Tradeweb Markets (TW -1.41%)Q4 2024 Earnings CallFeb 06, 2025, 9:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good morning and welcome to Tradeweb's fourth quarter 2024 earnings conference call. As a reminder, today's call is being recorded and will be available for playback. To begin, I will turn the call over to head of treasury, FP&A, and investor relations, Ashley Serrao. Please go ahead.

Ashley Serrao -- Head of Treasury, FP&A, and Investor Relations

Thank you, and good morning. Joining me today for the call are our CEO, Billy Hult, who will review our business results and key growth initiatives; and our CFO, Sara Furber, who will review our financial results. We intend to use the website as a means of disclosing material nonpublic information and complying with our disclosure obligations under Regulation FD. I'd like to remind you that certain statements in this presentation and during the Q&A may relate to future events and expectations and as such constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Statements related to, among other things, our guidance are forward-looking statements. Actual results may differ materially from these forward-looking statements. Information concerning factors that could cause actual results to differ from forward-looking statements is contained in our earnings release, earnings presentation, and periodic reports filed with the SEC. In addition, on today's call, we will reference certain non-GAAP measures, as well as certain market and industry data.

Information regarding these non-GAAP measures, including reconciliations to GAAP measures, is in our earnings release and earnings presentation. Information regarding market and industry data, including sources, is in our earnings presentation. Now, let me turn the call over to Billy.

Billy Hult -- Chief Executive Officer

Thanks, Ashley. Good morning, everyone, and thank you for joining our fourth quarter earnings call. I am extremely proud of the Tradeweb team that helped produce the best revenue year and quarter in our history. As I look back at 2024, it was filled with healthy debate and continued market share gains across our core products.

Since our IPO in 2019, we have more than doubled our revenues and more than tripled our quarterly adjusted EPS, as well as our free cash flow. We want to honor that past, build upon our scrappy culture, continue to expand our presence across the fixed income ecosystem, and diligently accelerate our revenue growth. We are a technology company with the core focus of electronifying markets by efficiently connecting our buy-side clients with our most important liquidity providers. Central to our strategy is always remembering to strike the right balance where innovation not only helps the buy side but also benefits our dealer clients.

In 2024, we expanded our developed market footprint globally across rates, credit, money markets, and equities. We also continue to make inroads into emerging markets, and we are now run-rating at over 60 million in EM revenues annually. Additionally, we have deepened and expanded our client relationships with our acquisitions of Yieldbroker and r8fin and moved into the corporate treasury space with ICD, something we believe will collectively pay dividends for years to come. Looking ahead, we continue to evaluate more opportunities to plant more flags and deepen our multi-asset network.

Diving into the fourth quarter on Slide 4. Strong client activity, share gains, and a risk-on environment drove 25.2% year-over-year revenue growth on a reported basis. We continue to balance investing for growth and profitability as fourth quarter adjusted EBITDA margins expanded by 40 basis points relative to the 2023 full year margins. Turning to Slide 5.

Our rates business produced a record revenue quarter, driven by continued organic growth across swaps, global government bonds, and mortgages and was also supplemented by the addition of r8fin and Yieldbroker. Credit was led by strength in U.S. and European corporate bonds, with our second-highest quarterly market share across fully electronic U.S. high grade and record market share across fully electronic high yield, and further supported by growth across credit derivatives.

Money markets was led by the addition of ICD and aided by record quarterly revenues across global repos. Equities posted double-digit revenue growth, led by growth in our global ETF and equity derivatives business. Finally, market data revenues were driven by growth in our LSEG market data contract and proprietary data products. Turning to Slide 6.

Our record fourth quarter capped off a record revenue year in 2024. Record volumes across most asset classes translated into 29% revenue growth on a reported basis. The scale generated by our strong top-line results drove 91 basis points of adjusted EBITDA margin expansion and 29% adjusted EPS growth. As our growth initiatives continue to scale, we maintain our tradition of constant and focused investment.

Broadly, we enhanced our existing product capabilities, adding new clients, and forged new partnerships. On the capability front, we completed our integration of r8fin and Yieldbroker, made meaningful progress across our mortgage specified pool platform, and we rolled out our new RFQ Edge offering in global cash credit. On the client side, we continue to scale our credit mortgage and swaps platform as we make inroads with our largest clients. Finally, on the collaboration front, we made meaningful progress on the second phase of our integration with BlackRock's Aladdin and expanded our partnership with FTSE indices.

Additionally, we became the first strategic partner for Goldman Sachs' new GS Digital Assets platform and announced a partnership with the Tokyo Stock Exchange. We believe our investments have not only positioned us well for the future but also helped to make 2024 another banner year for Tradeweb. Moving to Slide 7. 2024 continued the streak of robust revenue growth that we have worked hard to deliver for multiple years now.

Specifically, while the majority of our revenues still come from rates, 46% of our revenue growth came from our other businesses in 2024. In fact, over the past six years, over 50% of our revenue growth came from nonrates businesses. Over the same period, 40% of our revenue growth was attributable to our international business. International revenues have grown on average 20% per year since 2016.

Our international business is anchored by our European business, but our Asia-Pacific product suite continues to scale. Our APAC business spans rates, credit, equities, and money markets, and volumes more than doubled year over year. We have seen strong active client growth across our APAC products, with global active APAC product users up over 20% year over year. Over 20% of our APAC product variable revenues in 2024 came from products that weren't generating revenues on the platform in 2019, a testament to the growing product diversity across our APAC business.

As we scale our presence across the APAC region, this is also driving strong APAC client engagement across non-APAC products. For example, we saw strong APAC active client growth across U.S. and European swaps, U.S. government bonds, and European credit.

2025 marks our 20th anniversary of being in the Japan markets, and we have made meaningful progress in scaling our offering. Our Japanese government bond volumes have grown at an average of over 30% since 2020, while our greater than one-year yen swap volumes have increased at an average of 45% over that same time frame. Looking ahead, we believe Asia-Pacific and, more broadly, emerging markets will continue to become a larger component of our growth story over the next few years as we expand our client and product network across the region. Relentless innovation has been critical to our success.

