MARKETAXESS HOLDINGS INC false 0001278021 0001278021 2024-08-06 2024-08-06

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

Current Report

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 6, 2024

 

 

MarketAxess Holdings Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

 

Delaware   001-34091   52-2230784

(State or other jurisdiction

of incorporation)

  

(Commission

File Number)

  

(IRS Employer

Identification No.)

55 Hudson Yards

New York, New York 10001

(Address of principal executive offices, including zip code)

(212) 813-6000

(Registrant’s telephone number, including area code)

Not applicable

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

  

Trading
Symbol(s)

  

Name of each exchange

on which registered

Common Stock, par value $0.003 per share   MKTX   NASDAQ Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

Item 2.02

Results of Operations and Financial Condition

On August 6, 2024, MarketAxess Holdings Inc. (the “Company”) issued a press release announcing the Company’s financial results for its second quarter ended June 30, 2024. A copy of this press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

The information included in this Current Report on Form 8-K (including Exhibit 99.1 hereto) that is furnished pursuant to this Item 2.02 shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. In addition, the information included in this Current Report on Form 8-K (including Exhibit 99.1 hereto) that is furnished pursuant to this Item 2.02 shall not be incorporated by reference into any filing of the Registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference into such filing.

 

Item 8.01

Other Events

Declaration of Dividend

On August 6, 2024, the Company announced that its Board of Directors has declared a regular quarterly dividend to be paid to the holders of the outstanding shares of capital stock. A cash dividend of $0.74 per share of common stock outstanding will be paid on September 4, 2024 to stockholders of record as of the close of business on August 21, 2024.

Share Repurchase Program

On August 6, 2024, the Company also announced that its Board of Directors approved the authorization of a new share repurchase program under which the Company may purchase up to $200.0 million of its common stock (the “Share Repurchase Program”) in addition to the $50.0 million remaining under its existing share repurchase program.

Pursuant to the Share Repurchase Program, the Company may repurchase its 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 Share Repurchase Program will be conducted in compliance with applicable legal requirements and the manner, timing and amount of any purchase will be based on an evaluation of market conditions, stock price and other factors. The Share Repurchase Program has no termination date, may be suspended or discontinued at any time and does not obligate the Company to acquire any amount of common stock.

 

Item 9.01

Financial Statements and Exhibits

(d) Exhibits:

 

99.1    Press Release issued by MarketAxess Holdings Inc. on August 6, 2024.
104    Cover Page Interactive File (the cover page tags are embedded within the Inline XBRL document).

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    MARKETAXESS HOLDINGS INC.
Date: August 6, 2024     By:  

/s/ Ilene Fiszel Bieler

    Name:   Ilene Fiszel Bieler
    Title:   Chief Financial Officer

Exhibit 99.1

 

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MarketAxess Reports Second Quarter 2024 Financial Results

Revenue Growth of 10% Driven by Growth in Total Credit ADV and Pragma Revenues

Second Strongest Quarter for Total Credit ADV with Strong Growth Across Most Products

Record Eurobonds ADV, Portfolio Trading Volume and Muni Bond Estimated Market Share

Board Increases Share Repurchase Authorization to $250 Million

 

NEW YORK | August 6, 2024 - MarketAxess Holdings Inc. (Nasdaq: MKTX), the operator of a leading electronic trading platform for fixed-income securities, today announced financial results for the second quarter ended June 30, 2024.

 

2Q24 select financial and operational highlights*

 

•  Total revenues of $197.7 million, up 10%, includes Pragma revenues of $7.9 million and an increase of approximately $0.3 million from the impact of foreign currency fluctuations.

 

•  Strong geographic and product/protocol diversification with 16% growth across emerging markets, Eurobonds and municipals commission revenue helping to offset a decrease in U.S. high-yield trading activity, driven by lower credit spread volatility.

 

•  Record portfolio trading volume of $55.0 billion.1

 

•  22% increase in services revenue (combined information, post-trade and technology services revenue) to $26.0 million, includes record information services revenue and an increase of approximately $2.9 million from Pragma revenues.

 

•  Total expenses of $116.3 million, up 12%, includes Pragma operating expenses of $7.8 million and an increase of approximately $0.2 million from the impact of foreign currency fluctuations.

 

•  Diluted earnings per share (“EPS”) of $1.72 on net income of $64.9 million, compared to EPS of $1.59 on net income of $59.9 million. The prior year quarter included a negative $0.04 per diluted share impact from foreign currency transaction losses and unrealized losses on investments.

