# Tradeweb Markets Inc. (TW) FY 2024 MD&A

Verbatim Item 7 Management's Discussion and Analysis from Tradeweb Markets Inc.'s 10-K for fiscal year 2024.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1758730/000175873025000038/tw-20241231.htm
Accession: 0001758730-25-000038
Filing date: 2025-02-07
Report date: 2024-12-31
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Published MD&A gate trimmed front/tail over-capture.
Confidence: high

Company profile: /company/TW/
All MD&A years: /company/TW/mda/
Previous year: /company/TW/mda/fy2023/ (FY 2023)
Next year: /company/TW/mda/fy2025/ (FY 2025)

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the sections titled “Introductory Note”, “Use of Non-GAAP Financial Measures” and our audited consolidated financial statements and related notes and other information included elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from the results described in or implied by the forward-looking statements. Factors that could cause or contribute to those differences include, but are not limited to, those identified below and those discussed in the sections titled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” included elsewhere in this Annual Report on Form 10-K.

The following discussion includes a comparison of our results of operations, cash flows and liquidity and capital resources for the years ended December 31, 2024 and 2023, respectively. A comparison of our results of operations, cash flows and liquidity and capital resources for the years ended December 31, 2023 and December 31, 2022 may be found in Part II, Item 7. – “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of our Annual Report on Form 10-K for the year ended December 31, 2023.

Overview

We are a leader in building and operating electronic marketplaces for our global network of more than 3,000 clients across the financial ecosystem. Our network is comprised of clients across the institutional, wholesale, retail and corporates client sectors, including many of the largest global asset managers, hedge funds, insurance companies, central banks, banks and dealers, proprietary trading firms, retail brokerage and financial advisory firms, regional dealers and corporations. Our marketplaces facilitate trading across a range of asset classes, including rates, credit, equities and money markets. We are a global company serving clients in over 85 countries with offices in North America, South America, Europe, Australia, Asia and the Middle East. We believe our proprietary technology and culture of collaborative innovation allow us to adapt our offerings to enter new markets, create new platforms and solutions and adjust to regulations quickly and efficiently. We support our clients by providing solutions across the trade lifecycle, including pre-trade, execution, post-trade and data and analytics.

Our institutional client sector serves institutional investors in over 85 countries around the globe and across over 30 currencies. We connect institutional investors with pools of liquidity using our flexible order and trading systems. Our clients trust the integrity of our markets and recognize the value they get by trading electronically: enhanced transparency, competitive pricing, efficient trade execution and regulatory compliance.

In our wholesale client sector, we provide a broad range of electronic, voice and hybrid platforms to dealers and financial institutions trading on our electronic or hybrid markets with our Dealerweb platform. This platform was launched in 2008 following the acquisition of inter-dealer broker Hilliard Farber & Co., Inc. In 2011, we acquired the brokerage assets of Rafferty Capital Markets and in June 2021, we acquired Nasdaq’s U.S. fixed income electronic trading platform (formerly known as eSpeed) (the “NFI Acquisition”). Today, Dealerweb actively competes across a range of rates, credit, money markets, derivatives and equity markets.

In our retail client sector, we provide advanced trading solutions for financial advisory firms and traders with our Tradeweb Direct platform. We entered the retail sector in 2006 and launched our Tradeweb Direct platform following the 2013 acquisition of BondDesk Group LLC, which was built to bring innovation and efficiency to the wealth management community. Tradeweb Direct provides financial advisory firms access to live offerings, accurate pricing in the marketplace and fast execution.

In our corporates client sector, we provide comprehensive investment technology and research solutions tailored to the needs of corporate treasury organizations globally. These solutions enable efficient trading of institutional money market funds and other short-term investments. We expanded into the corporate client sector through our acquisition of ICD on August 1, 2024. The addition of ICD to our network broadened our product suite, further diversified our client and revenue base and strengthened our position in the corporate treasury space, enabling us to provide a more comprehensive range of liquidity management tools and services.

Our markets are large and growing. Electronic trading continues to increase across the markets in which we operate as a result of market demand for greater transparency, higher execution quality, operational efficiency and lower costs, as well as regulatory changes. We believe our deep client relationships, asset class breadth, geographic reach, regulatory knowledge and scalable technology position us to continue to be at the forefront of the evolution of electronic trading. Our platforms provide transparent, efficient, cost-effective and compliant trading solutions across multiple products, regions and regulatory regimes. As market participants seek to trade across multiple asset classes, reduce their costs of trading and increase the effectiveness of their trading,

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including through the use of data and analytics, we believe the demand for our platforms and electronic trading solutions will continue to grow.

Trends and Other Factors Impacting Our Performance

Acquisitions

From time to time, we may evaluate potential acquisitions and engage in discussions and negotiations regarding potential acquisitions. Our revenues and profitability are affected by our acquisition activity, including the speed and cost at which we successfully integrate completed acquisitions into our existing business operations.

ICD

On August 1, 2024, we completed our acquisition of ICD.

In connection with the acquisition closing, Tradeweb Markets Inc. (the “Corporation”) issued and sold 41,705 shares of Class A common stock, with a grant date fair value of $4.7 million, to an equityholder of the ICD seller, who was also an employee of ICD and is currently an employee of the Company, which shares of Class A common stock were issued and sold as restricted stock (“RSAs”). The RSAs issued are subject to a two-year vesting period and forfeiture terms, pursuant to the Tradeweb Markets Inc. 2019 Omnibus Equity Incentive Plan. Of the $4.7 million in RSAs issued, $3.3 million was allocated to consideration transferred for the business combination, relating to the pre-combination service period completed before the acquisition date, and $1.3 million will be amortized into non-cash stock-based compensation expense over the two-year service period required subsequent to the acquisition date, with such special stock-based compensation amortization expense excluded from our non-GAAP financial measures of Adjusted EBITDA and Adjusted Net Income when it is recorded as expense.

Cash paid at closing, net of cash acquired and net of the proceeds from the sale of the RSAs, totaled $773.8 million, of which $770.9 million was determined to be consideration transferred for the business combination, $1.4 million was expensed during the year ended December 31, 2024 and $1.4 million was recorded as a prepaid asset, to be expensed over a two-year period. Both of these purchase price amounts that were or will be expensed are considered merger and acquisition transaction and integration costs and will be excluded from our non-GAAP financial measures of Adjusted EBITDA and Adjusted Net Income when recorded as expense.

In connection with the ICD Acquisition, we also issued to certain key ICD employees, 92,672 restricted stock units (the “ICD RSU Awards”), with a total grant date fair value of $10.3 million, that will vest one-third each year over a three-year period. Management determined that approximately $5.2 million of the ICD RSU Awards represents market based ordinary course compensation expense for these individuals, with the remaining $5.2 million representing a special award to help ensure retention of these key ICD employees during the three-year period subsequent to the acquisition and allow sufficient time for the integration of ICD’s operations into Tradeweb. The stock-based compensation expense relating to the portion of the ICD RSU Awards determined to be a special award will also be excluded from our non-GAAP financial measures of Adjusted EBITDA and Adjusted Net Income when it is recorded as expense. See “Non-GAAP Financial Measures” below for further details on ICD Acquisition related non-GAAP adjustments.

ICD is an institutional investment technology provider for corporate treasury organizations trading short-term investments. ICD’s flagship products include ICD Portal and ICD Portfolio Analytics. Our ICD portal is a one-stop shop to research, trade, analyze and report on investments across more than 40 available investment providers primarily offering money market funds and access to other short term products including deposits, fixed term funds and separately managed accounts (“SMAs”) (collectively referred to herein as “money market funds”). Portfolio Analytics is an AI-driven cloud solution for aggregating positions across a corporate treasury’s entire portfolio for analysis and reporting.

As part of Tradeweb, our goal is to provide a comprehensive solution for corporate treasurers and asset managers worldwide to manage short-term liquidity needs, including future plans to provide ICD clients with the ability to manage short-term liquidity needs and FX risk, as well as optimize yield and duration via our existing suite of products and partnerships. ICD clients will retain the ability to fully integrate their workflows with leading third-party treasury management and accounting systems and ICD’s portfolio analytics solution. In addition to plans to cross-sell our products to ICD’s clients, we also plan to leverage our international presence with the aim to accelerate growth and expansion, including by offering money market funds to our existing network of clients globally.

From the date of the ICD Acquisition through December 31, 2024, ICD revenues of $43.2 million and operating income of $2.1 million, including $18.4 million of depreciation and amortization from acquired assets, were included in our consolidated statements of income for the year ended December 31, 2024. See Note 4 – Acquisitions to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional details of this acquisition.

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r8fin

On January 19, 2024, we completed our acquisition of r8fin (the “r8fin Acquisition”) in exchange for total consideration of $125.9 million, consisting of $89.2 million in cash paid at closing (net of cash acquired) and the issuance of 374,601 shares of Class A common stock of the Corporation valued as of the acquisition date at $36.7 million.

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 Automated Intelligent Execution (“AiEX”) offerings, creating a valuable and broad-based approach to trading U.S. Treasuries and related futures trading. The r8fin Acquisition is not material to our consolidated financial statements and did not have a significant impact to our results of operations for the year ended December 31, 2024. See Note 4 – Acquisitions to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional details.

Organizational Changes

On June 20, 2024, we announced organizational changes to optimize operations for continued growth. As part of those organizational changes, Amy Clack joined the Company in August 2024 as Chief Administrative Officer and a member of the Executive Committee, overseeing operations, business integration, risk and corporate services. In addition, Thomas Pluta, our former President, left the Company and the board of directors, effective September 30, 2024. Effective in January 2025, we also named Enrico Bruni and Troy Dixon to the newly created roles of Co-Head of Global Markets. Mr. Dixon stepped down from serving on our board of directors, effective December 31, 2024, in anticipation of his new role as a member of our Executive Committee.

During the year ended December 31, 2024, we incurred $2.9 million in incremental compensation expense related to a cash severance payment to be paid to Mr. Pluta in accordance with the Company’s Executive Severance Policy with respect to Mr. Pluta’s departure in September 2024, all recorded during the three months ended June 30, 2024. As of June 17, 2024, there was also approximately $4.4 million in total unamortized stock-based compensation associated with equity awards previously granted to Mr. Pluta that were accelerated and amortized into expense over a revised estimated service period ending on September 30, 2024. Of this amount, $1.7 million represented regularly scheduled amortization that would have been recognized from June 17, 2024 through September 30, 2024 if Mr. Pluta’s employment was not terminated and $2.7 million represented accelerated stock-based compensation expense that was excluded from our non-GAAP financial measures of Adjusted EBITDA and Adjusted Net Income when it was recorded as expense during the year ended December 31, 2024. See “Non-GAAP Financial Measures” below for further details.

Economic Environment

Our business is impacted by the overall market activity and, in particular, trading volumes and market volatility. Lower volatility may result in lower trading volume for our clients and may negatively impact our operating performance and financial condition. Factors that may impact market activity in 2025 include, among other things, evolving monetary policies of central banks, economic, political and social conditions, legislative, regulatory or government policy changes, including the recent change in U.S. administration and Congress, which may lead to material changes to prior laws, rules and regulations, guidance and enforcement stances and concerns with respect to the banking industry, including as a result of any bank failures.