Throughout our history, we have prioritized being first to market, which requires constant investment. In the last nine years, we've invested over 780 million in technology to help shape the future of electronic markets, growing those investments at an average of 15% since 2016. And as our investments bear fruit, adjusted EBITDA margins have expanded consistently. Starting with U.S.

treasuries on Slide 8. Record fourth quarter market share of 25% drove revenue growth of 23% year over year. Our institutional business saw record revenues, and the leading indicators of the business remained strong. We gained share and achieved record quarterly market share of over 50% in institutional U.S.

treasuries versus our main electronic competitor. Our third consecutive quarter above 50%. Automation continues to be an important theme with institutional U.S. treasury AiEX average daily trades increasing by over 20% year over year.

Turning to our U.S. treasury wholesale business. We achieved our second-best revenue quarter in our history. This was led by record streaming activity, growing adoption of our sessions protocol, and continued contribution from r8fin.

Wholesale continues to remain a key area of focus as we prioritize onboarding more liquidity providers and enhancing our various liquidity pools as we deliver on our holistic strategy. Within equities, our ETF business produced record fourth quarter revenues. Our efforts to expand our equity brand beyond our flagship ETF franchise continue to bear fruit, with record equity derivative revenues increasing 20% year over year. Looking ahead, we continue to make inroads by integrating new clients, and the client pipeline remains strong as the benefits of our electronic solutions continue to resonate.

We believe we are well positioned to capitalize on the long-term secular ETF growth story, not just in equities, but across our fixed income business. Turning to Slide 9 for a closer look at another strong quarter for credit. Revenue growth was driven by 14% and 7% year-over-year revenue growth across U.S. and European credit, respectively.

We also achieved strong double-digit revenue growth across credit derivatives. Automation continued to grow, with global credit AiEX average daily trades increasing over 10% year over year. We achieved our second-highest fully electronic quarterly market share across U.S. IG and the highest fully electronic quarterly market share across U.S.

high yield. We also crossed the 1,000 client count threshold in the fourth quarter as clients gravitate toward our deepening liquidity pool and premium client experience. Our institutional business continues to scale as clients adopt our diverse set of protocols. Our institutional RFQ average daily volume grew over 30% year over year, with strong double-digit growth across both IG and high yield.

Our RFQ volumes as a percentage of TRACE touched a new high in the fourth quarter across both IG and high yield. Moreover, portfolio trading average daily volume rose over 20% year over year, with growth of over 30% across IG portfolio trading. Retail credit revenues produced another solid quarter, but revenues were down 11%, primarily due to outsized muni tax-loss selling in the fourth quarter of 2023. AllTrade produced a solid quarter with over $180 billion in volume, up over 15% year over year.

Specifically, our all-to-all average daily volume grew over 10% year over year and our dealer-RFQ offering grew low single digits year on year. The team continues to be focused on broadening out our network and increasing the number of responders on the AllTrade platform. In the fourth quarter, the average number of responses per all-to-all inquiry rose over 15% year on year. Finally, our sessions average daily volume grew over 20% year over year.

It was a year of innovation and growth with a focus on redefining our diverse set of all-weather protocols. We enhanced our portfolio trading offering to incorporate ETF analytics, rolled out RFQ Edge, and further enhanced our algorithmic capabilities. Since 2020, we have grown our fully electronic IG share by more than double and we have more than tripled our high yield share. Stepping back, 20% of our IG share growth was driven by RFQ, with 35% and 40% coming from portfolio trading and sessions, respectively.

On the high yield front, 50% of our share growth was driven by RFQ, with 40% and 10% being driven by PT and sessions, respectively. Looking ahead, U.S. credit remains a key focus area, and we like the way we are positioned across our client channels for this asset class. We believe we have a long runway for growth with ample opportunity to innovate alongside our clients.

We are focused on further upgrades to our leading PT offering, new tools to further penetrate block trading workflows, enhance the analytics through the trading life cycle, and then improved client user interface experience. We also remain very focused on chipping away at high yield. Our average high yield response rate hit a new record in the fourth quarter, and we remain very focused in 2025 on expanding our client network. We're near the end of phase 2 of our Aladdin integration, and both teams are formulating plans on the next deliverables with a goal to deliver real differentiated liquidity solutions over pure workflow efficiency.

Beyond U.S. credit, we are focused on our EM expansion efforts. We expect to go live with our Saudi Arabian offering in the coming quarters, and we are working through regulatory approvals for our Indian offering. Strategically, we're looking to build a robust trading solution and expand our local network, leveraging our global product suite.

Moving to Slide 10. Global swaps produced record revenues, driven by a combination of strong client engagement in response to the macro environment, better mix shift toward risk trading, and stable weighted-average duration. All in, global swaps revenue grew 37% year over year. Core risk market share, which excludes compression trading, set a new record in the fourth quarter, increasing by over 210 basis points year over year.

Overall market share decreased to 20.8%, primarily due to a significant drop in European swap client-related compression volumes, which carries a significantly lower fee rate. During the quarter, we also achieved record share across G-11 and EM-denominated currencies and the second-highest share in our history across sterling swaps. The fourth quarter exemplified the diversity of our global swaps revenue growth. We achieved record institutional swap revenues across European and EM swaps and our second-highest quarterly revenues across dollar and APAC swaps.

Across our 27 currencies, we saw the biggest market share increases in 2024 across Taiwan dollar, Swiss franc, and Hong Kong dollar, with each gaining over 900 basis points of market share year over year. Beyond this, over 60% of our currencies saw at least 500 basis points of market share gains in 2024, yet many remain below 25% market share, highlighting the opportunity ahead of us. Finally, we continue to make progress across emerging market swaps and our rapidly growing RFM protocol. Our fourth quarter EM swaps revenue rose over 80% year over year, and we believe there is still significant room to grow given the low levels of electronification.

Our RFM protocol saw average daily volume rise over 140% year over year with adoption picking up. Looking ahead, the global macro backdrop continues to be in flux, and we believe the long-term swaps revenue growth potential is meaningful. As we build solutions for our clients, adoption can take time, but when it does happen, the upside potential could be significant. For example, we rolled out our electronic inflation swaps offering in 2017.

