Revenue Growth of 20% Driven by Strong
Growth in Total Credit ADV on Higher Market Volumes
Record Portfolio Trading ADV; Record
Municipal Bonds ADV and Estimated Market Share
MarketAxess Holdings Inc. (Nasdaq: MKTX), the operator of a
leading electronic trading platform for fixed-income securities,
today announced financial results for the third quarter ended
September 30, 2024.
3Q24 select financial and operational highlights*
- 20% increase in total revenues to $206.7 million,
including Pragma revenue of $7.7 million and an increase of
approximately $0.9 million from the impact of foreign
currency fluctuations.
- 24% growth in U.S. high-grade commission revenue on
strong growth in market volumes.
- 20% growth in emerging markets and Eurobonds commission
revenue reflecting strong geographic diversification.
- Record portfolio trading ADV of $1.1
billion.
- Record rates commission revenue, up 35%.
- 21% increase in services revenue (combined information,
post-trade and technology services revenue) to $26.3
million, including Pragma revenue of $2.8 million.
- Total expenses of $119.7 million, up 14%,
including Pragma operating expenses of $8.2 million and an
increase of approximately $0.7 million from the impact of
foreign currency fluctuations.
- 30% increase in diluted earnings per share (“EPS”) to
$1.90 on net income of $71.5 million.
- Record 2,125 (+2%) active client firms and 1,079
(+2%) international active client firms on the platform.
- Record automation suite trading volume (+28%),
trade count (+37%) and active client firms (+49%);
dealer algorithmic responses up 24%.
*All comparisons versus 3Q23.
Chris Concannon, CEO of MarketAxess, commented:
“We delivered significantly improved financial results in the
third quarter, as we continued to make progress in executing our
strategy.
The initial roll-out of X-Pro to our international client base
is underway. In the third quarter, we delivered several hundred
basis points in market share gains in U.S. credit portfolio trading
compared to second quarter 2024 levels. Additionally, a record 74%
of our portfolio trading volume was executed on X-Pro in September.
We are looking to build on these gains in the coming quarters with
the initial launch of our targeted block trading solutions last
month, designed to minimize market impact and optimize trading
success. Additionally, we are enhancing our dealer liquidity
solutions by extending our suite of automation services to our
dealer clients.
In summary, we exited the quarter in September with a
constructive market backdrop, characterized by strong market
volumes, a robust new issue calendar and an increase in the
velocity of trading in U.S. high-grade. We believe we are well
positioned to deliver continued growth in the coming quarters.”
Table 1: 3Q24 select financial results
$ in millions, except per share data(unaudited)
Revenues
Operating Income Net Income Diluted EPS Net
IncomeMargin (%) EBITDA1 EBITDAMargin (%)1
3Q24
$207
$87
$71
$1.90
34.6%
$105
50.8%
2Q24
$198
$81
$65
$1.72
32.9%
$99
50.0%
3Q23
$172
$67
$55
$1.46
31.9%
$83
48.1%
YoY % Change
20%
30%
30%
30%
+270 bps
27%
+270 bps
QoQ % Change
5%
7%
10%
10%
+170 bps
6%
+80 bps
YTD 2024
$615
$261
$209
$5.55
34.0%
$313
51.0%
YTD 2023
$555
$238
$188
$5.01
33.9%
$284
51.2%
% Change
11%
10%
11%
11%
+10 bps
10%
(20) bps
Table 1A: 3Q24 trading volume (ADV)
CREDIT
RATES
$ in millions(unaudited)
US/UK Trading Days2
Total ADV
Total Credit
High-Grade
High-Yield
Emerging Markets
Eurobonds
Municipal Bonds
Total Rates
US Govt. Bonds
Agcy./Other Govt.
