FORM 10-Q September 30, 2023 Delaware (I.R.S. Employer Identification No.) 10036 (Address of principal executive offices) (Zip Code) Smaller reporting company Class of Stock Shares Outstanding as of October 19, 2023 Class A Common Stock, par value $0.00001 per share Class B Common Stock, par value $0.00001 per share 96,933,192 Class C Common Stock, par value $0.00001 per share Class D Common Stock, par value $0.00001 per share and its subsidiaries. March 31, 2019 December 31, 2018 Assets Cash $ 100 $ 100 Total assets $ 100 $ 100 Stockholder’s Equity Common Stock, par value $0.01 per share, 1,000 shares authorized, 100 issued and outstanding $ 1 $ 1 Additional paid-in capital (see note 4) 99 99 Total stockholder’s equity $ 100 $ 100 and Subsidiaries As of September 30, 2023, Tradeweb Markets Inc. from TR. The Class of Common Stock Par Value Votes Economic Rights Class A common stock $ 0.00001 1 Yes Class B common stock $ 0.00001 10 Yes Class C common stock $ 0.00001 1 No Class D common stock $ 0.00001 10 No See Note 11 – Fair Value of Financial Instruments for additional details. Successor Successor March 31, December 31, Assets Cash and cash equivalents including cash deposited with related parties of $246,416 and $283,790 at March 31, 2019 and December 31, 2018, respectively $ 361,608 $ 410,104 Restricted cash 1,200 1,200 Receivable from brokers and dealers and clearing organizations including receivables from related parties of $199 and $3,332 at March 31, 2019 and December 31, 2018, respectively 88,422 174,591 Deposits with clearing organizations including deposits from related parties of $500 at both March 31, 2019 and December 31, 2018 8,872 11,427 Accounts receivable, net of allowance including receivables from related parties of $46,947 and $40,730 at March 31, 2019 and December 31, 2018, respectively 94,284 87,192 Furniture, equipment, purchased software and leasehold improvements, net of accumulated depreciation and amortization 36,790 38,128 Right-of-use assets 32,647 — Software development costs, net of accumulated amortization 171,705 170,582 Intangible assets, net of accumulated amortization 1,355,996 1,380,848 Goodwill 2,694,797 2,694,797 Receivable from affiliates 3,026 3,243 Other assets including other assets from related parties of $0 and $9 at March 31, 2019 and December 31, 2018, respectively 32,238 25,027 Total assets $ 4,881,585 $ 4,997,139 Liabilities and Members’ Capital Liabilities Payable to brokers and dealers and clearing organizations including payables to related parties of $0 and $2,404 at March 31, 2019 and December 31, 2018, respectively $ 81,214 $ 171,214 Accrued compensation 54,087 120,158 Deferred revenue including deferred revenue from related parties of $8,556 and $9,151 at March 31, 2019 and December 31, 2018, respectively 28,487 27,883 Accounts payable, accrued expenses and other liabilities including payables to related parties of $387 and $0 at March 31, 2019 and December 31, 2018, respectively 33,295 42,548 Employee equity compensation payable 299 24,187 Lease liability 37,310 — Payable to affiliates 6,050 5,009 Deferred tax liability 19,589 19,627 Total liabilities 260,331 410,626 Commitments and contingencies (note 13) Mezzanine Capital Class C Shares and Class P(C) Shares 23,275 14,179 Members’ capital Members’ capital 4,597,857 4,573,200 Accumulated other comprehensive income 122 (866 ) Total members’ capital 4,597,979 4,572,334 Total liabilities and members’ capital $ 4,881,585 $ 4,997,139 Successor Predecessor Three Months Three Months Revenues Transaction fees including from related parties of $59,643 and $52,918 in the three months ended March 31, 2019 and 2018, respectively $ 102,640 $ 90,139 Subscription fees including from related parties of $5,670 and $5,220 in the three months ended March 31, 2019 and 2018, respectively 34,445 36,326 Commissions including from related parties of $16,186 and $11,631 in the three months ended March 31, 2019 and 2018, respectively 34,197 27,883 Refinitiv market data fees 13,616 12,237 Other 1,894 2,918 Gross revenue 186,792 169,503 Contingent consideration — (10,070 ) Net revenue 186,792 159,433 Expenses Employee compensation and benefits 77,273 71,570 Depreciation and amortization 33,503 16,268 Technology and communications including from related parties of $740 in both the three months ended March 31, 2019 and 2018 10,040 8,463 General and administrative including from related parties of $180 in both the three months ended March 31, 2019 and 2018 9,089 6,517 Professional fees 6,971 5,538 Occupancy including from related parties of $155 in both the three months ended March 31, 2019 and 2018 3,639 3,722 Total expenses 140,515 112,078 Operating income 46,277 47,355 Interest income including from related parties of $208 and $21 in the three months ended March 31, 2019 and 2018, respectively 858 471 Income before taxes 47,135 47,826 Provision for income taxes (4,783 ) (2,518 ) Net income $ 42,352 $ 45,308 Net income per share Basic $ 0.19 $ 0.21 Diluted $ 0.19 $ 0.21 Weighted average number of shares outstanding (note 14) Basic 222,222,197 213,435,321 Diluted 223,320,457 213,435,321 Successor Predecessor Three Months Three Months Ended Ended March 31, March 31, 2019 2018 Net income $ 42,352 $ 45,308 Foreign currency translation adjustments 988 1,928 Comprehensive income $ 43,340 $ 47,236 Members’ Accumulated Total Predecessor Members’ capital at December 31, 2017 $ 999,735 $ (13,267 ) $ 986,468 Comprehensive income: Net income 45,308 45,308 Foreign currency translation adjustments 1,928 1,928 Capital distributions (25,000 ) (25,000 ) Members’ capital at March 31, 2018 $ 1 ,020,043 $ (11,339 ) $ 1 ,008,704 Members’ Accumulated Total Successor Members’ capital at December 31, 2018 $ 4 ,573,200 $ (866 ) $ 4 ,572,334 Comprehensive income: Net income 42,352 42,352 Foreign currency translation adjustments 988 988 Adjustment to Class C Shares and Class P(C) Shares in mezzanine capital (2,369 ) (2,369 ) Share-based compensation 4,674 4,674 Capital distributions (20,000 ) (20,000 ) Members’ capital at March 31, 2019 $ 4 ,597,857 $ 122 $ 4 ,597,979 Successor Predecessor Three Months Three Months Cash flows from operating activities Net income $ 42,352 $ 45,308 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 33,503 16,268 Contingent consideration — 10,070 Share-based compensation expense 4,674 — Deferred taxes (39 ) 452 (Increase) decrease in operating assets: Receivable from brokers and dealers and clearing organizations 86,169 4,324 Deposits with clearing organizations 2,570 (950 ) Accounts receivable (6,406 ) (29,762 ) Receivable from affiliates 217 (119 ) Other assets (7,152 ) 903 Increase (decrease) in operating liabilities: Payable to brokers and dealers and clearing organizations (90,000 ) (4,322 ) Accrued compensation (66,447 ) (59,693 ) Deferred revenue 602 1 ,479 Accounts payable, accrued expenses and other liabilities (4,911 ) 4 ,201 Employee equity compensation payable (17,161 ) (11,797 ) Payable to affiliates 950 9 ,412 Net cash used in operating activities (21,079 ) (14,226 ) Cash flows from investing activities Purchase of furniture, equipment, software and leasehold improvements (1,516 ) (1,244 ) Capitalized software development costs (6,767 ) (6,198 ) Net cash used in investing activities (8,283 ) (7,442 ) Cash flows from financing activities Capital distributions (20,000 ) (25,000 ) Net cash used in financing activities (20,000 ) (25,000 ) Effect of exchange rate changes on cash and cash equivalents 866 1 ,813 Net decrease in cash and cash equivalents (48,496 ) (44,855 ) Cash and cash equivalents and restricted cash Beginning of period 411,304 353,798 End of period $ 362,808 $ 308,943 Successor Predecessor Three Months Three Months March 31, 2019 March 31, 2018 Supplemental disclosure of cash flow information Interest paid $ — $ — Income taxes paid $ 7,301 $ 1,784 Successor Predecessor Three Months Three Months March 31, 2019 March 31, 2018 Cash and cash equivalents $ 361,608 $ 307,743 Restricted cash 1,200 1 ,200 Cash and cash equivalents and restricted cash $ 362,808 $ 308,943 Successor Predecessor Three Months Ended Three Months Ended (in thousands) (in thousands) Variable Fixed Variable Fixed Revenues Transaction fees $ 78,915 $ 23,725 $ 69,637 $ 20,502 Subscription Fees including Refinitiv market data fees 455 47,606 475 48,088 Commissions 24,310 9,887 17,780 10,103 Other 303 1,591 12 2,906 Gross revenues $ 103,983 $ 82,809 $ 87,904 $ 81,599 Tradeweb Markets LLC: Remainder of 2019 $ 1,715 2020 1,953 2021 6,873 2022 — 2023 1,225 Thereafter 29,013 Total future minimum lease payments 40,779 Less imputed interest (3,469 ) Lease liability $ 37,310 Remainder of 2019 $ 8,511 2020 7,725 2021 5,380 2022 4,081 2023 3,907 Thereafter 11,175 $ 40,779 Licenses $ 168,800 Tradename 154,300 Total $ 323,100 Successor Successor March 31, 2019 December 31, 2018 Amortization Cost Accumulated Net Carrying Cost Accumulated Net Carrying Customer relationships - Refinitiv Transaction 12 Years $ 928,200 $ (38,675 ) $ 889,525 $ 928,200 $ (19,338 ) $ 908,862 Content and data 7 Years 154,400 (11,029 ) 143,371 154,400 (5,514 ) 148,886 $ 1,082,600 $ (49,704 ) $ 1,032,896 $ 1,082,600 $ (24,852 ) $ 1,057,748 Remainder of 2019 $ 74,556 2020 99,408 2021 99,408 2022 99,408 2023 99,408 Deferred revenue balance - December 31, 2018 $ 27,883 New billings 29,165 Revenue recognized (28,561 ) Deferred revenue balance - March 31, 2019 $ 28,487 Successor Predecessor Three Months Ended Three Months Ended March 31, 2019 March 31, 2018 Current: Federal $ — $ — State and Local 1,487 856 Foreign 3,335 1,210 4,822 2,066 Deferred - Federal 704 299 Deferred - state and local 577 153 Deferred - foreign (1,320 ) — Total deferred (39 ) 452 Total $ 4,783 $ 2,518 non-employee directors will vest after one year. PRSUs Successor Number of Weighted Outstanding at December 31, 2018 1,442.2 $30,472 Granted 554.3 31,563 Outstanding at March 31, 2019 1,996.5 $34,151 Successor Number of Weighted Outstanding at December 31, 2018 522.5 $ 34,075 Exercised (507.2 ) 33,694 Outstanding at March 31, 2019 15.3 $ 51,334 Weighted Average Expected Life (years) 5.7 Weighted Average Risk Free Interest Rate 2.94 % Weighted Average Expected Volatility 20.0 % Weighted Average Expected Dividend Yield 4.01 % Share Price $ 25,692 Exercise Price $ 28,601 Successor Number of Weighted Intrinsic Outstanding at December 31, 2018 13,025.8 $ 2,569 Granted 130.4 4,132 Forfeited (97.8 ) 4,159 Outstanding at March 31, 2019 13,058.4 $ 2,573 $ 74,421 Cash-Settled Equity Settled Options Total unrecognized compensation cost $ 390,000 $ 36,199,000 $ 33,460,000 Weighted average recognition period 1.54 years 2.02 years 0.6 years Class C Class P(C) Class P-1(C) 447 2 232 share repurchase programs discussed above. Successor Successor March 31, 2019 December 31, 2018 Cash and cash equivalents $ 246,416 $ 283,790 Receivables from brokers and dealers and clearing organizations 199 $ 3,332 Deposits with clearing organizations 500 500 Accounts receivable 46,947 40,730 Receivable from affiliates 3,026 3,243 Other assets — 9 Payable to brokers and dealers and clearing organizations — 2,404 Deferred revenue 8,556 9,151 Accounts payable, accrued expenses and other liabilities 387 — Payable to affiliates 6,050 5,009 items: income in the following line items: follows: Successor Quoted Prices in Significant Significant Total As of March 31, 2019 Assets Money market funds $ 137,502 $ — $ — $ 137,502 $ 137,502 $ — $ — $ 137,502 As of December 31, 2018 Assets Money market funds $ 127,927 $ — $ — $ 127,927 $ 127,927 $ — $ — $ 127,927 of both September 30, 2023 and December 31, 2022. diversifies as determined appropriate. However, from time to time, the Company enters into repurchase and/or reverse repurchase agreements to facilitate the clearance of securities relating to fails to deliver or receive. We seek to manage credit exposure related to these agreements to repurchase (or reverse repurchase), including the risk related to a decline in market value of collateral (pledged or received), 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 operates a continuous net settlement system, whereby as trades are submitted and compared, the FICC becomes the counterparty. policy of reviewing, as considered necessary, the credit standing of each counterparty with which it conducts business. an interest rate swaps matter in 2017, but that matter continues against the remaining defendant financial institutions. Successor Predecessor Three Months Ended Three Months Ended March 31, 2019 March 31, 2018 Net Income (in thousands) $ 42,352 $ 45,308 Basic Weighted Average Shares Outstanding 222,222,197 213,435,321 Dilutive Effect of equity settled PRSUs 1,098,260 — Diluted Weighted Average Shares Outstanding 223,320,457 213,435,321 Basic Net Income Per Share $ 0.19 $ 0.21 Diluted Net Income Per Share $ 0.19 $ 0.21 economic rights in Tradeweb Markets Inc. and, therefore, are not included in the calculation of basic earnings per share and are not participating securities for purposes of the computation of diluted earnings per share. Netherlands and YB is subject to certain financial resource requirements with ASIC. At As of March 31, 2019 TWL DW TWD TEL TWJ TWEU Regulatory Capital $ 13,981 $ 39,711 $ 26,695 $ 46,537 $ 10,532 $ 4,034 Regulatory Capital Requirement 1,398 1,133 311 17,515 3,804 4,034 Excess Regulatory Capital $ 12,583 $ 38,578 $ 26,384 $ 29,022 $ 6,728 $ — As of December 31, 2018 TWL DW TWD TEL TWJ Regulatory Capital $ 18,986 $ 41,164 $ 24,042 $ 46,157 $ 10,592 Regulatory Capital Requirement 2,698 1,803 599 17,493 3,413 Excess Regulatory Capital $ 16,288 $ 39,361 $ 23,443 $ 28,664 $ 7,179 follows: As of March 31, 2019 As of December 31, 2018 TW SEF DW SEF TW SEF DW SEF Financial Resources $ 28,912 $ 18,524 $ 31,232 $ 17,837 Required Financial Resources 10,500 5,440 10,500 5,169 Excess Financial Resources $ 18,412 $ 13,084 $ 20,732 $ 12,668 Liquid Financial Assets $ 15,929 $ 12,517 $ 16,662 $ 11,888 Required Liquid Financial Assets 5,250 2,720 5,250 2,585 Excess Liquid Financial Assets $ 10,679 $ 9,797 $ 11,412 $ 9,303 Successor Predecessor Three Months Ended Three Months Ended Net revenue: Institutional $ 109,252 $ 102,320 Wholesale 39,431 32,595 Retail 21,206 19,036 Market Data 16,903 15,552 Contingent consideration — (10,070 ) Net revenue 186,792 159,433 Operating expenses 140,515 112,078 Operating income $ 46,277 $ 47,355 follows: Successor Predecessor Three Months Ended Three Months Ended March 31, 2019 March 31, 2018 Net Revenue: U.S. $ 119,397 $ 107,782 International 67,395 61,721 Gross revenue 186,792 169,503 Contingent consideration — (10,070 ) Total $ 186,792 $ 159,433 March 31, 2019 December 31, 2018 Long-lived assets U.S. $ 4,277,698 $ 4,276,568 International 14,237 7,787 Total $ 4,291,935 $ 4,284,355 Tradeweb Markets 10‑Q and the section titled “Item 1A. Risk Factors” in Part I of the 2022 Form 10-K. result in rising interest rates and have other adverse effects on the securities markets and the overall economy, they may adversely affect our results of operations and financial condition. the development of new and enhanced platforms is essential to maintaining our level of competitiveness in the market and attracting new clients seeking platforms that provide advanced automation and better liquidity. We believe we will continue to increase demand for our platforms and solutions and the volume of transactions on our platforms, and thereby enhance our client relationships, by responding to new trading and information requirements costs. the 15% corporate minimum tax on subsequent periods. The adoption of the IRA will not have an impact to our non-GAAP adjusted effective tax rate used for purposes of calculating our non-GAAP measure of Adjusted Net Income. Commissions and sell price of the transacted product. For TBA-MBS, U.S. initial referral. cybersecurity. business acquisition transactions. various jurisdictions, which impacted our tax savings. There was no tax receivable agreement liability adjustment during each of the three and nine months ended September 30, 2023 and 2022. Facility. receive a corresponding number of LLC Interests, increasing our total ownership interest in TWM LLC. Following the completion of the Reorganization Transactions and the IPO, we owned 64.3% of TWM LLC and Continuing LLC Owners owned the remaining 35.7% of TWM LLC. As of September 30, 2023, we owned 90.2% of TWM LLC and Continuing LLC Owners owned the remaining 9.8% of TWM LLC. September 30, 2022 Successor Predecessor Three Three (dollars in thousands) Gross revenue $ 186,792 $ 169,503 Contingent consideration — (10,070 ) Net revenue 186,792 159,433 Total expenses 140,515 112,078 Operating income 46,277 47,355 Net interest income 858 471 Income before taxes 47,135 47,826 Income taxes (4,783 ) (2,518 ) Net income $ 42,352 $ 45,308 2022: Successor Predecessor Three Months Three Months $ % of Gross $ % of Gross $ Change % Change (dollars in thousands) Revenues Transaction fees $ 102,640 54.9 % $ 90,139 53.2 % $ 12,501 13.9 % Subscription fees(1) 48,061 25.7 % 48,563 28.7 % (502 ) (1.0 )% Commissions 34,197 18.3 % 27,883 16.4 % 6,314 22.6 % Other 1,894 1.0 % 2,918 1.7 % (1,024 ) (35.1 )% Gross revenue 186,792 100.0 % 169,503 100.0 % 17,289 10.2 % Contingent consideration — (10,070 ) 10,070 (100 )% Net revenue $ 186,792 $ 159,433 $ 27,359 17.2 % Components of gross revenue growth: Constant currency growth(2) 12.6 % Foreign currency impact (2.4 )% Total gross revenue growth 10.2 % Successor Predecessor Three Months Ended Three Months Ended $ Change % Change Variable Fixed Variable Fixed Variable Fixed Variable Fixed (dollars in thousands) Revenues Transaction fees $ 78,915 $ 23,725 $ 69,637 $ 20,502 $ 9,278 $ 3,223 13.3 % 15.7 % Subscription fees(1) 455 47,606 475 48,088 (20 ) (482 ) (4.2 )% (1.0 )% Commissions 24,310 9,887 17,780 10,103 6,530 (216 ) 36.7 % (2.1 )% Other 303 1,591 12 2,906 291 (1,315 ) 2,421 % (45.2 )% Gross revenue $ 103,983 $ 82,809 $ 87,904 $ 81,599 $ 16,079 $ 1,210 18.3 % 1.5 % Successor Predecessor Three Months Three Months $ Change % Change (dollars in thousands) Revenues Institutional $ 109,252 $ 102,320 $ 6,932 6.8 % Wholesale 39,431 32,595 6,836 21.0 % Retail 21,206 19,036 2,170 11.4 % Market Data 16,903 15,552 1,351 8.7 % Total gross revenue $ 186,792 $ 169,503 $ 17,289 10.2 % Successor Predecessor Three Months Three Months $ Change % Change (dollars in thousands) Revenues Rates $ 104,090 $ 93,913 $ 10,177 10.8 % Credit 39,435 34,733 4,702 13.5 % Equities 11,798 10,192 1,606 15.8 % Money Markets 9,562 8,114 1,448 17.8 % Market Data 16,903 15,552 1,351 8.7 % Other Fees 5,004 6,999 (1,995 ) (28.5 )% Total gross revenue $ 186,792 $ 169,503 $ 17,289 10.2 % Successor Predecessor Three Months Ended Three Months Ended $ Change % Change Variable Fixed Variable Fixed Variable Fixed Variable Fixed (dollars in thousands) Revenues Rates $ 53,650 $ 50,440 $ 45,068 $ 48,845 $ 8,582 $ 1,595 19.0 % 3.3 % Credit 34,358 5,077 29,613 5,120 4,745 (43 ) 16.0 % (0.8 )% Equities 10,152 1,646 8,521 1,671 1,631 (25 ) 19.1 % (1.5 )% Money Markets 5,823 3,739 4,702 3,412 1,121 327 23.8 % 9.6 % Market Data — 16,903 — 15,552 — 1,351 — 8.7 % Other — 5,004 — 6,999 — (1,995 ) — (28.5 )% Gross revenue $ 103,983 $ 82,809 $ 87,904 $ 81,599 $ 16,079 $ 1,210 18.3 % 1.5 % Three Months Ended March 31, 2019 March 31, 2018 ADV Volume ADV Volume ADV Change (dollars in millions) Rates $ 431,380 $ 26,453,386 $ 344,740 $ 21,142,985 25.1 % Credit 16,383 1,009,820 14,999 926,776 9.2 % Equities 7.702 475,731 9,977 612,528 (22.8 )% Money Markets 191,123 11,771,688 164,517 10,071,040 16.2 % 2023. March 31, 2019 2018 $ Change % Change Rates $ 2.02 $ 2.13 $ (0.11 ) (5.4 )% Credit 34.03 32.03 2.00 6.2 % Equities 21.36 13.91 7.45 53.4 % Money Markets 0.49 0.47 0.02 5.8 % Successor Predecessor Three Months Three Months $ Change % Change (dollars in thousands) Revenues U.S. $ 119,397 $ 107,782 11,615 10.8 % International 67,395 61,721 5,674 9.2 % Total gross revenue $ 186,792 $ 169,503 17,289 10.2 % market data. Successor Predecessor Three March 31, Three (in thousands) Employee compensation and benefits $ 77,273 $ 71,570 Depreciation and amortization 33,503 16,268 General and administrative 9,089 6,517 Technology and communications 10,040 8,463 Professional fees 6,971 5,538 Occupancy 3,639 3,722 $ 140,515 $ 112,078 the CEO Retirement Accelerated Stock-Based Compensation Expense. See “— Trends and Other Factors Impacting Our Performance — 2023 and the relocation of data centers to locations providing enhanced infrastructure and improved performance. income of $45.1 million for the nine months ended September 30, 2023 from net interest income of $3.5 million for the nine months ended September 30, 2022 primarily due to an increase in interest income earned relating to an increase in our average invested cash balance and an increase in interest rates period over period. Other Factors Impacting Our Performance — ability to continue to meet our future liquidity requirements will depend on, among other things, our ability to achieve anticipated levels of revenues and cash flows from operations and our ability to manage costs and working capital successfully, all of which are subject to general economic, financial, competitive and other factors beyond our control. In the event we require any additional capital, it will take the form of equity or debt financing, or both, and there can be no assurance that we will be able to raise any such financing on terms acceptable to us or at all. See Item 3. “Quantitative And Qualitative Disclosures About Market Risks — Credit Risk.” 2023, payable on December 13, 2023. market on a daily basis, requiring us to pay or receive margin amounts as part of the daily funds settlement. Margin call requirements can vary significantly across periods based on daily market changes and may represent a significant and unpredictable use of our liquidity. However, from time to time, we enter into repurchase and/or reverse repurchase agreements to facilitate the clearance of securities relating to fails to deliver or receive. We seek to manage credit exposure related to these agreements to repurchase (or reverse repurchase), including the risk related to a decline in market value of collateral (pledged or received), by entering into agreements to repurchase with overnight or short-term maturity dates and only entering into repurchase transactions with netting members of the FICC. The FICC operates a continuous net settlement system, whereby as trades are submitted and compared, the FICC becomes the counterparty. March 31, December (dollars in thousands) Cash and cash equivalents $ 361,608 $ 410,104 Restricted cash 1,200 1,200 Receivable from brokers and dealers and clearing organizations 88,422 174,591 Deposits with clearing organizations 8,872 11,427 Accounts receivable 94,284 87,192 Receivable from affiliates 3,026 3,243 Current assets 557,412 687,757 Payable to brokers and dealers and clearing organizations 81,214 171,214 Accrued compensation 54,087 120,158 Deferred revenue 28,487 27,883 Accounts payable, accrued expenses and other liabilities 29,885 42,548 Employee equity compensation payable 108 24,187 Lease liability 9,740 — Payable to affiliates 6,050 5,009 Current liabilities 209,571 390,999 Working capital $ 347,841 $ 296,758 Assets which occurred during the nine months ended September 30, 2023. above for a discussion on how capital requirements can impact our working capital. Successor Predecessor Three 2019 Three March 31, (in thousands) Net cash flows (used in) operating activities $ (21,079 ) $ (14,226 ) Net cash flows (used in) investing activities (8,283 ) (7,442 ) Net cash flows (used in) financing activities (20,000 ) (25,000 ) Effect of exchange rate changes on cash and cash equivalents 866 1,813 Net decrease in cash and cash equivalents $ (48,496 ) $ (44,855 ) working capital. proceeds from the related stock-based compensation option exercises, $65.3 million in share repurchases pursuant to the 2021 Share Repurchase Program and $49.4 million in cash dividends to our Class A and Class B common stockholders. Successor Predecessor Three Three (in thousands) Cash flow from operating activities $ (21,079 ) $ (14,226 ) Less: Capitalization of software development costs (6,767 ) (6,198 ) Less: Purchases of furniture, equipment and leasehold improvements (1,516 ) (1,244 ) Free Cash Flow $ (29,362 ) $ (21,668 ) 2022: Adjusted EBIT and Adjusted EBIT margin this stock-based compensation expense and associated payroll taxes because the amount of expense associated with the Special Option Award and the post-IPO option awards in 2019 may not directly correlate to the underlying performance of our business and will vary across periods. Beginning on August 30, 2021, we also exclude the non-cash accelerated stock-based compensation expense associated with our former CFO and beginning on February 11, 2022 the incremental non-cash accelerated stock-based compensation expense associated with our retired CEO, the CEO Retirement Accelerated Stock-Based Compensation Expense discussed above under “— Trends and Other Factors Impacting Our Performance — In addition to excluding items that are non-recurring or may not be indicative of our ongoing operating performance, by assuming the full exchange of all outstanding LLC Interests held by non-controlling interests, we believe that Adjusted Net Income and Adjusted Diluted EPS for Tradeweb Markets Inc. facilitate comparisons with other companies that have different organizational and tax structures, as well as comparisons period over period, because it eliminates the effect of any changes in net income attributable to Tradeweb Markets Inc. driven by increases in our ownership of TWM LLC, which are unrelated to our operating performance. Successor Predecessor Three Three (in thousands) Net income $ 42,352 $ 45,308 Contingent consideration — 10,070 Interest income, net (858 ) (471 ) Depreciation and amortization 33,503 16,268 Provision for income taxes 4,783 2,518 Unrealized foreign exchange (gains) / losses (293 ) (968 ) (Gain) / loss from revaluation of foreign denominated cash(1) 860 (44 ) Adjusted EBITDA $ 80,347 $ 72,681 Adjusted EBITDA margin(2) 43.0 % 42.9 % Successor Predecessor Three Months Three Months (in thousands) Net income per diluted share $ 0.19 $ 0.21 Net income $ 42,352 $ 45,308 Provision for income taxes 4,783 2,518 Contingent consideration — 10,070 Acquisition and Refinitiv Transaction related depreciation and amortization(1) 23,209 6,506 Unrealized foreign exchange (gains) / losses (293 ) (968 ) (Gain) / loss from revaluation of foreign denominated cash(2) 860 (44 ) Adjusted Net Income before income taxes 70,911 63,390 Adjusted income taxes(3) (18,721 ) (16,735 ) Adjusted Net Income $ 52,190 $ 46,655 Diluted weighted average number of shares outstanding 222,320,457 213,435,321 Adjusted Diluted EPS $ 0.23 $ 0.22 our electronic marketplaces. Fixed monthly transaction fees or commissions or monthly transaction fee or commission minimums are generally earned on a monthly basis in the period the stand-ready trading services are provided. Variable transaction fee or commission revenue is recognized and recorded on a trade-date basis when the individual trade occurs. Variable discounts or rebates on transaction fees or commissions are generally earned and applied monthly or quarterly, are resolved within the same reporting period and are recorded as a reduction to revenue in the period the relevant trades occur. 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 A U.S. shareholder of a controlled foreign corporation (“CFC”) is required to include in income, as a deemed dividend, the global intangible low-taxed income (“GILTI”) of the CFC. We have elected to treat taxes due on future U.S. inclusions in taxable income 15 year period is dependent upon our annual taxable income over the same period. In determining the estimated timing of payments, the change occurs. pronouncements. Realized and unrealized losses from foreign currency re-measurement of transactions in nonfunctional currencies recognized in the condensed consolidated statements of income within general and administrative expense totaled $0.7 million and $0.6 million during the three months ended September 30, 2023 and 2022, respectively, and realized and unrealized losses totaled $1.0 million and $2.3 million during the nine months ended September 30, 2023 and 2022, respectively. nine months ended September 30, 2023 and 2022: Realized and unrealized gains/losses on foreign currency forward contracts totaled a $3.9 million gain and a $6.8 million gain during the three months ended September 30, 2023 and 2022, respectively, and realized and unrealized gains on foreign currency forward contracts totaled $4.9 million and $12.9 million during the nine months ended September 30, 2023 and 2022, respectively. As of September 30, 2023 and December 31, 2022, the counterparty on each of the foreign exchange derivative contracts was an affiliate of LSEG. receivables totaled $0.2 million and $0.1 million, respectively. 10-K. “Item 1A. Risk Factors” in Part I of our 2022 Form 10-K Description of Exhibit 31.2* 32.1* 32.2* 101.INS* XBRL Instance Document. 101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document. 101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document. * Filed herewith. /s/ By: Chief Executive Officer (Principal Executive Officer) /s/ By: Chief Financial Officer (Principal Financial Officer)x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 March 31, 2019oTRANSITION 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 Tradeweb Markets Inc.Delaware83-245635883-2456358 (State of other jurisdiction of incorporation or organization) Title of each class Trading Symbol(s) Name of each exchange on which registered Class A common stock, par value $0.00001 TW Nasdaq Global Select Market o☒Yes x☐ Nox☒ Yes o☐ NoLarge accelerated filer oAccelerated filer oNon-accelerated filer xoEmerging growth company xx☐o☐ Yes x☒ NoSecurities registered pursuant to Section 12(b) of the Act:Title of each classTrading Symbol(s)Name of each exchange on which registeredClass A common stock, par value $0.00001TWNasdaq Global Select MarketMay 15, 201946,000,00010,006,26969,282,736PagePage 4663758596060606061616162that were completed subsequent to March 31, 2019 (the “Reorganization Transactions”) that were completed in connection with Tradeweb Markets Inc.’s initial public offering (“IPO”(the “IPO”), which was completedclosed on April 8, 2019. Accordingly,had no business transactions or activities and nohas a substantial assets or liabilities during the periods presentedfinancial interest in this Quarterly Report on Form 10-Q and because the Reorganization Transactions had not been completed as of such date, we believe that it is informative to provide the financial statements and various other disclosures of TWMTradeweb Markets LLC, as of March 31, 2019 and December 31, 2018 and for the three months ended March 31, 2019 and 2018. For more information regarding the transactions described above, see Note 4 to the unaudited financial statements of Tradeweb Markets Inc. and Note 18 toconsolidates the unaudited consolidated financial statementsresults of Tradeweb Markets LLC each contained elsewhere in this Quarterly Report on Form 10-Q.