Tradeweb Markets Inc.
02/05/2026 | Press release | Distributed by Public on 02/05/2026 06:03
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
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, 2025 and 2024, respectively. A comparison of our results of operations, cash flows and liquidity and capital resources for the years ended December 31, 2024 and December 31, 2023 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, 2024.
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. The Tradeweb platform includes marketplaces that facilitate trading global products across a range of asset classes, including rates, credit, equities and money markets. We are a global company serving clients through 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 platform offerings to enter new markets, create new trading marketplaces 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 deep 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 fully electronic, voice and hybrid trading options to dealers and financial institutions trading on our platform. We entered the wholesale client sector through our acquisitions of the inter-dealer broker Hilliard Farber & Co. in 2008, Inc. and then Rafferty Capital Markets in 2011 and in June 2021, we acquired Nasdaq's U.S. fixed income electronic trading platform (formerly known as eSpeed) (the "NFI Acquisition"). Today, we actively compete in wholesale trading across a range of rates, credit, money markets, derivatives and equity markets.
In our retail client sector, our platform provides advanced trading solutions for financial advisory firms and traders. We entered the retail sector through our acquisition of LeverTrade in 2006 and scaled our retail market position through our acquisition of BondDesk in 2013. Through our platform we provide financial advisory firms access to live offerings, accurate pricing in the retail 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 corporates client sector through our acquisition of ICD on August 1, 2024. The addition of ICD to our platform broadened our product suite, further diversified our client and revenue bases 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 in 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 platform provides 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, including through the use of data and analytics, we believe the demand for our platform and electronic trading solutions will continue to grow.
Trends and Other Factors Impacting Our Performance
Strategic Acquisitions and Investments
From time to time, we may evaluate potential strategic acquisitions and investments and engage in discussions and negotiations regarding potential acquisitions and investments. Our revenues and profitability are affected by our acquisition activity, including the speed and cost at which we successfully integrate completed consolidated acquisitions into our existing business operations. In addition, our earnings volatility and profitability may be affected by any unrealized or realized gains or losses or income or losses from our Canton Coin holdings or unconsolidated minority equity or debt investments.
LSEG Market Data Agreement
In November 2023, we entered into a new market data license agreement with affiliates of LSEG, pursuant to which, among other things, we license certain market data (including real time feeds) for multiple fixed income and derivative products to LSEG which distributes such data directly to LSEG customers through its flagship financial platforms. This agreement was initiated in 2010 with a former owner of the LSEG Data & Analytics business and most recently amended effective November 1, 2025. We primarily earn fixed license fees under the amended market data license agreement, which has an initial 3-year license period through October 31, 2028. The amended market data license agreement is expected to result in higher annual revenue for the year ending December 31, 2026 as compared to the $93.2 million of revenue generated under the market data license agreement in 2025. The majority of the revenue expected to be earned under the amended market data license agreement will be recorded as revenue on a straight-line basis over its initial term ending October 31, 2028, with a portion of such revenue to be recognized when usage occurs based on a revenue share. We will seek to further monetize our data over time both through potential expansion of our existing market data license agreement with LSEG and through distributing additional datasets, derived data and analytics offerings through our own platform or through other third-party networks.
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 2026 include, among other things, evolving monetary policies of central banks, economic, political and social conditions, global geopolitical tensions, legislative, regulatory or government policy changes, including the recent and potential future changes in tariffs, international trade agreements or trade policies and other potential 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.
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, typically resulting in enforcement of new laws and regulations that apply to our business. The regulatory environment in the United States and abroad may be subject to future legislative and regulatory changes driven by current U.S. and global issues and priorities. Legislative and regulatory changes may include the promulgation of new or revised laws and regulations, or the adoption of changes in the interpretation of or the repeal of existing laws and regulations, or the abandonment of any pending legislative or regulatory proposals. The impact of any changes in the legal or regulatory landscape on us and our operations generally 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 platform and, as a result, our profitability. However, under certain circumstances regulation may increase demand for our platform 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. Currently, we believe that uncertainty and potential delays around the final form of certain new rules and regulations may negatively impact our clients and trading volumes in certain markets in which we transact, although a relaxation of or the amendment of existing rules and regulations could potentially have a positive impact on certain markets.
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 platform. 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 platform, (v) our ability to hire and retain talent, (vi) our ability to pursue strategic acquisitions and alliances and (vii) our ability to maintain the security of our platform 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 platform offerings 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 platform and solutions and the volume of transactions on our platform, 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 platform 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, 2025, 2024 and 2023.
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 July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted in the U.S. The OBBBA contains several changes to corporate taxation including modifications to capitalization of research and development expenses, limitations on deductions for interest expense and accelerated fixed asset depreciation. The OBBBA did not have a material impact on the Company's consolidated statements of financial condition, income or cash flows as of or for the year ended December 31, 2025. The Company will continue to evaluate the implications of this legislation on future periods.
On August 16, 2022, the Inflation Reduction Act of 2022 ("IRA") was signed into law. The IRA established a 15% corporate alternative minimum tax ("CAMT") effective for taxable years beginning after December 31, 2022, and imposed 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 a material impact on the Company's consolidated statements of financial condition, income or cash flows as of or for the years ended December 31, 2025, 2024 and 2023. The Company is subject to the current 15% CAMT, however, it did not have an impact on the Company's effective tax rate for the years ended December 31, 2025, 2024 or 2023. 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 Two Pillar Plan did not have a material impact on the Company's consolidated statements of financial condition, income or cash flows as of or for the years ended December 31, 2025 and 2024. The Company continues to monitor developments related to the G7's discussions on global tax reform and is awaiting legislative updates.
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 platform 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. The mix between fixed and variable revenue may change over time.
