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, 2023.
2Q23 select financial and operational highlights*
- $179.8 million in total revenues, down 1.3%,
reflects impact of low credit spread volatility.
- 4.0% growth in total revenues year-to-date to $383.0
million compared to the prior year.
- 6.9% increase in total expenses, driven principally by
investments to capture the long-term revenue opportunity in the
global fixed-income markets; $75.7 million in
operating income.
- Diluted EPS of $1.59 on net income of $59.9
million. Foreign currency transaction losses and unrealized
losses on investments had a $0.04 per diluted share negative
impact in the current quarter. The prior year quarter included a
net $0.11 per diluted share positive impact from foreign
currency transaction gains.
- Record emerging markets estimated market share1;
10.7% increase in emerging markets local markets trading
volume in the quarter driven by a record $31.2
billion in the month of June.
- Record Eurobonds average daily volume (“ADV”) of $1.9
billion, record estimated market share2 of 18.4%
(+330 bps); Municipal bonds estimated market share of
5.8% (+190 bps).
- Record information services revenue of $11.7
million, up 24.0%, reflecting increasing adoption of
Composite+™, our algorithmic pricing engine.
- Record 2,083 (+7.6%) active client firms, record
1,606 (+11.1%) active U.S. credit client firms;
record 1,054 (+7.3%) international active client firms and
record 1,127 (+6.7%) active client firms trading three or
more products.
- 39.5% growth in hedge fund client trading volume and
29.0% growth in private bank client trading volume
reflecting increasing contribution from new client segments.
- Record automation trading volume (+26.8%), trade
count (+38.1%) and active client firms (+20.7%);
record level of algorithmic responses on the platform
(+30.7%). Record U.S. high-grade automation trading
volume of $41.3 billion in the quarter, up 11.8%
versus the prior year.
- 34% total credit Open Trading® share3 in line
with the prior year. Estimated price improvement4 via Open
Trading was approximately $157 million and was $409
million year-to-date.
*All comparisons versus second
quarter 2022 unless otherwise noted.
Chris Concannon, CEO of MarketAxess, commented:
“In the second quarter we continued to innovate, integrate
and execute across our product areas with strong share gains in
emerging markets, Eurobonds and municipals, and a significant
expansion of our active global client network, especially in U.S.
credit. We significantly enhanced our franchise in the quarter
despite dramatically lower credit spread volatility which dampened
trading activity by ETF market makers, especially in
high-yield.
In terms of innovation, we are leveraging our leadership
position in the credit markets by delivering new, innovative
proprietary data to our clients to help them make better trading
decisions. We are integrating the full potential of our data,
protocols and liquidity for clients through our new trading
platform. And we are expanding our automated solutions with the
first client algo, Adaptive Auto-X. We are also continuing to drive
growth with the expansion of our international franchise in
Eurobonds and emerging markets, as well as domestically in
municipal bonds.
In summary, we made significant progress in the second
quarter in establishing the next generation of trading tools for
clients to engage our integrated markets and drive future
growth.”
Table 1: 2Q23 select financial results
$ in millions, except per share
data (unaudited)
Revenues
Operating Income
Net Income
Diluted EPS
Net Income Margin (%)
EBITDA5
EBITDA Margin (%)5
2Q23
$180
$76
$60
$1.59
33.3%
$91
50.4%
2Q22
$182
$85
$67
$1.78
36.7%
$105
57.6%
% Change
(1%)
(11%)
(10%)
(11%)
(340) bps
(14%)
(720) bps
YTD 2023
$383
$171
$133
$3.55
34.9%
$201
52.5%
YTD 2022
$368
$173
$132
$3.49
35.8%
$211
57.2%
% Change
4%
(1%)
1%
2%
(90) bps
(4%)
(470) bps
Table 1A: 2Q23 trading volume (ADV)
CREDIT
RATES
$ in millions (unaudited)
US/UK Trading Days6
Total ADV
Total Credit
High-Grade
High-Yield
Emerging Markets
Eurobonds
Municipal Bonds
Total Rates
US Govt. Bonds
Agcy./Other Govt.