· “We, including the IPO, to Tradeweb Markets LLC, which we refer to as “TWM LLC,” and, unless otherwise stated or the context otherwise requires, all of its subsidiaries and any predecessor entities, and (ii) following the completion of the Reorganization Transactions including the IPO, to Tradeweb Markets Inc., and, unless otherwise stated or the context otherwise requires, TWM LLC and all of its subsidiaries and any predecessor entities.· “Bank Stockholders”Merrill Lynch, Pierce, Fenner & Smith Incorporated (a subsidiary of Bank of America Corporation), Morgan Stanley & Co. LLC, RBS Securities Inc., UBS Securities LLC and Wells Fargo Securities, LLC.· “ContinuingLLC, which, prior to the completion of the IPO, collectively held a 46% ownership interest in Tradeweb. Subsequent to August 2022, there were no LLC Interests (as defined below) held by Bank Stockholders. an indirect subsidiary of Refinitiv (as defined below), certain of the Bank Stockholders and members of management, that continued to own LLC Interests immediately prior toafter the closingcompletion of the IPO whoand Reorganization Transactions and that received shares of our Class C common stock, shares of our Class D common stock or a combination of both, as the case may be, in connection with the completion of the Reorganization Transactions.· “InvestorTransactions, (ii) any subsequent transferee of any Original LLC Owner that has executed a joinder agreement to TWM LLC’s limited liability company agreement (the “TWM LLC Agreement”) and (iii) solely with respect to the Tax Receivable Agreement (as defined below), (x) those Original LLC Owners, including certain of the Bank Stockholders, that disposed of all of their LLC Interests for cash in connection with the IPO and (y) any party that has executed a joinder agreement to the Tax Receivable Agreement in accordance with the Tax Receivable Agreement.holdheld indirectly a 55% ownership interest in Refinitiv (as defined below).· “LLCRefinitiv.newly issued common membershipmembership interests of TWM LLC.· “Original LLC Interests, other than those held by Tradeweb Markets Inc., are redeemable or exchangeable in accordance with the TWM LLC Agreement for shares of Class A common stock or Class B common stock, as the case may be, on a one-for-one basis.· “Refinitiv”whichand subsequent to the LSEG Transaction, refer to Refinitiv Parent Limited, and unless otherwise stated or the context otherwise requires, all of its subsidiaries. Refinitiv owns substantially all of the former financial and risk business of Thomson Reuters (as defined below), including, prior to and following the completion of the Reorganization Transactions, an indirect majority ownership interest in Tradeweb, and iswas controlled by the Investor Group.· “RefinitivGroup prior to the LSEG Transaction.· “Thomsonholdsheld a 45% ownership interest in Refinitiv.expected dividend policy, our share repurchase program and our expectations, beliefs, plans, strategies, objectives, prospects or assumptions orregarding future events, our performance or performance,otherwise, contained in this Quarterly Report on Form 10-Q are forward-looking statements.sharestock price.·····clients that are also stockholders;·clients;·maintainachieve our environmental, social and grow the capacity of our trading platforms, systems and infrastructure;· design defects, errors, failures or delays with our platforms or solutions;· systems failures, interruptions, delays in services, catastrophic events and resulting interruptions;·governance goals;··certain members of our management;· inadequate protection of our intellectual property;· extensive regulation of our industry;·senior management team;theour $500.0 million senior secured revolving credit facility (the “Revolving Credit Facility”) with Citibank, N.A., as administrative agent and collateral agent, and the other lenders party thereto, and certain Refinitiv indebtedness;·thereto;policypayments and to pay our taxes and expenses, including payments under the tax receivable agreement (the “Tax Receivable Agreement”) entered into in connection with the IPO;···inof our final prospectus, dated April 3, 2019Annual Report on Form 10-K for the year ended December 31, 2022 (the “IPO Prospectus”“2022 Form 10-K”), filed with the Securities and Exchange Commission (“SEC”) pursuant to Rule424(b) under the Securities Act, relating to our IPO, and in other filings we may make from time to time with the SEC.andor liquidity, and the development of the industry and markets in which we operate, may differ materially from the forward-looking statements contained in this Quarterly Report on Form 10-Q. In addition, even if future events, our results of operations, financial condition andor liquidity, and events in the industry and markets in which we operate, are consistent with the forward-looking statements contained in this Quarterly Report on Form 10-Q, they may not be predictive of events, results or developments in future periods.Twitter.X (formerly Twitter). The information that we post through these social media channels may be deemed material. As a result, we encourage investors, the media and others interested in Tradeweb to monitor these social media channels in addition to following our investor relations website, press releases, SEC filings and public conference calls and webcasts. These social media channels may be updated from time to time on our investor relations website.Financial Statements (Unaudited)Tradeweb Markets Inc.78Tradeweb Markets LLC and Subsidiaries121314Consolidated Statements of Changes in Members’ Capital and Accumulated Other Comprehensive Income151618September 30, December 31, 2023 2022 Assets Cash and cash equivalents $ 1,493,410 $ 1,257,229 Restricted cash 1,000 1,000 Receivable from brokers and dealers and clearing organizations 4,966 11,632 Deposits with clearing organizations 26,433 23,906 Accounts receivable, net of allowance for credit losses of $187 and $129 at September 30, 2023 and December 31, 2022, respectively 167,039 142,676 Furniture, equipment, purchased software and leasehold improvements, net of accumulated depreciation and amortization 36,151 37,413 Lease right-of-use assets 19,406 24,933 Software development costs, net of accumulated amortization 134,275 141,833 Goodwill 2,815,317 2,780,259 Intangible assets, net of accumulated amortization 1,032,354 1,072,818 Receivable and due from affiliates 3,165 2,728 Deferred tax asset 693,171 689,442 Other assets 77,866 74,262 Total assets $ 6,504,553 $ 6,260,131 Liabilities and Equity Liabilities Payable to brokers and dealers and clearing organizations $ 4,966 $ 11,264 Accrued compensation 121,227 150,884 Deferred revenue 31,404 22,827 Accounts payable, accrued expenses and other liabilities 46,668 46,690 Lease liabilities 22,040 27,943 Payable and due to affiliates 527 7,232 Deferred tax liability 18,004 21,251 Tax receivable agreement liability 447,976 425,724 Total liabilities 692,812 713,815 Equity Preferred stock, $0.00001 par value; 250,000,000 shares authorized; none issued or outstanding — — Class A common stock, $0.00001 par value; 1,000,000,000 shares authorized; 114,711,483 and 110,746,606 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively 1 1 Class B common stock, $0.00001 par value; 450,000,000 shares authorized; 96,933,192 and 96,933,192 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively 1 1 Class C common stock, $0.00001 par value; 350,000,000 shares authorized; none and 3,251,177 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively — — Class D common stock, $0.00001 par value; 300,000,000 shares authorized; 23,080,571 and 23,092,704 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively — — Additional paid-in capital 4,706,499 4,577,270 Accumulated other comprehensive income (loss) (10,836) (10,113) Retained earnings 570,149 386,632 Total stockholders’ equity attributable to Tradeweb Markets Inc. 5,265,814 4,953,791 Non-controlling interests 545,927 592,525 Total equity 5,811,741 5,546,316 Total liabilities and equity $ 6,504,553 $ 6,260,131 Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Revenues Transaction fees and commissions $ 263,485 $ 228,015 $ 776,544 $ 717,489 Subscription fees 46,361 41,342 136,483 124,337 Refinitiv market data fees 15,460 15,370 46,515 46,354 Other 3,051 2,388 8,677 7,559 Total revenue 328,357 287,115 968,219 895,739 Expenses Employee compensation and benefits 116,016 102,720 334,433 330,601 Depreciation and amortization 46,559 44,778 137,850 133,998 Technology and communications 19,733 16,816 56,001 48,626 General and administrative 6,700 6,892 31,692 24,806 Professional fees 10,479 9,400 32,321 25,832 Occupancy 4,132 3,699 12,283 10,857 Total expenses 203,619 184,305 604,580 574,720 Operating income 124,738 102,810 363,639 321,019 Net interest income (expense) 17,465 3,413 45,065 3,507 Other income (loss), net (1,907) — (2,022) — Income before taxes 140,296 106,223 406,682 324,526 Provision for income taxes (28,666) (24,657) (90,920) (63,915) Net income 111,630 81,566 315,762 260,611 Less: Net income attributable to non-controlling interests 13,016 12,483 40,210 40,219 Net income attributable to Tradeweb Markets Inc. $ 98,614 $ 69,083 $ 275,552 $ 220,392 Earnings per share attributable to Tradeweb Markets Inc. Class A and B common stockholders: Basic $ 0.47 $ 0.34 $ 1.31 $ 1.08 Diluted $ 0.46 $ 0.33 $ 1.30 $ 1.06 Weighted average shares outstanding: Basic 211,618,475 205,721,162 210,444,082 204,767,261 Diluted 213,491,634 208,329,469 212,276,908 207,748,037 Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Net income $ 111,630 $ 81,566 $ 315,762 $ 260,611 Other comprehensive income (loss), net of tax: Foreign currency translation adjustments, with no tax benefit for each of the three and nine months ended September 30, 2023 and 2022 (4,456) (12,406) (623) (26,181) Other comprehensive income (loss), net of tax (4,456) (12,406) (623) (26,181) Comprehensive income 107,174 69,160 315,139 234,430 Less: Net income attributable to non-controlling interests 13,016 12,483 40,210 40,219 Less: Foreign currency translation adjustments attributable to non-controlling interests (438) (1,521) (24) (3,288) Comprehensive income attributable to Tradeweb Markets Inc. $ 94,596 $ 58,198 $ 274,953 $ 197,499 Tradeweb Markets Inc. Stockholders’ Equity Par Value Class A
Common StockClass B
Common StockClass C
Common StockClass D
Common StockAdditional
Paid-In
CapitalAccumulated
Other
Comprehensive
Income (Loss)Retained
EarningsNon-
Controlling
InterestsTotal
EquityBalance at December 31, 2022 $ 1 $ 1 $ — $ — $ 4,577,270 $ (10,113) $ 386,632 $ 592,525 $ 5,546,316 Issuance of common stock from equity incentive plans — — — — 6,320 — — — 6,320 Share repurchases pursuant to share repurchase programs — — — — — — (22,706) — (22,706) Tax receivable agreement liability and deferred taxes arising from LLC Interest ownership exchanges and the issuance of common stock from equity incentive plans — — — — 15,082 — — — 15,082 Adjustments to non-controlling interests — — — — 6,910 (4) — (6,906) — Distributions to non-controlling interests — — — — — — — (2,283) (2,283) Dividends ($0.09 per share) — — — — — — (18,733) — (18,733) Stock-based compensation expense — — — — 11,905 — — — 11,905 Payroll taxes paid for stock-based compensation — — — — (39,878) — — — (39,878) Net income — — — — — — 87,856 14,337 102,193 Foreign currency translation adjustments — — — — — 2,352 — 297 2,649 Balance at March 31, 2023 $ 1 $ 1 $ — $ — $ 4,577,609 $ (7,765) $ 433,049 $ 597,970 $ 5,600,865 Issuance of common stock from equity incentive plans — — — — 1,262 — — — 1,262 Share repurchases pursuant to share repurchase programs — — — — — — (7,602) — (7,602) Tax receivable agreement liability and deferred taxes arising from LLC Interest ownership exchanges and the issuance of common stock from equity incentive plans — — — — 27,827 — — — 27,827 Adjustments to non-controlling interests — — — — 72,870 (120) — (72,750) — Distributions to non-controlling interests — — — — — — — (3,286) (3,286) Dividends ($0.09 per share) — — — — — — (19,048) — (19,048) Stock-based compensation expense — — — — 16,097 — — — 16,097 Payroll taxes paid for stock-based compensation — — — — (1,870) — — — (1,870) Net income — — — — — — 89,082 12,857 101,939 Foreign currency translation adjustments — — — — — 1,067 — 117 1,184 Balance at June 30, 2023 $ 1 $ 1 $ — $ — $ 4,693,795 $ (6,818) $ 495,481 $ 534,908 $ 5,717,368 Issuance of common stock from equity incentive plans — — — — 412 — — — 412 Share repurchases pursuant to share repurchase programs — — — — — — (4,897) — (4,897) Tax receivable agreement liability and deferred taxes arising from LLC Interest ownership exchanges and the issuance of common stock from equity incentive plans — — — — 2,801 — — — 2,801 Adjustments to non-controlling interests — — — — (404) — — 404 — Distributions to non-controlling interests — — — — — — — (1,963) (1,963) Dividends ($0.09 per share) — — — — — — (19,049) — (19,049) Stock-based compensation expense — — — — 17,668 — — — 17,668 Payroll taxes paid for stock-based compensation — — — — (7,773) — — — (7,773) Net income — — — — — — 98,614 13,016 111,630 Foreign currency translation adjustments — — — — — (4,018) — (438) (4,456) Balance at September 30, 2023 $ 1 $ 1 $ — $ — $ 4,706,499 $ (10,836) $ 570,149 $ 545,927 $ 5,811,741 Tradeweb Markets Inc. Stockholders’ Equity Par Value Class A
Common StockClass B
Common StockClass C
Common StockClass D
Common StockAdditional
Paid-In
CapitalAccumulated
Other
Comprehensive
Income (Loss)Retained
EarningsNon-
Controlling
InterestsTotal
EquityBalance at December 31, 2021 $ 1 $ 1 $ — $ — $ 4,401,366 $ 1,604 $ 242,623 $ 663,348 $ 5,308,943 Issuance of common stock from equity incentive plans — — — — 692 — — — 692 Share repurchases pursuant to share repurchase programs — — — — — — (47,323) — (47,323) Tax receivable agreement liability and deferred taxes arising from LLC Interest ownership exchanges and the issuance of common stock from equity incentive plans — — — — 38,676 — — — 38,676 Adjustments to non-controlling interests — — — — 30,005 — — (30,005) — Distributions to non-controlling interests — — — — — — — (2,178) (2,178) Dividends ($0.08 per share) — — — — — — (16,350) — (16,350) Stock-based compensation expense — — — — 13,682 — — — 13,682 Payroll taxes paid for stock-based compensation — — — — (95,758) — — — (95,758) Net income — — — — — — 82,965 14,480 97,445 Foreign currency translation adjustments — — — — — (3,568) — (530) (4,098) Balance at March 31, 2022 $ 1 $ 1 $ — $ — $ 4,388,663 $ (1,964) $ 261,915 $ 645,115 $ 5,293,731 Issuance of common stock from equity incentive plans — — — — 6,924 — — — 6,924 Share repurchases pursuant to share repurchase programs — — — — — — (9,000) — (9,000) Tax receivable agreement liability and deferred taxes arising from LLC Interest ownership exchanges and the issuance of common stock from equity incentive plans — — — — 7,449 — — — 7,449 Adjustments to non-controlling interests — — — — (1,300) — — 1,300 — Distributions to non-controlling interests — — — — — — — (2,568) (2,568) Dividends ($0.08 per share) — — — — — — (16,360) — (16,360) Stock-based compensation expense — — — — 20,887 — — — 20,887 Payroll taxes paid for stock-based compensation — — — — (2,218) — — — (2,218) Net income — — — — — — 68,344 13,256 81,600 Foreign currency translation adjustments — — — — — (8,440) — (1,237) (9,677) Balance at June 30, 2022 $ 1 $ 1 $ — $ — $ 4,420,405 $ (10,404) $ 304,899 $ 655,866 $ 5,370,768 Issuance of common stock from equity incentive plans — — — — 2,059 — — — 2,059 Share repurchases pursuant to share repurchase programs — — — — — — (9,000) — (9,000) Tax receivable agreement liability and deferred taxes arising from LLC Interest ownership exchanges and the issuance of common stock from equity incentive plans — — — — 27,740 — — — 27,740 Adjustments to non-controlling interests — — — — 79,606 (312) — (79,294) — Distributions to non-controlling interests — — — — — — — (2,857) (2,857) Dividends ($0.08 per share) — — — — — — (16,653) — (16,653) Stock-based compensation expense — — — — 14,622 — — — 14,622 Payroll taxes paid for stock-based compensation — — — — (2,272) — — — (2,272) Net income — — — — — — 69,083 12,483 81,566 Foreign currency translation adjustments — — — — — (10,885) — (1,521) (12,406) Balance at September 30, 2022 $ 1 $ 1 $ — $ — $ 4,542,160 $ (21,601) $ 348,329 $ 584,677 $ 5,453,567 Nine Months Ended September 30, 2023 2022 Cash flows from operating activities Net income $ 315,762 $ 260,611 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 137,850 133,998 Stock-based compensation expense 44,670 49,432 Deferred taxes 70,071 49,078 Other (income) loss, net 2,022 — (Increase) decrease in operating assets: Receivable from/payable to brokers and dealers and clearing organizations, net 368 (1) Deposits with clearing organizations (2,502) (5,074) Accounts receivable (22,330) (29,938) Receivable and due from affiliates/payable and due to affiliates, net (8,071) (5,167) Other assets (2,890) (4,433) Increase (decrease) in operating liabilities: Accrued compensation (33,814) (26,155) Deferred revenue 8,510 3,856 Accounts payable, accrued expenses and other liabilities (8,318) (1,385) Net cash provided by operating activities 501,328 424,822 Cash flows from investing activities Cash paid for acquisitions, net of cash acquired (69,648) — Cash paid for foreign currency call option, net of sale proceeds (1,289) — Purchases of furniture, equipment, software and leasehold improvements (17,467) (17,959) Capitalized software development costs (32,105) (27,470) Net cash used in investing activities (120,509) (45,429) Cash flows from financing activities Share repurchases pursuant to share repurchase programs (32,874) (65,323) Proceeds from stock-based compensation exercises 7,994 9,675 Dividends (56,830) (49,363) Distributions to non-controlling interests (7,532) (7,603) Payroll taxes paid for stock-based compensation (49,184) (100,248) Payments on tax receivable agreement liability (5,724) (8,995) Net cash used in financing activities (144,150) (221,857) Effect of exchange rate changes on cash, cash equivalents and restricted cash (488) (19,357) Net increase (decrease) in cash, cash equivalents and restricted cash 236,181 138,179 Cash, cash equivalents and restricted cash Beginning of period 1,258,229 973,048 End of period $ 1,494,410 $ 1,111,227 Nine Months Ended September 30, 2023 2022 Supplemental disclosure of cash flow information Income taxes paid, net of (refunds) $ 24,624 $ 10,992 Non-cash investing and financing activities Furniture, equipment, software and leasehold improvement additions included in accounts payable $ 478 $ 702 Unsettled share repurchases included in other liabilities $ 2,331 $ — Withholding taxes payable relating to stock-based compensation settlements included in accrued compensation $ 337 $ — Items arising from LLC Interest ownership changes: Establishment of liabilities under tax receivable agreement $ 27,976 $ 35,894 Deferred tax asset $ 73,686 $ 109,759 September 30, December 31, Reconciliation of cash, cash equivalents and restricted cash as shown on the statements of financial condition: 2023 2022 Cash and cash equivalents $ 1,493,410 $ 1,257,229 Restricted cash 1,000 1,000 Cash, cash equivalents and restricted cash shown in the statement of cash flows $ 1,494,410 $ 1,258,229 formedincorporated as a Delaware corporation on November 7, 2018. The Corporation was formed for the purpose of completing certain reorganization transactions in order2018 to carry on the business of Tradeweb Markets LLC (“TWM LLC”) and conducting anfollowing the completion of a series of reorganization transactions on April 4, 2019 (the “Reorganization Transactions”), in connection with Tradeweb Markets Inc.’s initial public offering (“IPO”(the “IPO”).On, which closed on April 8, 2019, the Corporation closed an IPO of 46,000,000 shares of Class A common stock at a public offering price of $27.00, which includes 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 $1,161,270,000 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 equityholders of TWM LLC (and cancelled the corresponding shares of common stock 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. Subsequent to2019. Following the Reorganization Transactions, Refinitiv (as defined below)note 4) that occurred after March 31, 2019,the Company (as defined below).the sole managera 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 will consolidateconsolidates the financial results of TWM LLC and reportreports a non-controlling interest in the Corporation’s condensed consolidated financial statements.2.Summary of Significant Accounting PoliciesBasis of AccountingThe statements of financial condition are presented in accordance with accounting principles generally accepted in the United States of America. Separate statements of operations, comprehensive income, changes in stockholder’s equity and cash flows have not been presented in the financial statements because, as of March 31, 2019, there have been no activities in this entity other than the initial capitalization.3.Stockholder’s EquityMarch 31, 2019, the Corporation was authorized to issue 1,000 shares of Common Stock, par value $0.01 per share. The Chief Executive Officer of TWM LLC was the sole shareholder of the Corporation and contributed $100 to the Corporation on November 7, 2018 to purchase 100 shares of common stock. Holders of common stock were entitled to one vote for each share of common stock held on all matters submitted to shareholders for vote, consent or approval.4.Subsequent EventsAs noted above, on April 8, 2019, the Corporation closed an IPO of 46,000,000 shares of Class A common stock at a public offering price of $27.00, which includes 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 $1,161,270,000 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 of the Bank Stockholders (as defined below) (and cancel the corresponding shares of common stock), at a purchase price per interest equal to the public offering price of $27.00, less the underwriting discounts and commissions payable thereon.Notes to Statements owned 90.2% of Financial Condition(Unaudited)Prior to the closing of the IPO, a series of reorganization transactions (the “Reorganization Transactions”) was completed among the Corporation, TWM LLC and the following parties:· The Ownersnon-controlling interest holders owned the remaining 9.8% of TWM LLC. As of December 31, 2022, Tradeweb Markets Inc. owned 88.7% of TWM LLC priorand the non-controlling interest holders owned the remaining 11.3% of TWM LLC. Reorganization Transactions,“Company” refer to Tradeweb Markets Inc. and its consolidated subsidiaries, including an indirect subsidiary (the “Refinitiv LLC Owner”) of Refinitiv Holdings Limited (“Refinitiv”), certain investment and commercial banks (collectively, the “Bank Stockholders”) and members of management, that continued to own LLC Interests (as defined below) immediately prior to the closing of the IPO and who received shares of the Corporation’s Class C common stock, shares of the Corporation’s Class D common stock or a combination of both, as the case may be (collectively, the “Continuing LLC Owners”); and· An indirect subsidiary (the “Refinitiv Direct Owner” and, together with the Refinitiv LLC Owner, the “Refinitiv Owners”) of Refinitiv that owned interests in an entity that held membership interests of TWM LLC, prior tofollowing the completion of the Reorganization Transactions, and contributed such entityTWM LLC and its consolidated subsidiaries prior to the Corporationcompletion of the Reorganization Transactions.Contribution”Transaction”).followingRefinitiv Transaction resulted in a new basis of accounting for certain of the Company’s assets and liabilities beginning on October 1, 2018. See Note 2 – Significant Accounting Policies for a description of pushdown accounting applied as a result of the Refinitiv Transaction. 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(the “LLC Interests”), (ii) exchange all of the then existing membership interests ofin TWM LLC’s existing equityholdersLLC for LLC Interests and (iii) appoint the Corporation as the sole manager of TWM LLC.The LLC Interests, other than those held by the Corporation, are redeemable or exchangeable in accordance with the TWM LLC Agreement also requires that TWM LLC at all times maintain (i) a one-to-one ratio between the number offor shares of Class A common stock, andpar value $0.00001 per share, of the Corporation (the “Class A common stock”) or Class B common stock, issued bypar value $0.00001 per share, of the Corporation (the “Class B common stock”), as the case may be, on a one-for-one basis.number“Bank Stockholders”), and members of management, that continued to own LLC Interests owned byafter the Corporationcompletion of the IPO and (ii) a one-to-one ratio between the number ofReorganization Transactions and that received shares of Class C common stock, andpar value $0.00001 per share, of the Corporation (the “Class C common stock”), shares of Class D common stock, issued bypar 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, (ii) any subsequent transferee of any Original LLC Owner that has executed a joinder agreement to the TWM LLC Agreement and (iii) solely with respect to the numberTax Receivable Agreement (as defined in Note 6 – Tax Receivable Agreement), (x) those Original LLC Owners, including certain of the Bank Stockholders, that disposed of all of their LLC Interests for cash in connection with the IPO and (y) any party that has executed a joinder agreement to the Tax Receivable Agreement in accordance with the Tax Receivable Agreement.by the holders of such Class C common stock and Class D common stock;· 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. Each share114,711,483 shares of Class A common stock, representing 8.7% of the combined voting power of Tradeweb Markets Inc.’s issued and Class Coutstanding common stock entitles its holder to one vote on all matters presented toand indirectly, through Tradeweb Markets Inc., owned 48.9% of the Corporation’s stockholders generally. Each shareeconomic interest in TWM LLC;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.Tradeweb Markets Inc.Notes to Statements of Financial Condition(Unaudited)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).· The Corporation assumed sponsorship of an option plan and PRSU plan formerly sponsored by TWM LLC. Accordingly, all options and PRSUs granted under such plans were converted into economically equivalent awards of the Corporation with respect to shares of the Corporation’s Class A common stock;· The Corporation’s board of directors adopted a new omnibus equity incentive plan, under which equity awards may be made in respect of shares of the Corporation’s Class A common stock;· The Corporation issued 20,000,000 shares of Class C common stock and 105,289,00522,988,329 shares of Class D common stock, to the Continuing LLC Owners, on a one-to-one basis with the number of LLC Interests they owned immediately following the amendment and restatementrepresenting 91.2% of the TWM LLC Agreement for nominal consideration (the Corporation canceled 9,993,731 sharescombined voting power of such Class CTradeweb Markets Inc.’s issued and outstanding common stock and 36,006,269directly and indirectly, through Tradeweb Markets Inc., owned 51.1% of the economic interest in TWM LLC; and such Class D common stock, representing 0.1% of the combined voting power of Tradeweb Markets Inc.’s issued and outstanding common stock. Collectively, these stockholders directly owned less than 0.1% of the economic interest in TWM LLC.Corporation’sRefinitiv Transaction. Goodwill also includes the cost of acquired companies in excess of the fair value of identifiable net assets at the acquisition date, including the Yieldbroker Acquisition and the NFI Acquisition. Goodwill is not amortized, but is tested for impairment annually on October 1st 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. The Company consists of one reporting unit for goodwill impairment testing purposes. 