MarketAxess Reports Fourth Quarter and Full-Year 2022 Results
MarketAxess Holdings Inc. (Nasdaq: MKTX) reported strong financial results for Q4 and FY 2022, achieving record revenues of $718.3 million, up 3% year-over-year. Q4 revenues increased 8% to $177.9 million, with a 24% rise in average daily trading volume to $12 billion. The company highlighted a record 36% of credit trading executed via its Open Trading platform, resulting in an estimated price improvement of approximately $945 million for clients. Despite a 10% decline in total credit average transaction fees, MarketAxess expects continued growth in 2023, driven by strong market share and trading volumes. Leadership transition to Chris Concannon as CEO will occur in April 2023.
- 8% increase in Q4 revenues to $177.9 million.
- Record full-year revenues of $718.3 million, a 3% increase.
- 24% growth in total credit average daily volume (ADV) to $12.0 billion during Q4.
- Record estimated market share across various bond types, including high-yield and Eurobonds.
- Estimated price improvement of approximately $945 million for clients through Open Trading.
- 9% decline in total credit average transaction fees per million (FPM) due to lower bond duration.
- 10% decline in total credit average FPM, impacting revenue.
“We delivered another strong year in 2022 as we executed our growth strategy, driving record revenues, estimated market share and trading volume across most of our product areas, reflecting the powerful benefits of Open Trading, our unique all-to-all liquidity pool.
A record
We believe the strong momentum we generated in the quarter with higher average daily volume and market share and an increase in the trading of longer duration bonds, combined with a favorable backdrop for fixed-income in 2023, create an attractive operating environment for our model in 2023.
Because of our strong positioning, we believe that it is now the right time for the leadership transition we announced earlier this month.
4Q22 financial and operational highlights*
-
8% increase in revenues to million; includes impact of a$177.9 9% decline in total credit average variable transaction fees per million (“FPM”), driven principally by the lower duration of bonds traded inU.S. high-grade. Excluding the impact of foreign currency fluctuations, revenues would have increased approximately10% . - Record estimated market share across composite corporate bond1 (+210 bps), high-yield (+500 bps), emerging markets2 (+290 bps), Eurobonds (+500 bps) and municipal bonds (+260 bps).
-
24% growth in total credit average daily volume (“ADV”) to billion, representing the third highest quarter ever.$12.0 -
7% increase in operating income to million and operating margin of$77.7 43.7% , in line with the prior year. -
15% increase in diluted EPS to on net income of$1.58 million; net income margin of$59.2 33.3% . -
10% increase in EBITDA to million and EBITDA margin of$95.2 53.5% , up from52.3% in the prior year. -
Record
38% of total credit trading volume was executed via Open Trading®, up from36% in the prior year. Estimated price improvement3 via Open Trading was approximately million.$246 -
Record 2,068 total active firms, up
10% ; record 11,679 total traders, up6% .
Full-year 2022 financial and operational highlights**
-
Record revenues of
million, up$718.3 3% ; includes impact of a10% decline in total credit average FPM, driven principally by the lower duration of bonds traded inU.S. high-grade. Excluding the impact of foreign currency fluctuations, revenues would have increased approximately4% . -
Record commission revenue across high-yield, emerging markets, Eurobonds, municipal bonds and
U.S. Treasuries. -
Record total trading ADV, up
24% , record total credit ADV, up13% , and record total rates ADV, up32% ; record estimated market share across most major product areas and record ADV across all major product areas. -
Record
36% of total credit trading volume was executed via Open Trading, up from35% in the prior year. Estimated price improvement3 via Open Trading was approximately million.$945
*All comparisons versus fourth quarter 2021 unless otherwise noted.
**All comparisons versus full-year 2021 unless otherwise noted.
Table 1: 4Q22 select financial results
$ in millions, except per share data (unaudited) |
Revenues |
Operating Income |
Net Income |
Diluted EPS |
Net Income
|
EBITDA |
EBITDA
|
4Q22 |
|
|
|
|
|
|
|
4Q21 |
|
|
|
|
|
|
|
% Change |
|
|
|
|
+170 bps |
|
+120 bps |
Table 1A: 4Q22 trading volume (ADV)
CREDIT |
RATES |
||||||||||
$ in millions
|
US/ |
Total
|
Total
|
High-Grade |
High-Yield |
Emerging
|
Eurobonds |
Municipal
|
Total
|
US Govt.
|
Agcy./Other
|
4Q22 |
61/63 |
|
|
|
|
|
|
|
|
|
|
4Q21 |
62/64 |
|
|
|
|
|
|
|
|
|
|
% Change |
|
|
|
|
|
|
|
|
( |
( |
( |
Table 1B: 4Q22 estimated market share
CREDIT |
RATES |
|||||||
(unaudited) |
High-Grade |
High-Yield |
High-Grade/High-
|
Emerging
|
Eurobonds |
Composite
|
Municipals |
US Govt.
