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DATE
Thursday, October 30, 2025 at 9:30 a.m. ET
CALL PARTICIPANTS
Chief Executive Officer — Billy Hult
Chief Financial Officer — Sara Hassan Furber
Head of Treasury, IR, and FP&A — Ashley Neil Serrao
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RISKS
Chief Executive Officer Hult stated, "Low volatility and limited data are near-term headwinds. Not just for us, but for the broader market," directly citing muted activity and data scarcity as current business challenges.
Chief Financial Officer Furber reported, "Unfavorable movements in FX resulted in a $1 million loss in 2025 versus approximately a $400,000 gain in 2024." highlighting adverse foreign exchange impacts.
TAKEAWAYS
Quarterly Revenue -- $509 million in reported revenue for Q3 2025, up 13% year-over-year on a reported basis and 11% on a constant currency basis.
Year-to-Date Revenue Growth -- Up 21% reported year-to-date and 17% organically year-to-date.
International Revenue -- 25% year-over-year growth in the quarter; 42% of revenues from international clients; more than 30% year-to-date international growth; now averaging a 19% CAGR from 2019 through 2024.
Adjusted EBITDA Margin -- 54.2% adjusted EBITDA margin year-to-date, expanding by 90 basis points over the 2024 full-year adjusted EBITDA margin.
Rates Segment -- Achieved its second-highest revenue quarter for Rates, with year-to-date revenue up 23% and mortgages posted record revenues; majority of global rates products still voice or chat-executed, indicating further electronification runway.
Global Swaps -- Over 30% year-over-year revenue growth; swaps revenues up more than 40% year-to-date; emerging markets initiatives contributed over 500 basis points to swaps year-to-date revenue growth.
Institutional US Treasuries Market Share -- Exceeded 50% for the sixth consecutive quarter in institutional US Treasuries versus main electronic rival; overall US treasury market share at 22%, declining from 22.4% in the third quarter of 2024, but rebounding quarter-over-quarter.
Equities Segment -- Revenue up 17% year-over-year; ETF automation (AIX) average daily trades up 90% year-over-year and AIX average daily trades up 70% quarter-over-quarter in the US; equity derivatives revenues grew 16% year-over-year.
Global Credit -- Low single-digit revenue growth year-over-year; European credit and municipal bonds delivered double-digit gains year-over-year; US retail corporate credit revenues fell nearly 30% year-over-year.
Portfolio and All-to-All Credit Trading -- Portfolio trading ADV up more than 10% year-over-year, and over 30% international revenue growth year-over-year year-to-date; AllTrade platform volume exceeded $200 billion with average daily volume up almost 10% year-over-year; all-to-all ADV rose over 35% year-over-year.
Digital Asset Initiatives -- Other revenues increased 52% year-over-year, with $2.3 million from activity on the Canton Network; $15 million realized gain from Canton coin sales in the quarter; $56 million Canton coin fair value held on balance sheet.
Market Data Contract -- Three-year LSEG agreement renewal agreed in principle, increasing annual contract value by 9% per year, effective November 1; $22 million expected Q4 2025 revenue run rate from this contract.
Adjusted Expenses -- Up 12% year-over-year; technology and communication costs increased 39%, mainly from ongoing infrastructure investments; adjusted general and administrative costs up 30%, primarily due to higher travel, entertainment, and FX losses.
Cash Position & Capital Return -- Ended the period with $1.9 billion in cash and equivalents; trailing twelve-month free cash flow was approximately $987 million; quarterly dividend of $0.12 per share, up 20% year-over-year.
SUMMARY
Management pointed to a sustained shift in client behavior toward systematic, data-driven trading, supporting expanded electronic platform usage. Strategic investments continue in digitization, infrastructure, and global expansion, enhancing revenue diversity and positioning for future industry shifts. Fourth-quarter guidance calls for continued double-digit technology spending growth and seasonal increases in professional fees, G&A, and occupancy. The LSEG data contract renewal introduces a new, higher-value recurring revenue stream. Digital initiatives are now directly contributing to both revenue and balance sheet assets via Canton Network activity and realized gains, as reflected in Q3 2025 results.
Chief Executive Officer Hult highlighted, "clients are becoming increasingly systematic and data-driven in how they trade, and that evolution aligns perfectly with how our global platform is built."
Chief Financial Officer Billy Hult stated, "From 2019 through 2024, swaps revenues have grown at more than 20% on average. And year-to-date, we have accelerated to 40% year-over-year," underscoring swaps as a leading growth engine.
The company expects continued international expansion, with over half of revenue growth originating outside the US year-to-date and nearly $100 million in annual revenue now pacing from emerging markets.
Ongoing technology and communications investment—expected to grow at a double-digit pace through 2026 based on the fourth quarter run rate—remains central to the firm’s strategy for margin improvement and product innovation.
Portfolio trading, RFQ, and sessions protocols continue to deepen liquidity and client engagement, driving record block share and volume diversity.
INDUSTRY GLOSSARY
AIX: Automated Intelligent Execution; Tradeweb’s automation technology for ETF and credit trading, allowing clients to streamline workflow and increase trade efficiency.
AllTrade: Tradeweb’s all-to-all trading platform enabling anonymous trading between a broad network of liquidity providers and clients across credit products.
RFM protocol: Request-for-Market protocol; an electronic workflow innovation that allows clients to solicit two-way prices for executing swaps and other complex trades efficiently.
ICD: Institutional Cash Distributors; a money market platform recently integrated with Tradeweb offerings for institutional clients.
Compression trading: A method in swaps markets for reducing gross notional exposures by offsetting equivalent trades, often carrying lower fee rates and distorting core revenue trends.
Canton Network: A decentralized blockchain-based network in which Tradeweb participates as a validator, facilitating digital asset trading and settlement for institutional clients.
LSAG/LSEG: London Stock Exchange Group; Tradeweb’s major partner for market data services, with a recently renewed contract agreement.
Full Conference Call Transcript
Billy Hult: Thanks, Ashley. Good morning, everyone, and thank you for joining our third quarter earnings call. We delivered another strong quarter surpassing $500 million in quarterly revenues for the third consecutive quarter. Year-to-date revenues as of the third quarter were up 21% or 17% organically, putting us on track for another year of double-digit revenue growth. We believe change is constant. The current macro environment is defined by historically low interest rate volatility, tight credit spreads, and muted equity volatility. At the same time, geopolitical uncertainty and the rapid rise of artificial intelligence continue to reshape how we work and live. We've consistently thrived amid change, and we believe we're well-positioned to keep doing so.
From the emergence of decentralized finance to shifting regulatory frameworks, we believe our global fixed income platform and network put us in the catbird seat, helping our clients solve their real-world and tangible challenges. While the pendulum may be swinging away from globalization, fixed income and ETF markets are becoming increasingly interconnected. Clients and major dealers are thinking globally, and nonbank liquidity providers are expanding their global presence, bringing new technology and data capabilities to the ecosystem. As clients seek more time and cost-efficient ways to interact across markets, we remain focused on delivering innovative, collaborative solutions that enhance liquidity and efficiency across the global fixed income ecosystem.
