb Markets Inc. | $ | 111,236 | $ | 42,440 | $ | 68,796 | 162.1 | % |
Nine Months Ended | |||||||||||||||||||||||||||||||||||
September 30, | |||||||||||||||||||||||||||||||||||
2020 | 2019 | ||||||||||||||||||||||||||||||||||
$ | % of Gross Revenue | $ | % of Gross Revenue | $ Change | % Change | ||||||||||||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||||||||||||||
Revenues | |||||||||||||||||||||||||||||||||||
Transaction fees | $ | 383,552 | 58.2 | % | $ | 319,338 | 55.2 | % | $ | 64,214 | 20.1 | % | |||||||||||||||||||||||
Subscription fees(1) | 149,172 | 22.6 | % | 144,650 | 25.0 | % | 4,522 | 3.1 | % | ||||||||||||||||||||||||||
Commissions | 120,201 | 18.2 | % | 108,200 | 18.7 | % | 12,001 | 11.1 | % | ||||||||||||||||||||||||||
Other | 6,658 | 1.0 | % | 6,070 | 1.1 | % | 588 | 9.7 | % | ||||||||||||||||||||||||||
Gross revenue | $ | 659,583 | 100.0 | % | $ | 578,258 | 100.0 | % | $ | 81,325 | 14.1 | % | |||||||||||||||||||||||
Components of gross revenue growth: | |||||||||||||||||||||||||||||||||||
Constant currency growth(2) | 14.0 | % | |||||||||||||||||||||||||||||||||
Foreign currency impact | 0.1 | % | |||||||||||||||||||||||||||||||||
Gross revenue growth | 14.1 | % |
Nine Months Ended | |||||||||||||||||||||||
September 30, | |||||||||||||||||||||||
2020 | 2019 | $ Change | % Change | ||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||
Revenues | |||||||||||||||||||||||
Institutional | $ | 407,464 | $ | 341,167 | $ | 66,297 | 19.4 | % | |||||||||||||||
Wholesale | 136,967 | 124,416 | 12,551 | 10.1 | % | ||||||||||||||||||
Retail | 59,495 | 61,314 | (1,819) | (3.0) | % | ||||||||||||||||||
Market Data | 55,657 | 51,361 | 4,296 | 8.4 | % | ||||||||||||||||||
Gross revenue | $ | 659,583 | $ | 578,258 | $ | 81,325 | 14.1 | % |
Nine Months Ended | |||||||||||||||||||||||
September 30, | |||||||||||||||||||||||
2020 | 2019 | $ Change | % Change | ||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||
Revenues | |||||||||||||||||||||||
Rates | $ | 354,628 | $ | 326,658 | $ | 27,970 | 8.6 | % | |||||||||||||||
Credit | 153,299 | 118,612 | 34,687 | 29.2 | % | ||||||||||||||||||
Equities | 46,698 | 35,247 | 11,451 | 32.5 | % | ||||||||||||||||||
Money Markets | 32,238 | 30,364 | 1,874 | 6.2 | % | ||||||||||||||||||
Market Data | 55,657 | 51,361 | 4,296 | 8.4 | % | ||||||||||||||||||
Other Fees | 17,063 | 16,016 | 1,047 | 6.5 | % | ||||||||||||||||||
Gross revenue | $ | 659,583 | $ | 578,258 | $ | 81,325 | 14.1 | % |
Nine Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||
September 30, | |||||||||||||||||||||||||||||||||||||||||||||||
2020 | 2019 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||||||
Variable | Fixed | Variable | Fixed | Variable | Fixed | Variable | Fixed | ||||||||||||||||||||||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
Revenues | |||||||||||||||||||||||||||||||||||||||||||||||
Rates | $ | 201,781 | $ | 152,847 | $ | 175,278 | $ | 151,380 | $ | 26,503 | $ | 1,467 | 15.1 | % | 1.0 | % | |||||||||||||||||||||||||||||||
Credit | 136,584 | 16,715 | 103,112 | 15,500 | 33,472 | 1,215 | 32.5 | % | 7.8 | % | |||||||||||||||||||||||||||||||||||||
Equities | 39,334 | 7,364 | 29,243 | 6,004 | 10,091 | 1,360 | 34.5 | % | 22.7 | % | |||||||||||||||||||||||||||||||||||||
Money Markets | 19,972 | 12,266 | 19,240 | 11,124 | 732 | 1,142 | 3.8 | % | 10.3 | % | |||||||||||||||||||||||||||||||||||||
Market Data | — | 55,657 | — | 51,361 | — | 4,296 | — | 8.4 | % | ||||||||||||||||||||||||||||||||||||||
Other | — | 17,063 | — | 16,016 | — | 1,047 | — | 6.5 | % | ||||||||||||||||||||||||||||||||||||||
Gross revenue | $ | 397,671 | $ | 261,912 | $ | 326,873 | $ | 251,385 | $ | 70,798 | $ | 10,527 | 21.7 | % | 4.2 | % |
Nine Months Ended | |||||||||||||||||||||||||||||
September 30, | |||||||||||||||||||||||||||||
2020 | 2019 | ADV | |||||||||||||||||||||||||||
ADV | Volume | ADV | Volume | % Change | |||||||||||||||||||||||||
(dollars in millions) | |||||||||||||||||||||||||||||
Rates | $ | 528,713 | $ | 100,227,837 | $ | 502,159 | $ | 94,682,969 | 5.3 | % | |||||||||||||||||||
Credit | 23,494 | 4,462,319 | 15,314 | 2,893,964 | 53.4 | % | |||||||||||||||||||||||
Equities | 12,237 | 2,321,691 | 7,407 | 1,401,552 | 65.2 | % | |||||||||||||||||||||||
Money Markets | 253,702 | 48,077,073 | 215,023 | 40,499,348 | 18.0 | % | |||||||||||||||||||||||
Total | $ | 818,146 | $ | 155,088,920 | $ | 739,903 | $ | 139,477,833 | 10.6 | % |
Nine Months Ended | ||||||||||||||||||||||||||
September 30, | ||||||||||||||||||||||||||
2020 | 2019 | $ Change | % Change | |||||||||||||||||||||||
Rates | $ | 2.01 | $ | 1.85 | $ | 0.16 | 8.7 | % | ||||||||||||||||||
Cash Rates | $ | 1.89 | $ | 1.87 | $ | 0.02 | 1.0 | % | ||||||||||||||||||
Rates Derivatives | $ | 2.20 | $ | 1.83 | $ | 0.37 | 20.2 | % | ||||||||||||||||||
Swaps/Swaptions Tenor (greater than 1 year) | $ | 3.21 | $ | 2.83 | $ | 0.38 | 13.7 | % | ||||||||||||||||||
Other Rates Derivatives(1) | $ | 0.19 | $ | 0.08 | $ | 0.11 | 147.8 | % | ||||||||||||||||||
Credit | $ | 30.61 | $ | 35.63 | $ | (5.02) | (14.1) | % | ||||||||||||||||||
Cash Credit(2) | $ | 131.59 | $ | 128.02 | $ | 3.57 | 2.8 | % | ||||||||||||||||||
Credit Derivatives and U.S. Cash "EP" | $ | 6.40 | $ | 6.72 | $ | (0.32) | (4.7) | % | ||||||||||||||||||
Equities | $ | 16.94 | $ | 20.86 | $ | (3.92) | (18.8) | % | ||||||||||||||||||
Cash Equities | $ | 23.97 | $ | 29.28 | $ | (5.31) | (18.1) | % | ||||||||||||||||||
Equity Derivatives | $ | 7.63 | $ | 8.81 | $ | (1.18) | (13.4) | % | ||||||||||||||||||
Money Markets (Cash) | $ | 0.42 | $ | 0.48 | $ | (0.06) | (12.5) | % | ||||||||||||||||||
Total Fees per Million | $ | 2.56 | $ | 2.34 | $ | 0.22 | 9.4 | % | ||||||||||||||||||
Total Fees per Million excluding Other Rates Derivatives(3) | $ | 2.79 | $ | 2.62 | $ | 0.17 | 6.4 | % |
Nine Months Ended | |||||||||||||||||||||||
September 30, | |||||||||||||||||||||||
2020 | 2019 | $ Change | % Change | ||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||
Revenues | |||||||||||||||||||||||
U.S. | $ | 422,114 | $ | 368,689 | $ | 53,425 | 14.5 | % | |||||||||||||||
International | 237,469 | 209,569 | 27,900 | 13.3 | % | ||||||||||||||||||
Gross revenue | $ | 659,583 | $ | 578,258 | $ | 81,325 | 14.1 | % |
Nine Months Ended | |||||||||||||||||||||||
September 30, | |||||||||||||||||||||||
2020 | 2019 | $ Change | % Change | ||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Employee compensation and benefits | $ | 263,353 | $ | 252,912 | $ | 10,441 | 4.1 | % | |||||||||||||||
Depreciation and amortization | 113,952 | 102,928 | 11,024 | 10.7 | % | ||||||||||||||||||
Technology and communications | 34,397 | 29,086 | 5,311 | 18.3 | % | ||||||||||||||||||
General and administrative | 24,520 | 25,961 | (1,441) | (5.6) | % | ||||||||||||||||||
Professional fees | 20,908 | 20,981 | (73) | (0.3) | % | ||||||||||||||||||
Occupancy | 10,678 | 10,900 | (222) | (2.0) | % | ||||||||||||||||||
Total Expenses | $ | 467,808 | $ | 442,768 | $ | 25,040 | 5.7 | % |
September 30, 2020 | December 31, 2019 | ||||||||||
(in thousands) | |||||||||||
Cash and cash equivalents | $ | 677,352 | $ | 460,711 | |||||||
Restricted cash | 1,000 | 1,000 | |||||||||
Receivable from brokers and dealers and clearing organizations | 57,346 | 30,641 | |||||||||
Deposits with clearing organizations | 10,163 | 9,724 | |||||||||
Accounts receivable | 97,783 | 92,814 | |||||||||
Receivable from affiliates | 36 | 2,525 | |||||||||
Current assets | 843,680 | 597,415 | |||||||||
Payable to brokers and dealers and clearing organizations | 56,802 | 30,452 | |||||||||
Accrued compensation | 101,436 | 119,415 | |||||||||
Deferred revenue | 29,857 | 23,990 | |||||||||
Accounts payable, accrued expenses and other liabilities | 36,193 | 32,834 | |||||||||
Employee equity compensation payable | 1,513 | 1,048 | |||||||||
Lease liability | 10,251 | 8,516 | |||||||||
Payable to affiliates | 4,977 | 1,506 | |||||||||
Tax receivable agreement liability | 17,438 | 6,949 | |||||||||
Current liabilities | 258,467 | 224,710 | |||||||||
Working capital | $ | 585,213 | $ | 372,705 |
Nine Months Ended | |||||||||||
September 30, | |||||||||||
2020 | 2019 | ||||||||||
(in thousands) | |||||||||||
Net cash flows provided by operating activities | $ | 303,532 | $ | 190,465 | |||||||
Net cash flows used in investing activities | (29,348) | (29,767) | |||||||||
Net cash flows used in financing activities | (56,063) | (178,856) | |||||||||
Effect of exchange rate changes on cash and cash equivalents | (1,480) | (2,016) | |||||||||
Net increase (decrease) in cash and cash equivalents | $ | 216,641 | $ | (20,174) |
Nine Months Ended | |||||||||||
September 30, | |||||||||||
2020 | 2019 | ||||||||||
(in thousands) | |||||||||||
Cash flow from operating activities | $ | 303,532 | $ | 190,465 | |||||||
Less: Capitalization of software development costs | (22,864) | (21,200) | |||||||||
Less: Purchases of furniture, equipment and leasehold improvements | (6,484) | (8,567) | |||||||||
Free Cash Flow | $ | 274,184 | $ | 160,698 |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Net income | $ | 47,048 | $ | 48,578 | $ | 151,941 | $ | 115,746 | |||||||||||||||
Net interest income (expense) | 349 | (636) | (64) | (1,669) | |||||||||||||||||||
Depreciation and amortization | 38,857 | 35,133 | 113,952 | 102,928 | |||||||||||||||||||
Stock-based compensation expense(1) | 1,816 | 1,995 | 10,308 | 22,398 | |||||||||||||||||||
Provision for income taxes | 11,124 | 10,316 | 39,898 | 21,413 | |||||||||||||||||||
Unrealized foreign exchange (gains) / losses | 1,492 | (2,499) | 5,449 | (1,215) | |||||||||||||||||||
(Gain) / loss from revaluation of foreign denominated cash(2) | 227 | 562 | 388 | 1,120 | |||||||||||||||||||
Adjusted EBITDA | $ | 100,913 | $ | 93,449 | $ | 321,872 | $ | 260,721 | |||||||||||||||
Less: Depreciation and amortization | (38,857) | (35,133) | (113,952) | (102,928) | |||||||||||||||||||
Add: Acquisition and Refinitiv Transaction related D&A(3) | 27,959 | 24,780 | 81,363 | 72,122 | |||||||||||||||||||
Adjusted EBIT | $ | 90,015 | $ | 83,096 | $ | 289,283 | $ | 229,915 | |||||||||||||||
Adjusted EBITDA margin(4) | 47.4 | % | 46.5 | % | 48.8 | % | 45.1 | % | |||||||||||||||
Adjusted EBIT margin(4) | 42.3 | % | 41.3 | % | 43.9 | % | 39.8 | % |
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||||||||||
(in thousands except per share amounts) | ||||||||||||||||||||||||||||||||||||||
Earnings per diluted share(1) | $ | 0.19 | (a) | $ | 0.20 | (a) | $ | 0.60 | (a) | $ | 0.19 / 0.28 | (b)/ (a) | ||||||||||||||||||||||||||
Pre-IPO net income attributable to Tradeweb Markets LLC (1) | $ | — | $ | — | $ | — | $ | 42,352 | (b) | |||||||||||||||||||||||||||||
Net income attributable to Tradeweb Markets Inc.(1) | 36,812 | (a) | 29,612 | (a) | 111,236 | (a) | 42,440 | (a) | ||||||||||||||||||||||||||||||
Net income attributable to non-controlling interests (1)(2) | 10,236 | (a) | 18,966 | (a) | 40,705 | (a) | 30,954 | (a) | ||||||||||||||||||||||||||||||
Net income(1) | 47,048 | (a) | 48,578 | (a) | 151,941 | (a) | 115,746 | (b)/ (a) | ||||||||||||||||||||||||||||||
Provision for income taxes | 11,124 | 10,316 | 39,898 | 21,413 | ||||||||||||||||||||||||||||||||||
Acquisition and Refinitiv Transaction related D&A(3) | 27,959 | 24,780 | 81,363 | 72,122 | ||||||||||||||||||||||||||||||||||
Stock-based compensation expense(4) | 1,816 | 1,995 | 10,308 | 22,398 | ||||||||||||||||||||||||||||||||||
Unrealized foreign exchange (gains) / losses | 1,492 | (2,499) | 5,449 | (1,215) | ||||||||||||||||||||||||||||||||||
(Gain) / loss from revaluation of foreign denominated cash(5) | 227 | 562 | 388 | 1,120 | ||||||||||||||||||||||||||||||||||
Adjusted Net Income before income taxes | 89,666 | 83,732 | 289,347 | 231,584 | ||||||||||||||||||||||||||||||||||
Adjusted income taxes(6) | (19,727) | (22,105) | (63,656) | (61,139) | ||||||||||||||||||||||||||||||||||
Adjusted Net Income | $ | 69,939 | $ | 61,627 | $ | 225,691 | $ | 170,445 | ||||||||||||||||||||||||||||||
Adjusted Diluted EPS (1)(7) | $ | 0.30 | (a) | $ | 0.27 | (a) | $ | 0.97 | (a) | $ | 0.23 / 0.51 | (b)/ (a) |
Pre-IPO Period | Post-IPO Period | |||||||||||||||||||||||||||||||
Reconciliation of Diluted Weighted Average Shares Outstanding to Adjusted Diluted Weighted Average Shares Outstanding | Three Months Ended September 30, 2020 | Three Months Ended September 30, 2019 | Nine Months Ended September 30, 2020 | Nine Months Ended September 30, 2019 | Nine Months Ended September 30, 2019 | |||||||||||||||||||||||||||
Diluted weighted average TWM LLC shares outstanding | — | — | — | 223,320,457 | — | |||||||||||||||||||||||||||
Diluted weighted average shares of Class A and Class B common stock outstanding | 194,955,695 | 151,362,643 | 185,026,108 | — | 151,158,760 | |||||||||||||||||||||||||||
Assumed exchange of LLC interests for shares of Class A or Class B common stock (1) | 39,513,246 | 79,289,005 | 48,397,598 | — | 79,289,005 | |||||||||||||||||||||||||||
Adjusted diluted weighted average shares outstanding | 234,468,941 | 230,651,648 | 233,423,706 | 223,320,457 | 230,447,765 | |||||||||||||||||||||||||||
Adjusted Net Income (in thousands) | $ | 69,939 | $ | 61,627 | $ | 225,691 | $ | 52,190 | $ | 118,255 | ||||||||||||||||||||||
Adjusted Diluted EPS | $ | 0.30 | $ | 0.27 | $ | 0.97 | $ | 0.23 | $ | 0.51 |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
% of revenue denominated in foreign currencies (1) | 28% | 32% | 29% | 31 | % | ||||||||||||||||||
% of operating expenses denominated in foreign currencies (2) | 15% | 16% | 15% | 15 | % |
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
Impact of Foreign Currency Rate Fluctuations (amounts in thousands) | September 30, | September 30, | ||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||
Increase (decrease) in gross revenue | $ | 2,100 | $ | (3,600) | $ | 800 | $ | (8,400) | ||||||||||||||||||
Increase (decrease) in operating income | $ | 1,600 | $ | (1,200) | $ | 800 | $ | (6,400) |
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||||||||
Hypothetical 10% Change in Value of U.S. Dollar (amounts in thousands) | September 30, | September 30, | ||||||||||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||||||||||
Effect of 10% change on gross revenue | +/- | $6,800 | +/- | $6,500 | +/- | $21,300 | +/- | $18,000 | ||||||||||||||||||||||||||||||
Effect of 10% change on operating income | +/- | $4,300 | +/- | $4,200 | +/- | $13,800 | +/- | $11,400 |
Exhibit Number | Description of Exhibit | |||||||
31.1 | ||||||||
31.2 | ||||||||
32.1 | ||||||||
32.2 | ||||||||
101.INS | XBRL Instance Document. | |||||||
101.SCH | XBRL Taxonomy Extension Schema Document. | |||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | |||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. | |||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | |||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. | |||||||