|
4Q22 |
|
|
|
|
|
|
|
|
4Q21 |
|
|
|
|
|
|
|
|
Bps Change |
(10) bps |
+500 bps |
+140 bps |
+290 bps |
+500 bps |
+210 bps |
+260 bps |
+20 bps |
4Q22 overview of results
Revenues and trading volume
Credit
-
Total credit commission revenue of
million (including$153.7 million in fixed-distribution fees) increased$32.8 million, or$12.8 9% , compared to million (including$140.9 million in fixed-distribution fees) in the prior year. The increase in total credit commission revenue was driven principally by higher trading volumes and strong estimated market share gains across most credit products, partially offset by lower average FPM. The decline in average FPM for total credit to$31.9 , compared to$163.87 in the fourth quarter of 2021, was mainly due to the lower duration of bonds traded in$180.24 U.S. high-grade, driven principally by higher bond yields, as well as product mix-shift in other credit products.-
90% of credit volume on the platform was executed by institutional clients. -
Total credit trading ADV of
billion, up$12.0 24% , driven by a22% increase inU.S. high-grade ADV and strong growth acrossU.S. high-yield, Eurobonds and municipal bonds product areas. -
Record
20.9% (+210 bps) composite corporate bond estimated market share,1 up from18.8% . -
22% increase inU.S. high-grade ADV to billion with estimated market share of$5.5 21.1% .-
Estimated
U.S. high-grade TRACE market ADV increased23% .
-
Estimated
-
Record
U.S. high-yield estimated market share of20.5% (+500 bps), up from15.5% , on ADV of billion, representing an increase of$1.8 33% . -
Emerging markets ADV of
billion, up$2.7 3% ; up approximately5% excluding the impact of foreign currency fluctuations. FINRA TRACE-reportable emerging markets market volumes2 down19% .-
Record
31.1% (+290 bps) estimated market share of FINRA TRACE-reportable emerging markets trading volume.2
-
Record
-
Record
18.2% (+500 bps) Eurobonds estimated market share, up from13.2% on record ADV of billion, representing an increase of$1.6 34% ; up approximately49% excluding the impact of foreign currency fluctuations. -
Record
5.0% (+260 bps) municipal bond estimated market share on record ADV of million.$500 -
Record
38% of total credit trading volume was executed via Open Trading, up from36% in the prior year. Estimated price improvement3 via Open Trading was approximately million, and average estimated price improvement per million was$246 .$988 -
Record
billion in portfolio trading volume, up$31 135% from billion in 4Q21, and$13 billion in 3Q22.$25
-
Rates
-
Total rates commission revenue of
million decreased$4.7 million, or$0.3 6% , compared to the prior year, driven by a6% decrease inU.S. Treasury ADV to billion. The average FPM for total rates products was$18.0 , slightly above fourth quarter 2021.$4.16
Information services & post-trade services
-
Record information services revenue of
million increased$10.4 million, or$0.8 9% , compared to the prior year. The increase in revenue was principally driven by new data contract revenue, mainly offset by the impact of foreign currency fluctuations. Excluding the impact of foreign currency fluctuations, information services revenue would have increased approximately17% . -
Post-trade services revenue of
million decreased$8.8 million, or$0.5 6% , compared to the prior year. The decrease in revenue was principally driven by the impact of foreign currency fluctuations, which was partially offset by net new contract revenue and higher transaction reporting revenue on higher volumes. Excluding the impact of foreign currency fluctuations, post-trade services revenue would have increased approximately8% .
Expenses
-
Total expenses of
million increased$100.2 million, or$7.8 8% . The increase in expenses was driven principally by higher employee compensation and benefits as a result of the increase in headcount, higher technology and communication expenses due to higher subscription costs and cloud hosting expense and higher general and administrative expense which includes an increase in a reserve related to a contractual dispute with a vendor. Excluding the impact of foreign currency fluctuations, total expenses would have increased approximately12% .
Non-operating
-
Other income (expense): Other income was
million, up from ($1.8 ) million in the prior year. The current quarter included higher interest income of$1.0 million due to rising interest rates. The prior year period benefited from a$3.2 million revaluation gain on a contingent liability recognized during the fourth quarter of 2021.$0.6 -
Tax rate: The effective tax rate was
25.4% , compared to27.1% in the prior year. The higher effective tax rate in the prior year period was driven by return-to-provision adjustments.
