Good morning, and welcome to Tradeweb's Fourth Quarter 2020 Earnings Conference Call. As a reminder, today's call is being recorded and will be available for playback. To begin, I'll turn the call over to Head of U.S. Corporate Development and Investor Relations, Ashley Serrao. Please go ahead.

Thank you, and good morning. Joining me today for the call are our CEO, Lee Olesky, who will review the highlights for the quarter and provide a business update; our President, Billy Hult, who will dive a little deeper into some growth initiatives; and Bob Warshaw, our CFO, who will review our financial results. Our fourth quarter's earnings release, prepared remarks and accompanying presentation are available on the Investor Relations portion of our website. I'd like to remind you that certain statements in this presentation and during Q&A may relate to future events and expectations, and as such, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements related to, among other things, our guidance including full year 2021 guidance and the COVID-19 pandemic, the potential impacts of which are inherently uncertain are forward-looking statements. Actual results may differ materially from these forward-looking statements. Information concerning factors that could cause actual results to differ from forward-looking statements is contained in our earnings release and periodic reports filed with the SEC. In addition, on today's call, we will reference certain non-GAAP measures. Information regarding these non-GAAP measures, including reconciliations to GAAP measures are in our posted earnings release and presentation. Lastly, we provide certain market and industry data, which is based on management's estimates and various industry sources. Please see our posted earnings presentation for more details. To recap, this morning we reported GAAP earnings per diluted share of $0.28. Excluding certain non-cash stock-based compensation expense, acquisition and Refinitiv related D&A and certain FX items, and assuming an effective tax rate of 22%, we reported adjusted net income per diluted share of $0.34. Please see the earnings release and the Form 10-K to be filed with the SEC for additional information regarding the presentation of our historical results. Now, let me turn the call over to Lee.

Thanks, Ashley. Good morning, everyone, and thank you for joining our fourth quarter earnings call. Since our inception, we have combined the creativity of our employees, power of our technology and depth of our network to collaboratively innovate with our clients to simplify their workflows across the fixed income and equity markets. In 2020, the shockwaves created by the COVID-19 pandemic further illuminated the importance of Tradeweb as a critical marketplace, as we have helped our clients seamlessly shift their workflows remotely, often to their kitchens and bedrooms and trade more than a trillion dollars in volume on a number of days, a feat that would have been unthinkable only a few years ago. We believe the acceleration of digitization that we saw in 2020 is here to stay and we remain excited about the opportunity ahead of us to drive further innovation across our markets. We believe the defining trends underpinning our growth, such as technological advances, globalization of debt, growth of ETFs, focus on cost reduction and data-driven trading have a long runway. We remain laser focused on responding to these trends, as we strive to be the primary electronic price discovery and trading platform for our clients, as they look to efficiently discover the best price across rates, credit, OTC equities and money markets. Turning to Slide 4, the acceleration of digitization I just described was on display, as we reported the strongest fourth quarter in our history hitting new market share and volume records across a number of products. Specifically gross revenues of 233 million during the fourth quarter of '20, were up 18.1% year-on-year on a reported basis and 15.9% on a constant currency basis. The revenue growth and the resulting scale translated into improved profitability year-on-year, as our fourth quarter adjusted EBITDA margin expanded…

Thanks, Lee, and thank you, everyone for joining the call. As we think about building marketplaces, we pay a lot of attention to creating great feedback loops with our clients. And a great feedback loop to us is centered on listening to our clients across sectors, protocols and geographies. It is this collaborative approach that has sparked innovation and allowed us to re-imagine client workflows to drive organic growth. And we believe our organic growth story continues to have a strong multi-year runway. Turning to our organic opportunity set in rates on Slide 10. In U.S. treasuries, our market share increased by 150 basis points to a record 13.8% in 2020. Looking ahead, we are focused on driving our share higher across both the institutional and wholesale market. We are investing a lot of effort in driving the adoption of early stage streaming protocols that are becoming more impactful as technology advances. Today market makers are able to manage risk across multiple liquidity books, fueling changes in client behavior. In institutional treasuries, Tradeweb plus and RFM are seeing increased client adoption complementing the great growth we are seeing in RFQ. In the wholesale market, our streaming protocol continues its strong growth, as market participants increasingly use streaming protocols to complement their CLOB activity. Even with the rapid growth in streams, the CLOB today accounts for the majority of their electronic wholesale activity allowing market participants to passively rest orders in an order book to manage risk. As such, the acquisition of the former eSpeed business is another example of investing to improve our feedback loop and gain another window into client behavior. Looking ahead, we are excited about the opportunity to provide our wholesale clients with a seamless offering across both the CLOB and streaming protocols. In mortgages, we see…