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.from certainis evaluated under the if-converted method, where the securities are assumed to be converted at the beginning of the Bank Stockholdersperiod, and the resulting common shares are included in the denominator of the diluted earnings per share calculation for the entire period presented. Performance-based awards are considered contingently issuable shares and their dilutive effect is included in the denominator of the diluted earnings per share calculation for the entire period, if those shares would be issuable as of the end of the reporting period, assuming the end of the reporting period was also the end of the contingency period.net proceedsincome approach, specifically a multi-period excess earnings method. The excess earnings method examines the economic returns contributed by the identified tangible and intangible assets of a company, and then examines the excess return that is attributable to the intangible asset being valued. The discount rate used reflects the amount of risk associated with the hypothetical cash flows for the customer relationships relative to the overall business. In developing a discount rate for the customer relationships, the Company estimated a weighted-average cost of capital for the overall business and employed an intangible asset risk premium to this rate when discounting the excess earnings related to customer relationships. The resulting discounted cash flows were then tax-affected at the applicable statutory rate.Purchase Price Allocation (in thousands) Cash and cash equivalents $ 12,753 Accounts receivable 1,631 Equipment 384 Lease right-of-use assets 1,453 Software development costs 588 Goodwill 35,058 Intangible assets - Customer relationships 39,746 Intangible assets - Tradename 492 Deferred tax asset 3,361 Other assets 701 Accrued compensation (3,485) Deferred revenue (72) Accounts payable, accrued expenses and other liabilities (8,713) Lease liabilities (1,496) Total cash paid 82,401 Less: Cash acquired (12,753) Less: Preliminary working capital and other closing adjustments 10,432 Purchase price, net of cash acquired and excluding working capital and other closing adjustments $ 80,080 IPO)preliminary purchase price allocation that are not yet finalized as of September 30, 2023 relate primarily to the valuation of the identifiable intangible assets and software and final working capital adjustments. The allocation of the purchase price will be finalized upon completion of the analysis of the acquired assets within one year of the date of the closing of the acquisition.Three Months Ended Three Months Ended September 30, 2023 September 30, 2022 (in thousands) (in thousands) Variable Fixed Variable Fixed Revenues Transaction fees and commissions $ 225,934 $ 37,551 $ 192,191 $ 35,824 Subscription fees 465 45,896 470 40,872 Refinitiv market data fees — 15,460 — 15,370 Other 328 2,723 212 2,176 Total revenue $ 226,727 $ 101,630 $ 192,873 $ 94,242 Nine Months Ended Nine Months Ended September 30, 2023 September 30, 2022 (in thousands) (in thousands) Variable Fixed Variable Fixed Revenues Transaction fees and commissions $ 665,749 $ 110,795 $ 607,126 $ 110,363 Subscription fees 1,395 135,088 1,430 122,907 Refinitiv market data fees — 46,515 — 46,354 Other 794 7,883 677 6,882 Total revenue $ 667,938 $ 300,281 $ 609,233 $ 286,506 Amount (in thousands) Deferred revenue balance - December 31, 2022 $ 22,827 New billings 100,331 Revenue recognized (91,832) Deferred revenue acquired in connection with the Yieldbroker Acquisition 72 Effect of foreign currency exchange rate changes 6 Deferred revenue balance - September 30, 2023 $ 31,404 are redeemable, at the election of such holders,redeem or exchange their LLC Interests for newly issued shares of Class A common stock or Class B common stock, as applicable, or the caseCorporation purchases LLC Interests from such Continuing LLC Owners. The Company’s consolidated effective tax rate will also vary from period to period depending on changes in the mix of earnings, tax legislation and tax rates in various jurisdictions. The Company’s provision for income taxes includes U.S., federal, state, local and foreign taxes.be,in the future 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 the Corporation 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 for further details. The tax benefit has been recognized in deferred tax assets on the condensed consolidated statement of financial condition.one-for-one basis (and such holders’Refinitiv entity was contributed to the Corporation, pursuant to which the Corporation received 96,933,192 LLC Interests and Refinitiv received 96,933,192 shares of Class CB 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)(“Refinitiv Contribution”). The Corporation’s board of directors, which includes directors who hold LLC Interests or are affiliated with holders of LLC Interests and may include such directors in the future, may, at its option, instead of the foregoing redemptions 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 (subject to customary adjustments, including for stock splits, stock dividends and reclassifications) in accordance with the terms of the TWM LLC Agreement. Holders of Class D common stock may also 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;· As a result of the Refinitiv Contribution, the Corporation received 96,933,192 LLC InterestsCompany assumed the tax liabilities of the contributed entity. During the second quarter of 2023, the contributed entity reached an audit settlement with the State of New Jersey for the tax years 2008 - 2015. As of September 30, 2023 and December 31, 2022, none and $2.7 million, respectively, is included in accounts payable, accrued expenses and other liabilities on the condensed consolidated statements of financial condition relating to these tax liabilities. The Company is indemnified by Refinitiv for these tax liabilities that were assumed by the Company as a result of the Refinitiv Direct Owner received 96,933,192 sharesContribution. As of Class B common stock. The Refinitiv Direct OwnerSeptember 30, 2023 and other future holdersDecember 31, 2022, none and $2.7 million, respectively, is included in receivable and due from affiliates on the condensed consolidated statements of Class B common stock may from time to time exchange all or a portionfinancial condition associated with this related party indemnification.Corporation’s 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); andTradeweb Markets Inc.Notes to Statements of Financial Condition(Unaudited)· TheReorganization Transactions, the Corporation entered into a Taxtax receivable agreement (the “Tax Receivable AgreementAgreement”) with TWM LLC and the Continuing LLC Owners, thatwhich 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, usingincluding with the net proceeds offrom the IPO orand any future offeringsubsequent offerings 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.Following Payments under the completionTax Receivable Agreement are made within 150 days after the filing of the Reorganization Transactions, includingtax return based on the IPO andactual tax savings realized by the applicationCorporation. The first payment of the proceeds therefrom as described above,Tax Receivable Agreement was made in January 2021. Substantially all payments due under the Corporation owns 64.3%Tax Receivable Agreement are payable over fifteen years following the purchase of TWM LLC. TheLLC Interests from Continuing LLC Owners that continue to ownor redemption or exchanges by Continuing LLC Owners of LLC Interests.own the remaining 35.7% of TWM LLC.On May 8, 2019, the Corporation’s board of directors declared a cash dividend of $0.08 per shareby Continuing LLC Owners for shares of Class A common stock andor Class B common stock foror cash, as the second quarter of 2019. This dividend willcase may be, payable on June 15, 2019 to stockholders of record as of June 1, 2019.There were no other subsequent events requiring adjustment to the financial statements or disclosure.Tradeweb Markets LLC and SubsidiariesConsolidated Statements of Financial Condition(in thousands)(Unaudited)
2019
2018The accompanying notes are an integral part of these consolidated financial statements.Tradeweb Markets LLC and SubsidiariesConsolidated Statements of Income(in thousands, except share and per share data)(Unaudited)
Ended
March 31,
2019
Ended
March 31,
2018The accompanying notes are an integral part of these consolidated financial statements.Tradeweb Markets LLC and SubsidiariesConsolidated Statements of Comprehensive Income(in thousands)(Unaudited)The accompanying notes are an integral part of these consolidated financial statements.Tradeweb Markets LLC and SubsidiariesConsolidated Statements of Changes in Members’ Capital and Accumulated Other Comprehensive Income(in thousands)(Unaudited)
Capital
Other
Comprehensive
Loss
Members’
Capital
Capital
Other
Comprehensive
Income
Members’
CapitalThe accompanying notes are an integral part of these consolidated financial statements.Tradeweb Markets LLC and SubsidiariesConsolidated Statements of Cash Flows(in thousands)(Unaudited)
Ended
March 31, 2019
Ended
March 31, 2018The accompanying notes are an integral part of these consolidated financial statements.Tradeweb Markets LLC and SubsidiariesConsolidated Statements of Cash Flows — (Continued)(in thousands)(Unaudited)
Ended
EndedThe following table provides a reconciliation of cash and cash equivalents and restricted cash that sum to the amounts shown in the consolidated statements of cash flows:
Ended
EndedThe accompanying notes are an integral part of these consolidated financial statements.Tradeweb Markets LLC and SubsidiariesNotes to Consolidated Financial Statements(Unaudited)1.OrganizationTradeweb Markets LLC (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, a Delaware limited liability company, is a consolidating subsidiary of BCP York Holdings (“BCP”), a company owned by certain investment funds affiliated with The Blackstone Group L.P., through BCP’s majority ownership interest in Refinitiv Holdings Limited (“Refinitiv” or the “Parent”). As of March 31, 2019, Refinitiv owned a majority ownership interest in the Company and a minority ownership interest of the Company was owned by a group of investment and commercial banks (the “Banks”).A majority interest of Refinitiv (formerly the Thomson Reuters Financial & Risk Business) was acquired by BCP on October 1, 2018 (the “Refinitiv Transaction”) from Thomson Reuters Corporation (“TR”). The accompanying consolidated financial statements are presented for two periods: predecessor and successor, which relate to the periods preceding and succeeding the Refinitiv Transaction, respectively. The Refinitiv Transaction results in a new basis of accounting beginning on October 1, 2018 and the financial reporting periods are presented as follows:· The successor period of the Company, reflecting the Refinitiv Transaction, as of March 31, 2019 and December 31, 2018 and for the three months ended March 31, 2019.· The predecessor period of the Company for the three months ended March 31, 2018.The Company, through its subsidiary Tradeweb Global LLC (“TWG”), owns:· 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”).· Tradeweb Europe Limited (“TEL”), a Multilateral Trading Facility regulatedpurchases by the Financial Conduct Authority (the “FCA”)Corporation of LLC Interests from Continuing LLC Owners by recognizing an increase 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”).The Company, through its subsidiary Tradeweb IDB Markets Inc. (“TWIDB”) (formerly known as Hydrogen Holdings Corporation), owns Dealerweb Inc. (“DW”) (formerly known as Hilliard Farber & Co., Inc.). DW is 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 Markets LLC and SubsidiariesNotes to Consolidated Financial Statements(Unaudited)The Company, through its subsidiary BondDesk Group LLC, owns 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.2.Significant Accounting PoliciesThe following is a summary of significant accounting policies:Basis of AccountingThe 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.Use of EstimatesThe 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 ofdeferred tax assets, and liabilities and disclosures of contingent assets and liabilitiesbased on enacted tax rates at the date of each redemption, exchange, or purchase, as the consolidated financial statementscase may be. Further, the Corporation evaluates the likelihood that it will realize the benefit represented by the deferred tax asset, 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 ConsolidationThe consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.RecapitalizationAs discussed in note 18, on April 4, 2019, the Company’s limited liability company agreement (“LLC Agreement”) was amended and restated to, among other things, (i) provide for a new single class of common membership interests in the Company (“LLC Interests”) and (ii) exchange all of the existing membership interests of the Company’s existing equityholders for LLC Interests. For purposes of calculating net income per share on the consolidated statements of income, the number of outstanding shares have been adjusted retroactively for all periods to reflect the above-mentioned amendment and resulting recapitalization. Other share amounts and related disclosures in the notes to the consolidated financial statements reflect the share classes and amounts prior to the recapitalization unless otherwise indicated.Cash and Cash EquivalentsCash 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 Doubtful AccountsThe Company continually monitors collections and payments from its clients and maintains an allowance for doubtful accounts. The allowance for doubtful accounts is based upon the historical collection experience and specific collection issues that have been identified. Additions, if any, to the allowance for doubtful accounts are charged to bad debt expense, which is included in general and administrative expenses on the consolidated statements of income.Furniture, Equipment, Purchased Software and Leasehold ImprovementsFurniture, equipment, purchased software and leasehold improvements are carried at cost less accumulated depreciation. Depreciation for furniture, equipment and purchased software, including the allocated fair value of assets as a result of pushdown accounting (see note 3), is computed on a straight-line basis over the estimated useful lives of the related assets, ranging from three 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.Tradeweb Markets LLC and SubsidiariesNotes to Consolidated Financial Statements(Unaudited)Software Development CostsThe 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 Accounting Standards Codification (“ASC”) 350. 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. Once the product is ready for its intended use, such costs are amortized on a straight-line basis over three years. Costs capitalized as part of the pushdown accounting allocation (see note 3) are amortized over nine years. The Company reviews the amounts capitalized for impairment whenever events or changes in circumstances indicateextent 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.Intangible AssetsIntangible assets with a finite life are amortized over the estimated lives 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 undiscounted cash flows relating to the asset or asset group is less than the corresponding fair value. Intangible assets are amortized over their estimated useful lives of seven to sixteen years.GoodwillGoodwill 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 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. 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 does this change result in adjustments to the Company’s previously issued financial statements. 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.Deferred IPO CostsIn 2018 the Company began incurring costs in connection with the filing of a Registration Statement on Form S-1, which are deferred in other assets in accordance with ASC 505-10-25 in the consolidated statements of financial condition. Initial public offering (“IPO”) costs consist of legal, accounting, and other costs directly related to the Company’s efforts to raise capital through an IPO. These deferred costs were offset against proceeds received from the offering which closed on April 8, 2019 and will be reclassified to additional paid-in capital on the consolidated statements of financial condition. See note 18.Translation of Foreign CurrencyRevenues 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 TaxThe Company is a multiple member limited liability company which is taxed as a partnership. No federal income tax provision is required on the earnings of the Company as it is a partnership, and therefore the tax effects of its activities accrue directly to its partners. As a partnership, the Company and certain subsidiaries are subject to unincorporated business taxes on income earned, or losses incurred, by conducting business inTradeweb Markets LLC and SubsidiariesNotes to Consolidated Financial Statements(Unaudited)certain state and local jurisdictions and income taxes in foreign jurisdictions on certain of their operations. Additionally, TWIDB and its subsidiary DW are C Corporations and therefore incur corporate federal, state and local income tax expense. Income taxes are accounted for in accordance with ASC 740. The Company recorded 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. Based on the weight of the positive and negative evidence considered, management believesCorporation estimates that it is more likely than not that it will not realize the Company will be able to realize itsbenefit, it reduces the carrying amount of the deferred tax assetsasset with a valuation allowance.future, therefore, no valuation allowance is necessary.The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process whereby (1) 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 (2) 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 incometotal projected obligations recorded under the GILTI provisionTax Receivable Agreement as a current period expense when incurred.Revenue RecognitionThe 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 onresult of actual changes in 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 feesearnings, tax legislation and tax rates in various jurisdictions, or other factors that may impact the Corporation’s actual tax savings realized, are recognized intoreflected in income before taxes on the condensed consolidated statements of income in the period that access is provided on a monthly basis. Also included in subscription feeswhich the change occurs. As of September 30, 2023 and December 31, 2022, the tax receivable agreement liability on the consolidated statements of income are viewer fees earned monthly from institutional investors accessing fixed income market data. The frequency of subscription fee billings varies from monthly until annually, depending on contract terms. Fees received by the Company which are not yet earned are included in deferred revenue on thecondensed consolidated statements of financial condition until the revenue recognition criteria has been met.The Company earns commission revenue from its electronictotaled $448.0 million 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$425.7 million, respectively. During each of the transacted product. Securities transactionsthree and related commission income for brokerage transactions are recorded on a trade-date basis. This income is received by the Company when the transactions settle or is billed monthly.The Company earns fees from Refinitiv, formerly TR in the predecessor periods, 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 arenine months ended September 30, 2023 and 2022, no tax receivable agreement liability adjustment was recognized in the period thatcondensed consolidated statements of income.data is provided, generally onReorganization Transactions, Tradeweb Markets Inc. became the sole manager of TWM LLC and, as a monthly basisresult of this control, and historical data sets which are recognized whenbecause Tradeweb Markets Inc. has a substantial financial interest in TWM LLC, consolidates the historical data set is provided to Refinitiv.On January 1, 2018, the Company adopted ASU 2014-09, Revenue from Contracts with Customers, using the modified retrospective approach.financial results of TWM LLC into its condensed consolidated financial statements. The adoption of ASU 2014-09 did not have a material impactnon-controlling interests balance reported on the measurementcondensed 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 recognition of revenue in any prior reporting periods. However, subsequentloss is attributed to the adoption,Tradeweb Markets LLC and SubsidiariesNotes to Consolidated Financial Statements(Unaudited)the Company was required to make significant judgements for the Refinitiv market data fees. 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 commission and transaction fees 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 months ended March 31, 2019 and 2018 is as follows:
March 31, 2019
March 31, 2018Share-Based CompensationThe Company accounts for share-based compensation in accordance with ASC 718. ASC 718 focuses primarily on accounting for a transaction in which an entity obtains employee services in exchange for share-based payments. Under ASC 718, the share-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 members’ capital.As a liability award, the cost of employee services received in exchange for an award of equity instruments is generally measurednon-controlling interests based on the grant-date fair valuerelative ownership percentages 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 valueLLC Interests held during the requisite service period are recognized as compensation cost over that period.Under ASC 718, the grant-date fair value of share-based awards that do not require future service (i.e., vested awards) are expensed immediately. The grant-date fair value of share-based employee 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 share-based employee awards that require both future serviceby Tradeweb Markets Inc. and the achievementother holders of Company performance-based conditions, are amortized overLLC Interests.relevant service period for the performance-based condition. Ifownership interest in a reporting period it isSeptember 30, 2023 September 30, 2022 LLC
InterestsOwnership
%LLC
InterestsOwnership
%Number of LLC Interests held by Tradeweb Markets Inc. 211,644,675 90.2 % 208,177,751 88.8 % Number of LLC Interests held by non-controlling interests 23,080,571 9.8 % 26,347,881 11.2 % Total LLC Interests outstanding 234,725,246 100.0 % 234,525,632 100.0 % and SubsidiariesNotes to Consolidated Financial Statements(Unaudited)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.Determining the appropriate fair value model and calculating the fair value of the share-based payment awards requires the input of highly subjective assumptions, including the expected life of the share-based payment awards and the stock price volatility. The Company uses the Black-Scholes pricing model to value some of its share-based awards. Application of alternative assumptions could produce significantly different estimates of the fair value of stock-based compensation and consequently, the related amounts recognized in the Company’s consolidated statements of income.Net Income Per ShareBasic net income per share is computed by dividing the net income attributable to the Company’s sharesInterests held by the weighted-average number of the Company’s shares outstanding during the period. For purposes of computing diluted net income per share, the weighted-average number of the Company’s shares reflects the dilutive effect that could occur if convertible securities were converted into or exercised for the Company’s shares using the treasury stock method.Fair Value MeasurementThe 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)Continuing LLC Owners 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 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 MeasurementLevel 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.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.Recent Accounting PronouncementsIn June 2016, the 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. This ASU is effective in the fiscal year beginning January 1, 2020. The Company is currently evaluating the impact of this ASU on the Company’s consolidated financial statements.In January 2017, the FASB issued ASU 2017-04, 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 ASU is applicable for the Company in the fiscal year beginning January 1, 2021. The CompanyTradeweb Markets LLC and SubsidiariesNotes to Consolidated Financial Statements(Unaudited)does not anticipate the adoption of this ASU to have a material impact on the Company’s consolidated financial statements.3.Pushdown AccountingThe Refinitiv Transaction was accounted for by Refinitivredeemable in accordance with the acquisition methodTWM LLC Agreement at the election of accountingthe members for shares of Class A common stock or Class B common stock, as applicable, 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.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, 2023 2022 2023 2022 (in thousands) Net income attributable to Tradeweb Markets Inc. $ 98,614 $ 69,083 $ 275,552 $ 220,392 Transfers (to) from non-controlling interests: Increase/(decrease) in Tradeweb Markets Inc.’s additional paid-in capital as a result of ownership changes in TWM LLC (404) 79,606 79,376 108,311 Net transfers (to) from non-controlling interests (404) 79,606 79,376 108,311 Change from net income attributable to Tradeweb Markets Inc. and transfers (to) from non-controlling interests $ 98,210 $ 148,689 $ 354,928 $ 328,703 Class A Class B Class C Class D Total Balance at December 31, 2022 110,746,606 96,933,192 3,251,177 23,092,704 234,023,679 Activities related to exchanges of LLC Interests 8,733 — — (8,733) — Issuance of common stock from equity incentive plans 986,090 — — — 986,090 Share repurchases pursuant to share repurchase programs (313,311) — — — (313,311) Balance at March 31, 2023 111,428,118 96,933,192 3,251,177 23,083,971 234,696,458 Activities related to exchanges of LLC Interests 3,254,577 — (3,251,177) (3,400) — Issuance of common stock from equity incentive plans 92,687 — — — 92,687 Share repurchases pursuant to share repurchase programs (107,365) — — — (107,365) Balance at June 30, 2023 114,668,017 96,933,192 — 23,080,571 234,681,780 Activities related to exchanges of LLC Interests — — — — — Issuance of common stock from equity incentive plans 108,520 — — — 108,520 Share repurchases pursuant to share repurchase programs (65,054) — — — (65,054) Balance at September 30, 2023 114,711,483 96,933,192 — 23,080,571 234,725,246 Class A Class B Class C Class D Total Balance at December 31, 2021 106,286,821 96,933,192 1,654,825 28,873,139 233,747,977 Activities related to exchanges of LLC Interests 552,606 — — (552,606) — Issuance of common stock from equity incentive plans 1,068,080 — — — 1,068,080 Share repurchases pursuant to share repurchase programs (559,428) — — — (559,428) Balance at March 31, 2022 107,348,079 96,933,192 1,654,825 28,320,533 234,256,629 Activities related to exchanges of LLC Interests 3,700 — — (3,700) — Issuance of common stock from equity incentive plans 367,374 — — — 367,374 Share repurchases pursuant to share repurchase programs (103,458) — — — (103,458) Balance at June 30, 2022 107,615,695 96,933,192 1,654,825 28,316,833 234,520,545 Activities related to exchanges of LLC Interests 3,623,777 — 1,596,352 (5,220,129) — Issuance of common stock from equity incentive plans 134,896 — — — 134,896 Share repurchases pursuant to share repurchase programs (129,809) — — — (129,809) Balance at September 30, 2022 111,244,559 96,933,192 3,251,177 23,096,704 234,525,632 ASC 805, and pushdown accounting was applied to Refinitiv to record the fair value2019 Omnibus Equity Incentive Plan, which vest based on the financial performance of the assets and liabilitiesCompany (“PRSUs”), during the nine months ended September 30, 2023, on March 15, 2023, the Company granted to certain executives, an aggregate of Refinitiv251,113 performance-based restricted stock units that vest based on market conditions (“PSUs”). PSUs are promises to issue actual shares of Class A common stock which cliff vest on January 1 of the third calendar year from the calendar year of the date of the Refinitiv Transaction.grant. The Company, asnumber of shares 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 was recorded as goodwill. The Company has one year from the date of the Refinitiv Transaction to finalize these amounts.Theparticipant will receive upon vesting is determined by a performance modifier, which is adjusted valuations resulted in an increase in depreciation and amortization expense, due to the increased carrying value of the Company’s assets and the related increase in depreciation of tangible assets and amortization of intangible assets, and a decrease in occupancy expense as a result of the recognitionCompany’s total shareholder return over a three-year performance period. The performance modifier can vary between 0% (minimum) and 250% (maximum) of the target (100%) award amount. The PSUs granted on March 15, 2023 had a leasehold interest liability.4.LeasesEffective January 1, 2019,grant date fair value of $98.33 per share, or $24.7 million in total, which will be expensed on a straight-line basis through December 31, 2025, the Company adopted ASC 842. This standard requiresend of the Company to recognizethree-year performance period. The grant date fair value of the March 2023 PSUs was estimated using the Monte Carlo simulation model and the significant valuation assumptions used in the valuation were a right-of-use assetmaturity of 2.8 years annualized volatility of 28.81% and a lease liability for all leases with an initial term in excessrisk-free interest rate of twelve months. The Company accounts for an option to extend a lease when the option is reasonably certain to be exercised. 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. The Company adopted ASC 842 using a modified retrospective approach and did not restate comparative periods. The Company elected to take the package of practical expedients allowing the Company to not reassess (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. The Company has elected to account for nonlease components in a contract as part of the single lease component to which they are related.Significant assumptions and judgements in calculating the right-of-use assets and lease liability include the determination of the applicable borrowing rate for each lease.On January 1, 2019, upon the adoption of ASC 842, the Company recorded, for office space and data center leases in the US and UK, right-of-use assets of $34,760,000, lease liabilities of $39,635,000 and eliminated deferred rent of $4,875,000. The leases have initial lease terms ranging from 3 to 11 years.Activity related to the Company’s leases for3.77%. There were no PSUs granted during the three months ended March 31, 2019 is as follows (in thousands):Operating lease expense$2 ,589Cash for amounts included in the measurement of operating liability2 ,834Right-of-use assets obtained in exchange for operating liabilities—At March 31, 2019,September 30, 2023 or the weighted average borrowing ratethree and weighted average lease term are as follows:Weighted average borrowing rate2.9%Weighted average remaining lease term (years)5.9Tradeweb Markets LLC and SubsidiariesNotes to Consolidated Financial Statements(Unaudited)The following table presents the maturity of lease liabilities as of March 31, 2019 (in thousands):At March 31, 2019, the future minimum lease payments are as follows (in thousands):One US lease is secured by a letter of credit in the amount of $1,200,000, which is guaranteed by Refinitiv.5.Intangible Assets and GoodwillIntangible assets and goodwill relate to the allocation of purchase price associated with the Refinitiv Transaction (see note 3).The following is a summary of intangible assets which have an indefinite useful life at both March 31, 2019 and December 31, 2018 (in thousands):Intangible assets that are subject to amortization, including the related accumulated amortization, are comprised as follows (in thousands):