104 | Cover page formatted as Inline XBRL and contained in Exhibit 101. |
TRADEWEB MARKETS INC. | ||||||||
October 29, 2020 | /s/ Lee Olesky | |||||||
By: | Lee Olesky | |||||||
Chief Executive Officer (Principal Executive Officer) | ||||||||
October 29, 2020 | /s/ Robert Warshaw | |||||||
By: | Robert Warshaw | |||||||
Chief Financial Officer (Principal Financial Officer) |
October 29, 2020 | /s/ Lee Olesky | ||||
Lee Olesky | |||||
Chief Executive Officer |
October 29, 2020 | /s/ Robert Warshaw | ||||
Robert Warshaw | |||||
Chief Financial Officer |
October 29, 2020 | /s/ Lee Olesky | ||||
Lee Olesky | |||||
Chief Executive Officer |
October 29, 2020 | /s/ Robert Warshaw | ||||
Robert Warshaw | |||||
Chief Financial Officer |
Consolidated Statements of Income - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
||||||||
Revenues | |||||||||||
Gross revenue | $ 212,870 | $ 200,981 | $ 659,583 | $ 578,258 | |||||||
Expenses | |||||||||||
Employee compensation and benefits | 83,967 | 79,644 | 263,353 | 252,912 | |||||||
Depreciation and amortization | 38,857 | 35,133 | 113,952 | 102,928 | |||||||
Technology and communications | 12,037 | 9,527 | 34,397 | 29,086 | |||||||
General and administrative | 8,657 | 7,507 | 24,520 | 25,961 | |||||||
Professional fees | 7,388 | 7,272 | 20,908 | 20,981 | |||||||
Occupancy | 3,443 | 3,640 | 10,678 | 10,900 | |||||||
Total expenses | 154,349 | 142,723 | 467,808 | 442,768 | |||||||
Operating income | 58,521 | 58,258 | 191,775 | 135,490 | |||||||
Net interest income (expense) | (349) | 636 | 64 | 1,669 | |||||||
Income before taxes | 58,172 | 58,894 | 191,839 | 137,159 | |||||||
Provision for income taxes | (11,124) | (10,316) | (39,898) | (21,413) | |||||||
Net income | 47,048 | 48,578 | 151,941 | 115,746 | |||||||
Net income attributable to Tradeweb Markets Inc. | $ 36,812 | $ 29,612 | $ 111,236 | 42,440 | |||||||
EPS calculations for post-IPO and pre-IPO periods | |||||||||||
Basic (in dollars per share) | $ 0.20 | $ 0.21 | $ 0.63 | ||||||||
Diluted (in dollars per share) | $ 0.19 | $ 0.20 | $ 0.60 | ||||||||
Weighted average shares outstanding | |||||||||||
Basic (in shares) | [1],[2] | 187,774,170 | 142,935,206 | 177,257,994 | |||||||
Diluted (in shares) | [1],[2] | 194,955,695 | 151,362,643 | 185,026,108 | |||||||
Tradeweb Markets LLC | |||||||||||
Expenses | |||||||||||
Less: Net income attributable to non-controlling interests | $ 0 | $ 0 | $ 0 | $ 42,352 | |||||||
EPS calculations for post-IPO and pre-IPO periods | |||||||||||
Basic (in dollars per share) | [1],[3] | $ 0.19 | |||||||||
Diluted (in dollars per share) | [1],[3] | $ 0.19 | |||||||||
Weighted average shares outstanding | |||||||||||
Basic (in shares) | [1],[3] | 222,222,197 | |||||||||
Diluted (in shares) | [1],[3] | 223,320,457 | |||||||||
Tradeweb Markets Inc | |||||||||||
Expenses | |||||||||||
Net income | 47,048 | 48,578 | 151,941 | $ 73,394 | |||||||
Less: Net income attributable to non-controlling interests | $ 10,236 | $ 18,966 | $ 40,705 | $ 30,954 | |||||||
EPS calculations for post-IPO and pre-IPO periods | |||||||||||
Basic (in dollars per share) | $ 0.20 | $ 0.21 | $ 0.63 | $ 0.30 | [1],[2] | ||||||
Diluted (in dollars per share) | $ 0.19 | $ 0.20 | $ 0.60 | $ 0.28 | [1],[2] | ||||||
Weighted average shares outstanding | |||||||||||
Basic (in shares) | 187,774,170 | 142,935,206 | 177,257,994 | 142,934,221 | [1],[2] | ||||||
Diluted (in shares) | 194,955,695 | 151,362,643 | 185,026,108 | 151,158,760 | [1],[2] | ||||||
Transaction fees | |||||||||||
Revenues | |||||||||||
Gross revenue | $ 120,582 | $ 112,746 | $ 383,552 | $ 319,338 | |||||||
Subscription fees | |||||||||||
Revenues | |||||||||||
Gross revenue | 36,217 | 35,387 | 105,706 | 104,398 | |||||||
Commissions | |||||||||||
Revenues | |||||||||||
Gross revenue | 39,593 | 37,590 | 120,201 | 108,200 | |||||||
Refinitiv market data fees | |||||||||||
Revenues | |||||||||||
Gross revenue | 14,273 | 13,251 | 43,466 | 40,252 | |||||||
Other | |||||||||||
Revenues | |||||||||||
Gross revenue | $ 2,205 | $ 2,007 | $ 6,658 | $ 6,070 | |||||||
|
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Net income attributable to Tradeweb Markets Inc. | $ 36,812 | $ 29,612 | $ 111,236 | $ 42,440 |
Foreign currency translation adjustments attributable to Tradeweb Markets Inc. | 2,793 | (1,329) | (1,024) | (1,976) |
Comprehensive income attributable to Tradeweb Markets Inc. | 39,605 | 28,283 | 110,212 | 40,464 |
Foreign currency translation adjustments | 588 | (737) | (715) | (1,096) |
Comprehensive income | 10,824 | 18,229 | 39,990 | 29,858 |
Tradeweb Markets Inc | ||||
Comprehensive income, net income | 10,236 | 18,966 | 40,705 | 30,954 |
Tradeweb Markets LLC | ||||
Comprehensive income, net income | $ 0 | $ 0 | $ 0 | 42,352 |
Foreign currency translation adjustments | 988 | |||
Comprehensive income | $ 43,340 |
Consolidated Statements of Changes in Equity (Parenthetical) - $ / shares |
3 Months Ended | |||
---|---|---|---|---|
Sep. 30, 2020 |
Mar. 31, 2020 |
Sep. 30, 2019 |
Jun. 30, 2019 |
|
Limited Liability Company (LLC) Members' Equity [Abstract] | ||||
Dividends (in dollars per share) | $ 0.08 | $ 0.08 | $ 0.08 | $ 0.08 |
Organization |
9 Months Ended |
---|---|
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Organization Tradeweb Markets Inc. (the “Corporation”) was incorporated as a Delaware corporation on November 7, 2018 for the purpose of completing certain reorganization transactions in order to carry on the business of Tradeweb Markets LLC (“TWM LLC”) and conducting an initial public offering (“IPO”) as described below under “—Initial Public Offering” and “—Reorganization Transactions.” The Corporation is a consolidating subsidiary of BCP York Holdings, (“BCP”) a company owned by certain investment funds affiliated with The Blackstone Group Inc. (f/k/a The Blackstone Group L.P.) (“Blackstone”), through BCP’s majority ownership interest in Refinitiv Holdings Limited (the “Parent” and, unless otherwise stated or the context otherwise requires, together with all of its subsidiaries, “Refinitiv”). As of September 30, 2020, Refinitiv owns a majority ownership interest in the Company (as defined below). The Corporation is a holding company whose principal asset is LLC Interests (as defined below) of TWM LLC. As the sole manager of TWM LLC, the Corporation operates and controls all of the business and affairs of TWM LLC and, through TWM LLC and its subsidiaries, conducts the Corporation’s business. As a result of this control, and because the Corporation has a substantial financial interest in TWM LLC, the Corporation consolidates the financial results of TWM LLC and reports a non-controlling interest in the Corporation’s consolidated financial statements. As of September 30, 2020, Tradeweb Markets Inc. owns 82.6% of TWM LLC and the Continuing LLC Owners (defined below) own the remaining 17.4% of TWM LLC. Unless the context otherwise requires, references to the “Company” refer to Tradeweb Markets Inc. and its consolidated subsidiaries, including TWM LLC, following the completion of the Reorganization Transactions (as defined below), and TWM LLC and its consolidated subsidiaries prior to the completion of the Reorganization Transactions. The Company is a leader in building and operating electronic marketplaces for a global network of clients across the institutional, wholesale and retail client sectors. The Company’s principal subsidiaries include: •Tradeweb LLC (“TWL”), a registered broker-dealer under the Securities Exchange Act of 1934, a member of the Financial Industry Regulatory Authority (“FINRA”), a registered independent introducing broker with the Commodities Future Trading Commission (“CFTC”) and a member of the National Futures Association (“NFA”). •Dealerweb Inc. (“DW”) (formerly known as Hilliard Farber & Co., Inc.), a registered broker-dealer under the Securities Exchange Act of 1934 and a member of FINRA. DW is also registered as an introducing broker with the CFTC and NFA. •Tradeweb Direct LLC (“TWD”) (formerly known as BondDesk Trading LLC), a registered broker-dealer under the Securities Exchange Act of 1934 and a member of FINRA. •Tradeweb Europe Limited (“TEL”), a Multilateral Trading Facility regulated by the Financial Conduct Authority (the “FCA”) in the UK, which maintains branches in Asia which are regulated by certain Asian securities regulators. •TW SEF LLC (“TW SEF”), a Swap Execution Facility (“SEF”) regulated by the CFTC. •DW SEF LLC (“DW SEF”), a SEF regulated by the CFTC. •Tradeweb Japan K.K. (“TWJ”), a security house regulated by the Japanese Financial Services Agency (“JFSA”) and the Japan Securities Dealers Association (“JSDA”). •Tradeweb EU B.V. (“TWEU”), a Trading Venue and Approved Publication Arrangement regulated by the Netherlands Authority for the Financial Markets (“AFM”). Initial Public Offering On April 8, 2019, the Corporation completed its IPO of 46,000,000 shares of Class A common stock, par value $0.00001 per share, of the Corporation (the “Class A common stock”) at a public offering price of $27.00, which included 6,000,000 shares of Class A common stock issued pursuant to the underwriters’ option to purchase additional shares of Class A common stock. The Corporation received $1.2 billion in net proceeds, after deducting underwriting discounts and commissions but before deducting offering expenses, which were used to purchase membership interests of TWM LLC from certain existing equity holders of TWM LLC (and the corresponding shares of common stock were cancelled as described below), at a purchase price per interest equal to the public offering price of $27.00, less the underwriting discounts and commissions payable thereon. See Note 8 – Stockholders’ Equity. Reorganization Transactions Prior to the closing of the IPO, a series of reorganization transactions (the “Reorganization Transactions”) was completed among the Corporation, TWM LLC and the owners of TWM LLC prior to the Reorganization Transactions (collectively, the “Original LLC Owners”), including the following parties: •certain investment and commercial banks (collectively, the “Bank Stockholders”); •members of management; •the Refinitiv Direct Owner, (i) prior to June 28, 2019, a direct subsidiary of Refinitiv that owned interests in an entity that held membership interests of TWM LLC prior to the Reorganization Transactions and contributed such entity to the Corporation (the “Refinitiv Contribution”) in exchange for shares of Class B common stock, par value $0.00001 per share, of the Corporation (the “Class B common stock”) in connection with the completion of the Reorganization Transactions and (ii) on and after June 28, 2019, an indirect subsidiary of Refinitiv that owns shares of Class B common stock which shares were contributed by the direct subsidiary of Refinitiv referred to in the foregoing clause (i); and •an indirect subsidiary (the “Refinitiv LLC Owner” and, together with the Refinitiv Direct Owner, the “Refinitiv Owners”) of Refinitiv. As used herein, references to “Continuing LLC Owners” refer collectively to (i) those Original LLC Owners, including the Refinitiv LLC Owner, certain Bank Stockholders and members of management, that continue to own LLC Interests (as defined below) after the completion of the IPO and Reorganization Transactions, that received shares of Class C common stock, par value $0.00001 per share, of the Corporation (the “Class C common stock”), shares of Class D common stock, par value $0.00001 per share, of the Corporation (the “Class D common stock”) or a combination of both, as the case may be, in connection with the completion of the Reorganization Transactions, and that may redeem or exchange their LLC Interests for shares of Class A common stock or Class B common stock and (ii) solely with respect to the Tax Receivable Agreement (as defined below), also includes those Original LLC Owners, including certain Bank Stockholders, that disposed of all of their LLC Interests for cash in connection with the IPO. The following Reorganization Transactions occurred: •TWM LLC’s limited liability company agreement (the “TWM LLC Agreement”) was amended and restated to, among other things, (i) provide for a new single class of common membership interests in TWM LLC (“LLC Interests”), (ii) exchange all of the then existing membership interests in TWM LLC for LLC Interests and (iii) appoint the Corporation as the sole manager of TWM LLC. See Note 8 – Stockholders’ Equity. •The Corporation’s certificate of incorporation was amended and restated to, among other things, provide for Class A common stock, Class B common stock, Class C common stock and Class D common stock. See Note 8 – Stockholders’ Equity. •The Corporation issued 20,000,000 shares of Class C common stock and 105,289,005 shares of Class D common stock to the Original LLC Owners that received LLC Interests on a one-to-one basis with the number of LLC Interests they owned immediately following the amendment and restatement of the TWM LLC Agreement for nominal consideration (and the Corporation subsequently cancelled 9,993,731 shares of such Class C common stock and 36,006,269 shares of such Class D common stock in connection with the Corporation’s purchase of LLC Interests from certain of the Bank Stockholders using the net proceeds of the IPO). •As a result of the Refinitiv Contribution (described above), the Corporation received 96,933,192 LLC Interests and the Refinitiv Direct Owner received 96,933,192 shares of Class B common stock. See Note 8 – Stockholders’ Equity. •The Corporation’s board of directors adopted a new omnibus equity incentive plan, (the “Omnibus Equity Plan”), under which equity awards may be made in respect of shares of the Corporation’s Class A common stock. It also assumed sponsorship of an option plan and PRSU plan formerly sponsored by TWM LLC. See Note 10 – Stock-Based Compensation Plans. •The Corporation entered into a tax receivable agreement (the “Tax Receivable Agreement”) with TWM LLC and the Continuing LLC Owners. See Note 7 – Tax Receivable Agreement. LSEG Transaction On August 1, 2019, London Stock Exchange Group plc announced that it has agreed to definitive terms with a consortium including certain investment funds affiliated with Blackstone as well as Thomson Reuters Corporation ("TR") to acquire the Refinitiv business in an all share transaction (the “LSEG Transaction”). The LSEG Transaction is subject to customary regulatory approvals and closing conditions, and is expected to close in the first quarter of 2021. There can be no assurance that the LSEG transaction will be consummated on the expected timing or at all.
