Tradeweb Markets Inc. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. Page Reports of Independent Registered Public Accounting Firm (PCAOB ID N o. 34 ) 99 Consolidated Statements of Financial Condition 103 Consolidated Statements of Income 104 Consolidated Statements of Comprehensive Income 105 Consolidated Statements of Changes in Equity 106 Consolidated Statements of Cash Flows 107 Notes to Consolidated Financial Statements 109 98 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Tradeweb Markets Inc. Opinion on the Financial Statements We have audited the accompanying consolidated statements of financial condition of Tradeweb Markets Inc. and subsidiaries (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 9, 2024, expressed an unqualified opinion on the Company’s internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Income Taxes - Refer to Note 9 to the financial statements Critical Audit Matter Description Tradeweb Markets Inc. (the “Corporation” or the “Company” which refers to Tradeweb Markets Inc. and its consolidated subsidiaries) is subject to U.S. federal, state and local income taxes with respect to its taxable income, including its allocable share of any taxable income of Tradeweb Markets LLC (TWM LLC), and is taxed at prevailing corporate tax rates. TWM LLC is a multiple member limited liability company taxed as a partnership and accordingly, any taxable income generated by TWM LLC is passed through to and included in the taxable income of its members, including the Corporation. The Company has deferred tax assets and liabilities for the expected future tax consequences of temporary differences between financial reporting and tax bases of assets and liabilities. The Company also records uncertain tax positions and recognizes the amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. 99 Table of Contents Auditing management’s estimates related to income taxes required a high degree of auditor judgment and an increased extent of effort, including the need to involve our income tax specialists, when performing procedures to audit the application of relevant domestic and foreign income tax laws, income allocations and apportionment among the taxing jurisdictions, and the flow-through of earnings to the partners of TWM LLC. Given the Company’s legal structure, the multiple jurisdictions in which the Company files its tax returns, and the breadth of applicable tax laws and regulations, auditing management’s tax balances is complex. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to income taxes included, among others, the following: • We tested the effectiveness of controls over income tax balances, including the provision for income taxes, deferred tax assets and liabilities and unrecognized tax benefits. • With the assistance of our income tax specialists, we assessed the Company’s provision for income taxes by: ◦ Evaluating the Company’s income tax provision calculation, including: (1) testing the appropriateness of income tax rates applied by agreeing to applicable Federal and state tax laws, (2) testing the accuracy of income allocations and apportionment among the taxing jurisdictions based on the Company’s structure, source of revenues, and other factors, (3) testing, on a sample basis, the completeness and accuracy of book to tax differences, and (4) testing the mathematical accuracy of the income tax provision calculation. ◦ Evaluating the Company’s analyses supporting its conclusions, in the context of the Company’s specific structure, as to the recognition and measurement of deferred tax assets and liabilities, including the calculation of the deferred tax asset related to the tax basis step-up received in connection with the Company’s equity public offerings. We considered whether permanent and temporary differences had been appropriately identified by evaluating the Company’s trial balance and transactions and applying tax specialist’s knowledge of tax laws and the Company’s business. We also tested that the tax rates used to measure the deferred tax assets and liabilities were appropriate in accordance with Federal and state tax laws. ◦ Evaluating both positive and negative evidence in management’s assessment of the Company’s ability to utilize the deferred tax assets in future years to conclude if it is appropriate to continue to recognize a deferred tax asset. ◦ Evaluating the appropriateness of the recognition, measurement and accuracy of the Company’s unrecognized tax benefits (“UTB”) to determine if they have been correctly recognized if they meet the “more likely than not threshold” to be realized. Tax Receivable Agreement Liability – Refer to Note 10 to the financial statements Critical Audit Matter Description In connection with the Company’s Reorganization Transactions, the Corporation entered into a Tax Receivable Agreement between the Company and former and continuing owners of Tradeweb Markets LLC (Continuing LLC Owner) which provides for the payment by the Corporation to a Continuing LLC Owner of 50% of the amount of U.S. federal, state and local income or franchise tax savings, if any, realized due to tax benefits resulting from the Reorganization Transaction. The Corporation accounts for the income tax effects resulting from taxable redemptions or exchanges of LLC Interests by the Continuing LLC Owners for shares of Class A common stock or Class B common stock or cash, as the case may be, and purchases by the Corporation of LLC Interests from the Continuing LLC Owners by recognizing a change to its Tax Receivable Agreement liability, reflecting the amount expected to be due to Continuing LLC Owners, discounted at present value. In addition, the Corporation recognizes a change in the Corporation’s tax basis in its LLC interest (i.e., “tax basis step up”). The tax basis step up, in turn, results in a change to the Corporation’s deferred tax assets, based on enacted tax rates at the date of each redemption or exchange. The impact of any changes in the projected obligations under the Tax Receivable Agreement for the tax basis step up as a result of changes in the geographic mix of the Company’s earnings, changes in tax legislation and tax rates or other factors that may impact the Corporation’s tax savings will be reflected in income before taxes on the statement of income in the period in which the change occurs. 100 Table of Contents Given the complexity of the calculation and high volume of inputs used to estimate the Tax Receivable Agreement liability and related deferred tax assets, performing audit procedures to evaluate the accuracy of the calculation and appropriateness of the inputs required a high degree of auditor judgment and an increased extent of effort, including the need to involve our income tax specialists who possess significant tax regulation and Tax Receivable Agreement calculation expertise. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the Tax Receivable Agreement liability included, among others, the following: • We tested the effectiveness of the controls established by the Company around the Tax Receivable Agreement liability and related deferred tax assets. • With the assistance of our income tax specialists, we evaluated: ◦ the impact of partnership exchange transactions on the computation of the Tax Receivable Agreement liability. ◦ whether the sources of management’s estimated taxable income were of the appropriate character and sufficient to utilize the deferred tax assets and result in cash tax savings under the relevant tax laws. ◦ the appropriateness of the tax rates, interest rates and tax amortization utilized in the determination of the Tax Receivable Agreement liability, by agreeing to the terms in the Tax Receivable Agreement and applicable Federal and state tax laws. ◦ the reasonableness of the methods, inputs, and assumptions used by management to determine the Tax Receivable Agreement liability. We performed testing, on a sample basis, on contributions, distributions, and tax basis amounts and calculations related to the step-up in basis. ◦ the mathematical accuracy of the Tax Receivable Agreement liability calculation and cash payments. /s/ Deloitte & Touche LLP New York, New York February 9, 2024 We have served as the Company’s auditor since 2018. 101 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Tradeweb Markets Inc. Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of Tradeweb Markets Inc. and subsidiaries (the “Company”) as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2023, of the Company and our report dated February 9, 2024, expressed an unqualified opinion on those financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Deloitte & Touche LLP New York, New York February 9, 2024 102 Table of Contents Tradeweb Markets Inc. and Subsidiaries Consolidated Statements of Financial Condition (in thousands, except share and per share amounts) December 31, 2023 2022 Assets Cash and cash equivalents $ 1,706,468 $ 1,257,229 Restricted cash 1,000 1,000 Receivable from brokers and dealers and clearing organizations 381,178 11,632 Deposits with clearing organizations 36,806 23,906 Accounts receivable, net of allowance for credit losses of $ 284 and $ 129 at December 31, 2023 and 2022, respectively 168,407 142,676 Furniture, equipment, purchased software and leasehold improvements, net of accumulated depreciation and amortization 33,559 37,413 Lease right-of-use assets 25,206 24,933 Software development costs, net of accumulated amortization 131,332 141,833 Goodwill 2,815,524 2,780,259 Intangible assets, net of accumulated amortization 1,004,797 1,072,818 Receivable and due from affiliates 192 2,728 Deferred tax asset 684,250 689,442 Other assets 70,819 74,262 Total assets $ 7,059,538 $ 6,260,131 Liabilities and Equity Liabilities Securities sold under agreements to repurchase $ 21,612 $ — Payable to brokers and dealers and clearing organizations 351,864 11,264 Accrued compensation 164,329 150,884 Deferred revenue 25,746 22,827 Accounts payable, accrued expenses and other liabilities 57,501 46,690 Lease liabilities 27,463 27,943 Payable and due to affiliates 1,327 7,232 Deferred tax liability 20,767 21,251 Tax receivable agreement liability 457,523 425,724 Total liabilities 1,128,132 713,815 Commitments and contingencies (Note 17) 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; 115,090,787 and 110,746,606 shares issued and outstanding as of December 31, 2023 and 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 December 31, 2023 and 2022, respectively 1 1 Class C common stock, $ 0.00001 par value; 350,000,000 shares authorized; 18,000,000 and 3,251,177 shares issued and outstanding as of December 31, 2023 and 2022, respectively — — Class D common stock, $ 0.00001 par value; 300,000,000 shares authorized; 5,077,973 and 23,092,704 shares issued and outstanding as of December 31, 2023 and 2022, respectively — — Additional paid-in capital 4,738,758 4,577,270 Accumulated other comprehensive income (loss) ( 5,389 ) ( 10,113 ) Retained earnings 640,384 386,632 Total stockholders’ equity attributable to Tradeweb Markets Inc. 5,373,755 4,953,791 Non-controlling interests 557,651 592,525 Total equity 5,931,406 5,546,316 Total liabilities and equity $ 7,059,538 $ 6,260,131 The accompanying notes are an integral part of these consolidated financial statements. 103 Table of Contents Tradeweb Markets Inc. and Subsidiaries Consolidated Statements of Income (in thousands, except share and per share amounts) Year Ended December 31, 2023 2022 2021 Revenues Transaction fees and commissions $ 1,078,344 $ 950,269 $ 846,354 Subscription fees 183,972 165,922 158,448 LSEG market data fees 64,336 62,721 61,161 Other 11,567 9,869 10,484 Total revenue 1,338,219 1,188,781 1,076,447 Expenses Employee compensation and benefits 460,305 432,421 407,260 Depreciation and amortization 185,350 178,879 171,308 Technology and communications 77,506 65,857 56,189 General and administrative 51,495 46,561 32,153 Professional fees 42,364 37,764 36,181 Occupancy 15,930 14,726 14,528 Total expenses 832,950 776,208 717,619 Operating income 505,269 412,573 358,828 Tax receivable agreement liability adjustment (1) ( 9,517 ) 13,653 12,745 Net interest income (expense) 65,350 11,907 ( 1,590 ) Other income (loss), net ( 13,122 ) ( 1,000 ) — Income before taxes 547,980 437,133 369,983 Provision for income taxes ( 128,477 ) ( 77,520 ) ( 96,875 ) Net income 419,503 359,613 273,108 Less: Net income attributable to non-controlling interests 54,637 50,275 46,280 Net income attributable to Tradeweb Markets Inc. $ 364,866 $ 309,338 $ 226,828 Earnings per share attributable to Tradeweb Markets Inc. Class A and B common stockholders: Basic $ 1.73 $ 1.50 $ 1.13 Diluted $ 1.71 $ 1.48 $ 1.09 Weighted average shares outstanding: Basic 210,796,802 205,576,637 201,419,081 Diluted 212,668,808 208,400,040 207,254,840 (1) See Note 10 – Tax Receivable Agreement. The accompanying notes are an integral part of these consolidated financial statements. 104 Table of Contents Tradeweb Markets Inc. and Subsidiaries Consolidated Statements of Comprehensive Income (in thousands) Year Ended December 31, 2023 2022 2021 Net income $ 419,503 $ 359,613 $ 273,108 Other comprehensive income (loss), net of tax: Foreign currency translation adjustments, with no tax benefit for each of the years ended December 31, 2023, 2022 and 2021 5,419 ( 13,242 ) ( 3,219 ) Other comprehensive income (loss), net of tax 5,419 ( 13,242 ) ( 3,219 ) Comprehensive income 424,922 346,371 269,889 Less: Net income attributable to non-controlling interests 54,637 50,275 46,280 Less: Foreign currency translation adjustments attributable to non-controlling interests 569 ( 1,833 ) ( 423 ) Comprehensive income attributable to Tradeweb Markets Inc. $ 369,716 $ 297,929 $ 224,032 The accompanying notes are an integral part of these consolidated financial statements. 105 Table of Contents Tradeweb Markets Inc. and Subsidiaries Consolidated Statements of Changes in Equity (in thousands, except share and per share amounts) Tradeweb Markets Inc. Stockholders’ Equity Par Value Class A Common Stock Class B Common Stock Class C Common Stock Class D Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Retained Earnings Non- Controlling Interests Total Equity Balance at December 31, 2020 $ 1 $ 1 $ — $ — $ 4,143,094 $ 4,314 $ 156,041 $ 715,712 $ 5,019,163 Issuance of common stock from equity incentive plans — — — — 93,104 — — 93,104 Share repurchases pursuant to share repurchase programs — — — — — — ( 75,676 ) — ( 75,676 ) Tax receivable agreement liability and deferred taxes arising from LLC Interest ownership exchanges and the issuance of common stock from equity incentive plans — — — — 95,670 — — — 95,670 Adjustments to non-controlling interests — — — — 87,006 86 — ( 87,092 ) — Distributions to non-controlling interests — — — — — — — ( 11,129 ) ( 11,129 ) Dividends ($ 0.32 per share) — — — — — — ( 64,570 ) — ( 64,570 ) Stock-based compensation expense — — — — 51,943 — — — 51,943 Payroll taxes paid for stock-based compensation — — — — ( 71,024 ) — — — ( 71,024 ) Net income — — — — — — 226,828 46,280 273,108 Foreign currency translation adjustments — — — — — ( 2,796 ) — ( 423 ) ( 3,219 ) Other - See Note 14 — — — — 1,573 — — — 1,573 Balance 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 — — — 10,190 — — — 10,190 Share repurchases pursuant to share repurchase programs — — — — — ( 99,323 ) — ( 99,323 ) Tax receivable agreement liability and deferred taxes arising from LLC Interest ownership exchanges and the issuance of common stock from equity incentive plans — — — 88,230 — — — 88,230 Adjustments to non-controlling interests — — — — 108,679 ( 308 ) — ( 108,371 ) — Distributions to non-controlling interests — — — — — — — ( 10,894 ) ( 10,894 ) Dividends ($ 0.32 per share) — — — — — — ( 66,006 ) — ( 66,006 ) Stock-based compensation expense — — — — 67,380 — — — 67,380 Payroll taxes paid for stock-based compensation — — — — ( 101,675 ) — — — ( 101,675 ) Net income — — — — — — 309,338 50,275 359,613 Foreign currency translation adjustments — — — — — ( 11,409 ) — ( 1,833 ) ( 13,242 ) Other - See Note 14 — — — — 3,100 — — — 3,100 Balance 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 — — — — 15,238 — — — 15,238 Share repurchases pursuant to the share repurchase programs — — — — — — ( 35,205 ) — ( 35,205 ) Tax receivable agreement liability and deferred taxes arising from LLC Interest ownership exchanges and the issuance of common stock from equity incentive plans — — — — 53,395 — — — 53,395 Adjustments to non-controlling interests — — — — 77,767 ( 126 ) — ( 77,641 ) — Distributions to non-controlling interests — — — — — — — ( 12,439 ) ( 12,439 ) Dividends ($ 0.36 per share) — — — — — — ( 75,909 ) — ( 75,909 ) Stock-based compensation expense — — — — 66,607 — — — 66,607 Payroll taxes paid for stock-based compensation — — — — ( 51,519 ) — — — ( 51,519 ) Net income — — — — — — 364,866 54,637 419,503 Foreign currency translation adjustments — — — — — 4,850 — 569 5,419 Balance at December 31, 2023 $ 1 $ 1 $ — $ — $ 4,738,758 $ ( 5,389 ) $ 640,384 $ 557,651 $ 5,931,406 The accompanying notes are an integral part of these consolidated financial statements. 