Adoption was slow out of the gate. However, since 2020, industry inflation swaps volume is up 85%. Our risk-related inflation swaps volumes are up nearly 600% over that same time frame. We are looking forward to providing more solutions for more parts of the swaps market.

With the overall swaps market still about 30% electronified, we believe there remains a lot we can do to help digitize our clients' manual workflows while the global fixed income markets and broader swaps markets grow. And with that, let me turn it over to Sara to discuss our financials in more detail.

Sara Furber -- Chief Financial Officer

Thanks, Billy, and good morning. As I go through the numbers, all comparisons will be to the prior-year period unless otherwise noted. Slide 11 provides a summary of our quarterly earnings performance. As Billy recapped earlier, this quarter, we saw record revenues of $463 million that were up 25.2% year over year on a reported basis and 25.5% on a constant currency basis.

We derived approximately 40% of our fourth quarter revenues from international clients, and recall that approximately 30% of our revenue base is denominated in currencies other than dollars, predominantly in euros. Our variable revenues increased by 30%, and total trading revenues increased by 26%. Total fixed revenues related to our four major asset classes were up 10.9% on a reported basis and 11.1% on a constant currency basis. Rates fixed revenue growth was primarily driven by the movement of a dealer to a more fixed schedule and by the addition of dealers to our mortgage and U.S.

government bond platforms. Credit fixed revenue growth was primarily driven by increases to our subscription fees and by the movement of dealers to a more fixed plan this year. And other trading revenues were up 21%. As a reminder, this line fluctuates as it reflects revenues tied to periodic technology enhancements performed for our retail clients.

Full year 2024 adjusted EBITDA margin of 53.3% increased by 91 basis points on a reported basis when compared to our 2023 full year margins. Moving on to fees per million on Slide 12 and a highlight of the key trends for the quarter. You can see Slide 18 of the earnings presentation for additional detail regarding our fee per million performance this quarter. For cash rates products, average fees per million were down 4%, primarily due to lower fee per million across U.S.

government bonds. For long-tenor swaps, average fees per million were up 55%, primarily due to a decline in compression activity and greater risk-taking volumes. For cash credit, average fees per million decreased 12% due to a mix shift away from munis and a change in dealer fee plans from variable to fixed. For cash equities, average fees per million increased 4% due to a mix shift toward EU ETFs, which carry a relatively higher fee per million.

And finally, with money markets, average fees per million increased least 55% due to the inclusion of ICD. Slide 13 details our adjusted expenses. At a high level, the scalability and variable nature of our expense base allows us to continue to invest for growth and grow margins. We have maintained a consistent philosophy here.

Adjusted expenses for the fourth quarter increased 25% on both a reported basis and constant currency basis. Given the strong environment to invest for long-term growth, during the fourth quarter, we continued investments in marketing, digital assets, consulting, and client relationship development. Adjusted compensation costs grew 21%, the vast majority related to variable or discretionary components. Over 50% of the increase came from performance-related compensation and the addition of ICD.

Technology and communication costs increased 34%, primarily due to our previously communicated investments in data strategy and infrastructure. Adjusted professional fees grew 47%, mainly due to an increase in tech consultants as we augment our onshore technology operations and build incremental scalability. Adjusted general and administrative costs increased 34% due to a pickup in travel and entertainment, as well as marketing, which was offset by favorable movements in FX that resulted in approximately a $1.1 million gain in the fourth quarter of '24 versus a $500,000 loss in the fourth quarter of '23. Slide 14 details capital management and our guidance.

On our cash position and capital return policy, we ended fourth quarter in a strong position with $1.3 billion in cash and cash equivalents and free cash flow reached approximately $809 million for the trailing 12 months. Our net interest income of $14.2 million decreased due to lower cash balances as we funded our recent ICD acquisition with $771 million of cash on hand. With this quarter's earnings, the board declared a quarterly dividend of $0.12 per Class A and Class B shares, up 20% year over year. Turning to our guidance for 2025.

We will continue to invest in the business in 2025 and are expecting adjusted expenses to range from $970 million to $1.03 billion. The midpoint of this range would represent an approximate 15% increase year over year. Excluding the impact of acquisitions, the midpoint of this range would represent an approximately 11% increase year over year, relatively in line with our average expense growth since 2016. We believe we can drive adjusted EBITDA and operating margin expansion compared to 2024 at either end of this range, although we expect the incremental margin expansion to be more muted as overall margins are higher and we continue to focus on balancing margin expansion with investing for the future.

Specifically, we continue to invest in credit, rates, emerging markets, and ICD as key focus areas with a long runway for growth. We also continue to invest in technology that allows us to sustain and build our leading platform. Some of these investments will take time to drive revenue growth, but we continue to prize innovation and scale our technology pipeline. We expect 2025 quarterly run rate technology and communication expenses to grow from the fourth quarter of '24 levels, and we continue to invest in our data strategy and infrastructure to support the growth of our platform and new product initiatives.

We expect annual G&A expenses to grow in the mid-single digits, with seasonally higher levels in the second and fourth quarters due to normal cyclicality in T&E. We expect 2025 quarterly run rate professional fee expenses to be at the fourth quarter '24 levels as we continue to augment our technology effort with consultants. We expect annual occupancy expenses to increase approximately 40% year over year, primarily due to the move to our new New York City headquarters and overall expansion of our geographic footprint. We expect the first half of 2025 occupancy expenses to rise approximately 30% year over year and second half 2025 expenses to rise 55% year over year, which includes approximately $1.5 million in duplicate rent-related expenses.

For forecasting purposes, our assumed non-GAAP tax rate ranges from 24.5% to 25.5% for the year. We expect capex and capitalized software development to range between $99 million and $109 million. We estimate that approximately 50% will be spent on software development to support our growth initiatives, and approximately 50% will be related to growth and maintenance capex. The midpoint of our capex guidance implies a roughly 17% year-over-year increase, primarily driven by building out our new New York City office and the ICD acquisition.