|
Significant Accounting Policies |
9 Months Ended |
---|---|
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies The following is a summary of significant accounting policies: Basis of Accounting The consolidated financial statements have been presented in conformity with accounting principles generally accepted in the United States of America. All adjustments, which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented, are normal and recurring in nature. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and the difference may be material to the consolidated financial statements. Basis of Presentation and Consolidation The consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. As discussed in Note 1—Organization, as a result of the Reorganization Transactions, Tradeweb Markets Inc. consolidates TWM LLC and TWM LLC is considered to be the predecessor to Tradeweb Markets Inc. for financial reporting purposes. As a result, the consolidated financial statements for periods prior to the Reorganization Transactions have been adjusted to combine the previously separate entities for presentation purposes. However, Tradeweb Markets Inc. had no business transactions or activities and no substantial assets or liabilities prior to the Reorganization Transactions. As such, for periods prior to the completion of the Reorganization Transactions, the consolidated financial statements represent the historical financial condition and results of operations of TWM LLC and its subsidiaries. For periods after the completion of the Reorganization Transactions, the consolidated financial statements represent the financial condition and results of operations of the Company and report a non-controlling interest related to the LLC Interests held by the Continuing LLC Owners. Pushdown Accounting A majority interest of Refinitiv (formerly the Thomson Reuters Financial & Risk Business) was acquired by BCP on October 1, 2018 (the “Refinitiv Transaction”) from TR. The Refinitiv Transaction was accounted for by Refinitiv in accordance with the acquisition method of accounting pursuant to Accounting Standards Codification (“ASC”) 805, Business Combinations, and pushdown accounting was applied to Refinitiv to record the fair value of the assets and liabilities of Refinitiv as of October 1, 2018, the date of the Refinitiv Transaction. The Company, as a consolidating subsidiary of Refinitiv, also accounted for the Refinitiv Transaction using pushdown accounting. Under pushdown accounting, the excess of the fair value of the Company above the fair value accounting basis of the net assets and liabilities of the Company is recorded as goodwill. The fair value of assets acquired and liabilities assumed was determined based on assumptions that reasonable market participants would use in the principal (or most advantageous) market for the asset or liability. The adjusted valuations primarily affected the values of our long-lived and indefinite-lived intangible assets, including software development costs. Cash and Cash Equivalents Cash and cash equivalents consists of cash and highly liquid investments (such as short-term money market instruments) with original maturities of less than three months. Allowance for Credit Losses The Company continually monitors collections and payments from its clients and maintains an allowance for credit losses. The allowance for credit losses is based on an estimate of the amount of potential credit losses in existing accounts receivable, as determined from a review of aging schedules, past due balances, historical collection experience and other specific account data. Careful analysis of the financial condition of our counterparties is also performed. Once determined uncollectable, aged balances are written off as credit loss expense, which is included in general and administrative expenses on the consolidated statements of income. See Note 13 – Credit Risk for additional information. Receivable from and Payable to Brokers and Dealers and Clearing Organizations Receivable from and payable to brokers and dealers and clearing organizations consists of proceeds from transactions which failed to settle due to the inability of a transaction party to deliver or receive the transacted security. These securities transactions are generally collateralized by those securities. At times, transactions executed on the Company’s wholesale platform fail to settle due to the inability of a transaction party to deliver or receive the transacted security. Until the failed transaction settles, a receivable from (and a matching payable to) brokers and dealers and clearing organizations is recognized for the proceeds from the unsettled transaction. Deposits with Clearing Organizations Deposits with clearing organizations are comprised of cash deposits. Due to the short-term nature of these deposits, the recorded value has been determined to approximate fair value. Furniture, Equipment, Purchased Software and Leasehold Improvements Furniture, equipment, purchased software and leasehold improvements are carried at cost less accumulated depreciation. Depreciation for furniture, equipment and purchased software is computed on a straight-line basis over the estimated useful lives of the related assets, ranging from to seven years. Leasehold improvements are amortized over the lesser of the estimated useful lives of the leasehold improvements or the remaining term of the lease for office space. Furniture, equipment, purchased software and leasehold improvements are tested for impairment whenever events or changes in circumstances suggest that an asset’s carrying value may not be fully recoverable in accordance with ASC 360, Property, Plant and Equipment. Software Development Costs The Company capitalizes costs associated with the development of internal use software at the point at which the conceptual formulation, design and testing of possible software project alternatives have been completed, in accordance with ASC 350, Intangibles – Goodwill and Other. The Company capitalizes employee compensation and related benefits and third party consulting costs incurred during the application development stage which directly contribute to such development. Such costs are amortized on a straight-line basis over three years. Costs capitalized as part of the pushdown accounting allocation are amortized over nine years. The Company reviews the amounts capitalized for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable, or that their useful lives are shorter than originally expected. Non-capitalized software costs and routine maintenance costs are expensed as incurred. Goodwill Goodwill is the excess of the fair value of the Company above the fair value accounting basis of the net assets and liabilities of the Company under pushdown accounting. Goodwill is also the cost of acquired companies in excess of the fair value of identifiable net assets at the acquisition date. Goodwill is not amortized, but in accordance with ASC 350, goodwill is tested for impairment annually and between annual tests whenever events or changes in circumstances indicate that the carrying amount may not be fully recoverable. Goodwill is tested at the reporting unit level, which is defined as an operating segment or one level below the operating segment. An impairment loss is recognized if the estimated fair value of a reporting unit is less than its net book value. Such loss is calculated as the difference between the estimated fair value of goodwill and its carrying value. In 2019, the Company changed the annual date on which goodwill is tested for impairment from July 1st to October 1st to align with the annual impairment testing date of the Company’s Parent. This change did not accelerate, delay, avoid or cause an impairment charge, nor did this change result in adjustments to any previously issued financial statements. Goodwill was last assessed on October 1, 2019. Intangible Assets Intangible assets with a finite life are amortized over the estimated lives, ranging from to twelve years, in accordance with ASC 350. Intangible assets subject to amortization are tested for impairment whenever events or changes in circumstances suggest that an asset's or asset group's carrying value may not be fully recoverable in accordance with ASC 360. Intangible assets with an indefinite useful life are tested for impairment at least annually. An impairment loss is recognized if the sum of the estimated discounted cash flows relating to the asset or asset group is less than the corresponding book value. Deferred IPO and Follow-On Offering Costs The Company began incurring costs in connection with the filing of a Registration Statement on Form S-1 for an IPO in 2018 and Registration Statements on Form S-1 for follow-on offerings in 2019 and 2020. IPO and follow-on offering costs consist of legal, accounting, and other costs directly related to the Company’s efforts to raise capital. In accordance with ASC 505-10-25, Equity, these costs are recognized in additional paid-in capital within the consolidated statements of financial condition when the offering is effective. At September 30, 2020, $15.9 million of deferred costs related to the IPO and $5.1 million of deferred costs related to the follow-on offerings were recognized within additional paid-in capital on the consolidated statements of financial condition. See Note 8 – Stockholders’ Equity. Translation of Foreign Currency Revenues and expenses denominated in foreign currencies are translated at the rate of exchange prevailing at the transaction date. Assets and liabilities denominated in foreign currencies are translated at the rate prevailing at the consolidated statements of financial condition date. Foreign currency re-measurement gains or losses on transactions in nonfunctional currencies are recognized in the consolidated statements of income. Gains or losses on translation in the financial statements of a non-U.S. operation, when the functional currency is other than the U.S. dollar, are included as a component of comprehensive income. Income Tax The Corporation is subject to U.S. federal, state and local income taxes with respect to its taxable income, including its allocable share of any taxable income of TWM LLC, and is taxed at prevailing corporate tax rates. TWM LLC is a multiple member limited liability company taxed as a partnership and accordingly any taxable income generated by TWM LLC is passed through to and included in the taxable income of its members, including the Corporation. Income taxes also include unincorporated business taxes on income earned or losses incurred for conducting business in certain state and local jurisdictions, income taxes on income earned or losses incurred in foreign jurisdictions on certain operations and federal and state income taxes on income earned or losses incurred, both current and deferred, on subsidiaries that are taxed as corporations for U.S. tax purposes. The Company records deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities. The Company measures deferred taxes using the enacted tax rates and laws that will be in effect when such temporary differences are expected to reverse. The Company evaluates the need for valuation allowances based on the weight of positive and negative evidence. The Company records valuation allowances wherever management believes it is more likely than not that the Company will not be able to realize its deferred tax assets in the future. The Company records uncertain tax positions in accordance with ASC 740, Income Taxes, on the basis of a two-step process whereby (i) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (ii) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company recognizes interest and penalties related to income taxes within the provision for income taxes in the consolidated statements of income. Accrued interest and penalties are included within accounts payable, accrued expenses and other liabilities in the consolidated statements of financial condition. The Company has elected to treat taxes due on future U.S. inclusions in taxable income under the global intangible low-taxed income (“GILTI”) provision of the Tax Cuts and Jobs Act as a current period expense when incurred. Stock-Based Compensation The Company accounts for stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation. ASC 718 focuses primarily on accounting for a transaction in which an entity obtains employee services in exchange for stock-based payments. Under ASC 718, the stock-based payments received by the employees of the Company are accounted for either as equity awards or as liability awards. As an equity award, the Company measures and recognizes the cost of employee services received in exchange for awards of equity instruments based on their estimated fair values measured as of the grant date. These costs are recognized as an expense over the requisite service period, with an offsetting increase to additional paid-in capital. As a liability award, the cost of employee services received in exchange for an award of equity instruments is generally measured based on the grant-date fair value of the award. The fair value of that award is remeasured subsequently at each reporting date through the settlement in accordance with ASC 505. Changes in the equity instrument's fair value during the requisite service period are recognized as compensation cost over that period. For periods following the Reorganization Transactions and the IPO, the fair value of new equity instrument grants is determined based on the price of the Company’s Class A common stock on the grant date. Under ASC 718, the grant-date fair value of stock-based awards that do not require future service (i.e., vested awards) are expensed immediately. The grant-date fair value of stock-based awards that require future service, and are graded-vesting awards, are amortized over the relevant service period on a straight-line basis, with each tranche separately measured. The grant-date fair value of stock-based awards that require both future service and the achievement of Company performance-based conditions, are amortized over the relevant service period for the performance-based condition. If in a reporting period it is determined that the achievement of a performance target for a performance-based tranche is not probable, then no expense is recognized for that tranche and any expenses already recognized relating to that tranche in prior reporting periods are reversed in the current reporting period. Prior to the IPO, the Company awarded options to management and other employees (collectively, the “Special Option Award”) under the Amended and Restated Tradeweb Markets Inc. Option Plan (the “Option Plan”). In accounting for the options issued under the Option Plan, compensation expense is measured and recognized for all awards based on their estimated fair values measured as of the grant date. Costs related to these options are recognized as an expense in the consolidated statements of income over the requisite service period, with an offsetting increase to additional paid-in capital. The non-cash stock-based compensation expense associated with the Special Option Award began being expensed in the second quarter of 2019. Determining the appropriate fair value model and calculating the fair value of the stock-based awards requires the input of highly subjective assumptions, including the expected life of the stock-based awards and the stock price volatility. The Company uses the Black-Scholes pricing model to value some of its stock-based awards. Earnings Per Share Basic earnings per share is computed by dividing the net income attributable to the Company's shares by the weighted-average number of the Company's shares outstanding during the period. For purposes of computing diluted earnings per share, the weighted-average number of the Company’s shares reflects the dilutive effect that could occur if securities that qualify as participating securities were converted into or exchanged or exercised for TWM LLC’s shares, in the pre-IPO period, and the Corporation’s Class A or Class B common stock, in the post-IPO period, using the treasury stock method, as applicable. Shares of Class C and Class D common stock do not have economic rights in Tradeweb Markets Inc. and, therefore, are not participating securities for purposes of the computation of earnings per share. Fair Value Measurement The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). Instruments that the Company owns (long positions) are marked to bid prices, and instruments that the Company has sold, but not yet purchased (short positions) are marked to offer prices. Fair value measurements do not include transaction costs. The fair value hierarchy under ASC 820, Fair Value Measurement, prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under ASC 820 are described below: Basis of Fair Value Measurement A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. •Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; •Level 2: Quoted prices in markets that are not considered to be active or financial instruments for which all significant inputs are observable, either directly or indirectly; •Level 3: Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. Recent Accounting Pronouncements – Adopted In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016‑13, Financial Instruments – Credit Losses. The ASU provides new guidance for estimating credit losses on certain types of financial instruments by introducing an approach based on expected losses. ASU 2016-13 was adopted on January 1, 2020 using the modified retrospective method of adoption. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements. See Note 13 – Credit Risk for additional information. In January 2017, the FASB issued ASU 2017‑4, Intangibles – Goodwill and Other. The ASU simplifies the quantitative goodwill impairment test by eliminating the second step of the test. Under this ASU, impairment will be measured by comparing the estimated fair value of the reporting unit with its carrying value. The new guidance does not amend the optional qualitative assessment of goodwill impairment. ASU 2017-4 was adopted on January 1, 2020. The adoption of this ASU did not impact the Company’s consolidated financial statements. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this ASU simplify the accounting for income taxes by removing certain exceptions for investments, intraperiod allocations and interim calculations and include additional guidance in order to reduce complexity in accounting for income taxes. ASU 2019-12 is effective for annual periods beginning after December 15, 2020, with early adoption permitted. ASU 2019-12 was early adopted on January 1, 2020. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements. In February 2016, the FASB issued ASU 2016-2, Leases (Topic 842), which requires lessees to recognize a right-of-use asset and a lease liability for all leases with an initial term in excess of twelve months. The asset reflects the present value of unpaid lease payments coupled with initial direct costs, prepaid lease payments and lease incentives. The amount of the lease liability is calculated as the present value of unpaid lease payments. ASU 2016-2 was adopted on January 1, 2019 using the modified retrospective method of adoption. Upon adoption, the Company: •Recorded right-of-use assets of $31.8 million, •Recorded a lease liability of $39.6 million, •Eliminated deferred rent of $4.9 million, •Eliminated leasehold interests of $2.9 million, and •Elected to take the optional package of practical expedients, which allows for no reassessment of i.whether any expired or existing contracts are or contain leases, ii.the lease classification for any expired or existing leases, and iii.initial direct costs for any existing leases.