 

•  Record 2,119 (+2%) active client firms, 1,626 (+1%) active U.S. credit client firms, record 1,076 (+2%) international active client firms and 1,167 (+4%) active client firms trading three or more products.

 

•  Record automation suite trade count (+37%) and record active client firms (+70%); automation suite trading volume up 21% and dealer algorithmic responses up 38%.

   

Chris Concannon, CEO of MarketAxess, commented:

 

“In the second quarter, we continued to execute our strategy and delivered solid financial results and continued expense and capital discipline. Our strong free cash flow generation model gives us the flexibility to invest for growth and return capital to investors. We repurchased $50 million in shares year-to-date, and our Board approved a new share repurchase authorization of $200 million.

 

The international roll-out of X-Pro and the launch of the next phase of our high-touch strategy is expected to occur late in the third quarter and will include initial elements of AI dealer select functionality. Our announcement yesterday to connect our liquidity pools with ICE Bonds to drive greater efficiency and liquidity in the Municipal and corporate bond markets is a great example of how we are leveraging connectivity to drive future growth.

 

In summary, we made significant progress in executing our strategy in the second quarter, and we believe the strategic priorities we have established will drive increased market share and higher levels of revenue growth for shareholders in the future.”

•  In August 2024, the Board of Directors authorized a new share repurchase program for up to $200.0 million of the Company’s common stock. This program is in addition to the $50.0 million currently remaining under the Company’s existing program for a current aggregate outstanding authorization of $250.0 million.

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*

All comparisons versus 2Q23 unless otherwise noted.

Table 1: 2Q24 select financial results

 

5 in millions, except per share data

(unaudited)

    Revenues     Operating Income     Net Income     Diluted EPS     Net Income
Margin (%)		     EBITDA4     EBITDA
Margin (%)4		  

2Q24

    $ 198     $ 81     $ 65     $ 1.72       32.9 %    $ 99       50.0 % 

2Q23

    $ 180     $ 76     $ 60     $ 1.59       33.3 %    $ 91       50.4 % 

% Change

      10 %      7 %      8 %      8 %      (40 ) bps      9 %      (40 ) bps 

YTD 2024

    $ 408     $ 174     $ 138     $ 3.64       33.7 %    $ 208       51.0 % 

YTD 2023

    $ 383     $ 171     $ 133     $ 3.55       34.9 %    $ 201       52.5 % 

% Change

      7 %      2 %      3 %      3 %      (120 ) bps      3 %      (150 ) bps 

Table 1A: 2Q24 trading volume (ADV)

 

                CREDIT     RATES  

$ in millions

(unaudited)

   US/UK Trading
Days5		     Total
ADV		     Total
Credit		     High-Grade     High-Yield     Emerging
Markets		     Eurobonds     Municipal
Bonds		     Total
Rates		     US Govt.
Bonds		     Agcy./Other
Govt. Bonds		  

2Q24

     63/61     $ 34,169     $ 13,743     $ 6,436     $ 1,337     $ 3,337     $ 2,103     $ 522     $ 20,426     $ 19,634     $ 792  

2Q23

     62/60     $ 27,828     $ 12,226     $ 5,697     $ 1,474     $ 2,714     $ 1,942     $ 389     $ 15,602     $ 15,163     $ 439  

% Change

       23 %      12 %      13 %      (9 %)      23 %      8 %      34 %      31 %      29 %      80 % 

Table 1B: 2Q24 estimated market share

 

     CREDIT     RATES  

(unaudited)

    High-Grade     High-Yield     High-Grade/High-Yield
Combined		     Municipals1     US Govt.
Bonds1		  

2Q24

      18.7 %      13.5 %      17.6 %      7.4 %      2.3 % 

2Q23

      20.7 %      16.5 %      19.7 %      5.4 %      2.1 % 

Bps Change

      (200 ) bps      (300 ) bps      (210 ) bps      +200  bps      +20  bps 

2Q24 overview of results

Commission revenue and trading volume

Credit

Credit Commission Revenue

 

  •  

Total credit commission revenue of $160.8 million (including $33.2 million in fixed-distribution fees) increased $6.8 million, or 4%, compared to $154.0 million (including $35.3 million in fixed-distribution fees) in the prior year. The increase in total credit commission revenue was driven principally by higher emerging markets, U.S. high-grade and Eurobonds commission revenue. Strong growth in these products was partially offset by lower U.S. high-yield commission revenue on lower credit spread volatility. The decline in variable transaction fees per million (“FPM”) to $148.16 from $157.42 in the prior year was mainly due to product and protocol mix-shift, principally lower levels of U.S. high-yield activity and increased portfolio trading. The decrease in fixed-distribution fees was principally driven by the consolidation of two global dealers and migrations to variable fee plans, partially offset by the addition of new dealer fixed fee plans.