Subscription Fees
We earn subscription fees primarily for granting clients access to our platform 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.
Other Revenue
In line with our digital asset strategy, currently included in our other revenue is revenue earned for performing Super Validator and Validator services on the Canton Network (collectively "Validator Revenue"). For these services, we earn Canton Coins and the number of Canton Coins earned in a particular period is variable based on the Canton Network's minting curve and burn-mint equilibrium and the amount of time that our nodes are active during any given minting cycle (with new rounds beginning at regular 10 minute intervals throughout each day), in comparison to other network participants. Validator Revenue is recognized based on the fair value of each Canton Coin at contract inception, which has been deemed to be the start of each validation round, and therefore Validator Revenue will also vary based on any changes in the fair value of the Canton Coin, which may be highly volatile. As our digital asset strategy continues to evolve, in the future, we may also begin earning revenue from applications developed on the Canton Network.
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 platform 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.
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, any unrealized and realized gain/loss on foreign exchange derivative contractsentered into for foreign exchange risk management purposes relating to investing activities and any other non-operating items. Other income (loss), net may vary period over period based on any changes in the fair value of the Canton Coin, which may be highly volatile.
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, 2025, we owned 90.2% of TWM LLC and Continuing LLC Owners owned the remaining 9.8% of TWM LLC.
Results of Operations
For the Years Ended December 31, 2025 and December 31, 2024
The following table sets forth a summary of our statements of income for the years ended December 31, 2025 and 2024:
| Year Ended | ||||||||||||||||||||||||||
| December 31, | ||||||||||||||||||||||||||
| 2025 | 2024 |
$ Change
|
% Change
|
|||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||
| Total revenue | $ | 2,052,429 | $ | 1,725,949 | $ | 326,480 | 18.9 | % | ||||||||||||||||||
| Total expenses | 1,217,091 | 1,047,921 | 169,170 | 16.1 | % | |||||||||||||||||||||
| Operating income | 835,338 | 678,028 | 157,310 | 23.2 | % | |||||||||||||||||||||
|
Tax receivable agreement liability adjustment
|
9,786 | 7,730 | 2,056 | 26.6 | % | |||||||||||||||||||||
| Interest income | 68,407 | 74,037 | (5,630) | (7.6) | % | |||||||||||||||||||||
| Interest expense | (1,941) | (4,279) | 2,338 | (54.6) | % | |||||||||||||||||||||
| Other income (loss), net | 263,384 | (1,114) | 264,498 | N/M | ||||||||||||||||||||||
| Income before taxes | 1,174,974 | 754,402 | 420,572 | 55.7 | % | |||||||||||||||||||||
| Provision for income taxes | (253,474) | (184,439) | (69,035) | 37.4 | % | |||||||||||||||||||||
| Net income | 921,500 | 569,963 | 351,537 | 61.7 | % | |||||||||||||||||||||
| Less: Net income attributable to non-controlling interests | 108,708 | 68,456 | 40,252 | 58.8 | % | |||||||||||||||||||||
| Net income attributable to Tradeweb Markets Inc. | $ | 812,792 | $ | 501,507 | $ | 311,285 | 62.1 | % | ||||||||||||||||||
N/M = not meaningful
Revenues
Our revenues for the years ended December 31, 2025 and 2024, and the resulting dollar and percentage changes, were as follows:
| Year Ended | ||||||||||||||||||||||||||||||||||||||
| December 31, | ||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||||||||||||||
|
$
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% of Total Revenue |
$
|
% of Total Revenue |
$ Change
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% Change
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| (dollars in thousands) | ||||||||||||||||||||||||||||||||||||||
| Revenues | ||||||||||||||||||||||||||||||||||||||
| Transaction fees and commissions | $ | 1,700,427 | 82.8 | % | $ | 1,423,547 | 82.5 | % | $ | 276,880 | 19.5 | % | ||||||||||||||||||||||||||
|
Subscription fees(1)
|
327,214 | 15.9 | 288,804 | 16.7 | 38,410 | 13.3 | % | |||||||||||||||||||||||||||||||
| Other | 24,788 | 1.2 | 13,598 | 0.8 | 11,190 | 82.3 | % | |||||||||||||||||||||||||||||||
| Total revenue | $ | 2,052,429 | 100.0 | % | $ | 1,725,949 | 100.0 | % | $ | 326,480 | 18.9 | % | ||||||||||||||||||||||||||
| Components of total revenue growth: | ||||||||||||||||||||||||||||||||||||||
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Constant currency change(2)
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17.5 | % | ||||||||||||||||||||||||||||||||||||
| Foreign currency impact | 1.4 | % | ||||||||||||||||||||||||||||||||||||
| Total revenue growth | 18.9 | % | ||||||||||||||||||||||||||||||||||||
(1)Subscription fees for the years ended December 31, 2025 and 2024 include $93.2 million and $82.1 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.
Our strong results for the year ended December 31, 2025 reflected significant organic growth, strong client engagement and contributions from our acquisition of ICD on August 1, 2024. Our markets remained resilient despite the dynamic volatility. The year was marked by several notable events, including heightened volatility in April, brought on by evolving central bank policy expectations, the announcement of new U.S. tariffs and rising geopolitical tensions globally, all of which influenced trading activity across the broader financial ecosystem. The primary driver of the $326.5 million increase in revenue was related to a $276.9 million increase in transaction fees and commissions to $1.7 billion for the year ended December 31, 2025 from $1.4 billion for the year ended December 31, 2024, primarily due to higher revenues for rates derivatives products, municipals, U.S government bonds, international and U.S. ETFs, repurchase agreements, credit derivatives products and mortgages, as well as a full year of basis point commissions earned on the ADB of client money market fund investments made through the ICD Portal during the year ended December 31, 2025 compared to five months during the year ended December 31, 2024 for the period subsequent to the August 1, 2024 acquisition. Additionally, there was a $38.4 million increase in subscription fees to $327.2 million for the year ended December 31, 2025 from $288.8 million for the year ended December 31, 2024, primarily due to certain market participants switching from fully variable pricing plans to pricing plans that include subscriptions, resulting in a shift of a portion of revenues from transaction fees and commissions to subscription fees.