106 Table of Contents Tradeweb Markets Inc. and Subsidiaries Consolidated Statements of Cash Flows (in thousands) Year Ended December 31, 2023 2022 2021 Cash flows from operating activities Net income $ 419,503 $ 359,613 $ 273,108 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 185,350 178,879 171,308 Stock-based compensation expense 65,128 66,644 51,943 Deferred taxes 89,896 52,863 85,409 Tax receivable agreement liability adjustment 9,517 ( 13,653 ) ( 12,745 ) Other (income) loss, net 13,122 1,000 — (Increase) decrease in operating assets: Receivable from/payable to brokers and dealers and clearing organizations, net ( 28,946 ) ( 368 ) 116 Deposits with clearing organizations ( 12,799 ) ( 3,597 ) 9,273 Accounts receivable ( 21,081 ) ( 17,228 ) ( 22,369 ) Receivable and due from affiliates/payable and due to affiliates, net ( 4,241 ) 3,135 ( 4,590 ) Other assets ( 3,919 ) ( 2,120 ) 6,016 Increase (decrease) in operating liabilities: Securities sold under agreements to repurchase 21,612 — — Accrued compensation 7,964 ( 552 ) 24,789 Deferred revenue 2,796 ( 1,989 ) 1,143 Accounts payable, accrued expenses and other liabilities 2,187 10,195 ( 3,480 ) Employee equity compensation payable — — ( 1,900 ) Net cash provided by operating activities 746,089 632,822 578,021 Cash flows from investing activities Cash paid for acquisitions, net of cash acquired ( 69,712 ) — ( 207,762 ) Cash paid for foreign currency call option, net of sale proceeds ( 1,289 ) — — Purchases of furniture, equipment, software and leasehold improvements ( 18,529 ) ( 23,214 ) ( 16,878 ) Capitalized software development costs ( 43,235 ) ( 36,882 ) ( 34,470 ) Net cash used in investing activities ( 132,765 ) ( 60,096 ) ( 259,110 ) Cash flows from financing activities Share repurchases pursuant to share repurchase programs ( 35,205 ) ( 99,323 ) ( 75,676 ) Proceeds from stock-based compensation exercises 15,238 10,190 93,104 Deferred financing costs ( 2,794 ) — — Dividends ( 75,909 ) ( 66,006 ) ( 64,570 ) Distributions to non-controlling interests ( 12,439 ) ( 10,894 ) ( 11,129 ) Payroll taxes paid for stock-based compensation ( 51,341 ) ( 101,675 ) ( 71,024 ) Payments on tax receivable agreement liability ( 5,724 ) ( 8,995 ) ( 6,805 ) Net cash used in financing activities ( 168,174 ) ( 276,703 ) ( 136,100 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash 4,089 ( 10,842 ) ( 2,043 ) Net increase (decrease) in cash, cash equivalents and restricted cash 449,239 285,181 180,768 Cash, cash equivalents and restricted cash Beginning of period 1,258,229 973,048 792,280 End of period $ 1,707,468 $ 1,258,229 $ 973,048 The accompanying notes are an integral part of these consolidated financial statements. 107 Table of Contents Tradeweb Markets Inc. and Subsidiaries Consolidated Statements of Cash Flows - (Continued) (in thousands) Year Ended December 31, 2023 2022 2021 Supplemental disclosure of cash flow information: Income taxes paid, net of (refunds) $ 28,641 $ 13,198 $ 3,880 Non-cash investing and financing activities: Furniture, equipment, software and leasehold improvement additions included in accounts payable $ 1,834 $ 3,632 $ — Withholding taxes payable relating to stock-based compensation settlements included in accrued compensation $ 178 $ — $ — Lease right-of-use assets obtained in exchange for lease liabilities, net of modifications and terminations $ 10,395 $ 9,122 $ ( 575 ) Stock-based compensation expense capitalized to software development costs $ 1,474 $ 928 $ — Items arising from follow-on offering and other LLC Interest ownership changes: Establishment of liabilities under Tax Receivable Agreement $ 28,006 $ 35,923 $ 27,666 Deferred tax asset $ 81,401 $ 124,154 $ 123,336 Other - See Note 14 $ — $ 3,100 $ 1,573 Reconciliation of cash, cash equivalents and restricted cash as shown on the statements of financial condition: December 31, 2023 2022 2021 Cash and cash equivalents $ 1,706,468 $ 1,257,229 $ 972,048 Restricted cash 1,000 1,000 1,000 Cash, cash equivalents and restricted cash shown in the statement of cash flows $ 1,707,468 $ 1,258,229 $ 973,048 The accompanying notes are an integral part of these consolidated financial statements. 108 Table of Contents Notes to Consolidated Financial Statements Page Note 1 Organization 110 Note 2 Significant Accounting Policies 112 Note 3 Restricted Cash 119 Note 4 Acquisitions 119 Note 5 Software Development Costs 121 Note 6 Goodwill and Intangible Assets 122 Note 7 Leases 123 Note 8 Revenue 124 Note 9 Income Taxes 125 Note 1 0 Tax Receivable Agreement 128 Note 1 1 Stockholders’ Equity 129 Note 1 2 Non-Controlling Interests 131 Note 1 3 Stock-Based Compensation Plans 132 Note 1 4 Related Party Transactions 136 Note 1 5 Fair Value of Financial Instruments 138 Note 16 Credit Risk 141 Note 17 Commitments and Contingencies 142 Note 18 Earnings Per Share 144 Note 19 Regulatory Capital Requirements 145 Note 20 Business Segment and Geographic Information 146 Note 2 1 Subsequent Events 147 109 Table of Contents Tradeweb Markets Inc. and Subsidiaries Notes to Consolidated Financial Statements 1. Organization Tradeweb Markets Inc. (the “Corporation”) was incorporated as a Delaware corporation on November 7, 2018 to carry on the business of Tradeweb Markets LLC (“TWM LLC”) following 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 (the “IPO”), which closed on April 8, 2019. Following the Reorganization Transactions, Refinitiv ( as defined below) owned an indirect majority ownership interest in the Company (as defined below). On January 29, 2021, London Stock Exchange Group plc (“LSEG”) completed its acquisition of the Refinitiv business (currently referred to by LSEG as LSEG Data & Analytics) from a consortium, including certain investment funds affiliated with The Blackstone Group Inc. (f/k/a The Blackstone Group L.P.) (“Blackstone”) as well as Thomson Reuters Corporation (“TR”), in an all share transaction (the “LSEG Transaction”). In connection with the LSEG Transaction, the Corporation became a consolidating subsidiary of LSEG. Prior to the LSEG Transaction, the Corporation was a consolidating subsidiary of BCP York Holdings (“BCP”), a company owned by certain investment funds affiliated with Blackstone, through BCP’s previous majority ownership interest in Refinitiv. As used herein, “Refinitiv,” prior to the LSEG Transaction, means Refinitiv Holdings Limited, and unless otherwise stated or the context otherwise requires, all of its direct and indirect subsidiaries, and subsequent to the LSEG Transaction, refers 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 the Company. The Corporation is a holding company whose principal asset is LLC Interests (as defined below) of TWM LLC. As the sole manager of TWM LLC, the Corporation operates and controls all of the business and affairs of TWM LLC and, through TWM LLC and its subsidiaries, conducts the Corporation’s business. As a result of this control, and because the Corporation has a substantial financial interest in TWM LLC, the Corporation consolidates the financial results of TWM LLC and reports a non-controlling interest in the Corporation’s consolidated financial statements. As of December 31, 2023, Tradeweb Markets Inc. owns 90.2 % of TWM LLC and the non-controlling interest holders own the remaining 9.8 % of TWM LLC. As of December 31, 2022, Tradeweb Markets Inc. owned 88.7 % of TWM LLC and the non-controlling interest holders owned the remaining 11.3 % of TWM LLC. Unless the context otherwise requires, references to the “Company” refer to Tradeweb Markets Inc. and its consolidated subsidiaries, including TWM LLC, following the completion of the Reorganization Transactions, and TWM LLC and its consolidated subsidiaries prior to the completion of the Reorganization Transactions. The Company is a leader in building and operating electronic marketplaces for a global network of clients across the institutional, wholesale and retail client sectors. The Company’s principal subsidiaries include: • Tradeweb LLC (“TWL”), a registered broker-dealer under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), a member of the Financial Industry Regulatory Authority (“FINRA”), a member of the Municipal Securities Rulemaking Board (“MSRB”), a registered independent introducing broker with the Commodities Future Trading Commission (“CFTC”) and a member of the National Futures Association (“NFA”). • Dealerweb Inc. (“DW”) (formerly known as Hilliard Farber & Co., Inc.), a registered broker-dealer under the Exchange Act and a member of FINRA and MSRB. DW is also registered as an introducing broker with the CFTC and a member of the NFA. • Tradeweb Direct LLC (“TWD”) (formerly known as BondDesk Trading LLC), a registered broker-dealer under the Exchange Act and a member of FINRA and MSRB. • Tradeweb Europe Limited (“TEL”), a MiFID Investment Firm regulated by the Financial Conduct Authority (the “FCA”) in the UK and certain other global regulators and that maintains branches in Asia. • TW SEF LLC (“TW SEF”), a Swap Execution Facility (“SEF”) regulated by the CFTC and certain other global regulators. • DW SEF LLC (“DW SEF”), a SEF regulated by the CFTC and certain other global regulators. 110 Table of Contents • 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 MiFID Investment Firm regulated by the Netherlands Authority for the Financial Markets (“AFM”), the De Nederlandsche Bank (“DNB”) and certain other global regulators and that maintains a branch in France. • Tradeweb Execution Services Limited (“TESL”), an Investment Firm (“BIPRU Firm”) regulated by the FCA in the UK. • Tradeweb Information Technology Services (Shanghai) Co., Ltd is a wholly-owned foreign enterprise (WOFE) in China. Its business scope includes information, data and technology related services including development, sales, import and export and consulting. The Tradeweb offshore electronic trading platform is recognized by the People’s Bank of China (“PBOC”) for the provision of Bond Connect, CIBM Direct RFQ and Swap Connect. • Tradeweb Execution Services B.V. (“TESBV”), a MiFID Investment Firm authorized and regulated by the AFM, with permission to trade on a matched principal basis. • Tradeweb Australia Pty Ltd (formerly Yieldbroker Pty Limited) (“YB” or “Yieldbroker”), acquired in August 2023, a Tier 1 Australian Markets Licensee in Australia, regulated by the Australian Securities & Investments Commission (“ASIC”), that maintains a branch in Singapore that is regulated by the Monetary Authority of Singapore (“MAS”) as a Regulated Market Operator. Tradeweb Australia Pty Ltd changed its name from Yieldbroker Pty Limited in January 2024. • Tradeweb (DIFC) Limited (“TDIFC”) is an Authorized Firm regulated by the Dubai Financial Services Authority (“DFSA”) with a license for “arranging deals in investments” for users to access the Company’s various trading venues that are also separately recognized by the DFSA. In May 2023, the Company announced that it had entered into a definitive agreement to acquire all of the outstanding equity interests of Yieldbroker. Yieldbroker is 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 growing fixed income markets with Tradeweb’s international reach and scale. The A$ 123.6 million, all-cash transaction closed on August 31, 2023 (the “Yieldbroker Acquisition”), following the satisfaction of closing conditions and regulatory reviews. See Note 4 – Acquisitions for additional details on this acquisition. In June 2021, the Company acquired Nasdaq’s U.S. fixed income electronic trading platform, formerly known as eSpeed (the “NFI Acquisition”), which is a fully executable central limit order book (CLOB) for electronic trading in on-the-run (OTR) U.S. government bonds. The NFI Acquisition included the acquisition of Execution Access, LLC, (“EA”), a registered broker-dealer under the Exchange Act and a member of FINRA. In November 2022, EA merged with and into DW with DW being the surviving entity. A majority interest of Refinitiv (formerly the Thomson Reuters Financial & Risk Business) was acquired by BCP on October 1, 2018 (the “Refinitiv Transaction”) from TR. The Refinitiv Transaction 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. In connection with the Reorganization Transactions, 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 (the “LLC Interests”), (ii) exchange all of the then existing membership interests in TWM LLC for LLC Interests and (iii) appoint the Corporation as the sole manager of TWM LLC. LLC Interests, other than those held by the Corporation, are redeemable or exchangeable in accordance with the TWM LLC Agreement for shares of Class A common stock, par value $ 0.00001 per share, of the Corporation (the “Class A common stock”) or Class B common stock, par value $ 0.00001 per share, of the Corporation (the “Class B common stock”), as the case may be, on a one -for-one basis. 111 Table of Contents As used herein, references to “Continuing LLC Owners” refer collectively to (i) those owners of TWM LLC prior to the Reorganization Transactions (the “Original LLC Owners”) , incl uding an indirect subsidiary of Refinitiv, certain investment and commercial banks (collectively, the “Bank Stockholders”), and members of management, that contin ued to own LLC Interests after the completion of the IPO and Reorganization Transactions and that received shares of Class C common stock, par value $ 0.00001 per share, of the Corporation (the “Class C common stock”), shares of Class D common stock, par value $ 0.00001 per share, of the Corporation (the “Class D common stock”) or a combination of both, as the case may be, in connection with the completion of the Reorganization Transactions, (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 Tax Receivable Agreement (as defined in Note 10 – 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. As of December 31, 2023: • The public investors collectively owned 115,090,787 shares of Class A common stock, representing 10.0 % of the combined voting power of Tradeweb Markets Inc.’s issued and outstanding common stock and indirectly, through Tradeweb Markets Inc., owned 49.0 % of the economic interest in TWM LLC; • Refinitiv collectively owned 96,933,192 shares of Class B common stock, 18,000,000 shares of Class C common stock and 4,988,329 shares of Class D common stock, representing 89.9 % of the combined voting power of Tradeweb Markets Inc.’s issued and outstanding common stock and directly and indirectly, through Tradeweb Markets Inc., owned 51.0 % of the economic interest in TWM LLC; and • Other stockholders that continued to own LLC Interests also collectively owned 89,644 shares of 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 LL C. In addition, for the year ended December 31, 2023, the Company’s basic and diluted earnings per share calculations were impacted by 270,249 of weighted average shares resulting from unvested restricted stock units and unsettled vested performance-based restricted stock units that were considered participating securities for purposes of calculating earnings per share in accordance with the two-class method. For the year ended December 31, 2023 the Company’s diluted earnings per share calculation also includes 1,872,006 of weighted average shares resulting from the dilutive effect of its equity incentive plans. See Note 18 – Earnings Per Share for additional details. 