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Restricted Cash |
9 Months Ended |
---|---|
Sep. 30, 2020 | |
Restricted Cash Equivalents [Abstract] | |
Restricted Cash | Restricted CashCash has been segregated in a special reserve bank account for the benefit of brokers and dealers under SEC Rule 15c3-3. The Company computes the proprietary accounts of other broker-dealers (“PAB”) reserve, which requires the Company to maintain minimum segregated cash in the amount of total credits per the reserve computation. As of September 30, 2020 and December 31, 2019, cash in the amount of $1.0 million has been segregated in the PAB reserve account exceeding the requirements pursuant to SEC Rule 15c3-3. |
Goodwill and Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill The carrying amount of goodwill at September 30, 2020 and December 31, 2019 was $2.7 billion. Intangible Assets Intangible assets with an indefinite useful life consisted of the following at September 30, 2020 and December 31, 2019 (in thousands):
Intangible assets that are subject to amortization consisted of the following at September 30, 2020 and December 31, 2019 (in thousands):
Amortization expense for definite-lived intangible assets was $24.9 million for each of the three months ended September 30, 2020 and 2019, respectively, and $74.6 million for each of the nine months ended September 30, 2020 and 2019.
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Revenue |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | Revenue Revenue Recognition The Company earns transaction fees from transactions executed on the Company’s trading platforms through various fee plans. Transaction fees are generated both on a variable and fixed price basis and vary by geographic region, product type and trade size. For variable transaction fees, the Company charges clients fees based on the mix of products traded and the volume of transactions executed. Transaction fee revenue is recorded at a point in time when the trade occurs and is generally billed monthly. The Company earns subscription fees from granting access to institutional investors to the Company's electronic marketplaces. Subscription fees are recognized into income in the period that access is provided on a monthly basis. Also included in subscription fees are viewer fees earned monthly from institutional investors accessing fixed income market data. The frequency of subscription fee billings varies from monthly to annually, depending on contract terms. Fees received by the Company which are not yet earned are included in deferred revenue on the consolidated statements of financial condition until the revenue recognition criteria has been met. The Company earns commission revenue from its electronic and voice brokerage services on a riskless principal basis. Riskless principal revenues are derived on matched principal transactions where revenues are earned on the spread between the buy and sell price of the transacted product. Securities transactions and related commission income for brokerage transactions are recognized and recorded on a trade-date basis. Commission revenue is collected by the Company when the trade settles or is billed monthly. The Company earns fees from Refinitiv relating to the sale of market data to Refinitiv, which redistributes that data. Included in these fees, which are billed quarterly, are real-time market data fees which are recognized in the period that the data is provided, generally on a monthly basis, and historical data sets which are recognized when the historical data set is provided to Refinitiv. Significant judgements used in accounting for this contract include: •The provision of real-time market data feeds and annual historical data sets are distinct performance obligations. •The performance obligations under this contract are recognized over time from the initial delivery of the data feeds or each historical data set until the end of the contract term. •Determining the transaction price for the performance obligations by using a market assessment analysis. Inputs in this analysis include a consultant study which determined the overall value of the Company's market data and pricing information for historical data sets provided by other companies. Some revenues earned by the Company have fixed fee components, such as monthly minimums or fixed monthly fees, and variable components, such as transaction based fees. The breakdown of revenues between fixed and variable revenues, in thousands, for the three and nine months ended September 30, 2020 and 2019 is as follows:
Deferred Revenue The Company records deferred revenue when cash payments are received or due in advance of services to be performed. The recognized revenue and remaining balance is shown below (in thousands):
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Income Taxes |
9 Months Ended |
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Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s provision for income taxes includes U.S. federal, state, local and foreign taxes. The Company’s effective tax rate for the nine months ended September 30, 2020 and 2019 was approximately 20.8% and 15.6%, respectively. The effective tax rate for the nine months ended September 30, 2020 differed from the U.S. federal statutory rate of 21.0% primarily due to the effect of non-controlling interests and the tax impact of the exercise of equity compensation, partially offset by state, local and foreign taxes. The effective tax rate for the nine months ended September 30, 2019 differed from the U.S. federal statutory rate of 21.0% primarily due to the effect of non-controlling interests and other discrete items, partially offset by state and local taxes. The Company’s effective tax rate for the three months ended September 30, 2020 and 2019 was approximately 19.1% and 17.5%, respectively. The effective tax rate for the three months ended September 30, 2020 differed from the U.S. federal statutory rate of 21.0% primarily due to the effect of non-controlling interests and the tax impact of the exercise of equity compensation, partially offset by state, local and foreign taxes. The effective tax rate for the three months ended September 30, 2019 differed from the U.S. federal statutory rate of 21.0% primarily due to the effect of non-controlling interests, partially offset by state, local and foreign taxes and other discrete items. As a result of the Reorganization Transactions, the Corporation is subject to U.S. federal, state and local income taxes with respect to its taxable income, including its allocable share of any taxable income of TWM LLC, and is taxed at prevailing corporate tax rates. The Company’s actual effective tax rate will be impacted by the Corporation’s ownership share of TWM LLC, which will increase over time as the Continuing LLC Owners redeem or exchange their LLC Interests for shares of Class A common stock or Class B common stock, as applicable, or the Corporation purchases LLC Interests from the Continuing LLC Owners. The Company's consolidated effective tax rate will vary from period to period depending on redemptions, exchanges or purchases of LLC Interests as described above, changes in the geographic mix of its earnings and changes in tax legislation and tax rates. The Company expects to obtain an increase in its share of the tax basis of the assets of TWM LLC when LLC Interests are redeemed or exchanged by the Continuing LLC Owners and in connection with certain other qualifying transactions. This increase in tax basis may have the effect of reducing the amounts that the Corporation would otherwise pay in the future to various tax authorities. Pursuant to the Tax Receivable Agreement, the Corporation is required to make cash payments to the Continuing LLC Owners equal to 50% of the amount of U.S. federal, state and local income or franchise tax savings, if any, that the Corporation actually realizes (or in some circumstances are deemed to realize) as a result of certain future tax benefits to which we may become entitled. The Corporation expects to benefit from the remaining 50% of tax benefits, if any, that the Corporation may actually realize. See Note 7 – Tax Receivable Agreement. The tax benefit has been recognized in deferred tax assets on the September 30, 2020 consolidated statement of financial condition. As a result of the Refinitiv Contribution, the Company assumed the tax liabilities of the contributed entity. The contributed entity is under audit by the State of New Jersey for the tax years 2012 – 2015 and is appealing a tax assessment from an audit by the State of New Jersey for the tax years 2008 – 2011. At September 30, 2020, the tax liability related to the Refinitiv Contribution is $2.7 million and is included within accounts payable, accrued expenses and other liabilities on the consolidated statement of financial condition. The Company is indemnified by Refinitiv for tax liabilities that were assumed by the Company as a result of the Refinitiv Contribution. At September 30, 2020, $2.7 million is included in other assets on the consolidated statement of financial condition related to this indemnification.
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Tax Receivable Agreement |
9 Months Ended |
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Sep. 30, 2020 | |
Tax Receivable Agreement | |
Tax Receivable Agreement | Tax Receivable Agreement In connection with the Reorganization Transactions, the Corporation entered into the Tax Receivable Agreement with TWM LLC and the Continuing LLC Owners, which provides for the payment by the Corporation to a Continuing LLC Owner of 50% of the amount of U.S. federal, state and local income or franchise tax savings, if any, that the Corporation actually realizes (or in some circumstances is deemed to realize) as a result of (i) increases in the tax basis of TWM LLC’s assets resulting from (a) the purchase of LLC Interests from such Continuing LLC Owner, including with the net proceeds from the IPO, the October 2019 and April 2020 follow-on offerings and any future offering or (b) redemptions or exchanges by such Continuing LLC Owner of LLC Interests for shares of Class A common stock or Class B common stock or for cash, as applicable, and (ii) certain other tax benefits related to the Corporation making payments under the Tax Receivable Agreement. Payments under the Tax Receivable Agreement are made annually based on the actual tax savings realized by the Corporation in its previous tax year. As of December 31, 2019, the liability was $240.8 million, primarily due to the purchase of LLC Interests by the Corporation using the net proceeds of the IPO and the October 2019 follow-on offering, as well as additional exchanges of LLC Interests by Continuing LLC Owners. During 2020, the liability increased to $373.0 million, primarily due to the April 2020 follow-on offering and additional exchanges of LLC Interests by Continuing LLC Owners. Substantially all payments due under the tax receivable agreement are payable over the fifteen years following the purchase of LLC Interests from Continuing LLC Owners or redemption or exchanges by Continuing LLC Owners of LLC Interests. The Corporation accounts for the income tax effects resulting from taxable redemptions or exchanges of LLC Interests by the Continuing LLC Owners for shares of Class A common stock or Class B common stock or cash, as the case may be, and purchases by the Corporation of LLC Interests from the Continuing LLC Owners by recognizing an increase in deferred tax assets, based on enacted tax rates at the date of each redemption or exchange, as the case may be. Further, the Corporation evaluates the likelihood that it will realize the benefit represented by the deferred tax asset, and, to the extent that the Corporation estimates that it is more likely than not that it will not realize the benefit, it reduces the carrying amount of the deferred tax asset with a valuation allowance. The impact of any changes in the projected obligations under the Tax Receivable Agreement as a result of changes in the geographic mix of the Company’s earnings, changes in tax legislation and tax rates or other factors that may impact the Corporation’s tax savings will be reflected in income before taxes on the consolidated statement of income in the period in which the change occurs.