Our total revenue by asset class for the years ended December 31, 2025 and 2024, and the resulting dollar and percentage changes, were as follows:
| Year Ended | ||||||||||||||||||||||||||
| December 31, | ||||||||||||||||||||||||||
| 2025 | 2024 |
$ Change
|
% Change
|
|||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||
| Revenues | ||||||||||||||||||||||||||
| Rates | $ | 1,093,529 | $ | 904,938 | $ | 188,591 | 20.8 | % | ||||||||||||||||||
| Credit | 488,037 | 459,040 | 28,997 | 6.3 | % | |||||||||||||||||||||
| Equities | 127,024 | 104,184 | 22,840 | 21.9 | % | |||||||||||||||||||||
| Money Markets | 173,860 | 115,220 | 58,640 | 50.9 | % | |||||||||||||||||||||
| Market Data | 133,724 | 118,020 | 15,704 | 13.3 | % | |||||||||||||||||||||
| Other | 36,255 | 24,547 | 11,708 | 47.7 | % | |||||||||||||||||||||
| Total revenue | $ | 2,052,429 | $ | 1,725,949 | $ | 326,480 | 18.9 | % | ||||||||||||||||||
Our variable and fixed revenues by asset class for the years ended December 31, 2025and 2024, and the resulting dollar and percentage changes, were as follows:
| Year Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
| December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 |
$ Change
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% Change
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Variable
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Fixed
|
Variable
|
Fixed
|
Variable
|
Fixed
|
Variable
|
Fixed
|
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| (dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenues | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Rates | $ | 813,244 | $ | 280,285 | $ | 660,438 | $ | 244,500 | $ | 152,806 | $ | 35,785 | 23.1 | % | 14.6 | % | ||||||||||||||||||||||||||||||||||
| Credit | 425,317 | 62,720 | 423,708 | 35,332 | 1,609 | 27,388 | 0.4 | % | 77.5 | % | ||||||||||||||||||||||||||||||||||||||||
| Equities | 117,520 | 9,504 | 94,964 | 9,220 | 22,556 | 284 | 23.8 | % | 3.1 | % | ||||||||||||||||||||||||||||||||||||||||
| Money Markets | 156,224 | 17,636 | 98,216 | 17,004 | 58,008 | 632 | 59.1 | % | 3.7 | % | ||||||||||||||||||||||||||||||||||||||||
| Market Data | 415 | 133,309 | 457 | 117,563 | (42) | 15,746 | (9.2) | % | 13.4 | % | ||||||||||||||||||||||||||||||||||||||||
| Other | 11,692 | 24,563 | 981 | 23,566 | 10,711 | 997 | N/M | 4.2 | % | |||||||||||||||||||||||||||||||||||||||||
| Total revenue | $ | 1,524,412 | $ | 528,017 | $ | 1,278,764 | $ | 447,185 | $ | 245,648 | $ | 80,832 | 19.2 | % | 18.1 | % | ||||||||||||||||||||||||||||||||||
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 $188.6 million or 20.8% to $1.1 billion for the year ended December 31, 2025 compared to $904.9 million for the year ended December 31, 2024 primarily due to higher variable transaction fees and commissions on higher trading volumes for rates derivatives products and U.S. government bonds. The increase in fixed revenue was primarily driven by changes to certain contracts that, among other items, introduced minimum fee floors or subscription fees, resulting in a shift of a portion of revenues from variable to fixed revenue.
Credit.Revenues from our credit asset class increased by $29.0 million or 6.3% to $488.0 million for the year ended December 31, 2025 compared to $459.0 million for the year ended December 31, 2024 primarily due to an increase in fixed revenues, primarily driven by certain market participants switching from fully variable pricing plans to pricing plans that include minimum fee floors or subscription fees, resulting in a shift of a portion of revenues from variable to fixed revenue. Revenues from our credit asset class also increased due to higher variable transaction fees and commissions on higher trading volumes for municipals, credit derivatives products and European and emerging markets corporate bonds.
Equities.Revenues from our equities asset class increased by $22.8 million or 21.9% to $127.0 million for the year ended December 31, 2025 compared to $104.2 million for the year ended December 31, 2024 primarily due to higher variable transaction fees and commissions on higher trading volumes for international and U.S. ETFs and equity derivatives products.
Money Markets.Revenues from our money markets asset class increased by $58.6 million or 50.9% to $173.9 million for the year ended December 31, 2025 compared to $115.2 million for the year ended December 31, 2024 primarily due to a full year of basis point commissions earned on the ADB of client money market fund investments made through the ICD Portal during the year ended December 31, 2025 compared to five months during the year ended December 31, 2024 for the period subsequent to the August 1, 2024 acquisition, 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 $15.7 million or 13.3% to $133.7 million for the year ended December 31, 2025 compared to $118.0 million for the year ended December 31, 2024. The increase was primarily due to increased LSEG market data fees, with $8.4 million from the periodic delivery of historical data sets which occurred during the three months ended March 31, 2025, as well as higher fees resulting from our amended LSEG market data license agreement effective November 1, 2025 and other increases in proprietary third party market data revenue.