2. Significant Accounting Policies The following is a summary of significant accounting policies: Basis of Presentation The consolidated financial statements have been presented in conformity with accounting principles generally accepted in the United States of America (“GAAP” or “U.S. GAAP”). The consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. As discussed in Note 1 – Organization, as a result of the Reorganization Transactions, Tradeweb Markets Inc. consolidates TWM LLC and its subsidiaries and TWM LLC is considered to be the predecessor to Tradeweb Markets Inc. for financial reporting purposes. Tradeweb Markets Inc. had no business transactions or activities and no substantial assets or liabilities prior to the Reorganization Transactions. The consolidated financial statements represent the financial condition and results of operations of the Company and report a non-controlling interest related to the LLC Interests held by Continuing LLC Owners. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and the difference may be material to the consolidated financial statements. 112 Table of Contents Reclassifications Certain reclassifications have been made to the December 31, 2022 consolidated statement of financial condition, and related financial information, to conform to the current period presentation. These primarily include reclassifying approximately $ 2.7 million of related party balances from other assets to receivable and due from affiliates and $ 5.8 million of related party balances from accounts payable, accrued expenses and other liabilities to payable and due to affiliates. These reclassifications had no impact on total assets, total liabilities or total equity on the consolidated statement of financial condition, nor did they have any impact on the consolidated statements of income, comprehensive income, changes in equity or cash flows. 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. Transaction costs incurred to effect a business combination are expensed as incurred and are included as a component of professional fees or general and administrative expenses in the consolidated statements of income. Pushdown Accounting In connection with the Refinitiv Transaction, a majority interest of Refinitiv was acquired by BCP on October 1, 2018 from TR. The Refinitiv Transaction was accounted for by Refinitiv in accordance with the acquisition method of accounting pursuant to ASC 805 , and pushdown accounting was applied to Refinitiv to record the fair value of the assets and liabilities of Refinitiv as of October 1, 2018, the date of the Refinitiv Transaction. The Company, as a consolidating subsidiary of Refinitiv, also accounted for the Refinitiv Transaction using pushdown accounting which resulted in a new fair value basis of accounting for certain of the Company’s assets and liabilities beginning on October 1, 2018. Under the pushdown accounting applied, the excess of the fair value of the Company above the fair value accounting basis of the net assets and liabilities of the Company as of October 1, 2018 was recorded as goodwill. The fair value of assets acquired and liabilities assumed was determined based on assumptions that reasonable market participants would use in the principal (or most advantageous) market for the asset or liability. The adjusted valuations primarily affected the values of the Company’s long-lived and indefinite-lived intangible assets, including software development costs. Cash and Cash Equivalents Cash and cash equivalents consists of cash and highly liquid investments with remaining maturities at the time of purchase of three months or less. Allowance for Credit Losses The Company continually monitors collections and payments from its clients and maintains an allowance for credit losses. The allowance for credit losses is based on an estimate of the amount of potential credit losses in existing accounts receivable, as determined from a review of aging schedules, past due balances, historical collection experience and other specific account data. Careful analysis of the financial condition of the Company’s counterparties is also performed. Additions to the allowance for credit losses are charged to credit loss expense, which is included in general and administrative expenses in the consolidated statements of income. Aged balances that are determined to be uncollectible are written off against the allowance for credit losses. See Note 16 – Credit Risk for additional information. Receivable from and Payable to Brokers and Dealers and Clearing Organizations Receivable from and payable to brokers and dealers and clearing organizations consists of proceeds from transactions executed on the Company’s wholesale platform which failed to settle due to the inability of a transaction party to deliver or receive the transacted security. These securities transactions are generally collateralized by those securities. Until the failed transaction settles, a receivable from (and a matching payable to) brokers and dealers and clearing organizations is recognized for the proceeds from the unsettled transaction. 113 Table of Contents Deposits with Clearing Organizations Deposits with clearing organizations are comprised of cash deposits. Furniture, Equipment, Purchased Software and Leasehold Improvements Furniture, equipment, purchased software and leasehold improvements are carried at cost less accumulated depreciation. Depreciation for furniture, equipment and purchased software is computed on a straight-line basis over the estimated useful lives of the related assets, ranging from 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. Furniture, equipment, purchased software and leasehold improvements are tested for impairment whenever events or changes in circumstances suggest that an asset’s carrying value may not be fully recoverable. As of December 31, 2023 and 2022, accumulated depreciation related to furniture, equipment, purchased software and leasehold improvements totaled $ 95.8 million and $ 73.8 million, respectively. Depreciation expense for furniture, equipment, purchased software and leasehold improvements for the years ended December 31, 2023, 2022 and 2021 was $ 21.3 million, $ 19.5 million and $ 20.9 million, respectively. Software Development Costs The Company capitalizes costs associated with the development of internal use software at the point at which the conceptual formulation, design and testing of possible software project alternatives have been completed. The Company capitalizes employee compensation and related benefits and third party consulting costs incurred during the application development stage which directly contribute to such development. Such costs are amortized on a straight-line basis over three years . Software development costs acquired as part of the Yieldbroker Acquisition and the NFI Acquisition were both amortized over one year . Costs capitalized as part of the Refinitiv Transaction pushdown accounting allocation are amortized over nine years . The Company reviews the amounts capitalized for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable, or that their useful lives are shorter than originally expected. Non-capitalized software costs and routine maintenance costs are expensed as incurred. Goodwill Goodwill includes the excess of the fair value of the Company above the fair value accounting basis of the net assets and liabilities of the Company as previously applied under pushdown accounting in connection with the Refinitiv 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. Goodwill was last tested for impairment on October 1, 2023 and no impairment of goodwill was identified. Intangible Assets Intangible assets with a finite life are amortized over the estimated lives, ranging from four to thirteen years . These 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. Intangible assets with an indefinite useful life are tested for impairment at least annually. An impairment loss is recognized if the sum of the estimated discounted cash flows relating to the asset or asset group is less than the corresponding book value. Equity Investments Without Readily Determinable Fair Values Equity Investments without a readily determinable fair value are measured at cost, less impairment, plus or minus observable price changes (in orderly transactions) of an identical or similar investment of the same issuer. If the Company determines that the equity investment is impaired on the basis of a qualitative assessment, the Company will recognize an impairment loss equal to the amount by which the investment’s carrying amount exceeds its fair value. Equity investments are included as a component of other assets on the consolidated statements of financial condition. 114 Table of Contents Securities Sold Under Agreements to Repurchase From time to time, the Company sells securities under agreements to repurchase in order to facilitate the clearance of securities. Securities sold under agreements to repurchase are treated as collateralized financings and are presented in the consolidated statements of financial condition at the amounts of cash received. Receivables and payables arising from these agreements are not offset in the consolidated statements of financial condition. Leases At lease commencement, a right-of-use asset and a lease liability are recognized for all leases with an initial term in excess of 12 months based on the initial present value of the fixed lease payments over the lease term. The lease right-of-use asset also reflects the present value of any initial direct costs, prepaid lease payments and lease incentives. The Company’s leases do not provide a readily determinable implicit discount rate. Therefore, management estimates the Company’s incremental borrowing rate used to discount the lease payments based on the information available at lease commencement. The Company includes the term covered by an option to extend a lease when the option is reasonably certain to be exercised. The Company has elected not to separate non-lease components from lease components for all leases. Significant assumptions and judgments in calculating the lease right-of-use assets and lease liabilities include the determination of the applicable borrowing rate for each lease. Operating lease expense is recognized on a straight-line basis over the lease term and included as a component of occupancy expense in the consolidated statements of income. Deferred Offering Costs Deferred offering costs consist of legal, accounting and other costs directly related to the Company’s efforts to raise capital. These costs are recognized as a reduction in additional paid-in capital within the consolidated statements of financial condition when the offering is effective. No offering costs were incurred during the years ended December 31, 2023, 2022 and 2021. Revenue Recognition The Company’s classification of revenues in the consolidated statements of income represents revenues from contracts with customers disaggregated by type of revenue. See Note 8 – Revenue for additional details regarding revenue types and the Company’s policies regarding revenue recognition. Translation of Foreign Currency and Foreign Exchange Derivative Contracts Revenues, expenses, assets and liabilities denominated in non-functional currencies are recorded in the appropriate functional currency for the 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 end 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 consolidated statements of income within general and administrative expenses. The realized and unrealized gains/losses totaled a loss of $ 1.6 million, $ 2.3 million and $ 4.0 million for the years ended December 31, 2023, 2022 and 2021, respectively. Since the consolidated financial statements are presented in U.S. dollars, the Company also translates all non-U.S. dollar functional currency revenues, expenses, 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. 115 Table of Contents The Company enters 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. In June 2023, the Company also entered into a foreign currency call option on Australian dollars, see Note 4 – Acquisitions for additional details. The Company’s foreign exchange derivative contracts are not designated as hedges for accounting purposes. Changes in the fair value during the period of foreign currency forward contracts, which were entered into for foreign exchange risk management purposes relating to operating activities, are recognized in the consolidated statements of income within general and administrative expenses and related cash flows are included in cash flows from operating activities, and changes in the fair value during the period of the foreign currency call option on Australian dollars, which was entered into for foreign exchange risk management purposes relating to investing activities, are recognized in the consolidated statements of income within other income/loss and related cash flows are included in cash flows from investing activities. The Company does not use derivative instruments for trading or speculative purposes. Realized and unrea lized gains/losses on foreig n currency forward contracts totaled a gain of $ 0.8 million, $ 4.9 million and $ 9.0 million for the years ended December 31, 2023, 2022 and 2021, respectively. Realized losses on the foreign currency call option on the Australian dollar call option during the year ended December 31, 2023 totaled $ 1.3 million . As of December 31, 2023 and 2022, the counterparty on each of the 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 consolidated statements of financial condition. See Note 15 – Fair Value of Financial Instruments for additional details on the Company’s derivative instruments. Income Tax The Corporation is subject to U.S. federal, state and local income taxes with respect to its taxable income, including its allocable share of any taxable income of TWM LLC, and is taxed at prevailing corporate tax rates. TWM LLC is a multiple member limited liability company taxed as a partnership and accordingly any taxable income generated by TWM LLC is passed through to and included in the taxable income of its members, including the Corporation. Income taxes also include unincorporated business taxes on income earned or losses incurred for conducting business in certain state and local jurisdictions, income taxes on income earned or losses incurred in foreign jurisdictions on certain operations and federal and state income taxes on income earned or losses incurred, both current and deferred, on subsidiaries that are taxed as corporations for U.S. tax purposes. The Company records deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities. The Company measures deferred taxes using the enacted tax rates and laws that will be in effect when such temporary differences are expected to reverse. The Company evaluates the need for valuation allowances based on the weight of positive and negative evidence. The Company records valuation allowances wherever management believes it is more likely than not that the Company will not be able to realize its deferred tax assets in the foreseeable future. The Company records uncertain tax positions on the basis of a two-step process whereby (i) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (ii) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority. The Company recognizes interest and penalties related to income taxes within the provision for income taxes in the consolidated statements of income. Accrued interest and penalties are included within accounts payable, accrued expenses and other liabilities in the consolidated statements of financial condition. The Company has elected to treat taxes due on future U.S. inclusions in taxable income under the global intangible low-taxed income (“GILTI”) provision of the Tax Cuts and Jobs Act of 2017 as a current period expense when incurred. On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (“IRA”) into law. 