MarketAxess Holdings Inc. (Nasdaq: MKTX), the operator of a
leading electronic trading platform for fixed-income securities,
today announced financial results for the fourth quarter and full
year ended December 31, 2023.
4Q23 select financial and operational highlights*
- Total revenues of $197.2 million, up 10.9%,
includes Pragma revenues of $7.6 million and an increase of
$1.8 million from the impact of foreign currency
fluctuations.
- Total expenses of $120.2 million, up 19.9%,
includes Pragma operating expenses of $8.7 million,
acquisition-related expenses and costs associated with efficiency
initiatives of $2.4 million and an increase of $1.7
million from the impact of foreign currency fluctuations.
- 16.5% increase in diluted EPS to $1.84 on net
income of $69.6 million, up from diluted EPS of
$1.58 on net income of $59.2 million in the prior
year. The current quarter includes a benefit to earnings in the
provision for income taxes from return-to-provision adjustments and
the purchase of transferable tax credits by the Company.
- Record information services revenue of $11.9
million, up 14.6%, and record post-trade revenue
of $11.0 million, up 24.1%. Information services and
post-trade revenues include increases from the impact of foreign
currency fluctuations of $0.4 million and $0.6
million, respectively.
- Strong geographic and product diversification with a
10.8% increase in average daily volume (“ADV”) from
international products (emerging markets and Eurobonds);
record portfolio trading volume of $41.8 billion, up
35.8%, and 7.8% growth in municipal bonds on
record ADV, with a record $23.7 billion
in tax-exempt trading volume.
- 30.3% of eligible portfolio trading volume was executed
over MarketAxess X-Pro, up from 18.2% in 3Q23, as
client engagement with the new platform continues to grow.
- Record automated and algorithmic trading volume
(+40.3%), trade count (+41.3%) and active client
firms (+36.0%); record level of algorithmic responses
(+40.0%).
- Record 2,108 (+2.1%) active client firms, record
1,638 (+3.7%) active U.S. credit client firms; 1,053
(+2.3%) international active client firms and record 1,167
(+6.6%) active client firms trading three or more
products.
- 36% total credit Open Trading® share,1 down from
38% in the prior year. The Company delivered estimated
price improvement2 via Open Trading of approximately $173
million in the quarter and $702 million for full year
2023.
*All comparisons versus 4Q22 unless otherwise noted.
Chris Concannon, CEO of MarketAxess, commented:
“In 2023, we made significant strides in enhancing our client
franchise, increasing client engagement with MarketAxess X-Pro, our
new trading platform, and delivering solid growth in ADV across new
product areas and regions.
We have integrated our market leading data, protocols and
liquidity pools for clients through X-Pro, designed to make client
workflows more efficient. Our innovative proprietary data is
powering X-Pro, and we believe, is helping our clients make better
trading decisions. We are expanding our automated and algorithmic
trading solutions by leveraging our newly acquired quantitative
trading expertise to generate new client algorithms. These new
algorithms solve for increasing investor demand for efficiency and
the need to enhance profitability.
We made significant progress establishing the next generation of
trading tools for clients to engage our integrated markets. We are
entering 2024 with a more favorable backdrop for fixed-income, and
our client franchise has never been stronger. We are focused on
realizing the full potential of the investments we have made to
drive continued growth in the quarters ahead.”
