MARKETAXESS HOLDINGS INC false 0001278021 0001278021 2024-11-04 2024-11-04

 

 

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): November 4, 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 November 6, 2024, MarketAxess Holdings Inc. (the “Company”) issued a press release announcing the Company’s financial results for its third quarter ended September 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 5.02

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On November 6, 2024, the Company announced that, on November 4, 2024, Mr. Richard M. McVey, our Executive Chairman of the Board of Directors (the “Board”), informed the Board that he will retire from his position and as a member of the Board, effective December 31, 2024. Mr. McVey’s retirement is not due to any disagreement with the Company.

Mr. McVey has agreed to remain as chairman of the board of directors of MarketAxess Limited (the “Subsidiary”), the Company’s international holding company, following his retirement from the Board. During such time that Mr. McVey serves as a director of the Subsidiary, he will receive an annual cash director fee of $275,000 per year and Mr. McVey’s outstanding unvested equity awards will continue to vest. Mr. McVey will remain eligible for an annual incentive for year-end 2024. Mr. McVey’s retirement is considered a termination by Mr. McVey without good reason under the Employment Agreement between Mr. McVey and the Company, dated as of January 6, 2023, and he will not receive any continued base salary, bonus payment multiple or continued healthcare coverage under such agreement.

In addition, on November 6, 2024, the Company announced that on November 4, 2024, the Board elected Mr. Carlos M. Hernandez as Chairman of the Board, effective January 1, 2025. The Board has previously determined that Mr. Hernandez is an independent director and, as such, in connection with Mr. Hernandez’s election as Chairman of the Board, Ms. Nancy Altobello, who currently serves as the Board’s Lead Independent Director, will remain on the Board, but cease serving as Lead Independent Director as of January 1, 2025.

 

Item 7.01

Regulation FD Disclosure

On November 6, 2024, the Company issued a press release announcing Mr. McVey’s retirement and Mr. Hernandez’s appointment as Chairman of the Board, effective December 31, 2024 and January 1, 2025, respectively. The press release is attached hereto as Exhibit 99.2 and is incorporated by reference into this Item 7.01.

The information included in this Current Report on Form 8-K (including Exhibit 99.2 hereto) that is furnished pursuant to this Item 7.01 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, and shall not be incorporated by reference into any filing of the Company, 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 November 6, 2024, the Company announced that its Board 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 December 4, 2024 to stockholders of record as of the close of business on November 20, 2024.

 

Item 9.01

Financial Statements and Exhibits

(d) Exhibits:

 

99.1    Press Release issued by MarketAxess Holdings Inc. on November 6, 2024.
99.2    Press Release issued by MarketAxess Holdings Inc. on November 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: November 6, 2024  
  By:  

/s/ Ilene Fiszel Bieler

  Name:     Ilene Fiszel Bieler
  Title:   Chief Financial Officer

Exhibit 99.1

 

LOGO

MarketAxess Reports Third Quarter 2024 Financial Results

Revenue Growth of 20% Driven by Strong Growth in Total Credit ADV on Higher Market Volumes

Record Portfolio Trading ADV; Record Municipal Bonds ADV and Estimated Market Share

 

NEW YORK | November 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 third quarter ended September 30, 2024.

 

3Q24 select financial and operational highlights*

 

•  20% increase in total revenues to $206.7 million, including Pragma revenue of $7.7 million and an increase of approximately $0.9 million from the impact of foreign currency fluctuations.

 

•  24% growth in U.S. high-grade commission revenue on strong growth in market volumes.

 

•  20% growth in emerging markets and Eurobonds commission revenue reflecting strong geographic diversification.

 

•  Record portfolio trading ADV of $1.1 billion.

 

•  Record rates commission revenue, up 35%.

 

•  21% increase in services revenue (combined information, post-trade and technology services revenue) to $26.3 million, including Pragma revenue of $2.8 million.

 

•  Total expenses of $119.7 million, up 14%, including Pragma operating expenses of $8.2 million and an increase of approximately $0.7 million from the impact of foreign currency fluctuations.

 

•  30% increase in diluted earnings per share (“EPS”) to $1.90 on net income of $71.5 million.

 

•  Record 2,125 (+2%) active client firms and 1,079 (+2%) international active client firms on the platform.