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. 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. 116 Table of Contents 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. 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. These costs are recognized as an expense over the requisite service period, with an offsetting increase to additional paid-in capital. The grant-date fair value of stock-based awards that do not require future service (i.e., vested awards) are expensed immediately. Forfeitures of stock-based compensation awards are recognized as they occur. For grants made during the post-IPO period, the fair value of the equity instruments is determined based on the price of the Class A common stock on the grant date. Prior to the IPO, the Company awarded options to management and other employees (collectively, the “Special Option Award”) under the Amended and Restated Tradeweb Markets Inc. Option Plan (the “Option Plan”). The significant assumptions used to estimate the fair value as of grant date of the options awarded prior to the IPO did not reflect changes that would have occurred to these assumptions as a result of the IPO. The non-cash stock-based compensation expense associated with the Special Option Award began being expensed in the second quarter of 2019. The Company uses the Black-Scholes pricing model to value some of its option awards. Determining the appropriate fair value model and calculating the fair value of the option awards requires the input of highly subjective assumptions, including the expected life of the option awards and the stock price volatility. 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. 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. Earnings Per Share Basic and diluted earnings per share are computed in accordance with the two-class method as unvested restricted stock units and unsettled vested performance-based restricted stock units issued to certain retired executives are entitled to non-forfeitable dividend equivalent rights and are considered participating securities prior to being issued and outstanding shares of common stock. The two-class method is an earnings allocation formula that treats a participating security as having rights to earnings that otherwise would have been available to common shareholders. Basic earnings per share is computed by dividing the net income attributable to the Company’s outstanding shares of Class A and Class B common stock by the weighted-average number of the Company’s shares outstanding during the period. For purposes of computing diluted earnings per share, the weighted-average number of the Company’s shares reflects the dilutive effect that could occur if all potentially dilutive securities were converted into or exchanged or exercised for the Company’s Class A or Class B common stock. 117 Table of Contents The dilutive effect of stock options and other stock-based payment awards is calculated using the treasury stock method, which assumes the proceeds from the exercise of these instruments are used to purchase common shares at the average market price for the period. The dilutive effect of LLC Interests is evaluated under the if-converted method, where the securities are assumed to be converted at the beginning of the period, 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. Shares of Class C and Class D common stock do not have economic rights in Tradeweb Markets Inc. and, therefore, are not included in the calculation of basic earnings per share. Fair Value Measurement The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). Instruments that the Company owns (long positions) are marked to bid prices, and instruments that the Company has sold, but not yet purchased (short positions) are marked to offer prices. Fair value measurements do not include transaction costs. The fair value hierarchy under ASC 820, Fair Value Measurement (“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 Measurement A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. • Level 1 : Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; • Level 2 : Quoted prices in markets that are not considered to be active or financial instruments for which all significant inputs are observable, either directly or indirectly; • Level 3 : Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. Recent Accounting Pronouncements In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Improvements to Income Tax Disclosures . The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation and income taxes paid. The ASU is effective for the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025. The guidance may be applied on a prospective or retrospective basis and early adoption is permitted. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements. In November 2023, FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures . The ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly reviewed by the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items and interim disclosures of a reportable segment’s profit or loss and assets. The ASU also allows, in addition to the measure that is most consistent with U.S. GAAP, the disclosure of additional measures of segment profit or loss that are used by the CODM in assessing segment performance and deciding how to allocate resources. The ASU also requires the disclosure of the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to to allocate resources. All disclosure requirements under ASU 2023-07 and existing segment disclosures in ASC 280, Segment Reporting are also required for public entities with a single reportable segment. The ASU is effective for the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, and subsequent interim periods, with early adoption permitted. The ASU is to be applied retrospectively to all periods presented in the financial statements. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements. 118 Table of Contents In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”), which clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value and that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. ASU 2022-03 also requires the disclosure of the fair value, as reflected in the statement of financial condition, of equity securities subject to contractual sale restrictions and the nature and the disclosure of the remaining duration of those restrictions. ASU 2022-03 is effective for the Company beginning on January 1, 2024 and early adoption is permitted for both interim and annual financial statements that have not yet been issued. The ASU is to be applied prospectively, with any adjustments from the adoption recognized in earnings on the date of adoption. As of December 31, 2023, the Company has not yet adopted ASU 2022-03 and does not expect that the adoption of this ASU will have a material impact on the Company’s consolidated financial statements. 3. Restricted Cash Cash has been segregated in a special reserve bank account for the benefit of brokers and dealers under SEC Rule 15c3-3. The Company computes the proprietary accounts of broker-dealers (“PAB”) reserve, which requires the Company to maintain minimum segregated cash in the amount of excess total credits per the reserve computation. As of both December 31, 2023 and 2022, cash in the amount of $ 1.0 million, has been segregated in the PAB reserve account, exceeding the requirements pursuant to SEC Rule 15c3-3. 4. Acquisitions Yieldbroker On August 31, 2023, the Company completed its acquisition of all of the outstanding equity interests of Tradeweb Australia Pty Ltd (Tradeweb Australia Pty Ltd changed its name from Yieldbroker Pty Limited in January 2024). 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. During the fourth quarter of 2023, the Company recorded final working capital and purchase price adjustments which resulted in a $ 0.5 million increase in total assets, a $ 0.4 million decrease in total liabilities and a $ 0.1 million increase in total cash paid. Tradeweb Australia Pty Ltd is a corporation registered under the Corporations Act 2001 in Australia and a Tier 1 Australian Markets Licensee in Australia, regulated by the ASIC, that maintains a branch in Singapore which 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. The acquisition was accounted for as a business combination and the Company 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. The fair values were determined based on assumptions that reasonable market participants would use in the principal (or most advantageous) market and primarily included significant unobservable inputs (Level 3). 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. 119 Table of Contents The final purchase price was allocated as follows: Purchase Price Allocation (in thousands) Cash and cash equivalents $ 12,753 Accounts receivable 1,900 Equipment 384 Lease right-of-use assets 1,453 Software development costs 588 Goodwill 35,265 Intangible assets – Customer relationships 39,746 Intangible assets – Tradename 492 Deferred tax asset 3,361 Other assets 693 Accrued compensation ( 3,577 ) Deferred revenue ( 72 ) Accounts payable, accrued expenses and other liabilities ( 9,025 ) Lease liabilities ( 1,496 ) Total cash paid 82,465 Less: Cash acquired ( 12,753 ) Less: Working capital and other closing adjustments 10,368 Purchase price, net of cash acquired and excluding working capital and other closing adjustments $ 80,080 The acquired software development costs will be amortized over a useful life of one year , the acquired tradename will be amortized over a useful life of four years and the customer relationships will be amortized over a useful life of 13 years. The goodwill recognized in connection with the Yieldbroker Acquisition is primarily attributable to the acquisition of an assembled workforce and expected future customers, future technology and synergies from the integration of the operations of Yieldbroker into the Company's operations and its single business segment. All of the goodwill recognized in connection with the Yieldbroker Acquisition is expected to be deductible for income tax purposes. During the year ended December 31, 2023, the Company recognized $ 2.3 million in transaction costs incurred to effect the Yieldbroker Acquisition, which are included as a component of professional fees in the accompanying consolidated statements of income. During the year ended December 31, 2023, the Company also recognized $ 0.9 million in transaction costs incurred to effect the Yieldbroker Acquisition, which are included as a component of general and administrative expenses in the accompanying consolidated statements of income. There were no acquisitions completed during the year ended December 31, 2022. During the year ended December 31, 2021, the Company recognized $ 5.1 million in transaction costs incurred to effect the NFI Acquisition, which are included as a component of professional fees in the accompanying consolidated statements of income. The Yieldbroker Acquisition was not material to the Company’s consolidated financial statements and therefore pro forma and current period results of this acquisition have not been presented. 120 Table of Contents On June 1, 2023, the Company entered into a foreign currency call option on Australian dollars, giving the Company an option to buy A$ 120.7 million, 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 counterparty on the foreign currency call option contract was an affiliate of LSEG. On August 25, 2023, the Company unwound the out-of-the-money foreign currency call option and received $ 1.1 million from an affiliate of LSEG. Realized losses on the Australian dollar call option during the year ended December 31, 2023 totaled $ 1.3 million, which is included within other income/loss in the accompanying consolidated statements of income . See Note 15 – Fair Value of Financial Instruments for additional details. r8fin On November 16, 2023, TWM LLC and the Corporation entered into a definitive agreement for TWM LLC to acquire all of the outstanding equity interests of R8FIN Holdings LP (together with its subsidiaries, “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. The acquisition closed on January 19, 2024, following the satisfaction of closing conditions and regulatory reviews. On the closing date, the Corporation issued a total of 374,601 shares of Class A common stock as partial consideration for the acquisition. 5. Software Development Costs The components of total software development costs, net of accumulated amortization are as follows: December 31, 2023 December 31, 2022 Cost Accumulated Amortization Net Carrying Amount Cost Accumulated Amortization Net Carrying Amount (in thousands) Software development costs – Refinitiv Transaction $ 168,500 $ ( 98,292 ) $ 70,208 $ 168,500 $ ( 79,569 ) $ 88,931 Software development costs – Other 185,290 ( 124,166 ) 61,124 139,982 ( 87,080 ) 52,902 Total software development costs $ 353,790 $ ( 222,458 ) $ 131,332 $ 308,482 $ ( 166,649 ) $ 141,833 Capitalized software development costs and amortization expense are as follows: Year Ended December 31, 2023 2022 2021 (in thousands) Software development costs capitalized (1) $ 44,720 $ 37,810 $ 34,470 Amortization expense related to capitalized software development costs $ 55,810 $ 52,180 $ 47,116 (1) Software development costs capitalized does not include the $ 0.6 million and $ 0.8 million in acquired software development costs acquired in connection with the Yieldbroker and NFI acquisitions during the years ended December 31, 2023 and 2021, respectively. See Note 4 – Acquisitions. Non-capitalized software costs and routine maintenance costs are expensed as incurred and are included in employee compensation and benefits and professional fees on the consolidated statements of income. The estimated annual future amortization for software development costs as of December 31, 2023 through December 31, 2028 is as follows: Amount (in thousands) 2024 $ 51,970 2025 $ 39,560 2026 $ 25,708 2027 $ 14,071 2028 $ 23 121 Table of Contents 6. Goodwill and Intangible Assets Goodwill Goodwill includes the following activity during the years ended December 31, 2023 and 2022: December 31, 2023 2022 (in thousands) Balance at beginning of period $ 2,780,259 $ 2,780,259 Goodwill recognized in connection with the Yieldbroker Acquisition 35,265 — Balance at end of period $ 2,815,524 $ 2,780,259 The components of goodwill are as follows: December 31, 2023 2022 (in thousands) Goodwill – Refinitiv Transaction $ 2,694,797 $ 2,694,797 Goodwill – Acquisitions and other 120,727 85,462 Total $ 2,815,524 $ 2,780,259 Intangible Assets Intangible assets with an indefinite useful life consisted of the following: December 31, 2023 2022 (in thousands) Licenses – Refinitiv Transaction $ 168,800 $ 168,800 Tradename – Refinitiv Transaction 154,300 154,300 Total $ 323,100 $ 323,100 Intangible assets that are subject to amortization consisted of the following: December 31, 2023 December 31, 2022 Amortization Period Cost Accumulated Amortization Net Carrying Amount Cost Accumulated Amortization Net Carrying Amount (in thousands) Customer relationships – Refinitiv Transaction 12 years $ 928,200 $ ( 406,088 ) $ 522,112 $ 928,200 $ ( 328,737 ) $ 599,463 Customer relationships – Acquisitions 13 years 141,031 ( 20,497 ) 120,534 101,285 ( 11,687 ) 89,598 Content and data – Refinitiv Transaction 7 years 154,400 ( 115,800 ) 38,600 154,400 ( 93,743 ) 60,657 Tradename – Acquisitions 4 years 492 ( 41 ) 451 — — — $ 1,224,123 $ ( 542,426 ) $ 681,697 $ 1,183,885 $ ( 434,167 ) $ 749,718 Amortization expense for definite-lived intangible assets during the years ended December 31, 2023, 2022 and 2021 was $ 108.3 million, $ 107.2 million and $ 103.3 million, respectively . 