Period
Amortization
Amount
Amortization
AmountFornine months ended September 30, 2022.March 31, 2019 and 2018, amortization expense relating to intangible assets was $24,852,000 and $6,506,000, respectively.Tradeweb Markets LLC and SubsidiariesNotes to Consolidated Financial Statements(Unaudited)The estimated annual future amortization for existing intangibles assets through December 31,September 30, 2023, is as follows (in thousands):6.Deferred RevenueThethe Company records deferred revenue when cash payments are received or due in advancegranted 1,743 RSUs at a weighted-average grant-date fair value of services to be performed. The recognized revenue and remaining balance is shown below (in thousands):7.Income TaxesThe provision for income taxes consists of the following (in thousands):The Company and certain of its subsidiaries are taxed as partnerships for U.S federal income tax purposes. The Company’s effective tax rate was 10.1% and 5.3% for$86.43. No PRSUs were granted during the three months ended March 31, 2019 and 2018, respectively. The Company’s consolidated effective tax rate can vary from period to period depending onSeptember 30, 2023. During the geographic mix of its earnings and changes in tax legislation and tax rates.8.SharesThe Company’s issued and vested shares as of both March 31, 2019 and December 31, 2018 are as follows:Class A Shares146,333Class C Shares447Class P(A) Shares6,887Class P(C) Shares2Class P-1(A) Shares6,094Class P-1(C) Shares232Tradeweb Markets LLC and SubsidiariesNotes to Consolidated Financial Statements(Unaudited)As described in note 18, on April 4, 2019, the LLC Agreement was amended and restated, pursuant to which, among other things, all of the outstanding Class A Shares, Class P(A) Shares, Class P-1(A) Shares, Class C Shares, Class P(C) Shares and Class P-1(C) Shares ofnine months ended September 30, 2023, the Company were exchanged for 222,222,197 LLC Interests.Each formerly outstanding Class A Share, Class P(A) Share, Class P-1(A) Share, Class C Share, Class P(C) Sharegranted 571,980 RSUs and Class P-1(C) Share equally participated in the earnings326,050 PRSUs at a weighted-average grant-date fair value of the Company. All of these shares could not be transferred without approval by the former Board of Managers of the Company, with the exception of transfers$69.66 and $69.56, respectively. RSU awards granted to certain related parties. Most of the Class Aemployees will generally vest one-third each year over a three-year period, and Class P(A) Shareholders had the rightRSU awards granted to appoint the members of the former Board of Managers. The Class C Shareholders, Class P(C) Shareholders and Class P-1(C) Shareholders did not have the right to appoint members of the former Board of Managers.9.Share-Based Compensation PlansAs of March 31, 2019, the Company maintained a share-based incentive plan (the “PRSU Plan”) which provided for the grant of performance-based restricted share units (“PRSUs”) to encourage employees of the Company to participate in the long-term success of the Company.vest in the third plan year following the year of grant. The outstanding PRSUsgenerally cliff vest on January 1 2020, 2021of the third calendar year from the calendar year of the date of grant and 2022. The finalthe number of the PRSUs receivedshares a participant will receive upon vesting is determined by a performance modifier, which is adjusted as a result of the financial performance of the Company. If an employee’s employment withCompany in the grant year. The performance modifier can vary between 0% (minimum) and 200% (maximum) of the target (100%) award amount for awards granted during 2022 and prior years. PRSUs granted during 2023 have a 250% maximum performance modifier.Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 (in thousands) Total stock-based compensation expense $ 17,348 $ 14,757 $ 44,670 $ 49,432 is terminated, subject to certain exceptions, all unvested PRSUs are forfeited.The following table reports the activity for equity-settled PRSUs of the Company:
PRSUs
Average
Fair Value
of PRSUsSubsequent to March 31, 2019, in connection with the reorganization transactions described in note 18, the Corporation’sannounced that its board of directors adopted and assumed sponsorshipauthorized a new share repurchase program (the “2022 Share Repurchase Program”), after completing in October 2022, the $150.0 million of total repurchases of the Amended & Restated Tradeweb Markets Inc. PRSU Plan, including all awardsCompany’s Class A common stock previously granted underauthorized in February 2021 (the “2021 Share Repurchase Program”). The 2022 Share Repurchase Program was authorized to continue to offset annual dilution from stock-based compensation plans, as well as to opportunistically repurchase the predecessor planCompany’s Class A common stock. The 2022 Share Repurchase Program authorizes the purchase of up to $300.0 million of the Company. As a result,Company’s Class A common stock at the equity-settled PRSUs outstanding at March 31, 2019, converted into equity-settled PRSUsCompany’s discretion and has no termination date. The 2022 Share Repurchase Program can be effected through regular open-market purchases (which may include repurchase plans designed to comply with Rule 10b5-1), through privately negotiated transactions or through accelerated share repurchases, each in accordance with applicable securities laws and other restrictions. The amounts, timing and manner of the Corporation represented by 2,770,334repurchases will be subject to general market conditions, the prevailing price and trading volumes of the Company’s Class A common stock and other factors. The 2022 Share Repurchase Program does not require the Company to acquire a specific number of shares and may be suspended, amended or discontinued at any time. During the three months ended September 30, 2023 and 2022, the Company acquired a total of 65,054 and 129,809 shares of Class A common stock, at an average price of $75.28 and $69.33, for purchases totaling $4.9 million and $9.0 million, respectively. During the nine months ended September 30, 2023 and 2022, the Company acquired a total of 485,730 and 792,695 shares of Class A common stock, at an average price of $72.48 and $82.41, for purchases totaling $35.2 million and $65.3 million, respectively.Corporation.Certain PRSUs are cash-settledClass A common stock and are accountedClass B common stock and the LLC Interests owned by the Corporation. Subsequent to their repurchase, the shares of Class A common stock and the LLC Interests were all cancelled and retired. As of September 30, 2023, a total of $239.8 million remained available for repurchase pursuant to the 2022 Share Repurchase Program.liability awards. Thea reduction to retained earnings.measures the costwithheld 92,373 and 33,348 shares, respectively, of common stock from employee services received in exchange for the awardstock option, PRSU and RSU awards, at an average price per share of $84.15 and $68.13, respectively, and an aggregate value of $7.8 million and $2.3 million, respectively, based on the fairprice of the Class A common stock on the date the relevant withholding occurred. During the nine months ended September 30, 2023 and 2022, the Company withheld 693,456 and 1,048,837 shares, respectively, of common stock from employee stock option, PRSU and RSU awards, at an average price per share of $71.38 and $95.59, respectively, and an aggregate value of $49.5 million and $100.3 million, respectively, based on the price of the Class A common stock on the date the relevant withholding occurred.andto cover 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.Tradeweb Markets LLC and SubsidiariesNotes to Consolidated Financial Statements(Unaudited)The following table reports the activity for cash-settled PRSUs of the Company:
PRSUs
Average
Fair Value
of PRSUsIn October 2018, the Company made a special award of options under an option plan (the “Option Plan”). Each option 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 graded vesting schedule with vesting dates of January 1, 2019, 2020, 2021 and 2022.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 (“IPO”) or during a 15-day period following a change in control of the Company. Costs related to these options will be recognized as an expense in the consolidated statements of income over the requisite service period, when exercisability is considered probable. Therefore expense will be recognized onlypayroll tax withholding obligations upon the completionexercise of an IPO or a change in control, over the vesting period, with an offsetting increase to members’ capital. On April 8, 2019, as a resultstock options and settlement of the options becoming exercisable because of completion of the Corporation’s IPO, the Company recognized $18,883,000 of compensation expense related to these options.The fair value of the options was calculated at the date of grant using the Black-Scholes model. The significant assumptions used to estimate the fair value of the options as of grant date didRSUs and PRSUs and such shares were not reflect changes that would have occurred to these assumptions as a result of the Corporation’s IPO. See note 18. The significant assumptions used to estimate the fair value of the options were as follows:The following table reports the activity for options held by employees of the Company:
Options
Average
Fair Value
of Options
Value
(in
thousands)Tradeweb Markets LLC and SubsidiariesNotes to Consolidated Financial Statements(Unaudited)Subsequent to March 31, 2019,withheld in connection with the reorganization transactions described in note 18, the Corporation’s board of directors adopted and assumed sponsorship of the Amended and Restated Tradeweb Markets Inc. 2018 Share Option Plan, including all awards previously granted under the predecessor plan of the Company. As a result, the options outstanding at March 31, 2019 converted into 18,137,050 options of the Corporation with respect to shares of the Corporation’s Class A common stock.As of March 31, 2019, total unrecognized compensation cost related to non-vested share-based compensation arrangements and the expected recognition period are as follows:
PRSUs
PRSUsCertain employees acquired or vested in Class C Shares, Class P(C) Shares and Class P-1(C) Shares of the Company (collectively, the “Employee Shares”).The Employee Shares outstanding at March 31, 2019 and December 31, 2018 are as follows:
Shares
Shares
SharesOn April 4, 2019, as a result of the amendment to the LLC Agreement described in note 18, the Employee Shares outstanding at March 31, 2019 converted into 946,569 LLC Units.The Employee Shares were classified as mezzanine capital, as opposed to members’ capital, due to the right of employees to sell the shares back to the Company at fair value upon termination of employment. Employee Shares that have been outstanding for less than six months were included in employee equity compensation payable. At December 31, 2018, $6,727,000 of vested Class P-1(C) Shares were included in employee compensation payable with any changes in the value of the shares included in compensation cost on the consolidated statements of income. There were no vested Class P-1(C) Shares included in employee compensation payable at March 31, 2019. Changes in the fair value of the Employee Shares included in mezzanine capital were not recognized as compensation cost.For the three months ended March 31, 2019 and 2018, $4,878,000 and $5,946,000, respectively, has been expensed relating to PRSUs, options and shares and included in employee compensation and benefits in the consolidated statements of income.Tradeweb Markets LLC and SubsidiariesNotes to Consolidated Financial Statements(Unaudited)the Banks and Refinitiv. At March 31, 2019September 30, 2023 and December 31, 2018,2022, the following balances with such affiliates were included in the condensed consolidated statements of financial condition in the following line items (in thousands):September 30, December 31, 2023 2022 (in thousands) Accounts receivable $ 1,812 $ 70 Receivable and due from affiliates 3,165 2,728 Other assets 74 261 Accounts payable, accrued expenses and other liabilities 1,467 335 Deferred revenue 5,099 5,076 Payable and due to affiliates 527 7,232 Company maintains a shared services agreementfollowing balances with Refinitiv (TRsuch affiliates were included in the predecessor period). Under the terms of the agreement, Refinitiv provides the Company with certain real estate, payroll, benefits administration, insurance, content, financial reporting and tax support. For both the three months ended March 31, 2019 and 2018, the Company incurred shared services fees of $1,075,000 relating to this agreement. These fees are included in occupancy, technology and communications and general and administrative expenses in thecondensed consolidated statements of income.Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 (in thousands) Revenue: Subscription fees $ 460 $ 282 $ 1,931 $ 799 15,460 15,370 46,515 46,354 Other fees 218 110 468 353 Employee compensation and benefits 9 — 26 613 Technology and communications 1,496 1,231 4,147 3,546 General and administrative 4 47 4 244 Professional fees 9 1 10 46 Occupancy 21 — 41 — Refinitiv (TR in the predecessor period).Refinitiv. Under the agreement, the Company delivers to Refinitiv certain market data feeds which Refinitiv redistributes to its customers. The Company earns license fees orand royalties for these feeds. For the three months ended March 31, 2019 and 2018,earned $13,616,000with certain real estate, payroll, benefits administration and $12,237,000, respectively, of revenue under this agreement.The Company reimburses affiliates of Refinitv (TR in the predecessor period) 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 months ended March 31, 2019 and 2018, the Company reimbursed such affiliates approximately $1,027,000 and $6,258,000, respectively, for these expenses.For the three months ended March 31, 2019 and 2018, the Company earned approximately $81,499,000 and $69,769,000, respectively,transaction, subscription and other fees from affiliates of the Banks.For the three months ended March 31, 2019 and 2018, the Company earned $208,000 and $21,000, respectively, of interest income from money market funds invested with and savings accounts deposited with affiliates of the Banks. Interest rates earned on the money market and savings accounts are comparable to rates offered to third parties.During 2014, the Company issued Class A Shares and unvested Class P-1(A) Shares to some of the Banks as a result of a $120,000,000 capital contribution. In connection with this investment, employees invested $5,266,000 in the Company and were issued Class C Shares and unvested Class P-1(C) Shares. Certain Class P-1(A) Shares and Class P-1(C) Shares vested on July 31, 2018, based on a formula determined by the Company’s new credit platforms’ revenues and any remaining unvested Class P-1(A) Shares and Class P-1(C) Shares were cancelled and as a result no contingent consideration has been recognized related to these shares subsequent to that date. The Company recognized contingent consideration for the three months ended March 31, 2018 of $10,070,000 relating to these shares, which is included in net revenue on the consolidated statements of income.Tradeweb Markets LLC and SubsidiariesNotes to Consolidated Financial Statements(Unaudited)Certainthat are not carriedmeasured at fair value on the condensed consolidated statements of financial condition are carried at amounts that approximate fair value. These instruments include deposits with clearing organizationsas of September 30, 2023 and accounts receivable.Following is a description ofDecember 31, 2022 have been categorized based upon the fair value methodologies used for the Company’s instruments measured at fair value,hierarchy as well as the general classification of such instruments pursuant to the valuation hierarchy:Total (in thousands) As of September 30, 2023 Assets Cash equivalents – Money market funds $ 1,361,198 $ — $ — $ 1,361,198 Receivable and due from affiliates – Foreign exchange derivative contracts — 3,019 — 3,019 Total assets measured at fair value $ 1,361,198 $ 3,019 $ — $ 1,364,217 Liabilities Payable and due to affiliates – Foreign exchange derivative contracts $ — $ — $ — $ — Total liabilities measured at fair value $ — $ — $ — $ — As of December 31, 2022 Assets Cash equivalents – Money market funds $ 1,106,916 $ — $ — $ 1,106,916 Total assets measured at fair value $ 1,106,916 $ — $ — $ 1,106,916 Liabilities $ — $ 1,002 $ — $ 1,002 Total liabilities measured at fair value $ — $ 1,002 $ — $ 1,002 Company’sCompany’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.has noenters into foreign currency forward contracts to mitigate its U.S. dollar and British pound sterling versus euro exposure, generally with a duration of less than 12 months. The valuations for the Company’s foreign currency forward contracts are primarily based on the difference between the exchange rate associated with the contract and the exchange rate at the current period end for the tenor of the contract. Foreign currency forward contracts are categorized as Level 2 in the fair value hierarchy. As of September 30, 2023 and December 31, 2022, the counterparty on each of these foreign exchange derivative contracts was an affiliate of LSEG and therefore the corresponding assets or liabilities on such contracts were included in receivable and due from affiliates or payable and due to affiliates, respectively, on the accompanying condensed consolidated statements of financial condition.September 30, December 31, 2023 2022 (in thousands) Foreign currency forward contracts – Gross notional amount $ 178,620 $ 162,845 Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 (in thousands) Foreign currency forward contracts not designated in accounting hedge relationship – General and administrative (expenses)/income $ 3,883 $ 6,767 $ 4,921 $ 12,937 $ (1,907) $ — $ (1,289) $ — thatnot measured at fair value on the condensed consolidated statements of financial condition as of September 30, 2023 and December 31, 2022 have been categorized based upon the fair value hierarchy as follows:Carrying Value Quoted Prices in
active Markets
for Identical
Assets
(Level 1)Significant
Unobservable
Inputs
(Level 3)Total Fair Value As of September 30, 2023 (in thousands) Assets Cash and restricted cash $ 133,212 $ 133,212 $ — $ — $ 133,212 Receivable from brokers and dealers and clearing organizations 4,966 — 4,966 — 4,966 Deposits with clearing organizations 26,433 26,433 — — 26,433 Accounts receivable 167,039 — 167,039 — 167,039 2,423 — — 2,423 2,423 Total $ 334,073 $ 159,645 $ 172,005 $ 2,423 $ 334,073 Liabilities Payable to brokers and dealers and clearing organizations $ 4,966 $ — $ 4,966 $ — $ 4,966 Total $ 4,966 $ — $ 4,966 $ — $ 4,966 As of December 31, 2022 Assets Cash and restricted cash $ 151,313 $ 151,313 $ — $ — $ 151,313 Receivable from brokers and dealers and clearing organizations 11,632 — 11,632 — 11,632 Deposits with clearing organizations 23,906 23,906 — — 23,906 Accounts receivable 142,676 — 142,676 — 142,676 2,406 — — 2,406 2,406 Total $ 331,933 $ 175,219 $ 154,308 $ 2,406 $ 331,933 Liabilities Payable to brokers and dealers and clearing organizations $ 11,264 $ — $ 11,264 $ — $ 11,264 Total $ 11,264 $ — $ 11,264 $ — $ 11,264 level 2 or level 3 of the fair value hierarchy.Thehierarchy because the valuation requires assumptions that are both significant and unobservable.value measurements arevalues of $20.0 million as follows (in thousands):
active Markets
for Indentical
Assets
(Level 1)
Observable
Inputs
(Level 2)
Unobservable
Inputs
(Level 3)The Company may be exposed to credit risk regarding its receivables, which are primarily receivables frominvestment managers and broker/dealers. At March 31, 2019 and December 31, 2018cash amounts in excess of federally insured limits. To mitigate this concentration of credit risk, the Company established an allowance for doubtful accountsinvests through high-credit-quality financial institutions, monitors the concentration of $1,253,000credit exposure of investments with any single obligor and $1,169,000, respectively, with regard to these receivables.brokers and dealers.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.Tradeweb Markets LLC and SubsidiariesNotes to Consolidated Financial Statements(Unaudited)user agreements with its dealerscustomers which provide the dealerscustomers with indemnification from third partiesrights, including 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.dozens ofother financial institutions, in two consolidated antitrust class actions (consolidated into two actions) relating to trading practices in United States Treasury securities auctionsauctions. The cases were dismissed in March 2021, with the Court granting the Plaintiffs leave to further amend the complaint by no later than May 14, 2021. The plaintiffs filed an amended complaint on or about May 14, 2021, and separately, interest rate swaps.the Company moved to dismiss the amended complaint on June 14, 2021. By order dated March 31, 2022, the Court granted the Company’s motion and dismissed all of the claims against it in the amended complaint. The Court also denied the plaintiffs’ request for leave to file a further amended complaint. On April 28, 2022, the Plaintiffs filed a Notice of Appeal of the decision and filed their opening brief on the appeal in the United States Court of Appeals for the Second Circuit on August 18, 2022. The Company filed its brief in response on November 17, 2022. Plaintiffs filed their brief in reply in further support of their appeal on December 14, 2022. Oral argument in the appeal was dismissed fromheld on October 3, 2023, and the interest rate swaps matter and believes itSecond Circuit now has substantialthe appeal under advisement. We believe that we have meritorious defenses to the other plaintiff’s claims set forth in the complaint and intends to defend itself vigorously.The Company is a co-defendant in a matter relating to the distribution of financial strength ratings over the Company’s trading platform to one of its customers. The matter alleges that while certain business units of the client were licensed to receive the data via the Company’s platform, the data was also distributed without authorization to certain end clients of the customer. The plaintiff claims to have suffered approximately $80,000,000 in damages and also seeks punitive damages, attorneys’ fees and costs. The Company intendsintend to continue to vigorously defend whatour position.believeswas dismissed from a class action relating to be meritless and excessive claims.Tradeweb Markets LLC and SubsidiariesNotes to Consolidated Financial Statements(Unaudited)14.Net Income Per Share4,8, 2019, the LLC AgreementCompany entered into a five year, $500.0 million senior secured revolving credit facility (“Revolving Credit Facility”) with a syndicate of banks. The Revolving Credit Facility was subsequently amended on November 7, 2019 and restatedMarch 31, 2023. The Revolving Credit Facility provides additional borrowing capacity to among other things, (i) providebe used to fund ongoing working capital needs, letters of credit and for LLC Interestsgeneral corporate purposes, including potential future acquisitions and (ii) exchange allexpansions.existing membership interests ofcredit agreement that governs the Revolving Credit Facility, borrowings under the Revolving Credit Facility bear interest at a rate equal to, at the Company’s existing equityholdersoption, 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 1.00% and (iii) one month Term SOFR plus 1.00% plus a credit adjustment spread of 0.10%, in each case plus 0.75%, (b) Term SOFR plus 1.75% plus a credit adjustment spread of 0.10%, subject to a 0.00% floor, (c) SONIA plus 1.75%, subject to a 0.00% floor or (d) EURIBOR plus 1.75%, subject to a 0.00% floor. The credit agreement also includes a commitment fee of 0.25% for LLC Interests. See note 18. For purposesavailable but unborrowed amounts and other administrative fees that are payable quarterly. The Revolving 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.calculating net income per share onboth September 30, 2023 and December 31, 2022, there were $0.5 million in letters of credit issued under the consolidated statementsRevolving Credit Facility and no borrowings outstanding.been adjusted retroactivelyoperating leases for all periods presentedcorporate offices and data centers with initial lease terms ranging from one to reflect the above-mentioned amendment and resulting recapitalization.ten years. The following table sets forthpresents the computationfuture minimum lease payments and the maturity of lease liabilities as of September 30, 2023:Amount (in thousands) Remainder of 2023 $ 3,495 2024 8,925 2025 4,046 2026 3,264 2027 3,261 Thereafter 223 Total future lease payments 23,214 Less imputed interest (1,174) Lease liability $ 22,040 net incomeearnings per share:Shares fromshare of Class A and Class B common stock for Tradeweb Markets Inc.:Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 (in thousands, except share and per share amounts) Numerator: Net income attributable to Tradeweb Markets Inc. $ 98,614 $ 69,083 $ 275,552 $ 220,392 (124) (82) (348) (111) Net income attributable to outstanding shares of Class A and Class B common stock - Basic and Diluted $ 98,490 $ 69,001 $ 275,204 $ 220,281 Denominator: Weighted average shares of Class A and Class B common stock outstanding - Basic 211,618,475 205,721,162 210,444,082 204,767,261 Dilutive effect of PRSUs 504,945 746,043 380,740 796,090 Dilutive effect of options 1,110,175 1,661,705 1,240,923 1,940,970 Dilutive effect of RSUs 258,039 200,559 211,163 243,716 Dilutive effect of PSUs — — — — Weighted average shares of Class A and Class B common stock outstanding - Diluted 213,491,634 208,329,469 212,276,908 207,748,037 Earnings per share - Basic $ 0.47 $ 0.34 $ 1.31 $ 1.08 Earnings per share - Diluted $ 0.46 $ 0.33 $ 1.30 $ 1.06 contingent consideration payable totaling 5,519,568 for three months ended March 31, 2018September 30, 2023 and 2022, there was a total of 265,681 and 246,238, respectively, and during the nine months ended September 30, 2023 and 2022, there was a total of 266,453 and 121,115, respectively, weighted average unvested RSUs and unsettled vested PRSUs that were considered a participating security for purposes of calculating earnings per share in accordance with the two-class method.net incomeearnings per share because their effect wouldfor the periods indicated:Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Anti-dilutive Shares: PRSUs — 324,467 — — Options — — — — RSUs 110,927 321,920 110,927 38,761 PSUs 144,666 — 144,666 — LLC Interests 23,080,571 28,750,603 24,179,583 29,667,383 been anti-dilutive.Securities Exchange Act of 1934.Act. TEL isand TESL are 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, TWEU and TWEU isTESBV are subject to certain finance resource requirements with the AFM in the Netherlands.March 31, 2019September 30, 2023 and December 31, 2018,2022, the regulatory capital requirements and regulatory capital for TWL, DW, TWD, TEL, TWJ and TWEU werethese entities are as follows (in thousands):As of September 30, 2023 TWL DW TWD TEL TWJ TWEU TESL TESBV YB (in thousands) Regulatory Capital $ 41,514 $ 149,497 $ 40,524 $ 74,995 $ 7,166 $ 11,381 $ 1,740 $ 1,558 $ 1,974 Regulatory Capital Requirement 2,639 2,852 741 33,024 2,022 5,358 917 860 1,014 Excess Regulatory Capital $ 38,875 $ 146,645 $ 39,783 $ 41,971 $ 5,144 $ 6,023 $ 823 $ 698 $ 960 As of December 31, 2022 TWL DW TWD TEL TWJ TWEU TESL TESBV (in thousands) Regulatory Capital $ 41,933 $ 131,026 $ 44,094 $ 59,904 $ 7,320 $ 8,794 $ 1,607 $ 1,677 Regulatory Capital Requirement 3,669 3,574 775 32,589 1,695 4,517 904 801 Excess Regulatory Capital $ 38,264 $ 127,452 $ 43,319 $ 27,315 $ 5,625 $ 4,277 $ 703 $ 876 March 31, 2019September 30, 2023 and December 31, 20182022 are as follows (in thousands):follows:As of September 30, 2023 As of December 31, 2022 TW SEF DW SEF TW SEF DW SEF (in thousands) Financial Resources $ 40,661 $ 12,861 $ 30,837 $ 14,714 Required Financial Resources 12,500 8,694 12,500 8,080 Excess Financial Resources $ 28,161 $ 4,167 $ 18,337 $ 6,634 Liquid Financial Assets $ 17,915 $ 7,523 $ 15,566 $ 9,493 Required Liquid Financial Assets 3,125 2,174 3,125 2,020 Excess Liquid Financial Assets $ 14,790 $ 5,349 $ 12,441 $ 7,473 Tradeweb Markets LLC and SubsidiariesNotes to Consolidated Financial Statements(Unaudited)16.Employees Savings PlanThe Company sponsors a 401(k) savings plan for its US employees. Employees may voluntarily contribute up to 75%Table of their annual compensation, including bonus. The Company matches 100% of the employee’s contribution, up to 4% of their annual compensation, not to exceed the maximum tax deferred amount, which vests immediately. Company’s expense for matching contributions for these plans was $2,436,000 and $2,136,000 for the three months ended March 31, 2019 and 2018, respectively.The Company has deferred compensation plans for its International employees. Employer contributions to the plans were $425,000 and $398,000 for the three months ended March 31, 2019 and 2018, respectively.17.Contentspricing and post-trade processing services. The Company’s operations constitute a single business segment because of the integrated nature of these marketplaces and services.follows (in thousands):
March 31, 2019