 

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Credit Trading Volumes

 

  •  

Strong growth in total credit average daily volume (“ADV”) to $13.7 billion, up 12%. Record $55.0 billion in total portfolio trading volume, up 143% compared to the prior year, and up 24% from 1Q24.1

 

  •  

34% Open Trading share2 of total credit trading volume, in line with the prior year. The Company delivered estimated price improvement3 via Open Trading of approximately $110 million in the quarter.

U.S. Credit

 

  •  

U.S. high-grade ADV of $6.4 billion, up 13% on a 25% increase in estimated market ADV. Estimated market share was 18.7% (19.2% including single-dealer portfolio trades),6 down from 20.7% (20.8% including single-dealer portfolio trades).6

 

  •  

U.S. high-yield ADV of $1.3 billion, down 9%, with estimated market share of 13.5% (13.8% including single-dealer portfolio trades),6 down from 16.5% (16.6% including single-dealer portfolio trades).6 U.S. high-yield estimated market ADV increased 11%. We believe the decrease in U.S. high-yield estimated market share year-over-year was driven, in part, by lower levels of credit spread volatility and a greater focus on the new issue calendar by our long-only client segment.

 

  •  

Lower levels of credit spread volatility drove an estimated 37% decrease in ETF market maker client activity on the platform.

 

  •  

U.S. high-yield new issuance was $77.9 billion, up 44% from the prior year.

Other credit

 

  •  

Emerging markets ADV of $3.3 billion, up 23%, with strong regional contribution across the LATAM, EMEA and APAC regions. The increase was driven by a 26% increase in hard currency ADV, and a 17% increase in local markets ADV.

 

  •  

Record $4.7 billion in emerging markets portfolio trading volume.

 

  •  

Record Eurobonds ADV of $2.1 billion, up 8%.

 

  •  

Municipal bond ADV of $522 million, up 34%, with estimated market ADV down 2%. Record estimated market share of 7.4%, up from 5.4% in the prior year.1

Strategic priority related protocols & workflow tools

 

  •  

A record 56% of our portfolio trading volume was executed on X-Pro.

 

  •  

Dealer RFQ ADV of $1.2 billion across all credit products increased 27%.

 

  •  

AxessIQ, the order and execution workflow solution designed for wealth management and private banking clients, achieved ADV of $135 million, up 22% from the prior year.

Rates

 

  •  

Total rates commission revenue of $5.8 million increased $1.2 million, or 25%. A 31% increase in total rates ADV to $20.4 billion was partially offset by a 5% decrease in FPM to $4.45 due to mix, compared to $4.70 in the prior year.

 

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Other

 

  •  

Total other commission revenue was $5.1 million, which consists of Pragma commission revenue.

Services revenue

Information services

 

  •  

Information services revenue of $12.5 million increased $0.9 million, or 8%, compared to the prior year. The increase in revenue was principally driven by net new data contract revenue.

Post-trade services

 

  •  

Post-trade services revenue of $10.4 million increased $1.0 million, or 10%, compared to the prior year mainly due to the impact of price increases and net new contract revenue.

Technology services

 

  •  

Total technology services revenue of $3.0 million, up from $0.2 million in the prior year. The current quarter includes $2.9 million of Pragma revenue.

Expenses

 

  •  

Total expenses of $116.3 million, up 12%, includes Pragma operating expenses of $7.8 million and an increase of $0.2 million from the impact of foreign currency fluctuations.

Non-operating

 

  •  

Other income (expense): Other income was $5.0 million, up from $3.2 million in the prior year. The current quarter included interest income of $6.4 million driven by higher interest rates, partially offset by a $1.0 million net foreign currency transaction loss. The prior year period included a $1.3 million net foreign currency transaction loss and a $0.8 million unrealized loss on U.S. Treasury investments, which had a negative $0.04 per diluted share impact in the quarter.

 

  •  

Tax rate: The effective tax rate was 24.8%, up from 24.2% in the prior year.

Capital

 

  •  

The Company had $558.8 million in cash, cash equivalents, corporate bond investments and U.S. Treasury investments as of June 30, 2024. There were no outstanding borrowings under the Company’s credit facility.

 

  •  

In August 2024, the Board of Directors authorized a new share repurchase program for up to $200.0 million of the Company’s common stock.