Because the majority of our financial assets are short-term in nature, they are not significantly affected by inflation. However, the rate of inflation may affect our expenses, such as employee compensation and benefits, technology and communication expenses and occupancy costs, which may not be readily recoverable in the prices of our services. We believe any effects of inflation on our results of operations and financial condition have not been significant during any of the periods presented in this Annual Report on Form 10-K. To the extent inflation, along with other factors, continues to result in elevated interest rates and has other adverse effects on the securities markets and the overall economy, it may adversely affect our results of operations and financial condition.

While our business is impacted by the overall activity of the market and market volatility, our revenues consist of a mix of fixed and variable fees that partially mitigates this impact. More importantly, we are actively engaged in the further electronification of trading activities, which will help mitigate this impact as we believe secular growth trends can partially offset market volatility risk.

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Regulatory Environment

Our business is subject to extensive regulations in the United States and internationally, which may expose us to significant regulatory risk and cause additional legal costs to ensure compliance. See Part I, Item 1. – “Business – Regulation.” The existing legal framework that governs the financial markets is periodically reviewed and amended, resulting in enforcement of new laws and regulations that apply to our business. The current regulatory environment in the United States and abroad may be subject to future legislative and regulatory changes driven by U.S. and global issues and priorities, including the recent change in U.S. administration and Congress, which may lead to material changes to prior laws, rules and regulations, guidance and enforcement stances. The impact of any changes in the legal or regulatory landscape on us and our operations remains uncertain. Compliance with regulations may require us to dedicate additional financial and operational resources, which may adversely affect our profitability. In addition, compliance with regulations may require our clients to dedicate significant financial and operational resources, which may negatively affect their ability to pay our fees and use our platforms and, as a result, our profitability. However, under certain circumstances regulation may increase demand for our platforms and solutions, and we believe we are well positioned to benefit from any potential increased electronification due to regulatory changes as market participants seek platforms that meet regulatory requirements and solutions that help them comply with their regulatory obligations.

Competitive Environment

We and our competitors compete to introduce innovations in market structure and new electronic trading capabilities. While we endeavor to be a leader in innovation, new trading capabilities of our competitors are also adopted by market participants. On the one hand, this increases liquidity and electronification for all participants, but it also puts pressure on us to further invest in our technology and to innovate to ensure the continued growth of our network of clients and continued improvement of liquidity, electronic processing and pricing on our platforms. Our ability to compete is influenced by key factors such as (i) developments in trading platforms and solutions, (ii) the liquidity we provide on transactions, (iii) the transaction costs we incur in providing our solutions, (iv) the efficiency in execution of transactions on our platforms, (v) our ability to hire and retain talent and (vi) our ability to pursue strategic acquisitions and alliances and (vii) our ability to maintain the security of our platforms and solutions. Our competitive position is also influenced by the familiarity and integration of our clients with our electronic, voice and hybrid systems. When either a client wants to trade in a new product or we want to introduce a new product, trading protocol or other solution, we believe we benefit from our clients’ familiarity with our offerings as well as our integration into their order management systems and back offices. See Part I, Item 1. – “Business – Competition” for more detail on our competitors.

Technology and Cybersecurity Environment

Our business and its success are largely impacted by the introduction of increasingly complex and sophisticated technology systems and infrastructures and new business models. Offering specialized trading venues and solutions through the development of new and enhanced platforms is essential to maintaining our level of competitiveness in the market and attracting new clients seeking platforms that provide advanced automation and better liquidity. We believe we will continue to increase demand for our platforms and solutions and the volume of transactions on our platforms, and thereby enhance our client relationships, by responding to new trading and information requirements through utilizing technological advances and emerging industry standards and practices in an effective and efficient way. We plan to continue to focus on and invest in technology infrastructure initiatives and continually improve and expand our platforms and solutions to further enhance our market position. We experience cyber-threats and attempted security breaches. If these were successful, these cybersecurity incidents could impact revenue and operating income and increase costs. We therefore continue to make investments to strengthen our cybersecurity infrastructure, which may result in increased costs. See Part I, Item 1C. – “Cybersecurity – Governance” for further detail regarding our cybersecurity risk management, strategy and governance structure.

Foreign Currency Exchange Rate Environment

We earn revenues, pay expenses, hold assets and incur liabilities in currencies other than the U.S. dollar. Accordingly, fluctuations in foreign currency exchange rates can affect our results of operations from period to period. In particular, fluctuations in exchange rates for non-U.S. dollar currencies may reduce the U.S. dollar value of revenues, earnings and cash flows we receive from non-U.S. markets, increase our operating expenses (as measured in U.S. dollars) in those markets, negatively impact our competitiveness in those markets or otherwise adversely impact our results of operations or financial condition. Future fluctuations of foreign currency exchange rates and their impact on our results of operations and financial condition are inherently uncertain. As we continue to grow the size of our global operations, these fluctuations may be material. See Part II, Item 7A. – “Quantitative and Qualitative Disclosures About Market Risk – Foreign Currency and Derivative Risk” elsewhere in this Annual Report on Form 10-K, for the change in revenue and operating income caused by fluctuations in foreign currency rates and realized and unrealized gains/losses from foreign currency during the years ended December 31, 2024, 2023 and 2022.

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Taxation

In connection with the Reorganization Transactions, we became the sole manager of TWM LLC. As a result, beginning with the second quarter of 2019, we became subject to U.S. federal, state and local income taxes with respect to our allocable share of any taxable income of TWM LLC and are taxed at prevailing corporate tax rates. Our actual effective tax rate is impacted by our ownership share of TWM LLC, which has increased over time primarily due to Continuing LLC Owners redeeming or exchanging their LLC Interests for shares of Class A common stock or Class B common stock, as applicable, and our purchase of LLC Interests from Continuing LLC Owners. Furthermore, in connection with the IPO, we entered into the Tax Receivable Agreement pursuant to which we began to make payments in January 2021, and we expect future payments to be significant. We intend to continue to cause TWM LLC to make distributions in an amount sufficient to allow us to pay our tax obligations, operating expenses, including payments under the Tax Receivable Agreement, and our quarterly cash dividends, as and when declared by our board of directors.

On August 16, 2022, former 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 years ended December 31, 2024 and 2023. The Company is subject to the current 15% CAMT. However, it is not expected to have a material impact on the Company’s effective tax rate. The IRA also has not had an impact to our non-GAAP adjusted effective tax rate used for purposes of calculating our non-GAAP measure of Adjusted Net Income.

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 which became effective for the Company beginning on January 1, 2024. The Company falls under 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 anticipate a material impact to its financial condition, results of operations and cash flows from the Two Pillar Plan.

Components of our Results of Operations

Revenues

Our revenue is derived primarily from transaction fees, commissions, subscription fees and market data fees.

Transaction Fees and Commissions

We earn transaction fees and/or commissions from transactions executed on our trading platforms on both a variable and fixed price basis, which vary by geographic region, product type and trade size. For most of our products, clients pay both fixed minimum monthly transaction fees and variable transaction fees on a per transaction basis in excess of the monthly minimum. Clients may also pay a subscription fee in addition to or instead of the minimum monthly transaction fees. For other products, instead of a minimum monthly transaction fee, clients may pay a fixed transaction fee or only a variable transaction fee on a per transaction basis. We also earn commission revenue from our 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. For to-be-announced mortgage backed securities (“TBA-MBS”), U.S. Treasury and repurchase agreement transactions executed by our wholesale clients, we also generate revenue from fixed commissions that are generally invoiced monthly.

For variable transaction fees and commissions, we charge clients based on the mix of products traded and the volume of transactions executed. Transaction volume is determined by using a measure of the notional volume of the products traded, a count of the number of trades or, in the case of the ICD Portal, the client’s average daily balance (“ADB”) invested in the money market funds during a calendar month. Because transaction fees and commissions are sometimes subject to plans with tiered pricing based on product mix, volume, monthly minimums and monthly maximum fee caps, average variable fees per million dollars of volume traded generated for a client may vary each month depending on the mix of products and volume traded. Furthermore, because transaction fees and commissions vary by geographic region, product type and trade size, our revenues may not correlate with volume growth.

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Subscription Fees

We earn subscription fees primarily for granting clients access to our markets for trading and market data. For a limited number of products, we only charge subscription fees and no transaction fees or commissions. Subscription fees are generally charged on a fixed price basis.

For purposes of our discussion of our results of operations, we include LSEG market data fees in subscription fees. We earn fixed license fees from our market data license agreement with LSEG. We also earn a revenue share for certain data services which are provided to LSEG and then sold by LSEG to its customers. Our revenue share revenues may fluctuate from period to period depending on the revenue achieved by LSEG during the applicable fee earning period.

Operating Expenses

Employee Compensation and Benefits

Employee compensation and benefits expense consists of wages, employee benefits, bonuses, commissions, stock-based compensation cost and related taxes. Factors that influence employee compensation and benefits expense include revenue and earnings growth, hiring or acquiring new employees and trading activity which generates broker commissions. We expect employee compensation and benefits expense to increase as we hire or acquire additional employees to support revenue and earnings growth. As a result, employee compensation and benefits can vary from period to period.

Depreciation and Amortization

Depreciation and amortization expense consists of costs relating to the depreciation and amortization of acquired and internally developed software, other intangible assets, leasehold improvements, furniture and equipment.

General and Administrative

General and administrative expense consists of travel and entertainment, marketing, value-added taxes, state use taxes, foreign currency transaction gains and losses, gains and losses on foreign exchange derivative contracts entered into for foreign exchange risk management purposes relating to operating activities, charitable contributions, other administrative expenses and credit loss expense. We expect general and administrative expense to increase as we expand the number of our employees and product offerings and grow our operations.

Technology and Communications

Technology and communications expense consists of costs relating to software and hardware maintenance, our internal network connections, data center costs, clearance and other trading platform related transaction costs and data feeds provided by third-party service providers, including LSEG. Factors that influence technology and communications expense include trading volumes and our investments in innovation, data strategy and cybersecurity.

Professional Fees

Professional fees consist primarily of accounting, tax and legal fees and fees paid to technology and software consultants to maintain our trading platforms and infrastructure, as well as costs related to business acquisition transactions.

Occupancy

Occupancy expense consists of operating lease rent and related costs for office space and data centers leased in North America, South America, Europe, Australia, Asia and the Middle East. We expect occupancy expense to increase as our space needs grow in line with our global expansion.

Tax Receivable Agreement Liability Adjustment

The tax receivable agreement liability adjustment reflects changes in the tax receivable agreement liability recorded in our consolidated statements of financial condition as a result of changes in the mix of earnings, tax legislation and tax rates in various jurisdictions which impacted our estimated future tax savings.

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Interest Income

Interest income consists primarily of interest earned from our cash deposited with large commercial banks and money market funds, as well as interest earned from our investments in available-for-sale debt securities.

Interest Expense

Interest expense consists primarily of any interest expense incurred or payable on our tax receivable agreement liability, commitment fees payable on, and, if applicable, interest payable on any borrowings outstanding under our credit facility and amortization of deferred financing costs.

Other Income (Loss), Net

Other income (loss), net consists of any income or loss earned from investments, any mark-to-market adjustments or impairments recorded on investments, unrealized and realized gain/loss on foreign exchange derivative contracts entered into for foreign exchange risk management purposes relating to investing activities and any other non-operating items.

Income Taxes

We are subject to U.S. federal, state and local income taxes with respect to our taxable income, including our allocable share of any taxable income of TWM LLC, and are 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 to us. 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.