Other.Revenues from our other asset class increased by $11.7 million or 47.7% to $36.3 million for the year ended December 31, 2025 compared to $24.5 million for the year ended December 31, 2024 primarily due to an increase in digital asset revenue earned for performing validation services on the Canton Network. We began earning Canton Coins for providing services to the Canton Network during the third quarter of 2024.
We generate revenue from a diverse portfolio of client sectors. Our total revenue by client sector for the years ended December 31, 2025 and 2024, and the resulting dollar and percentage changes, were as follows:
| Year Ended | ||||||||||||||||||||||||||
| December 31, | ||||||||||||||||||||||||||
| 2025 | 2024 |
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| Revenues | ||||||||||||||||||||||||||
| Institutional | $ | 1,275,547 | $ | 1,035,775 | $ | 239,772 | 23.1 | % | ||||||||||||||||||
| Wholesale | 400,753 | 385,673 | 15,080 | 3.9 | % | |||||||||||||||||||||
| Retail | 146,510 | 143,247 | 3,263 | 2.3 | % | |||||||||||||||||||||
| Corporates | 95,895 | 43,234 | 52,661 | 121.8 | % | |||||||||||||||||||||
| Market Data | 133,724 | 118,020 | 15,704 | 13.3 | % | |||||||||||||||||||||
| Total revenue | $ | 2,052,429 | $ | 1,725,949 | $ | 326,480 | 18.9 | % | ||||||||||||||||||
Institutional.Revenues from our institutional client sector increased by $239.8 million or 23.1% to $1.3 billion for the year ended December 31, 2025 compared to $1.0 billion for the year ended December 31, 2024. The increase was derived primarily from higher revenues for rates derivatives products, international and U.S. ETFs, U.S. and European corporate bonds, European and U.S. government bonds, mortgages and credit derivative products as well as an increase in digital asset revenue earned for performing validation services on the Canton Network.
Wholesale.Revenues from our wholesale client sector increased by $15.1 million or 3.9% to $400.8 million for the year ended December 31, 2025 compared to $385.7 million for the year ended December 31, 2024. The increase was derived primarily from higher revenues for U.S. government bonds, repurchase agreements and equity derivatives products, partially offset by lower revenues for U.S. corporate bonds.
Retail.Revenues from our retail client sector were relatively flat at $146.5 million for the year ended December 31, 2025, an increase of $3.3 million or 2.3% compared to $143.2 million for the year ended December 31, 2024 as higher revenues for municipals were partially offset by lower revenues for U.S. corporate bonds.
Corporates.Revenues from our corporates client sector increased by $52.7 million or 121.8% to $95.9 million for the year ended December 31, 2025 compared to $43.2 million for the year ended December 31, 2024. We entered the corporates client sector with the August 1, 2024 acquisition of ICD and its proprietary institutional investment technology. This client channel primarily serves corporate treasury organizations worldwide in investing in money market funds. The primary driver of the increase was a full year of basis point commissions earned on the ADB of client money market fund investments made through the ICD Portal during the year ended December 31, 2025 compared to five months during the year ended December 31, 2024 for the period subsequent to the August 1, 2024 acquisition.
Market Data.Revenues from our market data client sector increased by $15.7 million or 13.3% to $133.7 million for the year ended December 31, 2025 compared to $118.0 million for the year ended December 31, 2024. The increase was primarily due to increased LSEG market data fees, with $8.4 million from the periodic delivery of historical data sets which occurred during the three months ended March 31, 2025, as well as higher fees resulting from our amended LSEG market data license agreement effective November 1, 2025 and other increases in proprietary third party market data revenue.
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, 2025 and 2024, and the resulting dollar and percentage changes, were as follows:
| Year Ended | ||||||||||||||||||||||||||
| December 31, | ||||||||||||||||||||||||||
| 2025 | 2024 |
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| (dollars in thousands) | ||||||||||||||||||||||||||
| Revenues | ||||||||||||||||||||||||||
| U.S. | $ | 1,194,062 | $ | 1,060,697 | $ | 133,365 | 12.6 | % | ||||||||||||||||||
| International | 858,367 | 665,252 | 193,115 | 29.0 | % | |||||||||||||||||||||
| Total revenue | $ | 2,052,429 | $ | 1,725,949 | $ | 326,480 | 18.9 | % | ||||||||||||||||||
U.S.Revenues from U.S. clients increased by $133.4 million or 12.6% to $1.2 billion for the year ended December 31, 2025 compared to $1.1 billion for the year ended December 31, 2024 primarily due to higher revenues for money markets, including the contribution from the ICD acquisition, rates derivatives products, municipals, U.S. government bonds, mortgages and U.S. ETFs as well as an increase in digital asset revenue earned for performing validation services on the Canton Network.
International.Revenues from international clients increased by $193.1 million or 29.0% to $858.4 million for the year ended December 31, 2025 compared to $665.3 million for the year ended December 31, 2024 primarily due to higher revenues for rates derivatives products, money markets, including the contribution from the ICD acquisition, market data, European government bonds, international ETFs and European corporate bonds.
