Core Viewpoint - S&P Dow Jones Indices will implement changes to the S&P 100, S&P 500, S&P MidCap 400, and S&P SmallCap 600 indices effective September 22, 2025, to enhance market capitalization representation [1][2]. Changes Summary - **S&P 100 Changes**: - Addition of Uber Technologies (Ticker: UBER) in the Industrials sector - Deletion of Charter Communications (Ticker: CHTR) from the index [2][3]. - **S&P 500 Changes**: - Additions: - AppLovin (Ticker: APP) in the Information Technology sector - Robinhood Markets (Ticker: HOOD) in the Financials sector - Emcor Group (Ticker: EME) in the Industrials sector - Deletions: - MarketAxess Holdings (Ticker: MKTX) in the Financials sector - Caesars Entertainment (Ticker: CZR) in the Consumer Discretionary sector - Enphase Energy (Ticker: ENPH) in the Information Technology sector [2][3]. - **S&P MidCap 400 Changes**: - Additions: - Nutanix (Ticker: NTNX) in the Information Technology sector - TransUnion (Ticker: TRU) in the Industrials sector - MP Materials (Ticker: MP) in the Materials sector - Kratos Defense & Security Solutions (Ticker: KTOS) in the Industrials sector - Deletions: - Emcor Group (Ticker: EME) in the Industrials sector - The Wendy's Company (Ticker: WEN) in the Consumer Discretionary sector - Acadia Healthcare Company (Ticker: ACHC) in the Health Care sector - ManpowerGroup (Ticker: MAN) in the Industrials sector [3][4]. - **S&P SmallCap 600 Changes**: - Additions: - MarketAxess Holdings (Ticker: MKTX) in the Financials sector - Caesars Entertainment (Ticker: CZR) in the Consumer Discretionary sector - Enphase Energy (Ticker: ENPH) in the Information Technology sector - The Wendy's Company (Ticker: WEN) in the Consumer Discretionary sector - Acadia Healthcare Company (Ticker: ACHC) in the Health Care sector - Noble Corporation (Ticker: NE) in the Energy sector - Q2 Holdings (Ticker: QTWO) in the Information Technology sector - Waystar Holding (Ticker: WAY) in the Health Care sector - Hecla Mining (Ticker: HL) in the Materials sector - Deletions: - MP Materials (Ticker: MP) in the Materials sector - Kratos Defense & Security Solutions (Ticker: KTOS) in the Industrials sector - ProPetro Holding (Ticker: PUMP) in the Energy sector - Xerox Holdings (Ticker: XRX) in the Information Technology sector - TechTarget (Ticker: TTGT) in the Communication Services sector - Mesa Laboratories (Ticker: MLAB) in the Health Care sector - Owens & Minor (Ticker: OMI) in the Health Care sector - B&G Foods (Ticker: BGS) in the Consumer Staples sector - Jack in the Box (Ticker: JACK) in the Consumer Discretionary sector - Simulations Plus (Ticker: SLP) in the Health Care sector [3][4].