 

•  Record automation suite trading volume (+28%), trade count (+37%) and active client firms (+49%); dealer algorithmic responses up 24%.

   

Chris Concannon, CEO of MarketAxess, commented:

 

“We delivered significantly improved financial results in the third quarter, as we continued to make progress in executing our strategy.

 

The initial roll-out of X-Pro to our international client base is underway. In the third quarter, we delivered several hundred basis points in market share gains in U.S. credit portfolio trading compared to second quarter 2024 levels. Additionally, a record 74% of our portfolio trading volume was executed on X-Pro in September. We are looking to build on these gains in the coming quarters with the initial launch of our targeted block trading solutions last month, designed to minimize market impact and optimize trading success. Additionally, we are enhancing our dealer liquidity solutions by extending our suite of automation services to our dealer clients.

 

In summary, we exited the quarter in September with a constructive market backdrop, characterized by strong market volumes, a robust new issue calendar and an increase in the velocity of trading in U.S. high-grade. We believe we are well positioned to deliver continued growth in the coming quarters.”

 

*

All comparisons versus 3Q23.

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Table 1: 3Q24 select financial results

 

$ in millions, except per share data

(unaudited)

    Revenues     Operating Income     Net Income     Diluted
EPS		     Net Income
Margin (%)		     EBITDA1     EBITDA
Margin (%)1		    

 

  

3Q24

    $ 207     $ 87     $ 71     $ 1.90       34.6 %    $ 105       50.8 %   

2Q24

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

3Q23

    $ 172     $ 67     $ 55     $ 1.46       31.9 %    $ 83       48.1 %   

YoY % Change

      20 %      30 %      30 %      30 %      +270  bps      27 %      +270  bps   

QoQ % Change

      5 %      7 %      10 %      10 %      +170  bps      6 %      +80  bps   

YTD 2024

    $ 615     $ 261     $ 209     $ 5.55       34.0 %    $ 313       51.0 %   

YTD 2023

    $ 555     $ 238     $ 188     $ 5.01       33.9 %    $ 284       51.2 %   

% Change

      11 %      10 %      11 %      11 %      +10  bps      10 %      (20 ) bps   

Table 1A: 3Q24 trading volume (ADV)

 

                  CREDIT     RATES  

$ in millions

(unaudited)

    US/UK Trading
Days2		      Total
ADV		     Total
Credit		     High-Grade     High-Yield     Emerging
Markets		     Eurobonds     Municipal
Bonds		     Total
Rates		     US Govt.
Bonds		     Agcy./Other
Govt. Bonds		  

3Q24

      64/65      $ 40,516     $ 14,116     $ 7,027     $ 1,278     $ 3,333     $ 1,891     $ 577     $ 26,400     $ 25,302     $ 1,098  

2Q24

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

3Q23

      63/64      $ 29,285     $ 11,156     $ 5,179     $ 1,294     $ 2,799     $ 1,484     $ 388     $ 18,129     $ 17,713     $ 416  

YoY % Change

         38 %      27 %      36 %      (1 %)      19 %      27 %      49 %      46 %      43 %      164 % 

QoQ % Change

         19 %      3 %      9 %      (4 %)      —        (10 %)      11 %      29 %      29 %      39 % 

Table 1B: 3Q24 estimated market share

 

       CREDIT     RATES  

(unaudited)

      High-Grade     High-Yield     High-Grade/High-Yield
Combined		     Municipals3     US Govt.
Bonds3		  

3Q24

        19.5 %      13.0 %      18.1 %      8.7 %      2.6 % 

2Q24

        18.7 %      13.5 %      17.6 %      7.4 %      2.3 % 

3Q23

        20.0 %      16.1 %      19.1 %      5.5 %      2.5 % 

YoY Bps Change

        (50 ) bps      (310 ) bps      (100 ) bps      +320  bps      +10  bps 

QoQ Bps Change

        +80  bps      (50 ) bps      +50  bps      +130  bps      +30  bps 

3Q24 overview of results

Commission revenue and trading volume

Credit

Credit Commission Revenue

 

  •  

Total credit commission revenue of $168.4 million (including $33.6 million in fixed-distribution fees) increased $23.2 million, or 16%, compared to $145.2 million (including $36.2 million in fixed-distribution fees) in the prior year. The increase in total credit commission revenue was driven principally by 24% growth in U.S. high-grade commission revenue on a 39% increase in U.S. high-grade TRACE market ADV. The decline in variable transaction fees per million (“FPM”) to $148.97 from $154.85 in the prior year was mainly due to product and protocol

 

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mix-shift, principally lower levels of U.S. high-yield activity and increased portfolio trading, partially offset by the higher duration of bonds traded in U.S. high-grade, principally driven by an increase in the weighted average years to maturity. 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.

