MarketAxess Shows Lower Income, Record Volume in Q3 2023

MarketAxess Shows Lower Income, Record Volume in Q3 2023

Time Stamp: October 25, 2023 7:18 AM
Source Node: 2954545

MarketAxess
Holdings Inc., an electronic trading platform for fixed-income securities, has
released its financial results for the third quarter of 2023. The report shows
a stable revenue of $172.3 million, identical to the previous year. However, a
10% increase in total expenses, primarily due to strategic investments, led to a
lower operating income of $66.9 million.

MarketAxess Reports Higher
Revenue but Lower Net Income

The
company’s total revenue for the quarter remained unchanged at $172.3 million,
reflecting the impact of low credit spread volatility . Operating income saw a
decline, standing at $66.9 million, mainly due to a 10% increase in total
expenses. These expenses were primarily incurred to tap into long-term revenue
opportunities in the global fixed-income markets.

Despite the
increased expenses, MarketAxess maintains a robust financial position with
$553.3 million in cash, cash equivalents, and investments. The company has also
declared a quarterly cash dividend of $0.72 per share.

MarketAxess
reported a diluted EPS of $1.46, with a net income of $54.9 million. Compared
to last year’s quarter, this represents a 4% decrease in both metrics.

Table: 3Q 2023 select financial results

$ in millions, except per share data
(unaudited)

Revenues

Operating Income

Net Income

Diluted EPS

Net Income
Margin (%)

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

One of the
bright spots in the report was the record information services revenue of $11.8
million, marking a 21.5% increase. This growth is attributed to the increasing
adoption of the Composite+ data analytics tool.

Diversification and
Trading Volume

The company
exhibited strong geographic and product diversification. Average daily volume
(ADV) from international products, including emerging markets and Eurobonds,
increased by 11.3%. Municipal bonds also saw a 7.4% growth in ADV. Automated
trading volume and trade count broke previous records, surpassing full-year
2022 levels.

Table: 3Q 2023 trading volume

CREDIT

RATES

$ in millions
(unaudited)

US/UK Trading
Days4

Total
ADV

Total
Credit

High-Grade

High-Yield

Emerging
Markets

Eurobonds

Municipal
Bonds

Total
Rates

US Govt.
Bonds

Agcy./Other
Govt. 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%

The number
of active client firms also reached a record 2,093, a 6.1% increase. This
includes the highest number of active US credit client firms and international
active client firms, indicating a broadening customer base.

Future Outlook

The company
has refined its full-year 2023 expense guidance, now ranging from $432.0
million to $438.0 million, including an estimated $12.5 million of M&A-related
expenses. The effective tax rate for the full year is expected to be
approximately 23.5%, lower than the previously stated range.

Therefore,
while MarketAxess faces challenges due to low credit spread volatility and
increased expenses, its diversified product offerings and strong client
engagement provide a positive outlook for the future.

Recently, MarketAxxes cooperated with Bloomberg and Tradeweb to form a joint venture and establish an independent company with the goal of becoming the consolidated tape provider (CTP) for fixed-income instruments in the European Union.

MarketAxess
Holdings Inc., an electronic trading platform for fixed-income securities, has
released its financial results for the third quarter of 2023. The report shows
a stable revenue of $172.3 million, identical to the previous year. However, a
10% increase in total expenses, primarily due to strategic investments, led to a
lower operating income of $66.9 million.

MarketAxess Reports Higher
Revenue but Lower Net Income

The
company’s total revenue for the quarter remained unchanged at $172.3 million,
reflecting the impact of low credit spread volatility . Operating income saw a
decline, standing at $66.9 million, mainly due to a 10% increase in total
expenses. These expenses were primarily incurred to tap into long-term revenue
opportunities in the global fixed-income markets.

Despite the
increased expenses, MarketAxess maintains a robust financial position with
$553.3 million in cash, cash equivalents, and investments. The company has also
declared a quarterly cash dividend of $0.72 per share.

MarketAxess
reported a diluted EPS of $1.46, with a net income of $54.9 million. Compared
to last year’s quarter, this represents a 4% decrease in both metrics.

Table: 3Q 2023 select financial results

$ in millions, except per share data
(unaudited)

Revenues

Operating Income

Net Income

Diluted EPS

Net Income
Margin (%)

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

One of the
bright spots in the report was the record information services revenue of $11.8
million, marking a 21.5% increase. This growth is attributed to the increasing
adoption of the Composite+ data analytics tool.

Diversification and
Trading Volume

The company
exhibited strong geographic and product diversification. Average daily volume
(ADV) from international products, including emerging markets and Eurobonds,
increased by 11.3%. Municipal bonds also saw a 7.4% growth in ADV. Automated
trading volume and trade count broke previous records, surpassing full-year
2022 levels.

Table: 3Q 2023 trading volume

CREDIT

RATES

$ in millions
(unaudited)

US/UK Trading
Days4

Total
ADV

Total
Credit

High-Grade

High-Yield

Emerging
Markets

Eurobonds

Municipal
Bonds

Total
Rates

US Govt.
Bonds

Agcy./Other
Govt. 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%

The number
of active client firms also reached a record 2,093, a 6.1% increase. This
includes the highest number of active US credit client firms and international
active client firms, indicating a broadening customer base.

Future Outlook

The company
has refined its full-year 2023 expense guidance, now ranging from $432.0
million to $438.0 million, including an estimated $12.5 million of M&A-related
expenses. The effective tax rate for the full year is expected to be
approximately 23.5%, lower than the previously stated range.

Therefore,
while MarketAxess faces challenges due to low credit spread volatility and
increased expenses, its diversified product offerings and strong client
engagement provide a positive outlook for the future.

Recently, MarketAxxes cooperated with Bloomberg and Tradeweb to form a joint venture and establish an independent company with the goal of becoming the consolidated tape provider (CTP) for fixed-income instruments in the European Union.

Time Stamp:

More from Finance Magnates