Bonds
3Q24
64/65
$40,516
$14,116
$7,027
$1,278
$3,333
$1,891
$577
$26,400
$25,302
$1,098
2Q24
63/61
$34,169
$13,743
$6,436
$1,337
$3,337
$2,103
$522
$20,426
$19,634
$792
3Q23
63/64
$29,285
$11,156
$5,179
$1,294
$2,799
$1,484
$388
$18,129
$17,713
$416
YoY % Change
38%
27%
36%
(1%)
19%
27%
49%
46%
43%
164%
QoQ % Change
19%
3%
9%
(4%)
–
(10%)
11%
29%
29%
39%
Table 1B: 3Q24 estimated market share
CREDIT RATES (unaudited)
High-Grade
High-Yield High-Grade/High-Yield Combined
Municipals3 US Govt.Bonds3
3Q24
19.5%
13.0%
18.1%
8.7%
2.6%
2Q24
18.7%
13.5%
17.6%
7.4%
2.3%
3Q23
20.0%
16.1%
19.1%
5.5%
2.5%
YoY Bps Change
(50) bps
(310) bps
(100) bps
+320 bps
+10 bps
QoQ Bps Change
+80 bps
(50) bps
+50 bps
+130 bps
+30 bps
3Q24 overview of results
Commission revenue and trading
volume
Credit
Credit Commission Revenue
- Total credit commission revenue of $168.4 million
(including $33.6 million in fixed-distribution fees)
increased $23.2 million, or 16%, compared to
$145.2 million (including $36.2 million
in fixed-distribution fees) in the prior year. The increase in
total credit commission revenue was driven principally by
24% growth in U.S. high-grade commission revenue on a
39% increase in U.S. high-grade TRACE market ADV. The
decline in variable transaction fees per million (“FPM”) to
$148.97 from $154.85 in the prior year was mainly due
to product and protocol mix-shift, principally lower levels of U.S.
high-yield activity and increased portfolio trading, partially
offset by the higher duration of bonds traded in U.S. high-grade,
principally driven by an increase in the weighted average years to
maturity. The decrease in fixed-distribution fees was principally
driven by the consolidation of two global dealers and migrations to
variable fee plans, partially offset by the addition of new dealer
fixed fee plans.
Credit Trading Volumes
- Total credit ADV of $14.1 billion increased 27%
compared to the prior year, and increased 3% compared to
2Q24 levels.
- Record $1.1 billion in total portfolio trading ADV, up
163% compared to the prior year, and up 31% compared
to 2Q24.
- 35% Open Trading share4 of total credit trading volume,
up from 34% in each of the prior year and 2Q24. The Company
delivered estimated price improvement5 for clients via Open
Trading of approximately $119 million in the quarter.
U.S. Credit6
- U.S. high-grade ADV of $7.0 billion increased
36% compared to the prior year, and increased 9%
compared to 2Q24. Estimated market ADV increased 39%
compared to the prior year, and increased 5% compared to
2Q24. Estimated market share was 19.5%, down from
20.0% in the prior year, but up from 18.7% in 2Q24.
Including the impact of single-dealer portfolio trades,
estimated market share was 20.0%, in line with 20.1%
in the prior year, but up from 19.2% in 2Q24.
- U.S. high-yield ADV of $1.3 billion decreased 1%
compared to the prior year, and decreased 4% compared to
2Q24. Estimated market ADV increased 23% compared to the
prior year, but was in line with 2Q24. Estimated market share was
13.0% (13.4% including single-dealer portfolio
trades), down from 16.1% in the prior year, and down from
13.5% (13.8% including single-dealer portfolio
trades) in 2Q24.
Other Credit
- Emerging markets ADV of $3.3 billion increased
19% compared to the prior year, but was in line with 2Q24.
The year-over-year increase was driven by a 20% increase in
hard currency ADV, and an 18% increase in local currency
ADV.
- Eurobonds ADV of $1.9 billion increased
27% compared to the prior year, but decreased 10%
compared to 2Q24.
- Record Municipal bond ADV of $577 million
increased 49% compared to the prior year, and increased
11% compared to 2Q24. Estimated market ADV was down
5% compared to the prior year, and down 6% compared
to 2Q24. Record estimated market share of 8.7%, up
from 5.5% in the prior year, and up from 7.4% in
2Q24.3
Strategic Priority Related Protocols &
Workflow Tools
- Our estimated market share of U.S. high grade and U.S.
high-yield TRACE portfolio trading was 20.0% in 3Q24.