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Stockholder's Equity |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders’ Equity | Stockholders’ Equity Initial Public Offering and Reorganization Transactions As described in Note 1 – Organization, in April 2019, the Corporation completed its IPO of 46,000,000 shares of Class A common stock at a public offering price of $27.00, which included 6,000,000 shares of Class A common stock issued pursuant to the underwriters’ option to purchase additional shares of Class A common stock. The Corporation received $1.2 billion in net proceeds, after deducting underwriting discounts and commissions but before deducting offering expenses, which were used to purchase LLC Interests from certain of the Bank Stockholders (and the corresponding shares of common stock were cancelled as described below), at a purchase price per interest equal to the public offering price of $27.00, less the underwriting discounts and commissions payable thereon. In connection with the IPO, the Reorganization Transactions described below were completed. Amendment and Restatement of Certificate of Incorporation On April 3, 2019, the certificate of incorporation of Tradeweb Markets Inc. was amended and restated to, among other things, provide for the authorization of (i) 250,000,000 shares of preferred stock with a par value of $0.00001 per share (ii) 1,000,000,000 shares of Class A common stock with a par value of $0.00001 per share; (iii) 450,000,000 shares of Class B common stock with a par value of $0.00001 per share; (iv) 350,000,000 shares of Class C common stock with a par value of $0.00001 per share; and (v) 300,000,000 shares of Class D common stock with a par value of $0.00001 per share. Each share of Class A common stock and Class C common stock entitles its holder to one vote on all matters presented to the Corporation’s stockholders generally. Each share of Class B common stock and Class D common stock entitles its holder to ten votes on all matters presented to the Corporation’s stockholders generally. The holders of Class C common stock and Class D common stock have no economic interests in the Corporation (where “economic interests” means the right to receive any dividends or distributions, whether cash or stock, in connection with common stock). These attributes are summarized in the following table:
Holders of outstanding shares of Class A common stock, Class B common stock, Class C common stock and Class D common stock will vote together as a single class on all matters presented to the Corporation’s stockholders for their vote or approval, except as otherwise required by applicable law. Holders of Class B common stock may from time to time exchange all or a portion of their shares of Class B common stock for newly issued shares of Class A common stock on a one-for-one basis (in which case their shares of Class B common stock will be cancelled on a one-for-one basis upon any such issuance). Continuing LLC Owners that hold shares of Class D common stock may from time to time exchange all or a portion of their shares of Class D common stock for newly issued shares of Class C common stock on a one-for-one basis (in which case their shares of Class D common stock will be cancelled on a one-for-one basis upon such issuance). In addition, with respect to each Bank Stockholder that holds shares of Class D common stock, immediately prior to the occurrence of any event that would cause the combined voting power held by such Bank Stockholder to exceed 4.9%, the minimum number of shares of Class D common stock of such Bank Stockholder that would need to convert into shares of Class C common stock such that the combined voting power held by such Bank Stockholder would not exceed 4.9% will automatically convert into shares of Class C common stock. Each share of Class B common stock will automatically convert into one share of Class A common stock and each share of Class D common stock will automatically convert into one share of Class C common stock (i) immediately prior to any sale or other transfer of such share by a holder or its permitted transferees to a non-permitted transferee or (ii) once the Refinitiv Owners and their affiliates together no longer beneficially own a number of shares of common stock and LLC Interests that together entitle them to at least 10% of TWM LLC’s economic interest. Holders of LLC Interests that receive shares of Class C common stock upon any such conversion may continue to elect to have their LLC Interests redeemed for newly issued shares of Class A common stock as described below (in which case their shares of Class C common stock will be cancelled on a one-for-one basis upon such issuance). In addition, the Corporation’s board of directors adopted the Omnibus Equity Plan, under which equity awards may be made in respect of shares of Class A common stock. It also assumed sponsorship of the Option Plan and a PRSU plan formerly sponsored by TWM LLC. See Note 10 – Stock-Based Compensation Plans. Recapitalization of Tradeweb Markets LLC On April 4, 2019, the TWM LLC Agreement was amended and restated to, among other things, (i) provide for the LLC Interests, (ii) exchange all of the then existing membership interests in TWM LLC for LLC Interests and (iii) appoint the Corporation as the sole manager of TWM LLC. All of the shares of TWM LLC outstanding prior to the Reorganization Transactions were exchanged for 222,222,197 LLC Interests. TWM LLC’s outstanding shares prior to the Reorganization Transactions consisted of the following classes of shares:
The TWM LLC Agreement requires that TWM LLC at all times maintain (i) a one-to-one ratio between the number of shares of Class A common stock and Class B common stock issued by the Corporation and the number of LLC Interests owned by the Corporation and (ii) a one-to-one ratio between the number of shares of Class C common stock and Class D common stock issued by the Corporation and the number of LLC Interests owned by the holders of such Class C common stock and Class D common stock. LLC Interests held by Continuing LLC Owners are redeemable in accordance with the TWM LLC Agreement, at the election of such holders, for newly issued shares of Class A common stock or Class B common stock, as the case may be, on a one-for-one basis (and such holders’ shares of Class C common stock or Class D common stock, as the case may be, will be cancelled on a one-for-one basis upon any such issuance). In the event of such election by a Continuing LLC Owner, the Corporation may, at its option, effect a direct exchange of Class A common stock or Class B common stock for such LLC Interests of such Continuing LLC Owner in lieu of such redemption. In addition, the Corporation’s board of directors may, at its option, instead of the foregoing redemptions or exchanges of LLC Interests, cause the Corporation to make a cash payment equal to the volume weighted average market price of one share of Class A common stock for each LLC Interest redeemed or exchanged (subject to customary adjustments, including for stock splits, stock dividends and reclassifications) in accordance with the terms of the TWM LLC Agreement. Issuance and Cancellation of Common Stock •As a result of the Refinitiv Contribution, the Corporation received 96,933,192 LLC Interests and the Refinitiv Direct Owner received 96,933,192 shares of Class B common stock. •The Corporation issued 20,000,000 shares of Class C common stock and 105,289,005 shares of Class D common stock to the Original LLC Owners that received LLC Interests on a one-to-one basis with the number of LLC Interests they owned immediately following the amendment and restatement of the TWM LLC Agreement for nominal consideration (the Corporation subsequently cancelled 9,993,731 shares of such Class C common stock and 36,006,269 shares of such Class D common stock in connection with the Corporation’s purchase of LLC Interests from certain of the Bank Stockholders using the net proceeds of the IPO). Following the completion of the Reorganization Transactions, including the IPO and the application of the proceeds therefrom as described above, (i) the investors in the IPO collectively owned 46,000,000 shares of Class A common stock, representing 2.7% of the combined voting power of all of the Corporation’s common stock and, through the Corporation’s ownership of LLC Interests, 20.7% of the economic interest in TWM LLC; (ii) the Refinitiv Direct Owner owned 96,933,192 shares of Class B common stock, representing 56.4% of the combined voting power of all of the Corporation’s common stock and, through the Corporation’s ownership of LLC Interests, 43.6% of the economic interest in TWM LLC; (iii) the Refinitiv LLC Owner owned 22,988,329 shares of Class D common stock, representing 13.4% of the combined voting power of all of the Corporation’s common stock, and 22,988,329 LLC Interests, representing 10.3% of the economic interest in TWM LLC, (iv) the Continuing LLC Owners (other than the Refinitiv LLC Owner) collectively owned 10,006,269 shares of Class C common stock and 46,294,407 shares of Class D common stock, representing 27.5% of the combined voting power of all of the Corporation’s common stock, and 56,300,676 LLC Interests, representing 25.3% of the economic interest in TWM LLC; and (v) the Corporation owned 142,933,192 LLC Interests, representing 64.3% of the economic interest in TWM LLC. October 2019 Follow-On Offering In the fourth quarter of 2019, Tradeweb Markets Inc. completed an underwritten follow-on offering of 19,881,059 shares of Class A Common stock at a public offering price of $42.00 per share, which included 2,593,181 shares of Class A common stock issued pursuant to the underwriters’ option to purchase additional shares of Class A common stock. Tradeweb Markets Inc. received net proceeds of $810.0 million, after deducting underwriting discounts and commissions but before deducting estimated offering expenses, which were used to purchase (i) 19,835,666 issued and outstanding LLC Interests from certain of the Bank Stockholders and certain of our executive officers (and the corresponding shares of Class C common stock and/or Class D common stock held by such holders were cancelled) and (ii) 45,393 issued and outstanding shares of Class A common stock from certain of our executive officers (which shares of Class A common stock were cancelled), at a purchase price per interest and share equal to the public offering price of $42.00, less the underwriting discounts and commissions payable thereon. April 2020 Follow-On Offering In the second quarter of 2020, Tradeweb Markets Inc. completed an underwritten follow-on offering of 12,835,245 shares of Class A Common stock at a public offering price of $50.25 per share, which included 1,674,162 shares of Class A common stock issued pursuant to the underwriters’ option to purchase additional shares of Class A common stock. Tradeweb Markets Inc. received net proceeds of $626.3 million, after deducting underwriting discounts and commissions but before deducting estimated offering expenses, which were used to purchase (i) 12,238,827 issued and outstanding LLC Interests from certain of the Bank Stockholders and certain of our executive officers (and the corresponding shares of Class C common stock and/or Class D common stock held by such holders were cancelled) and (ii) 596,418 issued and outstanding shares of Class A common stock from certain of our executive officers (which shares of Class A common stock were cancelled), at a purchase price per interest and share equal to the public offering price of $50.25, less the underwriting discounts and commissions payable thereon. Redemptions and Exchanges of LLC Interests In addition to the IPO, the October 2019 follow-on offering and the April 2020 follow-on offering transactions described above, certain Continuing LLC Owners may, from time to time, exercise their redemption rights under the TWM LLC Agreement, pursuant to which LLC Interests are exchanged for newly-issued shares of Class A common stock. Simultaneously, and in connection with these exchanges, shares of Class C and/or Class D common stock are surrendered by the Continuing LLC Owners and cancelled. In connection with these exchanges, Tradeweb Markets Inc. receives LLC Interests, increasing its total ownership interest in TWM LLC. As a result of the Reorganization Transactions, the IPO, the October 2019 follow-on offering, the April 2020 follow-on offering and other exchanges and equity activity, as of September 30, 2020: •The public investors collectively owned 90,985,582 shares of the Company's Class A common stock, representing 6.5% of the combined voting power of Tradeweb Markets Inc.’s issued and outstanding common stock and indirectly, through Tradeweb Markets Inc., owned 40.0% of the economic interest in TWM LLC; •Refinitiv collectively owned 96,933,192 shares of the Company's Class B common stock and 22,988,329 shares of the Company's Class D common stock, representing 85.1% of the combined voting power of Tradeweb Markets Inc.’s issued and outstanding common stock and directly and indirectly, through Tradeweb Markets Inc., owned 52.7% of the economic interest in TWM LLC; and •The Bank Stockholders that continue to own LLC Interests collectively owned 5,109,991 shares of the Company's Class C common stock and 11,285,182 shares of the Company's Class D common stock, representing 8.4% of the combined voting power of Tradeweb Markets Inc.’s issued and outstanding common stock and directly and indirectly, through Tradeweb Markets Inc., owned 7.2% of the economic interest in TWM LLC.
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Non-Controlling Interests |
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Noncontrolling Interest [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-Controlling Interests | Non-Controlling InterestsIn connection with the Reorganization Transactions, Tradeweb Markets Inc. became the sole manager of TWM LLC and, as a result of this control, and because Tradeweb Markets Inc. has a substantial financial interest in TWM LLC, consolidates the financial results of TWM LLC into its consolidated financial statements. The non-controlling interests balance reported on the consolidated statements of financial condition represents the economic interests of TWM LLC held by the holders of LLC Interests other than Tradeweb Markets Inc. Income or loss is attributed to the non-controlling interests based on the relative ownership percentages of LLC Interests held during the period by Tradeweb Markets Inc. and the other holders of LLC Interests. The following table summarizes the ownership interest in Tradeweb Markets LLC:
LLC Interests held by the Continuing LLC Owners are redeemable in accordance with the TWM LLC Agreement at the election of the members for shares of Class A common stock or Class B common stock, on a one-for-one basis or, at the Company's option, a cash payment in accordance with the terms of the TWM LLC Agreement. See Note 8 – Stockholders’ Equity. The following table summarizes the impact on equity due to changes in the Corporation’s ownership interest in Tradeweb Markets LLC (in thousands):
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Stock-Based Compensation Plans |
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Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation Plans | Stock-Based Compensation Plans Under the Omnibus Equity Plan, the Company is authorized to issue up to 8,841,864 new shares of Class A common stock to employees, officers and non-employee directors. Under this plan, the Company may grant awards in respect of shares of Class A common stock, including performance-based restricted share units (“PRSUs”), stock options, restricted stock units (“RSUs”) and dividend equivalent rights. The awards may have performance-based and time-based vesting conditions. Stock options have a maximum contractual term of 10 years. PRSUs (Equity-Settled) Equity-settled PRSUs are promises to issue shares of Class A common stock at the end of a three-year cliff vesting period. The fair value of the equity-settled PRSUs is calculated on the grant date using the stock price of the Class A common stock. The number of shares a participant will receive upon vesting is determined in part based on a performance modifier, which is adjusted in accordance with the financial performance of the Company in the grant year. The performance modifier may vary between 0% (minimum) and 200% (maximum) of the target (100%) award amount. The following table summarizes information for equity-settled PRSUs of the Company:
The amount of unrecognized compensation expense for equity-settled PRSUs is $36.0 million, which is expected to be recognized over a weighted-average period of 1.74 years. PRSUs (Cash-Settled) The Company previously granted cash-settled PRSUs, some of which are still outstanding and are accounted for as liability awards. The Company measures the cost of employee services received in exchange for the award based on the fair value of the Company and the value of accumulated dividend rights associated with each award. The fair value of that award is remeasured subsequently at each reporting date through to settlement. Changes in the award's fair value during the requisite service period is recognized as compensation cost over that period. The following table summarizes information for cash-settled PRSUs:
The amount of unrecognized compensation expense is $0.1 million, which is expected to be recognized over a weighted-average period of 0.25 years. Options Prior to the IPO, the Company awarded options to management and other employees under the Option Plan. Each option award vests one half based solely on the passage of time and one half only if the Company achieves certain performance targets. The time vesting portion of the options has a four-year graded vesting schedule, with accelerated vesting for time-based options granted prior to the IPO with vesting dates of January 1, 2021 and 2022 upon the completion of the IPO. In the post-IPO period, the Company awarded options under the Option Plan with a four year-graded vesting schedule. One half of these awards vest solely based on the passage of time, without accelerated vesting, and one half vest only if the Company achieves certain performance targets. The Company may elect to net-settle exercised options by reducing the shares of Class A common stock to be issued upon such exercise by the number of shares of Class A common stock having a fair market value on the date of exercise equal to the aggregate option price. The Company can also elect, upon exercise, to reduce the shares to be issued by the number of shares having a fair market value on the date of exercise equal to employee payroll taxes. The Company may then pay these employee payroll taxes from the Company’s cash. In accounting for the options issued under the Option Plan, the Company measures and recognizes compensation expense for all awards based on their estimated fair values measured as of the grant date. These options are exercisable only any time following the closing of an initial public offering or during a 15-day period following a change in control of the Company (and certain other sales of equity by the Company’s shareholders). As a result, expense recognition commenced upon the completion of the IPO in April 2019. The following table summarizes information for options:
The amount of unrecognized compensation expense for options is $4.4 million, which is expected to be recognized over a weighted-average period of 1.83 years. RSUs In 2020, the Company expanded its restricted stock unit (“RSU”) grants under the Omnibus Equity Plan to employees. Previously, RSU grants were limited to non-employee directors. RSUs are promises to issue shares of Class A common stock at the end of a vesting period. RSUs granted to employees vest one-third each year over a three-year period. RSUs granted to non- employee directors vest after one year. The fair value of the RSUs is calculated on the grant date using the stock price of the Class A common stock. The following table summarizes information for RSUs:
The amount of unrecognized compensation expense is $15.6 million, which is expected to be recognized over a weighted-average period of 2.44 years.
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Related Party Transactions |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions | Related Party Transactions The Company enters into transactions with Refinitiv and its affiliates which are considered to be related party transactions. The Company also enters into transactions with the Bank Stockholders and their respective affiliates. Prior to the Reorganization Transactions, the Bank Stockholders were collectively considered to be related parties of the Company. As a result of the Reorganization Transactions, they are no longer considered to be related parties. As a result, the related party transactions listed below include transactions with affiliates of Refinitiv for all periods presented and only includes transactions with affiliates of the Bank Stockholders for pre-IPO periods. At September 30, 2020 and December 31, 2019, the following balances with such affiliates were included in the consolidated statements of financial condition in the following line items (in thousands):
The following balances with such affiliates were included in the consolidated statements of income in the following line items (in thousands):
(1)For pre-IPO periods, represents fees and commissions from affiliates of the Bank Stockholders. (2)The Company maintains a market data license agreement with Refinitiv. Under the agreement, the Company delivers to Refinitiv certain market data feeds which Refinitiv redistributes to its customers. The Company earns license fees and royalties for these feeds. (3)For pre-IPO periods, represents interest income from money market funds invested with and savings accounts deposited with affiliates of the Bank Stockholders. (4)The Company maintains a shared services agreement with Refinitiv. Under the terms of the agreement, Refinitiv provides the Company with certain real estate, payroll, benefits administration, insurance, content, financial reporting and tax support. The Company reimburses affiliates of Refinitiv for expenses paid on behalf of the Company for various services including salaries and bonuses, marketing, professional fees, communications, data costs and certain other administrative services. For the three and nine months ended September 30, 2020, the Company reimbursed such affiliates a net amount of approximately $0.1 million and $1.3 million, respectively, for these expenses. For the three and nine months ended September 30, 2019, the Company reimbursed such affiliates approximately $1.2 million and $5.5 million, respectively, for these expenses. The Company engaged Blackstone Advisory Partners L.P., an affiliate of Blackstone, to provide certain financial consulting services in connection with the IPO, the October 2019 follow-on offering and the April 2020 follow-on offering for fees of $1.0 million, $0.5 million, and $0.5 million, respectively, which fees, with respect to the October 2019 follow-on offering and the April 2020 follow-on offering, were reimbursed by the underwriters. $2.0 million is included in additional paid-in capital on the September 30, 2020 consolidated statement of financial condition related to these offering costs.
