Tradeweb Earnings: Market Share Gains Drive Double-Digit Revenue Growth

Wide-moat-rated Tradeweb TW reported strong third-quarter results, driven by market share gains in interest-rate swaps and a surge in Chinese bond trading on its platform. Net revenue increased 14.5% from last year and 5.7% from last quarter to $328 million. Net income increased 36.9% year over year to $112 million as Tradeweb benefited from good cost management and higher interest rates on its $1.5 billion cash hoard. As we incorporate these results, we do not plan to materially alter our $84 per share fair value estimate for Tradeweb, and we see shares as fairly valued.

Tradeweb’s rate-based trading products—its largest segment—performed the best, with revenue rising 16.6% from last year to $173 million. Average daily volume for long-tenor interest swaps rose 60.6% year over year. The increase in volume was driven by better market conditions and market share gains as Tradeweb saw its global interest-rate swap share increase to 18.2% from 15.3% last year. While market share performance was more muted for its U.S and European government bond trading, favorable market conditions also allowed Tradeweb to increase its volume in these segments 15.3% and 11.7%, respectively, from last year.

Tradeweb also saw strong performance in its credit-based trading products—an improvement from a disappointing second quarter—with revenue rising 15.3% from last year and 7.1% from last quarter. The firm’s market share in U.S. high-grade bonds showed strong momentum, increasing to 16.6% from 13.9% last year, a record for the firm. Tradeweb’s high-yield market share returned to expansion as well, rising to 7.8% from 5.4% last year. Tradeweb also saw a 274% increase in Chinese bond trading volume. While this was not an important part of Tradeweb credit segment, the sheer size of the increase has made it impactful, providing the segment with more than half of its volume increase over the past year.