What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2024-02-09 compared with 2023-02-24 · 200 added, 191 removed, 582 unchanged (40% of the section changed)

10 unchanged sentences

Our marketplaces facilitate trading across a range of asset classes, including rates, credit, equities and money markets.

We are a global company serving clients in over 65 countries with offices in North America, Europe and Asia.

We are a global company serving clients in over 70 countries with offices in North America, Europe, Asia, Australia and the Middle East.

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.

18 unchanged sentences

Trends and Other Factors Impacting Our Performance

CEO Transition

On February 16, 2022, we announced that Mr.

Lee Olesky would retire as Chief Executive Officer (“CEO”) of the Company, effective December 31, 2022.

On February 11, 2022, the board of directors elected our then-current President, Mr.

Billy Hult, to succeed Mr.

Olesky as CEO of the Company, effective January 1, 2023.

Following his retirement as CEO, Mr.

Olesky has continued in his role as Chairman of the board of directors.

As of the beginning of Mr.

Olesky’s six month notice period under our 2019 Omnibus Equity Incentive Plan, there were (i) approximately $6.7 million in total unamortized stock-based compensation associated with equity awards previously granted to Mr.

Olesky plus (ii) $5.0 million in unamortized stock-based compensation awards granted to Mr.

Olesky during 2022 that were accelerated and amortized into expense over a revised estimated service period that ended on August 11, 2022, the date that such six month notice period ended.

In addition, in December 2022, $5.5 million in stock-based compensation awards, relating to 2022 performance, were granted to Mr.

Olesky and immediately recognized into expense upon grant.

Of these amounts, $3.1 million represents regular amortization that would have been recognized through August 11, 2022 if Mr.

Olesky had not announced his retirement and $14.1 million represents accelerated stock-based compensation (the “CEO Retirement Accelerated Stock-Based Compensation Expense”) that is excluded from our non-GAAP measures of Adjusted EBITDA and Adjusted Net Income as it is recorded as expense.

Total amortization amounts disclosed were based on a 100% multiplier achieved for the 2022 performance-based restricted stock units and were adjusted, up by $0.7 million, based on the final performance multiplier achieved for the year ended December 31, 2022.

See “—Non-GAAP Financial Measures” below for further details.

During the year ended December 31, 2022, we incurred a total of $15.0 million in CEO Retirement Accelerated Stock-Based Compensation Expense and related payroll taxes.

President Transition

On July 13, 2022, we announced that the board of directors appointed Mr.

Thomas Pluta as our next President effective as of January 1, 2023.

Pluta succeeded Mr.

Hult in this role, when, as previously announced and discussed above, Mr.

Hult assumed the position of CEO of the Company on January 1, 2023.

Pluta joined the Company as President-elect on October 3, 2022.

Upon announcement, Mr.

Pluta was a standing non-independent member of our board of directors and has remained on the board in his new role.

CFO Transition

On August 30, 2021, our Board of Directors appointed Sara Furber to serve as our new Chief Financial Officer (“CFO”), effective September 7, 2021.

She succeeded Robert Warshaw, our former CFO, who left the Company following a period of transition ending on January 4, 2022.

In connection with her employment offer, Ms.

Furber was granted RSUs and PRSUs with grant date fair values totaling $3.9 million, collectively referred to as the “CFO Special Equity Awards”.

See Note 13 – Stock-Based Compensation Plans to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional details of the CFO Special Equity Awards.

As of August 30, 2021, there was approximately $1.8 million in unamortized stock-based compensation expense associated with equity awards previously granted to Mr.

Warshaw, which was accelerated and amortized into expense over a revised estimated service period ending on January 4, 2022 (the “Former CFO Accelerated Stock-Based Compensation Expense”).

During the year ended December 31, 2021, we incurred a total of $1.3 million in GAAP stock-based compensation expense relating to the CFO Special Equity Awards and $1.7 million relating to the Former CFO Accelerated Stock-Based Compensation Expense.

The Former CFO Accelerated Stock-Based Compensation Expense is excluded from our non-GAAP measures of Adjusted EBITDA and Adjusted Net Income.

Since the onset of the COVID-19 pandemic, we have been focused on keeping our employees safe, helping our staff and clients stay connected and ensuring our platforms operate efficiently.

Throughout the pandemic, we implemented a series of measures to protect the health and safety of our employees.

During 2022, we, like many companies, began to transition our workforce back to the office.

Our office re-entry policy set out guidance to protect employee safety and implement, at a minimum, the local regulations including, where applicable, masking mandates, vaccination status for in-person work, quarantine time, testing requirements, appropriate distancing measures and capacity limitations.

Our Workplace Safety Committee is governed by the heads of Risk, Human Resources, Facilities, Operations, Technology, and Marketing and meets in frequencies determined by the necessity and severity of the current conditions.

We will continue to monitor the impact of COVID-19, including any related variants, and will adjust our plans accordingly.

In light of the market volatility and economic disruption that has arise n in the wake of the pandemic, we have worked closely with our clients to provide flexible, stable, resilient and secure access to our platforms across our multi-asset offerings so they can reliably manage their core cash and derivatives needs in the diverse geographic, product and customer sector markets we serve.

Our employees and clients together have adapted to working remotely or on a hybrid basis.

We are focused on minimizing any future disruptive impact of COVID-19 on our business.

Although we have implemented risk management and contingency plans and taken preventive measures and other precautions, our efforts to mitigate the effects of any disruptions may prove to be inadequate.

Further, as the COVID-19 situation is unprecedented and continuously evolving, COVID-19, including any related variants, may also affect our operating and financial results in a manner that is not presently known to us or in a manner that we currently do not consider to present significant risks to our operations.

As the COVID-19 pandemic continues to evolve, it may also have the effect of heightening many of the risks described in Part I, Item 1A.

– “Risk Factors” of our Annual Report on Form 10-K.

On August 31, 2023, we completed the acquisition of all of the outstanding equity interests of Tradeweb Australia Pty Ltd (formerly Yieldbroker Pty Limited).

The all-cash purchase price of A$123.6 million ($80.1 million U.S.

dollars as translated as of August 31, 2023) was net of cash acquired and prior to working capital and other closing adjustments.

Yieldbroker is a Tier 1 Australian Markets Licensee in Australia, regulated by ASIC, that maintains a branch in Singapore that is regulated by the MAS as a Regulated Market Operator.

Yieldbroker operates a leading Australian trading platform for Australian and New Zealand government bonds and interest rate derivatives covering the institutional and wholesale client sectors.

This acquisition combines Australia and New Zealand’s highly attractive, fast-growing markets with Tradeweb’s international reach and scale.

The Yieldbroker acquisition is not material to our consolidated financial statements and did not have a significant impact to our results of operations for the year ended December 31, 2023.

See Note 4 – Acquisitions to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional details .

On November 16, 2023, we entered into a definitive agreement to acquire r8fin in exchange for total consideration of $125 million, consisting of $90 million in cash and $35 million in shares of Class A common stock of the Corporation, subject to working capital and other adjustments.

r8fin provides a suite of algorithmic-based tools as well as a thin-client execution management system (EMS) trading application to facilitate futures and cash trades.

The solutions complement Tradeweb’s existing Dealerweb Active Streams, Dealerweb Central Limit Order Book (CLOB), Tradeweb Request-for-Quote (RFQ) and Tradeweb AiEX (Automated Intelligent Execution) offerings, creating a valuable and broad-based approach to trading U.S.

Treasuries and related futures trading.

The acquisition closed on January 19, 2024, following the satisfaction of closing conditions and regulatory reviews.

The r8fin acquisition is not expected to be material to our 2024 consolidated financial statements.

2023 LSEG Market Data Agreement

In October 2023, we signed an amended and restated two-year market data license agreement with an affiliate of LSEG (formerly referred to as Refinitiv), pursuant to which LSEG will continue to distribute certain of our data directly to LSEG customers through its flagship financial platforms, LSEG Workspace, Datascope, LSEG Pricing Service and Tick History.