Thanks, Billy. Moving on to Slide 12, we wanted to provide you with some color on the smaller, but rapidly growing and important areas of our business. These are all great examples of how we connect the dots at Tradeweb and maximize the power of our multi-asset class network. Billy talked about how we are responding to market structure changes in credit driven by the growth of ETFs. We are also directly capitalizing on the secular growth and passive investing globally with our RFQ ETF platform. Tradeweb's global ETF volumes have increased by 42% annually on average since 2016 led by both equity and fixed income ETFs. Together with portfolio trading and index CDS, our passive trading electronic solution allows clients to take macro views in an efficient manner across asset classes and products. And while the shift towards passive investing is more than 20 years in the making, fixed income ETFs today only comprise approximately 20% of the 7 trillion outstanding and according to BlackRock are set to grow by more than 30% and exceed 2 trillion by 2024. Sophistication is increasing. Today fixed income specialists oversee fixed income ETF trading. This stands in stark contrast to the days when they were traded by equity specialists. Simultaneously, non-bank market makers have also become increasingly important, as liquidity providers to ETF RFQs on our platform. ETFs have become an important instrument for both equity and fixed income traders looking to manage beta, exposure or equitize cash. In fact, fixed income ETFs functioned as a strategic tool for institutional investors during the crisis - during the most recent crisis, given their reliable liquidity particularly in credit markets, with broker dealers and market makers routinely using fixed income ETFs to manage inventory, facilitate large client trades and hedge risk. And while we…

Thanks, Lee, and good morning. As I go through the numbers, all comparisons will be to the prior year period unless otherwise noted. Let me begin with an overview of our volumes on Slide 13. We reported quarterly total ADV of nearly 898 billion, up 30.9% and up 29.7% when you exclude short tenor swaps. Areas of notable growth include U.S. and European government bonds, mortgages, U.S. corporate credit, Chinese bonds, ETFs, equity derivatives and bilateral repo. Slide 14 provides a summary of our quarterly earnings performance. The record fourth quarter volumes translated into gross revenues increasing by 18.1% on a reported and 15.9% on a constant currency basis. We derived approximately 37% of our revenues from international customers, and recall that approximately 30% of our revenue base is denominated in currencies other than dollars predominantly in euros. Our variable revenues increased by 27% and our total trading revenue increased by 19.3%. Total fixed revenues related to our four major asset classes continue to grow, up 6.5% and 3.7% on a constant currency basis. Credit fixed revenue growth was primarily driven by the addition of new dealers in U.S. credit and additional clients in Chinese bonds. Equities fixed revenue growth was driven by the addition of new dealers and the impact of FX. Other trading revenues, the vast majority of which are tied to our retail business was up 4% driven in part by periodic revenues tied to technology enhancements performed for our clients. Market data increased by 7.8% led by Refinitiv, APA and proprietary data products. Adjusted EBITDA margin came in at 49.2% and extended nicely by 231 basis points relative to the fourth quarter 2019, as we continue to benefit from scale. All in, we reported adjusted net income per diluted share of $0.34. Moving on to fees…