Diving into the third quarter, despite muted volatility, strong client activity drove 13% year-over-year revenue growth on a reported basis. We produced strong third quarter revenue growth despite facing increasingly tougher year-over-year comparisons, especially in August, which last year defied the typical seasonal slowdown and was exceptionally active as macro growth fears gripped the market and the yen carry trade collapsed. Our international revenues continued to scale higher, delivering 25% year-over-year growth as our strategic initiatives in EM and APAC continue to pay off. We continue to balance investing for growth and profitability as adjusted EBITDA margins expanded by 54 basis points relative to 2024. Turning to slide five.
Rates produced its second highest revenue quarter driven by continued organic growth across swaps and global government bonds, while mortgages produced record revenues. Credit growth was led by strength across munis, European credit, and emerging market credit. Money markets revenue growth was led by the addition of ICD and aided by record quarterly revenues across global repos. ICD continues to build back balances post the April volatility that led to some large clients drawing down their money market fund balances to tactically buy back shares in the market and increase spending ahead of potential tariffs. ICD revenues were up 7% relative to the second quarter of 2025.
Equities posted another strong growth quarter with revenues up 17% year-over-year, led by growth in global ETFs and equity derivatives. Other revenues grew over 50% as we see growing contributions from our emerging digital asset initiatives. Finally, market data revenues were driven by growth in our proprietary data products. We've reached an agreement to renew the LSAG market data agreement, which is up for renewal in October for an additional three years, striking the right balance between maintaining the integrity of our platform and commercializing our rich data sets.
We expect this agreement will not only generate significantly more revenue for Tradeweb Markets Inc., which Sara will touch on later, but it also maintains flexibility to grow our proprietary data business. We also see additional upside as we build more products to enhance the trading experience of our clients. Turning to slide six. This quarter saw a significant drop in intraday volatility, from the off-the-chart levels seen in prior periods. Specifically, it was down 19% year-over-year and 30% quarter-over-quarter. All in, US treasury revenues decreased slightly by 2% year-over-year as positive revenue growth across our institutional channel was more than offset by weaker wholesale trends, a business that tends to thrive when there is heightened volatility.
One of the trends that has attracted a lot of attention this year is the rise of voice activity in tandem with and not at the expense of electronic trading. Year-to-date, electronic industry average daily volume saw a 10% increase year-over-year. We also saw a 26% increase in industry voice average daily volume. This distinction is very important. Electronic trading remains robust and should continue to rise. But we are operating with a continued paradigm of extreme market conditions, this time marked by unusually low volatility. This is driving more complex voice-centric package trades in the market, a mix shift that weighed on our US treasury market share, which stood at 22% in the third quarter.
However, our share is rebounding. It increased quarter-over-quarter with September reaching the highest levels since March. In addition, this week, we did our first package trade with a bespoke swap versus a US treasury. This is an entry point into a world of more complex package trades across the deep liquidity we have in US treasuries and swaps. Our competitive position remains strong on a relative basis. We exceeded 50% for the sixth consecutive quarter in institutional US Treasuries versus our main electronic competitor. During the quarter, we expanded our dealer algorithmic execution capabilities. We expect additional global dealer algos to be onboarded in the coming months, further enhancing our unified multi-dealer and multi-asset platform.
Finally, attacking voice package trades remains a main focus for the team, and we believe we have all the solutions in-house, especially with our Redfin asset. Turning to wholesale, 6% mainly driven by lower volumes across our central limit order book partially offset by growth across our wholesale streaming protocol. Wholesale continues to be a strategic priority as we focus on expanding our network of liquidity providers and strengthening our liquidity pools in alignment with our multi-protocol platform strategy. In equities, ETFs posted strong double-digit revenue growth as we continue to deepen integration with our clients. A key differentiator with our ETF clients has been our AIX automation solution, with average daily trades increasing over 90% year-over-year.
While AIX is deeply penetrated across European ETFs, we are now seeing strong adoption across US ETFs with AIX average daily trades up 70% quarter-over-quarter. Our efforts to broaden our equity presence beyond our flagship ETF franchise continue to pay off with institutional equity derivative revenues up 16% year-over-year. Looking ahead, the pipeline remains strong as the benefits of our electronic solutions continue to resonate with our clients. Turning to slide seven. Global rates continue to deliver diversified revenue growth across an expanding range of products and geographies. Rates have been a core growth engine for us with year-to-date revenues up 23% year-over-year and averaging 16% annual growth since 2019 with international being a highlight.
Even with our scale, the majority of Global Rates products still trade over the phone, or chat. That's a significant opportunity. We are leaning into it by building more innovative electronic solutions that make markets more efficient, transparent, and connected across swaps, government bonds, and mortgages. We are pushing into new voice-centric markets like bilateral and multi-asset package swaps, specified pool trading in mortgages, and package trading across global government bonds. Altogether, we estimate these initiatives to open up a revenue TAM of nearly $500 million annually. By capturing share from traditional voice trading, and continuing to innovate with clients, we continue to strengthen our competitive position in global rates.
Moving to slide eight, we have spent years building our strong global interest rate swaps foundation and its paying off. Clients continue to shift more of their workflow from voice to electronic, and we're right at the center of that change. What started as a regulatory push has evolved into a structural movement. Clients and dealers have never been so invested in building out more efficient workflow options for their voice flow. From 2019, through 2024, swaps revenues have grown at more than 20% on average. And year-to-date, we have accelerated to 40% year-over-year. Just like our broader rates franchise, the growth has been diverse.
Over 30% year-to-date revenue growth in European and dollar swaps, over 70% across APAC and our emerging market initiatives alone added over 500 basis points to our total swaps year-to-date revenue growth. We are seeing a client base that's deeply engaged, active, cross-currency, and increasingly electronic. And while compression can sometimes mask the strength of the business, the underlying trend is clear. We continue to grow our overall risk market share. Even with all that progress, the majority of swaps trading is still voice-driven, which means there's plenty of room ahead for continued electronification. Our team continues to innovate around that opportunity.
We're expanding our presence in emerging market swaps, building multi-asset package swaps capabilities across our clear developed market currencies, and making early headway in the bilateral swap space. Each of these initiatives opens new ways for clients to connect, trade, and unlock efficiency on Tradeweb Markets Inc. Focusing on the third quarter, Global Swaps delivered record revenues driven by a combination of strong client engagement, a dynamic macro backdrop, a favorable mix shift towards risk trading, and a 7% year-over-year increase in weighted average duration. Altogether, global swaps revenues grew over 30% year-over-year. Core risk market share, which excludes compression trading, had a record rising over 130 basis points year-over-year.
Total market share declined from 22.4% in the third quarter of 2024 to 21.2% in the third quarter of 2025. Largely due to a significant reduction in European client-related compression volumes, which carry much lower fee rates. The third quarter highlighted the continued global expansion of our swaps franchise. We achieved record revenues across EM and institutional dollar swaps revenues, while European swaps revenues rose nearly 30% year-over-year. Our strong performance was supported by an 8% year-over-year increase in global active users. We continue to make progress across emerging market swaps and our rapidly growing request for market protocol.
Our third quarter EM swaps revenues produced another strong quarter while our RFM protocol also saw average daily volume more than double year-over-year with adoption picking up. You can see Slide 17 of the earnings presentation for our usual global swaps disclosure. Looking ahead, we continue to believe the long-term growth potential for swaps remains significant. With just 30% of the cleared swaps market currently electronified, there is substantial runway to digitize workflows alongside our clients. Our clients have stayed very engaged given the fluid global macroeconomic backdrop, and we continue to partner with them to create better work solutions across a growing part of the cleared markets and make inroads into the uncleared swaps market.