March 31, 2018Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 (in thousands) Revenues Institutional $ 195,094 $ 172,814 $ 577,774 $ 551,322 Wholesale 77,975 64,584 227,404 205,532 Retail 32,332 28,495 94,875 75,267 Market Data 22,956 21,222 68,166 63,618 Total revenue 328,357 287,115 968,219 895,739 Operating expenses 203,619 184,305 604,580 574,720 Operating income $ 124,738 $ 102,810 $ 363,639 $ 321,019 Asia.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. Information regardingforby geographic area:Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 (in thousands) Revenues U.S. $ 207,842 $ 185,097 $ 617,463 $ 565,540 International 120,515 102,018 350,756 330,199 Total revenue $ 328,357 $ 287,115 $ 968,219 $ 895,739 three months ended March 31, 2019 and 2018 andattribution of long-lived assets asby geographic area:September 30, December 31, 2023 2022 (in thousands) Long-lived assets U.S. $ 4,022,318 $ 4,044,230 International 15,185 13,026 Total $ 4,037,503 $ 4,057,256 March 31, 2019 and December 31, 2018 is as follows (in thousands):ContentsTradeweb Markets LLC and SubsidiariesNotes to Consolidated Financial Statements(Unaudited)18.April 3, 2019,October 26, 2023, the Company paid a $100 million distribution to the then current owners of the Company (the “Original LLC Owners”).Prior to the closing of the Corporation’s IPO on April 8, 2019, the Corporation, the Company and the Original LLC Owners, including those Original LLC Owners that continued to own LLC Interests immediately prior to the closing of the IPO and who received shares of the Corporation’s common stock (collectively, the “Continuing LLC Owners”), completed a series of reorganization transactions (the “Reorganization Transactions”).On April 4, 2019, in connection with the IPO and the Reorganization Transactions, the LLC Agreement was amended and restated to, among other things, (i) provide for LLC Interests, a new single class of common membership interests in the Company; (ii) exchange all of the existing membership interests of the Company’s existing equityholders for LLC Interests; and (iii) appoint the Corporation as the sole manager of the Company. As the sole manager of the Company, the Corporation operates and controls all of the business and affairs of the Company and, through the Company and its subsidiaries, conducts the Corporation’s business. As a result of this control, and because, following the completion of the Reorganization Transactions, including the IPO and the application of the proceeds therefrom, the Corporation owns 64.3% of the LLC Interests, the Corporation will consolidate the financial results of the Company and report a non-controlling interest in the Corporation’s consolidated financial statements. The LLC Agreement also requires that the Company at all times maintain (i) a one-to one ratio between the number of shares of the 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 are redeemable, 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). The Corporation’s board of directors which includes directors who hold LLC Interests or are affiliated with holders of LLC Interests and may include such directors in the future, may, at its option, instead of the foregoing redemptions 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 (subject to customary adjustments, including for stock splits, stock dividends and reclassifications) in accordance with the terms of the LLC Agreement.LLC and SubsidiariesNotes to Consolidated Financial Statements(Unaudited)In addition, the Corporation assumed sponsorship of the Option Plan and the PRSU Plan formerly sponsored by the Company. Accordingly, all options and PRSUs granted under such plans were converted into economically equivalent awards of the Corporation with respect to shares of the Corporation’s Class A common stock.On April 8, 2019, the Company entered into a $500 million senior secured revolving credit facility with a five-year term, which includes borrowing capacity available for letters of credit and swingline loans.On May 8, 2019, the CompanyInc. declared a cash distribution of $33,378,019 for the second quarter of 2019. This distribution was paid on May 15, 2019 on a pro rata basis to the equityholders of the Company as of May 9, 2019, including the Corporation, for the purpose of funding the Corporation’s cash dividend of $0.08$0.09 per share of Class A common stock and Class B common stock for the third quarter of 2023. This dividend will be payable on JuneDecember 15, 20192023 to stockholders of record as of December 1, 2023.fund the tax liabilitiesrecord date of December 1, 2023, payable on December 13, 2023.equityholders’ allocableCompany entered into a master data license agreement (the “Master Data Agreement”) with Refinitiv US LLC and Refinitiv US Organization LLC (together, the “Refinitiv Parties”), which effective as of November 1, 2023 amends and restates in its entirety the Second Amended and Restated Market Data Agreement, dated November 1, 2018, by and among Tradeweb Markets and the Refinitiv Parties, as amended. Pursuant to the Master Data Agreement, on October 25, 2023, Tradeweb Markets and the Refinitiv Parties entered into separate data schedules (the “Current Data Schedules”) under which Tradeweb Markets will license certain data sets to Refinitiv US LLC and its relevant affiliates (collectively, the “Refinitiv Subscriber”) in exchange for either fixed license fees or fees payable based on a percentage of revenue generated by the Refinitiv Subscriber. As of the date hereof, Tradeweb Markets will provide the Refinitiv Subscriber with certain market data (including real time feeds) for multiple fixed income and derivatives products under a partially exclusive license pursuant to which the Refinitiv Subscriber is permitted to distribute such market data to its customers subject to the terms of the Master Data Agreement. Tradeweb Markets will also earn revenues from the Refinitiv Subscriber for servicing certain of its customers, as well as earn a share of taxable incomerevenue generated from the Company.There were no other subsequent events requiring adjustmentlicensing of 19901 data sets to clients, which utilizes Tradeweb Markets data.consolidated financial statements or disclosure.earlier of its termination in accordance with its terms and five years after the termination of all data schedules thereunder. The initial license and service periods under the Current Data Schedules run from November 1, 2023 through October 31, 2025 and unless otherwise agreed to by the parties, also includes the option for a twelve-month transition period following the initial period to allow for an orderly transition of the market data distribution arrangements contemplated under the applicable Current Data Schedule. The Master Data Agreement includes customary termination provisions, including termination of a data schedule in the event of a material breach of such data schedule that is not cured within 30 days of receipt of written notice.theour unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. This discussion of our historical financial position and results of operations does not give effect to the completion of our IPO or the Reorganization Transactions, which are described in the notes to unaudited financial statements included elsewhere in this Quarterly Report on Form 10-Q.10‑Q. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from the results described in or implied by the forward-looking statements. Factors that could cause or contribute to those differences include, but are not limited to, those identified below and those discussed in the section titled “Cautionary Note Regarding Forward-Looking Statements” included elsewhere in this Quarterly Report on Form 10-Q.markets and equities.markets. We are a global company serving clients in 62over 65 countries with offices in North America, Europe, Asia and Asia.Australia. We believe our proprietary technology and culture of collaborative innovation allow us to adapt our offerings to enter new markets, create new platforms and solutions and adjust to regulations quickly and efficiently. We support our clients by providing solutions across the trade lifecycle, including pre-trade, execution, post-trade and data.37 markets across 24 currencies, and in 62over 65 countries around the globe.globe and across over 25 currencies. We connect institutional investors with pools of liquidity using our flexible order and trading systems. Our clients trust the integrity of our markets and recognize the value they get by trading electronically: enhanced transparency, competitive pricing, efficient trade execution and regulatory compliance.90100 actively trading on our electronic or hybrid markets with our Dealerweb platform. This platform was launched in 2008 following the acquisition of inter-dealer broker Hilliard Farber & Co., Inc. In 2011, we acquired the brokerage assets of Rafferty Capital Markets.Markets and in June 2021, we acquired Nasdaq’s U.S. fixed income electronic trading platform (formerly known as eSpeed) (the “NFI Acquisition”). Today, Dealerweb actively competes across a range of rates, credit, money markets, derivatives and equity markets. is correlated to lower liquidity, which may result in lower trading volume for our clients and may negatively impact our operating performance. As a result, our business is sensitive to slow trading environmentsperformance and financial condition. Factors that may impact market activity during the continuityremainder of conservative2023 include, among other things, evolving monetary policies of central banks, internationally,economic, political and social conditions, legislative, regulatory or government policy changes and concerns with respect to the banking industry, including as a result of any bank failures.tendmay not be readily recoverable in the prices of our services. We believe any effects of inflation on our results of operations and financial condition have not been significant during any of the periods presented in this Quarterly Report on Form 10-Q. To the extent inflation, along with other factors, continue to lessen volatility.the current presidential administration.U.S. and global issues and priorities. The impact of any reform effortschanges in the legal or regulatory landscape on us and our operations remains uncertain. In addition, as a result of the referendum in favor of the United Kingdom’s withdrawal from the European Union (“Brexit”) in June 2016, which is currently scheduled to occur on October 31, 2019, we have incurred additional costs to address the potential effects of Brexit, including costs associated with establishing a new regulated subsidiary in the Netherlands. Compliance with regulations may require us to dedicate additional financial and operational resources, which may adversely affect our profitability. In addition, compliance with regulations may require our clients to dedicate significant financial and operational resources, which may negatively affect their ability to pay our fees and use our platforms and, as a result, our profitability. However, under certain circumstances regulation may increase demand for our platforms and solutions, and we believe we are well positioned to benefit from any potential increased electronification due to regulatory changes as market participants seek platforms that meet regulatory requirements and solutions that help them comply with their regulatory obligations. For example, our 2018 revenue increased due in part to increased trading volumes as a result of, and the introduction of our new Approved Publication Arrangement (“APA”) service in connection with, the implementation of Markets in Financial Instruments Directive II (“MiFID II”) in January 2018.sophisticated systems and infrastructures and new business models. Offering specialized trading venues and solutions throughbythrough utilizing technological advances and emerging industry standards and practices in an effective and efficient way. We plan to continue to focus on and invest in technology infrastructure initiatives and continually improve and expand our platforms and solutions to further enhance our market position.cyber securitycybersecurity incidents could impact revenue and operating income and increase costs. We therefore continue to make investments to strengthen our cybersecurity infrastructure, which may result in increased costs, to strengthen our cybersecurity measures. During the three months ended March 31, 2019 and 2018, approximately 30.3% and 29.1%, respectively, of our gross revenue and 15.1% and 16.1%, respectively, of our operating expenses were denominated in currencies other than the U.S. dollar, almost entirely the Euro for gross revenue and the British pound sterling for operating expenses. Accordingly, fluctuations in foreign currency exchange rates can affect our results of operations from period to period. In particular, fluctuations in exchange rates for non-U.S. dollar currencies may reduce the U.S. dollar value of revenues, earnings and cash flows we receive from non-U.S. markets, increase our operating expenses (as measured in U.S. dollars) in those markets, negatively impact our competitiveness in those markets or otherwise adversely impact our results of operations or financial condition. Future fluctuations of foreign currency exchange rates and their impact on our results of operations and financial condition are inherently uncertain. As we continue to grow the size of our global operations, these fluctuations may be material. See Part I, Item 3. “Quantitative and Qualitative Disclosures About Market Risk—Risk — Foreign Currency and Derivative Risk” elsewhere in this Quarterly Report on Form 10-Q.Effectof the Refinitiv Transaction, and the application of pushdown accounting, our assets and liabilities were adjusted to their estimated fair values as of October 1, 2018, the closing date of the Refinitiv Transaction. These adjusted valuations resulted in an increase in depreciation and amortization expense, due to the increased carrying value of our assets and the related increase in depreciation of tangible assets and amortization of our intangible assets, and a decrease in occupancy expense as a result of the recognition of a leasehold interest liability. Additionally, the excess of the portion of the total purchase price of the Refinitiv Transaction attributable to the purchase of our assets and liabilities over their estimated fair value as of the closing date of the Refinitiv Transaction was allocated to goodwill. Goodwill is subject to annual impairment testing. Amounts allocated to intangible assets with definite lives are subject to amortization over the estimated useful life of the asset. See “Note 3” to the unaudited consolidated financial statements of Tradeweb Markets LLC included elsewhere in this Quarterly Report on Form 10-Q and “— Critical Accounting Policies and Estimates — Pushdown Accounting.”Due to the change in the basis of accounting resulting from the application of pushdown accounting, the financial information for the period beginning on October 1, 2018, and through and including March 31, 2019, which we refer to as the “Successor period,” and the financial information for the periods prior to, and including, September 30, 2018, which we refer to as the “Predecessor period,” are not necessarily comparable. As discussed above, the new basis of accounting primarily impacted the values of our long-lived and indefinite-lived intangible assets and resulted in increased depreciation and amortization expense and decreased occupancy expense. However, the change in basis resulting from the Refinitiv Transaction and the application of pushdown accounting did not impact revenues, employee compensation and benefits expense, general and administrative expense, technology and communications expense or professional fees.Taxation and Public Company ExpensesBeginning with the second quarter of 2019, we will bebecame subject to U.S. federal, state and local income taxes with respect to our allocable share of any taxable income of TWM LLC and will beare taxed at prevailing corporate tax rates. Our actual effective tax rate is impacted by our ownership share of Tradeweb MarketsTWM LLC, which will increasehas increased over time as theprimarily due to Continuing LLC Owners exchangeredeeming or exchanging their LLC Interests for shares of Class A common stock or Class B common stock, as applicable. In addition to tax expenses, we also incur expenses related toapplicable, and our operations.purchase of LLC Interests from Continuing LLC Owners. Furthermore, in connection with the IPO, we entered into the Tax Receivable Agreement pursuant to which we willbegan to make payments thatin January 2021, and we expect future payments to be significant. We intend to continue to cause TWM LLC to make distributions in an amount sufficient to allow us to pay our tax obligations, and operating expenses, including payments under the Tax Receivable Agreement.Historically, Thomson ReutersAgreement, and related entities provided certain servicesour quarterly cash dividends, as and activitieswhen declared by our board of directors.support our business, including human resources, finance, taxfinancial condition, results of operations and accounting services, market data services, client services, technology services, salescash flows as of and customer support servicesfor the three and real estate and facilities support. Refinitivnine months ended September 30, 2023. The Company will continue to provide market data services and insurance and, at least in the near term, office space and related services. We do not anticipate that we will incur any material increased expenses if we transition away from Refinitiv for these services in the future.In addition, as a public company, we have started to implement additional procedures and processes for the purpose of addressing the standards and requirements applicable to public companies. In particular, we expect our accounting, legal and personnel-related expenses and directors’ and officers’ insurance costs to increase as we establish more comprehensive compliance and governance functions, establish, maintain and review internal controls over financial reporting in accordance with the Sarbanes-Oxley Act and prepare and distribute periodic reports in accordance with SEC rules. Our financial statements for future periods will reflectevaluate the impact of these expenses. gross revenue is derived primarily from transaction fees, commissions, subscription fees commissions and market data fees. For the three months ended March 31, 2018, our gross revenue is offset by contingent consideration recognized as a contra-revenue adjustment related to the achievement of specific revenue earnout milestones, as further described below. This contingent consideration vested on,has no additional impacts on our results of operations after, July 31, 2018. We believe that gross revenue is the key driver of our operating performance and therefore is the revenue measure we utilize to assess our business on a period by period basis.Transaction Feesvariablea fixed transaction fee or fixedvariable transaction fees on a per transaction basis. For variable transaction fees, we charge clients fees based on the mix of products traded and the volume of transactions executed.Subscription FeesWe earn subscription fees primarily for granting clients access to our markets for trading and market data. For a limited number of products, we only charge subscription fees and no transaction fees. Subscription fees are generally generated on a fixed price basis.For purposes of our discussion of our results of operations, we include Refinitiv (formerly Thomson Reuters) market data fees in subscription fees. We earn fixed license fees from our market data license agreement with Refinitiv. We also earn royalties from Refinitiv for referrals of new Eikon customers based on customer conversion rates. Royalties may fluctuate from period to period depending on the numbers of customer conversions achieved by Refinitiv during the applicable royalty fee earning period, which is typically seven years from the date of the initial referral.CommissionsTreasurytreasury and repurchase agreement transactions executed by our wholesale clients, we also generate revenue from fixed commissions that are generally invoiced monthly.Contingent ConsiderationIn 2014,issued Class A Sharesonly charge subscription fees and unvested Class P1-(A) Sharesno transaction fees or commissions. Subscription fees are generally generated on a fixed price basis.someperiod depending on the numbers of customer conversions achieved by Refinitiv during the applicable royalty fee earning period, which is typically five years from the date of the Bank Stockholders as a result of a $120.0 million capital contribution to facilitate our expansion into new credit products. In connection with this investment, certain employees also invested $5.3 million in us and were issued Class C Shares and unvested Class P1-(C) Shares. The Class P1-(A) Shares vested on July 31, 2018 upon the achievement of specific revenue earnout milestones related to the growth of specified credit products (the “Credit Initiative Earnout”). Prior to the July 31, 2018 vesting, we recognized contingent consideration with respect to the Credit Initiative Earnout as a contra-revenue adjustment, which partially offset gross revenue for the three months ended March 31, 2018. See “— Critical Accounting Policies and Estimates — Contingent Consideration” for a discussion of the calculation of contingent consideration. The value of the contingent consideration of $156.2 million was finalized and contributed to members’ capital or employee equity compensation payable on July 31, 2018 and we therefore no longer recognize any contra-revenue adjustments from the Credit Initiative Earnout subsequent to that date.and stock-based compensation cost.cost and related taxes. Factors that influence employee compensation and benefits expense include revenue and earnings growth, hiring new employees and trading activity which generates broker commissions and, beginning with the second quarter of 2019, the share price of our Class A common stock. As we grow our business, we expect to hire additional employees. As a result, wecommissions. We expect employee compensation and benefits expense to increase as we hire additional employees and as our revenuesto support revenue and earnings grow.growth. As a result, employee compensation and benefits can vary from period to period.other intangible assets, acquired and internally developed software, other intangible assets, leasehold improvements, furniture and equipment. As discussed in “— Effect of Pushdown Accounting on our Financial Statements,” we applied pushdown accounting as a result of the Refinitiv Transaction and therefore depreciation and amortization expense in Successor reporting periods will differ from amounts reported in Predecessor periods.bad debtcredit loss expense. We expect general and administrative expense to increase as we expand the number of our employees and product offerings and grow our operations.Refinitiv pursuant to a shared services agreement.Refinitiv. Factors that influence technology and communications expense include the growth oftrading volumes and our client baseinvestments in innovation, data strategy and product offerings.infrastructure. Accounting, tax and legal fees are expectedinfrastructure, as well as costs related to grow as aresult of the changes in our structure and operations that we will continue to implement as a public company. Factors that influence technology and software consulting expense include the growth of our client base and product offerings.United States and the United Kingdom. Fees incurred by us under a shared servicestax receivable agreement with Refinitiv for office space are also includedliability recorded in occupancy expense. We expect occupancy expense to increase as we expand the numberour condensed consolidated statement of our employees and grow our operations. As discussed in “— Effect of Pushdown Accounting on our Financial Statements,” we applied pushdown accountingfinancial condition as a result of changes in the Refinitiv Transactionmix of earnings, tax legislation and therefore occupancy expensetax rates in Successor reporting periods will differ from amounts reported in Predecessor periods.Beginning with the second quarterInterest expense consists of 2019, interest expense will consist ofcommitment fees payable on, and, if applicable, interest payable on any borrowings outstanding under the Revolving Credit Facility, if any.not requiredpassed through to maintain anand included in the taxable income tax provision onof its earnings.members, including to us. Income taxes consist ofalso include unincorporated business taxes on income earned or losses incurred byfor conducting business in certain state and local jurisdictions. Income taxes also includesjurisdictions, income taxes on income earned or losses incurred in foreign jurisdictions on certain of our operations as well asand federal and state income taxes on income earned or losses incurred, both current and deferred, fromon subsidiaries that are taxed as corporations for U.S. tax purposes. Beginning withsecond quartersole manager of 2019,TWM LLC. As a result of this control, and because we will also be subject to U.S. federal, state and local income taxes with respect to our allocable share of any taxable incomehave a substantial financial interest in TWM LLC, we consolidate the financial results of TWM LLC and report a non-controlling interest in our condensed consolidated financial statements, representing the economic interests of TWM LLC held by Continuing LLC Owners. Income or loss is attributed to the non-controlling interests based on the relative ownership percentages of LLC Interests held during the period by us and any Continuing LLC Owners.be taxed at prevailing corporate tax rates.March 31, 2019 (Successor)September 30, 2023 and Three Months Ended March 31, 2018 (Predecessor)March 31, 2019September 30, 2023 and 2018:
Months
Ended
March 31,
2019
Months
Ended
March 31,
2018OverviewDuring the three months ended March 31, 2019, our business was impacted by a number of factors, including higher client trading activity, driving revenue increases in rates, credit, equities and money markets trading. Our market data business also grew due to the expansion of our market data license agreement with Refinitiv.Gross revenue increased by $17.3 million or 10.2% to $186.8 million for the three months ended March 31, 2019 from $169.5 million for the three months ended March 31, 2018. This increase in gross revenue was mainly due to higher trading volumes resulting in a $12.5 million increase in transaction fees and a $6.3 million increase in commissions. Netrevenue increased by $27.4 million or 17.2% to $186.8 million for the three months ended March 31, 2019 from $159.4 million for the three months ended March 31, 2018. Non-cash contingent consideration decreased by $10.1 million for the three months ended March 31, 2019 as a result of the vesting of the Credit Initiative Earnout at July 31, 2018.Total expenses for the three months ended March 31, 2019 and 2018 were $140.5 million and $112.1 million, respectively. Total expenses for the three months ended March 31, 2019 were impacted by higher employee compensation and benefits expense, higher professional fees and higher general and administrative costs, specifically foreign exchange losses. Total expenses for the three months ended March 31, 2019 were also impacted by higher depreciation and amortization expense as a result of the application of pushdown accounting.Income before taxes for the three months ended March 31, 2019 and 2018 was $47.1 million and $47.8 million, respectively. Net income for the three months ended March 31, 2019 and 2018 was $42.4 million and $45.3 million, respectively. Income before taxes and net income for the three months ended March 31, 2019 were negatively impacted by higher depreciation and amortization expense as a result of the application of pushdown accounting, resulting in a $16.7 million increase in depreciation and amortization expense, partially offset by higher revenues.Three Months Ended September 30, 2023 2022 $ Change % Change (dollars in thousands) Total revenue $ 328,357 $ 287,115 $ 41,242 14.4 % Total expenses 203,619 184,305 19,314 10.5 % Operating income 124,738 102,810 21,928 21.3 % Net interest income (expense) 17,465 3,413 14,052 411.7 % Other income (loss), net (1,907) — (1,907) N/M Income before taxes 140,296 106,223 34,073 32.1 % Provision for income taxes (28,666) (24,657) (4,009) 16.3 % Net income 111,630 81,566 30,064 36.9 % Less: Net income attributable to non-controlling interests 13,016 12,483 533 4.3 % Net income attributable to Tradeweb Markets Inc. $ 98,614 $ 69,083 $ 29,531 42.7 % March 31, 2019September 30, 2023 and 2018,2022, and the resulting dollar and percentage changes, were as follows:
Ended March 31, 2019
Ended March 31, 2018
Revenue
RevenueThree Months Ended September 30, 2023 2022 $ % of Total
Revenue$ % of Total
Revenue$ Change % Change (dollars in thousands) Revenues Transaction fees and commissions $ 263,485 80.2 % $ 228,015 79.4 % $ 35,470 15.6 % 61,821 18.8 56,712 19.8 5,109 9.0 % Other 3,051 0.9 2,388 0.8 663 27.8 % Total revenue $ 328,357 100.0 % $ 287,115 100.0 % $ 41,242 14.4 % Components of total revenue growth: 12.5 % Foreign currency impact 1.9 % Total revenue growth 14.4 % March 31, 2019September 30, 2023 and 20182022 include $13.6$15.5 million and $12.2$15.4 million respectively, of Refinitiv market data fees.growth,revenue change, which is a non-GAAP financial measure, is defined as grosstotal revenue growthchange excluding the effects of foreign currency fluctuations. GrossTotal revenue excluding the impacteffects of foreign currency fluctuations is calculated by translating the current period and prior period’s grosstotal revenue using the annual average exchange rates for 2018.the prior period. We use constant currency growthchange as a supplemental metric to evaluate our underlying grosstotal revenue performance between periods by removing the impact of foreign currency fluctuations. We believe that providing constant currency growthchange provides a useful comparison of our grosstotal revenue performance and trends between periods.Our variable and fixed by fee type for the three months ended March 31, 2019September 30, 2023 continued to be impacted by a challenging macroeconomic backdrop, including rising interest rates, sustained broader market rate volatility and 2018,an inverted yield curve that impacted duration traded and overall fees per million. The primary driver of the $41.2 million increase in revenue was related to an $35.5 million increase in transaction fees and commissions to $263.5 million for the three months ended September 30, 2023 from $228.0 million for the three months ended September 30, 2022, primarily due to higher revenues for rate derivatives products, U.S. and European corporate bonds and U.S. and European government bonds.