Thanks, Bob. As many of you will attest to, 2020 was a very challenging year with a devastating health pandemic coupled with numerous political climate and social challenges. That being said, we are thankful to those on the frontline and scientists behind the vaccines, who have worked tirelessly to get us through the pandemic. I've never been prouder of Tradeweb team, which thrived while working remotely. 2020 was another record year marked by numerous milestones for the company and our products. We continue to expand our opportunity set across all of our businesses, and we're very excited by the potential we see for Tradeweb over the next few years. We are extremely focused on capitalizing on the various growth opportunities ahead of us and continuing to strike the right balance between investing for the future and driving margin expansion to create long-term value for our shareholders. The markets that we operate in are fundamentally changing, as we speak. And this current pandemic further demonstrates the importance of Tradeweb, as a critical marketplace for our clients to transfer risk. We believe the digitization of fixed income is accelerating. And as we've seen in numerous times in the past, behavioral change is very sticky. There remains plenty of room for digitization to increase and this technology fueled transition will continue to play out for years to come. Our network continues to deepen, as we innovate and connect the dots between different asset classes, sectors, protocols and regions. We believe it's this diversity that positions us well to both participate in and lead the next generation of progress. The momentum from 2020 is carried over into 2021. We've made several investments in our future to start the year investing in Asia, launching multi-client net spotting and announcing the acquisition of Nasdaq's U.S. electronic fixed income business. Our existing organic growth initiatives continue to payoff with January volumes reaching a new record. Specifically, our volumes increased by 29% year-on-year, with broad-based growth across our four asset classes and new volume records in U.S. treasuries, mortgages, U.S. high grade, high yield credit, European credit and Chinese bonds. Additionally, we captured a record 20.5% of the entire U.S. high grade TRACE market. I would like to conclude my remarks by thanking our clients for their business and partnership in the quarter, and I want to thank my colleagues for their efforts that contributed to our strongest fourth quarter in history and a record year for Tradeweb. With that I will turn it back to Ashley for your questions.

Thanks, Lee. As a reminder, please limit yourself to one question only. Feel free to hop back in the queue and ask additional questions at the end. Q&A will end around 10:40 Eastern Time. Operator, you can now take our first question.

[Operator Instructions] And our first question comes from Rich Repetto with Piper Sandler. Your line is now open.

So the - my question is on the Nasdaq fixed income acquisition, and you certainly made a compelling case how a CLOB or a central limit order book fits with your multi-channel, your Dealerweb, but there has been a - there was a dramatic deterioration in revenues there from 100 million back in 2012 to 23 million. So I guess, given you can do a lot of things with it, but could you identify like what was the drop off because you can't - that would be important to fix too, I guess. And I heard pricing was an issue or at least in years past?

Good morning, Rich. It's Lee. I'll take a crack at that. That's a good question. Yeah. So look we're very excited about this deal. This is a space, the treasury market that we've been active in for over 20 years is where we started the business, and we have a full complement of our team between sales, product, right up to Billy and I, that have been very involved in the treasury space for many, many years. So it's also - it's core to our focus. So without any too much analysis of what happened when it was in Nasdaq's hand, I think it's pretty clear to say that this is our sweet spot. This is one of our core markets. And in terms of the asset itself and what we're acquiring a liquid CLOB is really complementary to everything else we're doing. We think it's important to offer our customers a variety of solutions. In fact, just about every different way they could trade their treasury. So we've now offered this central limit order book with some real liquidity there. We've also - with the asset extended our client reach, so we're adding customers connected up. And we think as with other situations or platforms, the market is interested in competition. The market wants to have meaningful competitors in the space. So we've got the sort of breadth of the treasury offering now somewhat completed, and we're essentially now in a position, where we can offer clients a single API to connect to both the streams that we have today. And the order book, we think that's a - cost savings and advantage for our clients. We think the multi-protocol approach to the treasury market is a key differentiator that we'll offer. It didn't exist in its former structure. So we now complement everything else we're doing in treasuries with essentially the same - is the same marketplace, a lot of the same customers, we add customers, and we think we'll be able to really ramp this up and bring it to a competitive footprint with the leader. I guess, I would add my own experience as soon as a long time ago, but I actually started broker tech. So I go way back in terms of this space with treasuries, as is Billy. So we have a focus on this from the absolute top of the organization and a number of individuals, who are focused on selling and product design, service to clients, in addition to the technology, right. So we've got a tech advantage here. And then, after a couple of years, we'll be on the same CLOB that we've previously built. So there is a real efficiency play there as well. So we're pretty excited about it. We think we can turn the asset around and bring it to a very competitive footprint and really complement our whole offering in the treasury market.

