7. Tradeweb Markets Inc. (NASDAQ:TW)
Revenue Growth: 36.50%
Number of Hedge Fund Investors In Q3 2024: 34
Tradeweb Markets Inc. (NASDAQ:TW) is a New York-based financial services firm that enables institutional and professional investors to trade asset classes, run data analytics, and conduct associated operations. It is a sizable company with $7.3 billion in total assets as of the third quarter. Tradeweb Markets Inc. (NASDAQ:TW)’s reliance on financial markets means that the firm prospers as activity in sectors such as fixed income and derivatives grows and remains robust. Higher rates followed by a rate cut cycle typically mean that rate fixed assets see greater investor interest, and Tradeweb Markets Inc. (NASDAQ:TW)’s shares have gained 46% year-to-date as higher commissions and trading activity led to a 30% commission revenue growth in H1 2024. Looking ahead, since rate derivatives, corporate bonds, and municipal bonds account for nearly 75% of Tradeweb Markets Inc. (NASDAQ:TW)’s revenue, activity in these markets will drive the firm’s hypothesis.
Tradeweb Markets Inc. (NASDAQ:TW)’s management shared insights into its credit business during the Q3 2024 earnings call. Here is what they said:
“Strong double-digit revenue growth was driven by 37% and 14% year-over-year revenue growth across U.S. and European credit respectively. We also achieved strong double-digit revenue growth across credit derivatives, Munis and China bonds. Automation continues to surge with global credit AiEX average daily trades increasing over 25% year-over-year.
We achieved our second highest fully electronic market share across U.S. IG helped by IG block market share of over 8%. We also achieved our second highest fully electronic high yield market share with record high yield block market share of nearly 5%. During the quarter, we achieved a new monthly high yield record of 9% in July. Our institutional business continues to scale as clients adopt our diverse set of protocols. Year-to-date, we estimate over 40% of our U.S. institutional variable revenue growth was driven by non-market factors, mainly market share. Our primary focus on growing institutional RFQ continues to pay off with average daily volume growing over 45% year-over-year with strong double-digit growth across both IG and high yield.
Moreover, portfolio trading average daily volume rose over 50% year-over-year with growth of over 70% across IG portfolio trading and over 20% growth across high yield. We continue to focus on leading with innovation and this is resonating with our clients leading to user growth of over 20% year-over-year. Retail credit revenues were up over 15% year-over-year as financial advisors continue to allocate investments towards credit to compliment their buying of U.S. treasuries and retail certificates of deposits. All trade produced a solid quarter with over $185 billion in volume, up over 35% year-over-year. Specifically, our all-to-all average daily volume grew over 20% year-over-year and our dealer RFQ offering grew over 25% year-over-year. The team continues to be focused on broadening out our network and increasing the number of responders on the all trade platform.
In the third quarter, the average number of responses per all-to-all inquiry rose over 10% year-over-year. We also continue to increase our engagement and wallet share with ETF market makers with average daily volume up over 45% year-over-year. Finally, our session’s average daily volume grew over 45% year-over-year. Looking ahead, U.S. credit remains a key focus area and we like the way we are positioned across our three client channels. We believe we have a long runway for growth with ample opportunity to innovate alongside our clients. During the quarter, we enhanced our multi-client net spotting offering based on client feedback, expanded our PT offering to include auto send capabilities and continue to see growing adoption of our RFQ Edge offering.”