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Fair Value of Financial Instruments |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments Certain financial instruments that are carried on the consolidated statements of financial condition are carried at amounts that approximate fair value. These instruments include receivables from/payables to brokers and dealers and clearing organizations, deposits with clearing organizations and accounts receivable. The Company's money market funds are classified within level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets. The Company has no instruments that are classified within level 2 or level 3 of the fair value hierarchy. The fair value measurements are as follows (in thousands):
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Credit Risk |
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Risks and Uncertainties [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
Credit Risk | Credit Risk In the normal course of business the Company, as agent, executes transactions with, and on behalf of, other brokers and dealers. If the agency transactions do not settle because of failure to perform by either counterparty, the Company may be obligated to discharge the obligation of the non-performing party and, as a result, may incur a loss if the market value of the security is different from the contract amount of the transaction. A substantial number of the Company's transactions are collateralized and executed with, and on behalf of, a limited number of broker-dealers. The Company's exposure to credit risk associated with the nonperformance of these clients in fulfilling their contractual obligations pursuant to securities transactions can be directly impacted by volatile trading markets which may impair the clients' ability to satisfy their obligations to the Company. From time to time, the Company enters into agreements to repurchase to facilitate the clearance of securities. Credit exposure related to these agreements to repurchase, including the risk related to a decline in market value of collateral (pledged or received), is managed by entering into agreements to repurchase with overnight or short-term maturity dates and only entering into repurchase transactions with netting members of the Fixed Income Clearing Corporation (“FICC”). The FICC requires dealer netting members to maintain a minimum of $25 million in equity capital and $10 million in excess net capital (as defined in Rule 15c3-1 under the Securities Exchange Act of 1934). The FICC operates a continuous net settlement system, whereby as trades are submitted and compared the FICC becomes the counterparty. The FICC also marks to market collateral on a daily basis, requiring member firms to pay or receive margin amounts as part of their daily funds settlement. The Company does not expect nonperformance by counterparties in the above situations. However, the Company's policy is to monitor its market exposure and counterparty risk. In addition, the Company has a policy of reviewing, as considered necessary, the credit standing of each counterparty with which it conducts business. Allowance for Credit Losses The Company may be exposed to credit risk regarding its receivables, which are primarily receivables from financial institutions, including investment managers and broker-dealers. At September 30, 2020, the Company maintained an allowance for credit losses of $0.1 million with regard to these receivables. At December 31, 2019, the allowance for doubtful accounts was $0.2 million. The Company maintains an allowance for credit losses based upon an estimate of the amount of potential credit losses in existing accounts receivable, as determined from a review of aging schedules, past due balances, historical collection experience and other specific account data. Careful analysis of the financial condition of our counterparties is also performed. The Company has evaluated its loss assumptions as a result of the COVID-19 pandemic and determined the current estimate of expected credit losses remains reasonable due to continued strong collections and no deterioration in our accounts receivable aging. Account balances are pooled based on the following risk characteristics: 1.Geographic location 2.Transaction fee type (billing type) 3.Legal entity Write-Offs Once determined uncollectable, aged balances are written off as credit loss expense. This determination is based on careful analysis of individual receivables and aging schedules, which are disaggregated based on the risk characteristics described above. Based on current policy, this generally occurs when the receivable hits 360 days past due. The following table presents the activity in the allowance for credit losses for accounts receivable for the period ended September 30, 2020 (in thousands):
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Commitments and Contingencies |
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Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies In the normal course of business, the Company enters into user agreements with its dealers which provide the dealers with indemnification from third parties in the event that the electronic marketplaces of the Company infringe upon the intellectual property or other proprietary right of a third party. The Company's exposure under these user agreements is unknown as this would involve estimating future claims against the Company which have not yet occurred. However, based on its experience, the Company expects the risk of a material loss to be remote. The Company has been named as a defendant, along with other financial institutions, in antitrust class actions (consolidated into two actions) relating to trading practices in United States Treasury securities auctions. The Company has filed a motion to dismiss the actions, believes it has substantial defenses to the other plaintiff's claims and intends to defend itself vigorously. Additionally, the Company was dismissed from a class action relating to an interest rate swaps matter in 2017, but that matter continues against the remaining defendant financial institutions. The Company records its best estimate of a loss, including estimated defense costs, when the loss is considered probable and the amount of such loss can be reasonably estimated. Based on its experience, the Company believes that the amount of damages claimed in a legal proceeding is not a meaningful indicator of the potential liability. At this time, the Company cannot reasonably predict the timing or outcomes of, or estimate the amount of loss, or range of loss, if any, related to its pending legal proceedings, including the matter described above, and therefore does not have any contingency reserves established for any of these matters. Revolving Credit Facility On April 8, 2019, the Company entered into a five year, $500 million senior secured revolving credit facility (“Credit Facility”) with a syndicate of banks. The Credit Facility provides additional borrowing capacity to be used to fund ongoing working capital needs, letters of credit and for general corporate purposes, including potential future acquisitions and expansions. On November 7, 2019, TWM LLC entered into an amendment to the Revolving Credit Facility among TWM LLC and the lenders party thereto, which revised the Revolving Credit Facility to permit the pending LSEG Transaction. The amendment did not otherwise impact the terms of the Revolving Credit Facility and did not impact the amount of borrowings available to TWM LLC under the Revolving Credit Facility. Under the terms of the credit agreement that governs the Credit Facility, borrowings under the Credit Facility bear interest at a rate equal to, at the Company’s option, either (a) a base rate equal to the greatest of (i) the administrative agent’s prime rate, (ii) the federal funds effective rate plus ½ of 1.0% and (iii) one month LIBOR plus 1.0%, in each case plus 0.75%, or (b) LIBOR plus 1.75%, subject to a 0.00% floor. The credit agreement also includes a commitment fee of 0.25% for available but unborrowed amounts and other administrative fees that are payable quarterly. The Credit Facility is available until April 2024, provided the Company is in compliance with all covenants. Financial covenant requirements include maintaining minimum ratios related to interest coverage and leverage. As of September 30, 2020, there were no amounts outstanding under the Credit Facility.
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Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share In April 2019, the Company completed the Reorganization Transactions and the IPO, which, among other things, resulted in the Corporation becoming the successor of TWM LLC for financial reporting purposes. As a result, earnings per share information for the pre-IPO period is not comparable to earnings per share information for the post-IPO period. Thus, earnings per share information is being presented separately for the pre-IPO and post-IPO periods. The following table summarizes the basic and diluted earnings per share calculations for Tradeweb Markets Inc. (post-IPO period):
The following table summarizes the basic and diluted earnings per share calculations for Tradeweb Markets LLC (pre-IPO period):
(1)Earnings per share and weighted average shares outstanding for the pre-IPO period has been computed to give effect to the Reorganization Transactions, including the amendment and restatement of the TWM LLC Agreement to, among other things, (i) provide for LLC Interests and (ii) exchange all of the then existing membership interests in TWM LLC for LLC interests. For the three and nine months ended September 30, 2020, there were approximately 179,508 and 264,882 weighted-average options and RSUs, respectively, that were anti-dilutive. As a result, these shares, which are still outstanding, were excluded from the computation of diluted earnings per share. For the three and nine months ended September 30, 2019, there were approximately 247,491 and 126,667 weighted-average options and equity-settled PRSUs, respectively, that were anti-dilutive and thus excluded from the computation of diluted earnings per share. LLC Interests held by the Continuing LLC Owners are redeemable in accordance with the TWM LLC Agreement, at the election of such holders, for shares of Class A or Class B common stock of Tradeweb Markets Inc. After evaluating the potential dilutive effect under the if-converted method, the 39,513,246 and 48,397,598 weighted-average LLC Interests for the assumed exchange of non-controlling interests, for the three and nine months ended September 30, 2020, respectively, were determined to be anti-dilutive and thus were excluded from the computation of diluted earnings per share for the post-IPO periods. Shares of Class C and Class D common stock do not have economic rights in Tradeweb Markets Inc. and, therefore, are not participating securities for purposes of the computation of earnings per share.
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Regulatory Capital Requirements |
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Regulatory Capital Requirements | Regulatory Capital Requirements TWL, DW and TWD are subject to the Uniform Net Capital Rule 15c3-1 under the Securities Exchange Act of 1934. TEL is subject to certain financial resource requirements with the FCA in the UK, TWJ is subject to certain financial resource requirements with the FCA in Japan and TWEU is subject to certain finance resource requirements with the AFM in the Netherlands. At September 30, 2020 and December 31, 2019, the regulatory capital requirements and regulatory capital for TWL, DW, TWD, TEL, TWJ and TWEU are as follows (in thousands):
As SEFs, TW SEF and DW SEF are required to maintain adequate financial resources and liquid financial assets in accordance with CFTC regulations. The required and maintained financial resources and liquid financial assets at September 30, 2020 and December 31, 2019 are as follows (in thousands):
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Business Segment and Geographic Information |
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Business Segment and Geographic Information | Business Segment and Geographic Information The Company operates electronic marketplaces for the trading of products across the rates, credit, equities and money markets asset classes and provides related pre-trade and post-trade services. The Company’s operations constitute a single business segment because of the integrated nature of these marketplaces and services. Information regarding revenue by client sector is as follows (in thousands):
The Company operates in the U.S. and internationally, primarily in the Europe and Asia regions. Revenues are attributed to geographic area based on the jurisdiction where the underlying transactions take place. The results by geographic region are not meaningful in understanding the Company's business. Long-lived assets are attributed to the geographic area based on the location of the particular subsidiary. The following table provides a breakdown of revenue by geographic area for the three and nine months ended September 30, 2020 and 2019 (in thousands):
The following table provides information on the attribution of long-lived assets by geographic area as of September 30, 2020 and December 31, 2019 (in thousands):
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Subsequent Events |
9 Months Ended |
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Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | . Subsequent Events On October 27, 2020, the board of directors of Tradeweb Markets Inc. declared a cash dividend of $0.08 per share of Class A common stock and Class B common stock for the fourth quarter of 2020. This dividend will be payable on December 15, 2020 to stockholders of record as of December 1, 2020. On October 24, 2020, Tradeweb Markets Inc., as the sole manager, approved a distribution by TWM LLC to its equityholders, including Tradeweb Markets Inc., in an aggregate amount of $25.0 million payable on December 11, 2020.
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Significant Accounting Policies (Policies) |
9 Months Ended |
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Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Accounting | Basis of Accounting The consolidated financial statements have been presented in conformity with accounting principles generally accepted in the United States of America. All adjustments, which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented, are normal and recurring in nature. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year.
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Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and the difference may be material to the consolidated financial statements.
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Basis of Presentation and Consolidation | Basis of Presentation and Consolidation The consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. As discussed in Note 1—Organization, as a result of the Reorganization Transactions, Tradeweb Markets Inc. consolidates TWM LLC and TWM LLC is considered to be the predecessor to Tradeweb Markets Inc. for financial reporting purposes. As a result, the consolidated financial statements for periods prior to the Reorganization Transactions have been adjusted to combine the previously separate entities for presentation purposes. However, Tradeweb Markets Inc. had no business transactions or activities and no substantial assets or liabilities prior to the Reorganization Transactions. As such, for periods prior to the completion of the Reorganization Transactions, the consolidated financial statements represent the historical financial condition and results of operations of TWM LLC and its subsidiaries. For periods after the completion of the Reorganization Transactions, the consolidated financial statements represent the financial condition and results of operations of the Company and report a non-controlling interest related to the LLC Interests held by the Continuing LLC Owners.
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Pushdown Accounting | Pushdown Accounting A majority interest of Refinitiv (formerly the Thomson Reuters Financial & Risk Business) was acquired by BCP on October 1, 2018 (the “Refinitiv Transaction”) from TR. The Refinitiv Transaction was accounted for by Refinitiv in accordance with the acquisition method of accounting pursuant to Accounting Standards Codification (“ASC”) 805, Business Combinations, and pushdown accounting was applied to Refinitiv to record the fair value of the assets and liabilities of Refinitiv as of October 1, 2018, the date of the Refinitiv Transaction. The Company, as a consolidating subsidiary of Refinitiv, also accounted for the Refinitiv Transaction using pushdown accounting. Under pushdown accounting, the excess of the fair value of the Company above the fair value accounting basis of the net assets and liabilities of the Company is recorded as goodwill. The fair value of assets acquired and liabilities assumed was determined based on assumptions that reasonable market participants would use in the principal (or most advantageous) market for the asset or liability. The adjusted valuations primarily affected the values of our long-lived and indefinite-lived intangible assets, including software development costs.
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Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consists of cash and highly liquid investments (such as short-term money market instruments) with original maturities of less than three months.
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Allowance for Credit Losses | Allowance for Credit Losses The Company continually monitors collections and payments from its clients and maintains an allowance for credit losses. The allowance for credit losses is based on an estimate of the amount of potential credit losses in existing accounts receivable, as determined from a review of aging schedules, past due balances, historical collection experience and other specific account data. Careful analysis of the financial condition of our counterparties is also performed. Once determined uncollectable, aged balances are written off as credit loss expense, which is included in general and administrative expenses on the consolidated statements of income. See Note 13 – Credit Risk for additional information.
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Receivable from and Payable to Broker and Dealers and Clearing Organizations | Receivable from and Payable to Brokers and Dealers and Clearing Organizations Receivable from and payable to brokers and dealers and clearing organizations consists of proceeds from transactions which failed to settle due to the inability of a transaction party to deliver or receive the transacted security. These securities transactions are generally collateralized by those securities. At times, transactions executed on the Company’s wholesale platform fail to settle due to the inability of a transaction party to deliver or receive the transacted security. Until the failed transaction settles, a receivable from (and a matching payable to) brokers and dealers and clearing organizations is recognized for the proceeds from the unsettled transaction.
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Deposits with Clearing Organizations | Deposits with Clearing Organizations Deposits with clearing organizations are comprised of cash deposits. Due to the short-term nature of these deposits, the recorded value has been determined to approximate fair value.
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Furniture, Equipment, Purchased Software and Leasehold Improvements | Furniture, Equipment, Purchased Software and Leasehold Improvements Furniture, equipment, purchased software and leasehold improvements are carried at cost less accumulated depreciation. Depreciation for furniture, equipment and purchased software is computed on a straight-line basis over the estimated useful lives of the related assets, ranging from to seven years. Leasehold improvements are amortized over the lesser of the estimated useful lives of the leasehold improvements or the remaining term of the lease for office space. Furniture, equipment, purchased software and leasehold improvements are tested for impairment whenever events or changes in circumstances suggest that an asset’s carrying value may not be fully recoverable in accordance with ASC 360, Property, Plant and Equipment.
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Software Development Costs | Software Development Costs The Company capitalizes costs associated with the development of internal use software at the point at which the conceptual formulation, design and testing of possible software project alternatives have been completed, in accordance with ASC 350, Intangibles – Goodwill and Other. The Company capitalizes employee compensation and related benefits and third party consulting costs incurred during the application development stage which directly contribute to such development. Such costs are amortized on a straight-line basis over three years. Costs capitalized as part of the pushdown accounting allocation are amortized over nine years. The Company reviews the amounts capitalized for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable, or that their useful lives are shorter than originally expected. Non-capitalized software costs and routine maintenance costs are expensed as incurred.
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Goodwill | Goodwill Goodwill is the excess of the fair value of the Company above the fair value accounting basis of the net assets and liabilities of the Company under pushdown accounting. Goodwill is also the cost of acquired companies in excess of the fair value of identifiable net assets at the acquisition date. Goodwill is not amortized, but in accordance with ASC 350, goodwill is tested for impairment annually and between annual tests whenever events or changes in circumstances indicate that the carrying amount may not be fully recoverable. Goodwill is tested at the reporting unit level, which is defined as an operating segment or one level below the operating segment. An impairment loss is recognized if the estimated fair value of a reporting unit is less than its net book value. Such loss is calculated as the difference between the estimated fair value of goodwill and its carrying value. In 2019, the Company changed the annual date on which goodwill is tested for impairment from July 1st to October 1st to align with the annual impairment testing date of the Company’s Parent. This change did not accelerate, delay, avoid or cause an impairment charge, nor did this change result in adjustments to any previously issued financial statements. Goodwill was last assessed on October 1, 2019.