Acquisition and Refinitiv transaction-related D&A, which we adjust out due to the increase associated with pushdown accounting, is expected to be $176 million in 2025. Lastly, we continue to expect 2025 revenues generated under the master data agreement with LSEG to be approximately $90 million. Of the $90 million, we expect to generate $28 million in revenue in the first quarter of '25. Now, I'll turn it back to Billy for concluding remarks.

Billy Hult -- Chief Executive Officer

Thanks, Sara. As I embark on my 25th year at Tradeweb and my third year as CEO, I have never been more excited about the opportunities ahead of us. The ethos of the company has not changed, and we constantly ask ourselves what can we do to bring a differentiated offering to the market that improves the overall ecosystem for our clients. Ahead of our IPO, we were known as a leading rates company that had ambitions to grow outside of rates.

We believe we are now known as one of the leading financial technology companies that helps to provide innovative solutions to our clients across the fixed income ecosystem. Looking ahead, I am excited to continue to build upon our leading multi-asset class footprint. It's a good time to be in the risk intermediation business, but it's an even better time to shape the electronification of a growing fixed income ecosystem. On that note, we reported strong January volumes this morning, which translated into revenue growth in January of 23% year on year.

Excluding the $8 million contractual payments related to the LSEG market data agreement that we recognized in January, revenue growth would have been 17% year over year. Before I conclude, I would like to welcome Troy Dixon to Tradeweb, who previously was a member of the Tradeweb board. Troy, in conjunction with Enrico Bruni, will be co-heads of global markets. They will share responsibility for overseeing execution of the company's global market strategy, including pursuing both organic and inorganic growth opportunities across products, geographies, and our four client channels.

I look forward to our ongoing work together to maximize our current potential and to continue to build upon the next legs of our growth. Finally, I would like to conclude my remarks by thanking our clients for their business and partnership in the quarter, and I want to thank my colleagues for their efforts that contributed to the record quarterly and annual revenues and volumes at Tradeweb. With that, I will turn it back to Ashley for your questions.

Ashley Serrao -- Head of Treasury, FP&A, and Investor Relations

Thanks, Billy. As a reminder, please limit yourself to one question only. Feel free to hop back in the queue and ask additional questions at the end. Q&A will end at 10:30 a.m.

Eastern Time. Operator, you can now take our first question.

Questions & Answers:

Operator

Thank you. [Operator instructions] And our first question will come from the line of Chris Allen of Citi. Your line is open.

Christopher Allen -- Analyst

Hey. Good morning, everyone. Thanks for taking the question. I want to talk about interest rate swaps.

Billy, as you noted, the macro backdrop is in flux right now. So, maybe you could frame out and flesh out if the current environment is conducive for risk-on trading. And then on compression activity, that's moderated as a percentage of activity. Is that a function of less opportunities of compression trading, more risk-based trading by clients, or something else?

Billy Hult -- Chief Executive Officer

Hey, Chris, good question. Thank you. Good to hear your voice. It's a little late to say Happy New Year, but Happy New Year.

And I know -- we're going to try to get through as many questions, you know, obviously as possible. I know there's another call at 10:30. It's like you guys have like a little bit of like a double feature today, so appreciate that. And good question.

Kind of -- Chris, when I kind of step back a little bit on your kind of theme, you know, just a little bit of like a quick context around it. When we think about like cadence of volatility in the rates market, just think about it this way for a second, Chris. Like, since I became CEO, think about the sort of like the major volatility events that have impacted our businesses like the Russian invasion of Ukraine in '22; collapse of SVB in '23, which was a little bit more of a credit event but massive amplifications, you know, into rates; and then even like the sort of Japanese stock rout in early August of last year. And so, these are like headline, almost like stressful moments in the market that test the participants around the ecosystem.

You know, price is moving in ways that are unexpected and, in some ways, almost like challenging, you know, to rationalize. And for us and from our perspective, you know, these become moments when, as a leading platform for swaps, you know, from my perspective, we become almost like that destination of choice. You know, the sort of trusted marketplace where our biggest clients, our biggest buy-side firms can feel comfortable sort of reshuffling exposure. And that's a part of this kind of like -- I talk about the global brand that we have, you know, in the business, and these are ultimately, you know, moments that are sort of building blocks of credibility.

And so, when you enter into a different environment, you now have that ability to grow market share through orientation and micro trading protocols that capture, you know, real risk transfer, which is kind of -- as you know, that's sort of like the holy grail of it all in the electronification world. And so, you know, the data tells us that this environment is, I think, very conducive for what we think of as like risk-on trading. You know, the fourth quarter active users was up 15% year over year. January, up almost 10% year on year.

Chris, in January, we saw our total swaps revenue increase by -- I think it's like 30% year over year. And so, I don't have a crystal ball. I know no one has a kind of crystal ball, but we are, for sure, bullish on the forwards, you know, given the fact that there is plenty of headline debate in the markets, geopolitical uncertainty, rising trade war risks, inflation concerns, and you know about this sort of better than I do. I say this all the time.

The market is going to be the market. But as a company, we are like laser-focused on building out solutions for our clients. And so, as you mentioned, I highlighted in the script, you know, adoption takes time, but we believe we have a higher success rate with our innovations, in part because we go down this path of that sort of hand in hand with our buy-side and sell-side clients, that type of communication and partnership. And so, looking ahead, we see a long runway for growth in the areas of the market where we can front and center continue to innovate and go after more parts of the voice market and onboard clients.

And from my perspective, I remain, you know, very optimistic about the swaps business going forward. I think it's a great time to be in that business today. As you know very well, the technique and the tactics that we've had around compression trading was to get into risk transfer. And I think that technique and tactic has worked out very well for us.

And so, we feel really good about the performance of our swaps business and the leadership role that we play in that. And thanks very much for your question, Chris.

Ashley Serrao -- Head of Treasury, FP&A, and Investor Relations

Let's go to the next question.

Operator

And our next question will be coming from the line of Benjamin -- excuse me -- Budish of Barclays. Your line is open.

Ben Budish -- Analyst

Hey. Good morning. Thanks for taking my question. Billy, you know, in your prepared remarks, you talked a lot about technology innovation.