Net Income Attributable to Non-Controlling Interests

We are the sole manager of TWM LLC. As a result of this control, and because we have a substantial financial interest in TWM LLC, we consolidate the financial results of TWM LLC and report a non-controlling interest in our consolidated financial statements, representing the economic interests of TWM LLC held by Continuing LLC Owners. Income or loss is attributed to the non-controlling interests based on the relative ownership percentages of LLC Interests held during the period by us and any Continuing LLC Owners.

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. In the event of such election by a Continuing LLC Owner, we may, at our 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 connection with any redemption or exchange, we will receive a corresponding number of LLC Interests, increasing our total ownership interest in TWM LLC. As of December 31, 2024, we owned 90.2% of TWM LLC and Continuing LLC Owners owned the remaining 9.8% of TWM LLC.

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Results of Operations

For the Years Ended December 31, 2024 and December 31, 2023

The following table sets forth a summary of our statements of income for the years ended December 31, 2024 and 2023:

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[[/GREPCENT_TABLE]]

Revenues

Our revenues for the years ended December 31, 2024 and 2023, and the resulting dollar and percentage changes, were as follows:

[[GREPCENT_TABLE]]
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[[/GREPCENT_TABLE]]

(1)Subscription fees for the years ended December 31, 2024 and 2023 include $82.1 million and $64.3 million, respectively, of LSEG market data fees.

(2)Constant currency revenue change, which is a non-GAAP financial measure, is defined as total revenue change excluding the effects of foreign currency fluctuations. Total revenue excluding the effects of foreign currency fluctuations is calculated by translating the current period and prior period’s total revenue using the annual average exchange rates for the prior period. We use constant currency change as a supplemental metric to evaluate our underlying total revenue performance between periods by removing the impact of foreign currency fluctuations. We believe that providing constant currency change provides a useful comparison of our total revenue performance and trends between periods.

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Our strong results for the year ended December 31, 2024 reflected significant organic growth and solid contributions from our recent acquisitions of ICD, r8fin and Yieldbroker. We remained focused on and grew market share while also benefiting from rates market volatility around central bank moves and broad-based volume growth, which underscored our sustained momentum across asset classes. The primary driver of the $387.7 million increase in revenue was related to a $345.2 million increase in transaction fees and commissions to $1.4 billion for the year ended December 31, 2024 from $1.1 billion for the year ended December 31, 2023, primarily due to higher revenues for rates derivatives products, U.S. and European corporate bonds, U.S., European and other government bonds, repurchase agreements and mortgages, as well as the basis point commissions earned on the ADB of client money market fund investments made through the ICD Portal for the five months in 2024 subsequent to the ICD acquisition closing.

Our total revenue by asset class for the years ended December 31, 2024 and 2023, and the resulting dollar and percentage changes, were as follows:

[[GREPCENT_TABLE]]
[["","","Year Ended"],["","","December 31,"],["","","2024","","2023","","$ Change","","% Change"],["","","(dollars in thousands)"],["Revenues"],["Rates","","$","904,938","","","$","695,434","","","$","209,504","","","30.1","%"],["Credit","","459,040","","","367,394","","","91,646","","","24.9","%"],["Equities","","104,184","","","95,295","","","8,889","","","9.3","%"],["Money Markets","","115,220","","","63,010","","","52,210","","","82.9","%"],["Market Data","","118,020","","","94,074","","","23,946","","","25.5","%"],["Other","","24,547","","","23,012","","","1,535","","","6.7","%"],["Total revenue","","$","1,725,949","","","$","1,338,219","","","$","387,730","","","29.0","%"]]
[[/GREPCENT_TABLE]]

Our variable and fixed revenues by asset class for the years ended December 31, 2024 and 2023, and the resulting dollar and percentage changes, were as follows:

[[GREPCENT_TABLE]]
[["","","Year Ended"],["","","December 31,"],["","","2024","","2023","","$ Change","","% Change"],["","","Variable","","Fixed","","Variable","","Fixed","","Variable","","Fixed","","Variable","","Fixed"],["","","(dollars in thousands)"],["Revenues"],["Rates","","$","660,438","","","$","244,500","","","$","462,132","","","$","233,302","","","$","198,306","","","$","11,198","","","42.9","%","","4.8","%"],["Credit","","423,708","","","35,332","","","338,981","","","28,413","","","84,727","","","6,919","","","25.0","%","","24.4","%"],["Equities","","94,964","","","9,220","","","86,003","","","9,292","","","8,961","","","(72)","","","10.4","%","","(0.8)","%"],["Money Markets","","98,216","","","17,004","","","45,830","","","17,180","","","52,386","","","(176)","","","114.3","%","","(1.0)","%"],["Market Data","","457","","","117,563","","","268","","","93,806","","","189","","","23,757","","","70.5","%","","25.3","%"],["Other","","981","","","23,566","","","\u2014","","","23,012","","","981","","","554","","","N/M","","2.4","%"],["Total revenue","","$","1,278,764","","","$","447,185","","","$","933,214","","","$","405,005","","","$","345,550","","","$","42,180","","","37.0","%","","10.4","%"]]
[[/GREPCENT_TABLE]]

N/M = not meaningful

The key drivers of the change in total revenue by asset class are summarized as follows:

Rates. Revenues from our rates asset class increased by $209.5 million or 30.1% to $904.9 million for the year ended December 31, 2024 compared to $695.4 million for the year ended December 31, 2023 primarily due to higher variable transaction fees and commissions on higher trading volumes for rates derivatives products, U.S., European and other government bonds and mortgages.

Credit. Revenues from our credit asset class increased by $91.6 million or 24.9% to $459.0 million for the year ended December 31, 2024 compared to $367.4 million for the year ended December 31, 2023 primarily due to higher variable transaction fees and commissions on higher trading volumes for U.S. and European corporate bonds and credit derivatives products, as well as an increase in fixed subscription fees.

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Equities. Revenues from our equities asset class increased by $8.9 million or 9.3% to $104.2 million for the year ended December 31, 2024 compared to $95.3 million for the year ended December 31, 2023 primarily due to higher variable transaction fees and commissions on higher trading volumes for European ETFs and equity derivatives products.

Money Markets. Revenues from our money markets asset class increased by $52.2 million or 82.9% to $115.2 million for the year ended December 31, 2024 compared to $63.0 million for the year ended December 31, 2023 primarily due to the August 1, 2024 acquisition of ICD and the associated basis point commissions earned on the ADB of client money market fund investments made through the ICD Portal, as well as higher variable transaction fees and commissions on higher trading volumes for repurchase agreements.

Market Data. Revenues from our market data asset class increased by $23.9 million or 25.5% to $118.0 million for the year ended December 31, 2024 compared to $94.1 million for the year ended December 31, 2023. The increase was derived primarily from increased LSEG market data fees from our market data agreement that was amended effective as of November 1, 2023, as well as an increase in proprietary third party market data revenue.

Other. Revenues from our other asset class increased by $1.5 million or 6.7% to $24.5 million for the year ended December 31, 2024 compared to $23.0 million for the year ended December 31, 2023.

We generate revenue from a diverse portfolio of client sectors. Our total revenue by client sector for the years ended December 31, 2024 and 2023, and the resulting dollar and percentage changes, were as follows:

[[GREPCENT_TABLE]]
[["","","Year Ended"],["","","December 31,"],["","","2024","","2023","","$ Change","","% Change"],["","","(dollars in thousands)"],["Revenues"],["Institutional","","$","1,035,775","","","$","797,038","","","$","238,737","","","30.0","%"],["Wholesale","","385,673","","","312,586","","","73,087","","","23.4","%"],["Retail","","143,247","","","134,521","","","8,726","","","6.5","%"],["Corporates","","43,234","","","\u2014","","","43,234","","","N/M"],["Market Data","","118,020","","","94,074","","","23,946","","","25.5","%"],["Total revenue","","$","1,725,949","","","$","1,338,219","","","$","387,730","","","29.0","%"]]
[[/GREPCENT_TABLE]]

N/M = not meaningful

Institutional. Revenues from our institutional client sector increased by $238.7 million or 30.0% to $1.0 billion for the year ended December 31, 2024 from $797.0 million for the year ended December 31, 2023. The increase was derived primarily from higher revenues for rates derivatives products, U.S. and European corporate bonds and U.S., European and other government bonds.

Wholesale. Revenues from our wholesale client sector increased by $73.1 million or 23.4% to $385.7 million for the year ended December 31, 2024 from $312.6 million for the year ended December 31, 2023. The increase was derived primarily from higher revenues for U.S. government bonds, including positive contributions from r8fin, as well as higher revenues for U.S. and European corporate bonds, rates derivatives products and repurchase agreements.

Retail. Revenues from our retail client sector increased by $8.7 million or 6.5% to $143.2 million for the year ended December 31, 2024 from $134.5 million for the year ended December 31, 2023. The increase was derived primarily from higher revenues for U.S. corporate bonds, municipals and structured products.

Corporates. Revenues from our corporates client sector were $43.2 million for the year ended December 31, 2024. With the August 1, 2024 acquisition of ICD and its proprietary institutional investment technology, we entered the corporates client sector. This new client channel primarily serves corporate treasury organizations worldwide in investing in money market funds. Revenues from our corporates client sector primarily includes the basis point commissions earned on the ADB of client money market fund investments made through the ICD Portal for the five months subsequent to the acquisition closing. See “—Trends and Other Factors Impacting Our Performance—Acquisitions,” above for further details about this acquisition.

Market Data. Revenues from our market data client sector increased by $23.9 million or 25.5% to $118.0 million for the year ended December 31, 2024 from $94.1 million for the year ended December 31, 2023. The increase was derived primarily from increased LSEG market data fees from our market data agreement that was amended effective as of November 1, 2023, as well as an increase in proprietary third party market data revenue.

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Our revenues and client base are also diversified by geography. Our total revenue by geography (based on client location) for the years ended December 31, 2024 and 2023, and the resulting dollar and percentage changes, were as follows:

[[GREPCENT_TABLE]]
[["","","Year Ended"],["","","December 31,"],["","","2024","","2023","","$ Change","","% Change"],["","","(dollars in thousands)"],["Revenues"],["U.S.","","$","1,060,697","","","$","850,338","","","$","210,359","","","24.7","%"],["International","","665,252","","","487,881","","","177,371","","","36.4","%"],["Total revenue","","$","1,725,949","","","$","1,338,219","","","$","387,730","","","29.0","%"]]
[[/GREPCENT_TABLE]]

U.S. Revenues from U.S. clients increased by $210.4 million or 24.7% to $1.1 billion for the year ended December 31, 2024 from $850.3 million for the year ended December 31, 2023 primarily due to higher revenues for U.S. corporate bonds, U.S. government bonds, rates derivatives products, market data and money markets, including contributions from ICD.

International. Revenues from International clients increased by $177.4 million or 36.4% to $665.3 million for the year ended December 31, 2024 from $487.9 million for the year ended December 31, 2023 primarily due to higher revenues for rates derivatives products, European and other government bonds, European corporate bonds, market data and money markets, including contributions from ICD.

