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, an uptick of 10% 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 boost of 10% 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 decrease of 4% in both metrics.
Table: 3Q 2023 select financial results
|
$ in millions, except per share data |
Revenues |
Operating |
Net Income |
Diluted EPS |
Net Income |
EBITDA3 |
EBITDA |
|
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 an improvement of 21.5%. 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 rise of 7.4% 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 |
US/UK |
Total |
Total |
High-Grade |
High-Yield |
Emerging |
Eurobonds |
Municipal |
Total |
US Govt. |
Agcy./Other |
|
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 reached a record 2,093, a positive lift of 6.1%. 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, an uptick of 10% 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 boost of 10% 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 decrease of 4% in both metrics.
Table: 3Q 2023 select financial results
|
$ in millions, except per share data |
Revenues |
Operating |
Net Income |
Diluted EPS |
Net Income |
EBITDA3 |
EBITDA |
|
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 an improvement of 21.5%. 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 rise of 7.4% 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 |
US/UK |
Total |
Total |
High-Grade |
High-Yield |
Emerging |
Eurobonds |
Municipal |
Total |
US Govt. |
Agcy./Other |
|
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 reached a record 2,093, a positive lift of 6.1%. 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.