I'm wondering if you could talk about digital assets for a moment. There's been a couple of announcements coming from Tradeweb partnering I think with Goldman Sachs' spinout Digital Assets platform. Can you kind of talk about what you're doing here? How do you see, you know, blockchain technology, crypto, any and all of the above sort of fitting into the broader Tradeweb business? What are you doing and what are you thinking that, you know, may come from this over the next many years? Thanks.

Billy Hult -- Chief Executive Officer

Yeah. Hey, Ben. How are you? Good question. And I think you're right when you sort of talked about like the announcement that we've made.

I would say like front and center, and you know us very well, you know, our approach in this space quite bluntly is not about creating headlines, right? It's about, you know, adding value. And so, I've kind of talked about this a lot, which is, as you know, like the bones and the ethos of this company is about using technology to remove friction in our clients' workflows across the trade life cycle. That's who we are. That's been in our DNA since day one, you know, as we've created this sort of one-stop shop across asset classes.

And so, we are very focused kind of in the space because we're an ambitious company, as you know. And so, we always want to be front foot around change. And so, some of the things that we've kind of, you know, seen lately, I'll highlight for you, that which is -- you know, I wasn't at Davos, but I watched it on CNBC. I saw Larry Fink talking about, you know, the tokenization of real-world assets, treasuries, fixed income, equities, and this -- the concept of how sort of transformative and democratizing that will be.

I think that's an important concept and something to be aware of. Obviously, I think we're all kind of sitting and hearing, you know, the sort of the strong movements that are coming from Apollo. And obviously, they announced that they were listing their Diversified Credit Fund via Securitize. We think that's important, and we've been defending that space very well with how we've partnered with Securitize.

And then I think another thing I would just mention is, obviously, Circle announced their acquisition of Hashnote, you know, this month, and we think that's important in terms of yielding on chain money market instruments to complement where they are with stablecoins. So, a lot kind of happening. You know, from our perspective, to your question, as we kind of step back, and we have very smart, very strong people at the company, very focused on our digital assets strategy, it's essentially laser-focused in three areas. One is kind of trusted shareable data.

The second I would describe to you as kind of smart contracts because we see by utilizing smart contracts, you know, we can automate operations among multiple parties, enabling faster and lower-cost asset transfers and life cycle events. And these are kind of very important things as we think about, you know, the ecosystem of our world. And then tokenization and synchronized data. And those are the sort of like three big areas, you know, of focus for us as a company.

And so, we've been busy. You know, a lot of partnerships over the last year. I mentioned Securitize. In May of '24, we made our first strategic investment with them.

We think they're very smart and very important players in the space. We also followed that up with a commercial agreement with Alphaledger. And then in July -- this past July, you know, we joined the Canton Network. And I know you know that.

We think the Canton Network is important. Obviously, you know, Don Wilson and DRW is a firm that historically we've been close to for a while. I'll kind of say this with a little bit of a giggle, he's smart money, and we think, you know, being, investing, and partnering with him is a good idea. So, you know, we're doing kind of what you would expect us to do in the space, which is kind of keeping our options open, being front-footed about the best partners to invest in, and quite excited about this next evolution in this space and how they affect our markets.

And this is something that we feel very comfortable in continuing to innovate, and I think we are very well positioned in the space. And good question and thank you.

Ben Budish -- Analyst

Thanks for the color, Billy.

Billy Hult -- Chief Executive Officer

Yeah.

Operator

Thank you. One moment for the next question. And our next question will be coming from [Technical difficulty] of Goldman Sachs. Your line is open.

Ashley Serrao -- Head of Treasury, FP&A, and Investor Relations

Alex, you may be on mute if you're asking a question.

Alex Blostein -- Analyst

Sorry, guys. The phone broke up a little bit. I couldn't hear whether it was my name or somebody else's. Hey.

Good morning. Question for Sara, just kind of turning to the guidance for a minute. So, encouraging, you kind of put a comment in there around still delivering positive operating leverage this year, albeit, I guess, at a slower pace than what you saw last year. Can you just talk a little bit about your ability to pivot the expense base given that there's clearly some uncertainty around, you know, the revenue environment? You guys are coming off of really strong growth last year.

So, if you are at a slower pace of revenue growth, could you be below the guide to still deliver kind of this positive operating leverage or how would that -- how would those two things work together? Thanks.

Sara Furber -- Chief Financial Officer

Great. Good morning, Alex. It's a great question. Happy to talk about that.

From our perspective, we have significant operating leverage within the business, and that operating leverage lets us navigate even in weaker revenue environments. So, I think I've talked about this before, 50% of our expense base generally is variable or discretionary, which provides a lot of built-in flexibility in different revenue environments. So, by variable, I'm talking about things like performance-linked compensation, commissions, volume-driven costs like exchange fees that are going to scale up and down based on the revenue environment. And by discretionary, things like marketing, T&E, and obviously the pace of hiring, where we have a lot of flexibility on how we want to manage those.

Overall, our approach has been pretty consistent. We manage those costs dynamically, and we calibrate based on a number of things, including what the market opportunities are in front of us, the environment that we're in, but also making sure that we continuously invest in the things that we think are strategic and important through the cycle. I think you don't really have to look further than going back to the first half of 2023 to kind of see the proof is in the pudding. We had a weaker revenue environment.

Revenue was -- top line was mid-single digits, and we managed to maintain and grow our margins in that environment. Maybe not exactly your question, but I would say equally important, if you look at last year, top line, 29%. You saw us able to accelerate spend to take advantage of the environment and momentum and still balance delivering margin improvement. So, ultimately, I think we've shown a willingness and we have the flexibility and track record to both invest for the long term but also to be nimble.

And I think that gives you a good sense of our ability to deliver operating leverage regardless of the environment. Thanks for the question.

Alex Blostein -- Analyst

No, thank you.

Operator

Thank you. One moment for the next question. And our next question will be coming from the line of Dan Fannon of Jefferies. Your line is open.

Dan Fannon -- Analyst

Great. Thanks. Billy, I was hoping you could talk about just kind of at a high level. You've got looser regulation potentially coming from banks.

And as you think about the electronification trends that have been so strong, do you see that changing at all if banks are going to be using more balance sheet or taking on more risk or potentially keep a little bit more in-house versus some of the trends that have been so prevalent the last couple of years?