Table 1: 4Q23 select financial results
$ in millions, except per share data(unaudited)
Revenues
Operating Income Net Income Diluted EPS Net
IncomeMargin (%) EBITDA3 EBITDA Margin(%)3
4Q23
$197
$77
$70
$1.84
35.3%
$99
50.0%
4Q22
$178
$78
$59
$1.58
33.3%
$92
51.7%
% Change
11%
(1%)
18%
16%
+200 bps
7%
(170) bps
FY 2023
$753
$315
$258
$6.85
34.3%
$383
50.9%
FY 2022
$718
$327
$250
$6.65
34.8%
$395
55.0%
% Change
5%
(4%)
3%
3%
(50) bps
(3%)
(410) bps
Table 1A: 4Q23 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
4Q23
62/63
$29,641
$13,108
$6,215
$1,653
$2,927
$1,767
$539
$16,533
$16,106
$427
4Q22
61/63
$30,424
$12,042
$5,487
$1,805
$2,666
$1,569
$500
$18,382
$18,026
$356
% Change
(3%)
9%
13%
(8%)
10%
13%
8%
(10%)
(11%)
20%
Table 1B: 4Q23 estimated market share
CREDIT RATES (unaudited)
High-Grade
High-Yield High-Grade/High-Yield Combined
Eurobonds5 CompositeCorporate Bond6 Municipals
US Govt.Bonds
4Q23
20.9%
17.2%
20.0%
15.7%
19.4%
5.8%
2.3%
4Q22
21.1%
20.5%
20.9%
18.2%
20.9%
5.0%
3.1%
Bps Change
(20) bps
(330) bps
(90) bps
(250) bps
(150) bps
+80 bps
(80) bps
4Q23 overview of results
Revenues and trading volume
Credit
- Total credit commission revenue of $161.9 million
(including $34.6 million in fixed-distribution fees)
increased $8.2 million, or 5%, compared to
$153.7 million (including $32.8 million in
fixed-distribution fees) in the prior year. The increase in total
credit commission revenue was driven principally by higher
estimated market volumes and a $1.8 million, or 5%,
increase in total credit fixed-distribution fees, partially offset
by lower estimated market share and lower average fee per million
(“FPM”). 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 $156.28 from $163.87 in the prior
year was mainly due to product (lower U.S. high-yield activity) and
protocol (higher portfolio trading volume) mix-shift.
- Total credit ADV of $13.1 billion, up 8.9% versus
the prior year, and up 17.5% versus 3Q23 levels.
- U.S. high-grade ADV of $6.2 billion, up
13.3% from the prior year, and up 20.0% versus 3Q23.
Estimated market share of 20.9%, down slightly from
21.1% in the prior year, but up from 20.0% in 3Q23.
U.S. high-grade estimated market ADV increased 13.9%
compared to the prior year, and increased 14.7% versus
3Q23.
- U.S. high-yield ADV of $1.7 billion, down 8.4%
compared to the prior year, but up 27.7% from 3Q23 levels.
Estimated market share of 17.2%, down from 20.5% in
the prior year, but up from 16.1% in 3Q23. U.S. high-yield
estimated market ADV increased 9.0% versus the prior year,
and increased 19.4% compared to 3Q23. The decrease in U.S.
high-yield estimated market share year-over-year was driven
principally by an estimated 18.6% decrease in ETF market
maker activity on the platform.
- Emerging markets ADV of $2.9 billion, up 9.8%
from the prior year, and up 4.6% from 3Q23 levels. The
year-over-year increase was principally due to a 25.6%
increase in local currency trading ADV. Emerging markets estimated
market ADV increased 12.1% compared to the prior year, and
increased 4.2% compared to 3Q23.7
- Eurobonds ADV of $1.8 billion, up 12.6% from the
prior year, and up 19.1% from 3Q23.
- Record municipal bond ADV of $539 million, up
7.8% from the prior year, and up 38.9% from 3Q23. The
current quarter included a record $23.7 billion in
tax-exempt trading volume. Estimated market share of 5.8%,
up from 5.0% in the prior year and in line with 3Q23 levels.
Estimated market ADV down 7.0% compared to the prior year,
but up 38.5% compared to 3Q23.
- Axess IQTM, the order and execution workflow solution
designed for wealth management and private banking clients,
achieved record ADV of $140.6 million, up
67.0% from the prior year, and up 41.9% from 3Q23
levels.
- Record $41.8 billion in total portfolio trading volume,
up 35.8% from the prior year, and up 52.1% from 3Q23.
Approximately $11.6 billion, or 30.3%, of our
eligible portfolio trading volume was executed over X-Pro, our new
trading platform, compared to approximately $4.8 billion, or
18.2%, in 3Q23.
- 36% Open Trading share1 of total credit trading volume,
down from 38% in the prior year, but up from 34% in
3Q23.
Rates
- Total rates commission revenue of $4.8 million
was in line with the prior year. A 10% decrease in rates ADV
to $16.5 billion was offset by an 11% increase in FPM
for total rates products to $4.62, compared to $4.16
in the prior year.
Information services & post-trade services
- Record information services revenue of $11.9
million increased $1.5 million, or 15%,
compared to the prior year. The increase in revenue was principally
driven by net new data contract revenue and the impact of foreign
currency fluctuations.
- Record post-trade services revenue of $11.0
million was up 24% compared to the prior year mainly due
to the impact of price increases, higher end-of-year resubmissions
revenue and the impact of foreign currency fluctuations.
Technology services
- Total technology services revenue of $2.5
million, up from $0.2 million in the prior
year. The current quarter includes $2.3 million in
revenue from the acquisition of Pragma.