Table 1C: Full-year 2022 trading volume (ADV)
CREDIT |
RATES |
||||||||||
$ in millions
|
US/ |
Total
|
Total
|
High-Grade |
High-Yield |
Emerging
|
Eurobonds |
Municipal
|
Total
|
US Govt.
|
Agcy./Other
|
FY 2022 |
249/250 |
|
|
|
|
|
|
|
|
|
|
FY 2021 |
250/253 |
|
|
|
|
|
|
|
|
|
|
% Change |
|
|
|
|
|
|
|
|
|
|
|
Table 1D: Full-year 2022 estimated market share
CREDIT |
RATES |
|||||||
(unaudited) | High-Grade |
High-Yield |
High-Grade/High-
|
Emerging
|
Eurobonds |
Composite
|
Municipals |
US Govt.
|
FY 2022 |
|
|
|
|
|
|
|
|
FY 2021 |
|
|
|
|
|
|
|
|
Bps Change |
+30 bps |
+270 bps |
+110 bps |
+220 bps |
+330 bps |
+180 bps |
+240 bps |
+90 bps |
Full-year 2022 overview of results
Revenues and trading volume
Credit
-
Total credit commission revenue of
million (including$618.6 million in fixed-distribution fees) increased$126.9 million, or$14.4 2% , compared to million (including$604.2 million in fixed-distribution fees) in the prior year. The increase in total credit commission revenue was driven principally by higher trading volumes and strong estimated market share gains across most credit products, partially offset by lower average FPM. The decline in average FPM for total credit to$119.2 , compared to$166.96 in 2021, was mainly due to the lower duration of bonds traded in$184.78 U.S. high-grade, driven principally by higher bond yields, as well as product mix-shift.-
91% of credit volume on the platform was executed by institutional clients. -
Record
billion in total credit trading ADV, representing a$11.8 13% increase compared to the prior year. -
Record
19.9% (+180 bps) composite corporate bond estimated market share,1 up from18.1% . -
10% increase inU.S. high-grade ADV to a record billion with estimated market share of$5.5 21.3% .-
Estimated
U.S. high-grade TRACE market ADV increased9% .
-
Estimated
-
Record
U.S. high-yield estimated market share of17.9% (+270 bps), up from15.2% , on record ADV of billion, representing an increase of$1.7 15% . -
Record emerging markets ADV of
billion, up$2.8 7% ; up approximately10% excluding the impact of foreign currency fluctuations. FINRA TRACE-reportable emerging markets market volumes2 down15% .-
Record
29.0% (+220 bps) estimated market share of FINRA TRACE-reportable emerging markets trading volume.2
-
Record
-
Record
15.4% (+330 bps) Eurobonds estimated market share, up from12.1% on record ADV of billion, representing an increase of$1.5 10% ; up approximately23% excluding the impact of foreign currency fluctuations. -
Record
4.5% (+240 bps) municipal bond estimated market share on record ADV of million.$379 -
Record
36% of total credit trading volume was executed via Open Trading, up from35% in the prior year. Estimated price improvement3 via Open Trading was approximately million, and average estimated price improvement per million was$945 .$1,006 -
Record
billion in portfolio trading volume, up$92 217% from billion in 2021.$29
-
Rates
-
Total rates commission revenue of
million increased$22.6 million, or$5.8 34% , compared to the prior year, driven by a32% increase inU.S. Treasury ADV to a record billion. The average FPM for total rates products was$21.5 , compared to$4.10 in 2021.$4.00 -
Record
3.5% (+90 bps)U.S. Treasury estimated market share, up from2.6% .
-
Record
Information services & post-trade services
-
Record information services revenue of
million increased$39.3 million, or$1.1 3% , compared to the prior year. The increase in revenue was principally driven by new data contract revenue, mainly offset by the impact of foreign currency fluctuations. Excluding the impact of foreign currency fluctuations, information services revenue would have increased approximately9% . -
Post-trade services revenue of
million decreased$36.9 million, or$2.0 5% , compared to the prior year. The decrease in revenue was principally driven by the impact of foreign currency fluctuations and planned customer attrition in connection with the Regulatory Reporting Hub integration, which was partially offset by net new contract revenue and higher transaction reporting revenue on higher volumes. Excluding the impact of foreign currency fluctuations, post-trade services revenue would have increased approximately6% .
Expenses
-
Total expenses of
million increased$391.4 million, or$29.7 8% . The increase in expenses was driven principally by higher employee compensation and benefits as a result of the increase in headcount, increased investments to enhance the trading system and data products, higher technology and communication expenses due to higher subscription costs and cloud hosting expense and higher general and administrative expense which includes a reserve related to a contractual dispute with a vendor. Excluding the impact of foreign currency fluctuations, total expenses would have increased approximately11% .
