Tradeweb Markets (TW) delivered a quarter in which the headline undersells the operating story. Adjusted EPS of $1.02 matched consensus exactly, while revenue of $584.55 million beat estimates by 0.8%. Earnings grew 17.2% year over year and revenue grew 14.9%, a clear re-acceleration from roughly 9% revenue growth in the second quarter, though still short of the 21.2% pace set in the first quarter. The central tension is that volumes and market share are moving decisively in Tradeweb's favor while higher spending, persistent fee-per-million compression and a $1.97 billion acquisition limit how much of that strength reaches near-term margins and capital returns.
The quality of the quarter is mostly solid, with caveats. Average daily volume rose 22.4% to $3.2 trillion, and variable transaction revenue grew 17.6%. Rates led, with revenue up 18.2% on a 33.8% ADV increase, including a 28% jump in U.S. government bond volume and a record September for Treasury trading. Adjusted EBITDA margin widened 59 basis points to 54.5%. However, the revenue beat did not produce an EPS beat because adjusted expenses rose 13.9% (15.1% in constant currency), driven by incentive compensation, headcount and AI and data investment. GAAP net income rose only 6.8%, well below the adjusted figure, mainly because other income fell to $18.7 million from $39.4 million and included a $24.0 million unrealized loss on Canton Coin holdings. Market data revenue jumped 19.6%, but much of that reflects the amended LSEG license and the timing of data deliveries rather than organic demand.
The call showed broad improvement. Global swaps revenue grew 26% versus 13% in the second quarter, total swap share reached 25.3% from 21.8% a year earlier, and U.S. Treasury share climbed to 23.6% from 22.5% last quarter. Wholesale Treasury revenue swung to 15% growth from a 1% decline. Credit revenue growth improved to about 10% from low single digits, with institutional RFQ ADV up 30%. International revenue rose 22%. The weaker detail is monetization. Credit ADV rose 45% but credit revenue gained less than 10%, as the blended credit fee per million fell 23% on a mix shift toward portfolio trading and credit derivatives. Long-tenor swap fees fell 10.5% on compression activity and lower duration. Investors should also treat the 130-basis-point gain in high-grade electronic TRACE share with some caution, since a FINRA reporting change flattered the comparison and management said October IG share is tracking below September levels.
Looking ahead, the momentum in the fourth quarter is striking. Management said October average daily revenue is up 26% year over year, compared with low-teens growth in July and a low-single-digit decline in April. Management's tone turned openly bullish on a volatile 2027, citing central bank hikes, 10-year yields above 5.2%, and AI-capex-driven credit default swap activity. The Trumid acquisition is the largest in Tradeweb's history. It adds hedge fund relationships and new-issue credit flow, where hedge funds currently represent under 15% of Tradeweb's U.S. credit business. The costs are real. The $1.89 billion cash component absorbs most of the $2.1 billion cash balance, and buyback authorization has fallen to $124.5 million after $209.8 million of repurchases in the quarter. Net interest income is also declining. In addition, the adjusted expense guide was raised to $1.155 billion to $1.175 billion, and management again flagged more muted margin expansion. Other revenue fell 17% on lower Canton validator fees and is guided lower again.
The market had largely priced in the re-acceleration before the report. Shares rose 19.8% from the $100 open after the July report to $119.82, sit about 9.9% above the 200-day moving average, and entered earnings just 3.1% below the inter-earnings high of $123.63 set on October 26. That is a long run from the $94.29 low. Investor sentiment remains negative but improved meaningfully, rising from -0.57 to -0.35, which suggests skepticism is easing rather than turning into enthusiasm. The Earnings Whispers trend signals are mostly positive, with momentum neutral.
The bottom line is that Tradeweb's growth engine is clearly re-accelerating, driven by share gains in rates, swaps and credit, and October trends point to an even stronger fourth quarter. The in-line EPS, higher expense guidance, ongoing fee compression and the cash-heavy Trumid deal mean that bears have legitimate ammunition on margins and capital flexibility. With the stock near its highs entering the print, the volume story is well understood; the next leg depends on whether that activity translates into operating leverage and whether Trumid integrates cleanly.