March 31, 2019
March 31, 2018Three Months Ended September 30, 2023 2022 $ Change % Change (dollars in thousands) Revenues Rates $ 172,832 $ 148,167 $ 24,665 16.6 % Credit 90,062 78,101 11,961 15.3 % Equities 20,890 21,277 (387) (1.8) % Money Markets 15,763 12,969 2,794 21.5 % Market Data 22,956 21,222 1,734 8.2 % Other 5,854 5,379 475 8.8 % Total revenue $ 328,357 $ 287,115 $ 41,242 14.4 % (1) Subscription fees for the three months ended March 31, 2019 and 2018 include $13.6 million and $12.2 million, respectively, of Refinitiv (formerly Thomson Reuters) market data fees.Transaction fees. Transaction fees increased by $12.5 million or 13.9% to $102.6 million for the three months ended March 31, 2019 from $90.1 million for the three months ended March 31, 2018 primarily due to increased volumes for U.S and European rates derivatives products, U.S. and European ETFs and U.S. credit products.Subscription fees. Subscription fees decreased by $0.5 million or (1.0)% to $48.1 million for the three months ended March 31, 2019 from $48.6 million for the three months ended March 31, 2018 primarily due to lower European government bond fees, and software development fees, partially offset by higher market data fees.Commissions. Commissions increased by $6.3 million or 22.6% to $34.2 million for the three months ended March 31, 2019 from $27.9 million for the three months ended March 31, 2018 primarily due to higher trading volumes for U.S. corporate bonds and U.S. treasuries.Other. Other revenue decreased by $1.0 million or (35.1)% to $1.9 million for the three months ended March 31, 2019 from $2.9 million for the three months ended March 31, 2018 primarily as a result of lower fees from a third party for certain licensing and development in Canada.Contingent consideration. There was no contingent consideration for the three months ended March 31, 2019 due to the vesting of the Credit Initiative Earnout at July 31, 2018. Contingent consideration for the three months ended March 31, 2018 was $10.1 million.Our gross revenue by client sector for the three months ended March 31, 2019 and 2018, and the resulting dollar and percentage changes, were as follows:
Ended March
31, 2019
Ended March
31, 2018Institutional. Revenues from our Institutional client sector increased by $6.9 million or 6.8% to $109.3 million for the three months ended March 31, 2019 from $102.3 million for the three months ended March 31, 2018. The increase was derived primarily from increased volumes for U.S. and European rates derivatives products, partially offset by the impact of foreign exchange, mainly the deterioration of the euro.Wholesale. Revenues from our Wholesale client sector increased by $6.8 million or 21.0% to $39.4 million for the three months ended March 31, 2019 from $32.6 million for the three months ended March 31, 2018. The increase was derived primarily from U.S. session-based trading volumes.Retail. Revenues from our Retail client sector increased by $2.2 million or 11.4% to $21.2 million for the three months ended March 31, 2019 from $19.0 million for the three months ended March 31, 2018. The increase was derived primarily from higher trading volumes for U.S. corporate and municipal bonds.Market Data. Revenues from our Market Data client sector increased by $1.4 million or 8.7% to $16.9 million for the three months ended March 31, 2019 from $15.6 million for the three months ended March 31, 2018 primarily as a result of increased Refinitiv (formerly Thomson Reuters) license fees due to an increase in the number of market data feeds provided to Refinitiv and increased Gilt closing price revenues.Our gross revenue by asset class for the three months ended March 31, 2019 and 2018, and the resulting dollar and percentage changes, were as follows:
Ended March
31, 2019
Ended March
31, 2018March 31, 2019September 30, 2023 and 2018,2022, and the resulting dollar and percentage changes, were as follows:
March 31, 2019
March 31, 2018Rates. Revenues from our Rates asset class increased by $10.2 million or 10.8% to $104.1 million for the three months ended March 31, 2019 from $93.9 million for the three months ended March 31, 2018 primarily due to increased volumes in U.S. and European derivatives and U.S. treasuries.Credit. Revenues from our Credit asset class increased by $4.7 million or 13.5% to $39.4 million for the three months ended March 31, 2019 from $34.7 million for the three months ended March 31, 2018 primarily due to increased volumes for U.S. corporate and municipal bonds.Equities. Revenues from our Equities asset class increased by $1.6 million or 15.8% to $11.8 million for the three months ended March 31, 2019 from $10.2 million for the three months ended March 31, 2018 primarily due to increased volumes for U.S. and European ETFs.Money Markets. Revenues from our Money Markets asset class increased by $1.4 million or 17.8% to $9.6 million for the three months ended March 31, 2019 from $8.1 million for the three months ended March 31, 2018 primarily due to increased volumes for U.S. and European repurchase agreements and certificatesThree Months Ended September 30, 2023 2022 $ Change % Change Variable Fixed Variable Fixed Variable Fixed Variable Fixed (dollars in thousands) Revenues Rates $ 114,128 $ 58,704 $ 93,673 $ 54,494 $ 20,455 $ 4,210 21.8 % 7.7 % Credit 82,484 7,578 71,724 6,377 10,760 1,201 15.0 % 18.8 % Equities 18,567 2,323 18,969 2,308 (402) 15 (2.1) % 0.6 % Money Markets 11,433 4,330 8,507 4,462 2,926 (132) 34.4 % (3.0) % Market Data 115 22,841 — 21,222 115 1,619 N/M 7.6 % Other — 5,854 — 5,379 — 475 — 8.8 % Total revenue $ 226,727 $ 101,630 $ 192,873 $ 94,242 $ 33,854 $ 7,388 17.6 % 7.8 % deposit.ContentsMarket Data. Revenues from Market Data increased by $1.4 million or 8.7% to $16.9 million for the three months ended March 31, 2019 from $15.6 million for the three months ended March 31, 2018 primarily as a result of increased Refinitiv (formerly Thomson Reuters) license fees due to an increase in the number of market data feeds provided to Refinitiv and increased Gilt closing price revenues.Other Fees. Revenues from Other Fees decreased by $2.0 million or (28.5)% to $5.0 million for the three months ended March 31, 2019 from $7.0 million for the three months ended March 31, 2018 primarily due to lower fees from a third party for certain licensing and development in Canada and the timing of Retail fees for software development and implementation.revenuestransaction fees and commissions are tied directly to overall trading volumes in the rates, credit, equities and money markets asset classes. The average daily volumes and total volumes on our trading platforms by asset class for the three months ended MarchSeptember 30, 2023 and 2022, and the resulting percentage changes, are summarized as follows:Three Months Ended September 30, 2023 2022 ADV ADV Volume ADV Volume % Change (dollars in millions) Rates $ 853,316 $ 54,264,525 $ 652,804 $ 41,932,450 30.7 % Rates Cash 361,432 22,842,103 324,168 20,774,062 11.5 % Rates Derivatives 491,883 31,422,422 328,636 21,158,388 49.7 % Swaps / Swaptions Tenor (greater than 1 year) 326,175 20,799,345 203,038 13,066,309 60.7 % 165,709 10,623,077 125,597 8,092,079 31.9 % Credit 29,936 1,906,796 29,320 1,887,479 2.1 % 7,194 457,163 5,611 360,559 28.2 % Credit Derivatives, China Bonds and U.S. Cash “EP” 22,742 1,449,634 23,709 1,526,920 (4.1) % Equities 18,930 1,197,947 15,813 1,015,143 19.7 % Equities Cash 9,479 601,332 8,804 565,934 7.7 % Equities Derivatives 9,451 596,615 7,009 449,209 34.8 % Money Markets 522,075 33,065,896 400,726 25,721,492 30.3 % $ 1,424,256 $ 90,435,165 $ 1,098,663 $ 70,556,565 29.6 % $ 1,258,547 $ 79,812,088 $ 973,066 $ 62,464,486 29.3 % 2019 and 2018 were as follows:We believe the increases in average daily volumes in the three months ended March 31, 2019 for most asset classes can be attributed to various factors, including increased volatility across our rates, credit and money markets asset classes, further electronification of trading activities, increase in market share, new products and new clients.March 31, 2019September 30, 2023 and 20182022 are summarized below. There are four potential drivers of quarterly fluctuations in our average variable fees per million: (1) volume discounts, (2) the mix and duration of cash and derivatives products traded, (3)(2) the mix of protocols underpinning cash and derivatives products, (3) volume discounts and (4) pricing.clients moving between fixed and variable pricing structures. Average variable fees per million should be reviewed in conjunction with our trading volumes and grosstotal revenue by asset class. Since variable fees are sometimes subject to fee plans with tiered pricing based on product mix and volume, average variable fees per million for a specific asset class may not correlate with volumes or revenue growth. For example,Three Months Ended September 30, 2023 2022 $ Change % Change Rates $ 2.10 $ 2.23 $ (0.13) (5.7) % Rates Cash $ 2.42 $ 2.23 $ 0.19 8.5 % Rates Derivatives $ 1.87 $ 2.24 $ (0.37) (16.4) % Rates Derivatives (greater than 1 year) $ 2.72 $ 3.46 $ (0.74) (21.4) % $ 0.22 $ 0.27 $ (0.05) (19.1) % Credit $ 43.26 $ 38.03 $ 5.23 13.7 % $ 162.20 $ 168.74 $ (6.54) (3.9) % Credit Derivatives, China Bonds and U.S. Cash “EP” $ 5.75 $ 7.12 $ (1.37) (19.3) % Equities $ 15.50 $ 18.69 $ (3.19) (17.1) % Equities Cash $ 25.42 $ 29.33 $ (3.91) (13.3) % Equities Derivatives $ 5.50 $ 5.28 $ 0.22 4.1 % Money Markets $ 0.35 $ 0.33 $ 0.02 4.8 % Total $ 2.51 $ 2.73 $ (0.22) (8.2) % $ 2.81 $ 3.05 $ (0.24) (7.9) % dollarsfor rates derivatives driven primarily by shifts in the mix and duration of volumederivative products traded. This decrease was partially offset by an increase in average variable fees per million for rates cash products primarily due to shifts in the mix of trading towards U.S. government bonds, which have a higher variable fee capture compared to overall rates.Ratescredit asset class decreased 5.4%increased by $12.0 million or 15.3% to $90.1 million for the three months ended March 31, 2019 while gross revenueSeptember 30, 2023 compared to $78.1 million for our Rates asset class increased 10.8% over the same period.Rates averagethree months ended September 30, 2022 primarily due to higher variable transaction fees and commissions on higher trading volumes for U.S. and European corporate bonds, partially offset by lower variable transaction fees and commissions on lower trading volumes for credit derivatives products.impactedmore than offset by volume tier discountsa decline in cash products. Credit averagerevenue for U.S. and European ETFs.was impacted byfor equities decreased primarily due to a shift in the mix of products and size of units traded, including higher volume per unit traded in ETFs and higher volumes in equity derivatives.derivatives towards cash. Equities averageour money markets asset class increased by $2.8 million or 21.5% to $15.8 million for the three months ended September 30, 2023 compared to $13.0 million for the three months ended September 30, 2022 primarily due to higher variable transaction fees and commissions for certificates of deposit and repurchase agreements.impactedderived primarily from increased proprietary third party market data and trade reporting services (APA) revenue.a mix shift in volumes towardsclient sector for the three months ended September 30, 2023 and 2022, and the resulting dollar and percentage changes, were as follows:Three Months Ended September 30, 2023 2022 $ Change % Change (dollars in thousands) Revenues Institutional $ 195,094 $ 172,814 $ 22,280 12.9 % Wholesale 77,975 64,584 13,391 20.7 % Retail 32,332 28,495 3,837 13.5 % Market Data 22,956 21,222 1,734 8.2 % Total revenue $ 328,357 $ 287,115 $ 41,242 14.4 % ETFs. Money Markets average variable fees perclient sector increased by $22.3 million or 12.9% to $195.1 million for the three months ended September 30, 2023 from $172.8 million for the three months ended September 30, 2022. The increase was impactedderived primarily from higher revenues for rates derivatives products, U.S. corporate bonds and U.S. and European government bonds, partially offset by a shift in volumes within non-repurchase agreementlower revenues for credit derivatives products.grossrevenues and client base are also diversified by geography. Our total revenue by geography (based on client location) for the three months ended March 31, 2019September 30, 2023 and 2018,2022, and the resulting dollar and percentage changes, were as follows:
Ended March
31, 2019
Ended March
31, 2018Three Months Ended September 30, 2023 2022 $ Change % Change (dollars in thousands) Revenues U.S. $ 207,842 $ 185,097 $ 22,745 12.3 % International 120,515 102,018 18,497 18.1 % Total revenue $ 328,357 $ 287,115 $ 41,242 14.4 % $11.6$22.7 million or 10.8%12.3% to $119.4$207.8 million for the three months ended March 31, 2019September 30, 2023 from $107.8$185.1 million for the three months ended March 31, 2018September 30, 2022 primarily due to higher trading volumes from ourrevenues for U.S. creditcorporate bonds, U.S. government bonds, rates derivatives products U.S. ETFs, dollar swaps, treasuries and municipal bonds.International.certificates of deposit.$5.7$18.5 million or 9.2%18.1% to $67.4$120.5 million for the three months ended March 31, 2019September 30, 2023 from $61.7$102.0 million for the three months ended March 31, 2018September 30, 2022 primarily due to increased volumeshigher revenues for rates derivatives products, European interest rate swaps, Chinacorporate bonds, European government bonds and European credit default indexes. Fluctuations in foreign currency rates decreased our International gross revenue by $2.3 million.March 31, 2019September 30, 2023 and 20182022 were as follows:
Months
Ended
2019
Months
Ended
March 31,
2018Three Months Ended September 30, 2023 2022 $ Change % Change (dollars in thousands) Employee compensation and benefits $ 116,016 $ 102,720 $ 13,296 12.9 % Depreciation and amortization 46,559 44,778 1,781 4.0 % Technology and communications 19,733 16,816 2,917 17.3 % General and administrative 6,700 6,892 (192) (2.8) % Professional fees 10,479 9,400 1,079 11.5 % Occupancy 4,132 3,699 433 11.7 % Total expenses $ 203,619 $ 184,305 $ 19,314 10.5 % EmployeeExpenses related to employee compensation and benefits expense increased by $5.7$13.3 million or 8.0%12.9% to $77.3$116.0 million for the three months ended March 31, 2019September 30, 2023 from $71.6$102.7 million for the three months ended March 31, 2018.September 30, 2022. The increase was primarily due to a $4.2 millionan increase in headcount and related salaries and benefits dueas well as increases in incentive compensation expense and commissions tied to an increaseour operating performance, partially offset by a $2.0 million decrease in employee headcount,non-cash accelerated stock-based compensation expense and an increase in commissions of $1.8 million duerelated payroll taxes relating to higher Wholesale revenues. Total employee headcount increased to 931 as of March 31, 2019 from 848 as of March 31, 2018.Amortization. Depreciation and amortization expense for the three months ended March 31, 2019 was $33.5 million. Depreciation and amortization expense for the three months ended March 31, 2018 was $16.3 million. As a result of the Refinitiv Transaction and the application of pushdown accounting, we adjusted our assets and liabilitiesAmortization. Expenses related to their estimated fair values as of October 1, 2018, which resulted in an increase in depreciation of tangible assets and amortization of our intangible assets. The impact of such adjustments increased depreciation and amortization expense during the three months ended March 31, 2019 by $16.7 million.General and Administrative. General and administrative expense increased by $2.6$1.8 million or 39.5%4.0% to $9.1$46.6 million for the three months ended March 31, 2019September 30, 2023 from $6.5$44.8 million for the three months ended March 31, 2018. The increase was primarily a result of an increase in foreign exchange losses of $1.9 million, which includes a $0.9 million loss due to the revaluation of foreign denominated cash, and one-time IPO related fees.Technology and Communications. Technology and communications expense increased by $1.6 million or 18.6% to $10.0 million for the three months ended March 31, 2019 from $8.5 million for the three months ended March 31, 2018.September 30, 2022. The increase was primarily due to increases in cybersecurity spend,amortization of software development costs driven by increases in investment in our infrastructure initiatives and increased clearance fees as a result of higher trading volumes.Professional Feesexpense relating to the assets acquired in connection with the August 31, 2023 Yieldbroker Acquisition.Professional feesExpenses related to technology and communications increased by $1.4$2.9 million or 25.9%17.3% to $7.0$19.7 million for the three months ended March 31, 2019September 30, 2023 from $5.5$16.8 million for the three months ended March 31, 2018.September 30, 2022. The increase was primarily due to tax advisoryincreased investment in our data strategy and auditinfrastructure and increased data and clearance fees including fees incurred in preparation for the IPO.Occupancydriven primarily by higher period-over-period trading volumes.Occupancy expenseExpenses related to general and administrative costs remained relatively flat with a decrease of $0.2 million or 2.8% to $6.7 million for the three months ended March 31, 2019 was $3.6 million. Occupancy expenseSeptember 30, 2023 from $6.9 million for the three months ended March 31, 2018September 30, 2022. The decrease was $3.7 million. As aprimarily the result of decreases in recruiting and travel and entertainment expenses and various sales and use tax refunds and rebates received during the Refinitiv Transactionthree months ended September 30, 2023. These decreases were partially offset by $1.2 million in acquisition costs and the application of pushdown accounting, at October 1, 2018, we established a leasehold interest liability, which resulted in a $0.1$1.5 million decrease in foreign exchange gains during the three months ended September 30, 2023. Realized and unrealized foreign currency gains totaled $4.6 million during the three months ended September 30, 2023 as compared to $6.2 million in gains during three months ended September 30, 2022. The change was primarily driven by changes in fair value of our foreign currency forward contracts used in connection with our foreign currency risk management program.2019.(expense) increased by $0.4$14.1 million to net interest income of $0.9$17.5 million for the three months ended March 31, 2019September 30, 2023 from net interest income of $0.5 million. Net$3.4 million for the three months ended September 30, 2022 primarily due to an increase in interest income earned as a result of an increase in our average invested cash balance and an increase in interest rates period over period.