The 2023 agreement, which was effective on November 1, 2023, replaced an existing agreement that was initiated in 2010 and most recently renewed in 2018, and provides us with increased revenue and flexibility in growing our market data offering.

We will seek to further monetize our data over time both through potential expansion of our existing market data license agreement with LSEG and through distributing additional datasets, derived data and analytics offerings through our own network or through other third-party networks.

Our current revenue guidance related to the 2023 LSEG market data agreement is forecasting approximately $80 million and $90 million for the years ended December 31, 2024 and 2025, respectively.

Economic Environment

1 unchanged sentence

Lower volatility may result in lower trading volume for our clients and may negatively impact our operating performance and financial condition.

Factors that may impact market activity in 2023 include, among other things, evolving monetary policies of central banks, economic, political and social conditions, and legislative, regulatory or government policy changes.

Factors that may impact market activity in 2024 include, among other things, evolving monetary policies of central banks, 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.

Because the majority of our financial assets are short-term in nature, they are not significantly affected by inflation.

However, the rate of inflation may affect our expenses, such as employee compensation and benefits and technology and communication expenses, which may not be readily recoverable in the prices of our services.

However, the rate of inflation may affect our expenses, such as employee compensation and benefits, technology and communication expenses and occupancy costs, which may 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 Annual Report on Form 10-K.

29 unchanged sentences

We therefore continue to make investments to strengthen our cybersecurity infrastructure, which may result in increased costs.

See Part I, Item 1C.

– “Cybersecurity – Governance” for further detail regarding our cybersecurity risk management, strategy and governance structure.

Foreign Currency Exchange Rate Environment

10 unchanged sentences

– “Quantitative and Qualitative Disclosures about Market Risk – Foreign Currency and Derivative Risk” elsewhere in this Annual Report on Form 10-K, for the change in revenue and operating income caused by fluctuations in foreign currency rates and realized and unrealized gains/losses from foreign currency during the years ended December 31, 2023, 2022 and 2021.

Recent Developments

On February 16, 2023, the Board of Directors (the “Board”) appointed Mr.

Troy Dixon as an independent director of the Board, effective as of March 1, 2023.

Dixon is the Founder and Chief Investment Officer of Hollis Park Partners LP, an alternative asset manager that specializes in structured products, a position he has held since 2013.

Dixon has nearly thirty years of industry experience, including leading residential mortgage-backed securities trading at UBS Inc.

from 2002 to 2006 and at Deutsche Bank from 2006 to 2013.

In connection with the Reorganization Transactions, we became the sole manager of TWM LLC.

5 unchanged sentences

On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (“IRA”) into law.

The IRA establishes a 15% corporate minimum tax effective for taxable years beginning after December 31, 2022, and imposes a 1% excise tax on the repurchase after December 31, 2022 of stock by publicly traded U.S.

The IRA establishes a 15% corporate alternative minimum tax (“CAMT”) effective for taxable years beginning after December 31, 2022, and imposes a 1% excise tax on the repurchase after December 31, 2022 of stock by publicly traded U.S.

corporations.

We are currently evaluating the impacts, if any, of the provisions of the IRA however, do not expect a material impact to our financial condition, results of operations and cash flows.

We do not currently anticipate the adoption of the IRA will have an impact to our non-GAAP adjusted effective tax rate used for purposes of calculating our non-GAAP measure of Adjusted Net Income.

The 1% excise tax did not have an impact to our financial condition, results of operations and cash flows as of and for the year ended December 31, 2023.

The Company will be subject to the 15% CAMT, which is expected to change the estimated period in which the tax receivable agreement liability payments will be made.

However, it is not expected to have a material impact on the Company’s effective tax rate.

The adoption of the IRA will also 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.

On October 8, 2021, the Organization for Economic Cooperation and Development announced an accord endorsing and providing an implementation plan focused on global profit allocation, and implementing a global minimum tax rate of at least 15% for large multinational corporations on a jurisdiction-by-jurisdiction basis, known as the “Two Pillar Plan.” On December 15, 2022, the European Council formally adopted a European Union directive on the implementation of the plan by January 1, 2024.

The Company may be subject to the provisions of the Two Pillar Plan, and related tax impacts per local country adoption, as it is a consolidating subsidiary of LSEG.

The Company does not expect to have material impact of the Two Pillar Plan, but will continue to monitor legislative development.

Components of our Results of Operations

19 unchanged sentences

Subscription fees are generally generated on a fixed price basis.

For purposes of our discussion of our results of operations, we include Refinitiv 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 (a Refinitiv data platform) 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 five years from the date of the initial referral.

For purposes of our discussion of our results of operations, we include LSEG market data fees in subscription fees.

We earn fixed license fees from our market data license agreement with LSEG.

We also earn a revenue share for certain data services which are provided to LSEG and then sold by LSEG to its customers.

Our revenue share revenues may fluctuate from period to period depending on the revenue achieved by LSEG during the applicable fee earning period.

Operating Expenses

7 unchanged sentences

General and Administrative

General and administrative expense consists of travel and entertainment, marketing, value-added taxes, state use taxes, foreign currency transaction gains and losses, gains and losses on foreign currency forward contracts entered into for foreign exchange risk management purposes, charitable contributions, other administrative expenses and credit loss expense.

General and administrative expense consists of travel and entertainment, marketing, value-added taxes, state use taxes, foreign currency transaction gains and losses, gains and losses on foreign exchange derivative contracts entered into for foreign exchange risk management purposes relating to operating activities, charitable contributions, other administrative expenses and credit 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.

Technology and Communications

Technology and communications expense consists of costs relating to software and hardware maintenance, our internal network connections, data center costs, clearance and other trading platform related transaction costs and data feeds provided by third-party service providers, including Refinitiv.

Factors that influence technology and communications expense include trading volumes and our investments in innovation, data strategy and cybersecurity.

1 unchanged sentence

Professional fees consist primarily of accounting, tax and legal fees and fees paid to technology and software consultants to maintain our trading platforms and infrastructure, as well as costs related to business acquisition transactions.

Occupancy expense consists of operating lease rent and related costs for office space and data centers leased in North America, Europe and Asia.

Occupancy expense consists of operating lease rent and related costs for office space and data centers leased in North America, Europe, Asia, Australia and the Middle East.

Tax Receivable Agreement Liability Adjustment

The tax receivable agreement liability adjustment reflects changes in the tax receivable agreement liability recorded in our consolidated statement of financial condition as a result of changes in the mix of earnings, tax legislation and tax rates in various jurisdictions which impacted our tax savings.

The tax receivable agreement liability adjustment reflects changes in the tax receivable agreement liability recorded in our consolidated statements of financial condition as a result of changes in the mix of earnings, tax legislation and tax rates in various jurisdictions which impacted our estimated future tax savings.

Net Interest Income (Expense)

Interest income consists of interest earned from our cash deposited with large commercial banks and money market funds.

Interest expense consists of commitment fees payable on, and, if applicable, interest payable on any borrowings outstanding under, the Revolving Credit Facility.

Income (Loss) from Investments

Income (loss) from investments consists of income and losses earned from investments.

Interest expense consists of commitment fees payable on, and, if applicable, interest payable on any borrowings outstanding under our credit facility.

Other Income (Loss), Net

Other income (loss), net consists of any income or loss earned from investments, any mark-to-market adjustments or impairments recorded on investments, unrealized and realized gain/loss on foreign exchange derivative contracts entered into for foreign exchange risk management purposes relating to investing activities and any other non-operating items.

We are subject to U.S.

24 unchanged sentences

Net interest income (expense) 65,350 11,907 53,443 448.8 %

Income (loss) from investments (1,000) — (1,000) N/M

Other income (loss), net (13,122) (1,000) (12,122) N/M

Income before taxes 547,980 437,133 110,847 25.4 %

17 unchanged sentences

Total revenue growth 12.6 %

(1) Subscription fees for the years ended December 31, 2022 and 2021 include $62.7 million and $61.2 million, respectively, of Refinitiv market data fees.