 

  •  

Year-to-date through July 2024, a total of 242,890 shares were repurchased at a cost of $50.0 million, including 164,411 shares repurchased during the second quarter at a cost of $33.5 million. As of August 6, 2024, an aggregate of $250.0 million remained under the current authorizations by the Company’s Board of Directors.

 

  •  

The Board declared a quarterly cash dividend of $0.74 per share, payable on September 4, 2024 to stockholders of record as of the close of business on August 21, 2024.

 

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Other

 

  •  

Employee headcount was 864 as of June 30, 2024, down from 881 as of December 31, 2023, but up from 803 as of June 30, 2023.

 

1 

See “General Notes Regarding the Data Presented” below.

2

Open Trading share of total credit trading volume is derived by taking total Open Trading volume across all credit products where Open Trading is offered and dividing by total credit trading volume across all credit products where Open Trading is offered.

3

Estimated price improvement consists of estimated liquidity taker price improvement (defined as the difference between the winning price and the best disclosed dealer cover price) and estimated liquidity provider price improvement (defined as the difference between the winning price and then current Composite+ bid or offer level, offer if the provider is buying, bid if provider is selling) at the time of the inquiry.

4

EBITDA and EBITDA margin are non-GAAP financial measures. Refer to “Non-GAAP financial measures and other items” for a discussion of these non-GAAP financial measures.

5 

The number of U.S. trading days is based on the SIFMA holiday recommendation calendar and the number of U.K. trading days is based primarily on the U.K. bank holiday schedule.

6 

The Company is highlighting the impact of single-dealer portfolio trading volume on U.S. high-grade and U.S. high-yield trading volume and estimated market share, but will continue to exclude single-dealer portfolio trading activity from each product’s aggregated trading volume and estimated market share and the total credit FPM calculation.

Non-GAAP financial measures and other items

To supplement the Company’s unaudited financial statements presented in accordance with generally accepted accounting principles (“GAAP”), the Company uses certain non-GAAP measures of financial performance, including earnings before interest, taxes, depreciation and amortization (“EBITDA”), EBITDA margin and free cash flow. We define EBITDA margin as EBITDA divided by revenues. We define free cash flow as net cash provided by/(used in) operating activities excluding the net change in trading investments and net change in securities failed-to-deliver and securities failed-to-receive from broker-dealers, clearing organizations and customers, less expenditures for furniture, equipment and leasehold improvements and capitalized software development costs. The Company believes that these non-GAAP financial measures, when taken into consideration with the corresponding GAAP financial measures, provide additional information regarding the Company’s operating results because they assist both investors and management in analyzing and evaluating the performance of our business. See the attached schedule for a reconciliation of GAAP net income to EBITDA, GAAP net income margin to EBITDA margin and GAAP net cash provided by/(used in) operating activities to free cash flow.

Please refer to Tables 6 & 7 for a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP measures.

Webcast and conference call information

Chris Concannon, Chief Executive Officer, Richard Schiffman, Global Head of Trading Solutions, and Ilene Fiszel Bieler, Chief Financial Officer will host a conference call to discuss the Company’s financial results and outlook on Tuesday, August 6, 2024 at 10:00 a.m. ET. To access the conference call, please dial 646-307-1963 (U.S./International) and use the ID 1832176. The Company will also host a live audio Webcast of the conference call on the Investor Relations section of the Company’s website at http://investor.marketaxess.com. The Webcast will be archived on http://investor.marketaxess.com for 90 days following the announcement.

General Notes Regarding the Data Presented

Reported MarketAxess volume in all product categories includes only fully electronic trading volume. MarketAxess trading volumes and the Financial Industry Regulatory Authority (“FINRA”) Trade Reporting and Compliance Engine (“TRACE”) reported volumes are available on the Company’s website at investor.marketaxess.com/volume.

Due to variances in how portfolio trading market participants utilized the portfolio trading TRACE “flag,” the Company previously used its own internal methodology for calculating portfolio trading as an estimated percentage of TRACE volume and the Company’s estimated market share. The Company is reviewing recent improvements in the TRACE data, but it now believes that the portfolio trading TRACE “flag” more accurately reflects the true size of the portfolio trading market. As such, at this time, the Company is not presenting portfolio trading as an estimated percentage of TRACE volume or the Company’s portfolio trading estimated market share for the second quarter of 2024.