This month, we launched the first fully electronic swaption package trading protocol in the market, a major step forward in bringing transparency, efficiency, and two-way pricing to a product that has historically traded almost entirely by voice. Shifting to global credit on slide nine, low single-digit revenue growth for Global Credit was driven by strong double-digit revenue growth in both European credit and municipal bonds, which more than offset weakness in US credit where revenue fell year-over-year mainly due to retail corporate credit revenues that were down nearly 30% year-over-year. Primarily reflecting the better relative yields our clients were getting across money markets and munis. Automation continues to resonate with Global Credit AIX average daily trades increasing 5% year-over-year.
US credit remains a key growth initiative. We are focused on maintaining our leadership position and are pioneering portfolio and session trading protocols and increasing our block market share. Perhaps most importantly, continuing to increase our RFQ share, which we expect to be the number one driver of revenue growth in US Credit going forward. Our deepening liquidity pool, and continuously improving client experience is resonating as we attract more clients and experience talent across the board. We achieved record block share for the quarter in fully electronic US Investment grade at 10%. Our volume growth was driven by continued adoption of our portfolio trading, RFQ, and sessions protocols.
Institutional RFQ average daily volume grew 13% year-over-year with double-digit growth in both IG and high yield. Our efforts to expand into RFQ are seeing continued signs of success with our IG RFQ share of overall TRACE up over 60 basis points year-over-year. Portfolio trading average daily volume also increased over 10% year-over-year with over 30% growth across international portfolio trading. During the quarter, we saw our largest line item portfolio trade at over 4,000 lines. Additionally, we saw our largest ever international portfolio trade at nearly $1.4 billion. We saw double-digit active user growth across the US and international PT, and we continue to expect adoption of the portfolio trading solution to expand.
Alltrade had a strong quarter with over $200 billion in volume, with average daily volume up almost 10% year-over-year. Our all-to-all average daily volume grew over 35% year-over-year, while sessions average daily volume rose by nearly 10% year-over-year. The team remains focused on expanding our network and increasing the number of responders on the AllTrade platform. We saw record responder rates across IG, and we also saw strong ETF market maker participation across institutional credit with volume showing strong year-over-year gains. Moving to slide 10. One aspect of the Tradeweb Markets Inc. story that often doesn't get enough attention is how far we've come internationally.
Over the past few years, we've built tremendous momentum outside the US, with international revenues growing at a 19% compound annual growth rate from 2019 through 2024, and so far this year, up more than 30% year-over-year. Today, over half of our overall revenue growth is coming from outside the United States, and about a fifth of that is from regions beyond Europe and the UK. Mainly Asia. Regions that were once viewed as future opportunities have now become meaningful contributors to our business. This success stems from the strength of our global presence and the deep relationship we've built with our international clients. Importantly, these clients aren't just engaging with Tradeweb Markets Inc. for international fixed income products.
They're increasingly turning to the platform for our home court US products as well. Underscoring the global reach and versatility of our offering. Building on the success of our international expansion, we've also seen strong early results from our emerging markets initiative. Much like our broader international strategy, we've been leveraging our established developed market presence to drive growth in these regions. And we believe it is working. Traders in emerging markets are deeply engaged with Tradeweb Markets Inc. and increasingly drawn to our multi-asset class model, trading an average of more than five products on our platform. We're now pacing at over $100 million in annual revenue from emerging markets, nearly triple what we achieved in 2023.
Yet even with this progress, we're only beginning to tap into a total addressable market exceeding $1.5 billion. Across emerging market swaps in particular, longstanding challenges such as geographic dispersion, pricing opacity, and operational inefficiencies have traditionally made voice trading the default. That dynamic is changing. Tradeweb Markets Inc. is helping to lead the shift towards electronification by providing clients with more discreet, transparent, and efficient execution. Innovations like our RFM protocol and AIX are playing a key role in that evolution. Beyond swaps, we're also seeing encouraging momentum in emerging markets cash credit where revenues are up more than 40% year-over-year. Last week, we announced the successful launch of the first electronic bond alternative trading system in Saudi Arabia.
A foundational moment for a fixed income market structure in the kingdom, and a testament to our growing geographic footprint. The opportunity ahead remains significant. Not only within global fixed income and ETF markets, but also as we continue to build brand recognition and expand our footprint across more countries. With that, let me turn it over to Sara to discuss our financials in more detail.
Sara Hassan Furber: Thanks, Billy, and good morning. As I go through the numbers, all comparisons will be to the prior year period unless otherwise noted. Slide 11 provides a summary of our quarterly earnings performance. As Billy recapped earlier, this quarter we saw revenues of $509 million that were up 13% year-over-year on a reported basis and 11% on a constant currency basis, given the weakening dollar. We derived approximately 42% of our third quarter revenues from international clients. And recall that approximately 30% of our revenue base is denominated in currencies other than dollars, predominantly in euros. Our variable revenues increased by 11% and total trading revenues increased by 13%.
Total fixed revenues related to our four major asset classes were up 28% on a reported basis, and 26% on a constant currency basis. Rates fixed revenue growth was primarily driven by an increase in minimum fee floors for certain dealers and by the addition of dealers to our mortgage and US government bond platforms. Credit fixed revenue growth was primarily driven by the previously disclosed introduction of minimum fee floors and the migration of certain dealers to subscription fees. Other revenues increased 52% primarily driven by our digital initiatives. Specifically, we earned $2.3 million from our work with the Canton network, where we are compensated in Canton coins.
This item will be variable quarter to quarter reflecting fluctuations in the number of Canton coins earned, Canton coin prices, and periodic tech enhancements for retail clients. Year-to-date adjusted EBITDA margin of 54.2% increased by 90 basis points on a reported basis, when compared to our 2024 full-year margins. Lastly, this quarter's GAAP results include a $15 million realized gain from the sale of Canton coins. For the first nine months of 2025, we also recorded unrealized gains of $50.6 million. As a reminder, realized and unrealized gains are included in GAAP EPS and excluded from non-GAAP adjusted diluted EPS.
As of the end of the third quarter, we held approximately $1.7 billion Canton coins, with a fair value of approximately $56 million, which is recorded on our balance sheet under other assets. Moving on to fees per million on slide 12 and a highlight of the key trends for the quarter. You can see Slide 19 of the earnings presentation for additional detail regarding our fee per million performance this quarter. For cash rates products, average fees per million were down 7%, primarily due to a mix shift away from US government bonds, which carry a comparatively higher fee per million, and a shift towards mortgages, which carry a lower fee per million.
For long tenor swaps, average fees per million were up 21%, primarily due to a decline in compression activity. For cash credit, average fees per million decreased 15% due to the migration of certain dealers from fully variable plans to fixed plans across institutional and wholesale US credit, and a mix shift away from retail within US credit, which carries a higher fee per million. For cash equities, average fees per million increased 1% due to higher fee per million in EU ETFs. And finally, within money markets, average fees per million decreased 4% primarily due to a mix shift away from retail CDs, which carry a comparatively higher fee per million. Slide 13 details our adjusted expenses.
