Wall Street analysts expect MarketAxess (MKTX) to post quarterly earnings of $1.82 per share in its upcoming report, which indicates a year-over-year decline of 5.2%. Revenues are expected to be $210.63 million, up 0.2% from the year-ago quarter.The consensus EPS estimate for the quarter has been revised 0.2% higher over the last 30 days to the current level. This reflects how the analysts covering the stock have collectively reevaluated their initial estimates during this timeframe.Before a company announc ...

MarketAxess Holdings Inc. (NASDAQ: MKTX ) has finally reached the long-time coming point of inflection. My conviction on these centers on the long-awaited catalyst of returning market volatility which fuels revenue growth for this leading fixed-income electronic tradingEx-hedge fund analyst with a strong interest in finding winners and losers in industries where corporate strategy matters most. I focus on analysing the market structure, competitive positioning and strategic catalysts that lead to money-maki ...

MarketAxess Holdings Inc. (MKTX) announced impressive growth in its trading volumes for the first quarter of 2025. The total credit average daily trading volume (ADV) reached nearly $15.9 billion, marking a year-over-year increase of 6%. This growth was driven by notable gains across various segments, including a 9% boost in emerging markets ADV, and 15% growth in Eurobonds ADV. Total ADV rose 31% to $42.9 billion in the March quarter. One of the standout performers was the Municipal bonds segment (42%), wi ...

Core Insights - MarketAxess Holdings Inc. (MKTX) is experiencing growth due to rising commissions, strategic acquisitions, collaborations, and a strong financial position that supports expansion and shareholder returns [1] Financial Performance - MKTX has a Zacks Rank of 3 (Hold) and has gained 12.9% in the past month, outperforming the industry which declined by 4.4% [2] - The Zacks Consensus Estimate for MKTX's 2025 earnings is $7.70 per share, reflecting a year-over-year improvement of 5.8%, with revenues estimated at $876.3 million, indicating a 7.2% increase [3] - For 2026, earnings are projected at $8.63 per share, a 12.1% increase from 2025, with revenues expected to reach $969 million, a 10.6% improvement [4] - MKTX has consistently beaten earnings estimates in the last four quarters, with an average surprise of 2.93% [5] Operational Efficiency - The return on equity for MKTX stands at 20.2%, significantly higher than the industry average of 12%, demonstrating effective utilization of shareholders' funds [7] Market Position and Growth Drivers - MKTX benefits from rising trading volumes, which are a key driver of commission-based revenues, reporting an average daily trading volume of $37.1 billion in 2024, a 19% increase year-over-year [8] - The company has captured significant market share across various products, including U.S. High Grade, U.S. High Yield, Eurobonds, Emerging Markets, and Municipal Bonds [9] - MKTX actively pursues strategic acquisitions and partnerships to enhance its offerings and expand its presence in the fixed-income market [10] - The company serves over 1,000 active clients globally, with ongoing investments in international markets expected to drive sustained revenue growth [11] Financial Strength - MKTX's robust financial position is supported by strong liquidity and operating cash flows, with net cash generated from operations totaling $385.2 million in 2024, a 15.4% increase year-over-year [12]