Non-operating
-
Other income (expense): Other income was
million, up from ($11.4 ) million in the prior year. The increase in other income was driven principally by foreign currency translation gains, higher interest income due to rising interest rates and income from the Company’s unconsolidated equity investment.$3.3 -
Tax rate: The effective tax rate was
26.0% , compared to22.8% in the prior year. The higher effective tax rate was driven by a decrease in estimated excess tax benefits related to share based compensation awards and the impact of a tax charge of million related to a settlement with$3.2 New York State .
Capital
-
The Company had
million in cash, cash equivalents and investments; there are no outstanding borrowings under the Company’s credit facility.$514.5 -
The Board declared a quarterly cash dividend of
per share, payable on$0.72 February 22, 2023 to stockholders of record as of the close of business onFebruary 8, 2023 .
Other
-
The Company had a record 2,068 total active client firms, representing an increase of
10% and a record 1,006 total active international client firms, representing an increase of5% .-
The Company also had record active traders of 11,679 (up
6% ), consisting of a record 6,151 domestic traders (up3% ) and a record 5,528 international traders (up9% ).
-
The Company also had record active traders of 11,679 (up
-
Employee headcount was 744 as of
December 31, 2022 , compared to 676 as ofDecember 31, 2021 and 732 as ofSeptember 30, 2022 . The increase in headcount compared to the prior year was due to the continued investment in the Company’s growth initiatives, including geographic expansion, trading automation and new trading protocols.
Guidance for 2023
For full-year 2023, the Company is providing the following guidance:
-
Total expenses are expected to be in the range of
million to$418.0 million. Based on the midpoint of the stated guidance range, operating expenses are expected to increase by approximately$446.0 10% . This 2023 guidance is based on foreign exchange rates as ofDecember 31, 2022 . -
The Company’s overall effective tax rate is expected to be between
25.0% and26.0% . -
Capital expenditures to support new protocols, products and trading platform enhancements are expected to be in the range of
million to$52.0 million. This 2023 guidance is based on foreign exchange rates as of$58.0 December 31, 2022 .
1 Composite corporate bond estimated market share is defined as combined estimated market share across |
2 Emerging markets market volumes and estimated market share in this release are derived using FINRA TRACE-reportable emerging markets trading volume, principally |
3 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. |
4 The number of |
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. 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 cash flow from 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
Webcast and conference call information
About
Cautionary Note Regarding Forward-Looking Statements
This press release may contain forward-looking statements, including statements about the outlook and prospects for Company and industry growth, as well as statements about the Company’s future financial, operating performance and leadership transition. 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
Table 2: Consolidated Statements of Operations |