Group 1 - Loews, AFLAC, and Marketaxess Holdings will trade ex-dividend on 8/20/25, with respective dividends of $0.0625, $0.58, and $0.76 to be paid on 9/2/25 and 9/3/25 [1][2] - The expected price adjustments for the stocks are approximately 0.07% lower for Loews, 0.55% lower for AFLAC, and 0.40% lower for Marketaxess Holdings when they open for trading [2] - Marketaxess Holdings is a contender for the "Dividend Aristocrats" index, having over 16 years of dividend increases [3] Group 2 - The estimated annualized yields based on the most recent dividends are 0.26% for Loews, 2.20% for AFLAC, and 1.60% for Marketaxess Holdings [10] - In Monday trading, Loews shares decreased by about 0.6%, while AFLAC shares increased by about 0.1%, and Marketaxess Holdings shares rose by about 1.3% [11]

PART I — Financial Information [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Unaudited Q2 2025 financials show total assets at **$1.97 billion**, revenue up **11.0%** to **$219.5 million**, and net income up **9.6%** to **$71.1 million** [Consolidated Statements of Financial Condition](index=4&type=section&id=Consolidated%20Statements%20of%20Financial%20Condition) Total assets increased to **$1.97 billion** as of June 30, 2025, driven by receivables and goodwill, while liabilities also rose | Account | June 30, 2025 (In thousands) | December 31, 2024 (In thousands) | | :--- | :--- | :--- | | **Total Assets** | **$1,974,938** | **$1,789,216** | | Cash and cash equivalents | $462,837 | $544,478 | | Receivables from broker-dealers, etc. | $559,120 | $357,728 | | Goodwill | $286,020 | $236,706 | | **Total Liabilities** | **$574,038** | **$400,556** | | Payables to broker-dealers, etc. | $329,785 | $218,845 | | Income and other tax liabilities | $95,197 | $3,683 | | **Total Stockholders' Equity** | **$1,386,185** | **$1,388,660** | [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) Q2 2025 revenues grew **11.0%** to **$219.5 million** and net income rose **9.6%** to **$71.1 million**, while H1 net income fell **37.3%** due to higher taxes | Metric | Q2 2025 (In thousands) | Q2 2024 (In thousands) | YoY Change | H1 2025 (In thousands) | H1 2024 (In thousands) | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | **$219,462** | **$197,660** | **+11.0%** | **$428,038** | **$407,978** | **+4.9%** | | Commissions | $191,770 | $171,679 | +11.7% | $373,113 | $356,552 | +4.6% | | **Total Expenses** | **$127,598** | **$116,321** | **+9.7%** | **$247,792** | **$234,139** | **+5.8%** | | **Operating Income** | **$91,864** | **$81,339** | **+12.9%** | **$180,246** | **$173,839** | **+3.7%** | | Provision for Income Taxes | $26,236 | $21,399 | +22.6% | $107,325 | $45,501 | +135.9% | | **Net Income** | **$71,180** | **$64,938** | **+9.6%** | **$86,245** | **$137,553** | **-37.3%** | | **Diluted EPS** | **$1.91** | **$1.72** | **+11.0%** | **$2.31** | **$3.64** | **-36.5%** | - Cash dividends declared per common share increased to **$0.76** in Q2 2025 from **$0.74** in Q2 2024[14](index=14&type=chunk) [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) H1 2025 operating cash flow increased to **$133.3 million**, but cash and equivalents decreased by **$50.0 million** due to acquisitions and share repurchases | Activity | Six Months Ended June 30, 2025 (In thousands) | Six Months Ended June 30, 2024 (In thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $133,343 | $113,900 | | Net cash (used in) investing activities | $(68,177) | $(33,753) | | Net cash (used in) financing activities | $(142,315) | $(114,015) | | **Net decrease in cash** | **$(50,005)** | **$(37,542)** | - The acquisition of RFQ-hub resulted in a net cash outflow of **$36.5 million**[23](index=23&type=chunk) - Cash used for repurchases of common stock increased to **$74.8 million** in H1 2025 from **$43.6 million** in H1 2024[23](index=23&type=chunk) [Notes to Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail revenue recognition, the RFQ-hub acquisition, goodwill, a significant tax provision, and share repurchase activities Commission Revenue by Fee Type (Q2 2025 vs Q2 2024) | Fee Type | Q2 2025 (In thousands) | Q2 2024 (In thousands) | | :--- | :--- | :--- | | Variable transaction fees | $158,073 | $138,440 | | Distribution fees and unused minimum fees | $33,697 | $33,239 | | **Total commissions** | **$191,770** | **$171,679** | - In May 2025, the Company acquired a **90.3%** controlling stake in RFQ-hub for cash consideration of **$38.1 million**, recognizing **$49.3 million** in goodwill and **$30.3 million** in intangible assets[78](index=78&type=chunk)[81](index=81&type=chunk)[83](index=83&type=chunk) - The effective tax rate for H1 2025 was **55.4%**, up from **24.9%** in H1 2024, primarily due to a **$58.8 million** provision for unrecognized tax benefits[91](index=91&type=chunk) - During H1 2025, the Company repurchased **355,688** shares for **$74.8 million**, with **$150.3 million** remaining under the 2024 Repurchase Program[116](index=116&type=chunk) Geographic Revenue Breakdown (H1 2025 vs H1 2024) | Region | H1 2025 (In thousands) | H1 2024 (In thousands) | | :--- | :--- | :--- | | United States | $291,288 | $282,666 | | United Kingdom | $87,299 | $79,111 | | Other | $49,451 | $46,201 | | **Total** | **$428,038** | **$407,978** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 2025 revenue growth driven by trading volumes, increased expenses, a higher H1 tax rate, and strong liquidity [Critical Factors Affecting Our Industry and Our Company](index=35&type=section&id=Critical%20Factors%20Affecting%20Our%20Industry%20and%20Our%20Company) Market conditions, competition, and evolving regulations, including DORA, significantly impact the company's industry and operations - In H1 2025, U.S. high-grade and high-yield market average daily volumes increased by **12.3%** and **23.9%**, respectively[130](index=130&type=chunk) - Increased client demand for portfolio trading has intensified competition, potentially impacting market share due to competing platforms[136](index=136&type=chunk) - The E.U.'s Digital Operational Resilience Act (DORA) became applicable in January 2025, introducing significant ICT governance and risk management requirements[140](index=140&type=chunk) [Results of Operations](index=44&type=section&id=Results%20of%20Operations) Q2 2025 revenues rose **11.0%** due to higher trading volumes, while H1 net income dropped **37.3%** primarily from a substantial tax provision Q2 2025 vs Q2 2024 Trading Volume (in millions) | Product | Q2 2025 (in millions) | Q2 2024 (in millions) | % Change | | :--- | :--- | :--- | :--- | | Total Credit | $1,035,916 | $861,535 | +20.2% | | Total Rates | $1,994,517 | $1,285,423 | +55.2% | | **Total Trading Volume** | **$3,030,433** | **$2,146,958** | **+41.2%** | Q2 2025 vs Q2 2024 Average Variable Fee Per Million | Product | Q2 2025 ($) | Q2 2024 ($) | % Change | | :--- | :--- | :--- | :--- | | Credit | $138.02 | $148.16 | -6.8% | | Rates | $4.03 | $4.45 | -9.4% | - Employee compensation and benefits for Q2 2025 increased by **$8.4 million** YoY, primarily due to **$4.0 million** in severance costs[185](index=185&type=chunk) - The effective tax rate for H1 2025 increased to **55.4%** from **24.9%** in H1 2024, due to a reserve for unrecognized tax benefits[205](index=205&type=chunk) [Liquidity and Capital Resources](index=54&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with **$620.9 million** in cash and investments, and **$749.9 million** available under its credit facility - As of June 30, 2025, the company had **$749.9 million** in available borrowing capacity under its Credit Agreement[208](index=208&type=chunk) - Regulated subsidiaries held aggregate net capital **$603.8 million** in excess of the required **$42.4 million**[216](index=216&type=chunk) - The 2022 Share Repurchase Program was exhausted in Q1 2025, with **$150.3 million** remaining under the 2024 program[222](index=222&type=chunk) [Non-GAAP Financial Measures](index=57&type=section&id=Non-GAAP%20Financial%20Measures) The company uses non-GAAP measures like EBITDA and free cash flow, with Q2 2025 EBITDA at **$110.8 million** and an **EBITDA margin of 50.5%** Reconciliation of GAAP to Non-GAAP Diluted EPS (H1 2025) | Metric | H1 2025 ($) | | :--- | :--- | | Diluted EPS, GAAP-basis | $2.31 | | Notable items impact | $1.56 | | **Diluted EPS, excluding notable items** | **$3.87** | EBITDA and EBITDA Margin | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | H1 2025 (in thousands) | H1 2024 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | EBITDA | $110,820 | $98,913 | $218,254 | $208,173 | | EBITDA Margin | 50.5% | 50.0% | 51.0% | 51.0% | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=60&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market, interest rate, foreign currency, and credit risks, with specific impacts quantified for interest rate and FX changes - A hypothetical **100 basis point** change in interest rates would impact annual interest income by approximately **$6.5 million**[232](index=232&type=chunk) - A