(1) Subscription fees for the years ended December 31, 2023 and 2022 include $64.3 million and $62.7 million, respectively, of LSEG market data fees (formerly referred to as Refinitiv market data fees).

(2) Constant currency revenue change, which is a non-GAAP financial measure, is defined as total revenue change excluding the effects of foreign currency fluctuations.

2 unchanged sentences

We believe that providing constant currency change provides a useful comparison of our total revenue performance and trends between periods.

Our diversified offering across products, client sectors and geographies supported sustained growth amidst a complex macroeconomic backdrop, including evolving central bank policy, sustained elevated volatility, economic concerns and a stronger U.S.

The primary driver of the $112.3 million increase in revenue is related to a $103.9 million increase in transaction fees and commissions to $950.3 million for the year ended December 31, 2022 from $846.4 million for the year ended December 31, 2021, primarily due to increased volumes and fees for rates derivatives products, municipals, U.S.

government bonds and U.S.

corporate bonds.

Our diversified offering across products, client sectors and geographies supported sustained growth amidst a complex macroeconomic backdrop, including historic interest rate moves, geopolitical uncertainty and sustained broader market rate volatility.

The primary driver of the $149.4 million increase in revenue was related to a $128.1 million increase in transaction fees and commissions to $1.1 billion for the year ended December 31, 2023 from $950.3 million for the year ended December 31, 2022, primarily due to higher revenues for rates derivatives products, U.S.

and European corporate bonds, U.S.

and European government bonds and certificates of deposit.

Our total revenue by asset class for the years ended December 31, 2023 and 2022, and the resulting dollar and percentage changes, were as follows:

15 unchanged sentences

Money Markets 45,830 17,180 32,306 17,652 13,524 (472) 41.9 % (2.7) %

Market Data — 85,913 — 82,142 — 3,771 — 4.6 %

Market Data 268 93,806 — 85,913 268 7,893 N/M 9.2 %

Other — 23,012 — 22,227 — 785 — 3.5 %

Total revenue $ 933,214 $ 405,005 $ 806,200 $ 382,581 $ 127,014 $ 22,424 15.8 % 5.9 %

N/M = not meaningful

The key drivers of the change in total revenue by asset class are summarized as follows:

Revenues from our rates asset class increased by $42.5 million or 7.6% to $605.4 million for the year ended December 31, 2022 compared to $562.9 million for the year ended December 31, 2021 primarily due to variable transaction fees and commissions on higher trading volumes for rates derivatives products and U.S.

government bonds, partially offset by lower trading volumes for mortgages as historically high mortgage rates and inflation during 2022 impacted issuance and trading activity in mortgage products.

Revenues from our credit asset class increased by $39.4 million or 13.5% to $331.8 million for the year ended December 31, 2022 compared to $292.4 million for the year ended December 31, 2021 primarily due to variable transaction fees and commissions on higher trading volumes for municipals, U.S.

corporate bonds and credit derivatives products.

Revenues from our equities asset class increased by $22.4 million or 31.5% to $93.5 million for the year ended December 31, 2022 compared to $71.1 million for the year ended December 31, 2021 primarily due to variable transaction fees and commissions on higher trading volumes for U.S.

and European ETFs.

Revenues from our rates asset class increased by $90.0 million or 14.9% to $695.4 million for the year ended December 31, 2023 compared to $605.4 million for the year ended December 31, 2022 primarily due to higher variable transaction fees and commissions on higher trading volumes for rates derivatives products and U.S.

and European government bonds and an increase in fixed subscription fees.

Revenues from our credit asset class increased by $35.6 million or 10.7% to $367.4 million for the year ended December 31, 2023 compared to $331.8 million for the year ended December 31, 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.

Revenues from our equities asset class increased by $1.8 million or 1.9% to $95.3 million for the year ended December 31, 2023 compared to $93.5 million for the year ended December 31, 2022 primarily due to higher variable transaction fees and commissions on higher trading volumes for equity derivative products, partially offset by lower variable transaction fees and commissions on lower trading volumes for European ETFs.

Money Markets.

Revenues from our money markets asset class increased by $5.7 million or 12.8% to $50.0 million for the year ended December 31, 2022 compared to $44.3 million for the year ended December 31, 2021 primarily due to variable transaction fees and commissions on higher trading volumes for certificates of deposit and repurchase agreements .

Revenues from our money markets asset class increased by $13.1 million or 26.1% to $63.0 million for the year ended December 31, 2023 compared to $50.0 million for the year ended December 31, 2022 primarily due to higher variable transaction fees and commissions on higher trading volumes for certificates of deposit and repurchase agreements.

Revenues from our market data asset class increased by $8.2 million or 9.5% to $94.1 million for the year ended December 31, 2023 compared to $85.9 million for the year ended December 31, 2022.

The increase was derived primarily from increased third party market data fees and Refinitiv market data fees.

Revenues from our other asset class decreased by $1.4 million or 5.9%, to $22.2 million for the year ended December 31, 2022 compared to $23.6 million for the year ended December 31, 2021 primarily due to decreased fees from retail client fee minimums.

The increase was derived primarily from increased proprietary third party market data fees, increased trade reporting services (APA) revenue and increased LSEG market data fees driven primarily from the amended and restated market data license agreement effective as of November 1, 2023 discussed above in “—Trends and Other Factors Impacting Our Performance—2023 LSEG Market Data Agreement.”

Revenues from our other asset class remained relatively flat at $23.0 million for the year ended December 31, 2023 compared to $22.2 million for the year ended December 31, 2022, with a modest increase of $0.8 million or 3.5%.

We generate revenue from a diverse portfolio of client sectors.

9 unchanged sentences

Revenues from our institutional client sector increased by $77.8 million or 10.8% to $797.0 million for the year ended December 31, 2023 from $719.2 million for the year ended December 31, 2022.

The increase was derived primarily from increased volumes for rates derivatives products, U.S.

ETFs and credit derivatives products, partially offset by lower trading volumes for mortgages as historically high mortgage rates and inflation during 2022 impacted issuance and trading activity in mortgage products.

The increase was derived primarily from higher revenues for rates derivatives products, U.S.

corporate bonds and U.S.

and European government bonds, partially offset by lower revenues for credit derivatives products.

Revenues from our wholesale client sector increased by $39.4 million or 14.4% to $312.6 million for the year ended December 31, 2023 from $273.2 million for the year ended December 31, 2022.

The increase was derived primarily from increased volumes for U.S.

The increase was derived primarily from higher revenues for U.S.

and European corporate bonds and U.S.

government bonds.

Revenues from our retail client sector increased by $24.1 million or 21.8% to $134.5 million for the year ended December 31, 2023 from $110.5 million for the year ended December 31, 2022.

The increase was derived primarily from increased volumes for municipals, U.S.

corporate bonds and U.S.

government bonds.

The increase was derived primarily from higher revenues for certificates of deposit, U.S.

government bonds and U.S.

corporate bonds.

Revenues from our market data client sector increased by $8.2 million or 9.5% to $94.1 million for the year ended December 31, 2023 from $85.9 million for the year ended December 31, 2022.

The increase was derived primarily from increased third party market data fees and Refinitiv market data fees.

Our revenues and client base are also diversified by geography.

6 unchanged sentences

Revenues from U.S.

clients increased by $87.4 million or 13.0% to $760.6 million for the year ended December 31, 2022 from $673.2 million for the year ended December 31, 2021 primarily due to higher revenues for municipals, U.S.

ETFs and U.S.

corporate bonds.

clients increased by $89.7 million or 11.8% to $850.3 million for the year ended December 31, 2023 from $760.6 million for the year ended December 31, 2022 primarily due to higher revenues for U.S.

corporate bonds, U.S.

government bonds, rates derivatives products and certificates of deposit.