|
|
||||||||||||||||||||||||
|
|
Three Months Ended
|
|
|
|
Year Ended
|
|
|
||||||||||||||||||
In thousands, except per share data (unaudited) |
|
2022 |
|
|
2021 |
|
|
%
|
|
|
|
2022 |
|
|
2021 |
|
|
%
|
|
|
||||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commissions |
|
$ |
158,443 |
|
|
$ |
145,913 |
|
|
|
8.6 |
|
% |
|
$ |
641,183 |
|
|
$ |
621,008 |
|
|
|
3.2 |
|
% |
Information services |
|
|
10,398 |
|
|
|
9,561 |
|
|
|
8.8 |
|
|
|
|
39,314 |
|
|
|
38,175 |
|
|
|
3.0 |
|
|
Post-trade services |
|
|
8,821 |
|
|
|
9,369 |
|
|
|
(5.8 |
) |
|
|
|
36,877 |
|
|
|
38,922 |
|
|
|
(5.3 |
) |
|
Other |
|
|
240 |
|
|
|
217 |
|
|
|
10.6 |
|
|
|
|
926 |
|
|
|
846 |
|
|
|
9.5 |
|
|
Total revenues |
|
|
177,902 |
|
|
|
165,060 |
|
|
|
7.8 |
|
|
|
|
718,300 |
|
|
|
698,951 |
|
|
|
2.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee compensation and benefits |
|
|
44,108 |
|
|
|
41,218 |
|
|
|
7.0 |
|
|
|
|
182,104 |
|
|
|
170,916 |
|
|
|
6.5 |
|
|
Depreciation and amortization |
|
|
15,730 |
|
|
|
14,607 |
|
|
|
7.7 |
|
|
|
|
61,446 |
|
|
|
53,447 |
|
|
|
15.0 |
|
|
Technology and communications |
|
|
14,113 |
|
|
|
11,229 |
|
|
|
25.7 |
|
|
|
|
52,964 |
|
|
|
42,474 |
|
|
|
24.7 |
|
|
Professional and consulting fees |
|
|
7,848 |
|
|
|
10,734 |
|
|
|
(26.9 |
) |
|
|
|
33,949 |
|
|
|
41,925 |
|
|
|
(19.0 |
) |
|
Occupancy |
|
|
3,653 |
|
|
|
3,438 |
|
|
|
6.3 |
|
|
|
|
14,121 |
|
|
|
13,320 |
|
|
|
6.0 |
|
|
Marketing and advertising |
|
|
3,442 |
|
|
|
2,906 |
|
|
|
18.4 |
|
|
|
|
9,977 |
|
|
|
9,059 |
|
|
|
10.1 |
|
|
Clearing costs |
|
|
4,614 |
|
|
|
3,739 |
|
|
|
23.4 |
|
|
|
|
17,663 |
|
|
|
16,074 |
|
|
|
9.9 |
|
|
General and administrative |
|
|
6,721 |
|
|
|
4,608 |
|
|
|
45.9 |
|
|
|
|
19,200 |
|
|
|
14,501 |
|
|
|
32.4 |
|
|
Total expenses |
|
|
100,229 |
|
|
|
92,479 |
|
|
|
8.4 |
|
|
|
|
391,424 |
|
|
|
361,716 |
|
|
|
8.2 |
|
|
Operating income |
|
|
77,673 |
|
|
|
72,581 |
|
|
|
7.0 |
|
|
|
|
326,876 |
|
|
|
337,235 |
|
|
|
(3.1 |
) |
|
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
3,294 |
|
|
|
79 |
|
|
NM |
|
|
|
|
5,040 |
|
|
|
401 |
|
|
NM |
|
|
||
Interest expense |
|
|
(52 |
) |
|
|
(166 |
) |
|
|
(68.7 |
) |
|
|
|
(700 |
) |
|
|
(842 |
) |
|
|
(16.9 |
) |
|
Equity in earnings of unconsolidated affiliate |
|
|
66 |
|
|
|
— |
|
|
NM |
|
|
|
|
1,126 |
|
|
|
— |
|
|
NM |
|
|
||
Other, net |
|
|
(1,553 |
) |
|
|
(919 |
) |
|
|
69.0 |
|
|
|
|
5,946 |
|
|
|
(2,871 |
) |
|
NM |
|
|
|
Total other income (expense) |
|
|
1,755 |
|
|
|
(1,006 |
) |
|
NM |
|
|
|
|
11,412 |
|
|
|
(3,312 |
) |
|
NM |
|
|
||
Income before income taxes |
|
|
79,428 |
|
|
|
71,575 |
|
|
|
11.0 |
|
|
|
|
338,288 |
|
|
|
333,923 |
|
|
|
1.3 |
|
|
Provision for income taxes |
|
|
20,202 |
|
|
|
19,390 |
|
|
|
4.2 |
|
|
|
|
88,064 |
|
|
|
76,035 |
|
|
|
15.8 |
|
|
Net income |
|
$ |
59,226 |
|
|
$ |
52,185 |
|
|
|
13.5 |
|
|
|
$ |
250,224 |
|
|
$ |
257,888 |
|
|
|
(3.0 |
) |
|
Per Share Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
1.58 |
|
|
$ |
1.39 |
|
|
|
|
|
|
|
$ |
6.68 |
|
|
$ |
6.88 |
|
|
|
|
|
|
Diluted |
|
$ |
1.58 |
|
|
$ |
1.37 |
|
|
|
|
|
|
|
$ |
6.65 |
|
|
$ |
6.77 |
|
|
|
|
|
|
Cash dividends declared per common share |
|
$ |
0.70 |
|
|
$ |
0.66 |
|
|
|
|
|
|
|
$ |
2.80 |
|
|
$ |
2.64 |
|
|
|
|
|
|
Weighted-average common shares: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