At a high level, the scalability and variable nature of our expense base allow us to continue to invest for growth and grow margins. We have maintained a consistent philosophy here. Adjusted expenses for the third quarter increased 12% on a reported basis and 11% on a constant currency basis. During the third quarter, we continued investments in tech and communications, digital assets, consulting, and client relationship development. Adjusted compensation costs grew 6%, driven by a 12% year-over-year increase in headcount and higher salaries, partially offset by lower accruals for performance-related variable compensation. Technology and communication costs increased 39% primarily due to our continued investments in data strategy and infrastructure.
Adjusted professional fees grew 6%, mainly due to an increase in tech consultants as we augment our offshore technology operations and build incremental scalability. This was partially offset by lower legal fees. Occupancy expenses increased 23% primarily from increased rent due to the move of our new York City headquarters, including duplicate rent of $241,000 in the quarter. Excluding duplicate rent, occupancy expense grew 18%. Adjusted general and administrative costs increased 30% primarily due to a pickup in travel and entertainment and unfavorable movements in FX. Unfavorable movements in FX resulted in a $1 million loss in 2025 versus approximately a $400,000 gain in 2024. Excluding FX, adjusted general and administrative costs grew 19%.
Slide 14 details capital management and our guidance. On our cash position and capital return policy, we ended the third quarter in a strong position with $1.9 billion in cash and cash equivalents, and free cash flow reached approximately $987 million for the trailing twelve months. Our net interest income of $19.8 million increased due to higher cash balances despite lower interest yields and included a one-time payment of $2.4 million related to interest income from a tax refund. With this quarter's earnings, the Board declared a quarterly dividend of $0.12 per Class A and Class B shares, up 20% year-over-year. Turning to guidance for 2025. We are tightening our adjusted expense guidance to $1 billion to $1.025 billion.
In the fourth quarter, we expect a similar sequential dollar increase in technology and communication expenses as we are seeing this quarter, driven by continued investment in platform infrastructure, AI, and data. We expect to see continued double-digit growth in technology and communications through 2026 based off the fourth quarter run rate. We expect fourth quarter professional fees to see a seasonal pickup similar to 2024. We expect adjusted G&A to rise sequentially primarily due to an expected $4 million in FX losses based on where current FX rates are coupled with the usual seasonal rise in T&E, marketing, and charity.
Lastly, we estimate fourth quarter occupancy expenses to increase by $1.5 million over the third quarter, primarily due to the move to our New York City headquarters in September, along with higher data center costs. All in, with these investments in FX-related impacts, we continue to expect our 2025 adjusted EBITDA margin to exceed 2024 levels, although expansion will be more modest than last year as we support our current and future organic growth. As Billy mentioned, we reached an agreement in principle to renew our market data contract with LSEG for a duration of three years. That will see the contract increase in value by 9% annually, effective as of November 1.
We are still in the process of formalizing the contract and finalizing the cadence of revenue recognition and will provide an update on our fourth quarter earnings call. In the interim, for modeling purposes, you can use $22 million in revenue from the LSEG market data agreement for the fourth quarter, which is derived using the current monthly implied rate for the third quarter, for October, growing that by 9% for November and December. Now I'll turn it back to Billy for concluding remarks.
Billy Hult: Thanks, Sara. 2025 is shaping up to be another banner year for Tradeweb Markets Inc. even as the markets present their share of challenges. We have a data-driven Fed that reacts to each new data point, and that in turn is influencing how our clients think about risk and express it through our platform. Across our client base, a clear theme is emerging. What I'd like to call mechanized flow. Put simply, our clients are becoming increasingly systematic and data-driven in how they trade, and that evolution aligns perfectly with how our global platform is built. That said, we're in a period where the market feels somewhat on autopilot.
With the lack of fresh data that makes it difficult for our clients to war game and position effectively. Low volatility and limited data are near-term headwinds. Not just for us, but for the broader market. Still, we believe the setup heading into 2026 is constructive. Volatility will normalize, data will return. And when it does, our clients will once again need to hedge and reposition their global books of risk. And importantly, the firm is not standing still. We are focused on what we can control, building innovative solutions across our clients' execution workflows to win market share from the voice markets.
I remain incredibly proud of what we've achieved this year and confident in the opportunities ahead as we continue to partner with our clients to help redefine how the world trades fixed income. Overall, revenue growth is trending approximately 9% higher relative to October 2024, which was exceptionally strong given the election volatility. While overall revenue growth is lower than we expected, this growth is happening in an environment of low volatility, fewer data points, and without the benefit of an election year. Our international business continued its strong revenue performance with October growth of nearly 20% year-over-year.
The diversity of our growth remains a theme as we are seeing double-digit volume growth across global swaps, European government bonds, US high yield, European credit, minis, China bonds, global ETFs, global repo. Our IG share is tracking below September levels, while our high yield share is tracking above September levels. Finally, I would like to thank our clients for their business and partnership in the quarter. And recognize my colleagues for their efforts that contributed to the strong quarterly revenues and volumes at Tradeweb Markets Inc. With that, I will turn it back to Ashley for your questions.
Ashley Neil Serrao: Thanks, Billy. As a reminder, please limit yourself to one question only.
Operator: Feel free to hop back in the queue and ask additional questions at the end. Q&A will end at 10:30 AM Eastern Time. Operator, you can now take our first question.
Operator: Thank you so much. As a reminder, just press star 11 to get in the queue and wait for your name to be announced. To remove yourself, press star 11 again. Our first question comes from the line of Christopher John Allen with Citi. Please proceed.
Christopher John Allen: Yep. Good morning, everyone. Thanks for taking the question. I wanted to get a little bit more on the rate environment.
Billy Hult: Chris, as you noted, volatility and activity levels have been low. It sounds like clients are sitting on their hands to an extent. Just wondering, from your perspective, what potential catalysts are ahead that could spark volatility and improve activity. Also, you noted the lack of data impacting activity. Is there any way to gauge the impacts of government shutdown and the lack of releases on activity levels? Yeah. Chris, how are you? Thanks for the question. Speaking of volatility, I want to congratulate you on surviving your golf round with Sameer Murukutla.
Christopher John Allen: Much thanks. Yeah.
Billy Hult: October, I think, was, like, the lowest rate volatility since 2021. So your question's kinda interesting. And I think timely. And Chris, obviously, when we kind of think about it, to make an obvious point, our clients rely on data to make forward decisions starting with where to deploy capital, do you position risk, when are you kind of leaning in, when are you risk on, and when are you kinda risk off? So your question is a good one. And I said this in my closing remarks a little bit so let me get to it.
Like I think for sure from our perspective, part of the muted activity and I think muted is the right word, part of the muted activity I think we've seen recently is tied to the lack of data points that's obviously directly correlated to the government shutdown. Many of our clients, as you know now, are kind of more systematic and they rely on this kind of, like, they rely on as they wargame and shape the forward strategy, like real precise data. Market makers and hedge funds have become very important to the financial ecosystem. And I do think we've done a really good job of being like very front-footed on that trend. And so data is their fuel.
There's no other way for me to describe that. So I think without overdoing it, I think they have been a little bit in this kind of like wait and see mode as they traffic through the US markets. I think the Fed in an interesting way is maybe want to say flying blind, but maybe a little bit I think there was a perception that they were a little bit on kind of autopilot I think something around that in an interesting way kinda naturally maybe sets up for surprises. And I think yesterday is a really good kind of indication around how kind of surprises kind of seep into the marketplace.