hypothetical **10.0%** change in the U.S. dollar against other currencies would impact annual revenue by approximately **$13.8 million** and operating expenses by **$13.4 million**[236](index=236&type=chunk) - The company is exposed to credit risk as a matched principal trading counterparty, particularly with the growth of Open Trading[238](index=238&type=chunk) [Item 4. Controls and Procedures](index=62&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period[242](index=242&type=chunk) PART II — Other Information [Item 1. Legal Proceedings](index=63&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine legal matters, with outcomes not expected to materially impact its financial position - The outcome of outstanding legal matters is not expected to have a material adverse impact on the Company's financial position[246](index=246&type=chunk) [Item 1A. Risk Factors](index=63&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for FY2024 [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=63&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In Q2 2025, the company repurchased **169,195** shares for **$218.65** average per share, with **$150.3 million** remaining for repurchase Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share ($) | | :--- | :--- | :--- | | April 2025 | 63,593 | $216.14 | | May 2025 | 56,032 | $219.31 | | June 2025 | 49,570 | $221.12 | | **Total** | **169,195** | **$218.65** | - As of June 30, 2025, the company had **$150.3 million** of remaining capacity under the 2024 Repurchase Program[250](index=250&type=chunk) [Item 5. Other Information](index=64&type=section&id=Item%205.%20Other%20Information) The Chief Information Officer adopted a Rule 10b5-1 trading plan in May 2025 for the potential sale of up to **600** shares - On May 15, 2025, the Chief Information Officer adopted a Rule 10b5-1(c) trading arrangement for the sale of up to **600** shares of the Company's common stock, expiring May 29, 2026[253](index=253&type=chunk) [Item 6. Exhibits](index=65&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications by the CEO and CFO and various agreements

Group 1 - MarketAxess Holdings Inc. held its Q2 2025 Earnings Conference Call on August 6, 2025, with key participants including CEO Christopher Concannon and CFO Ilene Fiszel Bieler [1][2][3] - The call was structured to provide updates on the company's strategy and trading businesses, with a financial results review by the CFO [3] Group 2 - The conference call was recorded and included instructions for participants, indicating a formal setting for discussing the company's performance [2] - Forward-looking statements were mentioned, highlighting the uncertainty of future events and the potential for actual results to differ from expectations [4]

Core Insights - MarketAxess reported record revenue of $219.5 million for Q2 2025, reflecting an 11% year-over-year growth, and non-GAAP EPS of $2.00, surpassing analyst expectations [1][2] - The company experienced significant trading volume growth, with overall trading volume reaching $3.03 trillion, a 41% increase year-over-year [5] - Despite revenue growth, profit margins faced pressure due to a decline in fee-per-million and rising costs [1][9] Financial Performance - Non-GAAP EPS for Q2 2025 was $2.00, exceeding the estimate of $1.96 and up 16% from $1.72 in Q2 2024 [2] - GAAP revenue was $219.5 million, slightly above the estimate of $219.17 million and up from $198.0 million in Q2 2024 [2] - Net income (GAAP) increased to $71.2 million, a 10% rise from $64.9 million in the previous year [2] Trading Activity and Volume - Total trading volume reached $3.03 trillion, marking a 41% increase year-over-year, with average daily volume (ADV) climbing to $49.0 billion, up 43% [5] - High-grade U.S. credit segment ADV rose 21%, while high-yield increased by 27% [5] - U.S. government bond ADV grew 57% year-over-year, indicating strong demand in this segment [5] Product and Protocol Innovations - The company focused on enhancing trading protocols, including "portfolio trading" and "block trading," which saw significant adoption [4][6] - Portfolio trading ADV surged 69% to a record $1.5 billion, while block trading also experienced record activity [6] - The Open Trading system continued to attract liquidity and alternative market makers, contributing to overall platform growth [6] Technology and Analytics - Services revenue reached a record $27.7 million, up 7%, driven by advanced analytics and technology services [7] - The X-Pro platform processed over 92% of portfolio trades in Q2 2025, showcasing the effectiveness of technology integration [7] - The acquisition of RFQ-Hub contributed approximately $1.8 million to commission revenues, enhancing technology services growth [7] International Expansion - Emerging markets and eurobonds saw commission revenue growth of 16% and 22% year-over-year, respectively [8] - The rollout of the X-Pro platform is planned for Europe, indicating ongoing international expansion efforts [8] Margin and Expense Management - Fee-per-million (FPM) declined sharply, with credit FPM dropping 7% to $138, attributed to a shift in trading protocols [9] - Total expenses grew 10% to $127.6 million, driven by higher headcount and technology investments [10] - The effective tax rate rose to 26.9%, influenced by provisions for uncertain tax reserves [11] Capital Management - Cash, equivalents, and investments decreased to $620.9 million, down from $698.6 million due to share repurchases [12] - The company declared a quarterly dividend of $0.76 per share, consistent with previous quarters [12] Future Outlook - Management did not provide formal quantitative guidance for the remainder of fiscal 2025 but indicated a focus on expense discipline and margin trends [13][14] - The ongoing shift towards lower-fee, higher-volume protocols may continue to pressure profit margins despite revenue growth [14]

Core Insights - MarketAxess Holdings Inc. (MKTX) reported Q2 2025 earnings per share of $2, exceeding the Zacks Consensus Estimate by 3.1%, and up from $1.72 a year ago [1][10] - Total revenues increased by 11% year over year to $219.5 million, also surpassing the consensus mark by 0.6% [1][10] - The strong performance was driven by record-high trading volumes amid heightened market volatility, although elevated expenses partially offset this growth [2][10] Financial Performance - Commission revenues rose 12% year over year to $191.8 million, beating the Zacks Consensus Estimate by 1.3% [4] - Information services revenues were $13.1 million, a 4% year-over-year increase, but missed the consensus mark by 2% [4] - Total expenses increased by 10% year over year to $127.6 million, primarily due to higher employee compensation, technology, and G&A costs [5][10] - Net income grew 10% year over year to $71.2 million, exceeding estimates, while the net income margin decreased by 50 basis points to 32.4% [5] Trading Volumes - High-grade trading volume reached $481.1 billion, a 19% year-over-year increase, surpassing the consensus estimate by 3.8% [6] - High-yield trading volume increased by 25% year over year to $104.9 billion, with an average daily volume (ADV) rise of 27% to $1.7 billion [7] - Total credit trading volume grew 20% year over year to $1.04 trillion, with total credit ADV rising 22% to $16.8 billion [8] Balance Sheet and Cash Flow - As of June 30, 2025, cash and cash equivalents were $462.8 million, down from $544.5 million at the end of 2024 [9] - Total assets increased to $1.97 billion from $1.79 billion at the end of 2024 [9] - Net cash from operations was $103.7 million, down from $118.8 million a year ago, while free cash flow increased to $113 million from $97.6 million [12] Capital Deployment - MarketAxess repurchased shares worth $36.7 million in the quarter, totaling $80 million year-to-date, with $145 million remaining under the repurchase program [13] - A quarterly cash dividend of 76 cents per share was declared [13] Strategic Outlook - The company aims to execute its long-term growth strategy through product innovation and strategic talent acquisition, focusing on expanding block trading solutions and enhancing portfolio trading capabilities [14]

Financial Data and Key Metrics Changes - The company reported an 11% revenue growth to a record $219 million, including a $2 million benefit from foreign currency fluctuations, with a 10% growth excluding FX [23][24] - Diluted earnings per share increased by 11% to $1.91, or $2 per share excluding notable items, representing a 16% increase [23] - Commission revenue rose 12% to a record $192 million, driven by strong market volumes and increased volatility [24][27] Business Line Data and Key Metrics Changes - The client-initiated channel saw a 38% growth in block trading average daily dollar volume (ADD) across U.S. Credit, emerging markets, and Eurobonds [8][14] - Portfolio trading channel generated a 69% increase in total portfolio trading ADV [9] - Dealer-initiated channel experienced a 40% increase