37,480 |
|
|
|
37,527 |
|
|
|
|
|
|
|
|
37,468 |
|
|
|
37,508 |
|
|
|
|
|
|
Diluted |
|
|
37,573 |
|
|
|
38,046 |
|
|
|
|
|
|
|
|
37,643 |
|
|
|
38,097 |
|
|
|
|
|
|
NM - not meaningful |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 3: Commission Revenue Detail |
|||||||||||||||||||||||||||
In thousands, except fee per million data |
|
|
Three Months Ended |
|
|
|
Year Ended |
|
|
||||||||||||||||||
(unaudited) |
|
|
2022 |
|
|
2021 |
|
|
% Change |
|
|
|
2022 |
|
|
2021 |
|
|
% Change |
|
|
||||||
Variable transaction fees |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit |
|
|
$ |
120,887 |
|
|
$ |
108,940 |
|
|
|
11.0 |
|
% |
|
$ |
491,680 |
|
|
$ |
485,005 |
|
|
|
1.4 |
|
% |
Rates |
|
|
|
4,667 |
|
|
|
4,992 |
|
|
|
(6.5 |
) |
|
|
|
22,341 |
|
|
|
16,572 |
|
|
|
34.8 |
|
|
Total variable transaction fees |
|
|
|
125,554 |
|
|
|
113,932 |
|
|
|
10.2 |
|
|
|
|
514,021 |
|
|
|
501,577 |
|
|
|
2.5 |
|
|
Fixed distribution fees |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit |
|
|
|
32,817 |
|
|
|
31,927 |
|
|
|
2.8 |
|
|
|
|
126,915 |
|
|
|
119,178 |
|
|
|
6.5 |
|
|
Rates |
|
|
|
72 |
|
|
|
54 |
|
|
|
33.3 |
|
|
|
|
247 |
|
|
|
253 |
|
|
|
(2.4 |
) |
|
Total fixed distribution fees |
|
|
|
32,889 |
|
|
|
31,981 |
|
|
|
2.8 |
|
|
|
|
127,162 |
|
|
|
119,431 |
|
|
|
6.5 |
|
|
Total commission revenue |
|
|
$ |
158,443 |
|
|
$ |
145,913 |
|
|
|
8.6 |
|
|
|
$ |
641,183 |
|
|
$ |
621,008 |
|
|
|
3.2 |
|
|
Average variable transaction fee per million |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit |
|
|
|
163.87 |
|
|
|
180.24 |
|
|
|
(9.1 |
) |
|
|
|
166.96 |
|
|
|
184.78 |
|
|
|
(9.6 |
) |
|
Rates |
|
|
|
4.16 |
|
|
|
4.14 |
|
|
|
0.5 |
|
|
|
|
4.10 |
|
|
|
4.00 |
|
|
|
2.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 4: Trading Volume Detail* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
||||||||||||||||||||||
In millions (unaudited) |
|
|
2022 |
|
|
2021 |
|
|
% Change |
|
|
||||||||||||||||
|
|
|
Volume |
|
|
ADV |
|
|
Volume |
|
|
|
ADV |
|
|
Volume |
|
|
ADV |
|
|
||||||
Credit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High-grade |
|
|
$ |
334,735 |
|
|
$ |
5,487 |
|
|
$ |
277,891 |
|
|
|
$ |
4,482 |
|
|
|
20.5 |
|
% |
|
22.4 |
|
% |
High-yield |
|
|
|
110,091 |
|
|
|
1,805 |
|
|
|
84,004 |
|
|
|
|
1,355 |
|
|
|
31.1 |
|
|
|
33.2 |
|
|
Emerging markets |
|
|
|
162,597 |
|
|
|
2,666 |
|
|
|
160,560 |
|
|
|
|
2,590 |
|
|
|
1.3 |
|
|
|
2.9 |
|
|
Eurobonds |
|
|
|
98,853 |
|
|
|
1,569 |
|
|
|
74,817 |
|
|
|
|
1,169 |
|
|
|
32.1 |
|
|
|
34.2 |
|
|
Other credit |
|
|
|
31,404 |
|
|
|
515 |
|
|
|
7,131 |
|
|
|
|
115 |
|
|
|
340.4 |
|
|
|
347.8 |
|
|
Total credit trading |
|
|
|
737,680 |
|
|
|
12,042 |
|
|
|
604,403 |
|
|
|
|
9,711 |
|
|
|
22.1 |
|
|
|
24.0 |
|
|
Rates |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,099,596 |
|
|
|
18,026 |
|
|
|
1,183,410 |
|
|
|
|
19,087 |
|
|
|
(7.1 |
) |
|
|
(5.6 |
) |
|
Agency and other government bonds |
|
|
|
22,138 |
|
|
|
356 |
|
|
|
22,685 |
|
|
|
|
360 |
|
|
|
(2.4 |
) |
|
|
(1.1 |
) |
|
Total rates trading |
|
|
|
1,121,734 |
|
|
|
18,382 |
|
|
|
1,206,095 |
|
|
|
|
19,447 |
|
|
|
(7.0 |
) |
|
|
(5.5 |
) |
|
Total trading |
|
|
$ |
1,859,414 |
|
|
$ |
30,424 |
|
|
$ |
1,810,498 |
|
|
|
$ |
29,158 |
|
|
|
2.7 |
|
|
|
4.3 |
|
|
Number of |
|
|
|
|
|
|
61 |