Portfolio trading represented an estimated 10.7% of U.S.
high-grade and U.S. high-yield TRACE in 3Q24.
- A record 59% of our portfolio trading volume was
executed on X-Pro in 3Q24.
- Dealer RFQ ADV of $1.2 billion across all credit
products increased 26% compared to the prior year, and was
in line with 2Q24 levels.
- AxessIQ, the order and execution workflow solution
designed for wealth management and private banking clients,
achieved ADV of $131 million, up 32% compared to the
prior year, but down 3% compared to 2Q24.
Rates
- Record total rates commission revenue of $7.1
million increased $1.8 million, or 35%.
Record total rates ADV of $26.4 billion increased
46% compared to the prior year, and increased 29%
compared to 2Q24.
Other
- Total other commission revenue was $4.9 million,
which consists of Pragma commission revenue.
Services revenue
Information services
- Information services revenue of $13.0 million
increased $1.2 million, or 10%, compared to
the prior year. The increase in revenue was principally driven by
net new data contract revenue and an increase of $0.3
million from the impact of foreign currency fluctuations.
Post-trade services
- Post-trade services revenue of $10.4 million
increased $0.5 million, or 6%, compared to the prior
year mainly due to net new contract revenue and an increase of
$0.2 million from the impact of foreign currency
fluctuations.
Technology services
- Total technology services revenue of $3.0
million, up from $0.2 million in the prior year. The
current quarter includes $2.8 million of Pragma
revenue.
Expenses
- Total expenses of $119.7 million, up 14%,
including Pragma operating expenses of $8.2 million and an
increase of $0.7 million from the impact of foreign currency
fluctuations.
Non-operating
- Other income (expense): Other income was $5.8
million, up from $4.8 million in the prior
year. The current quarter included a $0.8 million unrealized
gain on U.S. Treasury investments compared to a $0.2 million
unrealized loss in the prior year.
- Tax rate: The effective tax rate was 23.0%, down
slightly from 23.4% in the prior year.
Capital
- The Company had $602.5 million in cash, cash
equivalents, corporate bond investments and U.S. Treasury
investments as of September 30, 2024, up from $558.8
million as of June 30, 2024. There were no outstanding
borrowings under the Company’s credit facility.
- Year-to-date through October 2024, a total of
296,505 shares were repurchased at a cost of $63.9
million, including 66,349 shares repurchased during the
third quarter at a cost of $15.0 million. As of October
31, 2024, a total of $236.1 million remained under the
aggregate authorizations by the Company’s Board of Directors.
- The Board declared a quarterly cash dividend of $0.74
per share, payable on December 4, 2024 to
stockholders of record as of the close of business on November
20, 2024.
Other
- Employee headcount was 881 as of September 30,
2024, in line with 881 as of December 31, 2023,
but up from 853 as of September 30, 2023.
1
EBITDA and EBITDA margin are non-GAAP
financial measures. Refer to “Non-GAAP financial measures and other
items” for a discussion of these non-GAAP financial measures.
2
The number of U.S. trading days is based
on the SIFMA holiday recommendation calendar and the number of U.K.
trading days is based primarily on the U.K. bank holiday
schedule.
3
See “General Notes Regarding the Data
Presented” below.
4
Open Trading share of total credit trading
volume is derived by taking total Open Trading volume across all
credit products where Open Trading is offered and dividing by total
credit trading volume across all credit products where Open Trading
is offered.
5
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.
6
The Company is highlighting the impact of
single-dealer portfolio trading volume on U.S. high-grade and U.S.
high-yield trading volume and estimated market share, where
material, but will continue to exclude single-dealer portfolio
trading activity from each product’s aggregated trading volume and
estimated market share and the total credit FPM calculation.
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. We define EBITDA margin as EBITDA divided by revenues.