Credit Trading Volumes

 

  •  

Total credit ADV of $14.1 billion increased 27% compared to the prior year, and increased 3% compared to 2Q24 levels.

 

  •  

Record $1.1 billion in total portfolio trading ADV, up 163% compared to the prior year, and up 31% compared to 2Q24.

 

  •  

35% Open Trading share4 of total credit trading volume, up from 34% in each of the prior year and 2Q24. The Company delivered estimated price improvement5 for clients via Open Trading of approximately $119 million in the quarter.

U.S. Credit6

 

  •  

U.S. high-grade ADV of $7.0 billion increased 36% compared to the prior year, and increased 9% compared to 2Q24. Estimated market ADV increased 39% compared to the prior year, and increased 5% compared to 2Q24. Estimated market share was 19.5%, down from 20.0% in the prior year, but up from 18.7% in 2Q24. Including the impact of single-dealer portfolio trades, estimated market share was 20.0%, in line with 20.1% in the prior year, but up from 19.2% in 2Q24.

 

  •  

U.S. high-yield ADV of $1.3 billion decreased 1% compared to the prior year, and decreased 4% compared to 2Q24. Estimated market ADV increased 23% compared to the prior year, but was in line with 2Q24. Estimated market share was 13.0% (13.4% including single-dealer portfolio trades), down from 16.1% in the prior year, and down from 13.5% (13.8% including single-dealer portfolio trades) in 2Q24.

Other Credit

 

  •  

Emerging markets ADV of $3.3 billion increased 19% compared to the prior year, but was in line with 2Q24. The year-over-year increase was driven by a 20% increase in hard currency ADV, and an 18% increase in local currency ADV.

 

  •  

Eurobonds ADV of $1.9 billion increased 27% compared to the prior year, but decreased 10% compared to 2Q24.

 

  •  

Record Municipal bond ADV of $577 million increased 49% compared to the prior year, and increased 11% compared to 2Q24. Estimated market ADV was down 5% compared to the prior year, and down 6% compared to 2Q24. Record estimated market share of 8.7%, up from 5.5% in the prior year, and up from 7.4% in 2Q24.3

Strategic Priority Related Protocols & Workflow Tools

 

  •  

Our estimated market share of U.S. high grade and U.S. high-yield TRACE portfolio trading was 20.0% in 3Q24. Portfolio trading represented an estimated 10.7% of U.S. high-grade and U.S. high-yield TRACE in 3Q24.

 

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  •  

A record 59% of our portfolio trading volume was executed on X-Pro in 3Q24.

 

  •  

Dealer RFQ ADV of $1.2 billion across all credit products increased 26% compared to the prior year, and was in line with 2Q24 levels.

 

  •  

AxessIQ, the order and execution workflow solution designed for wealth management and private banking clients, achieved ADV of $131 million, up 32% compared to the prior year, but down 3% compared to 2Q24.

Rates

 

  •  

Record total rates commission revenue of $7.1 million increased $1.8 million, or 35%. Record total rates ADV of $26.4 billion increased 46% compared to the prior year, and increased 29% compared to 2Q24.

Other

 

  •  

Total other commission revenue was $4.9 million, which consists of Pragma commission revenue.

Services revenue

Information services

 

  •  

Information services revenue of $13.0 million increased $1.2 million, or 10%, compared to the prior year. The increase in revenue was principally driven by net new data contract revenue and an increase of $0.3 million from the impact of foreign currency fluctuations.

Post-trade services

 

  •  

Post-trade services revenue of $10.4 million increased $0.5 million, or 6%, compared to the prior year mainly due to net new contract revenue and an increase of $0.2 million from the impact of foreign currency fluctuations.