International.

Revenues from International clients increased by $24.9 million or 6.2% to $428.1 million for the year ended December 31, 2022 from $403.2 million for the year ended December 31, 2021.

Fluctuations in foreign currency rates decreased our total International revenues for the year ended December 31, 2022 by $37.4 million when comparing to International revenues for the year ended December 31, 2022 determined using constant currency foreign currency exchange rates.

Excluding this foreign currency impact, international revenues increased by $62.3 million or 15.5% primarily due to higher revenues for rates derivatives products, European government bonds, credit derivatives products and European ETFs.

Revenues from International clients increased by $59.7 million or 14.0% to $487.9 million for the year ended December 31, 2023 from $428.1 million for the year ended December 31, 2022 primarily due to higher revenues for rates derivatives products, European corporate bonds, European government bonds and higher market data revenue, offset by lower revenues for credit derivatives products and European ETFs.

Operating Expenses

11 unchanged sentences

Expenses related to employee compensation and benefits increased by $27.9 million or 6.4% to $460.3 million for the year ended December 31, 2023 from $432.4 million for the year ended December 31, 2022.

The increase was primarily due to an increase in salaries and benefits as a result of increased employee headcount.

During the year ended December 31, 2022, we also incurred a total of $15.0 million in stock-based compensation expense and related payroll taxes relating to the CEO Retirement Accelerated Stock-Based Compensation Expense.

See “— Trends and Other Factors Impacting Our Performance — CEO Transition” for further details.

During the year ended December 31, 2021 we incurred a total of $1.7 million of non-cash accelerated stock-based compensation expense and related payroll taxes associated with our former CFO.

The increase was primarily due to an increase in headcount and related salaries and benefits as well as increases in incentive compensation expense and commissions tied to our operating performance, partially offset by $15.0 million in non-cash accelerated stock-based compensation expense and related payroll taxes relating to the retirement of our former CEO incurred during the year ended December 31, 2022 that did not recur during 2023.

Depreciation and Amortization.

Expenses related to depreciation and amortization increased by $6.5 million or 3.6% to $185.4 million for the year ended December 31, 2023 from $178.9 million for the year ended December 31, 2022.

The increase in depreciation and amortization expense was primarily the result of assets acquired in connection with the NFI Acquisition.

Also contributing to the increase were longer estimated useful lives of computer software and the adjusted fair value of the assets that were established in connection with pushdown accounting on October 1, 2018 (see Note 2 – Significant Accounting Policies — Pushdown Accounting, to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for details).

Assets which may have been fully depreciated or amortized prior to the application of pushdown accounting are still being depreciated or amortized in these periods.

The increase was primarily due to increases in amortization of software development costs and hardware driven by increases in investment in our infrastructure and expense relating to the assets acquired in connection with the August 31, 2023 Yieldbroker acquisition.

Technology and Communications.

Expenses related to technology and communications increased by $11.6 million or 17.7% to $77.5 million for the year ended December 31, 2023 from $65.9 million for the year ended December 31, 2022.

The increase was primarily due to increased investment in our data strategy and infrastructure and increased data and clearance fees driven primarily by higher trading volumes period over period.

The increase was primarily due to investment in our data strategy and infrastructure and increased data and clearance fees driven primarily by higher trading volumes period-over-period.

General and Administrative.

Expenses related to general and administrative costs increased by $4.9 million or 10.6% to $51.5 million for the year ended December 31, 2023 from $46.6 million for the year ended December 31, 2022.

The increase was primarily due to higher travel and entertainment expenses, as the COVID-19 pandemic contributed to a reduction in expenses during 2021.

Also contributing to the increase were realized and unrealized foreign currency gains, which decreased by $2.4 million to $2.6 million for the year ended December 31, 2022 from $5.0 million for the year ended December 31, 2021.

The increase was primarily due to an increase in realized and unrealized foreign currency losses, which increased by $3.4 million to $0.8 million in losses for the year ended December 31, 2023 compared to $2.6 million in gains for the year ended December 31, 2022.

The change was primarily driven by the change in fair value of our foreign currency forward contracts used in connection with our foreign currency risk management program, partially offset by a decrease in foreign currency re-measurement losses on transactions in nonfunctional currencies.

1 unchanged sentence

Expenses related to professional fees increased by $4.6 million or 12.2% to $42.4 million for the year ended December 31, 2023 from $37.8 million for the year ended December 31, 2022.

The increase was primarily the result of increased legal fees during 2022, partially offset by acquisition transaction costs related to the NFI Acquisition incurred during the year ended December 31, 2021.

Expenses related to occupancy costs remained relatively flat at $14.7 million for the year ended December 31, 2022 as compared to $14.5 million for the year ended December 31, 2021.

The increase was primarily due to increased legal and other costs related to acquisitions.

Expenses related to occupancy costs increased by $1.2 million or 8.2% to $15.9 million for the year ended December 31, 2023 as compared to $14.7 million for the year ended December 31, 2022.

The increase was primarily due to higher data center rent expense primarily driven by the completion of the NFI Acquisition technology integration during the three months ended March 31, 2023 and the relocation of data centers to locations providing enhanced infrastructure and improved performance.

Tax Receivable Agreement Liability Adjustment

The tax receivable agreement liability adjustment increased by $0.9 million to $13.7 million for the year ended December 31, 2022 from $12.7 million for the year ended December 31, 2021, due to changes in the tax receivable agreement liability recorded in our consolidated statement of financial condition as a result of changes in the mix of earnings, tax legislation and tax rates in various jurisdictions which impacted our tax savings.

The tax receivable agreement liability adjustment decreased by $23.2 million or 169.7% to $9.5 million of expense for the year ended December 31, 2023 from $13.7 million of income for the year ended December 31, 2022, due to changes in the tax receivable agreement liability recorded in our consolidated statements of financial condition as a result of changes in the mix of earnings, tax legislation and tax rates in various jurisdictions, which impacted our estimated future tax savings.

Net Interest Income (Expense)

Net interest income increased by $13.5 million to $11.9 million of net interest income for the year ended December 31, 2022 from $1.6 million of net interest expense for the year ended December 31, 2021, 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.

Income (Loss) From Investments

Our net loss from investments increased to $1.0 million for the year ended December 31, 2022 due to a write-off of an investment that was determined to be uncollectible.

Income tax expense decreased by $19.4 million to $77.5 million for the year ended December 31, 2022 from $96.9 million for the year ended December 31, 2021.

Net interest income increased by $53.4 million or 448.8% to $65.4 million of net interest income for the year ended December 31, 2023 from $11.9 million of net interest expense for the year ended December 31, 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 Income (Loss), Net

Other loss increased by $12.1 million to $13.1 million loss for the year ended December 31, 2023 from $1.0 million of loss for the year ended December 31, 2022.

During the year ended December 31, 2023, we recognized a loss of $11.1 million due to the impairment of a minority equity investment and a $1.3 million loss in connection with unwinding the out-of-the-money foreign currency call option entered into in order to partially mitigate the foreign currency exposure on the payment of the purchase price for the Yieldbroker Acquisition.

See Note 4 – Acquisitions to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.

During the year ended December 31, 2023, we also recognized a $0.7 million loss due to a net reduction in the tax indemnification receivables from Refinitiv relating to the settlement of the tax matter for less than the previously estimated amount.

See Note 9 – Income Taxes to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.

During the year ended December 31, 2022, we recognized a $1.0 million loss due to the write-off of an investment that was determined to be uncollectible.

Income tax expense increased by $51.0 million or 65.7% to $128.5 million for the year ended December 31, 2023 from $77.5 million for the year ended December 31, 2022.

The provision for income taxes includes U.S.

1 unchanged sentence

The effective tax rate for the year ended December 31, 2023 was approximately 23.4%, compared with 17.7% for the year ended December 31, 2022.