 

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In addition, for periods beginning with January 2024, the Company has made changes to the market volume data used to calculate estimated market share for Municipal and U.S. Government Bonds. For Municipal Bonds, the Company previously used estimates, derived from data issued by the Municipal Securities Rule Making Board (“MSRB”), including estimates for new issuance, commercial paper and variable-rate trading activity, and excluded these volumes from the estimated market volume data. While the Company still uses estimates, the new methodology for identifying and excluding these volumes from the market volume data is now based on MSRB “flags” to identify new issuance, commercial paper, and variable-rate volumes. For U.S. Government Bonds, the previous data source for estimated market volumes was the Federal Reserve Bank’s Reported Primary Dealer U.S. Treasury Bond Trading Volumes, which was reported on a one-week lag. The new source for U.S. Government Bond trading volumes is FINRA’s U.S. Treasury TRACE data. The Company believes that the refined methodology used for Municipal Bonds, and the new data source for U.S. Government Bonds, provides more accurate measures of estimated market volumes and estimated market share. Prior comparable periods have been recast retrospectively for both Municipal and U.S. Government Bonds to conform to the updated presentation of the data. The new estimated market volume data is also available on the Company’s website at investor.marketaxess.com/volume.

Cautionary Note Regarding Forward-Looking Statements

This press release may contain forward-looking statements, including statements about the outlook and prospects for the Company, product/protocol availability and ability to increase estimated market share, market conditions and industry growth, as well as statements about the Company’s future financial and operating performance. These and other statements that relate to future results and events are based on MarketAxess’ current expectations. The Company’s actual results in future periods may differ materially from those currently expected or desired because of a number of risks and uncertainties, including: global economic, political and market factors; the level of trading volume transacted on the MarketAxess platform; the rapidly evolving nature of the electronic financial services industry; the level and intensity of competition in the fixed-income electronic trading industry and the pricing pressures that may result; the variability of our growth rate; our ability to introduce new fee plans and our clients’ response; our ability to attract clients or adapt our technology and marketing strategy to new markets; risks related to our growing international operations; our dependence on our broker-dealer clients; the loss of any of our significant institutional investor clients; our exposure to risks resulting from non-performance by counterparties to transactions executed between our clients in which we act as an intermediary in matched principal trades; risks related to self-clearing; risks related to sanctions levied against states or individuals that could expose us to operational or regulatory risks; the effect of rapid market or technological changes on us and the users of our technology; our dependence on third-party suppliers for key products and services; our ability to successfully maintain the integrity of our trading platform and our response to system failures, capacity constraints and business interruptions; the occurrence of design defects, errors, failures or delays with our platforms, products or services; our vulnerability to malicious cyber-attacks and attempted cybersecurity breaches; our actual or perceived failure to comply with privacy and data protection laws; our ability to protect our intellectual property rights or technology and defend against intellectual property infringement or other claims; our ability to enter into strategic alliances and to acquire other businesses and successfully integrate them with our business; our dependence on our management team and our ability to attract and retain talent; limitations on our flexibility because we operate in a highly regulated industry; the increasing government regulation of us and our clients; risks related to the divergence of U.K. and European Union legal and regulatory requirements following the U.K.’s exit from the European Union; our exposure to costs and penalties related to our extensive regulation; our risks of litigation and securities laws liability; adverse effects as a result of climate change or other ESG risks that could affect our reputation; our future capital needs and our ability to obtain capital when needed; limitations on our operating flexibility contained in our credit agreement; our exposure to financial institutions by holding cash in excess of federally insured limits; and other factors. The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. More information about these and other factors affecting MarketAxess’ business and prospects is contained in MarketAxess’ periodic filings with the Securities and Exchange Commission and can be accessed at www.marketaxess.com.

 

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About MarketAxess

MarketAxess (Nasdaq: MKTX) operates a leading electronic trading platform that delivers greater trading efficiency, a diversified pool of liquidity and significant cost savings to institutional investors and broker-dealers across the global fixed-income markets. Over 2,000 firms leverage MarketAxess’ patented technology to efficiently trade fixed-income securities. Our automated and algorithmic trading solutions, combined with our integrated and actionable data offerings, help our clients make faster, better-informed decisions on when and how to trade on our platform. MarketAxess’ award-winning Open Trading® marketplace is widely regarded as the preferred all-to-all trading solution in the global credit markets. Founded in 2000, MarketAxess connects a robust network of market participants through an advanced full trading lifecycle solution that includes automated trading solutions, intelligent data and index products and a range of post-trade services. Learn more at www.marketaxess.com and on X @MarketAxess.

# # #

 

 

 

Contacts   
INVESTOR RELATIONS    MEDIA RELATIONS

Stephen Davidson

MarketAxess Holdings Inc.