So I think the rate cut announcement yesterday was accompanied by some new perspective, some new data. I think that interestingly did kind of spark our markets. We saw a very big sell-off on the short end of the curve yesterday. The Fed announced that it will end QT which we believe pretty strongly is a positive for our business. And I think they surprisingly raise questions about the pace of future cuts. Which leads to this kind of activity around repositioning. So new data always sparks volatility. And I would say looking ahead, we have growing I think dissent within the Fed. Rate and yield curve keeps changing.
Reminder, as we look to the forward, midterms, believe it or not, time is going so fast. Midterms are looming. I'll make this point very specifically. We know that this is a regime that by no means kinda flies below the radar. And the geopolitical landscape continues to remain very uncertain. And so these are, from our perspective, all potential catalysts for volatility and activity. So as I say all that, what I would say also, as you know very well, we are a global business. And it's a business I would say, as usual for international clients, they are not being weighed down by data drought at all.
So as we kind of reflect a little bit on the third quarter, even with volatility roughly I think it's roughly 20% below long-term averages. From my perspective, we still delivered positive revenue growth in institutional treasuries, double-digit growth across mortgages, I think that's an important comment. European governments, global swap have done well. Big picture, trends of higher global debt push for greater efficiency, leveraging electronic trading continue. That's a really important kind of comment for me. And I think the recent move lower in rates has without question reinvigorated our leading mortgage business where we have significant market share and has been a flagship franchise for us for a long time. It delivered record revenues.
Looking ahead, and I see this like very kind of clearly, I think it's a great time, you know, to be in the macro markets. Global backdrop, you have moderate growth, easing inflation, but also this kind of thing I said before, Chris, which is continued uncertainty and some structural challenges tariffs on, tariffs off. We've been through this movie a little bit. I always say this very loud and clear, control what you can control. You know that we are not a company that remotely stands still. So the focus is always going to be on expanding the electronic pie. Building new solutions. Continuing to compete with the voice markets, grow our overall revenue wallet.
Very proud that we launched. We had our first electronic swaption trade this month, first US multi-asset package trade continuing to innovate. And be front-footed. So good questions, Chris, and appreciate it always.
Christopher John Allen: Thanks, guys.
Operator: Thank you. Our next question comes from the line of Jeff Schmitt with William Blair. Please proceed.
Jeff Schmitt: Hi, good morning. Electronic market share for treasuries has been down in recent months, I think under 60% or even 55% of industry volumes. What's driving that greater mix of voice trades? I think you've pointed out package trades in the past. Is that still the case? And do you see this as a structural issue, or could it be more temporary?
Billy Hult: It's a really good question. And I don't see it as structural, but let me get into it. I think your frame is a good one and we say this all the time. I've been really clear about this, like our biggest competition is the phone. You know? It's the 1996 way of still doing business, not the 2026 way. That the market will do business. And so when I think about sort of the Holy Grail of it all, it continues to be going after these kind of larger complex trades that continue to be transacted on the phone. Voice trading has always been a part of the US Treasury market.
And there are certain strategies within the Treasury market like basis trades and you mentioned it before asset swaps, swap spreads, that I would say have kind of historically lent themselves to more 1996 voice execution. They're often kind of more complex, multi-leg trades, larger notionals, and it's made it more better suited that type of activity. Interestingly, and let me kind of comment again with a bit of bluntness on this because sort of does tie together.
With lower volatility, and that little bit of and little conviction on rate direction, I think the instinct that we have is that clients tend to focus on sort of more arbitrage opportunities within treasuries or between something like treasuries and futures and swaps. And so I think the instinct is these tend to be large notional package trades that remain predominantly voice-driven. For now. And I think we make a very strong point about saying for now because that's where a lot of the focus of that rates business is.
And so, to your point, that has led to sort of parts of that market where voice volumes have been growing at a faster pace than the kind of straightforward electronic flow that we live and breathe in. You know, I think I would say is from a good news perspective, and again, this kind of speaks a little bit to the focus that we have, I think the share around what you described kind of bottomed in kind of April and May. And I would say that we've been seeing I think, a real reacceleration of our share through September and into October. And I would say we expect that to continue.
And then I kinda always kinda say, like, what's the big picture here? So kinda stepping back, I think the very strong instinct is always the advent of new investment and new technology. Is a trend that has been unfolding for years. And it's like I always said, it's hard to call the kind of top around this continued expansion of electronification. We see it very much as this kind of one-way train with a lot of room to run. We're going to continue to apply kind of AI around the AIX pricing. We think the move into the kind of how we think about the DeFi ecosystem with stable coin and tokenization are very good trends for us.
And across fixed income, electronic trading continues to grow. Because electronic trading continues to grow because it delivers this efficiency, competition, transparency, all of the processing. And to make an obvious point, and it's really important that you hear me say this, these benefits are hard, if not impossible, to replicate in the voice market. Which gives us that kind of optimism as we continue to fine-tune and go after more of the complexity in the market. And so I say this all the time, like I can get a bit intense, but broad adoption does take time. It requires this thing that we know about really well, which is behavior change, behavior change from clients.
But I think from our perspective at Tradeweb Markets Inc. and Sara and I talk about this all the time, we're not complacent, but we're confident I think that the direction of travel around the ongoing electronification is pretty clear. So thanks very much for the question. Good to hear your voice.
Sara Hassan Furber: Maybe just like amplifying one of the points that you made earlier, in the earlier part of this call, when we talk about the percent of electronification in US Treasuries, and Billy said this, it sometimes gets lost. The actual electronic ADV in this Treasury market is up double digits year-to-date. Right? So Billy's talking about this episodic increased voice flow that we have an opportunity to help electronify around package trades, but not to lose sight of the underlying business, the underlying industry trend is actually up 10% year-over-year. So both things are healthy opportunities for us.
Billy Hult: Yes, very good point, Sara. Thank you.
Jeff Schmitt: Great, thank you.
Operator: Thank you. Our next question comes from the line of Daniel Thomas Fannon from Jefferies. Please proceed.
Daniel Thomas Fannon: Good morning. And welcome to Blue Chip Blue. We are here. Thanks. So sorry for the background noise here, but just there's a general narrative around lower rates and what that means for is bad for trading volumes for us. And so it was curious about how the outlook for rates, you know, given where the Fed funds curve is there, do you think about the outlook for the next year?
Billy Hult: Yeah. Good question. And maybe I'll take, like, a little bit of this, Sara, you come in with me on this as well. And good morning to whoever said that on the call as well. Know? So, you know, you and I know each other, Dan. So I've been at the company now. It's amazing. Like, I think it's, like, twenty-five plus years. Getting older by the day. We've grown revenues every year. I say this very proudly, because it has nothing to do with me.
But every year kind of irrespective of the rate environment, this is now, I'm going to say this like pretty clearly, nine straight you know, nine straight quarters of double-digit revenue growth that we've kind of managed to do that as you know very well through a bunch of different kind of market environments, because the focus is obviously always on building more innovative solutions attack this thing I was saying before around more parts of the voice market. So I want to make sure I'm really clear about that because that ethos has not changed over the past twenty-five years.
And so maybe for a second just like specifically around your question, your question is not oversimplified, but I think in some ways the view around that, as you know, I think is a little bit oversimplified. This environment from our perspective I think is constructive for us. Right? So we think about real yields of 2% to 3% on the short end, which we think makes fixed income quite an attractive income-generating tool. We think about the concept of kind of sustained upward sloping yield curve. Which we think incentivizes something very, very important. Which is duration extension. We think benefiting our higher duration products, I think that's like a really important thing for you to hear from me.