The effective tax rate for the years ended December 31, 2022 and 2021 differed from the U.S.

federal statutory rate of 21.0% primarily due to the state and local taxes including the tax impact of state apportionment rates changes on total tax expense as a result of the remeasurement of the Company’s net tax deferred asset, the effect of non-controlling interests and the tax impact of the exercise of equity compensation.

The effective tax rate for the year ended December 31, 2023 differed from the U.S.

federal statutory rate of 21.0% primarily due to state and local taxes net of the benefit related to the effect of non-controlling interest.

The effective tax rate for the year ended December 31, 2022 differed from the U.S.

federal statutory rate of 21.0% primarily due to state and local taxes including the tax impact of state apportionment rates changes on total tax expense as a result of the remeasurement of the Company’s net tax deferred asset, the effect of non-controlling interests and the tax impact of the exercise of equity compensation.

Effects of Inflation

15 unchanged sentences

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.

As of December 31, 2022 and 2021, we had cash and cash equivalents of approximately $1.3 billion and $972.0 million, respectively.

All cash and cash equivalents were held in accounts with financial institutions or money market funds such that the funds are immediately available or in fixed term deposits with a maximum maturity of three months.

As of December 31, 2023 and 2022, we had cash and cash equivalents of approximately $1.7 billion and $1.3 billion, respectively.

All cash and cash equivalents were held in accounts with financial institutions or money market funds such that the funds are immediately available or in fixed term deposits or investments with a maximum maturity of three months.

See Part II, Item 7A.

– “Quantitative and Qualitative Disclosures about Market Risk – Credit Risk” elsewhere in this Annual Report on Form 10-K.

Factors Influencing Our Liquidity and Capital Resources

15 unchanged sentences

This dividend will be payable on March 15, 2024 to stockholders of record as of March 1, 2024.

The February 2023 dividend declaration of $0.09 represents a 12.5% per share increase from our historical quarterly dividend of $0.08 per share.

The February 2024 dividend declaration of $0.10 represents a 11.1% per share increase from our historical quarterly dividend of $0.09.

During 2023, Tradeweb Markets Inc.

7 unchanged sentences

Share Repurchase Program

On February 4, 2021, we announced that our board of directors authorized a share repurchase program (the “2021 Share Repurchase Program”), primarily to offset annual dilution from stock-based compensation plans.

The 2021 Share Repurchase Program authorized the purchase of up to $150.0 million of our Class A common stock at the Company’s discretion through the end of fiscal year 2023.

The 2021 Share Repurchase Program was effected through regular open-market purchases (which included repurchase plans designed to comply with Rule 10b5-1).

The amounts and timing of the repurchases were subject to general market conditions and the prevailing price and trading volumes of our Class A common stock.

The 2021 Share Repurchase Program did not require the Company to acquire a specific number of shares and was able to be suspended, amended or discontinued at any time.

During the year ended December 31, 2022, the Company acquired a total of 959,869 shares of Class A common stock, at an average price of $77.43, for purchases totaling $74.3 million pursuant to the 2021 Share Repurchase Program.

As of December 31, 2022, no shares remained available for repurchase pursuant to the 2021 Share Repurchase Program.

On December 5, 2022, we announced that our board of directors authorized a new share repurchase program (the “2022 Share Repurchase Program”), to continue to offset annual dilution from stock-based compensation plans, as well as to opportunistically repurchase our stock.

In February 2021, the board of directors authorized $150.0 million of total repurchases of the Company’s Class A common stock (the “2021 Share Repurchase Program”), which was completed in October 2022.

On December 5, 2022, the Company announced that the board of directors had authorized a new share repurchase program (the “2022 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 our Class A common stock.

The 2022 Share Repurchase Program authorizes the purchase of up to $300.0 million of our Class A common stock at the Company’s discretion and has no termination date.

6 unchanged sentences

In addition to the share repurchase programs discussed above, we may also withhold shares to cover the payroll tax withholding obligations upon the exercise of stock options and vesting of PRSUs and RSUs.

During the years ended December 31, 2022 and 2021, the Company withheld 1,074,467 and 983,072 shares, respectively, of common stock from employee stock option, PRSU and RSU awards, at an average price per share of $94.64 and $72.25, respectively, and an aggregate value of $101.7 million and $71.0 million, respectively, based on the price of the Class A common stock on the date the relevant withholding occurred.

During the year ended December 31, 2023, the Company withheld 715,101 shares of common stock from employee stock option, PRSU and RSU awards, at an average price per share of $72.02 and an aggregate value of $51.5 million based on the price of the Class A common stock on the date the relevant withholding occurred.

Tax Receivable Agreement

9 unchanged sentences

In determining the estimated timing of payments, the current year’s taxable income is used to extrapolate an estimate of future taxable income.

The Company is subject to CAMT, which is expected to change the estimated period in which the payments will be made, as reflected in the payment schedule below.

As of December 31, 2023, we had the following obligations expected to be paid pursuant to the Tax Receivable Agreement:

6 unchanged sentences

As of December 31, 2023 and 2022, we had no outstanding indebtedness.

On April 8, 2019, TWM LLC entered into the Revolving Credit Facility with a syndicate of banks.

The Revolving Credit Facility was subsequently amended on November 7, 2019.

The Revolving Credit Facility provides 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.

On November 21, 2023, TWM LLC terminated the revolving credit facility entered into in April 2019 and replaced it with a new 2023 Revolving Credit Facility entered into with a syndicate of banks.

The 2023 Revolving Credit Facility provides borrowing capacity to be used to fund ongoing working capital needs, letters of credit and for general corporate purposes, including potential future acquisitions and expansions.

The 2023 Revolving Credit Facility permits borrowings of up to $500.0 million by TWM LLC.

Subject to the satisfaction of certain conditions, we will be able to increase the Revolving Credit Facility by $250.0 million with the consent of lenders participating in the increase.

The Revolving Credit Facility provides for the issuance of up to $5.0 million of letters of credit as well as borrowings on same-day notice, referred to as swingline loans, in an amount of up to $30.0 million.

The Revolving Credit Facility will mature on April 8, 2024.

As of December 31, 2022, there were $0.5 million in letters of credit issued under the Revolving Credit Facility and no borrowings outstanding.

Subject to the satisfaction of certain conditions, we will be able to increase the 2023 Revolving Credit Facility by $250.0 million with the consent of the lenders participating in the increase.

Borrowings under the 2023 Revolving Credit Facility may be, at the option of the Company, in US Dollars, Euros or Sterling.

The 2023 Revolving Credit Facility also provides for the issuance of up to $5.0 million of letters of credit as well as borrowings on same-day notice, referred to as swingline loans, in an amount of up to $50.0 million.

The 2023 Revolving Credit Facility will mature on November 21, 2028.

As of December 31, 2023, there were $0.5 million in letters of credit issued under the 2023 Revolving Credit Facility, respectively and no borrowings outstanding.

As of December 31, 2023, we had availability of $499.5 million.

Under the terms of the credit agreement that governs the Revolving Credit Facility, borrowings under the Revolving Credit Facility bear interest at a rate equal to, at our option, either (a) a base rate equal to the greatest of (i) the administrative agent’s prime rate, (ii) the federal funds effective rate plus ½ of 1.0% and (iii) one month LIBOR plus 1.0%, in each case plus 0.75%, or (b) LIBOR plus 1.75%, subject to a 0.00% floor.

The credit agreement also requires that we pay a commitment fee of 0.25% for available but unborrowed amounts.

We are also required to pay customary letter of credit fees and agency fees.

We have the option to voluntarily repay outstanding loans at any time without premium or penalty other than customary “breakage” costs with respect to LIBOR loans.