122 Table of Contents The estimated annual future amortization for definite-lived intangible assets as of December 31, 2023 through December 31, 2028 is as follows: Amount (in thousands) 2024 $ 110,379 2025 $ 104,864 2026 $ 88,321 2027 $ 88,280 2028 $ 88,199 7. Leases The Company has operating leases for corporate offices and data centers with initial lease terms ranging from one to 10 years. The following is a summary of lease right-of-use assets and lease liabilities related to operating leases as of December 31, 2023 and 2022: December 31, 2023 2022 (in thousands) Operating lease right-of-use assets $ 25,206 $ 24,933 Operating lease liabilities $ 27,463 $ 27,943 Activity related to the Company’s leases for the years ended December 31, 2023, 2022 and 2021 is as follows: Year Ended December 31, 2023 2022 2021 (in thousands) Operating lease expense included as a component of occupancy expense on the accompanying consolidated statements of income $ 11,768 $ 10,842 $ 10,624 Cash paid for amounts included in the measurement of operating lease liability $ 12,548 $ 11,940 $ 11,736 At December 31, 2023 and 2022, the weighted average borrowing rate and weighted average remaining lease term are as follows: December 31, 2023 2022 Weighted average borrowing rate 4.6 % 2.9 % Weighted average remaining lease term (years) 3.7 3.3 The following table presents the future minimum lease payments and the maturity of lease liabilities as of December 31, 2023: Amount (in thousands) 2024 $ 12,322 2025 5,389 2026 4,590 2027 4,588 2028 1,531 Thereafter 1,521 Total future lease payments 29,941 Less imputed interest ( 2,478 ) Lease liability $ 27,463 123 Table of Contents As of December 31, 2023 and 2022, one U.S. lease was secured by a $ 0.5 million letter of credit issued under the Company’s 2023 and 2019 Revolving Credit Facility (as defined in Note 17 – Commitments and Contingencies), respectively. 8. Revenue Revenue Recognition The Company enters into contracts with its clients to provide a stand-ready connection to its electronic marketplaces, which facilitates the execution of trades by its clients. The access to the Company’s electronic marketplaces includes market data, continuous pricing data refreshes and the processing of trades thereon. The stand-ready connection to the electronic marketplaces is considered a single performance obligation satisfied over time as the client simultaneously receives and consumes the benefit from the Company’s performance as access is provided (that is, the performance obligation constitutes a series of services that are substantially the same in nature and are provided over time using the same measure of progress). For its services, the Company earns subscription fees for granting access to its electronic marketplaces. Subscription fees, which are generally fixed fees, are recognized as revenue on a monthly basis, in the period that access is provided. The frequency of subscription fee billings varies from monthly to annually, depending on contract terms. Fees received by the Company which are not yet earned are included in deferred revenue on the consolidated statements of financial condition until the revenue recognition criteria have been met. The Company also earns transaction fees and/or commissions from transactions executed on the Company’s electronic marketplaces. The Company earns commission revenue from its electronic and voice brokerage services on a riskless principal basis. Riskless principal revenues are derived on matched principal transactions where revenues are earned on the spread between the buy and sell price of the transacted product. Transaction fees and commissions are generated both on a variable and fixed price basis and vary by geographic region, product type and trade size. Fixed monthly transaction fees or commissions, or monthly transaction fees or commission minimums, are earned on a monthly basis in the period the stand-ready trading services are provided and are generally billed monthly. For variable transaction fees or commissions, the Company charges its clients amounts calculated based on the mix of products traded and the volume of transactions executed. Variable transaction fee or commission revenue is recognized and recorded on a trade-date basis when the individual trade occurs and is generally billed when the trade settles or is billed monthly. Variable discounts or rebates on transaction fees or commissions are earned and applied monthly or quarterly, resolved within the same reporting period and are recorded as a reduction to revenue in the period the relevant trades occur. Effective November 1, 2023, the Company amended and restated its market data agreement with an affiliate of LSEG (formerly referred to as Refinitiv), pursuant to which the Company will continue to earn fees relating to the sale of market data to LSEG, which distributes that data. Included in these fees, which are billed quarterly, are real-time market data fees which are recognized monthly on a straight-line basis, as LSEG receives and consumes the benefit evenly over the contract period, as the data is provided. Also included in these fees are fees for historical data sets, which are recognized when the historical data set is provided to LSEG. Significant judgments used in accounting for the Company’s market data agreement with LSEG include the following determinations: • 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. 124 Table of Contents Some revenues earned by the Company have fixed fee components, such as monthly minimums or fixed monthly fees, and variable components, such as transaction-based fees. The breakdown of revenues between fixed and variable revenues for the years ended December 31, 2023, 2022 and 2021 is as follows: Year Ended Year Ended Year Ended December 31, 2023 December 31, 2022 December 31, 2021 (in thousands) Variable Fixed Variable Fixed Variable Fixed Revenues Transaction fees and commissions $ 930,247 $ 148,097 $ 803,465 $ 146,804 $ 690,592 $ 155,762 Subscription fees 1,855 182,117 1,873 164,049 1,812 156,636 LSEG market data fees — 64,336 — 62,721 — 61,161 Other 1,112 10,455 862 9,007 821 9,663 Total revenue $ 933,214 $ 405,005 $ 806,200 $ 382,581 $ 693,225 $ 383,222 Deferred Revenue The Company records deferred revenue when cash payments are received or due in advance of services to be performed. The revenue recognized and the remaining deferred revenue balances are shown below: Amount (in thousands) Deferred revenue balance - December 31, 2022 $ 22,827 New billings 129,193 Revenue recognized ( 126,407 ) Deferred revenue acquired in connection with the Yieldbroker Acquisition 72 Effect of foreign currency exchange rate changes 61 Deferred revenue balance - December 31, 2023 $ 25,746 During the year ended December 31, 2023, the Company recognized into revenue all of the $ 22.8 million in deferred revenue that was deferred as of December 31, 2022. During the year ended December 31, 2022, the Company recognized into revenue $ 23.5 million in deferred revenue that was deferred as of December 31, 2021. 9. Income Taxes The Corporation is subject to U.S. federal, state and local income taxes with respect to its taxable income, including its allocable share of any taxable income of TWM LLC, and is taxed at prevailing corporate tax rates. The Company’s actual effective tax rate will be impacted by the Corporation’s ownership share of TWM LLC, which will continue to increase as Continuing LLC Owners that continue to hold LLC Interests redeem or exchange their LLC Interests for shares of Class A common stock or Class B common stock, as applicable, or the Corporation purchases LLC Interests from 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. For the year ended December 31, 2023, total income before the provision for income taxes amounted to $ 548.0 million, consisting of $ 533.7 million in the United States and $ 14.3 million in foreign locations. 125 Table of Contents The provision for income taxes consists of the following: Year Ended December 31, 2023 2022 2021 (in thousands) Current: Federal $ 15,168 $ 7,260 $ 2,025 State and Local 20,748 16,243 8,334 Foreign 2,665 1,154 1,107 Total current tax expense 38,581 24,657 11,466 Deferred: Federal 79,264 66,591 49,266 State and local 9,707 ( 11,384 ) 40,363 Foreign 925 ( 2,344 ) ( 4,220 ) Total deferred tax expense 89,896 52,863 85,409 Total provision for income taxes $ 128,477 $ 77,520 $ 96,875 A reconciliation of the U.S. federal statutory tax rate to the effective rate is as follows: Year Ended December 31, 2023 2022 2021 Statutory U.S. federal income tax rate 21.0 % 21.0 % 21.0 % State and local income taxes, net of federal income tax benefit 6.3 5.3 3.7 Foreign tax rate differential — — ( 0.2 ) Non-controlling interest ( 1.9 ) ( 2.1 ) ( 2.3 ) Tax Receivable Agreement adjustment 0.4 ( 0.7 ) ( 0.7 ) Rate change ( 1.6 ) ( 4.1 ) 6.7 Equity Compensation ( 0.5 ) ( 2.1 ) ( 2.5 ) Other ( 0.3 ) 0.4 0.5 Effective income tax rate 23.4 % 17.7 % 26.2 % 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 and 26.2 % for the year ended December 31, 2021. 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 rates for the years ended December 31, 2022 and 2021 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. 126 Table of Contents The components of the Company’s net deferred tax asset (liability) are as follows: December 31, 2023 2022 (in thousands) Deferred tax assets: Investment in partnership $ 602,936 $ 566,524 Net operating losses 3,806 57,247 Tax Receivable Agreement - Interest 16,799 14,918 Employee compensation 52,029 43,861 Tax credits 5,099 9,985 Other 6,722 5,569 Deferred tax assets, gross 687,391 698,104 Valuation Allowance — — Total deferred tax assets, net 687,391 698,104 Deferred tax liabilities Goodwill and Intangibles ( 23,908 ) ( 29,913 ) Total deferred tax liabilities ( 23,908 ) ( 29,913 ) Total net deferred tax asset (liability) $ 663,483 $ 668,191 The Company has obtained, and expects to obtain an increase in its share of the tax basis of the assets of TWM LLC when LLC Interests are redeemed or exchanged by Continuing LLC Owners and in connection with certain other qualifying transactions. This increase in tax basis has had, and may 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 10 – Tax Receivable Agreement for further details. The tax benefit has been recognized in deferred tax assets on the consolidated statement of financial condition. As of December 31, 2023, the Company had no tax effected U.S. federal net operating loss carryforwards for income tax purposes, state and local net operating loss carryforwards of $ 1.7 million, and foreign net operating loss carryforwards of $ 2.1 million. If not utilized, the state and local net operating loss carryforwards will begin to expire in 2035. The foreign net operating loss carryforwards can be carried forward indefinitely. The components of the Company’s uncertain tax positions are as follows: Amount (in thousands) Gross unrecognized tax benefits as of January 1, 2023 $ 8,048 Increase in current year tax positions 4,256 Increase in prior year tax positions — Decrease in prior year tax positions — Acquired tax positions — Settlements ( 1,789 ) Gross unrecognized tax benefits as of December 31, 2023 $ 10,515 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 total amount of interest and penalties payable as of December 31, 2023 was $ 1.2 million and $ 0.1 million, respectively. 127 Table of Contents In connection with the Reorganization Transactions, a 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 B common stock (“Refinitiv Contribution”). As a result of the Refinitiv Contribution, the Company assumed the tax liabilities of the contributed entity. During the year ended December 31, 2023, the contributed entity reached an audit settlement with the State of New Jersey for the tax years 2008 - 2015. As of December 31, 2023 and 2022, none and $ 2.7 million, respectively, is included in accounts payable, accrued expenses and other liabilities on the 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 Contribution. As of December 31, 2023 and 2022, none and $ 2.7 million, respectively, is included in receivable and due from affiliates on the consolidated statements of financial condition associated with this related party indemnification. The above tax positions were recognized using the best estimate of the amount expected to be paid based on available information and assessment of all relevant factors. Due to the uncertainty associated with tax audits, it is possible that at some future date liabilities resulting from these audits could vary significantly from these positions. Nevertheless, based on currently enacted legislation and information currently known to us, the Company believes that the ultimate resolution of these audits will not have a material adverse impact on the Company’s financial condition taken as a whole. Furthermore, the Company does not anticipate any material changes to net uncertain tax benefits within the next twelve months. 