Expenses
- Total expenses of $120.2 million, up 19.9%,
includes Pragma operating expenses of $8.7 million,
acquisition-related expenses and costs associated with efficiency
initiatives of $2.4 million and an increase of $1.7
million from the impact of foreign currency fluctuations.
Non-operating
- Other income (expense): Other income was $6.8
million, up from $1.8 million in the prior
year. The current quarter included interest income of $6.3
million, compared to $3.3 million in the prior year,
driven by higher interest rates.
- Tax rate: The effective tax rate was 16.9%,
compared to 25.4% in the prior year. The decrease in the
effective tax rate was driven by return-to-provision adjustments
and the purchase of transferable tax credits by the Company.
Capital
- The Company had $586.1 million in cash, cash equivalents
and investments as of December 31, 2023, which includes the
impact of the Pragma acquisition. There were no outstanding
borrowings under the Company’s credit facility.
- The Board declared a quarterly cash dividend of $0.74
per share, an increase from $0.72 per share, payable on
February 28, 2024 to stockholders of record as of the
close of business on February 14, 2024.
Other
- Employee headcount was 881 as of December 31,
2023, which includes 59 employees from the Pragma
acquisition, compared to 744 as of December 31, 2022
and 853 as of September 30, 2023.
Guidance for full year 2024
For the full year 2024, the Company is providing the following
guidance which is based on foreign exchange rates as of December
31, 2023:
- Revenue from Pragma is expected to grow in the mid-single
digits (percent). Pragma’s revenue in 4Q23 was $7.6 million.
- Expenses are expected to be in the range of $480.0
million to $500.0 million and includes a full year of
Pragma expenses estimated to range between $33.0 million to
$35.0 million. Pragma expenses are expected to include
amortization expense on acquired intangible assets of $4.8
million. Based on the midpoint of the stated guidance range,
total expenses are expected to increase by approximately
12%, 6% excluding the impact of Pragma expenses.
- The effective tax rate is expected to be between 24.0%
and 25.0%.
- Capital expenditures to support new protocols, products and
trading platform enhancements are expected to be in the range of
$60.0 million to $65.0 million.
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 and
estimated market share is derived from MarketAxess TraX data for
Eurobonds and covered bonds market trading volume, which is
currently estimated to represent approximately 80% of the total
European market.
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) product areas.
7
Emerging markets estimated market ADV is
derived by combining MarketAxess TraX emerging markets trading
volume (currently estimated to represent approximately 60% of total
emerging markets) 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.
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, and Richard Schiffman,
Global Head of Trading Solutions, will host a conference call to
discuss the Company’s financial results and outlook on Wednesday,
January 31, 2024 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.
General Notes Regarding the Data Presented
Reported MarketAxess volume in all product categories includes
only fully electronic trading volume. MarketAxess trading volumes,
TRACE reported volumes and MarketAxess Post-Trade processed volumes
are available on the Company’s website at
investor.marketaxess.com/volume.
For periods beginning with January 2024, the Company will be
making 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, will provide more accurate
measures of estimated market volumes and estimated market share.
Prior comparable periods will be recast retrospectively for both
Municipal and U.S. Government Bonds to conform to the updated
presentation of the data. Beginning in January 2024, the new
estimated market volume data will also be available on the
Company’s website at investor.marketaxess.com/volume.
In addition, beginning with January 2024, the Company will no
longer include Eurobonds or Emerging Markets market ADV or
estimated market share. The Company is currently reviewing its
methodology for calculating such statistics, which historically
have been derived from MarketAxess TraX data, to ensure that the
statistics presented provide a complete and accurate view of the
market.
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.
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 X @MarketAxess.