Our next question comes from Ari Ghosh with Credit Suisse. Your line is now open.

Billy, maybe one for you. So there's been a lot of news flow around Bloomberg starting to charge the trading and rethinking other pricing, so they can invest more to announce their platform. Just curious what you're hearing in the market and from clients and potential implications for feedback?

Sure. Hi, Ari, how are you? I think it's been about a year since we've got a chance to meet you in person. It feels like about 15 years since that year has kind of gone by. But thanks for the question. And obviously, it's great to hear your voice. I've kind of said this before Ari, and I know, you've heard Lee say this as well, we grew up essentially from day one competing with Bloomberg whether or not that was U.S. government bonds, European government bonds, global swaps, it's been kind of us and Bloomberg kind of shoulder to shoulder together for a long time. So we know the company well, healthy, obviously healthy respect. Without sort of getting into sort of the absolute specifics around what their pricing change is and how it's being received, a couple of sort of high level points that I would make is always difficult to make a pricing change. So eyes wide opened, that's always a difficult thing to do. And then I would just say, given the work from home environment and all of that it probably on the edges make some of those conversations sort of in a certain way even more difficult. So just kind of pointing that out as kind of context. But in a specific way, Ari, we're going to continue to do kind of what we do really well, which is collaborate with the marketplace, continue to solve for problems, partner with the most important participants in the market and kind of do things that we've done to kind of get us here. So we always have or I kind of on the competitive landscape, but at the end of the day, also understand what we do best and kind of continue to do that. The other point, I would just kind of make very quickly is, you've heard us talk very specifically around this big important kind of trend around the acceleration of the movement from low touch to no touch. And we'll continue to play a leadership role in that through AiEX, and we think that's a very important trend going forward in the marketplace. And thank you for your question.

Our next question comes from Ken Worthington with JPMorgan. Your line is now open.

The Refinitiv deal with LLC has just closed and my fingers are crossed here that this may be better allow you to comment. But given the relationship between LLC and Tradeweb now and unique capabilities at LCH, are there opportunities to trade - for Tradeweb to work with LLC and LCH to further innovate in rates. And if there are any chance you can give us some high level hints on areas, where you might see opportunities?

I'll take that. Hey Ken, how are you? Thanks for the question. Right. So the deal has closed and in some respects, our mission stays consistent right. We're trying to build the most efficient market ecosystem and provide clients with the - a full suite of pre-trade, trade and post-trade services. And we've - as part of our history, I think we've said this probably repeatedly, we work to collaborate with our stakeholders. We've been doing that for many, many years. So whether it's Refinitiv or LLC, our motivation is to innovate, improve transparency into the financial markets and bring down the costs. So we'll be studying that and looking for ways to collaborate and work together. We've got one thing we've done with them was the FTSE Russell, where we're producing end of day gilt reference prices. It's just an example of something that we've done with them. And I think that the broad statement is that like we've done with all of our owners in the past, when it makes sense, we're going to work to collaborate, work together to provide services and products that are best for our customers. And we're excited for that, and we're looking forward to it. And I'm sure, we'll have more to talk about in the future.

Our next question comes from Dan Fannon with Jefferies. Your line is now open.

My question is around the credit. If you could expand upon the ReMatch protocol that you highlighted in your prepared comments and just differentiate the adverse some of the other offerings you have in credit and thinking about 2021 and what have you - kind of the best potential do you think for uptick?

It's Billy. So ReMatch is great, right. Because to its core, it sort of takes advantage on some level of what we do best, which is our network. And one of the things that ReMatch does at it's very best, it takes unmatched orders from our wholesale suite business and channels those orders into both our retail network and our institutional all-to-all network. So when we think about what Tradeweb does best, we think about our network, how do we create more liquidity because of this vast network that we have. And the early response around it is that we know the functionality, and we feel really good about where this business is going for us. It's just another example of how we're innovating in credit. And thanks for the question.

Our next question comes from Alex Blostein with Goldman Sachs. Your line is now open.

I was hoping, we could dig into the mortgage business a little bit, obviously really robust year in terms of volumes and the refi activity, obviously, is helping to some extent. Can you help us with the sensitivity to revenues, if we see - if we were to see a significant pullback in refi activity. And maybe just a reminder sort of the breakdown within the mortgage business, how much is sort of fixed versus variable? Thanks.