10. Tax Receivable Agreement In connection with the Reorganization Transactions, the Corporation entered into a tax receivable agreement (the “Tax Receivable Agreement”) with TWM LLC and the Continuing LLC Owners, which provides for the payment by the Corporation to a Continuing LLC Owner of 50 % of the amount of U.S. federal, state and local income or franchise tax savings, if any, that the Corporation actually realizes (or in some circumstances is deemed to realize) as a result of (i) increases in the tax basis of TWM LLC’s assets resulting from (a) the purchase of LLC Interests from such Continuing LLC Owner, including with the net proceeds from the IPO and any subsequent 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. Payments under the Tax Receivable Agreement are made within 150 days after the filing of the tax return based on the actual tax savings realized by the Corporatio n. The first payment of the Tax Receivable Agreement was made in January 2021. Substantially all payments due under the Tax Receivable Agreement are payable over fifteen years following the purchase of LLC Interests from Continuing LLC Owners or redemption or exchanges by Continuing LLC Owners of LLC Interests. The Corporation accounts for the income tax effects resulting from taxable redemptions or exchanges of LLC Interests by Continuing LLC Owners for shares of Class A common stock or Class B common stock or cash, as the case may be, and purchases by the Corporation of LLC Interests from Continuing LLC Owners by recognizing an increase in deferred tax assets, based on enacted tax rates at the date of each redemption, exchange, or purchase, as the case may be. Further, the Corporation evaluates the likelihood that it will realize the benefit represented by the deferred tax asset, and, to the extent that the Corporation estimates that it is more likely than not that it will not realize the benefit, it reduces the carrying amount of the deferred tax asset with a valuation allowance. The impact of any changes in the total projected obligations recorded under the Tax Receivable Agreement as a result of actual changes in the mix of the Company’s earnings, tax legislation and tax rates in various jurisdictions, or other factors that may impact the Corporation’s actual tax savings realized, are reflected in income before taxes on the consolidated statements of income in the period in which the change occurs. As of December 31, 2023 and 2022, the tax receivable agreement liability on the consolidated statements of financial condition totaled $ 457.5 million and $ 425.7 million, respectively. During the years ended December 31, 2023, 2022 and 2021, the Company recognized a tax receivable agreement liability adjustment o f $ 9.5 million of expense and $ 13.7 million and $ 12.7 million of income , respectively, in the consolidated statements of income. 128 Table of Contents 11. Stockholders’ Equity Common Stock Each share of Class A common stock and Class C common stock entitles its holder to one vote on all matters presented to the Corporation’s stockholders generally. Each share of Class B common stock and Class D common stock entitles its holder to ten votes on all matters presented to the Corporation’s stockholders generally. The holders of Class C common stock and Class D common stock have no economic interests in the Corporation (where “economic interests” means the right to receive any dividends or distributions, whether cash or stock, in connection with common stock). These attributes are summarized in the following table: 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 Holders of outstanding shares of Class A common stock, Class B common stock, Class C common stock and Class D common stock will vote together as a single class on all matters presented to the Corporation’s stockholders for their vote or approval, except as otherwise required by applicable law. Holders of Class B common stock may from time to time exchange all or a portion of their shares of Class B common stock for newly issued shares of Class A common stock on a one -for-one basis (in which case their shares of Class B common stock will be cancelled on a one -for-one basis upon any such issuance). Continuing LLC Owners that hold shares of Class D common stock may from time to time exchange all or a portion of their shares of Class D common stock for newly issued shares of Class C common stock on a one -for-one basis (in which case their shares of Class D common stock will be cancelled on a one -for-one basis upon such issuance). 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 Refinitiv no longer beneficially owns a number of shares of common stock and LLC Interests that together entitle them to at least 10 % of TWM LLC’s economic interest. Holders of LLC Interests that receive shares of Class C common stock upon any such conversion may continue to elect to have their LLC Interests redeemed for newly issued shares of Class A common stock as described below (in which case their shares of Class C common stock will be cancelled on a one -for-one basis upon such issuance). In addition, the Corporation’s board of directors adopted the Omnibus Equity Plan, under which equity awards may be made in respect of shares of Class A common stock. It also assumed sponsorship of the Option Plan and a PRSU plan formerly sponsored by TWM LLC. See Note 13 – Stock-Based Compensation Plans for further details. 129 Table of Contents The following table details the movement in the Company’s outstanding shares of common stock during the period: Class A Class B Class C Class D Total Balance at December 31, 2020 98,075,465 96,933,192 3,139,821 30,871,381 229,019,859 Activities related to exchanges of LLC Interests 3,483,238 — ( 1,484,996 ) ( 1,998,242 ) — Issuance of common stock from equity incentive plans 5,630,086 — — — 5,630,086 Share repurchases pursuant to share repurchase programs ( 901,968 ) — — — ( 901,968 ) 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 4,184,083 — 1,596,352 ( 5,780,435 ) — Issuance of common stock from equity incentive plans 1,622,769 — — — 1,622,769 Share repurchases pursuant to share repurchase programs ( 1,347,067 ) — — — ( 1,347,067 ) 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 3,265,908 — 14,748,823 ( 18,014,731 ) — Issuance of common stock from equity incentive plans 1,564,003 — — — 1,564,003 Share repurchases pursuant to share repurchase programs ( 485,730 ) — — — ( 485,730 ) Balance at December 31, 2023 115,090,787 96,933,192 18,000,000 5,077,973 235,101,952 LLC Interests The TWM LLC Agreement requires that TWM LLC at all times maintain (i) a one -to-one ratio between the number of shares of Class A common stock and Class B common stock issued by the Corporation and the number of LLC Interests owned by the Corporation and (ii) a one -to-one ratio between the number of shares of Class C common stock and Class D common stock issued by the Corporation and the number of LLC Interests owned by the holders of such Class C common stock and Class D common stock. LLC Interests held by Continuing LLC Owners are redeemable in accordance with the TWM LLC Agreement, at the election of such holders, for newly issued shares of Class A common stock or Class B common stock, as the case may be, on a one -for-one basis (and such holders’ shares of Class C common stock or Class D common stock, as the case may be, will be cancelled on a one -for-one basis upon any such issuance). In the event of such election by a Continuing LLC Owner, the Corporation may, at its option, effect a direct exchange of Class A common stock or Class B common stock for such LLC Interests of such Continuing LLC Owner in lieu of such redemption. In addition, the Corporation’s board of directors may, at its option, instead of the foregoing redemptions or exchanges of LLC Interests, cause the Corporation to make a cash payment equal to the volume weighted average market price of one share of Class A common stock for each LLC Interest redeemed or exchanged (subject to customary adjustments, including for stock splits, stock dividends and reclassifications) in accordance with the terms of the TWM LLC Agreement. Redemptions and Exchanges of LLC Interests Continuing LLC Owners may, from time to time, exercise their redemption rights under the TWM LLC Agreement, pursuant to which LLC Interests are exchanged for newly-issued shares of Class A common stock. Simultaneously, and in connection with these exchanges, shares of Class C and/or Class D common stock are surrendered by Continuing LLC Owners and cancelled. In connection with these exchanges, Tradeweb Markets Inc. receives LLC Interests, increasing its total ownership interest in TWM LLC. 130 Table of Contents Share Repurchase Programs On February 4, 2021, the Company announced that its 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 the Company’s 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 the Company’s 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. The Company began buying back shares pursuant to the 2021 Share Repurchase Program during the second quarter of 2021. During the years ended December 31, 2022 and 2021, the Company acquired a total of 959,869 and 901,968 shares of Class A common stock, respectively, at an average price of $ 77.43 and $ 83.90 , respectively, for purchases totaling $ 74.3 million and $ 75.7 million, respectively, 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, the Company announced that its 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 the Company’s stock. The 2022 Share Repurchase Program authorizes the purchase of up to $ 300.0 million of the Company’s Class A common stock at the Company’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 repurchases 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 years ended December 31, 2023 and 2022, the Company acquired a total of 485,730 and 387,198 shares of Class A common stock, at an average price of $ 72.48 and $ 64.57 , respectively, for purchases totaling $ 35.2 million and $ 25.0 million, respectively, pursuant to the 2022 Share Repurchase Program. Each share of Class A common stock repurchased pursuant to the 2021 and 2022 Share Repurchase Programs was funded with the proceeds, on a dollar-for-dollar basis, from the repurchase by Tradeweb Markets LLC of an LLC Interest from the Corporation in order to maintain the one -to-one ratio between outstanding shares of the Class A common stock and Class 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 December 31, 2023, a total of $ 239.8 million remained available for repurchase pursuant to the 2022 Share Repurchase Program. For shares repurchased pursuant to the 2021 and 2022 Share Repurchase Programs, the excess of the repurchase price paid over the par value of the Class A common stock will be recorded as a reduction to retained earnings. Other Share Repurchases During the years ended December 31, 2023, 2022 and 2021, the Company withheld 715,101 , 1,074,467 and 983,072 shares, respectively, of Class A common stock from employee stock option, PRSU and RSU awards, at an average price per share of $ 72.02 , $ 94.64 and $ 72.25 , respectively, and an aggregate value of $ 51.5 million, $ 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. These shares are withheld in order for the Company to cover the payroll tax withholding obligations upon the exercise of stock options and settlement of RSUs and PRSUs and such shares were not withheld in connection with the share repurchase programs discussed above. 12. Non-Controlling Interests In connection with the Reorganization Transactions, Tradeweb Markets Inc. became the sole manager of TWM LLC and, as a result of this control, and because Tradeweb Markets Inc. has a substantial financial interest in TWM LLC, consolidates the financial results of TWM LLC into its consolidated financial statements. The non-controlling interests balance reported on the consolidated statements of financial condition represents the economic interests of TWM LLC held by the holders of LLC Interests other than Tradeweb Markets Inc. Income or loss is attributed to the non-controlling interests based on the relative ownership percentages of LLC Interests held during the period by Tradeweb Markets Inc. and the other holders of LLC Interests. 131 Table of Contents The following table summarizes the ownership interest in Tradeweb Markets LLC: December 31, 2023 December 31, 2022 LLC Interests Ownership % LLC Interests Ownership % Number of LLC Interests held by Tradeweb Markets Inc. 212,023,979 90.2 % 207,679,798 88.7 % Number of LLC Interests held by non-controlling interests 23,077,973 9.8 % 26,343,881 11.3 % Total LLC Interests outstanding 235,101,952 100.0 % 234,023,679 100.0 % LLC Interests held by the Continuing LLC Owners are redeemable in accordance with the TWM LLC Agreement at the election of the members for shares of Class A common stock or Class B common stock, 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. The following table summarizes the impact on Tradeweb Market Inc.’s equity due to changes in the Corporation’s ownership interest in TWM LLC: Net Income Attributable to Tradeweb Markets Inc. and Transfers (to) from the Non-Controlling Interests Year Ended December 31, 2023 2022 2021 (in thousands) Net income attributable to Tradeweb Markets Inc. $ 364,866 $ 309,338 $ 226,828 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 77,767 108,679 87,006 Net transfers (to) from non-controlling interests 77,767 108,679 87,006 Change from net income attributable to Tradeweb Markets Inc. and transfers (to) from non-controlling interests $ 442,633 $ 418,017 $ 313,834 13. Stock-Based Compensation Plans Under the Tradeweb Markets Inc. 2019 Omnibus Equity Incentive Plan, the Company is authorized to issue up to 8,841,864 new shares of Class A common stock to employees, officers and non-employee directors. Under this plan, the Company may grant awards in respect of shares of Class A common stock, including performance-based restricted stock units, stock options, restricted stock units (“RSUs”) and dividend equivalent rights. The awards may have performance-based and/or time-based vesting conditions. Stock options have a maximum contractual term of 10 years. On February 16, 2022, the Company announced that Mr. Olesky would retire as Chief Executive Officer (“CEO”) of the Company, effective December 31, 2022, resulting in an acceleration of the total unamortized stock-based compensation associated with equity awards granted to him. The unamortized expense was accelerated over a revised estimated service period that ended on August 11, 2022, representing Mr. Olesky’s required six month notice period under the Company’s 2019 Omnibus Equity Incentive Plan. 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. During the year ended December 31, 2022, the Company recorded a total of $ 15.0 million in accelerated stock-based compensation expenses (“ CEO Retirement Accelerated Stock-Based Compensation Expense ”) and related payroll that would not have been recognized if Mr. Olesky had not announced his retirement . There was no CEO Retirement Accelerated Stock-Based Compensation Expense recorded during the year ended December 31, 2023. 132 Table of Contents PRSU Performance-based restricted stock units that are promises to issue actual shares of Class A common stock based on the financial performance of the Company are referred to as “PRSUs”. PRSUs generally cliff vest on January 1 of the third calendar year from the calendar year of the date of grant. The fair value of PRSUs is calculated on the grant date using the stock price of the Class A common stock. The number of shares a participant will receive upon vesting is determined by a performance modifier, which is adjusted as a result of the financial performance of the Company 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 had a 250 % maximum performance modifier. Compensation expense for PRSUs that cliff vest is recognized on a straight-line basis over the vesting period for the entire award. The number of shares included in expense each period is based on management’s estimate of the probable final performance modifier for those grants, with such estimate updated each period until the performance modifier is finalized. A summary of the Company’s outstanding PRSUs is presented below: PRSUs Weighted Average Grant-Date Fair Value PRSUs outstanding at December 31, 2022 1,422,421 $ 58.78 Grants 326,050 $ 69.56 Vests ( 706,407 ) $ 38.87 Performance adjustment 260,008 $ 69.56 Forfeitures and adjustments ( 30,159 ) $ 78.32 PRSUs outstanding at December 31, 2023 1,271,913 $ 74.34 The following table summarizes information about PRSU awards: Year Ended December 31, 2023 2022 2021 (in thousands) PRSU compensation expense $ 26,506 $ 30,645 $ 30,633 Income tax benefit $ ( 10,767 ) $ ( 34,711 ) $ ( 16,374 ) The weighted-average grant-date fair value of equity-settled PRSUs granted during the years ended December 31, 2022 and 2021 was $ 83.74 and $ 74.29 , respectively. The total fair value of PRSUs vested during the years ended December 31, 2023, 2022 and 2021 was $ 46.2 million, $ 152.8 million and $ 67.4 million, respectively. PSU Performance-based restricted stock units that are promises to issue actual shares of Class A common stock based on market conditions are referred to as “PSUs”. PSUs cliff vest on January 1 of the third calendar year from the calendar year of the date of grant. The number of shares a participant will receive upon vesting is determined by a performance modifier, which is adjusted as a result of the Company’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 grant date fair value of the PSUs, determined using the Monte Carlo simulation model, is recognized as compensation expense on a straight-line basis over the vesting period for the entire award, regardless of the number of shares received by the participant at vesting. 