Continued issuance would support and should support velocity and future secondary supply. And so with respect to rates, we think it's very, very important to draw I would say is a very clear and sharp distinction between lower rates and zero rates. These are very different environments. Think history shows that trading volumes kind of ebb and flow in ways that you know very well Dan. With volatility and policy expectations. It's not just absolute level of rates. And so as rates trend lower, we expect private intermediation, which is something I talked about a lot. It's back in vogue. The banks are capitalized and stronger than ever. Client-driven activity is going to continue to remain active.
And we think and we're starting to hear this that obviously the central banks will remain a smaller part of the market than they were a few years ago. And so we think that's a very good environment for us. And, Sarah, if you wanna add.
Sara Hassan Furber: I think, in addition to what Billy's talking about around what's really driving business volumes, I think it's also important to remember that lower interest rates actually impact in a positive way two of our biggest businesses around swaps and cash credit fee per million. So if you think about it and I know we've talked a little bit about this before, but if you were just to take rates and drop them by 100 basis points across the curve, swap fee per million would increase by 4% or 5% cash credit fee per million by 2%. And as a reminder, it's because both of those businesses and fee structures operate on PV01 or DV01s.
So on the risk notional that's being traded. And then I know earlier we talked about the shape of the curve. That also has a positive impact in terms of duration being extended in our products. And so as you think about the impact of that on fee per million, a one-year increase in duration, so if you take it ten years going to eleven years in a business like swaps, fee per million can go up 7% to 8% and credit a little bit less, but around 2%. So obviously, like when we think about our business, the way the business mix changes is the biggest driver of revenue.
But structurally, when rates go down, there is this positive impact on fee per million holding all else constant, I think is something sometimes people forget.
Billy Hult: It's amazing, Sara. If you look back at that kind of last period, Dan, of zero rates, which is obviously a very different and kind of more challenging environment than what Sara was describing as kind of lower rates. So we're really kind of talking about that sort of like 2019 to 2021 time period where the Fed was kind of a large buyer. And you've heard me talk about that when the Fed was a large buyer in the market. I think US Treasury industry volumes were flat. But at that time our revenues grew 14%, which is what you're describing, Sara?
And swaps, interest rate swaps volumes were down 14%, but our revenues were up 23% that year, which I think speaks a lot to how we are commercial in more challenging environments. I think it's a good question, Dan. So we appreciate you always.
Daniel Thomas Fannon: Thanks, Dan.
Operator: Thank you. Our next question comes from the line of Alexander Blostein with Goldman Sachs. Please proceed.
Alexander Blostein: Hey, Billy. Hey, Sara. Good morning, everybody. So wanted to spend a minute on the topic of tokenized assets. Obviously, quite an evolving landscape there. What are the opportunities, I guess, and risks that you see for Tradeweb Markets Inc. on both of those fronts? Thanks.
Sara Hassan Furber: Great. Nice to hear from you, Alex. Maybe I'll start, and then, Billy, feel free to chime in. Think, look, it's a great question and we are definitely spending a lot of time on tokenization and digital assets more broadly. So maybe let me cover a little bit about what we mean when we're talking about digital assets, because I think everybody talks about different components about it. For Tradeweb Markets Inc., when we're talking about tokenization, stablecoins and digital assets, we're really talking about further modernizing the way financial assets trade.
And so if you think about that, it's a natural extension of what we've done and what Billy and the team have done for twenty-five years in terms of electronifying voice markets. It's what we feel we do best. It's more efficient enabling the transfer of risk. And so our goal, just like when we talk about electronifying markets, is we want to be a market leader. We want to allow our clients to trade tokenized assets on blockchains. It's programmable. It's interoperable. It provides huge client benefits from our standpoint, faster settlement, things like 24/7 trading, data synchronization, I would love less reconciliation personally and capital efficiency. Is probably one of the biggest drivers.
So from our seat there's a lot of opportunity here when there's so much opportunity for our clients. And we have a right to win, which is sort of the first part of what I was getting at. And we've been at it for a while. We've been at it for over three years. Given the regulatory tailwinds that appear to be lining up, we think this is a real significant opportunity for us. And I think I say this with some appropriate humility. I think we feel we're well ahead of our peers in being able to provide both traditional and digital rails side by side for our clients at scale.
So all of those components, I think, matter as we think about the forwards. We've made a number of targeted investments. I think, Alex, you've seen us do that in an effort to provide this end-to-end service, like connecting issuance, trading, and settlement. Being able to handle the cash leg and the asset leg as you think about tokenized assets. And so I don't need to read the laundry list, but digital asset holdings, Finality, Securitize, and of course our work with Canton Network, the thing that's exciting, think, from my seat as a CFO is we're really generating revenue. This is having real impact.
And so obviously early innings, but year we've already generated $5 million year-to-date from our work as a validator and super validator on the Canton network. That's in addition to having $1.7 billion coins on our balance sheet with our are worth approximately $55 million. So I think there's real financial benefits. The digital business for us is something that we continue to invest in. We intend to expand our work at the Canton Network and obviously want to be part of growing that and building trading applications on it. So we think this is the beginning of our digital business.
And I think it's really important to recognize that because we've been in this for a long time, it's not just financial investments. It's inorganic. And organic, like people at Tradeweb Markets Inc. embedding these technologies in mortgages, in repo, in all of our traditional businesses. So I think obviously you can tell we're excited about it. Always trying to be balanced. When we talk about the risks, you know, I think complacency is probably the biggest risk that Billy and I spend a lot of time talking about. We don't take position in the ecosystem lightly. We don't ever expect to be the only solution or only platform out there.
But we do think, given how long we've been at it and some of the things that we can do uniquely, and maybe more importantly, Billie, like I know you feel strongly about this, who we've partnered with. Strategically. We think we're in a good position to evolve with a market that is going to keep evolving.
Billy Hult: It's always like a good question. We still like Alex. It's always a good question from Alex. I think it's impossible to look at kind of 2025 and not say that in exactly the way that you described really, really well, Sara, that crypto exposure to gold and the Mag-seven stocks have not become kind of macro products in our world. And so when we kinda when I say that out about kinda crypto, I mean, I think it's fair to say that, you know, ultimately we see institutional grade crypto as part of the kind of broader macro toolkit, and we plan to play a role there.
And part of the kind of partnerships, Sara, that you were alluding to and I think is very specifically around kind of the Canton network partnership that we have is very, very important to us because we see kind of best in class there and we see real potential partners with us in the kind of go forward evolution potentially around that marketplace becoming more institutional. And so as everybody here knows, the roots around that market are always by definition going to be kind of 24/7 stuff.
And so as this kind of ties in, the general feeling is as fixed income products kind of follow that route, around tokenization and 24/7 liquidity, we're going to play a leadership role with the potential, Alex, ability to pivot as a leader around institutional crypto trading. So this is all kind of very, very important and interesting that I think is going to define really the next couple of years of electronic marketplaces. And so thanks, Alex.
Operator: Thank you. Our next question comes from the line of Simon Clinch with Rose Charles and Company. Please go ahead.