N/M = not meaningfulNine Months Ended September 30, 2023 2022 $ Change % Change (dollars in thousands) Total revenue $ 968,219 $ 895,739 $ 72,480 8.1 % Total expenses 604,580 574,720 29,860 5.2 % Operating income 363,639 321,019 42,620 13.3 % Net interest income (expense) 45,065 3,507 41,558 N/M Other income (loss), net (2,022) — (2,022) N/M Income before taxes 406,682 324,526 82,156 25.3 % Provision for income taxes (90,920) (63,915) (27,005) 42.3 % Net income 315,762 260,611 55,151 21.2 % Less: Net income attributable to non-controlling interests 40,210 40,219 (9) — % Net income attributable to Tradeweb Markets Inc. $ 275,552 $ 220,392 $ 55,160 25.0 % Nine Months Ended September 30, 2023 2022 $ % of Total
Revenue$ % of Total
Revenue$ Change % Change (dollars in thousands) Revenues Transaction fees and commissions $ 776,544 80.2 % $ 717,489 80.1 % $ 59,055 8.2 % 182,998 18.9 170,691 19.1 12,307 7.2 % Other 8,677 0.9 7,559 0.8 1,118 14.8 % Total revenue $ 968,219 100.0 % $ 895,739 100.0 % $ 72,480 8.1 % Components of total revenue growth: 8.1 % Foreign currency impact — % Total revenue growth 8.1 % Nine Months Ended September 30, 2023 2022 $ Change % Change (dollars in thousands) Revenues Rates $ 503,691 $ 460,092 $ 43,599 9.5 % Credit 263,127 248,410 14,717 5.9 % Equities 69,239 70,471 (1,232) (1.7) % Money Markets 46,404 36,659 9,745 26.6 % Market Data 68,166 63,618 4,548 7.1 % Other 17,592 16,489 1,103 6.7 % Total revenue $ 968,219 $ 895,739 $ 72,480 8.1 % Nine Months Ended September 30, 2023 2022 $ Change % Change Variable Fixed Variable Fixed Variable Fixed Variable Fixed (dollars in thousands) Revenues Rates $ 329,884 $ 173,807 $ 293,396 $ 166,696 $ 36,488 $ 7,111 12.4 % 4.3 % Credit 242,182 20,945 228,869 19,541 13,313 1,404 5.8 % 7.2 % Equities 62,330 6,909 63,529 6,942 (1,199) (33) (1.9) % (0.5) % Money Markets 33,382 13,022 23,439 13,220 9,943 (198) 42.4 % (1.5) % Market Data 160 68,006 — 63,618 160 4,388 N/M 6.9 % Other — 17,592 — 16,489 — 1,103 — 6.7 % Total revenue $ 667,938 $ 300,281 $ 609,233 $ 286,506 $ 58,705 $ 13,775 9.6 % 4.8 % Nine Months Ended September 30, 2023 2022 $ Change % Change (dollars in thousands) Revenues Institutional $ 577,774 $ 551,322 $ 26,452 4.8 % Wholesale 227,404 205,532 21,872 10.6 % Retail 94,875 75,267 19,608 26.1 % Market Data 68,166 63,618 4,548 7.1 % Total revenue $ 968,219 $ 895,739 $ 72,480 8.1 % Nine Months Ended September 30, 2023 2022 $ Change % Change (dollars in thousands) Revenues U.S. $ 617,463 $ 565,540 $ 51,923 9.2 % International 350,756 330,199 20,557 6.2 % Total revenue $ 968,219 $ 895,739 $ 72,480 8.1 % Nine Months Ended September 30, 2023 2022 $ Change % Change (dollars in thousands) Employee compensation and benefits $ 334,433 $ 330,601 $ 3,832 1.2 % Depreciation and amortization 137,850 133,998 3,852 2.9 % Technology and communications 56,001 48,626 7,375 15.2 % General and administrative 31,692 24,806 6,886 27.8 % Professional fees 32,321 25,832 6,489 25.1 % Occupancy 12,283 10,857 1,426 13.1 % Total expenses $ 604,580 $ 574,720 $ 29,860 5.2 % 20192023 and 2018 was impactedthe relocation of data centers to locations providing enhanced infrastructure and improved performance.higher$41.6 million to net interest rates.Provision to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further detathreenine months ended March 31, 2019September 30, 2023 was $4.8 million. Provision for income taxesapproximately 22.4%, compared with 19.7% for the threenine months ended March 31, 2018 was $2.5 million. Provision for income taxesSeptember 30, 2022. The effective tax rate for the threenine months ended March 31, 2019 wasSeptember 30, 2023 differed from the U.S. federal statutory rate of 21.0% primarily due to state, local and foreign taxes, partially offset by the effect of non-controlling interests, the exercise of equity compensation and the return-to-provision adjustment. The effective tax rate for the nine months ended September 30, 2022 differed from the U.S. federal statutory rate of 21.0% primarily due to the tax impact of the issuance of common stock from equity incentive plans, return-to-provision adjustments and the effect of non-controlling interests, partially offset by state, local and foreign taxes.increased earningsinflation in certain subsidiariesthe future. See “— Trends and foreign jurisdictions which resulted in higher tax expense.and our expected dividend payments.payments and our share repurchase program. In addition, we are obligated to make payments under the Tax Receivable Agreement. Although the actual timing and amount of any payments that may be made under the Tax Receivable Agreement will vary, we expect that the payments that we will be required to make under the Tax Receivable Agreement will be significant. Any payments made by us under the Tax Receivable Agreement will generally reduce the amount of overall cash flows that might have otherwise been available to us or to TWM LLC. These payments will offset some of the tax benefits that we expect to realize as a result of the ownership structure of TWM LLC. To the extent that we are unable to make payments under the Tax Receivable Agreement for any reason, the unpaid amounts generally will be deferred and will accrue interest until paid by us.eventcase of an unexpected event in the future or otherwise, we may fund our liquidity requirements through borrowings under the Revolving Credit Facility.However,The Revolving Credit Facility matures in April 2024. We are currently in discussions to renew the Revolving Credit Facility. If we are not able to renew the Revolving Credit Facility, we believe we have sufficient cash to fund our liquidity requirements for at least the next 12 months without reliance on a credit facility, however, our future liquidity requirements could be higher than we currently expect as a result of various factors. For example, any future investments, acquisitions, joint ventures or other similar transactions, which we consider from time to time, may reduce our cash balance or require additional capital. In addition, ourMarch 31, 2019September 30, 2023 and December 31, 2018,2022, we had cash and cash equivalents of approximately $361.6 million$1.5 billion and $410.1 million,$1.3 billion, respectively. All cash and cash equivalents were held in accounts with banksfinancial institutions or money market funds such that the funds are immediately available or in fixed term deposits with a maximum maturity of three months.Weinitially equal to $0.08$0.09 per share, beginning with the second quarter of 2019. Based on 46,000,000 shares of Class A common stock and 96,933,192 shares of Class B common stock outstanding, this dividend policy implies a quarterly cash requirement of approximately $11.4 million (or an annual cash requirement of approximately $45.7 million).share. As discussed below, our ability to pay these quarterly cash dividends on our Class A common stock and Class B common stock will depend on distributions to us from TWM LLC.managing membermanager of TWM LLC, we intend to cause, and will rely on, TWM LLC to make distributions in respect of LLC Interests to fund our dividends. If TWM LLC is unable to cause these subsidiaries to make distributions, it may have inadequate funds to distribute to us and we may be unable to fund our dividends. In addition, when TWM LLC makes distributions to us, the Continuingother holders of LLC OwnersInterests will be entitled to receive proportionate distributions based on their economic interests in TWM LLC at the time of such distributions.We currently intend to increase the amount of our expected quarterly dividends in line with free cash flow growth, if any, after giving effect to required tax distributions to be paid by TWM LLC; however, anyAny future determination to change the amount of dividends and/or declare special dividends will be at the discretion of our board of directors and will be dependent upon then-existing conditions and other factors that our board of directors considers relevant.April 3, 2019, in connection withOctober 26, 2023, the IPO, TWM LLC made a cash distribution to the Original LLC Owners in an aggregate amount of $100.0 million.On May 15, 2019, TWM LLC made a cash distribution to its equityholders, including Tradeweb Markets Inc., in an aggregate amount of $34.4 million.The board of directors of Tradeweb Markets Inc. declared a cash dividend of $0.08$0.09 per share of Class A common stock and Class B common stock for the secondthird quarter of 2019.2023. This dividend will be payable on JuneDecember 15, 20192023 to stockholders of record as of December 1, 2023.2019.IndebtednessMarch 31, 2019September 30, 2023, a total of $239.8 million remained available for repurchase pursuant to the 2022 Share Repurchase Program.2018,2022, we had no outstanding indebtedness.Historically, the Company has only issued debt in connection with significant investment transactions and all debt issued by the Company has been issued to subsidiaries of Thomson Reuters.Concurrently with the closing of the IPO, weFacility.Facility with a syndicate of banks. The Revolving Credit Facility permits borrowings of up to $500.0 million,was subsequently amended on November 7, 2019 and includes borrowing capacity available for letters of credit andswingline loans.March 31, 2023. The Revolving Credit Facility will mature on April 8, 2024. We expect that the Revolving Credit Facility willprovides borrowing capacity to be used to fund our ongoing working capital needs, letters of credit and for general corporate purposes, including potential future acquisitions and expansions.U.K.,UK, the Nederlandsche Bank in the Netherlands, the Japanese Financial Services Agency, the Japanese Securities Dealers Association and other foreign regulators, and must maintain financial resources, as defined in the applicable regulations, in excess of the applicable financial resources requirement. As of March 31, 2019September 30, 2023 and December 31, 2018,2022, each of our regulated subsidiaries had maintained sufficient net capital or financial resources in excess ofto at least satisfy their minimum requirements, which in aggregate was $44.1were $70.6 million and $41.7$69.1 million, respectively. We maintain capital balances in these subsidiaries in excess of our minimum requirements in order to satisfy working capital needs and to ensure that we have enough cash on hand to satisfy margin requirements and credit risk, including the excess capital expectations of our clients.Fails The Fixed Income Clearing Corporation (“FICC”) and some of our clearing brokers require us to Deliver/Failspost collateral on unsettled positions, included within deposits with clearing organizations in our condensed consolidated statements of financial condition. Collateral amounts are marked to Receiveemployee equity compensation payablelease liabilities and payable to affiliates.tax receivable agreement liability. Changes in working capital, which impact our cash flows provided by operating activities, can vary depending on factors such as delays in the collection of receivables, changes in our operating performance, changes in trading patterns, changes in client billing terms and other changes in the demand for our platforms and solutions.March 31, 2019September 30, 2023 and December 31, 20182022 was as follows:
2019
31, 2018September 30, December 31, 2023 2022 (in thousands) Cash and cash equivalents $ 1,493,410 $ 1,257,229 Restricted cash 1,000 1,000 Receivable from brokers and dealers and clearing organizations 4,966 11,632 Deposits with clearing organizations 26,433 23,906 Accounts receivable 167,039 142,676 Receivable and due from affiliates 3,165 2,728 Total current assets 1,696,013 1,439,171 Payable to brokers and dealers and clearing organizations 4,966 11,264 Accrued compensation 121,227 150,884 Deferred revenue 31,404 22,827 Payable and due to affiliates 527 7,232 Current portion of: Accounts payable, accrued expenses and other liabilities 46,059 46,099 Lease liabilities 10,004 11,265 Tax receivable agreement liability 25,717 5,791 Total current liabilities 239,904 255,362 Total working capital $ 1,456,109 $ 1,183,809 assets$557.4$239.9 million as of March 31, 2019September 30, 2023 from $687.8$255.4 million as of December 31, 2018 2022 primarilydue to payments for annual accrued compensation and employee equity compensation. In addition, there was a decrease in receivable from brokers and dealers and clearing organizations resulting from a lower number of fails to deliveraccrued compensation as a result of lower unsettled wholesale platform transactions.Current liabilitiesCurrent liabilities decreased to $209.6 million as of March 31, 2019 from $391.0 million as of December 31, 2018 due toannual bonus payments for annual accrued compensation and employee equity compensation. In addition, there was a decrease in payable to brokers and dealers and clearing organizations resulting from a lower number of fails to receive as a result of lower unsettled wholesale platform transactions.and Capital Resources—Factors Influencing Our Liquidity and Capital Resources—Capital Requirements.Requirements”threenine months ended March 31, 2019September 30, 2023 and 20182022 were as follows:
Months
Ended
March 31,
Months
Ended
2018Nine Months Ended September 30, 2023 2022 (in thousands) Net cash provided by operating activities $ 501,328 $ 424,822 Net cash used in investing activities (120,509) (45,429) Net cash used in financing activities (144,150) (221,857) Effect of exchange rate changes on cash, cash equivalents and restricted cash (488) (19,357) Net increase (decrease) in cash, cash equivalents and restricted cash $ 236,181 $ 138,179 contingent considerationstock-based compensation expense and deferred revenue.tax expense. Cash flows from operating activities can fluctuate significantly from period-to-period as working capital needs and the timing of payments for accrued compensation (primarily in the first quarter) and other items impact reported cash flows.used inprovided by operating activities for the threenine months ended March 31, 2019September 30, 2023 was $(21.1)$501.3 million, which wasan increase of $76.5 million over the nine months ended September 30, 2022, primarily driven by annual payments for accrued compensationan increase in net income and employee equity compensation. Net cash usedchanges in operating activities for the three months ended March 31, 2018 was $(14.2) million, which was primarily driven by annual payments for accrued compensation.$8.3$120.5 million for the threenine months ended March 31, 2019,September 30, 2023, which consisted of $6.8$69.6 million of total net cash paid for the Yieldbroker Acquisition (net of cash acquired), $32.1 million of capitalized software development costs, and $1.5$17.5 million of purchases of furniture, equipment, purchased software and leasehold improvements.improvements and $1.3 million of cash paid for a foreign currency call option, net of sales proceeds. Net cash used in investing activities was $7.4$45.4 million for the threenine months ended March 31, 2018,September 30, 2022, which consisted of $6.2$27.5 million of capitalized software development costs and $1.2$18.0 million of purchases of furniture, equipment, purchased software and leasehold improvements.Financing activities consist of distributions to the Original LLC Owners.threenine months ended March 31, 2019September 30, 2023 was $20.0$144.2 million, which consistedand was primarily driven by $41.2 million in payroll tax payments for options, PRSUs and RSUs, net of capital distributions.proceeds from the related stock-based compensation option exercises, $32.9 million in share repurchases pursuant to the 2022 Share Repurchase Program and $56.8 million in cash dividends to our Class A and Class B common stockholders. Net cash used in financing activities for the threenine months ended March 31, 2018September 30, 2022 was $25.0$221.9 million, which consistedand was primarily driven by $90.6 million in payroll tax payments for options, PRSUs and RSUs, net of capital distributions.threenine months ended March 31, 2019September 30, 2023 and 2018:
Months
Ended
March 31,
2019
Months
Ended
March 31,
2018Nine Months Ended September 30, 2023 2022 (in thousands) Cash flow from operating activities $ 501,328 $ 424,822 Less: Capitalization of software development costs (32,105) (27,470) Less: Purchases of furniture, equipment and leasehold improvements (17,467) (17,959) Free Cash Flow $ 451,756 $ 379,393 and Adjusted EBITDA margin, Adjusted EBIT and Adjusted EBIT margin as a measurenon-GAAP measures of our operating performance and Adjusted Net Income and Adjusted Net Income per diluted share (“Adjusted Diluted EPSEPS”) as a measurenon-GAAP measures of our profitability. and Adjusted EBITDA margin,contingent consideration,net interest income, net,income/expense, provision for income taxes and depreciation and amortization, adjusted for the impact of certain other items, including merger and acquisition transaction and integration costs, certain stock-based compensation expense and related payroll taxes, tax receivable agreement liability adjustments, unrealized gains and losses from outstanding foreign exchangecurrency forward contracts, gains and losses from the revaluation of foreign denominated cash. cash and other income and loss.EBITDAEBIT is defined as net income before net interest income/expense and provision for income taxes, adjusted for the impact of certain other items, including merger and acquisition transaction and integration costs, certain stock-based compensation expense and related payroll taxes, tax receivable agreement liability adjustments, depreciation and amortization related to acquisitions and the Refinitiv Transaction, unrealized gains and losses from outstanding foreign currency forward contracts, gains and losses from the revaluation of foreign denominated cash and other income and loss.Adjusted EBITDAnet income, divided by gross revenue for the applicable period. Adjusted EBITDA margin and Adjusted EBIT margin are defined as Adjusted EBITDA and Adjusted EBIT, respectively, divided by revenue for the applicable period.EBITDAEBIT margin because we believe they assist investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. For example, we exclude contingent consideration because it is equity settled and its balance is based on our value at a certain time and may not reflect our actual operating performance. In addition, beginning with the second quarter of 2019, we expect to also excludenon-cash stock-based compensation expense associated with the Special Option Award discussed below under “— Criticalas defined in Note 2 – Significant Accounting Policies to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q and Estimates — Stock-Based Compensation.”post-IPO options awarded in 2019 to management and other employees as well as payroll taxes associated with exercises of such options during the applicable period. We believe it will beis useful to exclude stock basedEBITDAEBIT margin to assess our financial performance and believe it isthey are helpful in highlighting trends in our core operating performance, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate and capital investments. Further, our executive incentive compensation is based in part on components of Adjusted EBITDA and Adjusted EBITDA margin.before contingent consideration,attributable to Tradeweb Markets Inc. assuming the full exchange of all outstanding LLC Interests held by non-controlling interests for shares of Class A common stock or Class B common stock of Tradeweb Markets Inc., adjusted for certain stock-based compensation expense and related payroll taxes, tax receivable agreement liability adjustments, merger and acquisition transaction and Refinitiv Transaction relatedintegration costs, depreciation and amortization related to acquisitions and the Refinitiv Transaction, unrealized gains and losses from outstanding foreign exchangecurrency forward contracts, gains and losses from the revaluation of foreign denominated cash.cash and other income and loss. Adjusted Net Income also gives effect to certain tax related adjustments to reflect an assumed effective tax rate assuming TWM LLC was subject to a corporate tax rate for the periods presented.rate. Adjusted Diluted EPS is defined as Adjusted Net Income divided by the diluted weighted average number of shares of Class A common stock and Class B common stock outstanding for the applicable period. period (including the effect of potentially dilutive securities determined using the treasury stock method), plus the weighted average number of other participating securities reflected in earnings per share using the two-class method, plus the assumed full exchange of all outstanding LLC Interests held by non-controlling interests for shares of Class A common stock or Class B common stock.In addition to excluding contingent consideration for the reasons described above, we believe it is useful to exclude the depreciation and amortization of acquisition related tangible and intangible assets resulting from certain acquisitions, the Refinitiv Transaction and the application of pushdown accounting in order to facilitate a period-over-period comparison of our financial performance. Beginning with the second quarter of 2019, we expect to alsoWe exclude stock-based compensation expense associated with the Special Option Award and the post-IPO option awards in 2019 and payroll taxes associated with exercises of such options, non-cash accelerated stock-based compensation expense associated with our former CFO and related payroll taxes, CEO Retirement Accelerated Stock-Based Compensation Expense and related payroll taxes, tax receivable agreement liability adjustments, merger and acquisition transaction and integration costs and acquisition and Refinitiv Transaction-related depreciation and amortization for the reasons described above. Each of the normal recurring adjustments and other adjustments described in the definition of Adjusted Net Income helps to provide management with a measure of our operating performance over time by removing items that are not related to day-to-day operations or are non-cash expenses.net incomeearnings per diluted share or any other financial measure derived in accordance with GAAP. You are encouraged to evaluate each adjustment and, as applicable, the reasons we consider it appropriate for supplemental analysis. In addition, in evaluating Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT, Adjusted EBIT margin, Adjusted Net Income and Adjusted Diluted EPS you should be aware that in the future, we may incur expenses similar to the adjustments in the presentation of these non-GAAP financial measures. Our presentation of Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT, Adjusted EBIT margin, Adjusted Net Income and Adjusted Diluted EPS should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. In addition, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT, Adjusted EBIT margin, Adjusted Net Income and Adjusted Diluted EPS may not be comparable to similarly titled measures used by other companies in our industry or across different industries.EBITDAEBIT margin for the three and nine months ended March 31,September 30, 2023 and 2022:Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 (dollars in thousands) Net income $ 111,630 $ 81,566 $ 315,762 $ 260,611 4,614 43 6,411 40 Net interest (income) expense (17,465) (3,413) (45,065) (3,507) Depreciation and amortization 46,559 44,778 137,850 133,998 525 2,675 1,960 13,839 Provision for income taxes 28,666 24,657 90,920 63,915 (6,076) (3,972) (4,242) (6,306) — — — — Other (income) loss, net 1,907 — 2,022 — Adjusted EBITDA $ 170,360 $ 146,334 $ 505,618 $ 462,590 Less: Depreciation and amortization (46,559) (44,778) (137,850) (133,998) 31,971 31,558 95,217 95,088 Adjusted EBIT $ 155,772 $ 133,114 $ 462,985 $ 423,680 Net income margin 34.0 % 28.4 % 32.6 % 29.1 % Adjusted EBITDA margin 51.9 % 51.0 % 52.2 % 51.6 % Adjusted EBIT margin 47.4 % 46.4 % 47.8 % 47.3 % 2018:
Months
Ended
March 31,
2019
Months
Ended
March 31,
2018(1)(3)Represents unrealized gain or loss recognized on foreign currency forward contracts and foreign exchange gain or loss from the revaluation of cash denominated in a different currency than the entity’s functional currency.(2)Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 Basis Point Change 2023 2022 Basis Point Change Adjusted EBITDA margin 51.9 % 51.0 % +92 bps +181 bps 52.2 % 51.6 % +58 bps +90 bps Adjusted EBIT margin 47.4 % 46.4 % +108 bps +192 bps 47.8 % 47.3 % +52 bps +83 bps increased by 14 basis points or 80 basis points on a constant currency basis.and Adjusted EBITDAEBIT margin, growthboth on a constant currency basis, which is aare non-GAAP financial measure, ismeasures, and are defined as the changes in Adjusted EBITDA margin growthand Adjusted EBIT margin excluding the effects of foreign currency fluctuations. Adjusted EBITDA margin and Adjusted EBIT margin excluding the impacteffects of foreign currency fluctuations isare calculated by translating the current period and prior period’s results using the annual average exchange rates for 2018.the prior period. We use the changes in Adjusted EBITDA margin growthand Adjusted EBIT margin on a constant currency basis as a supplemental metricmetrics to evaluate our underlying margin performance between periods by removing the impact of foreign currency fluctuations. We believe that providing changes in Adjusted EBITDA margin growthand Adjusted EBIT margin on a constant currency basis provides aprovide useful comparisoncomparisons of our Adjusted EBITDA margin and Adjusted EBIT margin and trends between periods.providespresents a reconciliation of net income attributable to Tradeweb Markets Inc. and net income, as applicable, to Adjusted Net Income and Adjusted Diluted EPS for the three and nine months ended March 31, 2019September 30, 2023 and 2018:
Ended March
31, 2019
Ended March
31, 2018Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 (in thousands except per share amounts) Earnings per diluted share $ 0.46 $ 0.33 $ 1.30 $ 1.06 Net income attributable to Tradeweb Markets Inc. $ 98,614 $ 69,083 $ 275,552 $ 220,392 13,016 12,483 40,210 40,219 Net income 111,630 81,566 315,762 260,611 Provision for income taxes 28,666 24,657 90,920 63,915 4,614 43 6,411 40 31,971 31,558 95,217 95,088 525 2,675 1,960 13,839 (6,076) (3,972) (4,242) (6,306) — — — — Other (income) loss, net 1,907 — 2,022 — Adjusted Net Income before income taxes 173,237 136,527 508,050 427,187 (42,443) (30,036) (124,472) (93,982) Adjusted Net Income $ 130,794 $ 106,491 $ 383,578 $ 333,205 $ 0.55 $ 0.45 $ 1.62 $ 1.40 related intangiblesand integration of completed and potential mergers and acquisitions. These costs generally include legal, consulting, advisory, due diligence, severance and other third party costs incurred that directly relate to the acquisition transaction or its integration.Refinitiv Transaction and the application of pushdown accounting to the Refinitiv Transaction (where all assets were marked to fair value as of the closing date of the Refinitiv Transaction).(2)(3)26.4%, for the three months ended March 31, 2019 and 201824.5% applied to Adjusted Net Income before income taxes.Off-Balance Sheet ArrangementsAstaxes for the three and nine months ended September 30, 2023 and 22.0% for the three and nine months ended September 30, 2022.March 31, 2019, we did not have any off-balance sheet arrangements.the calculation of Adjusted Diluted EPS, see “Reconciliation of Diluted Weighted Average Shares Outstanding to Adjusted Diluted Weighted Average Shares Outstanding and Adjusted Diluted EPS” below.Reconciliation of Diluted Weighted Average Shares Outstanding to Adjusted Diluted Weighted Average Shares Outstanding and Adjusted Diluted EPS Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Diluted weighted average shares of Class A and Class B common stock outstanding 213,491,634 208,329,469 212,276,908 207,748,037 265,681 246,238 266,453 121,115 23,080,571 28,750,603 24,179,583 29,667,383 Adjusted diluted weighted average shares outstanding 236,837,886 237,326,310 236,722,944 237,536,535 Adjusted Net Income (in thousands) $ 130,794 $ 106,491 $ 383,578 $ 333,205 Adjusted Diluted EPS $ 0.55 $ 0.45 $ 1.62 $ 1.40 Management evaluates its accounting policies, estimates and judgments on an on-going basis.Management evaluated the development and selection of its critical accounting policies and estimates and believes that the following policies are most critical to the portrayal of our financial condition and results of operations, and that require our most difficult, subjective or complex judgments in estimating the effect of inherent uncertainties. With respect to critical accounting policies, even a relatively minor variance between actual and expected experience can potentially have a materially favorable or unfavorable impact on subsequent results of operations. More information on all of our significant accounting policies can be found in “Note 2 — Summary of Significant Accounting Policies” to the unaudited consolidated financial statements of Tradeweb Markets LLC included elsewhere in this Quarterly Report on Form 10-Q.Use of EstimatesThe preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in our consolidated financial statements and accompanying notes. These estimates and assumptions are based on judgment and the best available information at the time. Management bases its estimates on historical experience, observance of trends in particular areas, information available from outside sources and various other assumptions that are believed to be reasonable under the circumstances. Information from these sources form the basis for making judgments about the carrying values of assets and liabilities that may not be readily apparent from other sources. Therefore, actual results could differ materially from those estimates. SuchManagement evaluates its accounting policies, estimates and judgments on an on-going basis.pushdown accounting, intangible assets, goodwill, software development costs, stock basedbusiness combinations, revenue recognition, stock-based compensation, contingent consideration payable and current and deferred income taxes.Pushdowntaxes and the tax receivable agreement liability. With respect to critical accounting policies and estimates, even a relatively minor variance between actual and expected experience can potentially have a materially favorable or unfavorable impact on subsequent results of operations. More information on all of our significant accounting policies can be found in Note 2 – Significant AccountingThe Refinitiv Transaction was Policies to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.by Refinitiv in accordance withunder the acquisitionpurchase method of accounting pursuant to Accounting Standards Codification (“ASC”) 805, Business Combinations (“ASC 805 “Business Combinations” and pushdown accounting was applied805”). The total cost of an acquisition is allocated to Refinitiv to record the underlying net assets based on their respective estimated fair valuevalues. The excess of the assets and liabilities of Refinitiv onpurchase price over the dateestimated fair values of the Refinitiv Transaction. We, as a consolidating subsidiary of Refinitiv, also accounted for the Refinitiv Transaction using pushdown accounting. Under pushdown accounting, the excess of our fair value above the fair value accounting basis of our net assets and liabilitiesacquired is recorded as goodwill. The fair value of assets acquired and liabilities assumed wasis determined based on assumptions that reasonable market participants would use in the principal (or most advantageous) market for the asset or liability.In determiningthe liabilities assumed we considered a reportat the date of a third-party valuation expert.the closing of the acquisition. Management is responsible for these internal and third-party valuations and appraisalsappraisals.theyintangible assets of a company, and then examines the excess return that is attributable to the intangible asset being valued. The discount rate used reflects the amount of risk associated with the hypothetical cash flows for the Customer Relationships relative to the overall business. In developing a discount rate for the Customer Relationships, the Company estimated a weighted-average cost of capital for the overall business and employed an intangible asset risk premium to this rate when discounting the excess earnings related to Customer Relationships. The resulting discounted cash flows were then tax-affected at the applicable statutory rate. For GAAP purposes, the Customer Relationships will be amortized over a useful life of 13 years. Any changes in the discount rate used for valuing the Customer Relationships or the estimated useful life used for amortization purposes could have a material impact on our condensed consolidated statements of financial condition and condensed consolidated statement of income. Any increases or decreases in the allocation of purchase price to Customer Relationships, which is an amortizable asset, would be offset by a corresponding decrease or increase in goodwill, which is an indefinite-lived asset, not subject to amortization and as a result would impact the asset balances recorded on our condensed consolidated statements of financial condition as well as the amortization expense recorded on our condensed consolidated statement of income over the life of the asset. Any changes in the estimated useful life of the Customer Relationships would also impact timing of the reduction of the net balance of intangible assets, net of accumulated amortization on our consolidated statements of financial condition and the timing of the recognition of amortization expense on our condensed consolidated statement of income. The primary areas of the preliminary purchase price allocation that are continuingnot yet finalized as of September 