We define free cash flow as net cash provided by/(used in)
operating activities excluding the net change in trading
investments and net change in securities failed-to-deliver and
securities failed-to-receive from broker-dealers, clearing
organizations and customers, less expenditures for furniture,
equipment and leasehold improvements and capitalized software
development costs. The Company believes that these non-GAAP
financial measures, when taken into consideration with the
corresponding GAAP financial measures, provide additional
information regarding the Company’s operating results because they
assist both investors and management in analyzing and evaluating
the performance of our business. See the attached schedule for a
reconciliation of GAAP net income to EBITDA, GAAP net income margin
to EBITDA margin and GAAP net cash provided by/(used in) operating
activities to free cash flow.
Please refer to Tables 6 & 7 for a reconciliation of these
non-GAAP financial measures to their most directly comparable GAAP
measures.
Webcast and conference call information
Chris Concannon, Chief Executive Officer, Richard Schiffman,
Global Head of Trading Solutions, and Ilene Fiszel Bieler, Chief
Financial Officer will host a conference call to discuss the
Company’s financial results and outlook on Wednesday, November 6,
2024 at 10:00 a.m. ET. To access the conference call, please dial
646-307-1963 (U.S./International) and use the ID 1832176. The
Company will also host a live audio Webcast of the conference call
on the Investor Relations section of the Company's website at
http://investor.marketaxess.com. The Webcast will be archived on
http://investor.marketaxess.com for 90 days following the
announcement.
General Notes Regarding the Data Presented
Reported MarketAxess volume in all product categories includes
only fully electronic trading volume. MarketAxess trading volumes
and the Financial Industry Regulatory Authority (“FINRA”) Trade
Reporting and Compliance Engine (“TRACE”) reported volumes are
available on the Company’s website at
investor.marketaxess.com/volume.
For periods beginning with January 2024, the Company has made
changes to the market volume data used to calculate estimated
market share for Municipal and U.S. Government Bonds. For Municipal
Bonds, the Company previously used estimates, derived from data
issued by the Municipal Securities Rule Making Board (“MSRB”),
including estimates for new issuance, commercial paper and
variable-rate trading activity, and excluded these volumes from the
estimated market volume data. While the Company still uses
estimates, the new methodology for identifying and excluding these
volumes from the market volume data is now based on MSRB “flags” to
identify new issuance, commercial paper, and variable-rate volumes.
For U.S. Government Bonds, the previous data source for estimated
market volumes was the Federal Reserve Bank’s Reported Primary
Dealer U.S. Treasury Bond Trading Volumes, which was reported on a
one-week lag. The new source for U.S. Government Bond trading
volumes is FINRA’s U.S. Treasury TRACE data. The Company believes
that the refined methodology used for Municipal Bonds, and the new
data source for U.S. Government Bonds, provides more accurate
measures of estimated market volumes and estimated market share.
Prior comparable periods have been recast retrospectively for both
Municipal and U.S. Government Bonds to conform to the updated
presentation of the data. The new estimated market volume data is
also available on the Company’s website at
investor.marketaxess.com/volume.