Simon Clinch: Hi, Billy. Thanks for taking my question. Was wondering if you could talk maybe give us a sense of how to think about the stages of electronification in US credit in particular. And how Tradeweb Markets Inc. is positioned to both drive and benefit from this trend, specifically, you know, in terms of, like, the technologies you have in the pipeline, accelerate this opportunity, how the value trading fits into the frame, particularly in the case of locks, and ultimately, how we should think about the revenue benefits that accrue from this opportunity. Thanks.
Billy Hult: Sure. Thanks very much, Simon. You know, I said it before about kind of to be kinda super focused, but also with an understanding that human behavior change takes a little bit of time. So I'll make the most obvious point on this entire earnings call. Electronification and credit has never been and will never be kind of straight line stuff. And so what we've seen is periods of gradual progress, gradual progression followed from our perspective kind of sharp accelerations when what we would say very key ingredients come together, better technology, improved data, shifts in trading behavior and more efficient post-trade process. These are the kind of pieces of the ingredients that need to come together.
And I'll say it this way for a second. At the same time, I think it's important to recognize and understand something that's embedded in your question. Question, which is the credit market is structurally different from other asset classes. And I'll say it this way, I think from our perspective, I think liquidity in that marketplace can be a little bit fragile. It's fragmented market with thousands of individual bonds, sometimes limited depth, that can change very quickly when conditions move. And so the market itself, I would say this, like in my entire career, it's a challenge. And I say that optimistically, because I think challenges plays to kind of trade web strengths.
So in a complex market, think there's a real difference between just we would say is like adding technology for technology's sake and building balanced real solutions in collaborations with our partners. I mean, think that is front and center a fundamental ethos to how we partner with the buy side and with the dealers. We still feel exceptionally strong that we are right-sided on portfolio trading. We think bringing the dealers back into the equation as market makers is a fundamentally important part of marketplace. I would say there needs to be very strong and continued work on ultimately delivering the dealers' balance sheets and inventories to the most sophisticated and most important clients.
I think that's an important endeavor that we are working on. And ultimately, as you know well, this piece of the market is going to be defined as innovations that ultimately land again, this concept of the holy grail around risk traits. And so we have our best and brightest in the credit business working on this all the time. I feel very, very strong and proud around how we've landed in credit and the company is extremely focused into 2026 and continuing to make progress there. So appreciate it, Simon. Thank you.
Simon Clinch: Thanks very much.
Operator: Thank you. Our next question comes from the line of Craig Siegenthaler with Bank of America. Please proceed.
Craig Siegenthaler: Good morning. This is Eliabud on for Craig. Thanks for taking the question. You launched treasury trading on ICD last quarter. Can you update us on what adoption has looked like? Do you have any plans to launch more products in ICD? And then bigger picture, you're still sitting on a lot of cash. Is there more opportunities for M&A in the corporate channel going forward?
Sara Hassan Furber: Hey, Eli. It's Sara. I'll take that. Nice to hear from you. I think we are really excited. We've seen early interest from our T Bill launch on ICD, which we did at the end of the second quarter. And we've already had a few clients execute their first trades this month. So good momentum and progress there. What's been encouraging even beyond that is some of the largest potential clients we have in our pipeline, those who've previously passed on ICD are now more focused on reengaging because of this added ability to bring Tradeweb Markets Inc.'s products onto the platform, the ICD portal. So I think holistically, we continue to see momentum around that strategy.
Obviously, it takes time and they're long sales cycles. Beyond that, we're very focused on making the whole experience when we've brought Tradeweb Markets Inc. and ICD together to be more seamless. So there's work that we're doing to integrate straight-through processing between our organizations and platforms. And obviously, a couple aspects on the custody relationship. So more to come on that. But I think good progress. And beyond ICD, you know, the second part of your question, just in terms of bigger picture, sitting on cash and M&A, look, I think Billy's been really clear. We are an ambitious company and we continue to consistently evaluate buy versus build investments outright M&A.
Just because we have the cash does not mean that we're going to be lacking in discipline. Discipline. So the bar is high and we have a number of strategic and financial objectives that anything that we deploy capital against has to meet. But I think you've heard us talk about some of the areas that we're most excited about on this call, whether it be digital, an area that we're evaluating continued investments both inorganically and organically. Billy's talked about institutional crypto. As that world evolves, I think there are things that we can do to accelerate our technology build there. And areas that are adjacent to some of our markets like private credit.
So in particular, we're focused on where the biggest opportunities are for growth in the marketplace that are adjacent to what we do, where we think we have a right to win. And so I think the inorganic question is much more than just M&A from our seat. It's a combination of partnerships, investments as well as looking at acquisitions. So I hope that helps.
Eliabud: Got it. Thank you.
Operator: Thank you. Our next question comes from the line of Kenneth Brooks Worthington with JPMorgan. Please proceed.
Kenneth Brooks Worthington: Hi. Good morning, thanks for taking the question. Maybe following up here, the question. Sarah, you highlighted in that 25% would be an investment year, remain to evaluating M&A opportunities like if and where appropriate. When you're looking at the product suite as it stands today, are there particular protocols, technologies, geographies, that you think could better amplify Tradeweb Markets Inc.'s value proposition? And to Alex's question earlier, you spent a lot of time on digital and the Canton network. Are there pieces, particularly on the digital side, would be helpful to fill in here?
Sara Hassan Furber: Yeah. And obviously, Billy, feel free to jump in. I think I'd say I'd characterize we don't see any major gaps across our asset classes. Protocol, geography set. We think we're highly global, really diversified across client channels as well as asset classes. But we do consistently evaluate where can we amplify or accelerate. And so the areas I probably just highlighted are areas that we would call more frontier markets on the adjacent standpoint that I think are our biggest opportunities to add potential asset classes. Like when Billy talks about institutional crypto, we think of that as an adjacent asset class. And in some ways an extension of clients more crypto native firms.
So that would be an area that I'd highlight. It's interesting when you take a different lens around digital, and you asked a little bit life cycle, think that's like a really a really good added dimension to look at. Sometimes people think Tradeweb Markets Inc. is only focused on what I would call the math like the execution. The reality is our offering goes from pre-trade analytics to execution to post-trade in a lot of different scenarios.
I think what's really interesting about some of the work we're doing in the digital space is it can make our participation across the full trading lifecycle even more efficient, both from providing a service from two clients but also from a capital perspective. So I would say if anything, as the world evolves, and we don't think it'll be binary, I think our role and opportunity across the trading life cycle that opportunity kind of grows in multiple dimensions beyond just purely a trade execution.
Kenneth Brooks Worthington: Perfect. Great. Thank you.
Operator: Thank you so much. Our next question is from the line of Benjamin Elliot Budish with Barclays. Please proceed.
Benjamin Elliot Budish: Hi, good morning and thanks for taking my question. Billy, in your prepared remarks you talked a lot about very low levels market volatility and what that's doing to electronic share. Just curious, I think earlier in the Q&A you talked about your outlook for e-share. Maybe just on volumes in general both TRACE and US Treasury. What are your thoughts on why is that the case? It feels like uncertainty remains quite high. The comps are fairly tough, but like what do you think are the reasons that market volumes have been a little bit lower? And how do you think how that unfolds over the next six, twelve months?
