Executive Summary / Key Takeaways

• Electronification as a One-Way Train: Tradeweb Markets Inc. ($TW) is strategically positioned to capitalize on the irreversible shift from voice to electronic trading across global fixed income and money markets, consistently expanding its platform and protocols to capture voice-driven workflows.
• Diversified Growth Engines: The company demonstrates robust, diversified revenue growth across its Rates, Credit, Equities, and Money Markets segments, with international and emerging markets becoming increasingly significant contributors, driving consistent double-digit top-line expansion.
• Technological Leadership & Innovation: Tradeweb's proprietary technology, including AI-powered solutions like AiEX and strategic investments in digital assets and blockchain, provides a critical competitive moat, enhancing price discovery, execution efficiency, and client stickiness.
• Strong Financial Performance & Capital Allocation: Tradeweb consistently delivers strong revenue growth, expanding adjusted EBITDA margins, and robust free cash flow, supporting a balanced capital allocation strategy that prioritizes organic investment, strategic M&A, and growing dividends.
• Resilience Amidst Volatility: Despite periods of low market volatility and geopolitical uncertainty, Tradeweb's adaptable business model and continuous innovation allow it to thrive, converting market challenges into opportunities for deeper client engagement and market share gains.

The Unstoppable Current: Tradeweb's Dominance in Electronic Marketplaces

Tradeweb Markets Inc. ($TW) stands at the forefront of a fundamental transformation in global financial markets: the relentless electronification of trading. Since its founding in 1996, Tradeweb has evolved from a niche rates platform into a diversified financial technology powerhouse, building and operating electronic marketplaces across a broad spectrum of asset classes including rates, credit, equities, and money markets. This journey, marked by continuous innovation and strategic expansion, has cemented its role as a critical intermediary for a global network of over 3,000 clients, spanning institutional, wholesale, retail, and increasingly, corporate sectors. The company’s overarching strategy is clear: to leverage its proprietary technology and deep client relationships to convert traditionally voice- and paper-driven markets into transparent, efficient, and interconnected electronic ecosystems.

The industry landscape is characterized by an increasing demand for greater transparency, higher execution quality, operational efficiency, and lower costs, further accelerated by evolving regulatory frameworks. Tradeweb's competitive positioning is robust, often outperforming rivals in key segments. For instance, in institutional U.S. Treasuries, Tradeweb has consistently exceeded 50% market share against its main electronic competitor for six consecutive quarters. While direct quantitative comparisons with all private competitors are challenging to ascertain, Tradeweb's strengths in technological adaptability and global reach position it effectively against major publicly traded competitors like MarketAxess Holdings Inc. (MKTX), Intercontinental Exchange (ICE), CME Group Inc. (CME), and Nasdaq, Inc. (NDAQ).

Tradeweb’s core differentiated technology lies in its multi-protocol electronic trading platforms, which offer a suite of solutions from Request-for-Quote (RFQ) and streaming protocols to advanced algorithmic execution. A prime example is its Automated Intelligent Execution (AiEX) solution. This technology allows clients to automate trade execution based on pre-set parameters, significantly enhancing efficiency and reducing market impact. In the third quarter of 2025, AiEX average daily trades across ETFs increased over 90% year-over-year, with U.S. ETF adoption surging 70% quarter-over-quarter. This quantifiable benefit of faster, smarter execution directly contributes to Tradeweb's competitive moat, driving client stickiness and market share gains.

Beyond existing capabilities, Tradeweb is heavily invested in the next generation of trading technology. The company has invested over $780 million in technology over the last nine years, growing these investments at an average of 15% since 2016. A significant focus is on Artificial Intelligence (AI), with the appointment of a Head of AI in May 2025 to lead the next generation of its AI strategy, building on existing applications for price discovery, dealer selection, and analytics. The stated goal is to further enhance efficiency and provide more sophisticated tools for clients.