Borrowings under the 2023 Revolving Credit Facility bear interest at a rate equal to, at the Company’s option, either (a) a base rate equal to the greatest of (i) the administrative agent’s prime rate, (ii) the federal funds effective rate plus ½ of 1.00% and (iii) one month Term SOFR plus 1.00% plus a credit adjustment spread of 0.10%, in each case plus a margin based on the Company’s consolidated net leverage ratio ranging from 0.25% to 0.75%, or (b) a rate equal to (i) in the case of borrowings in US Dollars, Term SOFR plus a credit adjustment spread of 0.10%, subject to a 0.00% floor, (ii) in the case of borrowings in Sterling, SONIA subject to a 0.00% floor, and (iii) in the case of borrowings in Euros, EURIBOR, subject to a 0.00% floor, in each case plus a margin based on the Company’s consolidated net leverage ratio ranging from 1.25% to 1.75%.

The agreement also includes a commitment fee of 0.25% for available but unborrowed amounts We are also required to pay customary letter of credit fees and agency fees.

We have the option to voluntarily repay outstanding loans at any time without premium or penalty other than customary “breakage” costs with respect to Term SOFR, SONIA and EURIBOR loans.

There will be no scheduled amortization under the 2023 Revolving Credit Facility.

The principal amount outstanding will be due and payable in full at maturity.

Obligations under the Revolving Credit Facility are guaranteed by our existing and future direct and indirect material wholly-owned domestic subsidiaries, subject to certain exceptions.

The Revolving Credit Facility is secured by a first-priority security interest in substantially all of the assets of TWM LLC and the guarantors under the facility, subject to certain exceptions.

The credit agreement that governs the Revolving Credit Facility contains a number of covenants that, among other things and subject to certain exceptions, restrict the ability of TWM LLC and the ability of its restricted subsidiaries to:

• incur additional indebtedness and guarantee indebtedness;

• create or incur liens;

• pay dividends and distributions or repurchase capital stock;

• make investments, loans and advances;

• enter into certain transactions with affiliates.

The Revolving Credit Facility contains a financial covenant requiring compliance with a (i) maximum total net leverage ratio tested on the last day of each fiscal quarter not to exceed 3.5 to 1.0 (increasing to 4.0 to 1.0 for the four-quarter period following a material acquisition and the fiscal quarter in which such material acquisition is consummated) and (ii) minimum cash interest coverage ratio tested on the last day of each fiscal quarter not less than 3.0 to 1.0.

The 2023 Revolving Credit Facility is unsecured and as of December 31, 2023, obligations under the 2023 Revolving Credit Facility are not guaranteed by any of the Company’s subsidiaries.

The credit agreement that governs the 2023 Revolving Credit Facility contains a number of covenants that, among other things and subject to certain exceptions, restrict the ability of (i) TWM LLC to merge or consolidate with other entities, (ii) the subsidiaries of TWM LLC to incur or guarantee indebtedness and (iii) TWM LLC and its subsidiaries to create or incur liens.

The 2023 Revolving Credit Facility contains a financial covenant requiring compliance with a (i) maximum total net leverage ratio tested as of the last day of each fiscal quarter not to exceed 3.5 to 1.0 (increasing to 4.0 to 1.0 for the four-quarter period following a material acquisition and the fiscal quarter in which such material acquisition is consummated) and (ii) minimum cash interest coverage ratio tested as of the last day of each fiscal quarter not less than 3.0 to 1.0.

The credit agreement that governs the 2023 Revolving Credit Facility also contains certain affirmative covenants and events of default customary for facilities of this type, including relating to a change of control.

If an event of default occurs, the lenders under the Revolving Credit Facility will be entitled to take various actions, including the acceleration of amounts due under the Revolving Credit Facility and all actions permitted to be taken by secured creditors under applicable law.

If an event of default occurs, the lenders under the 2023 Revolving Credit Facility will be entitled to take various actions, including the acceleration of amounts due under the 2023 Revolving Credit Facility.

As of December 31, 2023, we were in compliance with all the covenants set forth in the 2023 Revolving Credit Facility.

2 unchanged sentences

Our operating lease obligations are primarily related to rental payments under lease agreements for office space in the United States and the United Kingdom through December 2027.

In March 2022, the lease for our New York headquarters was extended for an amended term through December 2023, as we continue to evaluate our office space needs for the future.

In December 2023, the lease for our New York headquarters was extended for an amended term through December 2024, as we continue to evaluate our office space needs for the future.

As of December 31, 2023, our operating lease liabilities totaled $27.5 million, with payments pursuant to these obligations due within the next 12 months and thereafter totaling $12.3 million and $17.6 million, respectively.

1 unchanged sentence

Our business also requires continued investment in our technology for product innovation, proprietary technology architecture, operational reliability and cybersecurity.

We expect total capital expenditures and software development costs for fiscal 2023 to be between $56 million and $62 million, compared to expenditures of $60.1 million in fiscal year 2022 and $51.3 million in fiscal year 2021, with the midpoint of our 2023 capital expenditure guidance at slightly lower than fiscal year 2022 due to the acceleration of certain infrastructure enhancements during 2022.

We expect total cash paid for non-acquisition related capital expenditures and software development costs for fiscal 2024 to be between $75 million and $83 million, compared to expenditures of $61.8 million and $60.1 million in fiscal years 2023 and 2022, respectively, with the midpoint of our 2024 capital expenditure guidance up 28% versus fiscal year 2023 primarily due to anticipated capitalized integration spend associated with the acquisitions of Yieldbroker and r8fin.

Excluding the 2024 integration and other one-time spend, the mid-point growth is projected to be approximately 15% higher year over year.

Other Cash and Liquidity Requirements

15 unchanged sentences

The FICC operates a continuous net settlement system, whereby as trades are submitted and compared, the FICC becomes the counterparty.

Historically we have used ICBC, a wholly-owned subsidiary of the Industrial and Commercial Bank of China Limited to clear U.S.

Treasury trades executed by non-FICC members on our wholesale trading platform.

Under that arrangement, ICBC submitted our trades from non-FICC members to the FICC under the ICBC netting account with the FICC.

Following the November 2023 ransomware attack on some ICBC operating systems, including those used to clear U.S.

Treasury and repurchase agreement financings, we have and may continue to self-clear these U.S.

Treasury trades.

As a result, this increased the number of trades that settle over the fed wire, instead of FICC clearing, and accordingly we have experienced and may continue to experience, an increase in the number of U.S.

Treasury failed settlement transactions.

As of December 31, 2023, we recorded a $381.2 million receivable and a $351.9 million payable from/to brokers and dealers and clearing organizations related to failed settlement transactions, entered into a repurchase transaction in the amount of $21.6 million and we self-funded the remaining $7.7 million difference between the fail to deliver and fail to receive.

All of the above failed settlement transactions and the securities sold under agreements to repurchase outstanding as of December 31, 2023 were fully settled during January 2024.

See below for further details regarding the changes to working capital as a result of these failed settlement transactions.

Working Capital

Working capital is defined as current assets minus current liabilities.

Current assets consist of cash and cash equivalents, restricted cash, receivable from brokers and dealers and clearing organizations, deposits with clearing organizations, accounts receivable and receivable from affiliates.

Current liabilities consist of payable to brokers and dealers and clearing organizations, accrued compensation, deferred revenue, payable to affiliates, accounts payable, accrued expenses and other liabilities, lease liabilities and tax receivable agreement liability.

Current liabilities consist of securities sold under agreements to repurchase, payable to brokers and dealers and clearing organizations, accrued compensation, deferred revenue, payable and due to affiliates, accounts payable, accrued expenses and other liabilities, lease liabilities and 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.

6 unchanged sentences

Accounts receivable 168,407 142,676

Receivable from affiliates 6 3,313

Receivable and due from affiliates 192 2,728

Total current assets 2,294,051 1,439,171

Securities sold under agreements to repurchase 21,612 —

Payable to brokers and dealers and clearing organizations 351,864 11,264

1 unchanged sentence

Deferred revenue 25,746 22,827

Payable to affiliates 1,414 4,860

Payable and due to affiliates 1,327 7,232

Current portion of:

5 unchanged sentences

Current Assets

Current assets increased to $1.4 billion as of December 31, 2022 from $1.1 billion as of December 31, 2021 primarily due to an increase in cash and cash equivalents (see “— Cash Flows” below) .