Cautionary Note Regarding Forward-Looking Statements
This press release may contain forward-looking statements,
including statements about the outlook and prospects for the
Company, product/protocol availability and ability to increase
estimated market share, market conditions and industry growth, as
well as statements about the Company’s future financial and
operating performance. These and other statements that relate to
future results and events are based on MarketAxess’ current
expectations. The Company’s actual results in future periods may
differ materially from those currently expected or desired because
of a number of risks and uncertainties, including: global economic,
political and market factors; the level of trading volume
transacted on the MarketAxess platform; the rapidly evolving nature
of the electronic financial services industry; the level and
intensity of competition in the fixed-income electronic trading
industry and the pricing pressures that may result; the variability
of our growth rate; our ability to introduce new fee plans and our
clients’ response; our ability to attract clients or adapt our
technology and marketing strategy to new markets; risks related to
our growing international operations; our dependence on our
broker-dealer clients; the loss of any of our significant
institutional investor clients; our exposure to risks resulting
from non-performance by counterparties to transactions executed
between our clients in which we act as an intermediary in matched
principal trades; risks related to self-clearing; risks related to
sanctions levied against states or individuals that could expose us
to operational or regulatory risks; the effect of rapid market or
technological changes on us and the users of our technology; our
dependence on third-party suppliers for key products and services;
our ability to successfully maintain the integrity of our trading
platform and our response to system failures, capacity constraints
and business interruptions; the occurrence of design defects,
errors, failures or delays with our platforms, products or
services; our vulnerability to malicious cyber-attacks and
attempted cybersecurity breaches; our actual or perceived failure
to comply with privacy and data protection laws; our ability to
protect our intellectual property rights or technology and defend
against intellectual property infringement or other claims; our
ability to enter into strategic alliances and to acquire other
businesses and successfully integrate them with our business; our
dependence on our management team and our ability to attract and
retain talent; limitations on our flexibility because we operate in
a highly regulated industry; the increasing government regulation
of us and our clients; risks related to the divergence of U.K. and
European Union legal and regulatory requirements following the
U.K.’s exit from the European Union; our exposure to costs and
penalties related to our extensive regulation; our risks of
litigation and securities laws liability; adverse effects as a
result of climate change or other ESG risks that could affect our
reputation; our future capital needs and our ability to obtain
capital when needed; limitations on our operating flexibility
contained in our credit agreement; our exposure to financial
institutions by holding cash in excess of federally insured limits;
and other factors. The Company undertakes no obligation to update
any forward-looking statements, whether as a result of new
information, future events or otherwise. More information about
these and other factors affecting MarketAxess’ business and
prospects is contained in MarketAxess’ periodic filings with the
Securities and Exchange Commission and can be accessed at
www.marketaxess.com.
About MarketAxess
MarketAxess (Nasdaq: MKTX) operates a leading electronic trading
platform that delivers greater trading efficiency, a diversified
pool of liquidity and significant cost savings to institutional
investors and broker-dealers across the global fixed-income
markets. Over 2,000 firms leverage MarketAxess’ patented technology
to efficiently trade fixed-income securities. Our automated and
algorithmic trading solutions, combined with our integrated and
actionable data offerings, help our clients make faster,
better-informed decisions on when and how to trade on our platform.
MarketAxess’ award-winning Open Trading® marketplace is widely
regarded as the preferred all-to-all trading solution in the global
credit markets. Founded in 2000, MarketAxess connects a robust
network of market participants through an advanced full trading
lifecycle solution that includes automated trading solutions,
intelligent data and index products and a range of post-trade
services. Learn more at www.marketaxess.com and on X
@MarketAxess.
Table 2: Consolidated Statements of Operations
Three Months Ended
Nine Months Ended
September 30,
September 30,
In thousands, except per share data
(unaudited)
2024
2023
% Change
2024
2023
% Change
Revenues
Commissions
$
180,392
$
150,496
20
%
$
536,944
$
491,073
9
%
Information services
12,960
11,801
10
37,385
34,466
8
Post-trade services
10,382
9,833
6
31,512
29,228
8
Technology services
2,981
154
NM
8,852
532
NM
Total revenues
206,715
172,284
20
614,693
555,299
11
Expenses
Employee compensation and benefits
58,431
48,872
20
176,485
149,570
18
Depreciation and amortization
18,728
17,561
7
55,284
51,027
8
Technology and communications
18,553
15,339
21
53,375
45,573
17
Professional and consulting fees
6,989
9,181
(24
)
21,053
24,331
(13
)
Occupancy
3,835
3,503
9
10,974
10,313
6
Marketing and advertising
2,898
2,100
38
7,741
8,403
(8
)
Clearing costs
4,387
3,665
20
13,420
12,392
8
General and administrative
5,839
5,154
13
15,467
15,698
(1
)
Total expenses
119,660
105,375
14
353,799
317,307
12
Operating income
87,055
66,909
30
260,894
237,992
10
Other income (expense)
Interest income
6,953
6,590
6
19,327
16,151
20
Interest expense
(346
)
(164
)
111
(1,283
)
(347
)
270
Equity in earnings of unconsolidated
affiliate
340
125
172
1,064
579
84
Other, net
(1,105
)
(1,717
)
(36
)
(4,051
)
(5,487
)
(26
)
Total other income (expense)
5,842
4,834
21
15,057
10,896
38
Income before income taxes
92,897
71,743
29
275,951
248,888
11
Provision for income taxes
21,408
16,802
27
66,909
60,460
11
Net income
$
71,489
$
54,941
30
$
209,042
$
188,428
11
Per Share Data:
Net income per common share
Basic
$
1.90
$
1.47
$
5.55
$
5.03
Diluted
$
1.90
$
1.46
$
5.55
$
5.01
Cash dividends declared per common
share
$
0.74
$
0.72
$
2.22
$
2.16
Weighted-average common shares:
Basic
37,527
37,491
37,641
37,485
Diluted
37,608
37,574
37,696
37,603
NM - not meaningful
Table 3: Commission Revenue
Detail
In thousands, except fee per million
data
Three Months Ended September
30,
Nine Months Ended September
30,
(unaudited)
2024
2023
% Change
2024
2023
% Change
Variable transaction fees
Credit
$
134,863
$
109,065
24
%
$
404,012
$
368,745
10
%
Rates
7,018
5,209
35
17,903
16,014
12
Other
4,856
—
NM
14,781
—
NM
Total variable transaction fees
146,737
114,274
28
436,696
384,759
13
Fixed distribution fees
Credit
33,584
36,167
(7
)
100,049
106,119
(6
)
Rates
71
55
29
199
195
2
Total fixed distribution fees
33,655
36,222
(7
)
100,248
106,314
(6
)
Total commission revenue
$
180,392
$
150,496
20
$
536,944
$
491,073
9
Average variable transaction fee per
million
Credit
$
148.97
$
154.85
(4
)
%
$
150.48
$
159.43
(6
)
%
Rates
4.15
4.56
(9
)
4.42
4.41
—
Table 4: Trading Volume Detail*
Three Months Ended September
30,
In millions (unaudited)
2024
2023
% Change
Volume
ADV
Volume
ADV
Volume
ADV
Credit
High-grade
$
449,708
$
7,027
$
326,304
$
5,179
38
%
36
%
High-yield
81,761
1,278
81,511
1,294
—
(1
)
Emerging markets
213,341
3,333
176,334
2,799
21
19
Eurobonds
122,914
1,891
94,980
1,484
29
27
Other credit
37,566
587
25,185
400
49
47
Total credit trading
905,290
14,116
704,314
11,156
29
27
Rates
U.S. government bonds
1,619,337
25,302
1,115,889
17,713
45
43
Agency and other government bonds
71,261
1,098
26,467
416
169
164
Total rates trading
1,690,598
26,400
1,142,356
18,129
48
46
Total trading
$
2,595,888
$
40,516
$
1,846,670
$
29,285
41
38
Number of U.S. Trading Days1
64
63
Number of U.K. Trading Days2
65
64
Nine Months Ended September
30,
In millions (unaudited)
2024
2023
% Change
Volume
ADV
Volume
ADV
Volume
ADV
Credit
High-grade
$
1,311,146
$
6,974
$
1,072,258
$
5,734
22
%
22
%
High-yield
251,388
1,337
295,774
1,582
(15
)
(15
)
Emerging markets
644,973
3,431
536,432
2,869
20
20
Eurobonds
380,029
2,011
329,841
1,754
15
15
Other credit
97,271
517
78,597
420
24
23
Total credit trading
2,684,807
14,270
2,312,902
12,359
16
15
Rates
U.S. government bonds
3,902,050
20,756
3,547,308
18,970
10
9
Agency and other government bonds
151,393
801
80,249
428
89
87
Total rates trading
4,053,443
21,557
3,627,557
19,398
12
11
Total trading
$
6,738,250
$
35,827
$
5,940,459
$
31,757
13
13
Number of U.S. Trading Days1
188
187
Number of U.K. Trading Days2
189
188
1 The number of U.S. trading days is based
on the SIFMA holiday recommendation calendar.
2 The number of U.K. trading days is based
on the U.K. Bank holiday schedule.
*Consistent with FINRA TRACE reporting
standards, both sides of trades are included in the Company's
reported volumes when the Company executes trades on a matched
principal basis between two counterparties. Consistent with
industry standards, U.S. government bond trades are
single-counted.
NM - not meaningful
Table 5: Consolidated Condensed Balance
Sheet Data
As of
In thousands (unaudited)
September 30, 2024
December 31, 2023
Assets
Cash and cash equivalents
$
446,347
$
451,280
Cash segregated under federal
regulations
46,657
45,122
Investments, at fair value
167,213
134,861
Accounts receivable, net
102,760
89,839
Receivables from broker-dealers, clearing
organizations and customers
474,989
687,936
Goodwill
236,706
236,706
Intangible assets, net of accumulated
amortization
104,331
119,108
Furniture, equipment, leasehold
improvements and capitalized software, net
109,482
102,671
Operating lease right-of-use assets
59,998
63,045
Prepaid expenses and other assets
84,566
84,499
Total assets
$
1,833,049
$
2,015,067
Liabilities and stockholders'
equity
Liabilities
Accrued employee compensation
$
52,816
$
60,124
Payables to broker-dealers, clearing
organizations and customers
283,314
537,398
Income and other tax liabilities
2,151
7,892
Accounts payable, accrued expenses
and other liabilities
33,437
37,013
Operating lease liabilities
75,077
79,677
Total liabilities
446,795
722,104
Stockholders' equity
Common stock
123
123
Additional paid-in capital
344,138
333,292
Treasury stock
(316,524
)
(260,298
)
Retained earnings
1,368,661
1,244,216
Accumulated other comprehensive loss
(10,144
)
(24,370
)
Total stockholders' equity
1,386,254
1,292,963
Total liabilities and stockholders'
equity
$
1,833,049
$
2,015,067
Table 6: Reconciliation of Net Income
to EBITDA and Net Income Margin to EBITDA Margin
Three Months Ended
September 30,
Nine Months Ended
September 30,
In thousands (unaudited)
2024
2023
2024
2023
Net income
$
71,489
$
54,941
$
209,042
$
188,428
Add back:
Interest income
(6,953
)
(6,590
)
(19,327
)
(16,151
)
Interest expense
346
164
1,283
347
Provision for income taxes
21,408
16,802
66,909
60,460
Depreciation and amortization
18,728
17,561
55,284
51,027
EBITDA
$
105,018
$
82,878
$
313,191
$
284,111
Net income margin1
34.6
%
31.9
%
34.0
%
33.9
%
Add back:
Interest income
(3.4
)
(3.8
)
(3.1
)
(2.9
)
Interest expense
0.2
0.1
0.2
0.1
Provision for income taxes
10.3
9.7
10.9
10.9
Depreciation and amortization
9.1
10.2
9.0
9.2
EBITDA margin2
50.8
%
48.1
%
51.0
%
51.2
%
Table 7: Reconciliation of Net Cash
Provided by Operating Activities to Free Cash Flow
Three Months Ended
September 30,
Nine Months Ended
September 30,
In thousands (unaudited)
2024
2023
2024
2023
Net cash (used in)/provided by
operating activities
$
95,089
$
79,161
$
208,989
$
192,082
Exclude: Net change in trading
investments
784
24,771
629
24,300
Exclude: Net change in
fail-to-deliver/receive from broker-dealers, clearing organizations
and customers
2,578
(13,099
)
50,715
(12,342
)
Less: Purchases of furniture, equipment
and leasehold improvements
(835
)
(5,983
)
(9,727
)
(7,255
)
Less: Capitalization of software
development costs
(11,331
)
(10,087
)
(35,790
)
(31,802
)
Free cash flow
$
86,285
$
74,763
$
214,816
$
164,983
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/20241105557526/en/
INVESTOR RELATIONS
Stephen Davidson MarketAxess Holdings Inc. +1 212 813
6313 sdavidson2@marketaxess.com
MEDIA RELATIONS
Marisha Mistry MarketAxess Holdings Inc. +1 917 267 1232
mmistry@marketaxess.com
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