Operating Expenses

Our expenses for the years ended December 31, 2024 and 2023 were as follows:

[[GREPCENT_TABLE]]
[["","","Year Ended"],["","","December 31,"],["","","2024","","2023","","$ Change","","% Change"],["","","(dollars in thousands)"],["Employee compensation and benefits","","$","592,690","","","$","460,305","","","$","132,385","","","28.8","%"],["Depreciation and amortization","","219,999","","","185,350","","","34,649","","","18.7","%"],["Technology and communications","","98,568","","","77,506","","","21,062","","","27.2","%"],["General and administrative","","56,317","","","51,495","","","4,822","","","9.4","%"],["Professional fees","","60,132","","","42,364","","","17,768","","","41.9","%"],["Occupancy","","20,215","","","15,930","","","4,285","","","26.9","%"],["Total expenses","","$","1,047,921","","","$","832,950","","","$","214,971","","","25.8","%"]]
[[/GREPCENT_TABLE]]

Employee Compensation and Benefits. Expenses related to employee compensation and benefits increased by $132.4 million or 28.8% to $592.7 million for the year ended December 31, 2024 from $460.3 million for the year ended December 31, 2023. The increase was primarily due to an increase in incentive compensation expense tied to our financial performance, as well as an increase in headcount and related salaries, bonuses and benefits to support our continued growth.

Depreciation and Amortization. Expenses related to depreciation and amortization increased by $34.6 million or 18.7% to $220.0 million for the year ended December 31, 2024 from $185.4 million for the year ended December 31, 2023. The increase was primarily due to increases in amortization of assets acquired in connection with the ICD, r8fin and Yieldbroker acquisitions on August 1, 2024, January 19, 2024 and August 31, 2023, respectively.

Technology and Communications. Expenses related to technology and communications increased by $21.1 million or 27.2% to $98.6 million for the year ended December 31, 2024 from $77.5 million for the year ended December 31, 2023. The increase was primarily due to investment in our data strategy and infrastructure and increased clearance and data fees driven primarily by higher trading volumes period-over-period.

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General and Administrative. Expenses related to general and administrative costs increased by $4.8 million or 9.4% to $56.3 million for the year ended December 31, 2024 from $51.5 million for the year ended December 31, 2023. The increase was primarily due to increases in travel, marketing and recruiting costs to support our continued growth. These increases were offset by an $11.3 million increase in foreign exchange gains during the year ended December 31, 2024 compared to the year ended December 31, 2023. Realized and unrealized foreign currency gains totaled $10.4 million during the year ended December 31, 2024 as compared to $0.8 million in losses during the year ended December 31, 2023. The change was primarily driven by the change in fair value of our foreign currency forward contracts used in connection with our foreign currency risk management program, partially offset by an increase in foreign currency re-measurement losses on transactions in nonfunctional currencies.

Professional Fees. Expenses related to professional fees increased by $17.8 million or 41.9% to $60.1 million for the year ended December 31, 2024 from $42.4 million for the year ended December 31, 2023. The increase was primarily due to an increase in professional fees related to acquisitions.

Occupancy. Expenses related to occupancy costs increased by $4.3 million or 26.9% to $20.2 million for the year ended December 31, 2024 as compared to $15.9 million for the year ended December 31, 2023. The increase was primarily due to higher data center and office rent expense associated with our global expansion.

Tax Receivable Agreement Liability Adjustment

The tax receivable agreement liability adjustment was $7.7 million of income for the year ended December 31, 2024 compared to $9.5 million of expense for the year ended December 31, 2023, due to changes in the tax receivable agreement liability recorded in our consolidated statements of financial condition primarily as a result of changes to tax legislation and tax rates in various jurisdictions, which impacted our estimated future tax savings.

Interest Income

Interest income increased by $6.6 million to $74.0 million for the year ended December 31, 2024 from $67.4 million for the year ended December 31, 2023 primarily due to increases in interest rates and our average invested cash balance period over period.

Interest Expense

Interest expense increased by $2.2 million to $4.3 million for the year ended December 31, 2024 from $2.0 million for the year ended December 31, 2023 primarily due to interest expense incurred on payments due under the Tax Receivable Agreement.

Other Income (Loss), Net

Other loss decreased by $12.0 million to a $1.1 million loss for the year ended December 31, 2024 from a $13.1 million loss for the year ended December 31, 2023. During the year ended December 31, 2024, we recognized a $1.3 million loss due to the impairment of a minority equity investment, which was partially offset by a $0.2 million unrealized gain relating to the increase in fair value of our Canton Coin holdings during the year ended December 31, 2024. During the year ended December 31, 2023, we recognized a $11.1 million loss due to the impairment of a minority equity investment and a $1.3 million loss in connection with unwinding the out-of-the-money foreign currency call option entered into in order to partially mitigate the foreign currency exposure on the payment of the purchase price for the Yieldbroker Acquisition. During the year ended December 31, 2023, we also recognized a $0.7 million loss due to a net reduction in the tax indemnification receivables from Refinitiv relating to the settlement of the tax matter for less than the previously estimated amount.

Income Taxes

Income tax expense increased by $56.0 million or 43.6% to $184.4 million for the year ended December 31, 2024 from $128.5 million for the year ended December 31, 2023. The provision for income taxes includes U.S. federal, state, local, and foreign taxes. The effective tax rate for the year ended December 31, 2024 was approximately 24.4%, compared with 23.4% for the year ended December 31, 2023. The effective tax rate for the years ended December 31, 2024 and 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 interests.

Effects of Inflation

While inflation may impact our revenues and operating expenses, we believe the effects of inflation, if any, on our results of operations and financial condition have not been significant during the years ended December 31, 2024 and 2023. However, there can be no assurance that our results of operations and financial condition will not be materially impacted by inflation in the future. See “— Trends and Other Factors Impacting Our Performance — Economic Environment” above.

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Liquidity and Capital Resources

Overview

Liquidity describes the ability of a company to generate sufficient cash flows to meet the cash requirements of its business operations, including working capital needs to meet operating expenses, debt service, acquisitions, other commitments and contractual obligations. We consider liquidity in terms of cash on hand, cash flows from operations and availability under the 2023 Revolving Credit Facility and their sufficiency to fund our operating and investing activities.

Historically, we have generated significant cash flows from operations and have funded our business operations through cash on hand and cash flows from operations.

Our primary cash needs are for day to day operations, working capital requirements, clearing margin requirements, capital expenditures primarily for software and equipment, our expected dividend payments and our share repurchase program. In addition, we are obligated to make payments under the Tax Receivable Agreement.

We expect to fund our short and long-term liquidity requirements through cash and cash equivalents and cash flows from operations. While historically we have generated significant and adequate cash flows from operations, in the case of an unexpected event in the future or otherwise, we may fund our liquidity requirements through borrowings under the 2023 Revolving Credit Facility.

We believe that our projected cash position, cash flows from operations and, if necessary, borrowings under the 2023 Revolving Credit Facility, will be sufficient to fund our liquidity requirements for at least the next 12 months. However, our future liquidity requirements could be higher than we currently expect as a result of various factors. For example, any future investments, acquisitions, joint ventures or other similar transactions, which we consider from time to time, may reduce our cash balance or require additional capital. In addition, our ability to continue to meet our future liquidity requirements will depend on, among other things, our ability to achieve anticipated levels of revenues and cash flows from operations and our ability to manage costs and working capital successfully, all of which are subject to general economic, financial, competitive and other factors beyond our control. In the event we require any additional capital, it will take the form of equity or debt financing, or both, and there can be no assurance that we will be able to raise any such financing on terms acceptable to us or at all.

As of December 31, 2024 and 2023, we had cash and cash equivalents of approximately $1.3 billion and $1.7 billion, respectively. All cash and cash equivalents were held in accounts with financial institutions or money market funds such that the funds are immediately available or in fixed term deposits or investments with a maximum maturity of three months. See Part II, Item 7A. – “Quantitative and Qualitative Disclosures About Market Risk – Credit Risk” elsewhere in this Annual Report on Form 10-K.

Factors Influencing Our Liquidity and Capital Resources

Dividend Policy

Subject to legally available funds, we intend to pay quarterly cash dividends on our Class A common stock and Class B common stock equal to $0.12 per share. As discussed below, our ability to pay these quarterly cash dividends on our Class A common stock and Class B common stock will depend on distributions to us from TWM LLC.

The declaration, amount and payment of any dividends will be at the sole discretion of our board of directors and will depend on our and our subsidiaries’ results of operations, capital requirements, financial condition, business prospects, contractual restrictions, restrictions imposed by applicable laws and other factors that our board of directors deem relevant. Because we are a holding company and all of our business is conducted through our subsidiaries, we expect to pay dividends, if any, only from funds we receive from our subsidiaries. Accordingly, our ability to pay dividends to our stockholders is dependent on the earnings and distributions of funds from our subsidiaries. As the sole manager of TWM LLC, we intend to cause, and will rely on, TWM LLC to make distributions in respect of LLC Interests to fund our dividends. If TWM LLC is unable to cause these subsidiaries to make distributions, it may have inadequate funds to distribute to us and we may be unable to fund our dividends. In addition, when TWM LLC makes distributions to us, the other holders of LLC Interests will be entitled to receive proportionate distributions based on their economic interests in TWM LLC at the time of such distributions.

Our board of directors will periodically review the cash generated from our business and the capital expenditures required to finance our growth plans and determine whether to modify the amount of regular dividends and/or declare any periodic special dividends. Any future determination to change the amount of dividends and/or declare special dividends will be at the discretion of our board of directors and will be dependent upon then-existing conditions and other factors that our board of directors

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considers relevant. See “Risk Factors — Risks Relating to our Organizational Structure and Governance — Our principal asset is our equity interest in TWM LLC, and, accordingly, we depend on distributions from TWM LLC to pay our taxes and expenses, including payments under the Tax Receivable Agreement” and “Risk Factors — Risks Relating to Ownership of our Class A Common Stock — We intend to continue to pay regular dividends on our Class A common stock and Class B common stock, but our ability to do so may be limited.”

Cash Dividends

On February 6, 2025, the board of directors of Tradeweb Markets Inc. declared a cash dividend of $0.12 per share of Class A common stock and Class B common stock for the first quarter of 2025. This dividend will be payable on March 17, 2025 to stockholders of record as of March 3, 2025. The February 2025 dividend declaration of $0.12 represents a 20.0% per share increase from our 2024 quarterly dividend of $0.10. During 2024, Tradeweb Markets Inc. paid quarterly cash dividends of $0.10 per share to holders of Class A common stock and Class B common stock in an aggregate amount totaling $85.2 million.

Cash Distributions

On February 6, 2025, 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 $75.8 million, as adjusted by required state and local tax withholdings that will be determined prior to the record date of March 3, 2025, payable on March 13, 2025.

During 2024, TWM LLC made quarterly cash distributions to its equityholders in an aggregate amount of $283.9 million, including distributions to Tradeweb Markets Inc. of $256.2 million and distributions to non-controlling interests of $27.8 million. The proceeds of the cash distributions were used by Tradeweb Markets Inc. to fund dividend payments, taxes and expenses.

Share Repurchase Program

On December 5, 2022, the board of directors authorized the 2022 Share Repurchase Program, after completing in October 2022, the $150.0 million of total repurchases of the Company’s Class A common stock authorized under its previous program. The 2022 Share Repurchase Program was authorized to continue to offset annual dilution from stock-based compensation plans, as well as to opportunistically repurchase our Class A common stock. The 2022 Share Repurchase Program authorizes the purchase of up to $300.0 million of our 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 10b-18 or 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 our 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 year ended December 31, 2024, the Company acquired a total of 478,915 shares of Class A common stock, at an average price of $125.07, for purchases totaling $59.9 million, pursuant to the 2022 Share Repurchase Program. As of December 31, 2024, a total of $179.9 million remained available for repurchase pursuant to the 2022 Share Repurchase Program.