Bob, you want to take that one?

Nobody wants to answer that.

Bob, I think you're on mute.

Yes.

I'm sorry. I missed a little bit of the first part of the question. I'm sorry, I was on mute. [technical difficulty]

Of course. So the question is around the mortgage business and just hoping to get some sensitivity around kind of the variable part of the mortgage revenues how sensitive it is to refi volume. So if you were to see refi volume slowdown, how big a deal is that as to mortgage revenues?

Yes. Look, I think we've obviously shown growth in volume and in revenue mortgages. So I think that we have demonstrated that - that's growth. And we've actually seen more come into our non-comp side of our platform, which should it means more in-comp, and therefore, we get picked a little bit more for that given it's price discovery and the rest. I think if refi rates slow, there is other aspects to the mortgage market that have connection as well and certainly having refis has helped to increase it. But we're also having done some initiatives in spec pools, and given the nature of that there is a large opportunity, spec pools to grow, which Billy could talk to and we're seeing that as the other side of - if one part of mortgages slows down in anyway because of albeit the rates increasing or refis changing, that would be the thing we're working on to - to be on the other side of that. That being said, I don't think we - so far we haven't seen a sign that, that's going to be a short-term happening in terms of what we're seeing. And it's - and so I think that given the nature of our fee structure and what we see, we should see a balance of growth going forward even as the market reform slightly because the initiatives we have particularly in spec pools.

Our next question comes from Alex Kramm with UBS. Your line is now open.

Just coming back to credit for a second here. I mean, tremendous drop on innovation obviously and seems to be driving some good market share. But can you also talk about how pricing matters at all or how much of a factor that's been. I think you've under cut some of your primary incumbent competitors there. So just wondering that's a big factor or if you think pricing is going to become more of a factor, as maybe these markets evolve over time. So any update on pricing would be fantastic? Thank you.

Sure. Sure. Hey, it's Billy. So we feel very comfortable with our pricing. We're the low cost provider in the space, and we feel comfortable with that lens. That being said, in a very straightforward way, we don't lead with pricing with clients. We think that's a mistake. We lead with innovation. We lead with solving for client workflows. We lead with how we're bringing value whether that's portfolio trading or net spotting and hedging. We always lead with value. To your question over time, do we think that our pricing model will kick in more and more and help us do something that gets more market share. Absolutely, yes. But it's not the first thing we lead with clients.

Our next question comes from Kyle Voigt with KBW. Your line is now open.

So it appears the new administration is potentially having a broad review of treasury trading and treasury market structure following your liquidity issues in March of last year, and some of the press reports noted that the administration could consider extension of primary dealers or also consider the interruption of central clearing. Just wondering, if you could provide any color on how either of those changes might impact your rates business?

I'll take that one. Thanks, Kyle for the question. So I think it's a good one. Yeah. Look, we've - the truth is, historically we benefited, as a result of change, regulatory change, tech change, these have been big drivers of the growth of our business, I should say that upfront. And we're supportive of regulators soliciting comments with respect to access the market considering central counterparty those sorts of things. And when you have a mandate to essentially clear securities, that's been historically an e-trading accelerant for a number of obvious reasons. We really saw that happen in the swaps market most recently. It allows for new liquidity providers generally tends to increase the velocity, the turnover in the market. So we think overall, is that what you're suggesting implies change, we've been able to really benefit from those kinds of changes historically both in terms of how much of an advocate we're in the market, but also the ability to adjust and change our systems to support the changes. So in terms of the cost to us, we're kind of registered in a lot of different ways. We're registered as an ATS that includes our treasury business. It's hard to imagine, there would be any sort of material change to our regulatory requirements with respect to this. But it does look to us like there is going to be a lot more interest and focus on this and we welcome it. We welcome it. We think change is good. And it allows us to innovate and solve for clients issues, as these things come into play.

Our next question comes from Michael Cyprys with Morgan Stanley. Your line is now open.