Billy Hult -- Chief Executive Officer

Yeah. Dan, how are you? Good question. It is kind of amazing like how quickly sort of the pendulum can swing in certain ways. And particularly around sort of, you know, how regulation has been framed, it does feel like quick -- kind of quick pendulum swings.

I would say like, you know, headline, like the onward march of electronification, from our perspective, is not a pendulum that swings back and forth. We think that's kind of like one way. And as I kind of think about your question, where my kind of brain goes is pretty interesting. It's kind of like if you think about it like the rise in the banks, in their market, business revenues really -- like since -- almost like we want to like define it down as like the pandemic.

It's almost become like the new normal. And this concept of like private sector intermediation -- we say this a lot, like private sector intermediation being back, you know, from our perspective, is like very, very good for our business because we see ourselves and I think we are, you know, this trusted electronic intermediary between the banks and their most important clients. And that business thriving, you know, is quite good for us. So, you know, banks with sophisticated and invested flow trading operations, providing, from our perspective, almost like that consistent presence for their most important clients while warehousing in the right way.

Warehousing and then efficiently recycling risk is good for us as the leading platform in both the institutional side, but then a little bit to your point, kind of also having that mirrored liquidity, you know, in our wholesale business. So, you know, I kind of said this before, like not anticipating at all -- it's a really good question -- that the move toward electronification is going to be slow at all as a consequence of the banks feeling healthy and vibrant and strong in the businesses that we live and breathe in. I think that the table stakes around efficiency are kind of here to stay, and we think we benefit from the banks being both strong and efficient. And that's -- and that winds up being, you know, quite a good outcome for us.

But good question. You know, interesting, just like the switches that wind up happening around the topics of regulation are quite interesting. And thanks for your question.

Dan Fannon -- Analyst

Thank you.

Operator

Thank you. One moment for the next question. And our next question will be coming from the line of Craig Siegenthaler of Bank of America. Your line is open.

Craig Siegenthaler -- Analyst

Good morning, Billy. Hope everyone is doing well, and I think my name went out a little bit like Alex's, but I'm here.

Sara Furber -- Chief Financial Officer

Good morning.

Billy Hult -- Chief Executive Officer

How are you, Craig? We can hear you.

Craig Siegenthaler -- Analyst

I'm good. So, our question is on streaming and session trading volumes in U.S. treasuries. So, there's some industry data out there that's pointing toward an accelerating adoption of streaming and session trading in rates over just the last kind of few quarters.

What are you seeing in terms of protocol usage in treasuries?

Billy Hult -- Chief Executive Officer

Yeah, it's a good question. It's a really interesting dynamic. It's almost like a micro sort of structure shift that's happening, and we kind of see it that way, too. I think there is a shift happening, you know, sort of across what we think about as that sort of wholesale kind of D2D marketplace, that sort of professional kind of marketplace where, you know, protocols are taking away market share from that kind of traditional almost out of central casting kind of CLOB protocol that we all kind of first understood as being central to that D2D market.

Our instinct is part of the move away from that. That CLOB is really due to, obviously, like the lower volatility environment that we've seen in rates. Our instinct is, you know, the streaming business and the session business tends to outperform in a lower volatility environment. And so, in a pretty basic way, our strategy is very straightforward, which is like always -- you know, how can we be better positioned to deliver an integrated product and product suite across the entire U.S.

treasury marketplace? And so, you know, from our perspective, we've been a driver of that change with our comprehensive protocol offering, you know, streams, CLOB, Sweep, and r8fin. And I do think it's important to be, you know, competitive in that CLOB world, but absolutely, there's been a shift around approach and usage. So, in 2024, the wholesale streaming average daily volume from our perspective was up 35% year over year, and the wholesale sessions business was up almost -- actually a little bit over kind of 25%. r8fin continues to be a sort of important business for us that's sort of -- when I say r8fin, the best way to describe it, I think, is that algorithmic-based spreading and aggregation technology.

We think that that facilitates the most sophisticated client usage around futures and related cash trades. That's a driver for us and something very important for us. So, that's continued to grow as a very high percentage of U.S. treasury ownership.

I think it's about 40 basis points higher than in 2024. So, we feel good about where we're kind of at in terms of that treasury business with that comprehensive offering. Those shifts that are occurring, those micro shifts that are occurring in this environment set up well for us because we've been the leaders in those new emerging protocols. And as I describe that, and you guys know me very well, we're still very focused on gaining market share in the CLOB.

You know, we don't think the CLOB is going away. We think that's a table stakes and important protocol. The combination of myself and Sara and, as you know, we hired Troy Dixon, we continue to push that team around increased market share gains in the CLOB because we think that's an important complement to where the market feels like it's going. And great question, Craig, and thanks very much for asking it.

Operator

Thank you. One moment for the next question. And the next question will be coming from the line of Alex Kramm of UBS. Your line is open.

Alex Kramm -- Analyst

Yeah. Hey. Good morning, everyone. Billy, when you walked through the investment priorities earlier on your prepared remarks, credit, again, was No.

1, and I'm just wondering how much you're increasing the focus there. I think some people think that into 2025, with all the tailwinds that you have, you're really going to dial up the competitiveness and be even more disruptive. So, just wondering if this is right, how much more of a focus credit can even become and what are you going to do in particular to continue that market share gaining? And of course, how much price -- I will have to ask on that, how much price will be a factor as well?

Billy Hult -- Chief Executive Officer

Yeah. I mean, it's a good question. It's like, you know, I talk about the concept of like laser-focus, and I mentioned that around a couple of the initiatives and a couple of the things that we're working on the rate space. But like, you know, no one will mistake the company's like extreme focus on credit because we see that as a huge opportunity for the company kind of period.

And, you know, we started with this basic premise that the market wanted competition in the space. And now, as you know very well, it's up to us to continue to differentiate ourselves and innovate in that marketplace along the right themes. So, we feel good how we're set up. We're going to continue to invest like across the board, like around portfolio trading, making sure that we maintain and feeling really good about the leadership position that we have in portfolio trading.