Market Performance and Trading Volume - In 2024, MarketAxess generated approximately $3.5 trillion in total credit trading volume, up from $2.6 trillion in 2020, with a market share of 19.0% in U.S. high-grade corporate bonds and 13.2% in high-yield corporate bonds[20]. - The average daily volume (ADV) for U.S. high-grade and U.S. high-yield bonds on MarketAxess's platforms was approximately $8.2 billion in 2024, representing 17.7% of the estimated addressable market of $46.2 billion[32]. - In 2024, the company executed approximately $1.0 trillion in credit trading volume using Open Trading, representing 35.0% of total eligible credit trading volume on its platforms[34]. - In 2024, over 60.0% of all credit volume on the MarketAxess platform was executed via the disclosed RFQ protocol[51]. - The ADV for U.S. high-grade bonds increased by 16.9% from 2023 to 2024, reaching $6.8 billion, while U.S. high-yield bonds saw a decrease of 16.3% to $1.3 billion[40]. - In 2024, $64.0 billion in green bond trading volume was executed globally on the platforms[75]. Revenue Sources and Financial Performance - 87.1% of MarketAxess's revenues in 2024 were derived from commissions for transactions executed on its platforms[16]. - The company reported that 87.1% of its revenues in 2024 were derived from transaction commissions, with 6.2% from data products and 5.2% from post-trade services[48]. - Approximately 40.0% of the company's revenues are derived from secondary trading in U.S. high-grade corporate bonds, indicating a reliance on this segment for financial performance[149]. - Revenues from international clients increased from 25.0% of total revenues in 2020 to 30.4% in 2024, with ADV in EMEA, Latin America, and APAC growing from $3.0 billion in 2019 to $4.8 billion in 2024[35]. Technology and Platform Development - The company introduced its new trading platform, MarketAxess X-Pro, in 2024, aimed at improving trading efficiency and integrating proprietary data and pre-trade analytics[13]. - MarketAxess's acquisition of Pragma in 2023 accelerated the development of AI-driven execution algorithms across key product areas, enhancing trading capabilities[13]. - The technology team delivered approximately 1,000 unique new business and technical features to clients in 2024[78]. - Significant upgrades to electronic trading platforms and infrastructure are necessary to accommodate increases in order message volume and trading volume, which require substantial financial and operational resources[179]. Regulatory Environment and Compliance - The company is subject to extensive regulation from various authorities, including the SEC in the U.S. and the FCA in the U.K., which oversee its operations and compliance[90][100]. - Regulatory changes, such as the SEC's proposed rules for fixed-income electronic trading platforms, may require the company to adapt its trading protocols to comply with new regulations[97]. - The central clearing mandate for U.S. Treasury securities transactions is set to take effect on December 31, 2025, impacting participants who do not currently centrally clear trades[98]. - The first stage of the MiFIR Review became effective in 2024, with full effectiveness expected in 2026, introducing significant changes to trading data publication and regulatory requirements[105]. - The company may incur substantial costs related to compliance with new regulations, which could materially affect its financial condition and results of operations[211]. Competition and Market Dynamics - The competitive landscape is intensifying, with competition arising from various market participants, including electronic trading platforms and traditional broker-dealers[81][86]. - The company competes based on client network, liquidity provided by broker-dealer clients, and the unique liquidity offered by its Open Trading protocols[82]. - Future growth may be hindered by intense competition, particularly from larger and more established firms that can offer a wider range of services and lower costs[145]. - The company faces substantial competition and market dynamics that could impact its profitability and growth prospects[128]. Employee and Talent Management - MarketAxess experienced a 1.1% increase in employee count in fiscal year 2024, totaling 891 employees, compared to an 18.4% increase in 2023[120]. - The company is committed to ongoing talent management and succession planning to support future growth and leadership development[122]. - The competitive market for qualified personnel, especially software developers, poses challenges in attracting and retaining skilled employees necessary for business support[205]. Risks and Challenges - The company faces risks related to regulatory changes and compliance costs, which could impact operational flexibility and financial performance[135]. - Loss of major institutional investor clients could significantly reduce trading volume and revenue, as a limited number of clients account for a substantial portion of trading[160]. - The company may experience reduced market liquidity if bank-affiliated broker-dealers decrease trading activity, impacting operating results[158]. - Economic sanctions, such as those imposed during the Russia-Ukraine conflict, could negatively impact financial markets and the company's operations[167]. - Cybersecurity threats and incidents have not materially affected the company in the last three years, but the risk of breaches remains a concern[187]. Acquisitions and Strategic Growth - The company has made acquisitions in the past, including the regulatory reporting business of Deutsche Börse in 2020, MuniBrokers in 2021, and Pragma in 2023, with a controlling stake in RFQ-hub agreed for 2024[199]. - The company routinely evaluates potential acquisition and divestiture candidates, but there is no assurance that transactions will be completed or beneficial[199]. - The company has entered new markets, including algorithmic trading and quantitative execution solutions in equities and foreign exchange, following the acquisition of Pragma in 2023[152].