Table 2: Consolidated Statements of
Operations
Three Months Ended
Year Ended
December 31,
December 31,
In thousands, except per share data
(unaudited)
2023
2022
% Change
2023
2022
% Change
Revenues
Commissions
$
171,891
$
158,443
8.5
%
$
662,964
$
641,183
3.4
%
Information services
11,917
10,398
14.6
46,383
39,314
18.0
Post-trade services
10,950
8,821
24.1
40,178
36,877
9.0
Technology services
2,490
240
NM
3,022
926
226.3
Total revenues
197,248
177,902
10.9
752,547
718,300
4.8
Expenses
Employee compensation and
benefits
57,356
44,108
30.0
206,926
182,104
13.6
Depreciation and amortization
19,530
15,730
24.2
70,557
61,446
14.8
Technology and communications
17,228
14,113
22.1
62,801
52,964
18.6
Professional and consulting fees
7,604
7,848
(3.1
)
31,935
33,949
(5.9
)
Occupancy
3,903
3,653
6.8
14,216
14,121
0.7
Marketing and advertising
2,646
3,442
(23.1
)
11,049
9,977
10.7
Clearing costs
4,610
4,614
(0.1
)
17,002
17,663
(3.7
)
General and administrative
7,344
6,721
9.3
23,042
19,200
20.0
Total expenses
120,221
100,229
19.9
437,528
391,424
11.8
Operating income
77,027
77,673
(0.8
)
315,019
326,876
(3.6
)
Other income (expense)
Interest income
6,274
3,294
90.5
22,425
5,040
344.9
Interest expense
(1,636
)
(52
)
NM
(1,983
)
(700
)
183.3
Equity in earnings of
unconsolidated affiliate
156
66
136.4
735
1,126
(34.7
)
Other, net
1,991
(1,553
)
NM
(3,496
)
5,946
NM
Total other income (expense)
6,785
1,755
286.6
17,681
11,412
54.9
Income before income taxes
83,812
79,428
5.5
332,700
338,288
(1.7
)
Provision for income taxes
14,185
20,202
(29.8
)
74,645
88,064
(15.2
)
Net income
$
69,627
$
59,226
17.6
$
258,055
$
250,224
3.1
Per Share Data:
Net income per common share
Basic
$
1.85
$
1.58
$
6.87
$
6.68
Diluted
$
1.84
$
1.58
$
6.85
$
6.65
Cash dividends declared per
common share
$
0.72
$
0.70
$
2.88
$
2.80
Weighted-average common shares:
Basic
37,730
37,480
37,546
37,468
Diluted
37,809
37,573
37,654
37,643
NM - not meaningful
Table 3: Commission Revenue
Detail
In thousands, except fee per million
data
Three Months Ended December
31,
Year Ended December
31,
(unaudited)
2023
2022
% Change
2023
2022
% Change
Variable transaction fees
Credit
$
127,283
$
120,887
5.3
%
$
496,028
$
491,680
0.9
%
Rates
4,735
4,667
1.5
20,749
22,341
(7.1
)
Other
4,979
–
NM
4,979
–
NM
Total variable transaction fees
136,997
125,554
9.1
521,756
514,021
1.5
Fixed distribution fees
Credit
$
34,581
32,817
5.4
140,700
126,915
10.9
Rates
57
72
(20.8
)
252
247
2.0
Other
256
–
NM
256
–
NM
Total fixed distribution fees
34,894
32,889
6.1
141,208
127,162
11.0
Total commission revenue
$
171,891
$
158,443
8.5
$
662,964
$
641,183
3.4
Average variable transaction fee per
million
Credit
$
156.28
$
163.87
(4.6
)%
$
158.61
$
166.96
(5.0
)%
Rates
4.62
4.16
11.1
4.46
4.10
8.8
Table 4: Trading Volume Detail*
Three Months Ended December
31,
In millions (unaudited)
2023
2022
% Change
Volume
ADV
Volume
ADV
Volume
ADV
Credit
High-grade
$
385,301
$
6,215
$
334,735
$
5,487
15.1
%
13.3
%
High-yield
102,501
1,653
110,091
1,805
(6.9
)
(8.4
)
Emerging markets
181,445
2,927
162,597
2,666
11.6
9.8
Eurobonds
111,330
1,767
98,853
1,569
12.6
12.6
Other credit
33,854
546
31,404
515
7.8
6.0
Total credit trading
814,431
13,108
737,680
12,042
10.4
8.9
Rates
U.S. government bonds
998,542
16,106
1,099,596
18,026
(9.2
)
(10.7
)
Agency and other government bonds
26,684
427
22,138
356
20.5
19.9
Total rates trading
1,025,226
16,533
1,121,734
18,382
(8.6
)
(10.1
)
Total trading
$
1,839,657
$
29,641
$
1,859,414
$
30,424
(1.1
)
(2.6
)
Number of U.S. Trading Days1
62
61
Number of U.K. Trading Days2
63
63
Year Ended December
31,
In millions (unaudited)
2023
2022
% Change
Volume
ADV
Volume
ADV
Volume
ADV
Credit
High-grade
$
1,457,559
$
5,854
$
1,364,530
$
5,480
6.8
%
6.8
%