Other Share Repurchases

In addition to the share repurchase programs discussed above, we may also withhold shares to cover the payroll tax withholding obligations upon the exercise of stock options and vesting of PRSUs, RSUs and performance-based restricted stock units that vest based on market conditions (“PSUs”).

During the year ended December 31, 2024, the Company withheld 485,745 shares of common stock from employee stock option, PRSU and RSU awards, at an average price per share of $98.72 and an aggregate value of $48.0 million based on the price of the Class A common stock on the date the relevant withholding occurred.

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Tax Receivable Agreement

We are obligated to make payments under the Tax Receivable Agreement. See Note 10 – Tax Receivable Agreement to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional details regarding the requirements for these payments. Although the actual timing and amount of any payments that may be made under the Tax Receivable Agreement will vary, we expect the payments required will be significant. Any payments made by us under the Tax Receivable Agreement will generally reduce the amount of overall cash flows that might have otherwise been available to us or to TWM LLC. These payments will offset some of the tax benefits that we expect to realize as a result of the ownership structure of TWM LLC. To the extent that we are unable to make payments under the Tax Receivable Agreement for any reason, the unpaid amounts generally will be deferred and will accrue interest until paid by us. The first payment of the Tax Receivable Agreement was made in January 2021. As of December 31, 2024, total amounts due to Continuing LLC Owners under the Tax Receivable Agreement were $372.8 million, substantially all due to be paid over 15 years following the purchase of LLC Interests from Continuing LLC Owners or redemption or exchanges by Continuing LLC Owners of LLC Interests.

Liabilities under the Tax Receivable Agreement include amounts to be paid to Continuing LLC Owners, assuming we will have sufficient taxable income over the term of the Tax Receivable Agreement to utilize the related tax benefits. In determining the estimated timing of payments, the current year’s taxable income is used to extrapolate an estimate of future taxable income. The Company is subject to CAMT, which has impacted the estimated period in which the payments will be made, as reflected in the payment schedule below. As of December 31, 2024, we had the following obligations expected to be paid pursuant to the Tax Receivable Agreement. We may choose, at our discretion, to make estimated payments ahead of contractual due dates in an effort to reduce interest expense payable on the current liability and as a result, timing of actual payments may differ from the schedule below.

[[GREPCENT_TABLE]]
[["","","","","Payments due by period"],["","","Total","","Less than 1 year","","1 to 3 years","","3 to 5 years","","More than 5 years"],["","","(dollars in thousands)"],["Tax receivable agreement liability","","$","372,839","","","$","3,981","","","$","99,245","","","$","94,596","","","$","175,017"]]
[[/GREPCENT_TABLE]]

In addition to these amounts above, our tax receivable agreement liability and future payments thereunder are expected to increase as we realize (or are deemed to realize) an increase in tax basis of TWM LLC’s assets resulting from any future purchases, redemptions or exchanges of LLC Interests from Continuing LLC Owners. We currently expect to fund these future tax receivable agreement liability payments from some of the realized cash tax savings as a result of this increase in tax basis.

Indebtedness

As of December 31, 2024 and 2023, we had no outstanding indebtedness.

On November 21, 2023, TWM LLC entered into the 2023 Revolving Credit Facility with a syndicate of banks, which replaced its secured credit facility entered into on April 8, 2019. 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.

The 2023 Revolving Credit Facility permits borrowings of up to $500.0 million by TWM LLC. Subject to the satisfaction of certain conditions, we will be 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. The 2023 Revolving Credit Facility will mature on November 21, 2028.

As of December 31, 2024, there were $0.5 million in letters of credit issued under the 2023 Revolving Credit Facility and no borrowings outstanding. As of December 31, 2024, we had availability of $499.5 million.

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

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margin based on the Company’s consolidated net leverage ratio ranging from 1.25% to 1.75%. The agreement that governs the 2023 Revolving Credit Facility also includes a commitment fee of 0.25% for available but unborrowed amounts. We are also required to pay customary letter of credit fees and agency fees.

We have the option to voluntarily repay outstanding loans at any time without premium or penalty other than customary “breakage” costs with respect to Term SOFR, SONIA and EURIBOR loans. There will be no scheduled amortization under the 2023 Revolving Credit Facility. The principal amount outstanding will be due and payable in full at maturity.

The 2023 Revolving Credit Facility is unsecured and as of December 31, 2024, obligations under the 2023 Revolving Credit Facility are not guaranteed by any of the Company’s subsidiaries.

The credit agreement that governs the 2023 Revolving Credit Facility contains a number of covenants that, among other things and subject to certain exceptions, restrict the ability of (i) TWM LLC to merge or consolidate with other entities, (ii) the subsidiaries of TWM LLC to incur or guarantee indebtedness and (iii) TWM LLC and its subsidiaries to create or incur liens.

The 2023 Revolving Credit Facility contains a financial covenant requiring compliance with a (i) maximum total net leverage ratio tested as of the last day of each fiscal quarter not to exceed 3.5 to 1.0 (increasing to 4.0 to 1.0 for the four-quarter period following a material acquisition and the fiscal quarter in which such material acquisition is consummated) and (ii) minimum cash interest coverage ratio tested as of the last day of each fiscal quarter not less than 3.0 to 1.0.

The credit agreement that governs the 2023 Revolving Credit Facility also contains certain affirmative covenants and events of default customary for facilities of this type, including relating to a change of control. If an event of default occurs, the lenders under the 2023 Revolving Credit Facility will be entitled to take various actions, including the acceleration of amounts due under the 2023 Revolving Credit Facility.

As of December 31, 2024, we were in compliance with all the covenants set forth in the 2023 Revolving Credit Facility.

Operating Lease Obligations

We currently have operating leases for corporate offices and data centers with initial lease terms ranging from one to 10 years. Our operating lease obligations are primarily related to rental payments under lease agreements for office space in the United States and the United Kingdom through March 2030. In addition, in June 2024, we signed a lease for our new headquarters in New York City that is expected to commence in mid-2025 and has an expected initial lease term of approximately 16 years. In August 2024, the existing lease for our current New York City headquarters was extended through September 2025.

As of December 31, 2024, our operating lease liabilities totaled $35.7 million, with payments pursuant to these obligations due within the next 12 months and thereafter totaling $13.4 million and $25.7 million, respectively. In addition, we are obligated on long-term future minimum lease payments of $159.2 million for a lease signed but not yet commenced as of December 31, 2024.

Capital Expenditures

Our business also requires continued investment in our technology for product innovation, proprietary technology architecture, operational reliability and cybersecurity. Excluding cash paid at closing for acquisitions, we expect total cash paid for capital expenditures and software development costs for fiscal year 2025 to be between $99 million and $109 million, compared to expenditures of $88.9 million and $61.8 million in fiscal years 2024 and 2023, respectively, with the midpoint of our 2025 capital expenditure guidance up 17% versus fiscal year 2024 primarily due to anticipated capitalized spend associated with our global headquarters relocation. Excluding the 2024 and 2025 one-time spend, the mid-point growth is projected to be approximately 3% higher year over year.

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Other Cash and Liquidity Requirements

Certain of our U.S. subsidiaries are registered as broker-dealers, SEFs or introducing brokers and are subject to the applicable rules and regulations of the SEC and CFTC. These rules contain minimum net capital or other financial resource requirements, as defined in the applicable regulations. These rules may also require a significant part of the registrants’ assets be kept in relatively liquid form. Certain of our foreign subsidiaries are regulated by the FCA in the UK, the Nederlandsche Bank in the Netherlands, the Japanese Financial Services Agency, the Japanese Securities Dealers Association and other foreign regulators, and must maintain financial resources, as defined in the applicable regulations, in excess of the applicable financial resources requirement. As of December 31, 2024 and 2023, each of our regulated subsidiaries had maintained sufficient net capital or financial resources to at least satisfy their minimum requirements, which in aggregate were $83.0 million and $76.7 million, respectively. We maintain capital balances in these subsidiaries in excess of our minimum requirements in order to satisfy working capital needs and to ensure that we have enough cash on hand to satisfy margin requirements and credit risk, including the excess capital expectations of our clients. The Fixed Income Clearing Corporation (“FICC”) and some of our clearing brokers require us to post collateral on unsettled positions, included within deposits with clearing organizations in our consolidated statements of financial condition. Collateral amounts are marked to market on a daily basis, requiring us to pay or receive margin amounts as part of the daily funds settlement. Margin call requirements can vary significantly across periods based on daily market changes and may represent a significant and unpredictable use of our liquidity.

At times, transactions executed on our wholesale platform fail to settle due to the inability of a transaction party to deliver or receive the transacted security. Until the failed transaction settles, we will recognize a receivable from (and a matching payable to) brokers and dealers and clearing organizations for the proceeds from the unsettled transaction. The impact on our liquidity and capital resources is minimal as receivables and payables for failed transactions are usually recognized simultaneously and predominantly offset. However, from time to time, we enter into repurchase and/or reverse repurchase agreements to facilitate the clearance of securities relating to fails to deliver or receive. We seek 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 FICC. The FICC operates a continuous net settlement system, whereby as trades are submitted and compared, the FICC becomes the counterparty.

Prior to November 2023, we had used ICBC, a wholly-owned subsidiary of the Industrial and Commercial Bank of China Limited, to clear U.S. Treasury trades executed by non-FICC members on our wholesale trading platform. Under that arrangement, ICBC submitted our trades from non-FICC members to the FICC under the ICBC netting account with the FICC. Following the November 2023 ransomware attack on some ICBC operating systems, including those used to clear U.S. Treasury and repurchase agreement financings, we have and may continue to self-clear these U.S. Treasury trades. As a result, this increased the number of trades that settle over the fed wire, instead of FICC clearing, and accordingly we have experienced and may continue to experience, an increase in the number of U.S. Treasury failed settlement transactions. As of December 31, 2024, we recorded a $67.8 million receivable and payable from/to brokers and dealers and clearing organizations related to failed settlement transactions. All of the failed settlement transactions outstanding as of December 31, 2024 were fully settled during January 2025. See below for further details regarding the changes to working capital as a result of these failed settlement transactions.

Working Capital

Working capital is defined as current assets minus current liabilities. Current assets consist of cash and cash equivalents, restricted cash, receivable from brokers and dealers and clearing organizations, deposits with clearing organizations, accounts receivable and receivable and due from affiliates. Current liabilities consist of securities sold under agreements to repurchase, payable to brokers and dealers and clearing organizations, accrued compensation, deferred revenue, payable and due to affiliates, accounts payable, accrued expenses and other liabilities, lease liabilities and tax receivable agreement liability. Changes in working capital, which impact our cash flows provided by operating activities, can vary depending on factors such as delays in the collection of receivables, changes in our operating performance, changes in trading patterns, changes in client billing terms and other changes in the demand for our platforms and solutions.

