Tradeweb Markets Inc., established in 1996 and headquartered in New York, US, is a global leader in electronic marketplaces for rates, credit, equities, and money markets. The company offers clients access to a wide range of markets, data, analytics, electronic trading, straight-through processing, and reporting for over 50 products. Tradeweb supports clients throughout the trade lifecycle, including pre-trade, execution, post-trade, and data and analytics. Its technology caters to multiple asset classes, trading protocols, and regions.

Tradeweb provides substantial liquidity pools to institutional, wholesale, and retail clients through its platforms: Tradeweb Institutional, Dealerweb, Tradeweb Direct, and ICD Portal. The Dealerweb platform offers fully electronic, hybrid, and voice trading for the wholesale community. The company's extensive network includes clients from institutional, wholesale, retail, and corporate sectors, such as global asset managers, hedge funds, central banks, banks, dealers, and others.

The company has approximately 1,412 employees and operates across two main segments: Transaction fees and commissions (82% of FY 24 revenue), Subscription fees (17%), and Other (1%). Revenue distribution by geography is as follows: United States (61%) and other regions (39%).

Robust performance in Q1 25

Tradeweb released its Q1 25 results on April 30, 2025, reporting an impressive 24.7% y/y increase in revenue to $509.7m. This was driven by increased Average daily volume which rose impressively by 33.7% y/y to $2.5tn. Operating income rose 26.7% y/y to $278.2m, with margins expanding by 88bp to 54.6%. Net profit rose 17.4% y/y to $168.3m.

Strong trading volumes

Tradeweb Markets reported a 33% y/y increase in average daily trading volume for May, reaching $2.5tn. The total trading volume for the month was $55.4tn, including contributions from its acquisition of ICD on August 1, 2024. US and European government bond average daily volumes rose nearly 23% to $236bn and $50.8bn, respectively, due to increased institutional client trading. Fully electronic US and European credit trading volumes increased to $8.3bn and $2.4bn, respectively, driven by greater adoption of Tradeweb's protocols. US and European exchange-traded fund volumes surged over 40% to $8.8bn and $3.3bn, respectively, while repo trading volumes grew by about 29% to $779.7bn, all due to heightened client participation.

Robust ROE

Tradeweb posted an impressive revenue CAGR of 17% over FY 21-24, reaching $1,720m. Operating income increased at a CAGR of 18.9% over the same period, reaching $921m in FY 24, with margins expanding by 240bp to 52.5%. Net income rose at a CAGR of 30.3% to $502m in FY 24.

Consistent growth in net profit led to positive cash from operations over FY 21-24, reaching $898m in FY 24 from $578m in FY 21. Cash and equivalent reached $1,340m at end-FY 24 from $972m at end-FY 21. In addition, ROE improved from 5.3% to 9.2%.

In comparison, its local peer CME Group Inc., reported a revenue CAGR of 9.3% FY 21-24, reaching $4.7bn in FY 24. Operating income increased at a CAGR of 12.6% to $4.3bn in FY 24. However, net income rose at a CAGR of 10.2% to reach $3.5bn in FY 24.

Analysts predict strong growth ahead

Over the past 12 months, the company's stock has delivered impressive returns of approximately 32.2%. In comparison, CME Group delivered higher returns of about 38.5%.

Tradeweb is currently trading at a P/E of 52.7x, based on FY 25 estimated EPS of $2.6, which is higher than its 3-year historical average of 51.1x and CME Group (26x). Likewise, in terms of EV/EBITDA, the company is currently trading at 25x, based on FY 25 estimated EBITDA of $1,104m, which is higher than its 3-year historical average of 24.6x and CME Group’s valuation of 21.4x.

Tradeweb is generally liked by 15 analysts, with six having ‘Buy’ ratings, five having ‘Outperform’ ratings and four having ‘Hold’ ratings for an average target price of $150.3, implying 8.3% upside potential from its current price.

Their views are further supported by an anticipated revenue CAGR of 13.2% over FY 24-27, reaching $2,503m. In addition, analysts estimate EBITDA CAGR of 14.4% to $1,379m, with margins expanding by 176bp to 55.1% in FY 27. Net profit CAGR of 21.4%, reaching $898m, with robust margins expanding by 682bp to 35.9% in FY 27, with EPS expected to increase to $3.5 in FY 27 from $2.3 in FY 24.

Overall, the company has demonstrated impressive growth and strong financial performance, driven by robust trading volumes and strategic acquisitions. The company's consistent revenue and profit increases, coupled with expanding margins, highlight its operational efficiency and market strength. Tradeweb's ability to attract institutional clients and expand its technology offerings positions it well for sustained success in the electronic trading marketplace.

However, the company faces several risks, including heightened competition within the electronic trading sector, variable market conditions affecting client trading volumes, regulatory changes, and technology vulnerabilities. In addition, potential geopolitical tensions could negatively influence operations and international business developments.