+1 212 813 6313

sdavidson2@marketaxess.com

   

Marisha Mistry

MarketAxess Holdings Inc.

+1 917 267 1232

mmistry@marketaxess.com

 

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Table 2: Consolidated Statements of Operations 

 

     Three Months Ended     Six Months Ended  
     June 30,     June 30,  

In thousands, except per share data (unaudited)

    2024     2023     %
Change		     2024     2023     %
Change		  

Revenues

             

Commissions

    $ 171,679     $ 158,586       8 %    $ 356,552     $ 340,577       5 % 

Information services

      12,544       11,655       8       24,425       22,665       8  

Post-trade services

      10,400       9,415       10       21,130       19,395       9  

Technology services

      3,037       190       NM       5,871       378       NM  
  

 

 

    

 

 

      

 

 

    

 

 

    

Total revenues

      197,660       179,846       10       407,978       383,015       7  
  

 

 

    

 

 

      

 

 

    

 

 

    

Expenses

             

Employee compensation and benefits

      56,790       48,383       17       118,054       100,698       17  

Depreciation and amortization

      18,356       17,005       8       36,556       33,466       9  

Technology and communications

      17,771       15,235       17       34,822       30,234       15  

Professional and consulting fees

      7,669       8,023       (4 )      14,064       15,150       (7 ) 

Occupancy

      3,714       3,199       16       7,139       6,810       5  

Marketing and advertising

      3,010       3,308       (9 )      4,843       6,303       (23 ) 

Clearing costs

      4,122       4,182       (1 )      9,033       8,727       4  

General and administrative

      4,889       4,784       2       9,628       10,544       (9 ) 
  

 

 

    

 

 

      

 

 

    

 

 

    

Total expenses

      116,321       104,119       12       234,139       211,932       10  
  

 

 

    

 

 

      

 

 

    

 

 

    

Operating income

      81,339       75,727       7       173,839       171,083       2  

Other income (expense)

             

Interest income

      6,401       5,312       21       12,374       9,561       29  

Interest expense

      (621 )      (53 )      NM       (937 )      (183 )      412  

Equity in earnings of unconsolidated affiliate

      354       250       42       724       454       59  

Other, net

      (1,136 )      (2,286 )      (50 )      (2,946 )      (3,770 )      (22 ) 
  

 

 

    

 

 

      

 

 

    

 

 

    

Total other income (expense)

      4,998       3,223       55       9,215       6,062       52  
  

 

 

    

 

 

      

 

 

    

 

 

    

Income before income taxes

      86,337       78,950       9       183,054       177,145       3  

Provision for income taxes

      21,399       19,091       12       45,501       43,658       4  
  

 

 

    

 

 

      

 

 

    

 

 

    

Net income

    $ 64,938     $ 59,859       8     $ 137,553     $ 133,487       3  
  

 

 

    

 

 

      

 

 

    

 

 

    

Per Share Data:

             

Net income per common share

             

Basic

    $ 1.72     $ 1.60       $ 3.65     $ 3.56    

Diluted

    $ 1.72     $ 1.59       $ 3.64     $ 3.55    

Cash dividends declared per common share

    $ 0.74     $ 0.72       $ 1.48     $ 1.44    

Weighted-average common shares:

             

Basic

      37,655       37,485         37,698       37,482    

Diluted

      37,689       37,588         37,740       37,617    

NM - not meaningful

 

Page 8

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Table 3: Commission Revenue Detail

In thousands, except fee per million data    Three Months Ended June 30,     Six Months Ended June 30,  

(unaudited)

    2024      2023      % Change     2024      2023     % Change  

Variable transaction fees

                

Credit

    $ 127,645      $ 118,710        8 %    $ 269,149      $ 259,680       4 % 

Rates

      5,719        4,547        26       10,885        10,805       1  

Other

      5,076        —         NM       9,925        —        NM  
  

 

 

     

 

 

       

 

 

     

 

 

    

Total variable transaction fees

      138,440        123,257        12       289,959        270,485       7  
  

 

 

     

 

 

       

 

 

     

 

 

    

Fixed distribution fees

                

Credit

      33,177        35,268        (6 )      66,465        69,952       (5 ) 

Rates

      62        61        2       128        140       (9 ) 
  

 

 

     

 

 

       

 

 

     

 

 

    

Total fixed distribution fees

      33,239        35,329        (6 )      66,593        70,092       (5 ) 
  

 

 

     

 

 

       

 

 

     

 

 

    

Total commission revenue

    $ 171,679      $ 158,586        8     $ 356,552      $ 340,577       5  
  

 

 

     

 

 

       

 