133 Table of Contents A summary of the Company’s outstanding PSUs is presented below: PSUs Weighted Average Grant-Date Fair Value PSUs outstanding at December 31, 2022 — $ — Grants 251,113 $ 98.33 Vests — $ — Performance adjustment — $ — Forfeitures and adjustments — $ — PSUs outstanding at December 31, 2023 251,113 The following table summarizes information about PSU awards: Year Ended December 31, 2023 2022 2021 (in thousands) PSU compensation expense $ 7,043 $ — $ — Income tax benefit $ ( 1,714 ) $ — $ — There were no PSUs granted during the years ended December 31, 2022 and 2021. The significant assumptions used to estimate the fair value of PSUs estimated using the Monte Carlo simulation model were as follows: March 15, 2023 PSU Grant Maturity (years) 2.8 Annualized Volatility 28.81 % Risk-Free Interest Rate 3.77 % Options Prior to the IPO, the Company granted the Special Option Award to management and other employees and granted additional options subsequent to the IPO in July 2019 and December 2019, in each case under the Option Plan (the “July 2019 Grants” and the “December 2019 Grants,” respectively). Each option award vests one half based solely on the passage of time and one half only if the Company achieves certain performance targets. The options have a four-year graded vesting schedule, with accelerated vesting for the time-based Special Option Award options originally scheduled to vest in years three and four that were accelerated upon completion of the IPO. The stock-based compensation expense recognition commenced upon the completion of the IPO. The grant-date fair value of the time-based options related to the Special Option Award and the July 2019 Grants are amortized into expense over the requisite service period on a straight-line basis, with each tranche separately measured. The grant-date fair value of the time - based December 2019 Grants are amortized into expense on a straight-line basis over the requisite service period for the entire award. For the portion of all awards that require both future service and the achievement of Company performance-based conditions, the grant-date fair value for each tranche is separately amortized into expense over the requisite service period for the requisite performance - based condition. If in a reporting period it is determined that the achievement of a performance target for a performance - based tranche is not probable, then no expense is recognized for that tranche and any expenses already recognized relating to that tranche in prior reporting periods are reversed in the current reporting period. The Company can elect to net - settle exercised options by reducing the shares of Class A common stock to be issued upon such exercise by the number of shares of Class A common stock having a fair market value on the date of exercise equal to the aggregate option price and withholding taxes payable in respect of the number of options exercised. The Company may then pay these employee payroll taxes from the Company’s cash. 134 Table of Contents A summary of the Company’s outstanding options is presented below: Options Weighted Average Grant-Date Fair Value Weighted Average Exercise Price Options outstanding at December 31, 2022 2,365,813 $ 2.95 $ 23.62 Grants — $ — $ — Exercises ( 1,353,637 ) $ 2.76 $ 23.06 Forfeitures and adjustments — $ — $ — Expired — $ — $ — Options outstanding at December 31, 2023 1,012,176 $ 3.21 $ 24.37 Vested options outstanding at December 31, 2023 - all exercisable 887,174 $ 2.19 $ 21.38 The following table summarizes information about options awards: Year Ended December 31, 2023 2022 2021 (in thousands) Options compensation expense $ 1,264 $ 2,097 $ 5,327 Income tax benefit $ ( 18,073 ) $ ( 12,894 ) $ ( 69,868 ) There were no options granted during the years ended December 31, 2022 and 2021. The total intrinsic value of options exercised during the years ended December 31, 2023, 2022 and 2021 was $ 77.4 million, $ 59.3 million and $ 333.8 million, respectively. The total intrinsic value of all options outstanding as of December 31, 2023 was $ 67.3 million. The weighted average remaining contractual life of all options outstanding as of December 31, 2023 was 5.0 years. The total intrinsic value of all vested options outstanding as of December 31, 2023 was $ 61.7 million, all of which are currently exercisable. The weighted average remaining contractual life of all vested options outstanding as of December 31, 2023 was 4.9 years. RSUs RSUs are promises to issue shares of Class A common stock at the end of a vesting period. RSUs granted to employees generally vest one-third each year over a three-year period. RSUs granted to non-employee directors generally vest after one year . The fair value of RSUs is calculated on the grant date using the stock price of the Class A common stock. The grant-date fair value of RSUs are amortized into expense on a straight-line basis over the requisite service period for the entire award. A summary of the Company’s outstanding RSUs is presented below: RSUs Weighted Average Grant-Date Fair Value RSUs outstanding at December 31, 2022 864,663 $ 71.47 Grants 573,975 $ 69.70 Vests ( 411,391 ) $ 64.38 Forfeitures ( 3,863 ) $ 67.72 RSUs outstanding at December 31, 2023 1,023,384 $ 73.35 135 Table of Contents The following table summarizes information about RSU awards: Year Ended December 31, 2023 2022 2021 (in thousands) RSU compensation expense $ 30,315 $ 33,902 $ 15,983 Income tax benefit $ ( 7,952 ) $ ( 10,096 ) $ ( 5,416 ) The weighted-average grant-date fair value of RSUs granted during the years ended December 31, 2022 and 2021 was $ 80.27 and $ 75.09 , respectively. The total fair value of RSUs vested during the years ended December 31, 2023, 2022 and 2021 was $ 30.7 million, $ 25.6 million, and $ 12.5 million, respectively. Compensation Expense The Company records stock-based compensation expense for employees and directors in the consolidated statements of income. A summary of the Company’s total stock-based compensation expense relating to its equity-settled PRSUs, options and RSUs, including the CEO Retirement Accelerated Stock-Based Compensation Expense, is presented below: Year Ended December 31, 2023 2022 2021 (in thousands) Total stock-based compensation expense $ 65,128 $ 66,644 $ 51,943 The stock-based compensation expense above excludes $ 1.5 million and $ 0.9 million of stock-based compensation expense capitalized to software development costs during the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023, total unrecognized compensation expense related to unvested stock-based compensation arrangements and the expected recognition period are as follows: PRSUs PSUs Options RSUs (dollars in thousands) Total unrecognized compensation cost $ 36,569 $ 17,651 $ 133 $ 39,095 Weighted-average recognition period (in years) 1.8 2.0 0.2 1.9 14. Related Party Transactions The Company enters into transactions with its affiliates from time to time which are considered to be related party transactions. As of December 31, 2023 and 2022, the following balances with such affiliates were included in the consolidated statements of financial condition in the following line items: December 31, 2023 2022 (in thousands) Accounts receivable $ 688 $ 70 Receivable and due from affiliates 192 2,728 Other assets 17 261 Accounts payable, accrued expenses and other liabilities 1,044 335 Deferred revenue 6,508 5,076 Payable and due to affiliates 1,327 7,232 136 Table of Contents The following balances with such affiliates were included in the consolidated statements of income in the following line items: Year Ended December 31, 2023 2022 2021 (in thousands) Revenue: Subscription fees $ 2,380 $ 1,308 $ 923 LSEG market data fees (1) 64,336 62,721 61,161 Other fees 601 464 522 Expenses: (2) Employee compensation and benefits 17 613 856 Technology and communications 5,747 4,713 3,951 General and administrative 7 291 194 Professional fees 30 46 39 Occupancy 67 — — (1) The Company maintains a market data license agreement with an affiliate of LSEG (formerly referred to as Refinitiv). Under the agreement, the Company delivers to LSEG certain market data feeds which LSEG distributes to its customers. The Company earns license fees and royalties for these feeds. (2) The Company maintains agreements with LSEG to provide the Company with certain real estate, payroll, benefits administration and other administrative services. During the years ended December 31, 2023, 2022 and 2021, none , $ 3.1 million and $ 1.6 million, respectively of previously accrued expenses payable to affiliates of LSEG were waived and the liabilities were reversed through an increase to additional paid-in capital. 137 Table of Contents 15. Fair Value of Financial Instruments Financial Instruments Measured at Fair Value The Company’s financial instruments measured at fair value on the consolidated statements of financial condition as of December 31, 2023 and 2022 have been categorized based upon the fair value hierarchy as follows: Quoted Prices in active Markets for Identical Assets (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total As of December 31, 2023 (in thousands) Assets Cash equivalents – Money market funds and other highly liquid investments $ 1,543,644 $ — $ — $ 1,543,644 Total assets measured at fair value $ 1,543,644 $ — $ — $ 1,543,644 Liabilities Payable and due to affiliates – Foreign exchange derivative contracts $ — $ 775 $ — $ 775 Total liabilities measured at fair value $ — $ 775 $ — $ 775 As of December 31, 2022 Assets Cash equivalents – Money market funds and other highly liquid investments $ 1,106,916 $ — $ — $ 1,106,916 Total assets measured at fair value $ 1,106,916 $ — $ — $ 1,106,916 Liabilities Payable and due to affiliates – Foreign exchange derivative contracts $ — $ 1,002 $ — $ 1,002 Total liabilities measured at fair value $ — $ 1,002 $ — $ 1,002 The Company’s cash equivalents are classified within level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets. The Company enters 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 December 31, 2023 and 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 consolidated statements of financial condition. The following table summarizes the aggregate U.S. d ollar equivalent notional amount of the Company’s foreign exchange derivative contracts not designated as hedges for accounting purposes: December 31, 2023 2022 (in thousands) Foreign currency forward contracts – Gross notional amount $ 192,877 $ 162,845 138 Table of Contents The Company’s foreign exchange derivative contracts are not designated as hedges for accounting purposes and changes in the fair value of these contracts during the period are recognized in the consolidated statements of income. The total realized and unrealized gains (losses) on foreign exchange derivative contracts recorded within the consolidated statements of income are as follows: Year Ended December 31, 2023 2022 2021 (in thousands) Foreign currency forward contracts not designated in accounting hedge relationship – General and administrative (expenses)/income $ 792 $ 4,871 $ 9,008 Foreign currency call option contract not designated in accounting hedge relationship – Other income/(loss) (1) $ ( 1,289 ) $ — $ — (1) On June 1, 2023, the Company 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. On August 25, 2023, the Company unwound the out-of-the-money foreign currency call option and received $ 1.1 million. See Note 4 – Acquisitions for additional details. 139 Table of Contents Financial Instruments Not Measured at Fair Value The Company’s financial instruments not measured at fair value on the consolidated statements of financial condition as of December 31, 2023 and 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 Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Fair Value As of December 31, 2023 (in thousands) Assets Cash and restricted cash $ 163,824 $ 163,824 $ — $ — $ 163,824 Receivable from brokers and dealers and clearing organizations 381,178 — 381,178 — 381,178 Deposits with clearing organizations 36,806 36,806 — — 36,806 Accounts receivable 168,407 — 168,407 — 168,407 Other assets – Memberships in clearing organizations 2,426 — — 2,426 2,426 Total $ 752,641 $ 200,630 $ 549,585 $ 2,426 $ 752,641 Liabilities Securities sold under agreements to repurchase (1) $ 21,612 $ — $ 21,612 $ — $ 21,612 Payable to brokers and dealers and clearing organizations 351,864 — 351,864 — 351,864 Total $ 373,476 $ — $ 373,476 $ — $ 373,476 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 Other assets – Memberships in clearing organizations 2,406 — — 2,406 2,406 Total $ 331,933 $ 175,219 $ 154,308 $ 2,406 $ 331,933 Liabilities Securities sold under agreements to repurchase $ — $ — $ — $ — $ — Payable to brokers and dealers and clearing organizations 11,264 — 11,264 — 11,264 Total $ 11,264 $ — $ 11,264 $ — $ 11,264 (1) As of December 31, 2023, Treasury securities with a fair value of $ 21.6 million collateralized the securities sold under agreements to repurchase liability. The liability amount presented represents the gross liability and is not offset on the consolidated statement of financial condition. The securities sold under agreements to repurchase liability were subsequently settled on January 2, 2024. The carrying value of financial instruments not measured at fair value classified within level 1 or level 2 of the fair value hierarchy approximates fair value because of the relatively short term nature of the underlying assets or liabilities. The memberships in clearing organizations, which are included in other assets on the consolidated statements of financial condition, are classified within level 3 of the fair value hierarchy because the valuation requires assumptions that are both significant and unobservable. 140 Table of Contents Non-recurring Fair Value Measurements The Company measures certain assets and liabilities, such as assets acquired in a business combination, at fair value as of the acquisition date. See Note 4 – Acquisitions for further details regarding these non-recurring fair value measurements. Financial Instruments Without Readily Determinable Fair Values Included in other assets on the consolidated statements of financial condition are equity investments without readily determinable fair values of $ 8.9 million and $ 20.0 million as of December 31, 2023 and 2022, respectively. During the year ended December 31, 2023, and as of December 31, 2023, the Company recorded an impairment on its equity investment totaling $ 11.1 million, as the investment’s carrying amount exceeded its fair value. The investment impairment is included in other income (loss) in the consolidated statements of income. The investment’s fair value was determined using a discounted cash flow model, using primarily Level 3 inputs. Significant unobservable inputs included a discount rate of 20 % and a perpetual growth rate of 3.0 %. During the year ended December 31, 2022, the Company recognized losses totaling $ 1.0 million included in other income (loss) in the consolidated statements of income, related to the write-off of an investment that was determined to be uncollectible. 