Operating Expenses
Our expenses for the years ended December 31, 2025 and 2024 were as follows:
| Year Ended | ||||||||||||||||||||||||||
| December 31, | ||||||||||||||||||||||||||
| 2025 | 2024 |
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| Employee compensation and benefits | $ | 670,831 | $ | 592,690 | $ | 78,141 | 13.2 | % | ||||||||||||||||||
| Depreciation and amortization | 250,189 | 219,999 | 30,190 | 13.7 | % | |||||||||||||||||||||
| Technology and communications | 128,327 | 98,568 | 29,759 | 30.2 | % | |||||||||||||||||||||
| General and administrative | 88,402 | 56,317 | 32,085 | 57.0 | % | |||||||||||||||||||||
| Professional fees | 53,391 | 60,132 | (6,741) | (11.2) | % | |||||||||||||||||||||
| Occupancy | 25,951 | 20,215 | 5,736 | 28.4 | % | |||||||||||||||||||||
| Total expenses | $ | 1,217,091 | $ | 1,047,921 | $ | 169,170 | 16.1 | % | ||||||||||||||||||
Employee Compensation and Benefits.Expenses related to employee compensation and benefits increased by $78.1 million or 13.2% to $670.8 million for the year ended December 31, 2025 from $592.7 million for the year ended December 31, 2024. The increase was primarily due to an increase in headcount and related salaries, bonus, benefits and stock-based compensation associated with our continued growth, including the August 1, 2024 ICD acquisition. As of December 31, 2025 and 2024, we had 1,569 and 1,412 employees globally, respectively. An increase in incentive compensation expense tied to our financial performance also contributed to the overall increase in employee compensation and benefits expenses.
Depreciation and Amortization.Expenses related to depreciation and amortization increased by $30.2 million or 13.7% to $250.2 million for the year ended December 31, 2025 from $220.0 million for the year ended December 31, 2024. The increase was primarily due to increases in amortization of assets acquired in connection with the ICD acquisition on August 1, 2024 and increases in amortization of software development costs and hardware driven by increases in investment in our infrastructure and the relocation of our New York City corporate headquarters during September 2025.
Technology and Communications.Expenses related to technology and communications increased by $29.8 million or 30.2% to $128.3 million for the year ended December 31, 2025 from $98.6 million for the year ended December 31, 2024. The increase was primarily due to increased investment in our data strategy and infrastructure and increased clearance and data fees driven primarily by higher trading volumes period-over-period.
General and Administrative.Expenses related to general and administrative costs increased by $32.1 million or 57.0% to $88.4 million for the year ended December 31, 2025 from $56.3 million for the year ended December 31, 2024. The increase was primarily due to a $27.5 million increase in foreign exchange losses during the year ended December 31, 2025 compared to the year ended December 31, 2024. Realized and unrealized foreign currency losses totaled $17.1 million during the year ended December 31, 2025 as compared to $10.4 million in gains during the year ended December 31, 2024. 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 gains on transactions in nonfunctional currencies. Increases in travel and entertainment costs to support our continued growth also contributed to the overall increase in general and administrative expenses.
Professional Fees.Expenses related to professional fees decreased by $6.7 million or 11.2% to $53.4 million for the year ended December 31, 2025 from $60.1 million for the year ended December 31, 2024 primarily due to a decrease in professional fees related to acquisitions.
Occupancy.Expenses related to occupancy costs increased by $5.7 million or 28.4% to $26.0 million for the year ended December 31, 2025 as compared to $20.2 million for the year ended December 31, 2024. The increase was primarily due to higher office and data center rent expense associated with our global expansion, including the commencement in September 2025 of the lease for our new corporate headquarters in New York City.
Tax Receivable Agreement Liability Adjustment
The tax receivable agreement liability adjustment was $9.8 million of income for the year ended December 31, 2025 compared to $7.7 million of income for the year ended December 31, 2024, 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 decreased by $5.6 million to $68.4 million for the year ended December 31, 2025 from $74.0 million for the year ended December 31, 2024 primarily due to a decrease in the average interest rates earned period-over-period. This decrease was partially offset by an increase in the average invested cash balance and interest earned on a federal income tax refund received during the year ended December 31, 2025.
Interest Expense
Interest expense decreased by $2.3 million to $1.9 million for the year ended December 31, 2025 from $4.3 million for the year ended December 31, 2024 primarily due to the timing of payments made under the Tax Receivable Agreement. No interest expense was incurred on payments due under the Tax Receivable Agreement during the year ended December 31, 2025 compared to $2.1 million of interest expense during the year ended December 31, 2024.
Other Income (Loss), Net
Other income was $263.4 million for the year ended December 31, 2025 versus a loss of $1.1 million for the year ended December 31, 2024. Other income increased primarily due to realized and unrealized gains on our Canton Coin holdings, which totaled $270.9 million during the year ended December 31, 2025 compared to $0.2 million in gains during the year ended December 31, 2024. Other income in both years was partially offset by a combination of various other impairments, net unrealized losses on investments or our pro rata share of losses from our equity method investment.
Income Taxes
Income tax expense increased by $69.0 million or 37.4% to $253.5 million for the year ended December 31, 2025 from $184.4 million for the year ended December 31, 2024. The provision for income taxes includes U.S. federal, state, local, and foreign taxes. The effective tax rate for the year ended December 31, 2025 was approximately 21.6%, compared with 24.4% for the year ended December 31, 2024. The effective tax rate for the years ended December 31, 2025 and 2024 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 and foreign-derived intangible income.
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, 2025 and 2024. 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.
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, 2025 and 2024, we had cash and cash equivalents of approximately $2.1 billion and $1.3 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 $0.14 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 considers relevant. See Part I, Item 1A. - "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 5, 2026, the board of directors of Tradeweb Markets Inc. declared a cash dividend of $0.14 per share of Class A common stock and Class B common stock for the first quarter of 2026. This dividend will be payable on March 16, 2026 to stockholders of record as of March 2, 2026. The February 2026 dividend declaration of $0.14 represents a 16.7% per share increase from our 2025 quarterly dividend of $0.12. During 2025, Tradeweb Markets Inc. paid quarterly cash dividends of $0.12 per share to holders of Class A common stock and Class B common stock in an aggregate amount totaling $102.3 million.
Cash Distributions
On February 5, 2026, 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 $78.1 million, as adjusted by required state and local tax withholdings that will be determined prior to the record date of March 2, 2026, payable on March 12, 2026.