High-yield
398,275
1,599
424,812
1,706
(6.2
)
(6.3
)
Emerging markets
717,877
2,883
693,560
2,785
3.5
3.5
Eurobonds
441,171
1,758
362,713
1,451
21.6
21.2
Other credit
112,451
451
99,225
398
13.3
13.3
Total credit trading
3,127,333
12,545
2,944,840
11,820
6.2
6.1
Rates
U.S. government bonds
4,545,850
18,256
5,347,607
21,476
(15.0
)
(15.0
)
Agency and other government bonds
106,933
427
96,782
388
10.5
10.1
Total rates trading
4,652,783
18,683
5,444,389
21,864
(14.5
)
(14.5
)
Total trading
$
7,780,116
$
31,228
$
8,389,229
$
33,684
(7.3
)
(7.3
)
Number of U.S. Trading Days1
249
249
Number of U.K. Trading Days2
251
250
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
Table 5: Consolidated Condensed Balance
Sheet Data
As of
In thousands (unaudited)
December 31, 2023
December 31, 2022
Assets
Cash and cash equivalents
$
451,280
$
430,746
Cash segregated under federal
regulations
45,122
50,947
Investments, at fair value
134,861
83,792
Accounts receivable, net
89,839
78,450
Receivables from broker-dealers, clearing
organizations
and customers
687,936
476,335
Goodwill
236,706
154,789
Intangible assets, net of accumulated
amortization
119,108
98,065
Furniture, equipment, leasehold
improvements and
capitalized software, net
102,671
100,256
Operating lease right-of-use assets
63,045
66,106
Prepaid expenses and other assets
84,499
68,289
Total assets
$
2,015,067
$
1,607,775
Liabilities and stockholders'
equity
Liabilities
Accrued employee compensation
$
60,124
$
56,302
Payables to broker-dealers, clearing
organizations
and customers
537,398
303,993
Income and other tax liabilities
7,892
28,448
Accounts payable, accrued expenses
and other liabilities
37,013
55,263
Operating lease liabilities
79,677
82,676
Total liabilities
722,104
526,682
Stockholders' equity
Common stock
123
123
Additional paid-in capital
333,292
345,468
Treasury stock
(260,298
)
(328,326
)
Retained earnings
1,244,216
1,101,525
Accumulated other comprehensive loss
(24,370
)
(37,697
)
Total stockholders' equity
1,292,963
1,081,093
Total liabilities and stockholders'
equity
$
2,015,067
$
1,607,775
Table 6: Reconciliation of Net Income
to EBITDA and Net Income Margin to EBITDA Margin
Three Months Ended
December 31,
Year Ended
December 31,
In thousands (unaudited)
2023
2022
2023
2022
Net income
$
69,627
$
59,226
$
258,055
$
250,224
Add back:
Interest income
(6,274
)
(3,294
)
(22,425
)
(5,040
)
Interest expense
1,636
52
1,983
700
Provision for income taxes
14,185
20,202
74,645
88,064
Depreciation and amortization
19,530
15,730
70,557
61,446
EBITDA
$
98,704
$
91,916
$
382,815
$
395,394
Net income margin1
35.3
%
33.3
%
34.3
%
34.8
%
Add back:
Interest income
(3.2
)
(1.8
)
(3.0
)
(0.8
)
Interest expense
0.8
—
0.3
0.1
Provision for income taxes
7.2
11.4
9.9
12.3
Depreciation and amortization
9.9
8.8
9.4
8.6
EBITDA margin2
50.0
%
51.7
%
50.9
%
55.0
%
Table 7: Reconciliation of Net Cash
Provided by Operating Activities to Free Cash Flow
Three Months Ended
December 31,
Year Ended
December 31,
In thousands (unaudited)
2023
2022
2023
2022
Net cash provided by operating
activities
$
141,685
$
134,226
$
333,767
$
289,231
Exclude: Net change in trading
investments
948
49,972
25,248
49,527
Exclude: Net change in
fail-to-deliver/receive
from broker-dealers, clearing
organizations
and customers
(34,354
)
(71,933
)
(46,696
)
(25,994
)
Less: Purchases of furniture, equipment
and
leasehold improvements
(2,071
)
(6,500
)
(9,326
)
(13,142
)
Less: Capitalization of software
development
costs
(11,320
)
(11,621
)
(43,122
)
(38,730
)
Free cash flow
$
94,888
$
94,144
$
259,871
$
260,892
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/20240130783344/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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