16. Credit Risk Cash and cash equivalents includes cash and highly liquid investments held by a limited number of global financial institutions, including cash amounts in excess of federally insured limits. To mitigate this concentration of credit risk, the Company invests through high-credit-quality financial institutions, monitors the concentration of credit exposure of investments with any single obligor and diversifies as determined appropriate. In the normal course of business the Company, as agent, executes transactions with, and on behalf of, other brokers and dealers. If the agency transactions do not settle because of failure to perform by either counterparty, the Company will recognize a receivable from (and a matching payable to) brokers and dealers and clearing organizations for the proceeds from the unsettled transaction, until the failed transaction settles. The Company may be obligated to discharge the obligation of the non-performing party and, as a result, may incur a loss if the market value of the security is different from the contract amount of the transaction. 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. The Company seeks 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. A substantial number of the Company’s transactions are collateralized and executed with, and on behalf of, a limited number of broker-dealers. The Company’s exposure to credit risk associated with the nonperformance of these clients in fulfilling their contractual obligations pursuant to securities transactions can be directly impacted by volatile trading markets which may impair the clients’ ability to satisfy their obligations to the Company. The Company does not expect nonperformance by counterparties in the above situations. However, the Company’s policy is to monitor its market exposure and counterparty risk. In addition, the Company has a policy of reviewing, as considered necessary, the credit standing of each counterparty with which it conducts business. Allowance for Credit Losses The Company may be exposed to credit risk regarding its receivables, which are primarily receivables from financial institutions, including investment managers and broker-dealers. The Company maintains an allowance for credit losses based upon an estimate of the amount of potential credit losses in existing accounts receivable, as determined from a review of aging schedules, past due balances, historical collection experience and other specific account data. Careful analysis of the financial condition of the Company’s counterparties is also performed. Account balances are pooled based on the following risk characteristics: • Geographic location • Transaction fee type (billing type) • Legal entity 141 Table of Contents Write-Offs Once determined uncollectible, aged balances are written off against the allowance for credit losses. This determination is based on careful analysis of individual receivables and aging schedules, which are disaggregated based on the risk characteristics described above. Based on current policy, this generally occurs when the receivable is 360 days past due. As of December 31, 2023 and 2022, the Company maintained an allowance for credit losses with regard to these receivables of $ 0.3 million and $ 0.1 million, respectively. For the years ended December 31, 2023 and 2021 credit loss expense was $ 208,000 and $ 13,000 , respectively. For the year ended December 31, 2022, recoveries resulted in a reversal of credit loss expense of $ 14,000 . 17. Commitments and Contingencies From time to time, the Company is subject to various claims, lawsuits and other legal proceedings, including reviews, investigations and proceedings by governmental and self-regulatory agencies regarding its business. While the ultimate resolution of these matters cannot presently be determined, the Company does not believe that, taking into account any applicable insurance coverage, any of the pending legal proceedings, including the matters set forth below, could reasonably be expected to have a material adverse effect on its business, financial condition or results of operations. In the normal course of business, the Company enters into agreements with its customers which provide the customers with indemnification rights, 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 agreements is unknown as this would involve estimating future claims against the Company which have not yet occurred. However, based on its experience, the Company expects the risk of a material loss to be remote. The Company has been named as a defendant, along with other financial institutions, in two consolidated antitrust class actions relating to trading practices in United States Treasury securities auctions. 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 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 held on October 3, 2023, and by order and opinion issued on February 1, 2024, the Second Circuit affirmed the District Court’s order dismissing all claims against all defendants, including the claims against the Company. Additionally, the Company was dismissed from a class action relating to an interest rate swaps matter in 2017, but that matter continues against the remaining defendant financial institutions. The Company records its best estimate of a loss, including estimated defense costs, when the loss is considered probable and the amount of such loss can be reasonably estimated. Based on its experience, the Company believes that the amount of damages claimed in a legal proceeding is not a meaningful indicator of the potential liability. At this time, the Company cannot reasonably predict the timing or outcomes of, or estimate the amount of loss, or range of loss, if any, related to its pending legal proceedings, including the matters described above, and therefore does not have any contingency reserves established for any of these matters. Revolving Credit Facility On November 21, 2023, the Company entered into a five year , $ 500.0 million unsecured revolving credit facility (the “2023 Revolving Credit Facility”) with a syndicate of banks, which replaced its $ 500.0 million secured credit facility entered into on April 8, 2019 and as amended on March 31, 2023 (the “2019 Revolving Credit Facility”). The 2019 Revolving Credit Facility had a scheduled maturity date of April 2024, but was terminated on November 21, 2023 in conjunction with entering into the 2023 Revolving Credit Facility. There were no outstanding borrowings under the 2019 Revolving Credit Facility at the time of termination and no penalties were due or owing and no penalties were required to be paid as a result of the termination. 142 Table of Contents 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. Subject to the satisfaction of certain conditions, the Company is 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. On November 21, 2023, the closing date, the $ 0.5 million letters of credit outstanding under the 2019 Revolving Credit Facility were rolled over under the 2023 Revolving Credit Facility. The 2023 Revolving Credit Facility will mature on November 21, 2028. 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 and other administrative fees that are payable quarterly. Financial covenant requirements include maintaining minimum ratios related to interest coverage and leverage. As of both December 31, 2023 and 2022, there were $ 0.5 million in letters of credit issued under the 2023 and 2019 Revolving Credit Facility, respectively and no borrowings outstanding. Other Commitments On March 31, 2023, the Company entered into a joint venture agreement (the “JV Agreement”) with subsidiaries of Bloomberg Inc. and MarketAxess Holdings Inc. to jointly establish and fund an independent company (the “CTP JV”) for the purpose of participating in the public procurement procedure to become the fixed income consolidated tape (“CTP”) provider in the European Union. The CTP JV was to be incorporated prior to the European Securities and Markets Authority (“ESMA”) tender process and in accordance with project planning. The operation of the CTP JV was contingent upon selection through the ESMA tender process and regulatory approvals. In December 2023, the joint venture agreement was terminated. 143 Table of Contents 18. Earnings Per Share The following table summarizes the calculations of basic and diluted earnings per share of Class A and Class B common stock for Tradeweb Markets Inc: Year Ended December 31, 2023 2022 2021 (in thousands, except share and per share amounts) Numerator: Net income attributable to Tradeweb Markets Inc. $ 364,866 $ 309,338 $ 226,828 Less: Distributed and undistributed earnings allocated to unvested RSUs and unsettled vested PRSUs (1) ( 467 ) ( 244 ) — Net income attributable to outstanding shares of Class A and Class B common stock - Basic and Diluted 364,399 309,094 226,828 Denominator: Weighted average shares of Class A and Class B common stock outstanding - Basic 210,796,802 205,576,637 201,419,081 Dilutive effect of PRSUs 458,343 770,726 2,067,558 Dilutive effect of options 1,150,159 1,810,956 3,473,549 Dilutive effect of RSUs 257,076 241,721 294,652 Dilutive effect of PSUs 6,428 — — Weighted average shares of Class A and Class B common stock outstanding - Diluted 212,668,808 208,400,040 207,254,840 Earnings per share - Basic $ 1.73 $ 1.50 $ 1.13 Earnings per share - Diluted $ 1.71 $ 1.48 $ 1.09 (1) During the years ended December 31, 2023 and 2022, there was a total of 270,249 and 193,441 , 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. There were none during the year ended December 31, 2021. LLC Interests held by Continuing LLC Owners are redeemable in accordance with the TWM LLC Agreement, at the election of such holders, for shares of Class A or Class B common stock, as applicable, of Tradeweb Markets Inc. The potential dilutive effect of LLC Interests are evaluated under the if-converted method. The potential dilutive effect of PRSUs, shares underlying options, RSUs and PSUs are evaluated under the treasury stock method. The following table summarizes the PRSUs, shares underlying options, RSUs, PSUs and weighted-average LLC Interests that were anti-dilutive for the periods indicated. As a result, these shares, which were outstanding, were excluded from the computation of diluted earnings per share for the periods indicated: Year Ended December 31, 2023 2022 2021 Anti - dilutive Shares: PRSUs — — — Options — — — RSUs — 19,551 — PSUs — — — LLC Interests 23,902,379 28,830,686 30,699,577 Shares of Class C and Class D common stock do not have 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. 144 Table of Contents 19. Regulatory Capital Requirements TWL, DW and TWD are subject to the Uniform Net Capital Rule 15c3-1 under the Exchange Act. TEL and 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 TESBV are subject to certain finance resource requirements with the AFM in the Netherlands, YB is subject to certain financial resource requirements with ASIC in Australia and TDIFC is subject to certain financial resource requirements with DFSA in the Dubai International Financial Centre. At December 31, 2023 and 2022, the regulatory capital requirements and regulatory capital for these entities are as follows: December 31, 2023 December 31, 2022 Regulatory Capital Regulatory Capital Requirement Excess Regulatory Capital Regulatory Capital Regulatory Capital Requirement Excess Regulatory Capital (in thousands) TWL $ 50,243 $ 2,856 $ 47,387 $ 41,933 $ 3,669 $ 38,264 DW 156,318 3,579 152,739 131,026 3,574 127,452 TWD 46,976 850 46,126 44,094 775 43,319 TEL 78,127 37,907 40,220 59,904 32,589 27,315 TWJ 6,963 2,029 4,934 7,320 1,695 5,625 TWEU 11,912 5,447 6,465 8,794 4,517 4,277 TESL 1,813 955 858 1,607 904 703 TESBV 1,683 843 840 1,677 801 876 YB 5,261 1,070 4,191 — — — TDIFC 250 39 211 — — — As SEFs, TW SEF and DW SEF are required to maintain adequate financial resources and liquid financial assets in accordance with CFTC regulations. The required and maintained financial resources and liquid financial assets at December 31, 2023 and 2022 are as follows: December 31, 2023 December 31, 2022 Financial Resources Required Financial Resources Excess Financial Resources Financial Resources Required Financial Resources Excess Financial Resources (in thousands) TW SEF $ 43,286 $ 12,500 $ 30,786 $ 30,837 $ 12,500 $ 18,337 DW SEF 13,309 8,669 4,640 14,714 8,080 $ 6,634 December 31, 2023 December 31, 2022 Liquid Financial Assets Required Liquid Financial Assets Excess Liquid Financial Assets Liquid Financial Assets Required Liquid Financial Assets Excess Liquid Financial Assets (in thousands) TW SEF $ 22,068 $ 3,125 $ 18,943 $ 15,566 $ 3,125 $ 12,441 DW SEF 7,935 2,167 5,768 9,493 2,020 7,473 145 Table of Contents 20. Business Segment and Geographic Information The Company operates electronic marketplaces for the trading of products across the rates, credit, equities and money markets asset classes and provides related pre-trade and post-trade services. The Company’s operations constitute a single business segment because of the integrated nature of these marketplaces and services. Information regarding revenue by client sector is as follows: Year Ended December 31, 2023 2022 2021 (in thousands) Revenues Institutional $ 797,038 $ 719,211 $ 668,812 Wholesale 312,586 273,189 254,927 Retail 134,521 110,468 70,566 Market Data 94,074 85,913 82,142 Total revenue 1,338,219 1,188,781 1,076,447 Operating expenses 832,950 776,208 717,619 Operating income $ 505,269 $ 412,573 $ 358,828 The Company operates in the U.S. and internationally, primarily in the Europe, Asia and Australia regions. Revenues are attributed to geographic area based on the jurisdiction where the underlying transactions take place. The results by geographic region are not meaningful in understanding the Company’s business. Long-lived assets are attributed to the geographic area based on the location of the particular subsidiary. The following table provides revenue by geographic area: Year Ended December 31, 2023 2022 2021 (in thousands) Revenues U.S. $ 850,338 $ 760,642 $ 673,223 International 487,881 428,139 403,224 Total revenue $ 1,338,219 $ 1,188,781 $ 1,076,447 The following table provides information on the attribution of long-lived assets by geographic area: December 31, 2023 2022 (in thousands) Long-lived assets U.S. $ 3,990,070 $ 4,044,230 International 20,348 13,026 Total $ 4,010,418 $ 4,057,256 146 Table of Contents 21. Subsequent Events On February 2, 2024, the board of directors of Tradeweb Markets Inc. declared a cash dividend of $ 0.10 per share of Class A common stock and Class B common stock for the first quarter of 2024. This dividend will be payable on March 15, 2024 to stockholders of record as of March 1, 2024. On February 2, 2024, Tradeweb Markets Inc., as the sole manager, approved a distribution by TWM LLC to its equityholders, including Tradeweb Markets Inc., in an aggregate amount of $ 62.1 million, as adjusted by required state and local tax withholdings that will be determined prior to the record date of March 1, 2024, payable on March 13, 2024. 147 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None.