Technology services

 

  •  

Total technology services revenue of $3.0 million, up from $0.2 million in the prior year. The current quarter includes $2.8 million of Pragma revenue.

Expenses

 

  •  

Total expenses of $119.7 million, up 14%, including Pragma operating expenses of $8.2 million and an increase of $0.7 million from the impact of foreign currency fluctuations.

Non-operating

 

  •  

Other income (expense): Other income was $5.8 million, up from $4.8 million in the prior year. The current quarter included a $0.8 million unrealized gain on U.S. Treasury investments compared to a $0.2 million unrealized loss in the prior year.

 

  •  

Tax rate: The effective tax rate was 23.0%, down slightly from 23.4% in the prior year.

Capital

 

  •  

The Company had $602.5 million in cash, cash equivalents, corporate bond investments and U.S. Treasury investments as of September 30, 2024, up from $558.8 million as of June 30, 2024. There were no outstanding borrowings under the Company’s credit facility.

 

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  •  

Year-to-date through October 2024, a total of 296,505 shares were repurchased at a cost of $63.9 million, including 66,349 shares repurchased during the third quarter at a cost of $15.0 million. As of October 31, 2024, a total of $236.1 million remained under the aggregate authorizations by the Company’s Board of Directors.

 

  •  

The Board declared a quarterly cash dividend of $0.74 per share, payable on December 4, 2024 to stockholders of record as of the close of business on November 20, 2024.

Other

 

  •  

Employee headcount was 881 as of September 30, 2024, in line with 881 as of December 31, 2023, but up from 853 as of September 30, 2023.

 

1

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.

2 

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.

3 

See “General Notes Regarding the Data Presented” below.

4

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.

5

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.

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, where material, 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 Wednesday, November 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.

 

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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.

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
September 30,		     Nine Months Ended
September 30,		  

In thousands, except per share data (unaudited)

    2024     2023     %
Change		     2024     2023     %
Change		  

Revenues

             

Commissions

    $ 180,392     $ 150,496       20 %    $ 536,944     $ 491,073       9 % 

Information services

      12,960       11,801       10       37,385       34,466       8  

Post-trade services

      10,382       9,833       6       31,512       29,228       8  

Technology services

      2,981       154       NM       8,852       532       NM  
  

 

 

    

 

 

      

 

 

    

 

 

    

Total revenues

      206,715       172,284       20       614,693       555,299       11  
  

 

 

    

 

 

      

 

 

    

 

 

    

Expenses

             

Employee compensation and benefits

      58,431       48,872       20       176,485       149,570       18  

Depreciation and amortization

      18,728       17,561       7       55,284       51,027       8  

Technology and communications

      18,553       15,339       21       53,375       45,573       17  

Professional and consulting fees

      6,989       9,181       (24 )      21,053       24,331       (13 ) 

Occupancy

      3,835       3,503       9       10,974       10,313       6  

Marketing and advertising

      2,898       2,100       38       7,741       8,403       (8 ) 

Clearing costs

      4,387       3,665       20       13,420       12,392       8  

General and administrative

      5,839       5,154       13       15,467       15,698       (1 ) 
  

 

 

    

 

 

      

 

 

    

 

 

    

Total expenses

      119,660       105,375       14       353,799       317,307       12  
  

 

 

    

 

 

      

 

 

    

 

 

    

Operating income

      87,055       66,909       30       260,894       237,992       10  

Other income (expense)

             

Interest income

      6,953       6,590       6       19,327       16,151       20  

Interest expense

      (346 )      (164 )      111       (1,283 )      (347 )      270  

Equity in earnings of unconsolidated affiliate

      340       125       172       1,064       579       84  

Other, net

      (1,105 )      (1,717 )      (36 )      (4,051 )      (5,487 )      (26 ) 
  

 

 

    

 

 

      

 

 

    

 

 

    

Total other income (expense)

      5,842       4,834       21       15,057       10,896       38  
  

 

 

    

 

 

      

 

 

    

 

 

    

Income before income taxes

      92,897       71,743       29       275,951       248,888       11  

Provision for income taxes

      21,408       16,802       27       66,909       60,460       11  
  

 

 

    

 

 

      

 

 

    

 

 

    

Net income

    $ 71,489     $ 54,941       30     $ 209,042     $ 188,428       11  
  

 

 

    

 

 

      

 

 

    

 

 

    

Per Share Data:

             

Net income per common share

             

Basic

    $ 1.90     $ 1.47       $ 5.55     $ 5.03    

Diluted

    $ 1.90     $ 1.46       $ 5.55     $ 5.01    

Cash dividends declared per

common share

    $ 0.74     $ 0.72       $ 2.22     $ 2.16    

Weighted-average common shares:

             

Basic

      37,527       37,491         37,641       37,485    

Diluted

      37,608       37,574         37,696       37,603    

NM - not meaningful

 

Page 8

LOGO

 

Table 3: Commission Revenue Detail

 

In thousands, except fee per million data    Three Months Ended September 30,     Nine Months Ended September 30,  

(unaudited)

    2024      2023      % Change     2024      2023     % Change  

Variable transaction fees

                

Credit

    $ 134,863      $ 109,065        24 %    $ 404,012      $ 368,745       10 % 

Rates

      7,018        5,209        35       17,903        16,014       12  

Other

      4,856        —         NM       14,781        —        NM  
  

 

 

     

 

 

       

 

 

     

 

 

    

Total variable transaction fees

      146,737        114,274        28       436,696        384,759       13  
  

 

 

     

 

 

       

 

 

     

 

 

    

Fixed distribution fees

                

Credit

      33,584        36,167        (7 )      100,049        106,119       (6 ) 

Rates

      71        55        29       199        195       2  
  

 

 

     

 

 

       

 

 

     

 

 

    

Total fixed distribution fees

      33,655        36,222        (7 )      100,248        106,314       (6 ) 
  

 

 

     

 

 

       

 

 

     

 

 

    

Total commission revenue

    $ 180,392      $ 150,496        20     $ 536,944      $ 491,073       9  
  

 

 

     

 

 

       

 

 

     

 

 

    

Average variable transaction fee per million

                

Credit

    $ 148.97      $ 154.85        (4 )%    $ 150.48      $ 159.43       (6 )% 

Rates

      4.15        4.56        (9 )      4.42        4.41       —   

Table 4: Trading Volume Detail*

                
     Three Months Ended September 30,  

In millions (unaudited)

    2024      2023      % Change  
     Volume      ADV      Volume     ADV      Volume     ADV  

Credit

                

High-grade

    $ 449,708      $ 7,027      $ 326,304     $ 5,179        38 %      36 % 

High-yield

      81,761        1,278        81,511       1,294        —        (1 ) 

Emerging markets

      213,341        3,333        176,334       2,799        21       19  

Eurobonds

      122,914        1,891        94,980       1,484        29       27  

Other credit

      37,566        587        25,185       400        49       47  
  

 

 

     

 

 

     

 

 

    

 

 

       

Total credit trading

      905,290        14,116        704,314       11,156        29       27  
  

 

 

     

 

 

     

 

 

    

 

 

       

Rates

                

U.S. government bonds

      1,619,337        25,302        1,115,889       17,713        45       43  

Agency and other government bonds

      71,261        1,098        26,467       416        169       164  
  

 

 

     

 

 

     

 

 

    

 

 

       

Total rates trading

      1,690,598        26,400        1,142,356       18,129        48       46  
  

 

 

     

 

 

     

 

 

    

 

 

       

Total trading

    $ 2,595,888      $ 40,516      $ 1,846,670     $ 29,285        41       38  
  

 

 

     

 

 

     

 

 

    

 

 

       

Number of U.S. Trading Days1

         64          63       

Number of U.K. Trading Days2

         65          64       
     Nine Months Ended September 30,  

In millions (unaudited)

    2024      2023      % Change  
     Volume      ADV      Volume     ADV      Volume     ADV  

Credit

                

High-grade

    $ 1,311,146      $ 6,974      $ 1,072,258     $ 5,734        22 %      22 % 

High-yield

      251,388        1,337        295,774       1,582        (15 )      (15 ) 

Emerging markets

      644,973        3,431        536,432       2,869        20       20  

Eurobonds

      380,029        2,011        329,841       1,754        15       15  

Other credit

      97,271        517        78,597       420        24       23  
  

 

 

     

 

 

     

 

 

    

 

 

       

Total credit trading

      2,684,807        14,270        2,312,902       12,359        16       15  
  

 

 

     

 

 

     

 

 

    

 

 

       

Rates

                

U.S. government bonds

      3,902,050        20,756        3,547,308       18,970        10       9  

Agency and other government bonds

      151,393        801        80,249       428        89       87  
  

 

 

     

 

 

     

 

 

    

 

 

       

Total rates trading

      4,053,443        21,557        3,627,557       19,398        12       11  
  

 

 

     

 

 

     

 

 

    

 

 

       

Total trading

    $ 6,738,250      $ 35,827      $ 5,940,459     $ 31,757        13       13  
  

 

 

     

 

 

     

 

 

    

 

 

       

Number of U.S. Trading Days1

         188          187       

Number of U.K. Trading Days2

         189          188       

 

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

 

Page 9

LOGO

 

Table 5: Consolidated Condensed Balance Sheet Data

 

     As of  

In thousands (unaudited)

    September 30, 2024     December 31, 2023  

Assets

     

Cash and cash equivalents

    $ 446,347     $ 451,280  

Cash segregated under federal regulations

      46,657       45,122  

Investments, at fair value

      167,213       134,861  

Accounts receivable, net

      102,760       89,839  

Receivables from broker-dealers, clearing organizations and customers

      474,989       687,936  

Goodwill

      236,706       236,706  

Intangible assets, net of accumulated amortization

      104,331       119,108  

Furniture, equipment, leasehold improvements and capitalized software, net

      109,482       102,671  

Operating lease right-of-use assets

      59,998       63,045  

Prepaid expenses and other assets

      84,566       84,499  
  

 

 

    

 

 

  

Total assets

    $ 1,833,049     $ 2,015,067  
  

 

 

    

 

 

  

Liabilities and stockholders’ equity

     

Liabilities

     

Accrued employee compensation

    $ 52,816     $ 60,124  

Payables to broker-dealers, clearing organizations and customers

      283,314       537,398  

Income and other tax liabilities

      2,151       7,892  

Accounts payable, accrued expenses and other liabilities

      33,437       37,013  

Operating lease liabilities

      75,077       79,677  
  

 

 

    

 

 

  

Total liabilities

      446,795       722,104  
  

 

 

    

 

 

  

Stockholders’ equity

     

Common stock

      123       123  

Additional paid-in capital

      344,138       333,292  

Treasury stock

      (316,524 )      (260,298 ) 

Retained earnings

      1,368,661       1,244,216  

Accumulated other comprehensive loss

      (10,144 )      (24,370 ) 
  

 

 

    

 

 

  

Total stockholders’ equity

      1,386,254       1,292,963  
  

 

 

    

 

 

  

Total liabilities and stockholders’ equity

    $ 1,833,049     $ 2,015,067  
  

 

 

    

 

 

  

 

Page 10

LOGO

 

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

 

     Three Months Ended
September 30,		     Nine Months Ended
September 30,		  

In thousands (unaudited)

    2024     2023     2024     2023  

Net income

    $ 71,489     $ 54,941     $ 209,042     $ 188,428  

Add back:

         

Interest income

      (6,953 )      (6,590 )      (19,327 )      (16,151 ) 

Interest expense

      346       164       1,283       347  

Provision for income taxes

      21,408       16,802       66,909       60,460  

Depreciation and amortization

      18,728       17,561       55,284       51,027  
  

 

 

    

 

 

    

 

 

    

 

 

  

EBITDA

    $ 105,018     $ 82,878     $ 313,191     $ 284,111  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net income margin1

      34.6 %      31.9 %      34.0 %      33.9 % 

Add back:

         

Interest income

      (3.4 )      (3.8 )      (3.1 )      (2.9 ) 

Interest expense

      0.2       0.1       0.2       0.1  

Provision for income taxes

      10.3       9.7       10.9       10.9  

Depreciation and amortization

      9.1       10.2       9.0       9.2  
  

 

 

    

 

 

    

 

 

    

 

 

  

EBITDA margin2

      50.8 %      48.1 %      51.0 %      51.2 % 
  

 