We are invested in our partnership with Aladdin in terms of bringing in more responders into the all-to-all network. I've talked about the concept of getting more into -- it's a little bit of a question that I was asked about regulation. I've talked about the concept a lot about getting into a little bit more of, you know, bank/dealer inventory and getting into kind of dealer access and getting those access communicated the right way to, you know, the bank's biggest and most important clients in a timely, electronic, efficient fashion. I think that's like a really big theme and something that we are kind of invested toward.

Price is, you know, not the lead horse, and you've heard me kind of say that. We think, you know, the client base wants innovation first and foremost, and we think we are, you know, positioned to deliver that for our clients. And we're not going to go down the path, you know, of that sort of price adjustments to pick up share. We just don't -- you know, we don't feel like that's the right step.

But from an investment perspective, I have it at the top of the list because we feel like that opportunity and that wallet and the ability to differentiate ourselves and provide that value to our client base is 100% there. And a very good question and thanks for asking it.

Alex Kramm -- Analyst

Of course. Thank you.

Operator

Thank you. One moment for the next question. And our next question will be coming from the line of Patrick Moley of Piper Sandler. Your line is open.

Patrick Moley -- Analyst

Yeah. Good morning. Thanks for taking the question. So, it's been about seven months now since you closed the ICD acquisition.

So, Billy, was hoping you could maybe just give a state of the union on how the integration has gone, any success that you've seen in cross-selling their capabilities to your client network, and just any kind of milestones that maybe we should be on the lookout for in 2025.

Billy Hult -- Chief Executive Officer

Yeah. Really good question, Patrick. Sara, let me hand that to you. You've been so front and center on this.

Sara Furber -- Chief Financial Officer

Sure. Thanks. Look, I think we've been really quite pleased as a team with the progress on ICD. The -- first and foremost, the core business continues to perform out of the gate, whether we're looking at revenue, client growth, balanced growth, retention, which is at 99%, client growth at 13%.

All the core metrics that we expect to see are on plan, and we're really quite excited about that. I think -- as we think about going ahead, you know, from our perspective, some of the milestones, it's not a classic integration. The tech platform -- the core tech platform that ICD operates on largely will run independently. And so, it's less about those types of milestones and really about the long-term revenue opportunities that we've talked about that you're referencing around building, I would say, a comprehensive solution for treasurers, particularly ICD's corporate treasurers, around investing and liquidity needs.

And so, when we think about those buckets, it's really two different things. One is expanding their footprint by leveraging our client relationships, our sales force, especially internationally and with financial institutions, which is something we bring to the table, and we're already seeing momentum there. Internationally, we've leveraged our infrastructure, in particular in Asia, to allow the ICD sales force to kind of operate from a regulatory perspective and from a time zone and client reach perspective more efficiently and begun doing joint meetings and engaging with prospects. And so, early days.

This isn't, you know, a sprint. This is a bit of a marathon. But we're seeing really good engagement. And I think our ability to drive that part of the business will materialize in 2025.

I would say the other side of the coin, which also, you know, has made good progress, is around expanding ICD's product offering, in particular by bringing our core products onto their platform. That obviously takes a little bit longer. So, we're expecting this year -- sort of by the middle of the year to start with U.S. treasuries and have those be available in ICD's platform.

I think once that's there, we expect to see good reception. In all of our engagement with clients, and we've done formal surveys, 65% of the client base has been asking for treasuries. And obviously, we think we have a leading platform there. So, I think we're set up to do quite well.

But again, we want to set this up in a really thoughtful way, and we're focused on the long term. But we're seeing good engagement, good momentum. And obviously, we'll report more as the year goes on. I would say just while we're on ICD, I think the other thing that we're focused on as we look forward is on a more macro level, you know, particularly with their client base, we're seeing strong levels of corporate cash, and we're expecting that to continue as those clients continue, and they're extremely profitable.

So, all things pointing in the positive direction as it relates to ICD. Thanks.

Patrick Moley -- Analyst

Thank you.

Operator

Thank you. One moment for the next question. And the next question will be coming from the line of Jeff Schmitt of William Blair. Your line is open.

Jeff Schmitt -- Analyst

Hi. Jeff Schmitt here. So, in the institutional channel for treasuries, you continue to see strong growth in automated trades. What's changed in that market or with your automated protocol that's driving such strong client adoption and how much of your treasury mix is automated today?

Billy Hult -- Chief Executive Officer

Yeah. Hey, Jeff. It's Billy. Good question.

And so, you know, I think we've done -- gotten a bunch of things right, and I say that very humbly. Not everything right, but I think we've gotten a bunch of things right. I think, you know, how we've kind of approached this sort of AiEX space, the kind of more algorithmic space with our clients, I would say it's probably one of the things that we've gotten like right the most or right the best. And I'll make a kind of little joke.

As you guys go to your kind of 10:30 doubleheader, you know, they've gotten it right, too, and they've done a really good job in terms of like this type of functionality as well. It's like the first sort of -- the first evolution was the phone to the mouse, the phone to the keyboard. This next evolution is, you know, mouse, keyboard to the algorithms and a more sophisticated way of finding liquidity. I think it's resonating now, particularly because that search for liquidity is so important.

You know, how do I find liquidity with leaving the least amount of footprints in the marketplace? I think that trend is like one way. And then you layer on the kind of concept of how do I do more with less? You know, how do I continue to approach and attract and find liquidity in the marketplace in a sophisticated way and act as a client to my liquidity providers? There's so much good vibrations and so many ways where this protocol kind of resonates sort of across the board from our perspective. And I think it's been the lead differentiator for us in the rates space generally as we've looked at sort of competing there from day one, essentially, with Bloomberg. I think it's sticky.

And so, the concept of sort of breaking down like large risk trades into smaller more digestible trades, and then those trades finding, you know, execution in a seamless way, there's something just very intuitive about that. And I think, you know, as we've gotten obviously now well through those dark days of the pandemic, the concept of the buy side continuing to invest in all of this technology is one way. And so, it took some thought process from our perspective in terms of a willingness to sort of cede some space around the desktop and really understand, I think, where like client behavior was going to go. But getting on the right side of that trend, I think, has done, you know, enormous favors to our rates franchise in terms of a differentiator.