Thanks for fitting me in here with the question. Just with a steeper curve that many expect here with an economic reopening later in the year prospects for a steeper curve. Just hoping you could talk a little bit about how that may impact the different parts of your business in terms of greater appetite for say different products, such as rate swaps? And also how that may impact and play through on the capture rate, would it just be seeing a mix driving the change in the fee capture or where could actually the fee rate itself actually just higher?

Yes. Thanks. Thanks, Michael. So I think what you're suggesting in your question is change. And as I was saying just before, changes though is a good thing, especially if market change or maybe more importantly, a bit of uncertainty in terms of what the actual direction is, and there is a lot of debate about what's going to be happening. And if you look at what's happening to my shoulder over just today and what's been happening last month, these types of changes that you're referring to are positive for volumes, and they are positive for Tradeweb. Diverging views, chasing higher yields, these are all positives. Steeper yield curve is actually good for our retail business, which has been - has had some challenges, as a result of that. We've made bonds more attractive to that sector. And it's not as if these things - the macro stuff is what we've been living with for 20 years, right. Our business is dynamic. And these kinds of changes tend to be positive accelerants if in fact they occur. And I look at the January numbers, and that's an example of possibly what - what's to come. But more importantly, then the macro stuff, which absolutely impacts our business, I don't want to say that's not important is the digitization march, right. This move towards more electronification, as clients are trying to streamline things. And I would add to that, when we're talking about the treasury market, an explosion of debt right. So that we have an absolute explosion of debt globally, not just in the U.S., with potential for more stimulus. These are all issues that create some uncertainty and potential movement, some steepening, which is historically that's been a - that's a good thing for our business. So we - but as always, that's not - we try not to speculate on that kind of stuff because it's just - it's really unknowable from our view.

I think, maybe, I'll add to that is one of the things, obviously, we can't predict what's going to happen, you said exactly. But our fees are correlated to some extent the duration. So the shape of - of things that might happen could have a positive effect as well.

Yes. Absolutely. That's a good point, Bob.

Our next question comes from Mike Carrier with Bank of America. Your line is now open.

Good morning, and thanks for taking the question. You guys provided a lot of good detail across the different product categories and strategic initiatives, the growth there and you mentioned the strong international growth. But can you provide an update on geographies, just given the recent hire in Asia and where your current client base is today and maybe investments being made, size of the sales platform in the U.S. versus outside, and then the potential growth you see, whether it's in Asia or Europe or the U.S.? Thanks.

Okay. There is a lot there. So let me just start by saying, international growth in general, for us, it's averaged around about 20% a year since we go back four years or five years 2016 that includes Europe and Asia, when we talk about international. And we've been expanding our product offering in those areas. Obviously, we've talked about China, China bonds in our recorded comments. We've got a new hire that just started in Asia, James, who is going to be running that business. We made a investment in Sumscope - minority investment in Sumscope in December. So we're fully focused on the growth opportunities outside of the U.S. and have been for some time. It's - I don't know, 36%, 37% of our revenues from last year, all that business ex- U.S. So it's a meaningful component, and it's a real opportunity set for us. In particular, we think, as I said, Asia and China, well, it's tough to handicap the timing of liberalization and access to the market both in and out of China, we're going to stay on the cutting edge. We were the first ones to be in that market in 2017, allowing access for international investors and we continue to invest there locally with both talent and some complementary assets. So we're very excited about the opportunity there. It's got a ways to go in terms of electronification when we think about Asia. And we always go back to the theme of connecting the dots and the fact that the markets are global markets, and as Billy likes to say, our network is our great strength. So adding a new region, adding new asset classes, adding new types of protocols and connecting that into our global network is a real big opportunity for us and one that we're pretty excited about.

Thank you. We can take one more question if anyone has anything. I'm not showing any further questions at this time. I would now like to turn the call back over to Lee Olesky for closing remarks.

Okay. Thank you all very much for joining us this morning. As hopefully, we were clear 2020 was a banner year for Tradeweb, and we're really excited about 2021. And at the start to the year, you can see the numbers in January. We feel we have really multi-year opportunities in front of us. And if you have any other follow-up questions, feel free to reach out to Ashley and the team, and thank you very much for joining us today.

Thank you, guys.

Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.