 

     

 

 

    

Average variable transaction fee per million

                

Credit

    $ 148.16      $ 157.42        (6 )%    $ 151.25      $ 161.43       (6 )% 

Rates

      4.45        4.70        (5 )      4.61        4.35       6  
Table 4: Trading Volume Detail*                                        
     Three Months Ended June 30,  

In millions (unaudited)

    2024      2023      % Change  
     Volume      ADV      Volume     ADV      Volume     ADV  

Credit

                

High-grade

    $ 405,440      $ 6,436      $ 353,239     $ 5,697        15 %      13 % 

High-yield

      84,248        1,337        91,390       1,474        (8 )      (9 ) 

Emerging markets

      210,205        3,337        168,257       2,714        25       23  

Eurobonds

      128,266        2,103        116,495       1,942        10       8  

Other credit

      33,376        530        24,729       399        35       33  
  

 

 

     

 

 

     

 

 

    

 

 

       

Total credit trading

      861,535        13,743        754,110       12,226        14       12  
  

 

 

     

 

 

     

 

 

    

 

 

       

Rates

                

U.S. government bonds

      1,236,917        19,634        940,127       15,163        32       29  

Agency and other government bonds

      48,506        792        26,721       439        82       80  
  

 

 

     

 

 

     

 

 

    

 

 

       

Total rates trading

      1,285,423        20,426        966,848       15,602        33       31  
  

 

 

     

 

 

     

 

 

    

 

 

       

Total trading

    $ 2,146,958      $ 34,169      $ 1,720,958     $ 27,828        25       23  
  

 

 

     

 

 

     

 

 

    

 

 

       

Number of U.S. Trading Days1

         63          62       

Number of U.K. Trading Days2

         61          60       
     Six Months Ended June 30,  

In millions (unaudited)

    2024      2023      % Change  
     Volume      ADV      Volume     ADV      Volume     ADV  

Credit

                

High-grade

    $ 861,438      $ 6,947      $ 745,954     $ 6,016        15 %      15 % 

High-yield

      169,627        1,368        214,263       1,728        (21 )      (21 ) 

Emerging markets

      431,632        3,481        360,098       2,904        20       20  

Eurobonds

      257,115        2,074        234,861       1,894        9       10  

Other credit

      59,705        481        53,412       430        12       12  
  

 

 

     

 

 

     

 

 

    

 

 

       

Total credit trading

      1,779,517        14,351        1,608,588       12,972        11       11  
  

 

 

     

 

 

     

 

 

    

 

 

       

Rates

                

U.S. government bonds

      2,282,713        18,409        2,431,419       19,608        (6 )      (6 ) 

Agency and other government bonds

      80,132        646        53,782       434        49       49  
  

 

 

     

 

 

     

 

 

    

 

 

       

Total rates trading

      2,362,845        19,055        2,485,201       20,042        (5 )      (5 ) 
  

 

 

     

 

 

     

 

 

    

 

 

       

Total trading

    $ 4,142,362      $ 33,406      $ 4,093,789     $ 33,014        1       1  
  

 

 

     

 

 

     

 

 

    

 

 

       

Number of U.S. Trading Days1

         124          124       

Number of U.K. Trading Days2

         124          124       

 

1

The number of U.S. trading days is based on the SIFMA holiday recommendation calendar.

2

The number of U.K. trading days is based on the U.K. Bank holiday schedule.

*

Consistent with FINRA TRACE reporting standards, both sides of trades are included in the Company’s reported volumes when the Company executes trades on a matched principal basis between two counterparties. Consistent with industry standards, U.S. government bond trades are single-counted.

NM - not meaningful

 

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Table 5: Consolidated Condensed Balance Sheet Data 

 

     As of  

In thousands (unaudited)

    June 30,
2024		     December 31,
2023		  

Assets

     

Cash and cash equivalents

    $ 434,063     $ 451,280  

Cash segregated under federal regulations

      46,141       45,122  

Investments, at fair value

      135,908       134,861  

Accounts receivable, net

      92,350       89,839  

Receivables from broker-dealers, clearing organizations and customers

      577,992       687,936  

Goodwill

      236,706       236,706  

Intangible assets, net of accumulated amortization

      108,420       119,108  

Furniture, equipment, leasehold improvements and capitalized software, net

      108,802       102,671  

Operating lease right-of-use assets

      60,500       63,045  

Prepaid expenses and other assets

      85,831       84,499  
  

 

 

    

 

 

  

Total assets

    $ 1,886,713     $ 2,015,067  
  

 

 

    

 

 