in dealer-initiated ADV [9] Market Data and Key Metrics Changes - U.S. High grade market share dropped to 10% in July from 12% in June, attributed to large trades moving to phone and chat [11] - The company reported a record 12.5% share of blocks in U.S. High grade, representing an increase of almost 200 basis points year-over-year [15] - Emerging markets and Eurobonds saw significant growth, with block trading volume up 27% in Q2 [56][100] Company Strategy and Development Direction - The company is focusing on becoming more protocol agnostic and expanding its addressable market through multiple trading protocols [5] - Strategic hires have been made to enhance product delivery and drive growth, including key personnel in product management and analytics [34][78] - The launch of the new Midex solution is expected to enhance dealer-to-dealer trading capabilities [18][34] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth, particularly in U.S. Credit, driven by new initiatives and a favorable macro environment [21][31] - The company acknowledged disappointing market share numbers in July but remains confident in its strategies to electronify the market [22][44] - Management highlighted the importance of adapting to market dynamics, particularly in the context of low volatility environments [42][72] Other Important Information - The company generated $360 million in free cash flow over the trailing twelve months, with $145 million remaining on the share repurchase authorization [29] - Operating expenses increased by 6% year-over-year, driven by higher employee compensation and technology costs [28] - The effective tax rate rose to 26.9%, reflecting increased accrual for uncertain tax positions [26] Q&A Session Summary Question: Can you provide details on the progress of new initiatives and market share? - Management reported significant growth in key areas, with investment grade portfolio trading up 47% year-to-date and market share in portfolio trading up 340 basis points [38][39] Question: What are the drivers behind the decline in fee per million? - The decline was attributed to protocol mix and increased portfolio trading volumes, although there was a slight recovery in July due to changes in high-grade duration [50][51] Question: Can you elaborate on the block trading initiative? - Management noted that block trading volume year-to-date is up over 20%, with significant growth in both Eurobonds and emerging markets [54][56] Question: What is the outlook for the municipal business? - The municipal business has seen a year-over-year growth of 23%, with a focus on enhancing electronic trading capabilities [85][89] Question: How does the company view M&A opportunities? - The company remains focused on organic growth but is also open to bolt-on acquisitions, leveraging a strong balance sheet for potential M&A activities [92][95]

Financial Data and Key Metrics Changes - The company reported an 11% revenue growth to a record $219 million, including a $2 million benefit from foreign currency fluctuations, with a 10% growth excluding FX [21][22] - Diluted earnings per share increased by 11% to $1.91, or $2 per share excluding notable items, representing a 16% increase [21] - Commission revenue increased by 12% to a record $192 million, driven by strong market volumes and increased volatility [22][25] Business Line Data and Key Metrics Changes - Block trading in the client-initiated channel saw a 38% growth in average daily volume (ADV) across U.S. Credit, emerging markets, and Eurobonds [6][12] - Portfolio trading channel generated a 69% increase in total portfolio trading ADV [7] - Dealer-initiated channel experienced a 40% increase in dealer-initiated ADV [7] Market Data and Key Metrics Changes - U.S. High grade market share dropped to 10% in July from 12% in June, attributed to large trades moving to phone and chat [9] - The share of lock trades equal to or larger than $5 million increased to 47% in July, up from 42% in June [9] - U.S. High grade portfolio trading market share was over 19%, up 370 basis points year-over-year [14] Company Strategy and Development Direction - The company is focusing on becoming more protocol agnostic and expanding its addressable market through multiple trading protocols and automation tools [4] - A high-touch strategy was launched in U.S. Credit to target the phone and chat market, which has seen significant block trading activity [10] - The company is preparing to launch a new Midex solution in September for U.S. Credit, aimed