MarketAxess Holdings, Inc.
Jul 28, 2010
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MarketAxess Reports Second Quarter 2010 Record Revenue of $35.3 Million, Record Pre-Tax Income of $11.9 Million and Diluted EPS of $0.18

Second Quarter Financial Highlights*
- Record revenues of $35.3 million, up 36.7%
- Total expenses of $23.5 million, up 16.7%
- Record pre-tax margin of 33.6%, up from 22.2%
- Net income of $7.2 million, up 124.9%
*All comparisons versus second quarter 2009.

NEW YORK, July 28, 2010 /PRNewswire via COMTEX/ --

MarketAxess Holdings Inc. (Nasdaq: MKTX), the operator of a leading electronic trading platform for U.S. and European high-grade corporate bonds, emerging markets bonds and other types of fixed-income securities, today announced results for the second quarter ended June 30, 2010.

"We are pleased to report another quarter of record revenues and earnings and the strongest quarterly free cash flow generation in the firm's history," said Richard M. McVey, chairman and chief executive officer of MarketAxess. "In addition to the strong current results, we are actively engaged in the regulatory reform process and look forward to participating as a swap execution facility in the new e-trading market structure."

Second Quarter Results

Total revenues for the second quarter of 2010 increased 36.7% to $35.3 million, compared to $25.8 million for the second quarter of 2009. Pre-tax income was a record $11.9 million, compared to $5.7 million for the second quarter of 2009, an increase of 106.7%. Pre-tax margin was 33.6%, compared to 22.2% for the second quarter of 2009. Net income totaled $7.2 million, or $0.18 per share on a diluted basis, compared to $3.2 million, or $0.08 per share on a diluted basis, for the second quarter of 2009.

Commission revenue for the second quarter of 2010 totaled $29.5 million on total trading volume of $98.3 billion, compared to $21.8 million in commission revenue on total trading volume of $66.8 billion for the second quarter of 2009. U.S. high-grade trading volume as a percentage of FINRA's high-grade TRACE trading volume increased to an estimated 8.1%, compared to an estimated 4.7% for the second quarter of 2009.

Technology products and services revenue, which includes revenue for technology licenses, support and professional services, totaled $3.3 million for the second quarter of 2010, compared to $2.1 million for the second quarter of 2009. Other revenue, which consists of information and user access fees, investment income and other revenue, increased 36.7% to $2.6 million, compared to $1.9 million for the second quarter of 2009.

Total expenses for the second quarter of 2010 increased 16.7% to $23.5 million, compared to $20.1 million for the second quarter of 2009. The majority of the increase was due to higher employee compensation and benefits expense of $2.3 million. The Company now expects total expenses for 2010 to be in the range of $94.0 million to $96.0 million.

The effective tax rate for the second quarter of 2010 was 39.5%, compared to 44.4% for the second quarter of 2009.

Employee headcount as of June 30, 2010 was 222, compared to 200 as of June 30, 2009.

Dividend

The Company's board of directors declared a quarterly cash dividend of $0.07 per share of common stock outstanding or issuable upon conversion of outstanding shares of non-voting common stock and Series B preferred stock, to be paid on August 25, 2010 to stockholders of record as of the close of business on August 11, 2010.

Share Repurchase Program

In June 2010, the Company's board of directors approved a $30 million share repurchase program, which authorizes the Company to repurchase shares of its common stock in the open market or in privately negotiated transactions, at times and prices considered appropriate by the Company. The Company initiated repurchases under the program in July 2010.

Balance Sheet Data

As of June 30, 2010, total assets were $285.4 million and included $187.6 million, or $4.75 per diluted share in cash, cash equivalents and securities. Total stockholders' equity, including the Series B preferred stock, as of June 30, 2010 was $260.4 million.

Webcast and Conference Call Information

Richard M. McVey, MarketAxess' chairman and chief executive officer, T. Kelley Millet, president, and Antonio L. DeLise, chief financial officer, will host a conference call to discuss the Company's financial results and outlook this morning at 8:30 a.m. Eastern time. To access the conference call, please dial 800-260-8140 (U.S.) or 617-614-3672 (international). The passcode for all callers is 12921667. 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://www.marketaxess.com. A replay of the call will be made available by dialing 888-286-8010 (U.S.) or 617-801-6888 (international) for one week after the announcement. The passcode for replay callers is 42572926. The Webcast will also be archived on http://www.marketaxess.com for 90 days following the announcement.

About MarketAxess

MarketAxess operates a leading electronic trading platform that enables investment industry professionals to efficiently trade corporate bonds and other types of fixed-income instruments. MarketAxess' patented trading technology allows institutional investor clients to request competitive, executable bids or offers from multiple broker-dealers simultaneously, and to execute trades with the broker-dealer of their choice. Approximately 796 institutional investors are active users of the MarketAxess trading platform, accessing the global liquidity provided by MarketAxess' 80 broker-dealer clients in U.S. high-grade corporate bonds, European bonds, high yield and emerging markets bonds, agency bonds and credit default swaps. MarketAxess also offers a number of trading-related products and services, including: market data to assist clients with trading decisions; connectivity solutions that facilitate straight-through processing; technology services to optimize trading environments; and execution services for exchange-traded fund managers and other clients.

MarketAxess maintains its headquarters in New York and has offices in London, Chicago and Salt Lake City. For more information, please visit www.marketaxess.com.