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Our working capital as of December 31, 2024 and 2023 was as follows:

[[GREPCENT_TABLE]]
[["","","December 31,"],["","","2024","","2023"],["","","(dollars in thousands)"],["Cash and cash equivalents","","$","1,340,302","","","$","1,706,468"],["Restricted cash","","1,000","","","1,000"],["Receivable from brokers and dealers and clearing organizations","","67,805","","","381,178"],["Deposits with clearing organizations","","54,702","","","36,806"],["Accounts receivable","","222,268","","","168,407"],["Receivable and due from affiliates","","8,094","","","192"],["Total current assets","","1,694,171","","","2,294,051"],["Securities sold under agreements to repurchase","","\u2014","","","21,612"],["Payable to brokers and dealers and clearing organizations","","67,816","","","351,864"],["Accrued compensation","","222,959","","","164,329"],["Deferred revenue","","30,800","","","25,746"],["Payable and due to affiliates","","763","","","1,327"],["Current portion of:"],["Accounts payable, accrued expenses and other liabilities","","94,620","","","56,878"],["Lease liabilities","","11,963","","","11,347"],["Tax receivable agreement liability","","3,981","","","26,804"],["Total current liabilities","","432,902","","","659,907"],["Total working capital","","$","1,261,269","","","$","1,634,144"]]
[[/GREPCENT_TABLE]]

Current Assets

Current assets decreased to $1.7 billion as of December 31, 2024 from $2.3 billion as of December 31, 2023 primarily due to a decrease in cash and cash equivalents as a result of the cash paid for the ICD Acquisition and a decrease in receivables from brokers and dealers and clearing organizations resulting from a decrease in unsettled wholesale platform transactions and a lower value of fails to deliver, all of which settled in January 2025. This decrease was partially offset by an increase in accounts receivable resulting from an increase in revenues and timing of collections. See “—Cash Flows” below for further discussion of the change in cash and cash equivalents.

Current Liabilities

Current liabilities decreased to $432.9 million as of December 31, 2024 from $659.9 million as of December 31, 2023 primarily due to a decrease in payable to brokers and dealers and clearing organizations resulting from a decrease in unsettled wholesale platform transactions and a lower value of fails to receive, all of which settled in January 2025.

See “—Other Cash and Liquidity Requirements” above for a discussion on how capital requirements can impact our working capital.

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Cash Flows

Our cash flows for the years ended December 31, 2024, 2023 and 2022 were as follows:

[[GREPCENT_TABLE]]
[["","","Year Ended"],["","","December 31,"],["","","2024","","2023","","2022"],["","","(dollars in thousands)"],["Net cash provided by operating activities","","$","897,741","","","$","746,089","","","$","632,822"],["Net cash used in investing activities","","(969,190)","","","(132,765)","","","(60,096)"],["Net cash used in financing activities","","(290,261)","","","(168,174)","","","(276,703)"],["Effect of exchange rate changes on cash, cash equivalents and restricted cash","","(4,456)","","","4,089","","","(10,842)"],["Net increase (decrease) in cash, cash equivalents and restricted cash","","$","(366,166)","","","$","449,239","","","$","285,181"]]
[[/GREPCENT_TABLE]]

Operating Activities

Operating activities consist primarily of net income adjusted for noncash items that primarily include depreciation and amortization, stock-based compensation expense and deferred tax expense. Cash flows from operating activities can fluctuate significantly from period-to-period as working capital needs and the timing of payments for accrued compensation (primarily in the first quarter) and other items impact reported cash flows.

Net cash provided by operating activities for the year ended December 31, 2024 was $897.7 million, an increase of $151.7 million as compared to the year ended December 31, 2023, primarily driven by an increase in net income and other net changes in working capital, partially offset by an increase in cash paid for income taxes.

Investing Activities

Investing activities consist primarily of software development costs, investments in technology hardware, purchases of equipment and other tangible assets, business acquisitions and investments.

Net cash used in investing activities was $969.2 million for the year ended December 31, 2024, which consisted of $860.1 million of total net cash paid for the acquisitions of ICD and r8fin (net of cash acquired), $47.9 million of capitalized software development costs, $41.0 million of purchases of furniture, equipment, purchased software and leasehold improvements and $20.2 million of cash paid for investments. Net cash used in investing activities was $132.8 million for the year ended December 31, 2023, which consisted of $69.7 million of total net cash paid for the Yieldbroker acquisition (net of cash acquired), $43.2 million of capitalized software development costs, $18.5 million of purchases of furniture, equipment, purchased software and leasehold improvements and $1.3 million of cash paid for a foreign currency call option, net of sales proceeds.

Financing Activities

Net cash used in financing activities for the year ended December 31, 2024 was $290.3 million, and was primarily driven by $85.2 million in cash dividends to our Class A and Class B common stockholders, $77.0 million in payments made under our Tax Receivable Agreement, $59.1 million in share repurchases pursuant to our 2022 Share Repurchase Program, $41.3 million in payroll tax payments for options, PRSUs and RSUs, net of proceeds from stock-based compensation option exercises and $27.8 million in distributions to non-controlling interest holders. Net cash used in financing activities for the year ended December 31, 2023 was $168.2 million, and was primarily driven by $75.9 million in cash dividends to our Class A and Class B common stockholders, $36.1 million in payroll tax payments for options, PRSUs and RSUs, net of proceeds from stock-based compensation option exercises, $35.2 million in share repurchases pursuant to our 2022 Share Repurchase Program and $12.4 million in distributions to non-controlling interest holders.

Non-GAAP Financial Measures

Free Cash Flow

In addition to cash flow from operating activities presented in accordance with GAAP, we use Free Cash Flow, a non-GAAP measure, to measure liquidity. Free Cash Flow is defined as cash flow from operating activities less non-acquisition related expenditures for capitalized software development costs and furniture, equipment and leasehold improvements.

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We present Free Cash Flow because we believe it is a useful indicator of liquidity that provides information to management and investors about the amount of cash generated from our core operations after non-acquisition related expenditures for capitalized software development costs and furniture, equipment and leasehold improvements.

Free Cash Flow has limitations as an analytical tool, and you should not consider Free Cash Flow in isolation or as an alternative to cash flow from operating activities or any other liquidity measure determined in accordance with GAAP. You are encouraged to evaluate each adjustment. In addition, in evaluating Free Cash Flow, you should be aware that in the future, we may incur expenditures similar to the adjustments in the presentation of Free Cash Flow. In addition, Free Cash Flow may not be comparable to similarly titled measures used by other companies in our industry or across different industries.

The table set forth below presents a reconciliation of our cash flow from operating activities to Free Cash Flow for the years ended December 31, 2024, 2023 and 2022:

[[GREPCENT_TABLE]]
[["","","Year Ended"],["","","December 31,"],["","","2024","","2023","","2022"],["","","(dollars in thousands)"],["Cash flow from operating activities","","$","897,741","","","$","746,089","","","$","632,822"],["Less: Capitalization of software development costs","","(47,909)","","","(43,235)","","","(36,882)"],["Less: Purchases of furniture, equipment and leasehold improvements","","(40,960)","","","(18,529)","","","(23,214)"],["Free Cash Flow","","$","808,872","","","$","684,325","","","$","572,726"]]
[[/GREPCENT_TABLE]]

Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT, Adjusted EBIT margin, Adjusted Net Income and Adjusted Diluted EPS

In addition to net income, net income margin and net income attributable to Tradeweb Markets Inc., each presented in accordance with GAAP, we present Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT and Adjusted EBIT margin as non-GAAP measures of our operating performance and Adjusted Net Income and Adjusted Net Income per diluted share (“Adjusted Diluted EPS”) as non-GAAP measures of our profitability.

Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT and Adjusted EBIT margin

Adjusted EBITDA is defined as net income before interest income, interest expense, provision for income taxes and depreciation and amortization, adjusted for the impact of certain other items, including merger and acquisition transaction and integration costs, certain stock-based compensation expense and related payroll taxes, tax receivable agreement liability adjustments, unrealized gains and losses from outstanding foreign currency forward contracts, gains and losses from the revaluation of foreign denominated cash and other income and loss.

Adjusted EBIT is defined as net income before interest income, interest expense and provision for income taxes, adjusted for the impact of certain other items, including merger and acquisition transaction and integration costs, certain stock-based compensation expense and related payroll taxes, tax receivable agreement liability adjustments, depreciation and amortization related to acquisitions and the Refinitiv Transaction, unrealized gains and losses from outstanding foreign currency forward contracts, gains and losses from the revaluation of foreign denominated cash and other income and loss.

Net income margin is defined as net income, divided by revenue for the applicable period. Adjusted EBITDA margin and Adjusted EBIT margin are defined as Adjusted EBITDA and Adjusted EBIT, respectively, divided by revenue for the applicable period.

We present Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT and Adjusted EBIT margin because we believe they assist investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. For example, we exclude non-cash stock-based compensation expense associated with the Special Option Award as defined in Note 2 – Significant Accounting Policies to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K and post-IPO options awarded in 2019 to management and other employees as well as payroll taxes associated with exercises of such options during the applicable period. The value of all previously issued options was fully expensed as of March 31, 2024, however we will continue to incur payroll tax expense as previously issued options are exercised by the holders. For applicable periods, we also exclude the incremental non-cash accelerated stock-based compensation expense and related payroll taxes associated with former and/or departing executive officers. The accelerated stock-based compensation expense associated with our former CFO, retired CEO

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and former President was fully amortized on January 4, 2022, December 31, 2022 and September 30, 2024, respectively. We also exclude stock-based compensation expense associated with special equity awards granted to help ensure the retention of key employees during the integration of acquisitions. We believe it is useful to exclude these stock-based compensation expenses and, as applicable, associated payroll taxes because the amount of expense may not directly correlate to the underlying performance of our business and will vary across periods. In addition, we exclude the tax receivable agreement liability adjustments discussed below under “— Critical Accounting Policies and Estimates — Tax Receivable Agreement.” We believe it is useful to exclude the tax receivable agreement liability adjustment because the recognition of income during a period due to changes in the tax receivable agreement liability recorded in our consolidated statements of financial condition as a result of changes in the mix of earnings, tax legislation and tax rates in various jurisdictions, or other factors that may impact our tax savings, may not directly correlate to the underlying performance of our business and will vary across periods. We also believe it is useful to exclude merger and acquisition transaction and integration costs as the incremental direct costs related to completed and potential acquisitions and related integrations are not indicative of our core ongoing operating performance. With respect to Adjusted EBIT and Adjusted EBIT margin, we believe it is useful to exclude the depreciation and amortization of tangible and intangible assets resulting from acquisitions and the application of pushdown accounting to the Refinitiv Transaction in order to facilitate a period-over-period comparison of our financial performance.

Management and our board of directors use Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT and Adjusted EBIT margin to assess our financial performance and believe they are helpful in highlighting trends in our core operating performance, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate and capital investments. Further, our executive incentive compensation is based in part on components of Adjusted EBITDA and Adjusted EBITDA margin.

Adjusted Net Income and Adjusted Diluted EPS

Adjusted Net Income is defined as net income attributable to Tradeweb Markets Inc. assuming the full exchange of all outstanding LLC Interests held by non-controlling interests for shares of Class A common stock or Class B common stock of Tradeweb Markets Inc., adjusted for certain stock-based compensation expense and related payroll taxes, tax receivable agreement liability adjustments, merger and acquisition transaction and integration costs, depreciation and amortization related to acquisitions and the Refinitiv Transaction, unrealized gains and losses from outstanding foreign currency forward contracts, gains and losses from the revaluation of foreign denominated cash and other income and loss. Adjusted Net Income also gives effect to certain tax related adjustments to reflect an assumed effective tax rate. Adjusted Diluted EPS is defined as Adjusted Net Income divided by the diluted weighted average number of shares of Class A common stock and Class B common stock outstanding for the applicable period (including the effect of potentially dilutive securities determined using the treasury stock method), plus the weighted average number of other participating securities reflected in earnings per share using the two-class method, plus the assumed full exchange of all outstanding LLC Interests held by non-controlling interests for shares of Class A common stock or Class B common stock.