|
|
|
|
|
|
|
62 |
|
|
|
|
|
|
|
|
|
|
||
Number of |
|
|
|
|
|
|
63 |
|
|
|
|
|
|
|
64 |
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
||||||||||||||||||||||
In millions (unaudited) |
|
|
2022 |
|
|
2021 |
|
|
% Change |
|
|
||||||||||||||||
|
|
|
Volume |
|
|
ADV |
|
|
Volume |
|
|
|
ADV |
|
|
Volume |
|
|
ADV |
|
|
||||||
Credit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High-grade |
|
|
$ |
1,364,530 |
|
|
$ |
5,480 |
|
|
$ |
1,243,180 |
|
|
|
$ |
4,973 |
|
|
|
9.8 |
|
% |
|
10.2 |
|
% |
High-yield |
|
|
|
424,812 |
|
|
|
1,706 |
|
|
|
371,116 |
|
|
|
|
1,484 |
|
|
|
14.5 |
|
|
|
15.0 |
|
|
Emerging markets |
|
|
|
693,560 |
|
|
|
2,785 |
|
|
|
649,455 |
|
|
|
|
2,598 |
|
|
|
6.8 |
|
|
|
7.2 |
|
|
Eurobonds |
|
|
|
362,713 |
|
|
|
1,451 |
|
|
|
334,899 |
|
|
|
|
1,324 |
|
|
|
8.3 |
|
|
|
9.6 |
|
|
Other credit |
|
|
|
99,225 |
|
|
|
398 |
|
|
|
26,134 |
|
|
|
|
105 |
|
|
|
279.7 |
|
|
|
279.0 |
|
|
Total credit trading |
|
|
|
2,944,840 |
|
|
|
11,820 |
|
|
|
2,624,784 |
|
|
|
|
10,484 |
|
|
|
12.2 |
|
|
|
12.7 |
|
|
Rates |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,347,607 |
|
|
|
21,476 |
|
|
|
4,074,451 |
|
|
|
|
16,298 |
|
|
|
31.2 |
|
|
|
31.8 |
|
|
Agency and other government bonds |
|
|
|
96,782 |
|
|
|
388 |
|
|
|
70,513 |
|
|
|
|
281 |
|
|
|
37.3 |
|
|
|
38.1 |
|
|
Total rates trading |
|
|
|
5,444,389 |
|
|
|
21,864 |
|
|
|
4,144,964 |
|
|
|
|
16,579 |
|
|
|
31.3 |
|
|
|
31.9 |
|
|
Total trading |
|
|
$ |
8,389,229 |
|
|
$ |
33,684 |
|
|
$ |
6,769,748 |
|
|
|
$ |
27,063 |
|
|
|
23.9 |
|
|
|
24.5 |
|
|
Number of |
|
|
|
|
|
|
249 |
|
|
|
|
|
|
|
250 |
|
|
|
|
|
|
|
|
|
|
||
Number of |
|
|
|
|
|
|
250 |
|
|
|
|
|
|
|
253 |
|
|
|
|
|
|
|
|
|
|
1 The number of |
2 The number of |
*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, |
|
|
|
|
|
|
|
|
|
|
Table 5: Consolidated Condensed Balance Sheet Data |
|
|
|
|
|
|
|
|
|
|
|
As of |
|
|
|||||
In thousands (unaudited) |
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
430,746 |
|
|
$ |
506,735 |
|
|
Cash segregated under federal regulations |
|
|
50,947 |
|
|
|
50,159 |
|
|
Investments, at fair value |
|
|
83,792 |
|
|
|
36,078 |
|
|
Accounts receivable, net |
|
|
78,450 |
|
|
|
63,881 |
|
|
Receivables from broker-dealers, clearing organizations and customers |
|
|
476,335 |
|
|
|
408,346 |
|
|
|
|
|
154,789 |
|
|
|
154,789 |
|
|
Intangible assets, net of accumulated amortization |
|
|
98,065 |
|
|
|
116,377 |
|
|
Furniture, equipment, leasehold improvements and capitalized software, net |
|
|
100,256 |
|
|
|
96,061 |
|
|
Operating lease right-of-use assets |
|
|
66,106 |
|
|
|
70,960 |
|
|
Prepaid expenses and other assets |
|
|
68,289 |
|
|
|
27,066 |
|
|
Total assets |
|
$ |
1,607,775 |
|
|
$ |
1,530,452 |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and stockholders' equity |
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
Accrued employee compensation |
|
$ |
56,302 |
|
|
$ |
59,719 |
|
|
Payables to broker-dealers, clearing organizations and customers |
|
|
303,993 |
|
|
|
229,325 |
|
|
Income and other tax liabilities |
|
|
28,448 |
|
|
|
40,456 |
|
|
Accounts payable, accrued expenses and other liabilities |
|
|
55,263 |
|
|
|
71,218 |
|
|
Operating lease liabilities |
|
|
82,676 |
|
|
|
88,425 |
|
|
Total liabilities |
|
|
526,682 |
|
|
|
489,143 |
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity |
|
|
|
|
|
|
|
|
|
Common stock |
|
|
123 |
|
|
|
123 |
|
|
Additional paid-in capital |
|
|
345,468 |
|
|
|
330,262 |
|
|
|
|
|
(328,326 |
) |
|
|
(232,712 |
) |
|
Retained earnings |
|
|
1,101,525 |
|
|
|
956,966 |
|
|
Accumulated other comprehensive loss |
|
|
(37,697 |
) |
|
|
(13,330 |
) |
|
Total stockholders' equity |
|
|
1,081,093 |
|
|
|
1,041,309 |
|
|
Total liabilities and stockholders' equity |
|
$ |
1,607,775 |
|
|
$ |
1,530,452 |
|
|
|
|
|
|
|
||||||||||||||
Table 6: Reconciliation of Net Income to EBITDA and Net Income Margin to EBITDA Margin |
|
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Year Ended
|
||||||||||||||
In thousands (unaudited) |
|
2022 |
|
|
2021 |
|
|
|
2022 |
|
|
2021 |
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
59,226 |
|
|
$ |
52,185 |
|
|
|
$ |
250,224 |
|
|
$ |
257,888 |
|
|
Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
52 |
|
|
|
166 |
|
|
|
|
700 |
|
|
|
842 |
|
|
Provision for income taxes |
|
|
20,202 |
|
|
|
19,390 |
|
|
|
|
88,064 |
|
|
|
76,035 |
|
|
Depreciation and amortization |
|
|
15,730 |
|
|
|
14,607 |
|
|
|
|
61,446 |
|
|
|
53,447 |
|
|
EBITDA |
|
$ |
95,210 |
|
|
$ |
86,348 |
|
|
|
$ |
400,434 |
|
|
$ |
388,212 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income margin1 |
|
|
33.3 |
% |
|
|
31.6 |
% |
|
|
|
34.8 |
% |
|
|
36.9 |
% |
|
Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
0.0 |
|
|
|
0.1 |
|
|
|
|
0.1 |
|
|
|
0.1 |
|
|
Provision for income taxes |
|
|
11.4 |
|
|
|
11.7 |
|
|
|
|
12.3 |
|
|
|
10.9 |
|
|
Depreciation and amortization |
|
|
8.8 |
|
|
|
8.8 |
|
|
|
|
8.6 |
|
|
|
7.6 |
|
|
EBITDA margin2 |
|
|
53.5 |
% |
|
|
52.3 |
% |
|
|
|
55.7 |
% |
|
|
55.5 |
% |
|
|
|
|
|
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 7: Reconciliation of Cash Flows from Operating Activities to Free Cash Flow |
|
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Year Ended
|
||||||||||||||
In thousands (unaudited) |
|
2022 |
|
|
2021 |
|
|
|
2022 |
|
|
2021 |
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities |
|
$ |
134,226 |
|
|
$ |
145,711 |
|
|
|
$ |
289,231 |
|
|
$ |
282,091 |
|
|
Exclude: Net change in trading investments |
|
|
49,972 |
|
|
|
5 |
|
|
|
|
49,527 |
|
|
|
5,574 |
|
|
Exclude: Net change in fail-to-deliver/receive from broker-dealers, clearing organizations and customers |
|
|
(71,933 |
) |
|
|
(62,318 |
) |
|
|
|
(25,994 |
) |
|
|
59,651 |
|
|
Less: Purchases of furniture, equipment and leasehold improvements |
|
|
(6,500 |
) |
|
|
(2,926 |
) |
|
|
|
(13,142 |
) |
|
|
(17,493 |
) |
|
Less: Capitalization of software development costs |
|
|
(11,621 |
) |
|
|
(8,473 |
) |
|
|
|
(38,730 |
) |
|
|
(33,123 |
) |
|
Free cash flow |
|
$ |
94,144 |
|
|
$ |
71,999 |
|
|
|
$ |
260,892 |
|
|
$ |
296,700 |
|
|
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. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230124006139/en/
INVESTOR RELATIONS
+1 212 813 6313
sdavidson2@marketaxess.com
MEDIA RELATIONS
+1 917 267 1232
mmistry@marketaxess.com
RF | Binder
+1 917 239 6726
Source:
FAQ
What were the financial results for MarketAxess (MKTX) in Q4 2022?
How much was the estimated price improvement for clients in 2022?
Who is the new CEO of MarketAxess (MKTX) and when will the transition occur?
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