Financial Data and Key Metrics Changes - The company reported a 9% growth in revenue for 2024, marking the strongest annual revenue growth rate since 2020, with record commission and services revenue [8][11] - Total revenue for Q4 2024 was $202 million, compared to $197 million in the prior year, with commission revenue increasing by 2% [35][36] - The effective tax rate was 23%, and diluted earnings per share were reported at $1.73 [38] Business Line Data and Key Metrics Changes - In the credit business, the company generated a record $712 million in commission revenue, with strong growth in emerging markets and Eurobonds [11][39] - The rates business saw trading ADV increase significantly from $2.9 billion per day in Q1 2024 to $11.4 billion in Q4 2024 [13] - Portfolio trading ADV reached over $900 million, with U.S. credit portfolio trading ADV at $800 million and a market share of 16% [33] Market Data and Key Metrics Changes - U.S. credit ADV was up 10% to $8 billion, while international product ADV reached a record $5 billion, up 17% [28] - The company reported record local markets ADV of over $1.4 billion, up 18% [29] - Open Trading ADV was a record $4 billion in 2024, an increase of 8% [31] Company Strategy and Development Direction - The company plans to focus on growing market share across client-initiated, portfolio trading, and dealer-initiated channels in 2025 [10][20] - A new block trading solution was launched in emerging markets and Eurobonds, with plans for a full rollout in U.S. credit by Q2 2025 [10][60] - The company aims to enhance its dealer solutions and expand its automation suite to support global product offerings [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the favorable macro environment for fixed income markets, with positive inflows into fixed income funds [66] - The company acknowledged challenges in U.S. credit market share but emphasized a clear strategy to return to growth [19][75] - Management highlighted the importance of data and analytics in driving client engagement and trading efficiency [88][90] Other Important Information - The company announced the appointment of Roberto Hoornweg to the Board of Directors, effective March 1, 2025 [7] - The balance sheet remains strong, with cash and equivalents totaling $699 million as of December 31, 2024 [42] Q&A Session Summary Question: Why was the block trading launch led with emerging markets and Eurobonds? - Management explained that the decision was based on strong pre-trade analytics and client demand in those markets, with a successful increase in EM block market share [52][54] Question: What gives confidence in growing market share in high grade? - Management cited favorable market conditions, robust new issue markets, and the introduction of multiple trading protocols as key drivers for growth [66][70] Question: What are the key areas for electronification in the market? - Management identified the block market and retail space as significant opportunities for electronification, particularly in emerging markets [84][88] Question: Can you discuss the motivation behind acquiring the rest of RFQ hub? - The acquisition aims to enhance cross-asset trading capabilities and provide clients with access to fixed income ETFs alongside traditional products [146][150] Question: What initiatives are planned for the rates platform? - Management highlighted the launch of algorithmic solutions and a hybrid offering that combines electronic and traditional RFQ solutions as key initiatives for growth in the rates market [161][163]

Core Viewpoint - MarketAxess Holdings Inc. reported mixed financial results for the fourth quarter of 2024, with earnings per share exceeding estimates but total revenues falling short of expectations [1][2]. Financial Performance - Earnings per share for Q4 2024 were $1.73, surpassing the Zacks Consensus Estimate by 1.8%, although this represented a 6% decline year over year [1]. - Total revenues increased by 3% year over year to $202 million, but missed the consensus mark by 0.5% [2]. - Commission revenues reached $174.8 million, a 2% year-over-year growth, but fell short of the Zacks Consensus Estimate of $176.7 million [3]. - Information services revenues improved by 10% year over year to $13.2 million, exceeding the consensus mark of $13.1 million [4]. - Total expenses rose by 2% year over year to $122.4 million, primarily due to increased employee compensation and technology costs, but were below the estimate of $125.8 million [5]. - Operating income increased by 4% year over year to $80 million, although it missed the estimate of $82 million [5]. - EBITDA decreased by 2% year over year to $97 million, with the EBITDA margin declining by 220 basis points to 47.8% [5]. Trading Volumes - High-grade trading volume was $400.1 billion, a 4% increase year over year, but below the consensus estimate of $441.8 billion [6]. - High-yield trading volume fell by 19% year over year, reflecting reduced credit spread volatility [6]. - Other credit trading volume rose by 14% year over year to $38.7 billion, with total credit trading volume growing by 6% to $864.7 billion [7]. Balance Sheet and Cash Flow - As of December 31, 2024, cash and cash equivalents were $544.5 million, a 20.7% increase from the end of 2023 [10]. - Total assets decreased by 11.2% to $1.8 billion, while total stockholders' equity improved by 7.4% to $1.4 billion [10]. - Net cash from operations for Q4 was $176.2 million, a 24.4% year-over-year increase, with free cash flow advancing by 19.5% to $113.4 million [11]. Capital Deployment - MarketAxess repurchased shares worth $16.4 million during the quarter, with a remaining capacity of $220 million under its repurchase program [12]. - The quarterly cash dividend was increased by 2.7% to 76 cents per share, payable on March 5, 2024 [12]. Full Year Update - For the full year 2024, revenues totaled $817.1 million, a 9% increase from 2023, with earnings per share rising by 6.3% to $7.28 [13]. 2025 Outlook - Services revenues are expected to grow in the mid-single digits, with total expenses projected between $505 million and $525 million [14].

4Q & FY 2024 Earnings Conference Call February 6, 2025 Strategic Update ❖Chris Concannon, CEO 2 Strategic update: solid financial performance in FY 2024¹ | | • Strongest annual revenue growth since 20202 | | | --- | --- | --- | | FINANCIAL | • | Record total ADV, record commission revenue2 , record services2,3 revenue | | | • | 9% growth in revenue to a record $817.1 million | | PERFORMANCE | • | 6% growth in diluted earnings per share to $7.28 | | | • | $328 million in TTM free cash flow4 generation | | | ...