Current assets increased to $2.3 billion as of December 31, 2023 from $1.4 billion as of December 31, 2022 primarily due to an increase in cash and cash equivalents (see “—Cash Flows” below) and receivables from brokers and dealers and clearing organizations resulting from a higher value of fails to deliver as a result of increased unsettled wholesale platform transactions, all of which settled in January 2024.

Current Liabilities

Current liabilities increased to $255.4 million as of December 31, 2022 from $239.4 million as of December 31, 2021 primarily due an increase in accounts payable, accrued expenses and other liabilities, primarily as a result of an increase in current income tax expense.

Current liabilities increased to $659.9 million as of December 31, 2023 from $255.4 million as of December 31, 2022 primarily due to an increase in the payable to brokers and dealers and clearing organizations and securities sold under agreements to repurchase resulting from a higher value of fails to deliver as a result of increased unsettled wholesale platform transactions, all of which settled in January 2024 and an increase in the current portion of the tax receivable agreement liability as a result of an increase in our taxable income.

See “— Other Cash and Liquidity Requirements ” above for a discussion on how capital requirements can impact our working capital.

10 unchanged sentences

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.

Net cash provided by operating activities for the year ended December 31, 2022 was $632.8 million, an increase of $54.8 million as compared to the year ended December 31, 2021, primarily driven by an increase in net income during 2022, partially offset by changes in working capital.

Net cash provided by operating activities for the year ended December 31, 2023 was $746.1 million, an increase of $113.3 million as compared to the year ended December 31, 2022, primarily driven by an increase in net income during 2023, including the adjustment to net income to add back non-cash related items such as deferred tax expense and the tax receivable liability adjustment and including an increase in net interest income, partially offset by changes in working capital.

Investing Activities

Investing activities consist primarily of software development costs, investments in technology hardware, purchases of equipment and other tangible assets, business acquisitions and investments.

Net cash used in investing activities was $132.8 million for the year ended December 31, 2023, which consisted of $69.7 million of total net cash paid for the Yieldbroker acquisition (net of cash acquired), $43.2 million of capitalized software development costs, $18.5 million of purchases of furniture, equipment, purchased software and leasehold 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 $60.1 million for the year ended December 31, 2022, which consisted of $36.9 million of capitalized software development costs and $23.2 million of purchases of furniture, equipment, purchased software and leasehold improvements.

Net cash used in investing activities was $259.1 million for the year ended December 31, 2021, which consisted of $207.8 million in total net cash paid related to the NFI Acquisition (net of cash acquired), $34.5 million of capitalized software development costs and $16.9 million of purchases of furniture, equipment, purchased software and leasehold improvements.

Financing Activities

Net cash used in financing activities for the year ended December 31, 2023 was $168.2 million, and was primarily driven by $35.2 million in share repurchases pursuant to our share repurchase programs, $36.1 million in payroll tax payments for options, PRSUs and RSUs, net of proceeds from stock-based compensation option exercises and $75.9 million in cash dividends to our Class A and Class B common stockholders.

Net cash used in financing activities for the year ended December 31, 2021 was $136.1 million, and was primarily driven by $75.7 million in share repurchases pursuant to our 2021 Share Repurchase Program and $64.6 million in cash dividends to our Class A and Class B common stockholders, partially offset by $22.1 million in net proceeds from stock-based compensation option exercises, net of related stock-based compensation payroll tax payments for options, PRSUs and RSUs.

Net cash used in financing activities for the year ended December 31, 2022 was $276.7 million, and was primarily driven by $99.3 million in share repurchases pursuant to our share repurchase programs, $91.5 million in payroll tax payments for options, PRSUs and RSUs, net of proceeds from stock-based compensation option exercises and $66.0 million in cash dividends to our Class A and Class B common stockholders.

Non-GAAP Financial Measures

17 unchanged sentences

Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT and Adjusted EBIT margin

Adjusted EBITDA is defined as net income before net interest 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 currency forward contracts, gains and losses from the revaluation of foreign denominated cash and income and loss from investments.

Adjusted EBIT 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 income and loss from investments.

Net income margin is defined as net income, divided by revenue for the applicable period.

3 unchanged sentences

We believe it is useful to exclude 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 — CEO Transition,” and related payroll taxes are also excluded, as we do not consider these expenses indicative of our core ongoing operating performance.

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 and related payroll taxes are also excluded, as we do not consider these expenses indicative of our core ongoing operating performance.

The accelerated stock-based compensation expense associated with our former CFO and retired CEO was fully amortized on January 4, 2022 and December 31, 2022, respectively.

In addition, we exclude the tax receivable agreement liability adjustments discussed below under “— Critical Accounting Policies and Estimates — Tax Receivable Agreement.” We believe it is useful to exclude the tax receivable agreement liability adjustment because the recognition of income during a period due to changes in the tax receivable agreement liability recorded in our consolidated statement of financial condition as a result of changes in the mix of earnings, tax legislation and tax rates in various jurisdictions, or other factors that may impact our tax savings, may not directly correlate to the underlying performance of our business and will vary across periods.

We also believe it is useful to exclude merger and acquisition transaction and integration costs as the incremental direct costs related to acquisitions and the related integration are not indicative of our core ongoing operating performance.

In addition, we exclude the tax receivable agreement liability adjustments discussed below under “— Critical Accounting Policies and Estimates — Tax Receivable Agreement.” We believe it is useful to exclude the tax receivable agreement liability adjustment because the recognition of income during a period due to changes in the tax receivable agreement liability recorded in our consolidated statements of financial condition as a result of changes in the mix of earnings, tax legislation and tax rates in various jurisdictions, or other factors that may impact our tax savings, may not directly correlate to the underlying performance of our business and will vary across periods.

We also believe it is useful to exclude merger and acquisition transaction and integration costs as the incremental direct costs related to completed and potential acquisitions and related integrations are not indicative of our core ongoing operating performance.

With respect to Adjusted EBIT and Adjusted EBIT margin, we believe it is useful to exclude the depreciation and amortization of tangible and intangible assets resulting from acquisitions and the application of pushdown accounting to the Refinitiv Transaction in order to facilitate a period-over-period comparison of our financial performance.

3 unchanged sentences

Adjusted Net Income is defined as net income 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 integration costs, 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 income and loss from investments.

Adjusted Net Income also gives effect to certain tax related adjustments to reflect an assumed effective tax rate.

1 unchanged sentence

We use Adjusted Net Income and Adjusted Diluted EPS as supplemental metrics to evaluate our business performance in a way that also considers our ability to generate profit without the impact of certain items.

We 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.

We 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 retired CEO 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.

25 unchanged sentences

9,517 (13,653) (12,745)

(Income) loss from investments 1,000 — —

Other (income) loss, net 13,122 1,000 —

Adjusted EBITDA

14 unchanged sentences

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.

(2) Represents non-cash stock-based compensation expense associated with the Special Option Award and post-IPO options awarded in 2019 and payroll taxes associated with the exercise of such options totaling $5.4 million, $14.8 million and $13.0 million during the years ended December 31, 2022, 2021 and 2020, respectively.

(2) Represents non-cash stock-based compensation expense associated with the Special Option Award and post-IPO options awarded in 2019 and payroll taxes associated with the exercise of such options.

During the year ended December 31, 2022, this adjustment also includes $15.0 million of non-cash accelerated stock-based compensation expense and related payroll taxes associated with our retired CEO.

2 unchanged sentences

(4) Represents income recognized during the applicable period due to changes in the tax receivable agreement liability recorded in the consolidated statement of financial condition as a result of changes in the mix of earnings, tax legislation and tax rates in various jurisdictions which impacted our tax savings.

(5) Represents intangible asset and acquired software amortization resulting from the NFI Acquisition and intangible asset amortization and increased tangible asset and capitalized software depreciation and amortization resulting from 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).