Bonds
2Q23
62/60
$27,828
$12,226
$5,697
$1,474
$2,714
$1,942
$389
$15,602
$15,163
$439
2Q22
62/60
$35,389
$12,290
$5,803
$1,771
$2,828
$1,491
$371
$23,099
$22,657
$442
% Change
(21%)
(1%)
(2%)
(17%)
(4%)
30%
5%
(32%)
(33%)
(1%)
Table 1B: 2Q23 estimated market share
CREDIT
RATES
(unaudited)
High-Grade
High-Yield
High-Grade/High- Yield
Combined
Eurobonds2
Composite Corporate
Bond7
Municipals
US Govt. Bonds
2Q23
20.7%
16.5%
19.7%
18.4%
19.7%
5.8%
2.5%
2Q22
22.3%
17.3%
20.9%
15.1%
20.2%
3.9%
3.7%
Bps Change
(160) bps
(80) bps
(120) bps
+330 bps
(50) bps
+190 bps
(120) bps
2Q23 overview of results
Revenues and trading volume
Credit
- Total credit commission revenue of $154.0 million
(including $35.3 million in fixed-distribution fees)
decreased $3.4 million, or 2%, compared to
$157.4 million (including $31.6 million in
fixed-distribution fees) in the prior year. The decrease in total
credit commission revenue was driven principally by lower estimated
market trading volumes and lower average fee per million (“FPM”),
partially offset by a $3.7 million, or 12%, increase
in total credit fixed distribution fees. The increase in total
credit fixed distribution fees was driven principally by new
dealers on fixed fee plans and upgrades of dealers on existing
fixed fee plans. The decline in FPM for total credit to
$157.42 from $165.75 in the second quarter of 2022
was mainly due to the lower duration of bonds traded in U.S.
high-grade, driven principally by higher bond yields, product
mix-shift in other credit products, primarily U.S. high-yield, and
client crossing activity in Eurobonds which is executed at a low
FPM.
- U.S. high-grade ADV of $5.7 billion, with estimated
market share of 20.7% reflecting the impact of low credit
spread volatility.
- U.S. high-yield ADV of $1.5 billion with estimated
market share of 16.5%. Low credit spread volatility has
reduced trading activity by ETF market makers, especially in U.S.
high-yield, with estimated U.S. high-yield TRACE market ADV down
13.2%.
- Emerging markets ADV of $2.7 billion decreased from
$2.8 billion in the prior year with record estimated
market share; decrease of 12.3% in emerging markets
estimated market ADV.1 Local markets emerging markets trading
volume increased 10.7% to $75.0 billion and
represented a record 44.2% of total emerging markets trading
volume in the quarter. Local markets trading volume in the quarter
benefited from a record $31.2 billion in June,
representing a 31.9% increase compared to the prior
year.
- 30.2% increase in Eurobonds ADV to a record
$1.9 billion with a record 18.4% (+330 bps) estimated
market share, up from 15.1%.2
- Municipal bond ADV of $389 million, up 4.8%, with
estimated market share of 5.8% (+190 bps), up from
3.9%. Municipal bond market ADV decreased 30.1%.
- 34% Open Trading® share3 of total credit trading volume.
Estimated price improvement4 via Open Trading was approximately
$157 million in the quarter and is $409 million
year-to-date through second quarter 2023.
Rates
- Total rates commission revenue of $4.6 million
decreased 24% compared to the prior year, mainly due to the
32% decrease in rates ADV to $15.6 billion, which was
partially offset by a 12% increase in FPM for total rates
products to $4.70, compared to $4.21 in the second
quarter of 2022.
- 262 active client firms on the platform, up 64%
from 160 in the prior year.
Information services & post-trade services
- Record information services revenue of $11.7
million increased $2.3 million, or 24%,
compared to the prior year. The increase in revenue was principally
driven by new Composite+™ data contract revenue.
- Post-trade services revenue of $9.4 million was up
3%, compared to the prior year.
Expenses
- Total expenses of $104.1 million increased $6.7
million, or 7%. The increase in expenses was driven
principally by higher employee compensation and benefits as a
result of a 17% increase in headcount, mainly in technology
and customer-facing roles, higher technology and communication
expenses due to higher subscription costs, data center and cloud
hosting expense and higher depreciation and amortization
expense.
Non-operating
- Other income (expense): Other income was $3.2
million, down from $4.8 million in the prior
year. The current quarter included interest income of $5.3
million, compared to $0.3 million in the prior year,
driven by higher interest rates, partially offset by a $1.3
million foreign currency transaction loss and a $0.8
million unrealized loss on U.S. Treasury investments. Foreign
currency transaction losses and unrealized losses on investments
had a $0.04 per diluted share negative impact in the current
quarter. The prior year quarter benefited from a $5.5
million foreign currency transaction gain, which was a net
benefit of $0.11 per diluted share.
- Tax rate: The effective tax rate was 24.2%,
compared to 25.3% in the prior year.
Capital
- The Company had $505.5 million in cash, cash equivalents
and investments; there were no outstanding borrowings under the
Company’s credit facility.
- The Board declared a quarterly cash dividend of $0.72
per share, payable on August 16, 2023 to stockholders of
record as of the close of business on August 2, 2023.
Other
- Employee headcount was 803 as of June 30, 2023,
compared to 684 as of June 30, 2022 and 774 as
of March 31, 2023. The increase in headcount compared to the
prior year was principally due to the continued investment in the
Company’s growth initiatives, including geographic expansion,
trading automation and new trading protocols.
Guidance
- The Company is reconfirming its previously stated full-year
2023 guidance for operating expenses, effective tax rate and
capital expenditures.
1
Emerging markets estimated market
share and emerging markets estimated market ADV are derived by
combining MarketAxess TraX emerging markets trading volume
(currently estimated to represent approximately 55% of the total
emerging markets market) and FINRA TRACE-reportable emerging
markets trading volume, principally U.S. dollar denominated
corporates.
2
Eurobonds estimated market share
is derived from MarketAxess TraX data for Eurobonds and covered
bonds market trading volume, which is currently estimated to
represent approximately 70% of the total European market.
3
Total credit Open Trading share
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.
4
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.
5
EBITDA and EBITDA margin are
non-GAAP financial measures. Refer to “Non-GAAP financial measures
and other items” for a discussion of changes made to the
calculation of EBITDA beginning in the first quarter of 2023.
6
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.
7
Composite corporate bond
estimated market share is defined as combined estimated market
share across U.S. high-grade (derived from FINRA TRACE reported
data), U.S. high-yield (derived from FINRA TRACE reported data),
emerging markets (derived from FINRA TRACE-reportable emerging
markets volume, principally U.S. dollar denominated corporates) and
Eurobonds (derived from MarketAxess TraX data, which is currently
estimated to represent approximately 70% of the total European
market) product areas.
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. Starting with the first quarter of 2023, our calculation
of EBITDA has been revised to adjust for interest income in
addition to interest expense. In prior periods, we only adjusted
for interest expense because interest income amounts were
insignificant. Prior comparable periods have now been recast to
conform to the current presentation. Likewise, starting with the
first quarter of 2023, EBITDA margin is calculated by adjusting for
interest income in addition to interest expense and prior
comparable periods have been recast to conform to the current
presentation. We define EBITDA margin as EBITDA divided by
revenues. We define free cash flow as cash flow from 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 cash flow
from operating activities to free cash flow.
The Company also presents revenue and expense growth rates
excluding the impact of foreign currency fluctuations. The Company
believes that it is useful to provide investors with this framework
that is also used by management to assess how our business
performed excluding the effect of foreign currency fluctuations. To
present this information, current and comparative prior period
results for product areas reporting in currencies other than U.S.
dollars are converted into U.S. dollars using the average exchange
rates from the comparative period rather than the actual exchange
rates in effect during the current period.
Please refer to Tables 6 and 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 Christopher Gerosa, Chief
Financial Officer, will host a conference call to discuss the
Company’s financial results and outlook on Thursday, July 20, 2023
at 10:00 a.m. ET. To access the conference call, please dial
888-660-6576 (U.S.) and use the ID 3629577 or 929-203-1995
(international) and use the ID 3629577. 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.
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. 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.
Cautionary Note Regarding Forward-Looking Statements
This press release may contain forward-looking statements,
including statements about the outlook and prospects for Company,
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; risks
relating to the COVID-19 pandemic, including the possible effects
of the economic conditions worldwide resulting from the COVID-19
pandemic; adverse effects as a result of climate change or other
ESG risks that could affect our reputation; 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; reputational or
credibility risks related to our data products and index business;
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; our vulnerability to malicious cyber-attacks and
attempted data security 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; our future capital needs
and our ability to obtain capital when needed; limitations on our
operating flexibility contained in our credit agreement; 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.