We use Adjusted Net Income and Adjusted Diluted EPS as supplemental metrics to evaluate our business performance in a way that also considers our ability to generate profit without the impact of certain items. We exclude certain stock-based compensation expense and related payroll taxes, tax receivable agreement liability adjustments, merger and acquisition transaction and integration costs and acquisition and Refinitiv Transaction-related depreciation and amortization for the reasons described above. Each of the normal recurring adjustments and other adjustments described in the definition of Adjusted Net Income helps to provide management with a measure of our operating performance over time by removing items that are not related to day-to-day operations or are non-cash expenses. In addition to excluding items that are non-recurring or may not be indicative of our ongoing operating performance, by assuming the full exchange of all outstanding LLC Interests held by non-controlling interests, we believe that Adjusted Net Income and Adjusted Diluted EPS for Tradeweb Markets Inc. facilitate comparisons with other companies that have different organizational and tax structures, as well as comparisons period over period, because it eliminates the effect of any changes in net income attributable to Tradeweb Markets Inc. driven by increases in our ownership of TWM LLC, which are unrelated to our operating performance.

Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT, Adjusted EBIT margin, Adjusted Net Income and Adjusted Diluted EPS have limitations as analytical tools, and you should not consider these non-GAAP financial measures in isolation or as alternatives to net income attributable to Tradeweb Markets Inc., net income, net income margin, operating income, gross margin, earnings per share or any other financial measure derived in accordance with GAAP. You are encouraged to evaluate each adjustment and, as applicable, the reasons we consider it appropriate for supplemental analysis. In addition, in evaluating Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT, Adjusted EBIT margin, Adjusted Net Income and Adjusted Diluted EPS you should be aware that in the future, we may incur expenses similar to the adjustments in the presentation of these non-GAAP financial measures. Our presentation of Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT, Adjusted EBIT margin, Adjusted Net Income and Adjusted Diluted EPS should not be construed as an inference that our future results will

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be unaffected by unusual or non-recurring items. In addition, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT, Adjusted EBIT margin, Adjusted Net Income and Adjusted Diluted EPS may not be comparable to similarly titled measures used by other companies in our industry or across different industries.

The table set forth below presents a reconciliation of net income and net income margin to Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBIT and Adjusted EBIT margin for the years ended December 31, 2024, 2023 and 2022:

[[GREPCENT_TABLE]]
[["","","Year Ended"],["","","December 31,"],["","","2024","","2023","","2022"],["","","(dollars in thousands)"],["Net income","","$","569,963","","","$","419,503","","","$","359,613"],["Merger and acquisition transaction and integration costs (1)","","22,823","","","8,042","","","1,069"],["Interest income","","(74,037)","","","(67,397)","","","(13,712)"],["Interest expense","","4,279","","","2,047","","","1,805"],["Depreciation and amortization","","219,999","","","185,350","","","178,879"],["Stock-based compensation expense (2)","","6,096","","","2,947","","","20,409"],["Provision for income taxes","","184,439","","","128,477","","","77,520"],["Foreign exchange (gains) / losses (3)","","(6,326)","","","(47)","","","4,409"],["Tax receivable agreement liability adjustment (4)","","(7,730)","","","9,517","","","(13,653)"],["Other (income) loss, net","","1,114","","","13,122","","","1,000"],["Adjusted EBITDA","","$","920,620","","","$","701,561","","","$","617,339"],["Less: Depreciation and amortization","","(219,999)","","","(185,350)","","","(178,879)"],["Add: D&A related to acquisitions and the Refinitiv Transaction (5)","","156,489","","","127,731","","","126,659"],["Adjusted EBIT","","$","857,110","","","$","643,942","","","$","565,119"],["Net income margin","","33.0","%","","31.3","%","","30.3","%"],["Adjusted EBITDA margin","","53.3","%","","52.4","%","","51.9","%"],["Adjusted EBIT margin","","49.7","%","","48.1","%","","47.5","%"]]
[[/GREPCENT_TABLE]]

(1)Represents incremental direct costs associated with the acquisition and integration of completed and potential mergers and acquisitions. These costs generally include legal, consulting, advisory, due diligence, severance and certain other transaction expenses and third party costs incurred that directly relate to the acquisition transaction or its integration.

(2)Represents non-cash stock-based compensation expense associated with the Special Option Award and post-IPO options awarded in 2019 and payroll taxes associated with the exercise of such options. During the years ended December 31, 2024 and 2022, this adjustment also includes $2.7 million and $15.0 million, respectively, of non-cash accelerated stock-based compensation expense and related payroll taxes associated with our former President and our retired CEO. During the year ended December 31, 2024, this adjustment also includes $1.0 million of non-cash stock-based compensation expense and related payroll taxes associated with RSAs and RSUs issued to help retain key ICD employees during the integration of ICD.

(3)Represents unrealized gain or loss recognized on foreign currency forward contracts and foreign exchange gain or loss from the revaluation of cash denominated in a different currency than the entity’s functional currency.

(4)Represents income recognized during the applicable period due to changes in the tax receivable agreement liability recorded in the consolidated statement of financial condition as a result of, as applicable, changes in the mix of earnings, tax legislation and tax rates in various jurisdictions which impacted our tax savings.

(5)Represents intangible asset and acquired software amortization resulting from acquisitions and intangible asset amortization and increased tangible asset and capitalized software depreciation and amortization resulting from the application of pushdown accounting to the Refinitiv Transaction (where all assets were marked to fair value as of the closing date of the Refinitiv Transaction).

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[[GREPCENT_TABLE]]
[["","","Year Ended"],["","","December 31,"],["","","2024","","2023","","Basis Point Change","","Constant Currency Basis Point Change (1)"],["Adjusted EBITDA margin","","53.3","%","","52.4","%","","+91 bps","","+80 bps"],["Adjusted EBIT margin","","49.7","%","","48.1","%","","+154 bps","","+143 bps"]]
[[/GREPCENT_TABLE]]

(1)The changes in Adjusted EBITDA margin and Adjusted EBIT margin, both on a constant currency basis, are non-GAAP financial measures, and are defined as the changes in Adjusted EBITDA margin and Adjusted EBIT margin excluding the effects of foreign currency fluctuations. Adjusted EBITDA margin and Adjusted EBIT margin excluding the effects of foreign currency fluctuations are calculated by translating the current period and prior period’s results using the annual average exchange rates for the prior period. We use the changes in Adjusted EBITDA margin and Adjusted EBIT margin on a constant currency basis as supplemental metrics to evaluate our underlying margin performance between periods by removing the impact of foreign currency fluctuations. We believe that providing changes in Adjusted EBITDA margin and Adjusted EBIT margin on a constant currency basis provide useful comparisons of our Adjusted EBITDA margin and Adjusted EBIT margin and trends between periods.

The table set forth below presents a reconciliation of net income attributable to Tradeweb Markets Inc. and net income, as applicable, to Adjusted Net Income and Adjusted Diluted EPS for the years ended December 31, 2024, 2023 and 2022:

[[GREPCENT_TABLE]]
[["","","Year Ended"],["","","December 31,"],["","","2024","","2023","","2022"],["","","(dollars in thousands, except per share amounts)"],["Earnings per diluted share","","$","2.33","","","$","1.71","","","$","1.48"],["Net income attributable to Tradeweb Markets Inc.","","$","501,507","","","$","364,866","","","$","309,338"],["Net income attributable to non-controlling interests (1)","","68,456","","","54,637","","","50,275"],["Net income","","569,963","","","419,503","","","359,613"],["Provision for income taxes","","184,439","","","128,477","","","77,520"],["Merger and acquisition transaction and integration costs (2)","","22,823","","","8,042","","","1,069"],["D&A related to acquisitions and the Refinitiv Transaction (3)","","156,489","","","127,731","","","126,659"],["Stock-based compensation expense (4)","","6,096","","","2,947","","","20,409"],["Foreign exchange (gains) / losses (5)","","(6,326)","","","(47)","","","4,409"],["Tax receivable agreement liability adjustment (6)","","(7,730)","","","9,517","","","(13,653)"],["Other (income) loss, net","","1,114","","","13,122","","","1,000"],["Adjusted Net Income before income taxes","","926,868","","","709,292","","","577,026"],["Adjusted income taxes (7)","","(231,717)","","","(173,777)","","","(126,946)"],["Adjusted Net Income","","$","695,151","","","$","535,515","","","$","450,080"],["Adjusted Diluted EPS (8)","","$","2.92","","","$","2.26","","","$","1.90"]]
[[/GREPCENT_TABLE]]

(1)Represents the reallocation of net income attributable to non-controlling interests from the assumed exchange of all outstanding LLC Interests held by non-controlling interests for shares of Class A or Class B common stock.

(2)Represents incremental direct costs associated with the acquisition and integration of completed and potential mergers and acquisitions. These costs generally include legal, consulting, advisory, due diligence, severance and certain other transaction expenses and third party costs incurred that directly relate to the acquisition transaction or its integration.

(3)Represents intangible asset and acquired software amortization resulting from acquisitions and intangible asset amortization and increased tangible asset and capitalized software depreciation and amortization resulting from the application of pushdown accounting to the Refinitiv Transaction (where all assets were marked to fair value as of the closing date of the Refinitiv Transaction).

(4)Represents non-cash stock-based compensation expense associated with the Special Option Award and post-IPO options awarded in 2019 and payroll taxes associated with the exercise of such options. During the years ended December 31, 2024 and 2022, this adjustment also includes $2.7 million and $15.0 million, respectively, of non-cash accelerated stock-based compensation expense and related payroll taxes associated with our former President and our retired CEO. During the year ended December 31, 2024, this adjustment also includes $1.0 million of non-cash stock-based compensation expense and related payroll taxes associated with RSAs and RSUs issued to help retain key ICD employees during the integration of ICD.

(5)Represents unrealized gain or loss recognized on foreign currency forward contracts and foreign exchange gain or loss from the revaluation of cash denominated in a different currency than the entity’s functional currency.

(6)Represents income recognized during the applicable period due to changes in the tax receivable agreement liability recorded in the consolidated statement of financial condition as a result of, as applicable, changes in the mix of earnings, tax legislation and tax rates in various jurisdictions which impacted our tax savings.

(7)Represents corporate income taxes at an assumed effective tax rate of 25.0%, 24.5% and 22.0%, applied to Adjusted Net Income before income taxes for the years ended December 31, 2024, 2023 and 2022, respectively.

(8)For a summary of the calculation of Adjusted Diluted EPS, see “Reconciliation of Diluted Weighted Average Shares Outstanding to Adjusted Diluted Weighted Average Shares Outstanding and Adjusted Diluted EPS” below.