Another critical area of innovation is digital assets and blockchain technology. Tradeweb is actively involved in the Canton Network as a Super Validator and Validator, earning Canton Coins for its services. This strategic move is aimed at creating a distributed, interoperable fixed income ecosystem using permissioned Distributed Ledger Technology (DLT). The company's strategy is laser-focused on three pillars: trusted shareable data, smart contracts to automate operations and enable faster asset transfers, and tokenization with synchronized data. The ultimate goal is to become the "go-to venue for ultimately secondary trading in digital fixed income," enabling capital efficiency, 24/7 trading, instant settlement, and reduced reconciliation. In Q3 2025, digital asset initiatives contributed to over 50% growth in "other revenues," including $2.3 million earned from the Canton Network, and the company held 1.7 billion Canton Coins valued at $56 million. These technological advancements are not merely R&D projects; they are foundational to Tradeweb's long-term growth strategy, promising to unlock new revenue streams and solidify its leadership in an evolving financial landscape.

Strategic Expansion and Diversified Performance

Tradeweb's growth narrative is deeply intertwined with its strategic acquisitions and relentless pursuit of new market opportunities. The August 2024 acquisition of Institutional Cash Distributors (ICD) was a pivotal move, introducing the "corporates" client channel and expanding Tradeweb into short-term investment technology. This immediately contributed to Money Markets revenue growth, with ICD revenues up 7% quarter-over-quarter in Q3 2025 as balances started to rebuild after earlier market volatility. The January 2024 acquisition of r8fin bolstered algorithmic trading tools for futures and cash trades, while the August 2023 acquisition of Yieldbroker expanded its footprint in the Australian bond and derivatives markets. These integrations are crucial, with r8fin and Yieldbroker fully absorbed, and ICD integration on track, demonstrating Tradeweb's ability to operationalize and scale acquired assets.

The company's financial performance reflects the success of these strategies. For the third quarter of 2025, Tradeweb reported $508.6 million in revenues, a 13.3% increase year-over-year (11.3% on a constant currency basis). Year-to-date revenues as of Q3 2025 reached $1.53 billion, up 21.3% from the prior year. This consistent double-digit growth underscores the strength of its diversified business model.

Segment-Specific Performance Highlights:

• Rates: This segment remains a core growth engine, delivering its second-highest revenue quarter in Q3 2025, driven by organic growth in swaps and global government bonds, and record revenues in mortgages. Global Rates year-to-date revenues are up 22.5% year-over-year. The electronification of risk-based swap share (excluding compression) increased from 10% in 2020 to 19% in 2025, a 150 basis point per annum growth.
• Credit: While Q3 2025 saw low single-digit revenue growth (2.6% YoY), it was propelled by strong double-digit growth in European credit and municipal bonds, offsetting weakness in U.S. retail corporate credit. Tradeweb achieved a record 10% block share in fully electronic U.S. investment grade and its RFQ average daily volume grew 13% year-over-year.
• Equities: This segment posted strong 16.9% year-over-year revenue growth in Q3 2025, led by global ETFs and equity derivatives. The AiEX automation solution is a key differentiator, with average daily trades increasing over 90% year-over-year.
• Money Markets: Revenues grew 18.7% year-over-year in Q3 2025, primarily due to the ICD acquisition and record global repos.

Profitability metrics remain strong, with adjusted EBITDA margin expanding by 54 basis points in Q3 2025 relative to Q3 2024, and year-to-date adjusted EBITDA margin reaching 54.2%. The company's gross profit margin (TTM) stands at 66.39%, operating profit margin (TTM) at 40.25%, and net profit margin (TTM) at 32.83%, demonstrating efficient operations and scalability.

Global Reach and Competitive Dynamics

Tradeweb's international business is a powerful growth driver, with international revenues growing 25% year-over-year in Q3 2025 and contributing over half of the company's overall revenue growth. Emerging Markets (EM) initiatives are particularly impactful, adding over 500 basis points to total swaps year-to-date revenue growth in Q3 2025 and pacing at over $100 million in annual revenue, nearly tripling 2023 levels. The company recently launched the first electronic bond alternative trading system in Saudi Arabia and is expanding its presence in EM swaps and cash credit.