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Intangible Assets | Intangible Assets Intangible assets with a finite life are amortized over the estimated lives, ranging from to twelve years, in accordance with ASC 350. Intangible assets subject to amortization are tested for impairment whenever events or changes in circumstances suggest that an asset's or asset group's carrying value may not be fully recoverable in accordance with ASC 360. Intangible assets with an indefinite useful life are tested for impairment at least annually. An impairment loss is recognized if the sum of the estimated discounted cash flows relating to the asset or asset group is less than the corresponding book value.
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Deferred IPO and Follow-On Offering Costs | Deferred IPO and Follow-On Offering CostsThe Company began incurring costs in connection with the filing of a Registration Statement on Form S-1 for an IPO in 2018 and Registration Statements on Form S-1 for follow-on offerings in 2019 and 2020. IPO and follow-on offering costs consist of legal, accounting, and other costs directly related to the Company’s efforts to raise capital. In accordance with ASC 505-10-25, Equity, these costs are recognized in additional paid-in capital within the consolidated statements of financial condition when the offering is effective. |
Translation of Foreign Currency | Translation of Foreign Currency Revenues and expenses denominated in foreign currencies are translated at the rate of exchange prevailing at the transaction date. Assets and liabilities denominated in foreign currencies are translated at the rate prevailing at the consolidated statements of financial condition date. Foreign currency re-measurement gains or losses on transactions in nonfunctional currencies are recognized in the consolidated statements of income. Gains or losses on translation in the financial statements of a non-U.S. operation, when the functional currency is other than the U.S. dollar, are included as a component of comprehensive income.
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Income Tax | Income Tax The Corporation is subject to U.S. federal, state and local income taxes with respect to its taxable income, including its allocable share of any taxable income of TWM LLC, and is taxed at prevailing corporate tax rates. TWM LLC is a multiple member limited liability company taxed as a partnership and accordingly any taxable income generated by TWM LLC is passed through to and included in the taxable income of its members, including the Corporation. Income taxes also include unincorporated business taxes on income earned or losses incurred for conducting business in certain state and local jurisdictions, income taxes on income earned or losses incurred in foreign jurisdictions on certain operations and federal and state income taxes on income earned or losses incurred, both current and deferred, on subsidiaries that are taxed as corporations for U.S. tax purposes. The Company records deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities. The Company measures deferred taxes using the enacted tax rates and laws that will be in effect when such temporary differences are expected to reverse. The Company evaluates the need for valuation allowances based on the weight of positive and negative evidence. The Company records valuation allowances wherever management believes it is more likely than not that the Company will not be able to realize its deferred tax assets in the future. The Company records uncertain tax positions in accordance with ASC 740, Income Taxes, on the basis of a two-step process whereby (i) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (ii) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company recognizes interest and penalties related to income taxes within the provision for income taxes in the consolidated statements of income. Accrued interest and penalties are included within accounts payable, accrued expenses and other liabilities in the consolidated statements of financial condition. The Company has elected to treat taxes due on future U.S. inclusions in taxable income under the global intangible low-taxed income (“GILTI”) provision of the Tax Cuts and Jobs Act as a current period expense when incurred.
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Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation. ASC 718 focuses primarily on accounting for a transaction in which an entity obtains employee services in exchange for stock-based payments. Under ASC 718, the stock-based payments received by the employees of the Company are accounted for either as equity awards or as liability awards. As an equity award, the Company measures and recognizes the cost of employee services received in exchange for awards of equity instruments based on their estimated fair values measured as of the grant date. These costs are recognized as an expense over the requisite service period, with an offsetting increase to additional paid-in capital. As a liability award, the cost of employee services received in exchange for an award of equity instruments is generally measured based on the grant-date fair value of the award. The fair value of that award is remeasured subsequently at each reporting date through the settlement in accordance with ASC 505. Changes in the equity instrument's fair value during the requisite service period are recognized as compensation cost over that period. For periods following the Reorganization Transactions and the IPO, the fair value of new equity instrument grants is determined based on the price of the Company’s Class A common stock on the grant date. Under ASC 718, the grant-date fair value of stock-based awards that do not require future service (i.e., vested awards) are expensed immediately. The grant-date fair value of stock-based awards that require future service, and are graded-vesting awards, are amortized over the relevant service period on a straight-line basis, with each tranche separately measured. The grant-date fair value of stock-based awards that require both future service and the achievement of Company performance-based conditions, are amortized over the relevant service period for the performance-based condition. If in a reporting period it is determined that the achievement of a performance target for a performance-based tranche is not probable, then no expense is recognized for that tranche and any expenses already recognized relating to that tranche in prior reporting periods are reversed in the current reporting period. Prior to the IPO, the Company awarded options to management and other employees (collectively, the “Special Option Award”) under the Amended and Restated Tradeweb Markets Inc. Option Plan (the “Option Plan”). In accounting for the options issued under the Option Plan, compensation expense is measured and recognized for all awards based on their estimated fair values measured as of the grant date. Costs related to these options are recognized as an expense in the consolidated statements of income over the requisite service period, with an offsetting increase to additional paid-in capital. The non-cash stock-based compensation expense associated with the Special Option Award began being expensed in the second quarter of 2019. Determining the appropriate fair value model and calculating the fair value of the stock-based awards requires the input of highly subjective assumptions, including the expected life of the stock-based awards and the stock price volatility. The Company uses the Black-Scholes pricing model to value some of its stock-based awards.
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Earnings Per Share | Earnings Per Share Basic earnings per share is computed by dividing the net income attributable to the Company's shares by the weighted-average number of the Company's shares outstanding during the period. For purposes of computing diluted earnings per share, the weighted-average number of the Company’s shares reflects the dilutive effect that could occur if securities that qualify as participating securities were converted into or exchanged or exercised for TWM LLC’s shares, in the pre-IPO period, and the Corporation’s Class A or Class B common stock, in the post-IPO period, using the treasury stock method, as applicable. Shares of Class C and Class D common stock do not have economic rights in Tradeweb Markets Inc. and, therefore, are not participating securities for purposes of the computation of earnings per share.
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Fair Value Measurement | Fair Value Measurement The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). Instruments that the Company owns (long positions) are marked to bid prices, and instruments that the Company has sold, but not yet purchased (short positions) are marked to offer prices. Fair value measurements do not include transaction costs. The fair value hierarchy under ASC 820, Fair Value Measurement, prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under ASC 820 are described below: Basis of Fair Value Measurement A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. •Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; •Level 2: Quoted prices in markets that are not considered to be active or financial instruments for which all significant inputs are observable, either directly or indirectly; •Level 3: Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.
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Recent Accounting Pronouncements – Adopted | Recent Accounting Pronouncements – Adopted In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016‑13, Financial Instruments – Credit Losses. The ASU provides new guidance for estimating credit losses on certain types of financial instruments by introducing an approach based on expected losses. ASU 2016-13 was adopted on January 1, 2020 using the modified retrospective method of adoption. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements. See Note 13 – Credit Risk for additional information. In January 2017, the FASB issued ASU 2017‑4, Intangibles – Goodwill and Other. The ASU simplifies the quantitative goodwill impairment test by eliminating the second step of the test. Under this ASU, impairment will be measured by comparing the estimated fair value of the reporting unit with its carrying value. The new guidance does not amend the optional qualitative assessment of goodwill impairment. ASU 2017-4 was adopted on January 1, 2020. The adoption of this ASU did not impact the Company’s consolidated financial statements. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this ASU simplify the accounting for income taxes by removing certain exceptions for investments, intraperiod allocations and interim calculations and include additional guidance in order to reduce complexity in accounting for income taxes. ASU 2019-12 is effective for annual periods beginning after December 15, 2020, with early adoption permitted. ASU 2019-12 was early adopted on January 1, 2020. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements. In February 2016, the FASB issued ASU 2016-2, Leases (Topic 842), which requires lessees to recognize a right-of-use asset and a lease liability for all leases with an initial term in excess of twelve months. The asset reflects the present value of unpaid lease payments coupled with initial direct costs, prepaid lease payments and lease incentives. The amount of the lease liability is calculated as the present value of unpaid lease payments. ASU 2016-2 was adopted on January 1, 2019 using the modified retrospective method of adoption. Upon adoption, the Company: •Recorded right-of-use assets of $31.8 million, •Recorded a lease liability of $39.6 million, •Eliminated deferred rent of $4.9 million, •Eliminated leasehold interests of $2.9 million, and •Elected to take the optional package of practical expedients, which allows for no reassessment of i.whether any expired or existing contracts are or contain leases, ii.the lease classification for any expired or existing leases, and iii.initial direct costs for any existing leases.
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Goodwill and Intangible Assets (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of intangible assets which have an indefinite useful life | Intangible assets with an indefinite useful life consisted of the following at September 30, 2020 and December 31, 2019 (in thousands):
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Intangible assets that are subject to amortization | Intangible assets that are subject to amortization consisted of the following at September 30, 2020 and December 31, 2019 (in thousands):
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Revenue (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Breakdown of revenues between fixed and variable revenues | The breakdown of revenues between fixed and variable revenues, in thousands, for the three and nine months ended September 30, 2020 and 2019 is as follows:
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Schedule of recognized revenue and remaining deferred revenue balance | The recognized revenue and remaining balance is shown below (in thousands):
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Stockholders’ Equity (Tables) |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of class of common stock par value, votes and economic rights | These attributes are summarized in the following table:
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Non-Controlling Interests (Tables) |
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Noncontrolling Interest [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the ownership interest in noncontrolling interest | The following table summarizes the ownership interest in Tradeweb Markets LLC:
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Summary of the impact on equity due to changes in the Company’s ownership interest in noncontrolling interest | The following table summarizes the impact on equity due to changes in the Corporation’s ownership interest in Tradeweb Markets LLC (in thousands):
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Stock-Based Compensation Plans (Tables) |
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Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of equity-settled PRSUs issued | The following table summarizes information for equity-settled PRSUs of the Company:
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Schedule of cash-settled PRSUs issued | The following table summarizes information for cash-settled PRSUs:
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Schedule of options issued | The following table summarizes information for options:
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Schedule of RSUs issued | The following table summarizes information for RSUs:
|
Related Party Transactions (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of balances from transactions with affiliates included in the consolidated statements | At September 30, 2020 and December 31, 2019, the following balances with such affiliates were included in the consolidated statements of financial condition in the following line items (in thousands):
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||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of affiliates were included in the consolidated statements of income | The following balances with such affiliates were included in the consolidated statements of income in the following line items (in thousands):
(1)For pre-IPO periods, represents fees and commissions from affiliates of the Bank Stockholders. (2)The Company maintains a market data license agreement with Refinitiv. Under the agreement, the Company delivers to Refinitiv certain market data feeds which Refinitiv redistributes to its customers. The Company earns license fees and royalties for these feeds. (3)For pre-IPO periods, represents interest income from money market funds invested with and savings accounts deposited with affiliates of the Bank Stockholders. (4)The Company maintains a shared services agreement with Refinitiv. Under the terms of the agreement, Refinitiv provides the Company with certain real estate, payroll, benefits administration, insurance, content, financial reporting and tax support.
|
Fair Value of Financial Instruments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of fair value measurements | The fair value measurements are as follows (in thousands):
|
Credit Risk (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||
Risks and Uncertainties [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable, Allowance for Credit Loss | The following table presents the activity in the allowance for credit losses for accounts receivable for the period ended September 30, 2020 (in thousands):
|
Earnings Per Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Basic and Diluted Earnings Per Share | The following table summarizes the basic and diluted earnings per share calculations for Tradeweb Markets Inc. (post-IPO period):
The following table summarizes the basic and diluted earnings per share calculations for Tradeweb Markets LLC (pre-IPO period):
(1)Earnings per share and weighted average shares outstanding for the pre-IPO period has been computed to give effect to the Reorganization Transactions, including the amendment and restatement of the TWM LLC Agreement to, among other things, (i) provide for LLC Interests and (ii) exchange all of the then existing membership interests in TWM LLC for LLC interests.
