Tradeweb Markets (TW)

Electronic trading platform Tradeweb Markets (NASDAQ:TW) reported Q3 CY2025 results beating Wall Street’s revenue expectations, with sales up 13.3% year on year to $508.6 million. Its non-GAAP profit of $0.87 per share was 4.9% above analysts’ consensus estimates.

Company Overview

Founded in 1996 as one of the pioneers in electronic bond trading, Tradeweb Markets (NASDAQ:TW) builds and operates electronic marketplaces that connect financial institutions for trading across rates, credit, equities, and money markets.

Financial exchanges and data providers operate trading platforms and sell market information. They enjoy relatively stable revenue from trading fees and subscriptions, increasing demand for data analytics, and expansion opportunities in emerging markets. Challenges include regulatory oversight of market structure, competition from alternative trading venues, and substantial technology investments needed to maintain low-latency trading infrastructure and data security.

Tradeweb's competitors include MarketAxess and Bloomberg in credit markets; Bloomberg, Euronext (MTS), and CME Group in rates markets; and BNY Mellon, State Street, and J.P. Morgan in money market portals. The company also competes with traditional exchanges like ICE and inter-dealer brokers such as TP ICAP and BGC Partners.

A company’s long-term sales performance is one signal of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Thankfully, Tradeweb Markets’s 18.4% annualized revenue growth over the last five years was excellent. Its growth surpassed the average financials company and shows its offerings resonate with customers, a great starting point for our analysis.

Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. Tradeweb Markets’s annualized revenue growth of 25.8% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Tradeweb Markets reported year-on-year revenue growth of 13.3%, and its $508.6 million of revenue exceeded Wall Street’s estimates by 1%.

The aggregate volume of transactions and loan originations processed by financial firms directly impacts their revenue and are fundamental to understanding their growth trajectories.

Tradeweb Markets’s volumes have grown at an annual rate of 26% over the last five years, much better than the broader financials industry and faster than its total revenue. When analyzing Tradeweb Markets’s volumes over the last two years, we can see that growth accelerated to 39% annually. Its recent performance could be a sign of better days to come.

Tradeweb Markets’s volumes punched in at $2.58 trillion this quarter, meeting analysts’ expectations. This print was 11.8% higher than the same quarter last year.

Revenue growth is one major determinant of business quality, and the efficiency of operations is another. For Financial Exchanges & Data companies, we look at pre-tax profit rather than the operating margin that defines sectors such as consumer, tech, and industrials.

Financials companies manage interest-bearing assets and liabilities, making the interest income and expenses included in pre-tax profit essential to their profit calculation. Taxes, being external factors beyond management control, are appropriately excluded from this alternative margin measure.

Over the last four years, Tradeweb Markets’s pre-tax profit margin has fallen by 12.7 percentage points, going from 33.8% to 46.6%. It has also expanded by 5.4 percentage points on a two-year basis, showing its expenses have consistently grown at a slower rate than revenue. This typically signals prudent management.

Tradeweb Markets’s pre-tax profit margin came in at 53% this quarter. This result was 14.3 percentage points better than the same quarter last year.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Tradeweb Markets’s EPS grew at an astounding 25.9% compounded annual growth rate over the last five years, higher than its 18.4% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Tradeweb Markets, its two-year annual EPS growth of 27.9% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.

In Q3, Tradeweb Markets reported adjusted EPS of $0.87, up from $0.68 in the same quarter last year. This print beat analysts’ estimates by 4.9%. Over the next 12 months, Wall Street expects Tradeweb Markets’s full-year EPS of $3.11 to grow 18.1%.

Return on equity (ROE) reveals the profit generated per dollar of shareholder equity, which represents a key source of bank funding. Banks maintaining elevated ROE levels tend to accelerate wealth creation for shareholders via earnings retention, buybacks, and distributions.

Over the last five years, Tradeweb Markets has averaged an ROE of 7.4%, uninspiring for a company operating in a sector where the average shakes out around 10%. We’re optimistic Tradeweb Markets can turn the ship around given its success in other measures of financial health.

Tradeweb Markets reported $1.91 billion of cash and $135.6 million of debt on its balance sheet in the most recent quarter.

Given the company has more cash than debt, leverage is not an issue here.

It was good to see Tradeweb Markets beat analysts’ EPS expectations this quarter. We were also happy its revenue narrowly outperformed Wall Street’s estimates. Overall, this print had some key positives. The stock traded up 1.5% to $107 immediately after reporting.

Updated: December 3, 2025 at 11:55 PM EST

Before deciding whether to buy Tradeweb Markets or pass, we urge investors to consider business quality, valuation, and the latest quarterly results.

There is a lot to like about Tradeweb Markets. For starters, its revenue growth was impressive over the last five years. On top of that, its transaction volume growth was exceptional over the last five years, and its expanding pre-tax profit margin shows the business has become more efficient.

Tradeweb Markets’s P/E ratio based on the next 12 months is 28.7x. Some good news is baked into the stock given its multiple, but we’ll happily own what we believe is one of the best businesses in our coverage. We’re in the camp that investments like this should be held for at least three to five years to negate the short-term price volatility that can come with relatively high valuations.

Wall Street analysts have a consensus one-year price target of $128.77 on the company (compared to the current share price of $107.96).