30, 2023 relate primarily to review the amountsvaluation of the identifiable intangible assets and allocations to finalize these amounts. We havesoftware and final working capital adjustments. The allocation of the purchase price will be finalized upon completion of the analysis of the acquired assets within one year fromof the date of the Refinitiv Transaction to finalize these amounts.Intangible AssetsWe amortize our intangible assets over the estimated useful lives and test for impairment whenever events or changes in circumstances suggest that an asset’s or asset group’s carrying value may not be fully recoverable. We test our intangible assets with an indefinite useful life for impairment at least annually. An impairment loss is recognized if the sumclosing of the estimated undiscounted cash flows relatingacquisition.asset or asset group is less thanexecution of trades by our clients. The access to our electronic marketplaces, including market data and continuous pricing data refreshes and the corresponding carrying value. Intangible assetsprocessing of trades thereon are amortizedhighly interrelated and are considered a single performance obligation satisfied over their estimated useful lives of seven to sixteen years.GoodwillGoodwill arises out of pushdown accounting and business combinations and is the cost of acquired companies in excess of the fair value of identifiable net assets at acquisition date. We test our goodwill at least annually for impairment and recognize an impairment loss if the estimated fair value of a reporting unit is less than its net book value. The Company is one reporting unit for goodwill impairment testing purposes. The fair value of a reporting unit is calculated using a discounted cash flow or a revenues and earnings multiple approach. We calculate such losstime as the difference betweenclient simultaneously receives and consumes theestimated fair value benefit from our performance. This performance obligation constitutes a series of goodwillservices that are substantially the same in nature and its carrying value. If future events or results differ adversely fromare provided over time using the estimates and assumptions made at acquisition or as partsame measure of subsequent impairment tests,progress. For our services, we may record increased amortization or impairment charges in the future.Software Development CostsWe capitalize certain 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, including among other items, employee compensation and related benefits and third-party consulting costs incurred during the application development stage which directly contributeearn subscription fees for granting access to such development. Once the product is ready for its intended use, 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. We review 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. Due to rapidly changing technology and the uncertainty of the software development process itself, future results could be affected if management’s current assessment of its software projects differs from actual performance.Revenue Recognitionthrough various fee plans. Transaction fees are generated on both a variable and fixed price basis and vary by geographic region, product type and trade size. For variable transaction fees, we charge clients fees based on the mix of products traded and the volume of transactions executed.We earn subscription fees primarily for granting clients access to our markets for trading and market data. Subscription fees are generally generated on a fixed price basis.We earnincluding commission revenue from our electronic and voice brokerage servicestransacted 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.inmonthly on a straight-line basis as Refinitiv receives and consumes the benefit evenly, over the contact period, thatas the data is provided, generally on a monthly basis, and fees for historical data sets which are recognized when the historical data set is provided to Refinitiv.On January 1, 2018, we adopted ASU 2014-09, Revenue from Contracts with Customers, using the modified retrospective approach. The adoption of ASU 2014-09 did not have a material impact on the measurement or timing of recognition of revenue in any prior reporting periods. However, in the current reporting period, we werejudgementsjudgments for the Refinitiv market data fees. Significant judgementsjudgments used in accounting for this contract include:·include the following determinations:·· Determining thecompensation that ourpayments received by the employees receiveof the Company are accounted for as equity or liability awards. As a stock-based equity award, theThe 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 overFor performance-based restricted stock units that vest based on market conditions, the requisite service period, with an offsetting increase to members’ capital.As aCompany recognizes stock-based liability award, the cost of the employee services received in exchange for an award of equity instruments is generally measuredcompensation based on the grant-dateestimated grant date fair value of the award.awards computed with the assistance of a valuation specialist using a Monte Carlo simulation on a binomial model, which represents a significant accounting estimate given the significant level of estimation uncertainty relating to the selection of valuation assumptions required for the valuation. The fair value of that award is remeasured subsequently at each reporting date throughsignificant assumptions used to settlement. Changes inestimate the fair value of the equity instrumentperformance-based restricted stock units that vest based on market conditions are recognized as compensation cost overyears of maturity, annualized volatility and the risk-free interest rate. The maturity period represents the period of time that the award granted was modeled into the future, the risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of measurement corresponding with the maturity period of the award and the expected volatility is based upon historical volatility of the Company’s Class A common stock. On March 15, 2023, we granted 251,113 performance-based restricted stock units that vest based on market conditions with a grant date fair value totaling $24.7 million, which will be amortized into expense on a straight-line basis through December 31, 2025. The significant assumptions used in our consolidated statements of income.Thedetermining the grant date fair value of the equity instruments is determinedaward were a maturity of 2.8 years, annualized volatility of 28.81% and a risk-free interest rate of 3.77%accordance with the American Institute of Certified Public Accountants Practice Aid, Valuation of Privately Held Company Securities Issued as Compensation. Factors that are considered in determining the fair value include forecasted future cash flows, the weighted average cost of capital, and the performance multiples of comparable companies.In October 2018, following the closingany of the Refinitiv Transaction, we made a special award of optionsassumptions used to management and other employees (the “Special Option Award”) under our Option Plan. In accounting for the options issued under this plan, we measure and recognize compensation expense for allvalue these awards based on their estimated fair values measured as of the grant date. Costs related to these options will be recognized as an expense in our consolidated statements of income over the requisite service period, with an offsetting increase to additional paid-in capital. We expect the non-cashcould materially affect stock-based compensation expense associated with the Special Option Award to be between approximately $33.5 million and $35.7 million, which is expected to be expensed beginningrecorded in the second quarter of 2019current and continuing over the following three years. For more information, please see “Executive Compensation—Narrative Disclosure to Summary Compensation Table—Amended and Restated future periods.2018 Share Option Plan” in the IPO Prospectus.We use the Black-Scholes pricing modelis subject to value someU.S. federal, state and local income taxes with respect to its taxable income, including its allocable share of our share-based payment awards. Determining the appropriate fair value modelany taxable income of TWM LLC, and calculating the fair value of the share-based payment awards requires the input of highly subjective assumptions, including the expected life of the share-based payment awards, the number of expected share-based payment awards that will be forfeited prior to the completion of the vesting requirements, and the stock price volatility.Income Taxesnot requiredpassed through to maintain anand included in the taxable income tax provision on its earnings. Therefore, the remaining tax effects of its activities accrue directlymembers, including to its partners.us. TWM LLC records taxes for conducting business in certain state, local and foreign jurisdictions and records U.S. federal taxes for subsidiaries that are taxed as corporations for U.S. tax purposes. We currently record 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 and measure the deferred taxes using the enacted tax rates and laws that will be in effect when such temporary differences are expected to reverse. WeThe measurement of deferred taxes often involves the exercise of significant judgment related to the realization of tax basis. Our deferred tax assets and liabilities reflect our assessment that tax positions taken in filed tax returns and the resulting tax basis are more likely than not to be sustained if they are audited by taxing authorities. Assessing tax rates that we expect to apply and determining the years when the temporary differences are expected to affect taxable income requires judgment about the future apportionment of our income among the jurisdictions in which we operate. Any changes in our practices or judgments involved in the measurement of deferred tax assets and liabilities could materially impact our financial condition or results of operations.therefore,earnings and the nature and timing of future deductions and benefits represented by the deferred tax assets, all of which involve the exercise of significant judgment. As of September 30, 2023 and December 31, 2022, we have no valuation allowance is necessary. Tradeweb Markets Inc. is subjectestablished on our deferred tax assets. If forecasts of future earnings and the nature and estimated timing of future deductions and benefits change in the future, we may determine that existing valuation allowances must be revised or new valuation allowances created, any of which could materially impact our financial condition or results of operations. See Note 6 – Income Taxes to U.S. federal, state and local income taxes with respect to its allocable shareour unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.under theof GILTI provision as a current period expense when incurred.Contingent ConsiderationIn 2014, we issued Class A Sharesunvested Class P-1(A) Sharesthe Continuing LLC Owners which provides for the payment by Tradeweb Markets Inc. to somea Continuing LLC Owner of 50% of the Bank Stockholdersamount of U.S. federal, state and local income or franchise tax savings, if any, that Tradeweb Markets Inc. actually realizes (or in some circumstances is deemed to realize) as a result of a capital contribution to facilitate our expansion into new credit products. The(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 issuanceIPO, the October 2019 and April 2020 follow-on offerings and any future offering or (b) redemptions or exchanges by such Continuing LLC Owner of theLLC Interests for shares were included in members’ capital. In connection with the investment, certain employees also invested in the Company and were issued Class C Shares and unvested Class P-1(C) Shares. The proceeds from the issuance of these shares were included in members’ capital. The Class A Shares and Class C Shares issued in connection with the investment equally participated in the earnings of the Company together with the other Class A Shares, Class P(A) Shares, Class C Shares and Class P(C) Shares of the Company. Most of the holders of Class A shares hadcommon stock or Class B common stock or for cash, as applicable, and (ii) certain other tax benefits related to Tradeweb Markets Inc. making payments under the right to appoint members toTax Receivable Agreement. Substantially all payments due under the boardTax Receivable Agreement are payable over the 15 years following the purchase of managersLLC Interests from Continuing LLC Owners or redemption or exchanges by Continuing LLC Owners of LLC Interests. The timing of the Company. The Class P-1(A) Shares and Class P-1(C) Shares did not have any earnings participation rights, nor did any of the Class P-1(A) Shares have the right to appoint members to the former board of managers, until they vested. The Class P-1(A) Shares and Class P-1(C) Shares vested in July 2018 upon the achievement of specific revenue earnout milestones related to the growth of our credit products, as defined by the agreement, from August 2014 through the vesting date of July 2018.Prior to the July 2018 vesting, we recognized contingent consideration with respect to the potential vesting of Class P-1(A) Shares and Class P-1(C) Shares as a contra-revenue adjustment in accordance with ASC 605-50-45-2 because the vesting could be viewed as a sales incentive to participating Bank Stockholders since they are also customers of the Company. The contingent consideration for each reporting period was calculated by estimating the final contingent consideration value using a monte carlo simulation and recognizing that value on a straightline basispayments over the 48 monthagreement, adjusting at each reporting period forcurrent year’s taxable income is used to extrapolate an estimate of future taxable income. This requires significant judgment relating to projecting future earnings, the geographic mix of those earnings and the timing of deferred taxes becoming current.final value estimate. The revenue milestones provided that shares would vest only if certain credit revenue milestones would be achieved intotal projected obligations recorded under the twelve months ended July 2016, 2017 and 2018.As a result of achieving these milestones, the final earnout amount was calculated based on the credit revenues during the twelve months ended July 31, 2018. On July 31, 2018, members’ capital increased by $150.5 millionTax Receivable Agreement as a result of actual changes in the vestinggeographic mix of our earnings, changes in tax legislation and tax rates or other factors that may impact our actual tax savings realized will be reflected in income before taxes in the Class P-1(A) Shares and employee equity compensation payable increased by $5.7 million as a result ofperiod in which the vesting of the Class P-1(C) Shares. The value of the vested Class P-1(C) Shares was included in employee equity compensation payable because the Class P-1(C) were owned for less than six months by employees who had the ability to exercise a put option of those shares under certain conditions under their control.Effective January 1, 2019, we adopted ASC 842, Leases. This standard requires us 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. We adopted ASC 842 prospectively and elected to take the package of practical expedients allowing us not to reassess (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.On January 1, 2019, upon the adoption of ASC 842, the Company recorded right-to-use assets of $34.8 million, lease liabilities of $39.6 million and eliminated deferred rent of $4.9 million.“NoteNote 2 — Summary of– Significant Accounting Policies”Policies to the unauditedcondensed consolidated financial statements of Tradeweb Markets LLC included elsewhere in this Quarterly Report on Form 10-Q for information regardinga discussion of recent accounting pronouncements not yet adopted.Effects of InflationWhile inflation may impact our revenues and operating expenses, we believe the effects of inflation, if any, on our results of operations and financial condition have not been significant. However, there can be no assurance that our results of operations and financial condition will not be materially impacted by inflation in the future.Jumpstart Our Business Startups Act of 2012The Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) permits us, as an “emerging growth company,” to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We have elected to “opt out” of this provision and, as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for public companies that are not emerging growth companies. This decision to opt out of the extended transition period under the JOBS Act is irrevocable. Duringthree months ended March 31, 2019 and 2018 approximately 30.3% and 29.1%, respectively,percentage breakdown of our gross revenue and 15.1% and 16.1%, respectively, of our operating expenses were denominated in currencies other than the U.S. dollar almost entirelyfor the Eurothree and nine months ended September 30, 2023 and 2022:Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 28% 27% 28% 29% 16% 14% 16% 14% gross revenuethe legal entity at the rate of exchange prevailing at the transaction date. Monetary assets and liabilities that are denominated in non-functional currencies are then remeasured at the British pound sterling for operatingend of each reporting period at the exchange rate prevailing at the end of the reporting period. Foreign currency remeasurement gains or losses on monetary assets and liabilities in nonfunctional currencies are recognized in the condensed consolidated statements of income within general and administrative expenses.mustalso translate all non-U.S. dollar functional currency revenues, and expenses, as well as assets and liabilities into U.S. dollars. All non-U.S. dollar functional currency revenue and expense amounts are translated into U.S. dollars monthly at the average exchange rate for the month. All non-U.S. dollar functional currency assets and liabilities are translated at the rate prevailing at the end of the reporting period. Gains or losses on translation in the financial statements, when the functional currency is other than the U.S. dollar, are included as a component of other comprehensive income. Accordingly, increases or decreases in the value of the U.S. dollar against the other currencies will affect our net operating revenues, operating income and the value of balance sheet itemsitems.foreign currencies. Revenueseuros and a significant portion of our expenses are denominated in currencies other thanBritish pound sterling. The following table shows the average foreign currency exchange rates to the U.S. dollar are translated atfor the rate of exchange prevailing atthree and nine months ended September 30, 2023 and 2022:Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Euros $ 1.09 $ 1.01 $ 1.08 $ 1.07 British pound sterling $ 1.27 $ 1.18 $ 1.24 $ 1.26 transaction date. Assetschange in revenue and liabilities denominated in foreign currencies are translated at the rate prevailing at the end of the reporting period. Any gain or loss resulting from the translation of assets and liabilities is included as a component of comprehensive income.Fluctuationsoperating income caused by fluctuations in foreign currency rates decreased our gross revenue by approximately $2.3 million forused in translation during the three and nine months ended March 31, 2019September 30, 2023 and decreased our operating income by approximately $3.1 million for2022:Three Months Ended Nine Months Ended Impact of Foreign Currency Rate Fluctuations (amounts in thousands) September 30, September 30, 2023 2022 2023 2022 Increase (decrease) in revenue $ 2,100 $ (12,800) $ 5,000 $ (26,000) Increase (decrease) in operating income $ 1,600 $ (8,600) $ 4,600 $ (19,100) three months ended March 31, 2019. Fluctuations in foreign currency rates increased our gross revenue by approximately $1.5 millionfor the three months ended March 31, 2018 and increased our operating income by approximately $1.4 million for the three months ended March 31, 2018. Based on actual results for the three months ended March 31, 2019 and 2018,impact a hypothetical 10% increase or decrease in the U.S. dollar against all other currencies and a hypothetical 10% increase or decrease in only euro or only British pound sterling exchange rates would have decreased or increased grosson the translation of actual revenue by approximately $5.7 million and $4.9 million, respectively, and operating income by approximately $3.6 millionfor the three and $3.1 million, respectively.Three Months Ended Nine Months Ended Hypothetical 10% Change in Value of U.S. Dollar (amounts in thousands) September 30, September 30, 2023 2022 2023 2022 All currencies Effect of 10% change on revenue +/- $ 10,300 +/- $ 8,600 +/- $ 30,000 +/- $ 28,200 Effect of 10% change on operating income +/- $ 6,500 +/- $ 5,500 +/- $ 19,400 +/- $ 19,100 Euros Effect of 10% change on revenue +/- $ 9,200 +/- $ 7,800 +/- $ 27,200 +/- $ 25,800 Effect of 10% change on operating income +/- $ 8,700 +/- $ 7,600 +/- $ 25,900 +/- $ 25,000 British pound sterling Effect of 10% change on revenue +/- $ 500 +/- $ 300 +/- $ 1,300 +/- $ 1,100 Effect of 10% change on operating income +/- $ 2,100 +/- $ 1,900 +/- $ 6,400 +/- $ 6,000 currency forward contracts.exchange derivative contracts. We enter into foreign currency forward contracts to mitigate our U.S. dollar and British pound sterling versus Euroeuro exposure, generally with a duration of lessnot more than fourteen12 months.In June 2023, we also entered into a foreign currency call option on Australian dollars, in order to partially mitigate the Company’s U.S. dollar versus Australian dollar foreign exchange exposure on the then-anticipated payment of the Australian dollar denominated purchase price for the Yieldbroker Acquisition. The out-of-the-money foreign currency call option was unwound in August 2023 and we recognized losses during three and nine months ended September 30, 2023 totaling $1.9 million and $1.3 million, respectively, relating to this option. We do not use derivative instruments for trading or speculative purposes.March 31, 2019September 30, 2023 and December 31, 2018,2022, the notional amount of our foreign currency forward contracts was $58.2$178.6 million and $1.7$162.8 million, respectively.At March 31, 2019As of September 30, 2023 and December 31, 2018, we established an2022, the allowance for doubtful accounts of $1.3 million and $1.2 million, respectively,credit losses with regard to these receivables.and with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), the effectiveness of our disclosure controls and procedures, as defined in Rule 13(a)-15(e)13a‑15(e) of the Exchange Act, as of the end of the period covered by this Quarterly Report on Form 10-Q.10‑Q. Based on that evaluation, our Chief Executive OfficerCEO and Chief Financial OfficerCFO have concluded that our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q10‑Q are effective at a reasonable assurance level in ensuring that information required to be disclosed in our Exchange Act reports is (1) recorded, processed, summarized and reported in a timely manner and (2) accumulated and communicated to our management, including our Chief Executive OfficerCEO and Chief Financial Officer,CFO, as appropriate to allow timely decisions regarding required disclosure. Our management, including our Chief Executive OfficerCEO and Chief Financial Officer,CFO, does not expect that our disclosure controls and procedures will prevent or detect all errors and all fraud. While our disclosure controls and procedures are designed to provide reasonable assurance of their effectiveness, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.March 31, 2019September 30, 2023 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.below,in Note 13 to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, there have been no material changes from the legal proceedings previously disclosed under the heading “Business—“Item 3. Legal Proceedings” in the IPO Prospectus. The legal proceeding described below has been disclosed previously in the IPO Prospectus. The matter is described in this Quarterly Report onPart I of our 2022 Form 10-Q to include certain developments in the case since we filed the IPO Prospectus.IDC MatterIn September 2015, IDC Financial Publishing, Inc. (“IDC”) filed a lawsuit in the United States District Court for the Eastern District of Wisconsin against BondDesk Group LLC and Tradeweb Markets LLC (together, the “Tradeweb Parties”), and Fidelity Global Brokerage Group, Inc., Fidelity Brokerage Services, LLC, and National Financial Services, LLC (collectively, “Fidelity”), captioned IDC Financial Publishing Inc. v. BondDesk Group LLC, et al., Case No. 2:15-cv-01085-PP, relating to the distribution of IDC’s financial strength ratings over Tradeweb’s trading platform to Fidelity, its registered investment advisors and Fidelity’s correspondent banks. IDC alleges that while certain business units of Fidelity were licensed to receive its data via Tradeweb’s platform, the IDC data was also distributed without authorization to Fidelity’s institutional customers for approximately five years. The complaint, as amended, asserts claims for breach of contract and intentional misrepresentation against all of the defendants (as well as a claim of tortious interference with contract against Fidelity). IDC claims to have suffered approximately $80 million in damages and also seeks punitive damages, attorneys’ fees and costs. The defendants answered the complaint denying the claims and asserting various affirmative defenses. The Tradeweb Parties and Fidelity have moved for summary judgment dismissing IDC’s claims and rejecting its damage theory as speculative and contrary to the evidence, and IDC has sought partial summary judgment dismissing several of the Tradeweb Parties’ and Fidelity’s affirmative defenses. Those motions remain pending. The Court has scheduled oral argument on those motions for September 2019. In April 2019, the Court adjourned the scheduled trial date, which had been set for July 2019, until March 2020. We intend to continue to vigorously defend what we believe to be meritless and excessive claims.the IPO Prospectus, which is accessible on the SEC’s website at www.sec.gov.In connectionPeriod Total Number of Shares Purchased Average Price Paid per Share (in thousands) July 1, 2023 – July 31, 2023 30,205 $ 69.86 30,205 $ 242,582 August 1, 2023 – August 30, 2023 — — — $ 242,582 September 1, 2023 – September 30, 2023 34,849 79.99 34,849 $ 239,794 Total 65,054 $ 75.28 65,054 Reorganization Transactions,proceeds, on a dollar-for-dollar basis, from the repurchase by Tradeweb Markets Inc., among other things, issuedLLC of an aggregateLLC Interest from the Corporation in order to maintain the one-to-one ratio between outstanding shares of 96,933,192 shares ofthe Class A common stock and Class B common stock to Refinitiv Parent Limited. In addition, in connection withand the Reorganization Transactions, Tradeweb Markets Inc. issued 20,000,000 shares of Class C common stock and 105,289,005 shares of Class D common stock to the Continuing LLC Owners. These equityholders also received LLC Interests owned by the Corporation.an immaterial amountvesting of cash in lieu ofPRSUs and RSUs. During the issuance of any fractional interests. 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 issuedthree months ended September 30, 2023, the Company withheld 92,373 shares of Class A common stock in connection with such exercises and vesting of stock awards.Name and Title Action Date Aggregate Number of Securities to be Purchased or Sold Adoption August 4, 2023 Sale of up to 760 shares of Class A common stock to be issued upon the vesting on May 15, 2024 of previously awarded restricted stock units. May 30, 2024 Adoption September 1, 2023 Sale of an amount equal to up to: (A) 3,048 shares of Class A common stock and (B) (i) 10,180 shares of Class A common stock to be issued upon the vesting on January 1, 2024 of previously awarded performance-based restricted stock units, plus (ii) the number of shares issued upon vesting on January 1, 2024 in settlement of dividend equivalent rights in respect of the 10,180 shares subject to the performance-based restricted stock units that accrued during the award’s vesting period of March 15, 2021 - January 1, 2024, pursuant to the terms of the award agreement and determined on the vesting date, less (iii) the number of shares withheld for taxes, to be determined on the vesting date. June 1, 2024 September 8, 2023 Sale of an amount equal to up to: (A) 35,000 shares of Class A common stock to be issued upon the exercise of options in accordance with the terms of the Rule 10b5-1 trading arrangement and (B) (i) 49,688 shares of Class A common stock to be issued upon the vesting on January 1, 2024 of previously awarded performance-based restricted stock units, plus (ii) the number of shares issued upon vesting on January 1, 2024 in settlement of dividend equivalent rights in respect of the 49,688 shares subject to the performance-based restricted stock units that accrued during the award’s vesting period of March 15, 2021 - January 1, 2024, pursuant to the terms of the award agreement and determined on the vesting date, less (iii) the number of shares withheld for taxes, to be determined on the vesting date. May 16, 2024 a one-for-one basis. In addition,such earlier date as all such transactions under the LLC Intereststrading arrangement are redeemablecompleted or at such time as such trading arrangement is otherwise terminated in accordance with its terms.newly issuedthe potential sale of an amount of shares of Class A common stock or Class B common stock on a one-for-one basis. For further information, see “Description of Capital Stock” in the IPO Prospectus. The issuances of the Class B common stock, Class C common stock and Class D common stock described in this paragraph were made in reliance on Section 4(a)(2) of the Securities Act. The Company relied on this exemption from registration based in part on the nature of the transactions and the various representations made by the parties thereto.Use of ProceedsOn April 8, 2019, we completed the IPO by issuing 46,000,000equal to up to: (i) 49,688 shares of Class A common stock which included 6,000,000to be issued upon the vesting on January 1, 2024 of previously awarded performance-based restricted stock units, plus (ii) the number of shares issued upon vesting on January 1, 2024 in settlement of dividend equivalent rights in respect of the 49,688 shares subject to the performance-based restricted stock units that accrued during the award’s vesting period of March 15, 2021 - January 1, 2024, pursuant to the terms of the award agreement and determined on the vesting date, less (iii) the number of shares withheld for taxes, to be determined on the vesting date. As of the date of modification, no shares of Class A common stock issued in connection with the underwriters’ exercise in full of their option to purchase additional shares of Class A common stock. The shares of Class A common stockhad been sold in the offering were registered under the Securities Act pursuant toOriginal Hult Plan.Registration Statement on Form S-1 (File No. 333-333-230115), which was declared effective by the SEC on April 3, 2019, and the Registration Statement on Form S-1 (File No. 333-230715), which became effective upon filing with the SEC on April 3, 2019. The sharesthree months ended September 30, 2023, none of Class A common stock are listed on the Nasdaq Global Select Market under the symbol “TW.” The sharesour directors or executive officers adopted, modified or terminated a non-Rule 10b5-1 trading arrangement (as defined in Item 408 of Class A Common Stock were sold at an initial public offering priceRegulation S-K).$27.00 per share. The offering closed on April 8, 2019, resulting in net proceeds of $1,161.3 million after deducting underwriting discounts and commissions of $80.7 million. We also incurred offering expenses of approximately $12.1 million in connection with the IPO. J.P. Morgan Securities LLC, Citigroup Global Markets Inc., Goldman Sachs & Co. LLC and Morgan Stanley & Co. LLC acted as joint lead book-running managers in the IPO. Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays Capital Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., UBS Securities LLC and Wells Fargo Securities, LLC acted as joint book-running managers for the IPO. Jefferies LLC and Sandler O’Neill & Partners, L.P. acted as co-managers for the IPO.We used the net proceeds from the IPO to purchase 46,000,000 issued and outstanding LLC Interests from certain of the Bank Stockholders (and cancelled 9,993,731 shares of Class C common stock and 36,006,269 shares of Class D common stock), at a purchase price per interest equal to the IPO price per share of Class A common stock, less the underwriting discounts and commissions payable thereon.There has been no material change in the use of proceeds as described in the IPO Prospectus.ITEM 3. DEFAULTS UPON SENIOR SECURITIESContentsNone.ITEM 4. MINE SAFETY DISCLOSURESNone.None.(a) ExhibitsThe following exhibits are filed as a part of this Quarterly Report on Form 10-Q:Exhibit Number 3.131.1* 3.210.1*10.2*10.3*10.4*10.5*10.6*10.7*10.8†*Amended and Restated Tradeweb Markets Inc. 2018 Share Option Plan.10.9†*10.10†*10.11†*Form of Director RSU Agreement under the Tradeweb Markets Inc. 2019 Omnibus Equity Incentive Plan.31.1*Exhibit NumberDescription of Exhibit101.SCH*101.SCH* Inline XBRL Taxonomy Extension Schema Document. 104 Cover page formatted as Inline XBRL and contained in Exhibit 101. TRADEWEB MARKETS INC. May 20, 2019Lee OleskyLee OleskyMay 20, 2019Robert WarshawRobert Warshaw