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 and operating performance. These and other statements that relate to future results and events are based on MarketAxess' current expectations. Actual results in future periods may differ materially from the those currently expected or desired because of a number of risks and uncertainties, including: 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; the rapidly evolving nature of the electronic financial services industry; the level of trading volume transacted on the MarketAxess platform; the absolute level and direction of interest rates and the corresponding volatility in the corporate fixed-income market; our ability to develop new products and offerings and the market's acceptance of those products; our exposure to risks resulting from non-performance by counterparties to transactions executed between our clients in which we act as an intermediary in matching back-to-back trades; our dependence on our broker-dealer clients; our ability to enter into strategic alliances and to acquire other businesses and successfully integrate them with our business; our future capital needs and our ability to obtain capital when needed; and other factors. The Company's actual results and financial condition may differ, perhaps materially, from the anticipated results and financial condition in any such forward-looking statements. 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.

                                MarketAxess Holdings Inc.
                                -------------------------
                          Consolidated Statements of Operations
                          -------------------------------------



                           Three Months Ended            Six Months Ended
                                June 30,                     June 30,
                                --------                     --------


                            2010         2009          2010         2009
                            ----         ----          ----         ----

                              ($ in thousands, except per share data)

                                            (unaudited)
    Revenues
      Commissions
        U.S. high-grade  $20,249      $13,808       $40,025      $27,323
        Eurobond           4,669        4,712        10,161        8,854
        Other              4,542        3,310         8,581        6,099
                           -----        -----         -----        -----
          Total
           commissions    29,460       21,830        58,767       42,276
        Technology
         products and
         services          3,251        2,096         6,415        4,119
        Information and
         user access
         fees              1,722        1,504         3,356        3,159
        Investment
         income              315          234           606          566
        Other                578          175         1,066          351
                             ---          ---         -----          ---
          Total revenues  35,326       25,839        70,210       50,471
                          ------       ------        ------       ------

    Expenses
        Employee
         compensation
         and benefits     14,189       11,917        28,122       23,359
        Depreciation and
         amortization      1,622        1,679         3,238        3,470
        Technology and
         communications    2,353        2,120         4,770        4,362
        Professional and
         consulting fees   1,990        1,613         4,128        3,492
        Occupancy            707          693         1,645        1,369
        Marketing and
         advertising         759          708         1,387        1,353
        General and
         administrative    1,850        1,373         3,979        2,599
                           -----        -----         -----        -----
          Total expenses  23,470       20,103        47,269       40,004
                          ------       ------        ------       ------

    Income before
     taxes                11,856        5,736        22,941       10,467
        Provision for
         income taxes      4,687        2,549         9,071        4,441
                           -----        -----         -----        -----
    Net income            $7,169       $3,187       $13,870       $6,026
                          ======       ======       =======       ======

    Per Share Data:
      Earnings per
       share:
        Basic              $0.19        $0.09         $0.37        $0.16
        Diluted            $0.18        $0.08         $0.35        $0.16

      Cash dividends
       declared per
       common share        $0.07           $-         $0.14           $-

      Weighted-
       average common
       shares:
        Basic             33,733       33,256        33,679       33,220
        Diluted           39,514       37,854        39,410       37,660


                            MarketAxess Holdings Inc.
                            -------------------------
                    Consolidated Condensed Balance Sheet Data
                    -----------------------------------------



                                                             December 31,
                                        June 30, 2010             2009
                                        -------------       -------------
                                                  ($ in thousands)

                                                    (unaudited)
    Assets
      Cash and cash equivalents               $113,526            $103,341
      Securities available-for-sale             74,087              70,997
      Deferred tax assets, net                  16,576              23,980
      All other assets                          81,247              78,968
                                                ------              ------
        Total assets                          $285,436            $277,286
                                              ========            ========

    Liabilities and Stockholders'
     Equity
      Total liabilities                        $25,011             $30,469
      Series B Preferred Stock                  30,315              30,315
      Total stockholders' equity               230,110             216,502
                                               -------             -------
        Total liabilities and
         stockholders' equity                 $285,436            $277,286
                                              --------            --------


                  MarketAxess Holdings Inc.
                  -------------------------
                      Volume Statistics
                      -----------------


                                       Total Trading Volume
                                       --------------------


                                Three Months              Six Months
                                    Ended                   Ended
                                  June 30,                June 30,


                                2010         2009          2010          2009
                                ----         ----          ----          ----

                                         ($ in millions)
                                           (unaudited)

    U.S. high-
     grade -
     multi dealer
     1
             fixed-rate    $55,829      $36,365      $114,495       $72,334
             floating-rate   2,341        1,545         5,186         2,415
    Eurobond                12,739       13,169        28,758        22,261
    Other 1                 27,372       15,742        49,044        29,882
        Total              $98,281      $66,821      $197,483      $126,892
                           =======      =======      ========      ========



                                       Average Daily Volume
                                      --------------------


                              Three Months               Six Months
                                  Ended                    Ended
                                June 30,                 June 30,


                              2010         2009          2010          2009
                              ----         ----          ----          ----

                                         ($ in millions)
                                           (unaudited)

    U.S. high-
     grade 1                  $923         $602          $965          $603
    Eurobond                   209          216           232           180
    Other 1                    434          250           396           241
        Total               $1,566       $1,068        $1,593        $1,024
                            ======       ======        ======        ======

    Number of
     U.S. Trading
     Days 2                     63           63           124           124
    Number of
     U.K. Trading
     Days 3                     61           61           124           124


    1 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 riskless
    principal basis between two counterparties.
    2 The number of U.S. trading days is based on the SIFMA holiday
    recommendation calendar.
    3 The number of U.K. trading days is based on the U.K. Bank holiday
    schedule.


SOURCE MarketAxess Holdings Inc.