  

Liabilities and stockholders’ equity

     

Liabilities

     

Accrued employee compensation

    $ 41,002     $ 60,124  

Payables to broker-dealers, clearing organizations and customers

      392,846       537,398  

Securities sold, not yet purchased, at fair value

      9,167       —   

Income and other tax liabilities

      2,058       7,892  

Accounts payable, accrued expenses and other liabilities

      36,338       37,013  

Operating lease liabilities

      76,081       79,677  
  

 

 

    

 

 

  

Total liabilities

      557,492       722,104  
  

 

 

    

 

 

  

Stockholders’ equity

     

Common stock

      123       123  

Additional paid-in capital

      335,641       333,292  

Treasury stock

      (302,455 )      (260,298 ) 

Retained earnings

      1,325,139       1,244,216  

Accumulated other comprehensive loss

      (29,227 )      (24,370 ) 
  

 

 

    

 

 

  

Total stockholders’ equity

      1,329,221       1,292,963  
  

 

 

    

 

 

  

Total liabilities and stockholders’ equity

    $ 1,886,713     $ 2,015,067  
  

 

 

    

 

 

  

 

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Table 6: Reconciliation of Net Income to EBITDA and Net Income Margin to EBITDA Margin 

 

     Three Months Ended
June 30,		     Six Months Ended
June 30,		  

In thousands (unaudited)

    2024     2023     2024     2023  

Net income

    $ 64,938     $ 59,859     $ 137,553     $ 133,487  

Add back:

         

Interest income

      (6,401 )      (5,312 )      (12,374 )      (9,561 ) 

Interest expense

      621       53       937       183  

Provision for income taxes

      21,399       19,091       45,501       43,658  

Depreciation and amortization

      18,356       17,005       36,556       33,466  
  

 

 

    

 

 

    

 

 

    

 

 

  

EBITDA

    $ 98,913     $ 90,696     $ 208,173     $ 201,233  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net income margin1

      32.9 %      33.3 %      33.7 %      34.9 % 

Add back:

         

Interest income

      (3.2 )      (3.0 )      (3.0 )      (2.5 ) 

Interest expense

      0.3       —        0.2       —   

Provision for income taxes

      10.7       10.6       11.1       11.4  

Depreciation and amortization

      9.3       9.5       9.0       8.7  
  

 

 

    

 

 

    

 

 

    

 

 

  

EBITDA margin2

      50.0 %      50.4 %      51.0 %      52.5 % 
  

 

 

    

 

 

    

 

 

    

 

 

  
Table 7: Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow

 

     Three Months Ended
June 30,		     Six Months Ended
June 30,		  

In thousands (unaudited)

    2024     2023     2024     2023  

Net cash (used in)/provided by operating activities

    $ 118,849     $ 105,394     $ 113,900     $ 112,921  

Exclude: Net change in trading investments

      100       (890 )      (155 )      (471 ) 

Exclude: Net change in fail-to-deliver/receive from broker-dealers, clearing organizations and customers

      (3,151 )      (46,010 )      48,137       757  

Less: Purchases of furniture, equipment and leasehold improvements

      (7,695 )      (1,055 )      (8,892 )      (1,272 ) 

Less: Capitalization of software development costs

      (10,496 )      (11,025 )      (24,459 )      (21,715 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Free cash flow

    $ 97,607     $ 46,414     $ 128,531     $ 90,220  
  

 

 

    

 

 

    

 

 

    

 

 

  

 

1

Net income margin is derived by dividing net income by total revenues for the applicable period.

2 

EBITDA margin is derived by dividing EBITDA by total revenues for the applicable period.

 

Page 11

v3.24.2.u1
Document and Entity Information
Aug. 06, 2024
Cover [Abstract]  
Entity Registrant Name MARKETAXESS HOLDINGS INC
Amendment Flag false
Entity Central Index Key 0001278021
Document Type 8-K
Document Period End Date Aug. 06, 2024
Entity Incorporation State Country Code DE
Entity File Number 001-34091
Entity Tax Identification Number 52-2230784
Entity Address, Address Line One 55 Hudson Yards
Entity Address, City or Town New York
Entity Address, State or Province NY
Entity Address, Postal Zip Code 10001
City Area Code (212)
Local Phone Number 813-6000
Written Communications false
Soliciting Material false
Pre Commencement Tender Offer false
Pre Commencement Issuer Tender Offer false
Security 12b Title Common Stock, par value $0.003 per share
Trading Symbol MKTX
Security Exchange Name NASDAQ
Entity Emerging Growth Company false
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