Core Viewpoint - MarketAxess reported quarterly earnings of $1.73 per share, exceeding the Zacks Consensus Estimate of $1.70 per share, but down from $1.84 per share a year ago, indicating a 6% year-over-year decline in earnings [1][2] Financial Performance - The company posted revenues of $202.4 million for the quarter ended December 2024, which missed the Zacks Consensus Estimate by 0.47% and represents a 2.4% increase from $197.25 million in the same quarter last year [2] - Over the last four quarters, MarketAxess has surpassed consensus EPS estimates four times, but has only topped consensus revenue estimates once [2] Stock Performance - MarketAxess shares have declined approximately 12.4% since the beginning of the year, contrasting with the S&P 500's gain of 3.1% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $2.03 on revenues of $226.03 million, and for the current fiscal year, it is $8.05 on revenues of $901.73 million [7] - The trend of estimate revisions for MarketAxess is mixed, which could change following the recent earnings report [6] Industry Context - The Securities and Exchanges industry, to which MarketAxess belongs, is currently ranked in the bottom 31% of over 250 Zacks industries, suggesting potential challenges ahead [8] - The performance of MarketAxess may be influenced by the overall outlook for the industry [8]

Financial Performance - Record full year revenue of $817 million, up 9% from the previous year[1] - Total revenues for Q4 2024 were $202.4 million, with a 3% year-over-year increase[6] - Total revenues for the year ended December 31, 2024, were $817.1 million, a 9% increase from $752.5 million in 2023[36] - Net income for the year ended December 31, 2024, was $274.2 million, reflecting a 6% increase from $258.1 million in 2023[36] - Total commission revenue for Q4 2024 was $174,766,000, a 2% increase from $171,891,000 in Q4 2023, and for the year ended December 31, 2024, it reached $711,710,000, up 7% from $662,964,000 in 2023[37] - Net income for Q4 2024 was $65,139,000, a decrease of 6% from $69,627,000 in Q4 2023, while net income margin was 32.2%[41] - EBITDA for Q4 2024 was $96,734,000, down from $98,704,000 in Q4 2023, resulting in an EBITDA margin of 47.8%[41] - Free cash flow for Q4 2024 was $113,367,000, an increase from $94,888,000 in Q4 2023[41] Revenue Sources - Commission revenue from emerging markets and Eurobonds grew by 15%, reflecting strong geographic diversification[6] - Record rates commission revenue increased by 53% in Q4 2024[6] - U.S. high-grade commission revenue grew by 9%, offsetting a 17% decline in U.S. high-yield commission revenue[6] - The Company reported a 41% increase in technology services revenue for the fourth quarter of 2024 compared to the same period in 2023[36] Market and Trading Activity - Emerging markets ADV increased by 18% year-over-year, reaching $3.5 billion[14] - Total rates ADV reached a record $27.1 billion, up 64% compared to the prior year[15] - Total trading volume for Q4 2024 was $2,549,919,000, a 39% increase from $1,839,657,000 in Q4 2023, with an average daily volume (ADV) of $41,030,000[38] - U.S. government bonds trading volume increased by 61% to $1,608,995,000 in Q4 2024, compared to $998,542,000 in Q4 2023[38] Financial Position - As of December 31, 2024, the Company had $698.6 million in cash and equivalents, an increase from $602.5 million as of September 30, 2024, and $575.7 million as of December 31, 2023[25] - Total assets as of December 31, 2024, were $1,789,216,000, down from $2,015,067,000 as of December 31, 2023[40] - Total liabilities decreased to $400,556,000 as of December 31, 2024, from $722,104,000 in the previous year[40] - Stockholders' equity increased to $1,388,660,000 as of December 31, 2024, compared to $1,292,963,000 as of December 31, 2023[40] Future Outlook - Services revenue is expected to grow in the mid-single digits percentage for the full year 2025[25] - Total expenses for 2025 are expected to be in the range of $505.0 million to $525.0 million, indicating an approximate 8% increase based on the midpoint of the guidance[25] - The effective tax rate for 2025 is projected to be between 23.5% and 24.5%[25] - Capital expenditures to support new protocols and product enhancements are expected to be in the range of $65.0 million to $70.0 million[25] Shareholder Returns - The Company declared a quarterly cash dividend of $0.76 per share, payable on March 5, 2025[25] - For the full year 2024, the Company repurchased a total of 341,477 shares at a cost of $75.0 million, with $220.0 million remaining under the Board's authorization as of January 31, 2025[25] Employee Metrics - Employee headcount increased to 891 as of December 31, 2024, up from 881 a year earlier[24] Pricing Metrics - Average variable transaction fee per million for credit decreased by 4% to $149.59 in Q4 2024, and for the year, it decreased by 5% to $150.26[37]