During 2025, TWM LLC made quarterly cash distributions to its equityholders in an aggregate amount of $253.1 million, including distributions to Tradeweb Markets Inc. of $228.4 million and distributions to non-controlling interests of $24.7 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 Company announced our board of directors authorized the 2022 Share Repurchase Program to continue to offset annual dilution from stock-based compensation plans, as well as to opportunistically repurchase the Company's Class A common stock. The 2022 Share Repurchase Program authorized the purchase of up to $300.0 millionof our Class A common stock at our discretion and had no termination date. During the year ended December 31, 2025, the Company acquired a total of 987,379shares of Class A common stock, at an average price of $107.29, for purchases totaling $105.9 million, pursuant to the 2022 Share Repurchase Program. As of December 31, 2025, a total of $74.0 million remained available for repurchase pursuant to the 2022 Share Repurchase Program.
On February 5, 2026, our board of directors approved a share repurchase program with an indefinite term under which the Company may purchase up to $500 million of its Class A common stock (the "2026 Share Repurchase Program") once the 2022 Share Repurchase Program has been exhausted. As of February 5, 2026, $23.2 million remained available for repurchase pursuant to the 2022 Share Repurchase Program. The 2026 Share Repurchase Program was authorized to continue to offset annual dilution from stock-based compensation plans, as well as to opportunistically repurchase Class A common stock. Pursuant to the 2026 Share Repurchase Program, the Company may repurchase its Class A common stock from time to time, in amounts, at prices and at such times as it deems appropriate, subject to market conditions and other considerations. The Company may make repurchases in the open market, through privately negotiated transactions, through accelerated repurchase programs (including through the use of derivatives), pursuant to Rule 10b5-1 plans or through enhanced open-market repurchases (eOMR). The 2026 Share Repurchase Program will be conducted in compliance with applicable legal requirements and shall be subject to market conditions and other factors. The manner, timing and amount of any purchase will be based on an evaluation of market conditions, stock price and other factors. The 2026 Share Repurchase Program has no termination date, may be suspended, amended or discontinued at any time and does not obligate the Company to acquire any amount of Class A common stock.
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, 2025, the Company withheld 360,041 shares of common stock from employee stock option, PRSU and RSU awards, at an average price per share of $137.13 and an aggregate value of $49.4 million, based on the price of the Class A common stock on the date the relevant withholding occurred.
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, 2025, total amounts due to Continuing LLC Owners under the Tax Receivable Agreement were $336.5 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, 2025, 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.
| 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 | $ | 336,519 | $ | 36,290 | $ | 61,480 | $ | 96,143 | $ | 142,606 | ||||||||||||||||||||||
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, 2025 and 2024, 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 U.S. 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, 2025, there were $0.5 million in letters of credit issued under the 2023 Revolving Credit Facility and no borrowings outstanding. As of December 31, 2025, 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 U.S. 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 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, 2025, 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, 2025, 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 16 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 May 2041.
As of December 31, 2025, our operating lease liabilities totaled $139.2 million, with payments pursuant to these obligations due within the next 12 months and thereafter totaling $18.3 million and $176.7 million, respectively.
Capital Expenditures
Our business also requires continued investment in our technology for product innovation, proprietary technology architecture, operational reliability and cybersecurity. We expect total cash paid for capital expenditures and software development costs for fiscal year 2026 to be between $107 million and $117 million, compared to expenditures of $103.1 million and $88.9 million in fiscal years 2025 and 2024, respectively, with the midpoint of our 2026 capital expenditure guidance up approximately 9% versus fiscal year 2025 primarily driven by platform enhancements, infrastructure modernization and cyber security initiatives to support long-term growth.
As of December 31, 2025, we also had $5.0 million in unfunded capital commitments to our equity method investment.
Other Cash and Liquidity Requirements
Certain of our U.S. subsidiaries are registered as broker-dealers, SEFs, SBSEFs 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, 2025 and 2024, each of our regulated subsidiaries had maintained sufficient net capital or financial resources to at least satisfy their minimum requirements, which in aggregate were $90.0 million and $83.0 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, wholesale transactions executed on our 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.
We self-clear wholesale U.S. Treasury trades executed by non-FICC members on our platform. The number of self-cleared trades that settle over the fed wire, instead of FICC clearing, may impact the number of U.S. Treasury failed settlement transactions. As of December 31, 2025, we recorded an $8.6 million receivable and a $3.4 million payable from/to brokers and dealers and clearing organizations related to failed settlement transactions and we self-funded the remaining $5.3 million difference between the fail to deliver and fail to receive. All of the failed settlement transactions outstanding as of December 31, 2025 were fully settled during January 2026. 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, receivable and due from related parties and other current assets. Current liabilities consist of, as applicable, securities sold under agreements to repurchase, payable to brokers and dealers and clearing organizations, accrued compensation, deferred revenue, payable and due to related parties, 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 platform and solutions.
Our working capital as of December 31, 2025 and 2024 was as follows:
| December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| (dollars in thousands) | ||||||||||||||
| Cash and cash equivalents | $ | 2,084,739 | $ | 1,340,302 | ||||||||||
| Restricted cash | 1,000 | 1,000 | ||||||||||||
| Receivable from brokers and dealers and clearing organizations | 8,630 | 67,805 | ||||||||||||
| Deposits with clearing organizations | 58,282 | 54,702 | ||||||||||||
| Accounts receivable | 257,845 | 222,268 | ||||||||||||
| Receivable and due from related parties | 8,303 | 8,094 | ||||||||||||
| Current portion of other assets | 71,239 | 43,163 | ||||||||||||
| Total current assets | 2,490,038 | 1,737,334 | ||||||||||||
| Payable to brokers and dealers and clearing organizations | 3,363 | 67,816 | ||||||||||||
| Accrued compensation | 251,169 | 222,959 | ||||||||||||
| Deferred revenue | 29,030 | 30,800 | ||||||||||||
| Payable and due to related parties | 7,090 | 763 | ||||||||||||
| Current portion of: | ||||||||||||||
| Accounts payable, accrued expenses and other liabilities | 182,583 | 94,620 | ||||||||||||
| Lease liabilities | 11,912 | 11,963 | ||||||||||||
| Tax receivable agreement liability | 36,290 | 3,981 | ||||||||||||
| Total current liabilities | 521,437 | 432,902 | ||||||||||||
| Total working capital | $ | 1,968,601 | $ | 1,304,432 | ||||||||||
Current Assets
Current assets increased to $2.5 billion as of December 31, 2025 from $1.7 billion as of December 31, 2024 primarily due to an increase in cash and cash equivalents due to our operating performance and the timing of collection of accounts receivable. See "-Cash Flows" below for further discussion of the change in cash and cash equivalents.
Current Liabilities
Current liabilities increased to $521.4 million as of December 31, 2025 from $432.9 million as of December 31, 2024 primarily due to an increase in current income taxes payable and an increase in the current portion of our tax receivable agreement liability.
See "-Other Cash and Liquidity Requirements" above for a discussion on how capital requirements can impact our working capital.
Cash Flows
Our cash flows for the years ended December 31, 2025, 2024 and 2023 were as follows:
| Year Ended | ||||||||||||||||||||
| December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| Net cash provided by operating activities | $ | 1,167,646 | $ | 897,741 | $ | 746,089 | ||||||||||||||
| Net cash used in investing activities | (126,533) | (969,190) | (132,765) | |||||||||||||||||
| Net cash used in financing activities | (307,475) | (290,261) | (168,174) | |||||||||||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | 10,799 | (4,456) | 4,089 | |||||||||||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | $ | 744,437 | $ | (366,166) | $ | 449,239 | ||||||||||||||
Operating Activities
Operating activities consist primarily of net income adjusted for non-cash items that primarily include depreciation and amortization, stock-based compensation expense, digital assets received as revenue, deferred taxes and other income and changes in working capital. 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, 2025 was $1.2 billion, an increase of $269.9 million as compared to the year ended December 31, 2024, primarily driven by an increase in net income, a decrease in cash paid for taxes due to changes in the timing of tax payments year over year and other net changes in working capital. During 2026, we plan to satisfy approximately $71 million related to our 2025 tax year obligations through the purchase of transferable tax credits or through cash payments to the applicable taxing authorities.
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 $126.5 million for the year ended December 31, 2025, which consisted of $62.5 million of capitalized software development costs, $40.6 million of purchases of furniture, equipment, purchased software and leasehold improvements and $38.4 million of cash paid for investments, partially offset by $15.0 million in cash received from the sale of Canton Coins. 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.
Financing Activities
Net cash used in financing activities for the year ended December 31, 2025 was $307.5 million, which consisted of $104.2 million in share repurchases pursuant to our 2022 Share Repurchase Program, $102.3 million in cash dividends to our Class A and Class B common stockholders, $49.5 million in payroll tax payments for options, PRSUs and RSUs, $26.7 million in payments made under our Tax Receivable Agreement and $24.7 million in distributions to non-controlling interest holders. Net cash used in financing activities for the year ended December 31, 2024 was $290.3 million, which consisted of $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.
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.
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, 2025, 2024 and 2023:
| Year Ended | ||||||||||||||||||||
| December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| Cash flow from operating activities | $ | 1,167,646 | $ | 897,741 | $ | 746,089 | ||||||||||||||
| Less: Capitalization of software development costs | (62,541) | (47,909) | (43,235) | |||||||||||||||||
| Less: Purchases of furniture, equipment and leasehold improvements | (40,552) | (40,960) | (18,529) | |||||||||||||||||
| Free Cash Flow | $ | 1,064,553 | $ | 808,872 | $ | 684,325 | ||||||||||||||
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. 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 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 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, 2025, 2024 and 2023:
| Year Ended | ||||||||||||||||||||
| December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
|
Net income
|
$ | 921,500 | $ | 569,963 | $ | 419,503 | ||||||||||||||
|
Merger and acquisition transaction and integration costs (1)
|
6,891 | 22,823 | 8,042 | |||||||||||||||||
|
Interest income
|
(68,407) | (74,037) | (67,397) | |||||||||||||||||
| Interest expense | 1,941 | 4,279 | 2,047 | |||||||||||||||||
|
Depreciation and amortization
|
250,189 | 219,999 | 185,350 | |||||||||||||||||
|
Stock-based compensation expense (2)
|
2,327 | 6,096 | 2,947 | |||||||||||||||||
|
Provision for income taxes
|
253,474 | 184,439 | 128,477 | |||||||||||||||||
|
Foreign exchange (gains) / losses (3)
|
13,112 | (6,326) | (47) | |||||||||||||||||
|
Tax receivable agreement liability adjustment (4)
|
(9,786) | (7,730) | 9,517 | |||||||||||||||||
| Other (income) loss, net | (263,384) | 1,114 | 13,122 | |||||||||||||||||
|
Adjusted EBITDA
|
$ | 1,107,857 | $ | 920,620 | $ | 701,561 | ||||||||||||||
|
Less: Depreciation and amortization
|
(250,189) | (219,999) | (185,350) | |||||||||||||||||
|
Add: D&A related to acquisitions and the Refinitiv Transaction (5)
|
176,322 | 156,489 | 127,731 | |||||||||||||||||
|
Adjusted EBIT
|
$ | 1,033,990 | $ | 857,110 | $ | 643,942 | ||||||||||||||
|
Net income margin
|
44.9 | % | 33.0 | % | 31.3 | % | ||||||||||||||
|
Adjusted EBITDA margin
|
54.0 | % | 53.3 | % | 52.4 | % | ||||||||||||||
|
Adjusted EBIT margin
|
50.4 | % | 49.7 | % | 48.1 | % | ||||||||||||||
(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, 2025 and 2024, this adjustment also includes $2.3 million and $1.0 million, respectively, 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. During the year ended December 31, 2024, this adjustment also includes $2.7 million of non-cash accelerated stock-based compensation expense and related payroll taxes associated with our former President.
(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 statements 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).
| Year Ended | ||||||||||||||||||||||||||
| December 31, | ||||||||||||||||||||||||||
| 2025 | 2024 | Basis Point Change |
Constant Currency Basis Point Change (1)
|
|||||||||||||||||||||||
| Adjusted EBITDA margin | 54.0 | % | 53.3 | % | +64 bps | +70 bps | ||||||||||||||||||||
| Adjusted EBIT margin | 50.4 | % | 49.7 | % | +72 bps | +75 bps | ||||||||||||||||||||
(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, 2025, 2024 and 2023:
| Year Ended | ||||||||||||||||||||
| December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (dollars in thousands, except per share amounts) | ||||||||||||||||||||
|
Earnings per diluted share
|
$ | 3.78 | $ | 2.33 | $ | 1.71 | ||||||||||||||
|
Net income attributable to Tradeweb Markets Inc.
|
$ | 812,792 | $ | 501,507 | $ | 364,866 | ||||||||||||||
|
Net income attributable to non-controlling interests (1)
|
108,708 | 68,456 | 54,637 | |||||||||||||||||
|
Net income
|
921,500 | 569,963 | 419,503 | |||||||||||||||||
|
Provision for income taxes
|
253,474 | 184,439 | 128,477 | |||||||||||||||||
|
Merger and acquisition transaction and integration costs (2)
|
6,891 | 22,823 | 8,042 | |||||||||||||||||
|
D&A related to acquisitions and the Refinitiv Transaction (3)
|
176,322 | 156,489 | 127,731 | |||||||||||||||||
|
Stock-based compensation expense (4)
|
2,327 | 6,096 | 2,947 | |||||||||||||||||
|
Foreign exchange (gains) / losses (5)
|
13,112 | (6,326) | (47) | |||||||||||||||||
|
Tax receivable agreement liability adjustment (6)
|
(9,786) | (7,730) | 9,517 | |||||||||||||||||
|
Other (income) loss, net
|
(263,384) | 1,114 | 13,122 | |||||||||||||||||
|
Adjusted Net Income before income taxes
|
1,100,456 | 926,868 | 709,292 | |||||||||||||||||
|
Adjusted income taxes (7)
|
(275,114) | (231,717) | (173,777) | |||||||||||||||||
|
Adjusted Net Income
|
$ | 825,342 | $ | 695,151 | $ | 535,515 | ||||||||||||||
|
Adjusted Diluted EPS (8)
|
$ | 3.47 | $ | 2.92 | $ | 2.26 | ||||||||||||||
(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, 2025 and 2024, this adjustment also includes $2.3 million and $1.0 million, respectively, 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. During the year ended December 31, 2024, this adjustment also includes $2.7 million of non-cash accelerated stock-based compensation expense and related payroll taxes associated with our former President.
(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 statements 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%, 25.0% and 24.5%, applied to Adjusted Net Income before income taxes for the years ended December 31, 2025, 2024 and 2023, 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.
The following table summarizes the calculation of Adjusted Diluted EPS for the years ended December 31, 2025, 2024 and 2023:
| Reconciliation of Diluted Weighted Average Shares Outstanding to Adjusted Diluted Weighted Average Shares Outstanding and Adjusted Diluted EPS | Year Ended | |||||||||||||||||||
| December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
|
Diluted weighted average shares of Class A and Class B common stock outstanding
|
214,898,240 | 214,924,763 | 212,668,808 | |||||||||||||||||
|
Weighted average of other participating securities (1)
|
167,018 | 165,565 | 270,249 | |||||||||||||||||
|
Assumed exchange of LLC Interests for shares of Class A or Class B common stock(2)
|
23,063,110 | 23,076,373 | 23,902,379 | |||||||||||||||||
|
Adjusted diluted weighted average shares outstanding
|
238,128,368 | 238,166,701 | 236,841,436 | |||||||||||||||||
|
Adjusted Net Income (in thousands)
|
$ | 825,342 | $ | 695,151 | $ | 535,515 | ||||||||||||||
|
Adjusted Diluted EPS
|
$ | 3.47 | $ | 2.92 | $ | 2.26 | ||||||||||||||
(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 forms 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 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.
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 platform, 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.
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, 2025, 2024 and 2023, 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 17, 2025, we granted 65,532 PSUs with a grant date fair value totaling $14.2 million, which will be amortized into expense on a straight-line basis through December 31, 2027. The significant assumptions used in determining the grant date fair value of the award were a maturity of 2.8 years, annualized volatility of 25.04% and a risk-free interest rate of 3.95%. 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, 2025, 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. For PRSUs granted during 2025 and 2024, 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, 2025, a 10% decrease in the estimated final share payouts would decrease the total expense recognized for these awards for the year ended December 31, 2025 by approximately $4.1 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 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, 2025 and December 31, 2024, we had a valuation allowance established on our deferred tax assets totaling $3.0 million and $1.7 million, respectively. 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.
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