In the competitive landscape, Tradeweb's primary rival is often "the phone" – the traditional voice-based trading that still dominates complex, multi-leg, large-notional trades, particularly in U.S. Treasuries. While electronic industry average daily volume in U.S. Treasuries increased 10% year-over-year, voice activity also saw a 26% increase, indicating a mix shift towards more complex voice-centric package trades during periods of low volatility. Tradeweb is directly addressing this by developing solutions like its new swaption package trading protocol, launched in October 2025, which aims to bring transparency and efficiency to historically voice-traded products.

Against other electronic platforms, Tradeweb maintains a strong competitive stance. It gained 250 basis points in institutional U.S. Treasuries market share versus Bloomberg year-over-year. In credit, Tradeweb has more than doubled its fully electronic investment grade share and more than tripled its high yield share since 2020, with RFQ, portfolio trading, and sessions protocols being key drivers. The company's strategy of fostering deep client relationships and continuously innovating across asset classes, rather than relying on price adjustments, is a core differentiator. The entry of firms like Citadel into electronic market making, particularly in credit, is viewed as a positive for Tradeweb, as it increases velocity and reinforces the broader trend towards electronification.

Outlook and Risk Assessment

Tradeweb's outlook for 2025 and beyond remains constructive, despite near-term headwinds such as historically low interest rate volatility, tight credit spreads, and geopolitical uncertainty. Management anticipates that volatility will normalize and data will return in 2026, prompting clients to re-hedge and reposition their global books of risk. The current environment, characterized by 2-3% real yields on the short end and an upward-sloping yield curve, is seen as constructive for fixed income, incentivizing duration extension and benefiting Tradeweb's higher-duration products.

For 2025, Tradeweb has tightened its adjusted expense guidance to $1 billion to $1.025 billion, reflecting continued strategic investments in technology, communications, AI, and data infrastructure. Capital expenditures and software development costs are projected to be between $99 million and $109 million, a 17% increase at the midpoint over 2024, largely driven by the new New York City headquarters relocation. The company expects its 2025 adjusted EBITDA margin to exceed 2024 levels, albeit with more modest expansion due to these growth investments. The renewed LSEG (LSEG) market data agreement, with a 9% annual value increase over three years, further solidifies a recurring revenue stream.

Key risks include ongoing market volatility, which can impact trading volumes, and extensive regulatory changes that may require additional resources for compliance. Cybersecurity threats also remain a constant concern, necessitating continuous investment in infrastructure. Fluctuations in foreign currency exchange rates can affect revenues and expenses, given Tradeweb's global operations. Furthermore, the significant payments under the Tax Receivable Agreement, totaling $351.4 million as of September 30, 2025, represent a substantial future cash outflow, with $37.9 million due within the next 12 months. However, Tradeweb's strong cash position ($1.9 billion as of Q3 2025) and robust free cash flow ($987 million TTM) provide ample liquidity to manage these obligations and pursue growth initiatives.

The company's capital allocation priorities remain consistent: organic growth, strategic M&A, share repurchases to offset dilution, and growing dividends (up 20% YoY to $0.12 per share for Q4 2025).

Conclusion

Tradeweb Markets Inc. is a compelling investment proposition, underpinned by its unwavering commitment to electronifying global financial markets. Its history of innovation, strategic acquisitions, and diversified growth across asset classes and client sectors positions it as a leader in an industry undergoing profound structural change. The company's proprietary technology, particularly its AI-driven solutions and proactive engagement in digital assets, provides a distinct competitive advantage, fostering efficiency and client loyalty.

Despite facing market headwinds such as low volatility and geopolitical uncertainties, Tradeweb's robust financial performance, characterized by consistent revenue growth and expanding margins, demonstrates its resilience. The company's strategic investments in technology and market expansion, coupled with a disciplined capital allocation approach, are designed to capture a significant share of the vast addressable market still dominated by voice trading. As the financial ecosystem continues its inevitable shift towards greater electronification and digital integration, Tradeweb's technological leadership and diversified global footprint make it a formidable player poised for sustained long-term growth.