at enhancing dealer-to-dealer trading [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the supportive market backdrop and strong growth across new initiatives, despite disappointing U.S. High grade share numbers in July [19][20] - The company anticipates continued growth in U.S. Credit through progress in client-initiated, portfolio trading, and dealer-initiated channels [30][31] - Management highlighted the importance of strategic hires in driving future growth and enhancing product offerings [33][79] Other Important Information - The company generated $360 million in free cash flow over the trailing twelve months, with $145 million remaining on the share repurchase authorization as of July 31, 2025 [28] - Operating expenses increased by 6% year-over-year, driven by higher employee compensation and technology costs [26] Q&A Session Summary Question: Progress on new initiatives and July volumes - Management reported significant growth in key areas, with investment grade portfolio trading up 47% year-to-date and block activity up over 20% [37][39] - July market dynamics favored large portfolio trades, impacting market share [42][44] Question: Drivers of fee per million decline - The decline was attributed to new protocols and increased portfolio trading volumes, though July saw a slight recovery due to high-grade duration changes [49][50] Question: Update on block trading initiatives - Block trading volume in Eurobonds was up 54% in July, with expectations for continued growth as dealer content increases [56][62] Question: Performance in the muni business - The muni market saw a 23% increase in overall volume, with tax-exempt business growing by 34% [85][88] Question: Capital return priorities and M&A - The company remains focused on organic growth opportunities while being opportunistic with share repurchases and considering bolt-on acquisitions [92][95]

Financial Performance - Revenue increased by 11% to a record $219 million, with 10% growth excluding FX[3] - Commissions revenue increased by 12% to a record $192 million[3] - Earnings per share (EPS) increased by 11% to $1.91, or $2.00 per share excluding notable items, a 16% increase[3] - The company generated $360 million in TTM free cash flow[3] Trading Volume Growth - Total trading ADV increased by 43% to a record $49.0 billion[3] - Total credit ADV increased by 22% to a record $16.8 billion[3] - Combined emerging markets ADV and eurobonds ADV increased by 23% to a record level[3] - Total portfolio trading ADV increased by 69% to a record $1.5 billion[3] Strategic Channel Performance - Client-Initiated Channel: Block trading ADV increased by 37%, emerging markets increased by 27%, and eurobonds increased by 100%[3] - Dealer-Initiated Channel: Dealer-initiated ADV increased by 40% to $1.8 billion, including record eurobonds ADV[3] Expense Management - Expenses grew by 10%, but only 5% excluding notable items and FX[3] Capital Management - Total cash, cash equivalents, corporate bond and U S Treasury investments amounted to $621 million as of June 30, 2025[5] - The company repurchased 380K shares for $80 million year-to-date through July 2025, including 168K shares repurchased in 2Q25 for $37 million[5]

Core Insights - MarketAxess (MKTX) reported quarterly earnings of $2 per share, exceeding the Zacks Consensus Estimate of $1.94 per share, and up from $1.72 per share a year ago, representing an earnings surprise of +3.09% [1] - The company achieved revenues of $219.46 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 0.59% and increasing from $197.66 million year-over-year [2] - MarketAxess has consistently surpassed consensus EPS estimates over the last four quarters, indicating strong performance [2] Financial Performance - The earnings surprise of +3.09% for the recent quarter follows a previous surprise of +2.75% when the company reported earnings of $1.87 per share against an expectation of $1.82 [1][2] - The current consensus EPS estimate for the upcoming quarter is $1.87, with projected revenues of $217.2 million, and for the current fiscal year, the EPS estimate is $7.50 on revenues of $866.46 million [7] Market Position - Despite the strong earnings report, MarketAxess shares have underperformed the market, losing about 8.1% since the beginning of the year, while the S&P 500 has gained 7.1% [3] - The Zacks Industry Rank places the Financial - Investment Bank sector in the top 5% of over 250 Zacks industries, suggesting a favorable outlook for companies within this sector [8]