Table 2: Consolidated Statements of
Operations
Three Months Ended
Six Months Ended
June 30,
June 30,
In thousands, except per share
data (unaudited)
2023
2022
% Change
2023
2022
% Change
Revenues
Commissions
$
158,586
$
163,463
(3.0
)
%
$
340,577
$
329,576
3.3
%
Information services
11,655
9,396
24.0
22,665
19,205
18.0
Post-trade services
9,415
9,144
3.0
19,395
19,056
1.8
Other
190
226
(15.9
)
378
449
(15.8
)
Total revenues
179,846
182,229
(1.3
)
383,015
368,286
4.0
Expenses
Employee compensation and benefits
48,383
45,435
6.5
100,698
93,191
8.1
Depreciation and amortization
17,005
15,240
11.6
33,466
30,414
10.0
Technology and communications
15,235
12,490
22.0
30,234
24,682
22.5
Professional and consulting fees
8,023
8,920
(10.1
)
15,150
18,541
(18.3
)
Occupancy
3,199
3,700
(13.5
)
6,810
7,087
(3.9
)
Marketing and advertising
3,308
2,949
12.2
6,303
4,738
33.0
Clearing costs
4,182
4,263
(1.9
)
8,727
8,838
(1.3
)
General and administrative
4,784
4,444
7.7
10,544
7,903
33.4
Total expenses
104,119
97,441
6.9
211,932
195,394
8.5
Operating income
75,727
84,788
(10.7
)
171,083
172,892
(1.0
)
Other income (expense)
Interest income
5,312
254
NM
9,561
313
NM
Interest expense
(53
)
(337
)
(84.3
)
(183
)
(510
)
(64.1
)
Equity in earnings of unconsolidated
affiliate
250
191
30.9
454
191
137.7
Other, net
(2,286
)
4,682
NM
(3,770
)
7,111
NM
Total other income (expense)
3,223
4,790
(32.7
)
6,062
7,105
(14.7
)
Income before income taxes
78,950
89,578
(11.9
)
177,145
179,997
(1.6
)
Provision for income taxes
19,091
22,656
(15.7
)
43,658
48,306
(9.6
)
Net income
$
59,859
$
66,922
(10.6
)
$
133,487
$
131,691
1.4
Per Share Data:
Net income per common share
Basic
$
1.60
$
1.78
$
3.56
$
3.52
Diluted
$
1.59
$
1.78
$
3.55
$
3.49
Cash dividends declared per common
share
$
0.72
$
0.70
$
1.44
$
1.40
Weighted-average common shares:
Basic
37,485
37,529
37,482
37,456
Diluted
37,588
37,608
37,617
37,716
NM - not meaningful
Table 3: Commission Revenue
Detail
In thousands, except fee per million
data
Three Months Ended June
30,
Six Months Ended June
30,
(unaudited)
2023
2022
% Change
2023
2022
% Change
Variable transaction fees
Credit
$
118,710
$
125,802
(5.6
)
%
$
259,680
$
254,484
2.0
%
Rates
4,547
6,020
(24.5
)
10,805
12,211
(11.5
)
Total variable transaction fees
123,257
131,822
(6.5
)
270,485
266,695
1.4
Fixed distribution fees
Credit
35,268
31,592
11.6
69,952
62,770
11.4
Rates
61
49
24.5
140
111
26.1
Total fixed distribution fees
35,329
31,641
11.7
70,092
62,881
11.5
Total commission revenue
$
158,586
$
163,463
(3.0
)
$
340,577
$
329,576
3.3
Average variable transaction fee per
million
Credit
157.42
165.75
(5.0
)
161.43
169.11
(4.5
)
Rates
4.70
4.21
11.6
4.35
4.05
7.3
Table 4: Trading Volume Detail*
Three Months Ended June
30,
In millions (unaudited)
2023
2022
% Change
Volume
ADV
Volume
ADV
Volume
ADV
Credit
High-grade
$
353,239
$
5,697
$
359,785
$
5,803
(1.8
)
%
(1.8
)
%
High-yield
91,390
1,474
109,829
1,771
(16.8
)
(16.8
)
Emerging markets
168,257
2,714
175,314
2,828
(4.0
)
(4.0
)
Eurobonds
116,495
1,942
89,480
1,491
30.2
30.2
Other credit
24,729
399
24,586
397
0.6
0.5
Total credit trading
754,110
12,226
758,994
12,290
(0.6
)
(0.5
)
Rates
U.S. government bonds
940,127
15,163
1,404,750
22,657
(33.1
)
(33.1
)
Agency and other government bonds
26,721
439
26,845
442
(0.5
)
(0.7
)
Total rates trading
966,848
15,602
1,431,595
23,099
(32.5
)
(32.5
)
Total trading
$
1,720,958
$
27,828
$
2,190,589
$
35,389
(21.4
)
(21.4
)
Number of U.S. Trading Days1
62
62
Number of U.K. Trading Days2
60
60
Six Months Ended June
30,
In millions (unaudited)
2023
2022
% Change
Volume
ADV
Volume
ADV
Volume
ADV
Credit
High-grade
$
745,954
$
6,016
$
701,878
$
5,660
6.3
%
6.3
%
High-yield
214,263
1,728
210,656
1,699
1.7
1.7
Emerging markets
360,098
2,904
365,054
2,944
(1.4
)
(1.4
)
Eurobonds
234,861
1,894
183,556
1,492
28.0
26.9
Other credit
53,412
430
43,661
352
22.3
22.2
Total credit trading
1,608,588
12,972
1,504,805
12,147
6.9
6.8
Rates
U.S. government bonds
2,431,419
19,608
2,959,466
23,867
(17.8
)
(17.8
)
Agency and other government bonds
53,782
434
53,363
433
0.8
0.2
Total rates trading
2,485,201
20,042
3,012,829
24,300
(17.5
)
(17.5
)
Total trading
$
4,093,789
$
33,014
$
4,517,634
$
36,447
(9.4
)
(9.4
)
Number of U.S. Trading Days1
124
124
Number of U.K. Trading Days2
124
123
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.
Table 5: Consolidated Condensed Balance
Sheet Data
As of
In thousands (unaudited)
June 30, 2023
December 31, 2022
Assets
Cash and cash equivalents
$
396,487
$
430,746
Cash segregated under federal
regulations
52,015
50,947
Investments, at fair value
109,037
83,792
Accounts receivable, net
92,969
78,450
Receivables from broker-dealers, clearing
organizations
and customers
479,741
476,335
Goodwill
154,789
154,789
Intangible assets, net of accumulated
amortization
89,812
98,065
Furniture, equipment, leasehold
improvements and
capitalized software, net
99,022
100,256
Operating lease right-of-use assets
63,674
66,106
Prepaid expenses and other assets
81,645
68,289
Total assets
$
1,619,191
$
1,607,775
Liabilities and stockholders'
equity
Liabilities
Accrued employee compensation
$
35,877
$
56,302
Payables to broker-dealers, clearing
organizations
and customers
287,360
303,993
Income and other tax liabilities
18,518
28,448
Accounts payable, accrued expenses
and other liabilities
32,422
55,263
Operating lease liabilities
79,922
82,676
Total liabilities
454,099
526,682
Stockholders' equity
Common stock
123
123
Additional paid-in capital
339,867
345,468
Treasury stock
(327,815
)
(328,326
)
Retained earnings
1,180,820
1,101,525
Accumulated other comprehensive loss
(27,903
)
(37,697
)
Total stockholders' equity
1,165,092
1,081,093
Total liabilities and stockholders'
equity
$
1,619,191
$
1,607,775
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)
2023
2022
2023
2022
Net income
$
59,859
$
66,922
$
133,487
$
131,691
Add back:
Interest income
(5,312
)
(254
)
(9,561
)
(313
)
Interest expense
53
337
183
510
Provision for income taxes
19,091
22,656
43,658
48,306
Depreciation and amortization
17,005
15,240
33,466
30,414
EBITDA
$
90,696
$
104,901
$
201,233
$
210,608
Net income margin1
33.3
%
36.7
%
34.9
%
35.8
%
Add back:
Interest income
(3.0
)
(0.1
)
(2.5
)
(0.1
)
Interest expense
—
0.2
—
0.1
Provision for income taxes
10.6
12.4
11.4
13.1
Depreciation and amortization
9.5
8.4
8.7
8.3
EBITDA margin2
50.4
%
57.6
%
52.5
%
57.2
%
Table 7: Reconciliation of Cash Flows
from Operating Activities to Free Cash Flow
Three Months Ended
June 30,
Six Months Ended
June 30,
In thousands (unaudited)
2023
2022
2023
2022
Cash flows from operating
activities
$
105,394
$
93,637
$
112,921
$
69,907
Exclude: Net change in trading
investments
(890
)
—
(471
)
—
Exclude: Net change in
fail-to-deliver/receive
from broker-dealers, clearing
organizations
and customers
(46,010
)
(20,376
)
757
48,166
Less: Purchases of furniture, equipment
and
leasehold improvements
(1,055
)
(1,285
)
(1,272
)
(2,681
)
Less: Capitalization of software
development
costs
(11,025
)
(9,136
)
(21,715
)
(18,561
)
Free cash flow
$
46,414
$
62,840
$
90,220
$
96,831
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.
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INVESTOR RELATIONS Stephen Davidson MarketAxess
Holdings Inc. +1 212 813 6313 sdavidson2@marketaxess.com
MEDIA RELATIONS Marisha Mistry MarketAxess
Holdings Inc. +1 917 267 1232 mmistry@marketaxess.com
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