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The following table summarizes the calculation of Adjusted Diluted EPS for the years ended December 31, 2024, 2023 and 2022:

[[GREPCENT_TABLE]]
[["Reconciliation of Diluted Weighted Average Shares Outstanding to Adjusted Diluted Weighted Average Shares Outstanding and Adjusted Diluted EPS","","Year Ended"],["","December 31,"],["","2024","","2023","","2022"],["Diluted weighted average shares of Class A and Class B common stock outstanding","","214,924,763","","","212,668,808","","","208,400,040"],["Weighted average of other participating securities (1)","","165,565","","","270,249","","","193,441"],["Assumed exchange of LLC Interests for shares of Class A or Class B common stock (2)","","23,076,373","","","23,902,379","","","28,830,686"],["Adjusted diluted weighted average shares outstanding","","238,166,701","","","236,841,436","","","237,424,167"],["Adjusted Net Income (in thousands)","","$","695,151","","","$","535,515","","","$","450,080"],["Adjusted Diluted EPS","","$","2.92","","","$","2.26","","","$","1.90"]]
[[/GREPCENT_TABLE]]

(1)Represents the weighted average of unvested stock awards and unsettled vested stock awards issued to certain retired or terminated employees that are entitled to non-forfeitable dividend equivalent rights and are considered participating securities prior to being issued and outstanding shares of common stock in accordance with the two-class method used for purposes of calculating earnings per share. See Note 2 – Significant Accounting Policies to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a discussion of the two-class method.

(2)Assumes the full exchange of the weighted average of all outstanding LLC Interests held by non-controlling interests for shares of Class A or Class B common stock, resulting in the elimination of the non-controlling interests and recognition of the net income attributable to non-controlling interests.

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with U.S. GAAP which requires us to make estimates and assumptions about future events that affect the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities. These estimates and assumptions are based on judgment and the best available information at the time. Management bases its estimates on historical experience, observance of trends in particular areas, information available from outside sources and various other assumptions that are believed to be reasonable under the circumstances. Information from these sources form the basis for making judgments about the carrying values of assets and liabilities that may not be readily apparent from other sources. Therefore, actual results could differ materially from those estimates. Management evaluates its accounting policies, estimates and judgments on an on-going basis.

Management evaluated the development and selection of its critical accounting policies and estimates and believes that the following policies are most critical to the portrayal of our financial condition and results of operations, and that require our most difficult, subjective or complex judgments in estimating the effect of inherent uncertainties. Our most critical policies and estimates include business combinations, revenue recognition, stock-based compensation, current and deferred income taxes and the tax receivable agreement liability. With respect to critical accounting policies and estimates, even a relatively minor variance between actual and expected experience can potentially have a materially favorable or unfavorable impact on subsequent results of operations. More information on all of our significant accounting policies can be found in Note 2 – Significant Accounting Policies to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

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.

The most significant accounting estimates associated with both the ICD and r8fin acquisitions, which closed in August 2024 and January 2024, respectively, were the valuations of the acquired definite-lived intangible customer relationship assets (the “Customer Relationships”), which were valued as of the closing date of each respective acquisition, at a combined total of approximately $396.5 million, and the valuation of the developed technology, which were valued, as of the closing date of each respective acquisition, at a combined total of approximately $188.0 million. The majority of the residual total purchase price, which between the two acquisitions totaled $900.2 million, net of cash acquired, was primarily allocated to goodwill, which was measured at a combined total of approximately $334.6 million as of the closing date of each respective acquisition. We utilized

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the assistance of a third-party valuation specialist to determine the fair value of the assets acquired and liabilities assumed at the respective closing date of each acquisition. Management is responsible for these valuations and appraisals.

The valuation of the Customer Relationships and the developed technology primarily included significant unobservable inputs (Level 3), creating a significant level of estimation uncertainty. 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.

The developed technology was valued using the income approach, specifically the relief-from-royalty method (“RFRM”). The RFRM is used to estimate the cost savings that accrue to the owner of an intangible asset who would otherwise have to pay royalties or license fees on revenues earned through the use of the asset. The royalty rate is applied to the projected revenue over the expected remaining life of the intangible asset to estimate royalty savings. The net after-tax royalty savings are calculated for each year in the remaining economic life of the technology and discounted to present value. The discount rate used reflects the amount of risk associated with the hypothetical cash flows for the developed technology relative to the overall business as discussed above relating to the Customer Relationships.

For GAAP purposes, the Customer Relationships will be amortized over a useful life of 15 years for ICD and 13 years for r8fin and the developed technology acquired will be amortized over a useful life of eight years for ICD and seven years for r8fin. Any changes in the discount rate used for valuing the acquired assets or the estimated useful life used for amortization purposes could have a material impact on our consolidated statements of financial condition and consolidated statement of income. Any increases or decreases in the allocation of purchase price to Customer Relationships or the developed technology acquired, which are both amortizable assets, would be offset by a corresponding decrease or increase in goodwill, which is an indefinite-lived asset, not subject to amortization and as a result would impact the asset balances recorded on our consolidated statements of financial condition as well as the amortization expense recorded on our consolidated statements of income over the life of the acquired asset. Any changes in the estimated useful life of the assets would also impact timing of the reduction of the net balance of intangible assets or software development costs, net of accumulated amortization on our consolidated statements of financial condition and the timing of the recognition of amortization expense on our consolidated statements of income.

Revenue Recognition

We enter into contracts with our clients to provide a stand-ready connection to our electronic marketplaces, which facilitates the execution of trades by our clients. The access to our electronic marketplaces, includes market data and continuous pricing data refreshes and the processing and reporting of trades thereon, which are highly interrelated services. The stand-ready connection to our electronic marketplaces is considered a single performance obligation satisfied over time as the client simultaneously receives and consumes the benefit from our performance as access is provided. This 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 our services, we may earn subscription fees for granting access to our electronic marketplaces. We may also earn transaction fees and/or commissions from transactions executed on our trading platforms, including the basis point commissions earned on the monthly ADB of money market fund investments made through our ICD Portal and commission revenue from electronic and voice brokerage transacted 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. Fixed monthly transaction fees and commissions or monthly transaction fee and commission minimums are generally earned on a monthly basis in the period the stand-ready trading services are provided. Variable transaction fee and commission revenue associated with a particular trade is recognized and recorded on a trade-date basis when the individual trade occurs. Variable commission revenue based upon a clients’ ADB invested in money market funds during a calendar month is recorded monthly. Variable discounts or rebates on transaction fees and commissions are generally earned and applied monthly or quarterly, are resolved within the same reporting period and are recorded as a reduction to revenue in the period the relevant trades occur.

We earn fees from LSEG relating to the sale of market data to LSEG, which distributes that data. Included in these fees 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 contact period, as the data is provided, and fees for historical data sets which are recognized when the historical data set is provided to LSEG.

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We are required to make significant judgments for the LSEG market data fees. Significant judgments used in accounting for this contract 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.

During each of the years ended December 31, 2024, 2023 and 2022, there were no material changes in the methodology or assumptions used to determine the LSEG market data fees.

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.

For PSUs, 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, which represents a significant accounting estimate given the significant level of estimation uncertainty relating to the selection of valuation assumptions required for the valuation. The significant assumptions used to estimate the fair value of the PSUs 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. On March 15, 2024, we granted 86,592 PSUs with a grant date fair value totaling $12.9 million, which will be amortized into expense on a straight-line basis through December 31, 2026. The significant assumptions used in determining the grant date fair value of the award were a maturity of 2.8 years, annualized volatility of 26.63% and a risk-free interest rate of 4.44%. A change in any of the assumptions used to value these awards could materially affect stock-based compensation expense recorded in the current and future periods. During each of the years ended December 31, 2024 and 2023, there were no material changes in the methodology or assumptions used to determine the valuation of our annual PSU grants.

For PRSUs, the Company recognizes stock-based compensation based on the fair market value of our Class A common stock at the grant date and an estimate of 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. On March 15, 2024, we granted 201,546 PRSUs at a weighted-average grant-date fair value of $104.66. For these awards, the financial performance of the Company will be determined based on the compound annual growth rate over a three-year performance period beginning on January 1 in the year of grant and the performance modifier can vary between 0% (minimum) and 250% (maximum) of the target (100%) award amount. As of December 31, 2024, a 10% decrease in the expected final share payouts would decrease the expense for the year ended December 31, 2024 by $1.5 million.

Income Taxes

Tradeweb Markets Inc. 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 to us. TWM LLC records taxes for conducting business in certain state, local and foreign jurisdictions and records U.S. federal taxes for subsidiaries that are taxed as corporations for U.S. tax purposes. We currently record 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 and measure the deferred taxes using the enacted tax rates and laws that will be in effect when such temporary differences are expected to reverse. The measurement of deferred taxes often involves the exercise of significant judgment related to the realization of tax basis. Our deferred tax assets and liabilities reflect our assessment that tax positions taken in filed tax returns and the resulting tax basis are more likely than not to be sustained if they are audited by taxing authorities. Assessing tax rates that we expect to apply and determining the years when the temporary differences are expected to affect taxable income requires judgment about the future apportionment of our income

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among the jurisdictions in which we operate. Any changes in our practices or judgments involved in the measurement of deferred tax assets and liabilities could materially impact our financial condition or results of operations.

In connection with recording deferred tax assets and liabilities, we record valuation allowances when we believe that it is more likely than not that the Company will not be able to realize its deferred tax assets in the future. We evaluate our deferred tax assets quarterly to determine whether adjustments to our valuation allowance are appropriate in light of changes in facts or circumstances, such as changes in tax law, interactions with taxing authorities and developments in case law. In making this evaluation, we rely on our recent history of pre-tax earnings, our forecasts of future earnings and the nature and timing of future deductions and benefits represented by the deferred tax assets, all of which involve the exercise of significant judgment. As of December 31, 2024, we have a $1.7 million valuation allowance on gross deferred tax assets totaling $644.9 million. As of December 31, 2023, we had no valuation allowance on gross deferred tax assets totaling $687.4 million. If forecasts of future earnings and the nature and estimated timing of future deductions and benefits change in the future, we may determine that existing valuation allowances must be revised or new valuation allowances created, any of which could materially impact our financial condition or results of operations. See Note 9 – Income Taxes to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

We recognize interest and penalties related to unrecognized tax benefits within the provision for income taxes in our consolidated statements of income. Accrued interest and penalties are included within accounts payable, accrued expenses and other liabilities in our consolidated statements of financial condition. A U.S. shareholder of a controlled foreign corporation (“CFC”) is required to include in income, as a deemed dividend, the global intangible low-taxed income (“GILTI”) of the CFC. We have elected to treat taxes due on future U.S. inclusions in taxable income of GILTI as a current period expense when incurred.

Tax Receivable Agreement

Tradeweb Markets Inc. entered into a Tax Receivable Agreement with TWM LLC and the Continuing LLC Owners which provides for the payment by Tradeweb Markets Inc. 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 Tradeweb Markets Inc. 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, the October 2019 and April 2020 follow-on offerings and any future offering 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 Tradeweb Markets Inc. making payments under the Tax Receivable Agreement. Substantially all payments due under the Tax Receivable Agreement are payable over the 15 years following the purchase of LLC Interests from Continuing LLC Owners or redemption or exchanges by Continuing LLC Owners of LLC Interests. The timing of the payments over the 15 year period is dependent upon our annual taxable income over the same period. In determining the estimated timing of payments, the current year’s taxable income is used to extrapolate an estimate of future taxable income. This requires significant judgment relating to projecting future earnings, the geographic mix of those earnings and the timing of deferred taxes becoming current.

The impact of any changes in the total projected obligations recorded under the Tax Receivable Agreement as a result of actual changes in the geographic mix of our earnings, changes in tax legislation and tax rates or other factors that may impact our actual tax savings realized will be reflected in income before taxes in the period in which the change occurs.

Recent Accounting Pronouncements

See Note 2 – Significant Accounting Policies to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a discussion of recent accounting pronouncements.