And we think it's probably the best thing that we've done in the rates space. And thanks very much, Jeff, for your question.

Jeff Schmitt -- Analyst

Great. Thank you.

Operator

Thank you. One moment for the next question. And the next question will be coming from the line of Kyle Voigt of KBW. Your line is open.

Kyle Voigt -- Analyst

Hi. Good morning, everyone. So, after completing both r8fin and ICD in 2024, just curious if I could check in on your appetite for additional M&A in 2025. What capabilities would you look to add and is there any way to frame whether we should still expect more bolt-on type deals or whether large-scale M&A is also on the table?

Billy Hult -- Chief Executive Officer

Yeah, very good question. You know, I was asked that question earlier about like focus, and I specifically talked about the focus the company has in credit, and you've kind of heard us and kind of understand the way we operate. And so, I would start by saying, you know, the company's focus and my focus on the organic business is extremely strong, and the confidence that we have around the growth in those businesses is extremely strong. I would start there.

Second thing I would say is I do feel good about the concept, and Sara and I have worked like very closely on this. You know, you said it, two deals in '24 with r8fin and ICD. Kind of three years -- excuse me, three deals in the sort of tenure of me as CEO. I think it's important to show, you know, the marketplace that we know how to do deals and we know how to integrate and we know how to assess value.

I think those are important concepts. When we think about this, it's pretty basic. Is it a culture of a company that we -- not like, that we love? And then is there a network out there -- you know, we're a network business, and that's something hugely important to us. Is there a network out there that we can get through an acquisition? And I say this a lot, like we have incredible technologists, you know, but is there a piece of technology, is there an algorithm, is there something happening, you know, through technology that it's better for us to acquire? And so, we look at it, you know, basically through those criteria, through that lens: culture, network, and technology.

And we feel like if it's -- you know, as it was with the two assets in '24, we feel like if those things add up for us, then we're going to have excitement around it. So, I think doing something well gives you credibility. It gives you more opportunity. And I think it's been a pretty important thing for us as a company that has largely gotten here, you know, through our organic business to be able to do deals.

And, Sara, you've been a very big part of that.

Sara Furber -- Chief Financial Officer

And I totally -- I mean, just building upon what you said, I think our ambition provided that we think the strategic fit for these types of acquisitions is strong. We have ambition that isn't limited to just bolt-on acquisitions, but we also have an extreme focus on being disciplined, particularly financially. So, we've talked about financial metrics and the framework that matters to us. But we think the strategy, the culture, the expansion, particularly around client networks, are important.

And financially, we're looking at acquisitions that really amplify what we're doing. So, were accretive to our earnings within a couple of years and either helping accelerate growth or profitability. So, I think that combination that Billy said is we are an ambitious company, but we want to build the credibility to do things well, and then we're going to be very disciplined about how we look at it. A great question, important topic.

Thank you.

Kyle Voigt -- Analyst

Thank you.

Operator

Thank you. One moment for the next question. And our next question will be coming from the line of Michael Cyprys of Morgan Stanley. Your line is open.

Michael Cyprys -- Analyst

Hey. Thanks for squeezing me in here. Billy, you talked about emerging markets that's going to be a larger part of the growth story for Tradeweb. Can you just talk about some of the initiatives and steps you're thinking about taking there to accelerate growth? How do you see this part of the business contributing over time and what sort of products/countries you think could be most meaningful?

Billy Hult -- Chief Executive Officer

Yeah. Absolutely. Good question. So, like, you know, big believers in sort of start with strength, and that's been -- from the beginning, as we thought about the EM world, that's been kind of start with what we're good at.

So, we wanted to start with, you know, the EM swaps, the EM rates world. But I think, you know, as we've done really well there, obviously, we are pretty focused on building out our presence in EM credit where we see some of the same tenants that we saw in the U.S. around an appetite for competition in the space. So, in an overall way, I would say we see our kind of emerging markets business as a multiproduct offering across rates and credit, period.

And so, our emerging markets business is now -- I think it's run-rating at a little bit over 60 million annually, and those revenues were up about 85% year over year. So, feeling good about the progress that we've made there but obviously seeing, you know, a lot more possibility and potential in both the rates world in terms of electronifying that swaps world, plus I think the ability to deliver innovation and efficiency specifically speaking kind of in credit. That EM, we call it like that sort of like hard local currency, provided close to 10% of that total EM revenue growth in '24. So, plenty of room for us to go there and confidence that we're kind of on the right track.

When we think about that sort of total addressable revenue opportunity, you know, we see the overall kind of EM wallet as well over $1 billion. And so, those are big headline kind of numbers for us there. I think 20% of it is around that kind of EM interest rate swap business, maybe 40% of it comes from EM cash, and then the rest of it kind of can come from that kind of China bond world. But it's a very big opportunity.

It's something that as a company -- again, I use the word focus -- as a company we are focused on. We feel like we've made a lot of progress already on the swaps side and the rates side there, big continued push for us into EM credit. And good question and thank you for asking it.

Michael Cyprys -- Analyst

Great. Thank you.

Billy Hult -- Chief Executive Officer

Yeah.

Operator

Thank you so much. We've run over on the call, and we'd now like to turn the call over to Billy Hult for closing remarks. Please go ahead.

Billy Hult -- Chief Executive Officer

Sure. Thank you all very much for joining us this morning. Great questions. As always, if you have any follow-up questions, please feel free to reach out to our great team, Ashley, Sameer.

Have a great day. Enjoy the second feature of the movie. Thank you.

Operator

[Operator signoff]

Duration: 0 minutes

Call participants:

Ashley Serrao -- Head of Treasury, FP&A, and Investor Relations

Billy Hult -- Chief Executive Officer

Sara Furber -- Chief Financial Officer

Christopher Allen -- Analyst

Ben Budish -- Analyst

Alex Blostein -- Analyst

Dan Fannon -- Analyst

Craig Siegenthaler -- Analyst

Alex Kramm -- Analyst

Patrick Moley -- Analyst

Jeff Schmitt -- Analyst

Kyle Voigt -- Analyst

Michael Cyprys -- Analyst

Mike Cyprys -- Analyst

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