 

    

 

 

    

 

 

    

 

 

  
Table 7: Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow  
     Three Months Ended
September 30,		     Nine Months Ended
September 30,		  

In thousands (unaudited)

    2024     2023     2024     2023  

Net cash (used in)/provided by operating activities

    $ 95,089     $ 79,161     $ 208,989     $ 192,082  

Exclude: Net change in trading investments

      784       24,771       629       24,300  

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

      2,578       (13,099 )      50,715       (12,342 ) 

Less: Purchases of furniture, equipment and leasehold improvements

      (835 )      (5,983 )      (9,727 )      (7,255 ) 

Less: Capitalization of software development costs

      (11,331 )      (10,087 )      (35,790 )      (31,802 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Free cash flow

    $ 86,285     $ 74,763     $ 214,816     $ 164,983  
  

 

 

    

 

 

    

 

 

    

 

 

  

 

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

Exhibit 99.2

 

LOGO

Rick McVey to Retire from MarketAxess

Carlos Hernandez Elected As Next Chairman

NEW YORK | November 6, 2024 – MarketAxess Holdings Inc. (Nasdaq: MKTX), the operator of a leading electronic trading platform for fixed-income securities, today announced that Founder and Executive Chairman Rick McVey will retire at the end of the year. Carlos Hernandez will succeed Mr. McVey as Chairman of the Board of Directors, effective January 1, 2025. Mr. McVey has agreed to remain as the Chairman of the Board of Directors of MarketAxess Limited, the Company’s international holding company.

Mr. McVey founded MarketAxess in 2000 and is a visionary in the evolution of fixed income market structure. Under his leadership, the company grew to become a global, S&P 500 company that has transformed the way the world’s largest capital market operates worldwide. Mr. McVey stepped down as CEO of MarketAxess in April 2023 after 23 years in that role, and has since been serving as Executive Chairman of the Board.

“Rick’s bold vision for the company nearly 25 years ago not only revolutionized trading forever, but also created an outstanding organization in the process,” said Chris Concannon, CEO of MarketAxess. “I’d like to congratulate Rick on an incredible accomplishment and thank him for the opportunity to lead the company as we continue to transform global markets.”

“The last quarter century has been an incredible journey, and it was an honor to lead this organization from a startup to a position of global leadership. None of this could have been possible without the skill and dedication of our management team, employees, and board of directors,” said Mr. McVey. “Most importantly, I am grateful for the tremendous support we enjoy from our dealer and investor clients around the world. The future of MarketAxess is bright and I am confident under Chris’ leadership we will continue our track record of innovation and growth to create lasting improvements for global fixed income markets. I look forward to my continued involvement on the Board of MarketAxess Limited as we continue to expand our reach in international financial markets.”

Mr. Hernandez previously served as a Director from 2006 to 2019 and rejoined the MarketAxess Board in September 2023. Mr. Hernandez, who is designated as an independent Director, currently serves as the Chair of the Board’s Compensation and Talent Committee. Mr. Hernandez retired from JPMorgan in April 2023 after 37 years of service. Prior to his retirement, Mr. Hernandez was Executive Chair of Investment and Corporate Banking at JPMorgan and served as a Member of the Operating Committee and a Member of the Corporate & Investment Bank Management Team.

“Having watched firsthand this incredible company that Rick McVey built, consistently challenge norms, break records and set new standards for fixed-income electronification for over two decades—I am incredibly honored to succeed him as Chairman,” said Mr. Hernandez. “I look forward to working closely with Chris Concannon and our seasoned management team during this next phase of MarketAxess as we find new ways to make one of the world’s leading fixed income marketplaces even better.”

# # #

 

LOGO

 

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 Twitter @MarketAxess.

# # #

 

 

 

Contacts   
INVESTOR RELATIONS    MEDIA RELATIONS

Stephen Davidson

MarketAxess Holdings Inc.

+1 212 813 6313

sdavidson2@marketaxess.com

   

Mary Sedarat

MarketAxess Holdings Inc.

+1 212 813 6226

msedarat@marketaxess.com

 

Page 2

v3.24.3
Document and Entity Information
Nov. 04, 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 Nov. 04, 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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