Billy Hult: It's a little bit of what I was saying before, it's a really good question. There's been a little bit of the kind of Fed on autopilot, lack of lack of data. You know, your question's a really interesting one, and as I'm kinda thinking about it, you think about '26 you know that factors around kind of timing of rate cuts is going to be very, very important like continued fiscal developments. There's going to be macro data surprises. We know that. Credit risks are coming to light. That's a big deal. So we feel kind of like volatility and client activity is big time coming back into the marketplace.
You know that we're gonna kinda win in the storm. Right? We've shown our ability to win in the storm consistently whether or not that storm was, you know, way back when kind of COVID or the regional crisis that storm that took place or then just very, very recently obviously around kind of liberation moments within the marketplace. We're going to win in the storm I feel very strongly that we're also gonna win in the calm. And we have been winning in the calm. And so that's where we kinda talk about this kinda concept of, you know, mechanized flow. And back to the basics around RFQ technology. These environments play very, very well for us.
In part because our ability to kind of engage Ben with clients and to put innovations into the marketplace at periods of calm I think plays extremely well to our strengths down the road. So I kind of say this with a little bit of a wink. Nobody knows anything. They're very strong instinct is, calm markets lead to something very different. And we've seen little even pieces of that as of yesterday afternoon when the market just saw something different than it expected to see and activity kind of surged very quickly and volatility surged. As a consequence of that, it's going to be a very, very interesting I think market dynamic into 2026.
And I think our general feeling here is and kind of Sara said it with humbleness but with a tremendous amount of confidence, I think we sit extremely well positioned to be that partner to the industry. So as always Ben, very good question and appreciate it. Thank you.
Sara Hassan Furber: You know, it's interesting I think also in what you're saying, you think about our ability to win in the storm and in the calm, the financial model supports that as well, which I think is a really and unique advantage. So we've had a market environment that was extremely volatile in the beginning half of the year and last year.
And as you think about one of the things that we do as an organization, as a management team, we've accelerated a lot of investments to invest through the cycle, in particular, been able to deploy a lot of capital in those environments for things that are new initiatives, which I know Ashley and Sameer have highlighted in some of the new slides that we put out. But new initiatives like inspect pools, in bilateral swaps, and obviously in government bonds. And being able to do those through the cycle, regardless of if it's highly volatile or not as volatile, think really sets that groundwork for us to perform in all different environments.
So that ability to have sustained investment through the cycle, I think is a complement, a different way of looking at kind of why I think Billy's point around we can win in either environment is really backed up.
Billy Hult: Great point, Sara. Thank you. Ben, thanks very much.
Operator: Thank you. Our next question comes from the line of Alexander Kramm with UBS. Please proceed.
Alexander Kramm: Yes. Hey. Hello, everyone. Late here, but look, there's been a lot of questions today, I feel like, on electronification of various markets both longer term. The one that hasn't come up is actually your largest business, which is interest rate swaps. And I think, Billy, you mentioned it earlier in your prepared remark, you know, only 30% of the market is of the cleared IRS market is electronic today. So this may be a little bit nitpicky, but I feel like I've heard that number for multiple years, maybe even back to the IPO. So just wondering, is it is this just a very rounded number? Is there just not good data on out there?
Or has the market actually not electronified more in the last few years? It's just all been market growth that you've been in.
Billy Hult: You have a good memory, Alex. It's such a good memory and it's such a good question that I'm definitely gonna have to have Sara answer it. But I'll first by acknowledging I thought I had a good memory until I got to know you, but it's a very good question. Hi, Alex.
Sara Hassan Furber: Actually, it's a great question because it does give us an opportunity to unpack something, which is true across a bunch of different aspects around our business because it is so nuanced and there's so many layers in it. So swaps, thank you, yes, is one of our biggest businesses, most important and growing most quickly. That 30% number like a lot of things, is this monolithic large pie and can mask a lot of the underlying trends that are really important. So swaps and that 30% number as an example include compression. Right? And as we've talked about every quarter, compression volumes can be really large.
Obviously don't come with the same amount of revenue, and can distort what's going on. So if I take out compression trades and really focus on what we call risk-based swap share for electronification or some people would call it like DV01 based swaps in that market. You can really see that electronification trend much more clearly. So in terms of that piece, that risk base, which really drives revenue, in 2020, the total electronification was 10%. And if we compare to where we are now, that number is 19%. So that's 150 basis points per annum over that five-year period. And I think really gets to what you're saying, which is like, okay, there is some real movement.
And actually that movement is what moves revenue. So when you know our revenues have moved in that of double digits, you kind of have that clearer picture. It's not the only way to look at it. I'd say the other big driver we spend a lot of time talking about but gets buried in that 30% is emerging markets. So emerging markets in 2020 was like 1%. Know if you can even measure 1%. But 1% electronically. It really wasn't electronic at all. And now if we fast forward to where the market is in 2025, and we obviously view ourselves as a leader in that market, it's at 18%.
So that market is going 300 basis points year over year in terms of electronification. So to your point, sometimes when you're trying to cover broad universe with a single stat it can not do justice some of the underlying trends that are really important, especially when you think about what drives our revenue opportunity going forward and our investment dollars.
Alexander Kramm: So thanks for the question. I don't know if you wanna add anything else.
Billy Hult: That's perfect.
Operator: Okay. Thank you so much. And our last question comes from the line of Kyle Voigt with KBW. Please proceed.
Kyle Voigt: Hi, good morning. Maybe a question on capital priorities. Just given the pullback in share price, have your capital allocation priorities shifted at all? I guess, why haven't you stepped up repurchases in light of that pullback in the share price? And then you addressed some of the inorganic investment outlook in a prior question. Also, maybe you could address the priorities for organic investments from an asset class or product perspective as we're looking out over the next year.
Sara Hassan Furber: Awesome. Great question. Okay. So there's a near-term view and a long-term view, and I don't want to conflate those. Long-term there's really no change in our capital management philosophy. But I think to the point and sort of the temperature around that question, given where the share price is, we do have a fundamental value on what the company is worth and don't really feel the valuation fully reflects all the opportunities we have in front of us. So we're definitely actively looking at share repurchases and being opportunistic in the market. Obviously, we have to wait until the window opens up again.
And to your point a little bit about why we weren't active in the earlier part of the market, there are times when the window is open and isn't, and we haven't active set of M&A targets and pipeline activities that we look at. So I think don't take that as we think this is where the stock should trade. I do think as we think longer term, the waterfall isn't really any different than it's been over the last five years, at least since I've been here. First and foremost, organic, then M&A, then share repurchases and then dividends, which we like to grow in line with earnings.
On the organic front, and I think we've talked a lot about the inorganic front on this call, and Billy feel free to chime in. I think some of the areas where we continue to invest obviously, EM has been a big focus for us. Swaps and credit clearly a consistent focus for us. And then increasingly, things like AI, our data and infrastructure strategy, and digital are areas that we're spending a lot of time all organically, even if they're complemented by inorganic strategy. So those are all things that we see large TAMs for, and our ability to leverage what we do well to drive long-term growth.
Billy Hult: Perfectly said. I would only mess it up by adding something in. As always, question. Thank you. Thanks, Scott.
Operator: Thank you. And this will conclude our Q&A session. I will pass it back to Billy Hult for his final comments.
Billy Hult: Thank you all very much for joining us this morning. As always, if you have any follow-up questions, please feel free to reach out to Ashley, Sameer, and the team. Have a great day everybody and thank you.