(5) Represents intangible asset and acquired software amortization resulting from acquisitions and intangible asset amortization and increased tangible asset and capitalized software depreciation and amortization resulting from 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).

2023 2022 Basis Point Change Constant Currency Basis Point Change (1)

28 unchanged sentences

9,517 (13,653) (12,745)

(Income) loss from investments

Other (income) loss, net

13,122 1,000 —

Adjusted Net Income before income taxes

9 unchanged sentences

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.

(3) Represents intangible asset and acquired software amortization resulting from the NFI Acquisition and intangible asset amortization and increased tangible asset and capitalized software depreciation and amortization resulting from 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).

(4) Represents non-cash stock-based compensation expense associated with the Special Option Award and post-IPO options awarded in 2019 and payroll taxes associated with the exercise of such options totaling $5.4 million, $14.8 million and $13.0 million during the years ended December 31, 2022, 2021 and 2020, respectively.

(3) Represents intangible asset and acquired software amortization resulting from acquisitions and intangible asset amortization and increased tangible asset and capitalized software depreciation and amortization resulting from 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).

(4) Represents non-cash stock-based compensation expense associated with the Special Option Award and post-IPO options awarded in 2019 and payroll taxes associated with the exercise of such options.

2 unchanged sentences

(6) Represents income recognized during the applicable period due to changes in the tax receivable agreement liability recorded in the consolidated statement of financial condition as a result of changes in the mix of earnings, tax legislation and tax rates in various jurisdictions which impacted our tax savings.

(7) Represents corporate income taxes at an assumed effective tax rate of 22% applied to Adjusted Net Income before income taxes for each of the years ended December 31, 2022, 2021 and 2020.

(7) Represents corporate income taxes at an assumed effective tax rate of 24.5% applied to Adjusted Net Income before income taxes for the year ended December 31, 2023 and 22% the years ended December 31, 2022 and 2021.

(8) For a summary of 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.

The following table summarizes the calculation of Adjusted Diluted EPS for the periods presented:

The following table summarizes the calculation of Adjusted Diluted EPS for the years ended December 31, 2023, 2022 and 2021:

Reconciliation of Diluted Weighted Average Shares Outstanding to Adjusted Diluted Weighted Average Shares Outstanding and Adjusted Diluted EPS Year Ended

3 unchanged sentences

Weighted average of other participating securities (1)

270,249 193,441 —

Assumed exchange of LLC Interests for shares of Class A or Class B common stock (2)

6 unchanged sentences

$ 2.26 $ 1.90 $ 1.63

(1) Represents weighted average unvested restricted stock units and unsettled vested performance-based restricted stock units issued to certain retired executives that are entitled to non-forfeitable dividend equivalent rights and are considered participating securities prior to being issued and outstanding shares of common stock in accordance with the two-class method used for purposes of calculating earnings per share.

(1) Represents weighted average unvested restricted stock units and unsettled vested performance-based restricted stock units issued to certain retired or terminated employees that are entitled to non-forfeitable dividend equivalent rights and are considered participating securities prior to being issued and outstanding shares of common stock in accordance with the two-class method used for purposes of calculating earnings per share.

See Note 2 – Significant Accounting Policies to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a discussion of the two-class method.

9 unchanged sentences

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.

Our most critical policies and estimates include revenue recognition, current and deferred income taxes and the tax receivable agreement liability.

Our most critical policies and estimates include business combinations, revenue recognition, stock-based compensation, current and deferred income taxes 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 Accounting Policies to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Business Combinations

Business combinations are accounted for under the purchase method of accounting pursuant to Accounting Standards Codification (“ASC”) 805, Business Combinations (“ASC 805”) .

The total cost of an acquisition is allocated to the underlying net assets based on their respective estimated fair values.

The excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill.

The fair value of assets acquired and liabilities assumed is determined based on assumptions that reasonable market participants would use in the principal (or most advantageous) market for the asset or liability.

Determining the fair value of certain assets acquired and liabilities assumed is judgmental in nature and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash flows, discount rates, growth rates, customer attrition rates and asset lives.

The most significant accounting estimate associated with the Yieldbroker Acquisition that closed in August 2023 was the valuation of the acquired definite-lived intangible customer relationship asset (the “Customer Relationships”), which was valued at approximately $39.7 million as of the date of the closing of the acquisition.

The majority of the residual total purchase price of $40.3 million, net of cash acquired and prior to working capital and other closing adjustments, was primarily allocated to goodwill, which was measured at approximately $35.3 million as of the date of the closing of the acquisition.

We utilized the assistance of a third-party valuation specialist to determine the fair value of the assets acquired and liabilities assumed at the date of the closing of the acquisition.

Management is responsible for these valuations and appraisals.

The valuation of the Customer Relationships primarily included significant unobservable inputs (Level 3), creating a significant level of estimation uncertainty.

Customer Relationships were valued using the income 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.

For GAAP purposes, the C ustomer 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 consolidated statements of financial condition and 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 consolidated statements of financial condition as well as the amortization expense recorded on our 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 consolidated statement of income.

Revenue Recognition

8 unchanged sentences

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.

We earn fees from Refinitiv relating to the sale of market data to Refinitiv, which redistributes that data.

We earn fees from LSEG relating to the sale of market data to LSEG, which distributes that data.

Included in these fees are real-time market data fees which are recognized monthly on a straight-line basis as Refinitiv receives and consumes the benefit evenly, over the contact period, as the data is provided, and fees for historical data sets which are recognized when the historical data set is provided to Refinitiv.

We are required to make significant judgments for the Refinitiv market data fees.

We are required to make significant judgments for the LSEG market data fees.

Significant judgments used in accounting for this contract include the following determinations:

• 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.

• The transaction price for the performance obligations is determined by using a market assessment analysis.

Inputs in this analysis include a consultant study which determined the overall value of our market data and pricing information for historical data sets provided by other companies.

During the years ended December 31, 2022, 2021 and 2020, there were no material changes in the assumptions used to determine the Refinitiv market data fees.

• The provision of real-time market data feeds and 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 until the end of the contract term or at a point in time upon delivery of each historical data set.

• The transaction prices for the performance obligations were determined by using an adjusted market assessment analysis.

Inputs in this analysis included publicly available price lists for data sets provided by other companies, planned internal pricing strategies and other market data points and adjustments obtained through consultations with market data industry experts regarding estimating a standalone selling price for each performance obligation.

During the years ended December 31, 2023, 2022 and 2021, there were no material changes in the methodology or assumptions used to determine the Refinitiv market data fees.

Stock-Based Compensation

The stock-based payments received by the employees of the Company are accounted for as equity awards.

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.

For performance-based restricted stock units that vest based on market conditions, the Company recognizes stock-based compensation based on the estimated grant date fair value of the 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 significant assumptions used to estimate the fair value of the performance-based restricted stock units that vest based on market conditions are years 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 determining the grant date fair value of the award were a maturity of 2.8 years, annualized volatility of 28.81% and a risk-free interest rate of 3.77% .

A change in any of the assumptions used to value these awards could materially affect stock-based compensation expense recorded in the current and future periods.

Tradeweb Markets Inc.

13 unchanged sentences

In making this evaluation, we rely on our recent history of pre-tax earnings, our forecasts of future 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 December 31, 2022 and 2021, we established a valuation allowance of none and $0.7 million on gross deferred tax assets totaling $698.1 million and $625.4 million, respectively.

As of December 31, 2023 and 2022, we have no valuation allowance established on gross deferred tax assets totaling $687.4 million and $698.1 million, respectively.

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.

17 unchanged sentences

The impact of any changes in the total projected obligations recorded under the Tax Receivable Agreement as a result of actual changes in the geographic 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 period in which the change occurs.

Recent Accounting Pronouncements

See Note 2 – Significant Accounting Policies to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a discussion of recent accounting pronouncements.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis