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, 2023.
3Q23 select financial and operational highlights*
- $172.3 million in total revenues, in line with the prior
year, reflecting the impact of low credit spread volatility in the
period.
- 10.0% increase in total expenses, driven principally by
investments to capture the long-term revenue opportunity in the
global fixed-income markets; $66.9 million in
operating income.
- Diluted EPS of $1.46 on net income of $54.9
million.
- Record information services revenue of $11.8
million, up 21.5%, reflecting increasing adoption of
Composite+™.
- Strong geographic and product diversification with
11.3% increase in average daily volume (“ADV”) from
international products (emerging markets and Eurobonds);
7.4% growth in municipal bonds ADV with estimated market
share of 5.8% (+90 bps).
- Record automated trading volume (+45.7%), trade
count (+54.5%) and active client firms (+24.6%);
record level of algorithmic responses (+40.7%).
Total automated trade volume and trade count surpassed full-year
2022 levels as of October 4, 2023.
- Record 2,093 (+6.1%) active client firms, record
1,625 (+8.2%) active U.S. credit client firms; record
1,056 (+6.3%) international active client firms and record
1,151 (+6.7%) active client firms trading three or more
products.
- 33% total credit Open Trading® share1 down from
37% in the prior year on lower credit spread volatility. The
Company delivered estimated price improvement2 via Open
Trading of approximately $120 million in the third quarter
of 2023 and $529 million year-to-date.
*All comparisons versus 3Q22 unless
otherwise noted.
Table 1: 3Q23 select financial results
$ in millions, except per share data(unaudited)
Revenues
Operating Income Net Income Diluted EPS Net
IncomeMargin (%) EBITDA3 EBITDA Margin(%)3
3Q23
$172
$67
$55
$1.46
31.9%
$83
48.1%
3Q22
$172
$76
$59
$1.58
34.5%
$93
54.0%
% Change
-
(12%)
(7%)
(8%)
(260) bps
(11%)
(590) bps
YTD 2023
$555
$238
$188
$5.01
33.9%
$284
51.2%
YTD 2022
$540
$249
$191
$5.07
35.3%
$303
56.2%
% Change
3%
(4%)
(2%)
(1%)
(140) bps
(6%)
(500) bps
Table 1A: 3Q23 trading volume (ADV)
CREDIT
RATES
$ in millions(unaudited)
US/UK TradingDays4 TotalADV
TotalCredit High-Grade High-Yield
EmergingMarkets Eurobonds MunicipalBonds
TotalRates US Govt.Bonds Agcy./OtherGovt.
Bonds
3Q23
63/64
$29,285
$11,156
$5,179
$1,294
$2,799
$1,484
$388
$18,129
$17,713
$416
3Q22
64/64
$31,440
$10,974
$5,124
$1,626
$2,592
$1,255
$361
$20,466
$20,133
$333
% Change
(7%)
2%
1%
(20%)
8%
18%
7%
(11%)
(12%)
25%
Table 1B: 3Q23 estimated market share
CREDIT RATES (unaudited)
High-Grade
High-Yield High-Grade/High-Yield Combined
Eurobonds5 CompositeCorporate Bond6 Municipals
US Govt.Bonds
3Q23
20.0%
16.1%
19.1%
15.8%
18.8%
5.8%
2.9%
3Q22
21.1%
19.3%
20.6%
17.6%
20.6%
4.9%
3.6%
Bps Change
(110) bps
(320) bps
(150) bps
(180) bps
(180) bps
+90 bps
(70) bps
3Q23 overview of results
Revenues and trading volume
Credit
- Total credit commission revenue of $145.2 million
(including $36.2 million in fixed-distribution fees)
decreased $2.4 million, or 2%, compared to
$147.6 million (including $31.3 million in
fixed-distribution fees) in the prior year. The decrease in total
credit commission revenue was driven principally by lower estimated
market share and lower average fee per million (“FPM”), partially
offset by a $4.8 million, or 15%, 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 $154.85 from
$165.60 in the third quarter of 2022 was mainly due to
product mix-shift in other credit products, primarily lower U.S.
high-yield activity and the lower duration of bonds traded in U.S.
high-grade. — The last week of September 2023 was the second
highest week of credit trading volume ever for the Company, as
volatility increased at the end of the month. — U.S. high-grade ADV
of $5.2 billion, up 1.1% with estimated market
share of 20.0%. U.S. high-grade estimated market ADV
increased 6.4%. — U.S. high-yield ADV of $1.3
billion, down 20.4% with estimated market share of
16.1%. U.S. high-yield estimated market ADV decreased
4.5%. The decrease in U.S. high-yield estimated market share
was driven principally by low levels of credit spread volatility,
resulting in a decrease in ETF market maker activity on the
platform. The VIX index, an indicator of volatility, was an average
15.1 in 3Q23, down 39.1% from 24.7 in 3Q22. —
8.0% increase in emerging markets ADV to $2.8
billion, driven by a 26.9% increase in local markets
trading volume, partially offset by a 4.2% decline in hard
currency trading volume; 4.3% decrease in emerging markets
estimated market ADV.7 — 18.2% increase in Eurobonds ADV to
$1.5 billion. Eurobonds estimated market ADV increased
31.6%.5 — Municipal bond ADV of $388 million, up
7.4% with estimated market share of 5.8%. Municipal
bond estimated market ADV decreased 10.1%. — $27.5
billion in total portfolio trading volume, up 11.1% from
$24.7 billion in 3Q22. — 33% Open Trading®
share1 of total credit trading volume, down from 37% in the
prior year on lower credit spread volatility. Estimated price
improvement2 delivered via Open Trading in the quarter was
approximately $120 million and is $529 million
year-to-date through September 2023.
Rates
- Total rates commission revenue of $5.2 million
decreased 5% compared to the prior year, mainly due to the
11% decrease in rates ADV to $18.1 billion, which was
partially offset by a 9% increase in FPM for total rates
products to $4.56, compared to $4.17 in the third
quarter of 2022. — 289 active client firms on the platform,
up 40% from 206 in the prior year.
Information services & post-trade services
- Record information services revenue of $11.8
million increased $2.1 million, or 22%,
compared to the prior year. The increase in revenue was principally
driven by new Composite+ data contract revenue and the impact of
foreign currency fluctuations. Excluding the impact of foreign
currency fluctuations, information services revenue would have
increased approximately 17%.
- Post-trade services revenue of $9.8 million was up
9% compared to the prior year mainly due to the impact of
foreign currency fluctuations. Excluding the impact of foreign
currency fluctuations, post-trade services revenue would have
increased approximately 2%.
Expenses
- Total expenses of $105.4 million increased $9.5
million, or 10%. 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 depreciation and amortization
expense and increased professional and consulting fees. Excluding
the impact of foreign currency fluctuations, total expenses would
have increased approximately 8%.
Non-operating
- Other income (expense): Other income was $4.8
million, up from $2.6 million in the prior
year. The current quarter included interest income of $6.6
million, compared to $1.4 million in the prior year,
driven by higher interest rates.
- Tax rate: The effective tax rate was 23.4%,
compared to 24.8% in the prior year.
Capital
- The Company had $553.3 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 November 22, 2023 to stockholders of
record as of the close of business on November 8, 2023.
Other
- Employee headcount was 853 as of September 30,
2023, compared to 732 as of September 30, 2022
and 803 as of June 30, 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
- Based on the progression of operating expenses and the
acquisition of Pragma, which closed on October 2, 2023, the Company
is refining its previously stated full-year 2023 expense guidance
range of $418.0 million to $446.0 million, to a new
range of $432.0 million to $438.0 million. The new
range includes an estimated $12.5 million of M&A related
expenses, including $8.5 million of direct operating
expenses related to Pragma and $4.0 million of non-recurring
M&A expenses.
- The Company is reconfirming its full-year 2023 capital
expenditures guidance range of $52.0 million to $58.0
million.
- The Company now expects the full-year 2023 effective tax rate
to be approximately 23.5%, below the previously stated range
of 25.0% to 26.0%. The lower effective tax rate for
the year is mainly driven by favorable apportionment in connection
with state tax filings and other federal tax filing positions.
1
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.
2
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.
3
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.
4
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.
5
Eurobonds estimated market ADV is derived
from MarketAxess TraX data for Eurobonds and covered bonds market
trading volume, which is now estimated to represent approximately
80% of the total European market beginning in September 2023, up
from the previous estimate of 70%.
6
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 now
estimated to represent approximately 80% of the total European
market, up from the previous estimate of 70%) product areas.
7
Emerging markets estimated market ADV is
derived by combining MarketAxess TraX emerging markets trading
volume (estimated to represent approximately 60% of the total
emerging markets market beginning in September 2023, up from the
previous estimate of 55%) and FINRA TRACE-reportable emerging
markets trading volume, principally U.S. dollar denominated
corporates.
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 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.
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 Wednesday, October 25,
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
Nine Months Ended
September 30,
September 30,
In thousands, except per share data
(unaudited)
2023
2022
% Change
2023
2022
% Change
Revenues
Commissions
$
150,496
$
153,164
(1.7
)%
$
491,073
$
482,740
1.7
%
Information services
11,801
9,711
21.5
34,466
28,916
19.2
Post-trade services
9,833
9,000
9.3
29,228
28,056
4.2
Other
154
237
(35.0
)
532
686
(22.4
)
Total revenues
172,284
172,112
0.1
555,299
540,398
2.8
Expenses
Employee compensation and benefits
48,872
44,805
9.1
149,570
137,996
8.4
Depreciation and amortization
17,561
15,302
14.8
51,027
45,716
11.6
Technology and communications
15,339
14,169
8.3
45,573
38,851
17.3
Professional and consulting fees
9,181
7,560
21.4
24,331
26,101
(6.8
)
Occupancy
3,503
3,381
3.6
10,313
10,468
(1.5
)
Marketing and advertising
2,100
1,797
16.9
8,403
6,535
28.6
Clearing costs
3,665
4,211
(13.0
)
12,392
13,049
(5.0
)
General and administrative
5,154
4,576
12.6
15,698
12,479
25.8
Total expenses
105,375
95,801
10.0
317,307
291,195
9.0
Operating income
66,909
76,311
(12.3
)
237,992
249,203
(4.5
)
Other income (expense)
Interest income
6,590
1,433
NM
16,151
1,746
NM
Interest expense
(164
)
(138
)
18.8
(347
)
(648
)
(46.5
)
Equity in earnings of
unconsolidated affiliate
125
869
(85.6
)
579
1,060
(45.4
)
Other, net
(1,717
)
388
NM
(5,487
)
7,499
NM
Total other income (expense)
4,834
2,552
89.4
10,896
9,657
12.8
Income before income taxes
71,743
78,863
(9.0
)
248,888
258,860
(3.9
)
Provision for income taxes
16,802
19,556
(14.1
)
60,460
67,862
(10.9
)
Net income
$
54,941
$
59,307
(7.4
)
$
188,428
$
190,998
(1.3
)
Per Share Data:
Net income per common share
Basic
$
1.47
$
1.58
$
5.03
$
5.10
Diluted
$
1.46
$
1.58
$
5.01
$
5.07
Cash dividends declared per
common share
$
0.72
$
0.70
$
2.16
$
2.10
Weighted-average common shares:
Basic
37,491
37,479
37,485
37,464
Diluted
37,574
37,567
37,603
37,666
NM - not meaningful
Table 3: Commission Revenue
Detail
In thousands, except fee per million
data
Three Months Ended September
30,
Nine Months Ended September
30,
(unaudited)
2023
2022
% Change
2023
2022
% Change
Variable transaction fees
Credit
$
109,065
$
116,309
(6.2
)%
$
368,745
$
370,793
(0.6
)%
Rates
5,209
5,463
(4.6
)
16,014
17,674
(9.4
)
Total variable transaction fees
114,274
121,772
(6.2
)
384,759
388,467
(1.0
)
Fixed distribution fees
Credit
36,167
31,328
15.4
106,119
94,098
12.8
Rates
55
64
(14.1
)
195
175
11.4
Total fixed distribution fees
36,222
31,392
15.4
106,314
94,273
12.8
Total commission revenue
$
150,496
$
153,164
(1.7
)
$
491,073
$
482,740
1.7
Average variable transaction fee per
million
Credit
$
154.85
$
165.60
(6.5
)%
$
159.43
$
168.00
(5.1
)%
Rates
4.56
4.17
9.4
4.41
4.09
7.8
Table 4: Trading Volume Detail*
Three Months Ended September
30,
In millions (unaudited)
2023
2022
% Change
Volume
ADV
Volume
ADV
Volume
ADV
Credit
High-grade
$
326,304
$
5,179
$
327,916
$
5,124
(0.5
)%
1.1
%
High-yield
81,511
1,294
104,066
1,626
(21.7
)
(20.4
)
Emerging markets
176,334
2,799
165,910
2,592
6.3
8.0
Eurobonds
94,980
1,484
80,305
1,255
18.3
18.2
Other credit
25,185
400
24,159
377
4.2
6.1
Total credit trading
704,314
11,156
702,356
10,974
0.3
1.7
Rates
U.S. government bonds
1,115,889
17,713
1,288,543
20,133
(13.4
)
(12.0
)
Agency and other government bonds
26,467
416
21,281
333
24.4
24.9
Total rates trading
1,142,356
18,129
1,309,824
20,466
(12.8
)
(11.4
)
Total trading
$
1,846,670
$
29,285
$
2,012,180
$
31,440
(8.2
)
(6.9
)
Number of U.S. Trading Days1
63
64
Number of U.K. Trading Days2
64
64
Nine Months Ended September
30,
In millions (unaudited)
2023
2022
% Change
Volume
ADV
Volume
ADV
Volume
ADV
Credit
High-grade
$
1,072,258
$
5,734
$
1,029,794
$
5,478
4.1
%
4.7
%
High-yield
295,774
1,582
314,721
1,674
(6.0
)
(5.5
)
Emerging markets
536,432
2,869
530,964
2,824
1.0
1.6
Eurobonds
329,841
1,754
263,862
1,411
25.0
24.3
Other credit
78,597
420
67,820
361
15.9
16.3
Total credit trading
2,312,902
12,359
2,207,161
11,748
4.8
5.2
Rates
U.S. government bonds
3,547,308
18,970
4,248,009
22,596
(16.5
)
(16.0
)
Agency and other government bonds
80,249
428
74,644
397
7.5
7.8
Total rates trading
3,627,557
19,398
4,322,653
22,993
(16.1
)
(15.6
)
Total trading
$
5,940,459
$
31,757
$
6,529,814
$
34,741
(9.0
)
(8.6
)
Number of U.S. Trading Days1
187
188
Number of U.K. Trading Days2
188
187
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)
September 30, 2023
December 31, 2022
Assets
Cash and cash equivalents
$
420,497
$
430,746
Cash segregated under federal
regulations
52,601
50,947
Investments, at fair value
132,844
83,792
Accounts receivable, net
90,548
78,450
Receivables from broker-dealers, clearing
organizations
and customers
548,081
476,335
Goodwill
154,789
154,789
Intangible assets, net of accumulated
amortization
84,687
98,065
Furniture, equipment, leasehold
improvements and
capitalized software, net
101,654
100,256
Operating lease right-of-use assets
63,101
66,106
Prepaid expenses and other assets
88,710
68,289
Total assets
$
1,737,512
$
1,607,775
Liabilities and stockholders'
equity
Liabilities
Accrued employee compensation
$
43,881
$
56,302
Payables to broker-dealers, clearing
organizations
and customers
364,086
303,993
Income and other tax liabilities
19,379
28,448
Accounts payable, accrued expenses
and other liabilities
40,019
55,263
Operating lease liabilities
79,169
82,676
Total liabilities
546,534
526,682
Stockholders' equity
Common stock
123
123
Additional paid-in capital
346,947
345,468
Treasury stock
(327,091
)
(328,326
)
Retained earnings
1,208,607
1,101,525
Accumulated other comprehensive loss
(37,608
)
(37,697
)
Total stockholders' equity
1,190,978
1,081,093
Total liabilities and stockholders'
equity
$
1,737,512
$
1,607,775
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)
2023
2022
2023
2022
Net income
$
54,941
$
59,307
$
188,428
$
190,998
Add back:
Interest income
(6,590
)
(1,433
)
(16,151
)
(1,746
)
Interest expense
164
138
347
648
Provision for income taxes
16,802
19,556
60,460
67,862
Depreciation and amortization
17,561
15,302
51,027
45,716
EBITDA
$
82,878
$
92,870
$
284,111
$
303,478
Net income margin1
31.9
%
34.5
%
33.9
%
35.3
%
Add back:
Interest income
(3.8
)
(0.8
)
(2.9
)
(0.3
)
Interest expense
0.1
0.1
0.1
0.1
Provision for income taxes
9.7
11.3
10.9
12.6
Depreciation and amortization
10.2
8.9
9.2
8.5
EBITDA margin2
48.1
%
54.0
%
51.2
%
56.2
%
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)
2023
2022
2023
2022
Net cash provided by operating
activities
$
79,161
$
85,098
$
192,082
$
155,005
Exclude: Net change in trading
investments
24,771
(445
)
24,300
(445
)
Exclude: Net change in
fail-to-deliver/receive
from broker-dealers, clearing
organizations
and customers
(13,099
)
(2,227
)
(12,342
)
45,939
Less: Purchases of furniture, equipment
and
leasehold improvements
(5,983
)
(3,961
)
(7,255
)
(6,642
)
Less: Capitalization of software
development
costs
(10,087
)
(8,548
)
(31,802
)
(27,109
)
Free cash flow
$
74,763
$
69,917
$
164,983
$
166,748
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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version on businesswire.com: https://www.businesswire.com/news/home/20231024261917/en/
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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