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Regulatory Capital Requirements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Broker-Dealer, Net Capital Requirement, SEC Regulation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of regulatory capital requirements | At September 30, 2020 and December 31, 2019, the regulatory capital requirements and regulatory capital for TWL, DW, TWD, TEL, TWJ and TWEU are as follows (in thousands):
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Schedule of financial resources and liquid financial resources | The required and maintained financial resources and liquid financial assets at September 30, 2020 and December 31, 2019 are as follows (in thousands):
|
Business Segment and Geographic Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of information regarding revenue by client sector | Information regarding revenue by client sector is as follows (in thousands):
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Schedule of revenue and long-lived assets by geographic location | The following table provides a breakdown of revenue by geographic area for the three and nine months ended September 30, 2020 and 2019 (in thousands):
The following table provides information on the attribution of long-lived assets by geographic area as of September 30, 2020 and December 31, 2019 (in thousands):
|
Significant Accounting Policies - Furniture, Equipment, Purchased Software, Leasehold Improvements and Software Development Cost (Details) |
9 Months Ended |
---|---|
Sep. 30, 2020 | |
Furniture, Equipment, Purchased Software and Leasehold Improvements | Minimum | |
Furniture, Equipment, Purchased Software and Leasehold Improvements | |
Useful life | 3 years |
Furniture, Equipment, Purchased Software and Leasehold Improvements | Maximum | |
Furniture, Equipment, Purchased Software and Leasehold Improvements | |
Useful life | 7 years |
Software Development Costs | |
Furniture, Equipment, Purchased Software and Leasehold Improvements | |
Useful life | 3 years |
Amortization of pushdown accounting allocation | 9 years |
Significant Accounting Policies - Intangible Assets (Details) |
9 Months Ended |
---|---|
Sep. 30, 2020 | |
Minimum | |
Intangible Assets | |
Useful life of intangible assets | 7 years |
Maximum | |
Intangible Assets | |
Useful life of intangible assets | 12 years |
Significant Accounting Policies - Deferred IPO Cost Follow-On Offering Costs (Details) $ in Millions |
Sep. 30, 2020
USD ($)
|
---|---|
Initial Public Offering | |
Deferred costs | $ 15.9 |
Follow On Offering | |
Deferred costs | $ 5.1 |
Significant Accounting Policies - Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands |
Jan. 01, 2019 |
Sep. 30, 2020 |
Dec. 31, 2019 |
---|---|---|---|
Lessee, Lease, Description [Line Items] | |||
Right-of-use assets | $ 28,073 | $ 24,504 | |
Lease liability | $ 33,240 | $ 30,955 | |
ASU 2016-02 | |||
Lessee, Lease, Description [Line Items] | |||
Right-of-use assets | $ 31,800 | ||
Lease liability | 39,600 | ||
Deferred rent | 4,900 | ||
Leasehold interest | $ 2,900 | ||
Package of practical expedients | true |
Restricted Cash (Details) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Restricted Cash Equivalents [Abstract] | ||
Restricted cash | $ 1,000 | $ 1,000 |
Goodwill and Intangible Assets - Summary of Goodwill (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
Dec. 31, 2019 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | |||||
Goodwill | $ 2,694,797 | $ 2,694,797 | $ 2,694,797 | ||
Amortization expense | $ 24,900 | $ 24,900 | $ 74,600 | $ 74,600 |
Goodwill and Intangible Assets - Indefinite Lived Intangible Assets (Details) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Intangible assets with indefinite useful lives | ||
Intangible assets which have an indefinite useful life | $ 323,100 | $ 323,100 |
Licenses | ||
Intangible assets with indefinite useful lives | ||
Intangible assets which have an indefinite useful life | 168,800 | 168,800 |
Tradename | ||
Intangible assets with indefinite useful lives | ||
Intangible assets which have an indefinite useful life | $ 154,300 | $ 154,300 |
Goodwill and Intangible Assets - Finite Lived Intangible Assets (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2020 |
Dec. 31, 2019 |
|
Intangible assets that are subject to amortization | ||
Cost | $ 1,082,600 | $ 1,082,600 |
Accumulated Amortization | (198,814) | (124,259) |
Net Carrying Amount | $ 883,786 | 958,341 |
Customer relationships | ||
Intangible assets that are subject to amortization | ||
Amortization Period | 12 years | |
Cost | $ 928,200 | 928,200 |
Accumulated Amortization | (154,700) | (96,687) |
Net Carrying Amount | $ 773,500 | 831,513 |
Content and data | ||
Intangible assets that are subject to amortization | ||
Amortization Period | 7 years | |
Cost | $ 154,400 | 154,400 |
Accumulated Amortization | (44,114) | (27,572) |
Net Carrying Amount | $ 110,286 | $ 126,828 |
Revenue - Recognized Revenue and Remaining Balances (Details) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2020
USD ($)
| |
Change In Contract with Customer, Liability [Roll Forward] | |
Deferred revenue balance - beginning of period | $ 23,990 |
New billings | 87,153 |
Revenue recognized | (81,286) |
Deferred revenue balance - end of period | $ 29,857 |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
Dec. 31, 2019 |
|
Income Tax Disclosure [Line Items] | |||||
Effective tax rate | 19.10% | 17.50% | 20.80% | 15.60% | |
Percentage of amount of U.S. federal, state and local income or franchise tax savings | 50.00% | ||||
Remaining percentage of tax benefits | 50.00% | ||||
Other assets | $ 44,561 | $ 44,561 | $ 27,236 | ||
Refinitiv | |||||
Income Tax Disclosure [Line Items] | |||||
Other assets | 2,700 | 2,700 | |||
Accounts payable, accrued expenses and other liabilities | |||||
Income Tax Disclosure [Line Items] | |||||
Tax liability | $ 2,700 | $ 2,700 | |||
State, local and foreign | |||||
Income Tax Disclosure [Line Items] | |||||
Percentage of amount of U.S. federal, state and local income or franchise tax savings | 21.00% | 21.00% | 21.00% | 21.00% |
Tax Receivable Agreement (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2020 |
Dec. 31, 2019 |
|
Tax Receivable Agreement | ||
Percentage of amount of U.S. federal, state and local income or franchise tax savings | 50.00% | |
Tax receivable agreement liability | $ 372,953 | $ 240,817 |
Stockholder's Equity - Initial Public Offering and Reorganization Transactions (Details) $ / shares in Units, $ in Billions |
Apr. 08, 2019
USD ($)
$ / shares
shares
|
---|---|
Class A Common Stock | Initial Public Offering | |
Subsidiary, Sale of Stock [Line Items] | |
Issuance of common stock from equity incentive plans (in shares) | shares | 46,000,000 |
Public offering price (in dollars per share) | $ / shares | $ 27.00 |
Class A Common Stock | Underwriter | |
Subsidiary, Sale of Stock [Line Items] | |
Issuance of common stock from equity incentive plans (in shares) | shares | 6,000,000 |
Tradeweb Markets LLC | |
Subsidiary, Sale of Stock [Line Items] | |
Public offering price (in dollars per share) | $ / shares | $ 27.00 |
Net proceeds | $ | $ 1.2 |
Stockholder's Equity - Recapitalization of Tradeweb Markets LLC (Details) - Tradeweb Markets LLC - shares |
9 Months Ended | |
---|---|---|
Apr. 04, 2019 |
Sep. 30, 2020 |
|
LLC Interests | ||
Class of Stock [Line Items] | ||
Common units exchanged (in shares) | 222,222,197 | |
Class A Common Stock | ||
Class of Stock [Line Items] | ||
Common units exchanged (in shares) | 146,333 | |
Class C Common Stock | ||
Class of Stock [Line Items] | ||
Common units exchanged (in shares) | 447 | |
Class P (A) | ||
Class of Stock [Line Items] | ||
Common units exchanged (in shares) | 6,887 | |
Class P (C) | ||
Class of Stock [Line Items] | ||
Common units exchanged (in shares) | 2 | |
Class P-1 (A) | ||
Class of Stock [Line Items] | ||
Common units exchanged (in shares) | 6,094 | |
Class P-1 (C) | ||
Class of Stock [Line Items] | ||
Common units exchanged (in shares) | 232 |
Stock-Based Compensation Plans - Options (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Options granted (in shares) | 0 | 205,000 | 0 | 386,115 |
Weighted-average grant-date fair value (in dollars per share) | $ 0 | $ 11.45 | $ 0 | $ 7.48 |
Compensation expense | $ 1,295 | $ 1,995 | $ 4,823 | $ 22,398 |
RSU | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Compensation expense | $ 1,684 | $ 0 | $ 3,674 | $ 0 |
RSUs granted (in shares) | 0 | 0 | 493,878 | 0 |
Weighted-average grant-date fair value (in dollars per share) | $ 0 | $ 0 | $ 38.91 | $ 0 |
Related Party Transactions - Balances (Details) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Related Party Transactions [Abstract] | ||
Accounts receivable | $ 2,609 | $ 0 |
Receivable from affiliates | 36 | 2,525 |
Accounts payable, accrued expenses and other liabilities | 539 | 0 |
Deferred revenue | 4,185 | 4,733 |
Payable to affiliates | $ 4,977 | $ 1,506 |
Related Party Transactions - Consolidated Statements of Income (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Revenue: | ||||
Revenue | $ 212,870 | $ 200,981 | $ 659,583 | $ 578,258 |
Operating Income and Expenses: | ||||
Interest income | (349) | 636 | 64 | 1,669 |
Shared Services Fees: | ||||
Technology and communications | 12,037 | 9,527 | 34,397 | 29,086 |
General and administrative | 8,657 | 7,507 | 24,520 | 25,961 |
Occupancy | 3,443 | 3,640 | 10,678 | 10,900 |
Affiliated Entity | ||||
Operating Income and Expenses: | ||||
Interest income | 0 | 0 | 0 | 858 |
Shared Services Fees: | ||||
Technology and communications | 740 | 740 | 2,220 | 2,220 |
General and administrative | 0 | 24 | (596) | 406 |
Occupancy | 0 | 123 | 15 | 434 |
Transaction fees | Affiliated Entity | ||||
Revenue: | ||||
Revenue | 0 | 0 | 0 | 59,643 |
Subscription fees | Affiliated Entity | ||||
Revenue: | ||||
Revenue | 0 | 0 | 0 | 5,670 |
Commissions | Affiliated Entity | ||||
Revenue: | ||||
Revenue | 0 | 0 | 0 | 16,186 |
Refinitiv market data fees | Affiliated Entity | ||||
Revenue: | ||||
Revenue | $ 14,273 | $ 13,251 | $ 43,466 | $ 40,252 |
Related Party Transactions - Narrative (Details) - USD ($) $ in Millions |
1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|---|
Apr. 30, 2019 |
Sep. 30, 2020 |
Jun. 30, 2020 |
Dec. 31, 2019 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Related Party Transactions | |||||||
Consulting service fee for IPO | $ 1.0 | ||||||
Consulting service fee for follow on offering | $ 0.5 | $ 0.5 | |||||
Adjustment to additional paid in capital due to consulting service fee | $ 2.0 | ||||||
Refinitiv | Operating Expense Reimbursement | |||||||
Related Party Transactions | |||||||
Related party expense | $ 0.1 | $ 1.2 | $ 1.3 | $ 5.5 |
Credit Risk (Details) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Credit Risk | ||
Total stockholder's equity | $ 4,056,855 | $ 3,378,588 |
Excess net capital | 10,000 | |
Allowance for doubtful accounts | 120 | $ 195 |
Minimum | ||
Credit Risk | ||
Total stockholder's equity | $ 25,000 |
Credit Risk - Credit losses (Details) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2020
USD ($)
| |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |
Beginning balance, prior to adoption of ASC 326 - December 31, 2019 | $ 195 |
Current-period provision for expected credit losses | 239 |
Write-offs charged against the allowance | (54) |
Recoveries collected | (260) |
Ending balance - September 30, 2020 | $ 120 |
Commitments and Contingencies (Details) - Revolving credit facility - USD ($) |
Apr. 08, 2019 |
Sep. 30, 2020 |
---|---|---|
Commitments and Contingencies | ||
Revolving credit facility, term | 5 years | |
Maximum borrowing capacity | $ 500,000,000 | |
Commitment fee, percentage | 0.25% | |
Amount outstanding | $ 0 | |
One-month LIBOR | ||
Commitments and Contingencies | ||
Spread | 1.00% | |
Base rate | ||
Commitments and Contingencies | ||
Spread | 0.75% | |
LIBOR | ||
Commitments and Contingencies | ||
Spread | 1.75% | |
Floor | 0.00% | |
Fed Funds Effective Rate | ||
Commitments and Contingencies | ||
Spread | 0.50% |
Earnings Per Share (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
||||||||
Denominator: | |||||||||||
Weighted average shares of Class A and Class B common stock outstanding - Basic (in shares) | [1],[2] | 187,774,170 | 142,935,206 | 177,257,994 | |||||||
Weighted average shares of Class A and Class B common stock outstanding - Diluted (in shares) | [1],[2] | 194,955,695 | 151,362,643 | 185,026,108 | |||||||
Earnings per share - Basic (in dollars per share) | $ 0.20 | $ 0.21 | $ 0.63 | ||||||||
Earnings per share - Diluted (in dollars per share) | $ 0.19 | $ 0.20 | $ 0.60 | ||||||||
Weighted-average shares (in shares) | 179,508 | 247,491 | 264,882 | 126,667 | |||||||
Potential Dilutive | |||||||||||
Denominator: | |||||||||||
Weighted-average shares (in shares) | 39,513,246 | 48,397,598 | |||||||||
Tradeweb Markets Inc | |||||||||||
Numerator: | |||||||||||
IPO net income | $ 36,812,000 | $ 29,612,000 | $ 111,236,000 | $ 42,440,000 | |||||||
Denominator: | |||||||||||
Weighted average shares of Class A and Class B common stock outstanding - Basic (in shares) | 187,774,170 | 142,935,206 | 177,257,994 | 142,934,221 | [1],[2] | ||||||
Weighted average shares of Class A and Class B common stock outstanding - Diluted (in shares) | 194,955,695 | 151,362,643 | 185,026,108 | 151,158,760 | [1],[2] | ||||||
Earnings per share - Basic (in dollars per share) | $ 0.20 | $ 0.21 | $ 0.63 | $ 0.30 | [1],[2] | ||||||
Earnings per share - Diluted (in dollars per share) | $ 0.19 | $ 0.20 | $ 0.60 | $ 0.28 | [1],[2] | ||||||
Tradeweb Markets Inc | PRSU | |||||||||||
Denominator: | |||||||||||
Dilutive effect (in shares) | 2,584,192 | 2,492,381 | 2,371,727 | 2,355,938 | |||||||
Tradeweb Markets Inc | Options | |||||||||||
Denominator: | |||||||||||
Dilutive effect (in shares) | 4,402,391 | 5,935,056 | 5,264,106 | 5,868,601 | |||||||
Tradeweb Markets Inc | RSU | |||||||||||
Denominator: | |||||||||||
Dilutive effect (in shares) | 194,942 | 0 | 132,281 | 0 | |||||||
Tradeweb Markets LLC | |||||||||||
Numerator: | |||||||||||
IPO net income | $ 42,352 | ||||||||||
Denominator: | |||||||||||
Weighted average shares of Class A and Class B common stock outstanding - Basic (in shares) | [1],[3] | 222,222,197 | |||||||||
Weighted average shares of Class A and Class B common stock outstanding - Diluted (in shares) | [1],[3] | 223,320,457 | |||||||||
Earnings per share - Basic (in dollars per share) | [1],[3] | $ 0.19 | |||||||||
Earnings per share - Diluted (in dollars per share) | [1],[3] | $ 0.19 | |||||||||
Tradeweb Markets LLC | PRSU | |||||||||||
Denominator: | |||||||||||
Dilutive effect (in shares) | 1,098,260 | ||||||||||
|
Business Segment and Geographic Information - Revenue by Client Sector (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Business Segment and Geographic Information | ||||
Gross revenue | $ 212,870 | $ 200,981 | $ 659,583 | $ 578,258 |
Total revenue | 212,870 | 200,981 | 659,583 | 578,258 |
Operating expenses | 154,349 | 142,723 | 467,808 | 442,768 |
Operating income | 58,521 | 58,258 | 191,775 | 135,490 |
Institutional | ||||
Business Segment and Geographic Information | ||||
Gross revenue | 131,860 | 120,858 | 407,464 | 341,167 |
Wholesale | ||||
Business Segment and Geographic Information | ||||
Gross revenue | 44,959 | 43,040 | 136,967 | 124,416 |
Retail | ||||
Business Segment and Geographic Information | ||||
Gross revenue | 17,453 | 20,169 | 59,495 | 61,314 |
Market Data | ||||
Business Segment and Geographic Information | ||||
Gross revenue | $ 18,598 | $ 16,914 | $ 55,657 | $ 51,361 |
Business Segment and Geographic Information - Revenue and Long-lived Assets by Geographic Region (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
Dec. 31, 2019 |
|
Business Segment and Geographic Information | |||||
Gross revenue | $ 212,870 | $ 200,981 | $ 659,583 | $ 578,258 | |
Long-lived assets | 4,133,061 | 4,133,061 | $ 4,214,233 | ||
U.S. | |||||
Business Segment and Geographic Information | |||||
Gross revenue | 136,785 | 126,599 | 422,114 | 368,689 | |
Long-lived assets | 4,116,769 | 4,116,769 | 4,200,133 | ||
International | |||||
Business Segment and Geographic Information | |||||
Gross revenue | 76,085 | $ 74,382 | 237,469 | $ 209,569 | |
Long-lived assets | $ 16,292 | $ 16,292 | $ 14,100 |
Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Oct. 27, 2020 |
Oct. 24, 2020 |
Sep. 30, 2020 |
Mar. 31, 2020 |
Sep. 30, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
|
Subsequent Event [Line Items] | |||||||
Cash dividend declared (in dollars per share) | $ 0.08 | $ 0.08 | $ 0.08 | $ 0.08 | |||
Capital distributions | $ 100,000 | $ 20,000 | |||||
Subsequent Event | |||||||
Subsequent Event [Line Items] | |||||||
Capital distributions | $ 25,000 | ||||||
Subsequent Event | Class B Common Stock | |||||||
Subsequent Event [Line Items] | |||||||
Cash dividend declared (in dollars per share) | $ 0.08 | ||||||
Subsequent Event | Class A Common Stock | |||||||
Subsequent Event [Line Items] | |||||||
Cash dividend declared (in dollars per share) | $ 0.08 |
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