MarketAxess Holdings, Inc.
Apr 28, 2010
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MarketAxess Reports First Quarter 2010 Record Revenue of $34.9 Million, Record Pre-Tax Income of $11.1 Million and Diluted EPS of $0.17

--First Quarter Financial Highlights* - Record revenues of $34.9 million, up 41.6% - Total expenses of $23.8 million, up 19.6% - Pre-tax margin of 31.8%, up from 19.2% - Net income of $6.7 million, up 136.0% --*All comparisons versus first quarter 2009.

NEW YORK, April 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 first quarter ended March 31, 2010.

"Our strategy to expand our institutional trading network throughout the credit crisis is paying off with record revenues and earnings as the markets continue to recover," said Richard M. McVey, chairman and chief executive officer of MarketAxess. "We are pleased with the growth that we are seeing in all of our major product areas and the momentum is building for greater electronic trading in fixed income markets."

First Quarter Results

Total revenues for the first quarter of 2010 increased 41.6% to $34.9 million, compared to $24.6 million for the first quarter of 2009. Pre-tax income was a record $11.1 million, compared to $4.7 million for the first quarter of 2009, an increase of 134.3%. Pre-tax margin was 31.8%, compared to 19.2% for the first quarter of 2009. Net income totaled $6.7 million, or $0.17 per share on a diluted basis, compared to $2.8 million, or $0.08 per share on a diluted basis, for the first quarter of 2009.

Commission revenue for the first quarter of 2010 totaled $29.3 million on total trading volume of $99.2 billion, compared to $20.4 million in commission revenue on total trading volume of $60.1 billion for the first quarter of 2009. U.S. high-grade trading volume as a percentage of FINRA's high-grade TRACE trading volume increased to an estimated 7.9%, compared to an estimated 5.7% for the first quarter of 2009.

Technology products and services revenue, which includes revenue for technology licenses, support and professional services, totaled $3.2 million for the first quarter of 2010, compared to $2.0 million for the first quarter of 2009. Other revenue, which consists of information and user access fees, investment income and other revenue, increased 11.6% to $2.4 million, compared to $2.2 million for the first quarter of 2009.

Total expenses for the first quarter of 2010 increased 19.6% to $23.8 million, compared to $19.9 million for the first quarter of 2009. The increase was primarily due to higher employee compensation and benefits expense of $2.5 million and $0.6 million in one-time expenses related to the relocation to our new corporate headquarters and the Haiti Charity Trading Day.

The effective tax rate for the first quarter of 2010 was 39.5%, compared to 40.0% for the first quarter of 2009.

Employee headcount as of March 31, 2010 was 219, compared to 198 as of March 31, 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 May 26, 2010 to stockholders of record as of the close of business on May 12, 2010.

Balance Sheet Data

As of March 31, 2010, total assets were $272.6 million and included $167.7 million in cash, cash equivalents and securities, and a deferred tax asset of $20.6 million. Total stockholders' equity, including the Series B preferred stock, as of March 31, 2010 was $252.5 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 866-510-0704 (U.S.) or 617-597-5362 (international). The passcode for all callers is 55004703. 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 46293689. 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 758 institutional investors are active users of the MarketAxess trading platform, accessing the global liquidity provided by MarketAxess' 72 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
                                                     March 31,
                                                     ---------


                                                   2010                2009
                                                   ----                ----
                                       ($ in thousands, except per share
                                                      data)

                                                  (unaudited)
    Revenues
      Commissions
        U.S. high-grade                         $19,776             $13,515
        Eurobond                                  5,492               4,142
        Other                                     4,039               2,789
                                                  -----               -----
          Total commissions                      29,307              20,446
        Technology products and
         services                                 3,164               2,023
        Information and user
         access fees                              1,634               1,655
        Investment income                           291                 332
        Other                                       488                 176
                                                    ---                 ---
          Total revenues                         34,884              24,632
                                                 ------              ------

    Expenses
        Employee compensation and
         benefits                                13,933              11,442
        Depreciation and
         amortization                             1,616               1,791
        Technology and
         communications                           2,417               2,242
        Professional and
         consulting fees                          2,138               1,879
        Occupancy                                   938                 676
        Marketing and advertising                   628                 645
        General and administrative                2,129               1,226
                                                  -----               -----
          Total expenses                         23,799              19,901
                                                 ------              ------

    Income before taxes                          11,085               4,731
        Provision for income taxes                4,384               1,892
                                                  -----               -----
    Net income                                   $6,701              $2,839
                                                 ======              ======

    Per Share Data:
      Earnings per share:
        Basic                                     $0.18               $0.08
        Diluted                                   $0.17               $0.08

      Weighted-average common shares:
        Basic                                    33,626              33,183
        Diluted                                  39,305              37,517



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

                                                            December 31,
                                      March 31, 2010             2009
                                      --------------       -------------
                                                 ($ in thousands)

                                        (unaudited)           (audited)
    Assets
      Cash and cash equivalents              $104,552            $103,341
      Securities available-for-sale            63,142              70,997
      Deferred tax assets, net                 20,628              23,980
      All other assets                         84,309              78,968
                                               ------              ------
        Total assets                         $272,631            $277,286
                                             ========            ========

    Liabilities and Stockholders' Equity
      Total liabilities                       $20,103             $30,469
      Series B Preferred Stock                 30,315              30,315
      Total stockholders' equity              222,213             216,502
                                              -------             -------
        Total liabilities and
         stockholders' equity                $272,631            $277,286
                                             ========            ========



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

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


                                               Three Months Ended
                                                   March 31,
                                               ---------


                                             2010                   2009
                                             ----                   ----

                                            ($ in millions)
                                              (unaudited)

    U.S. high-grade - multi dealer 1
              fixed-rate                  $58,666                $35,969
              floating-rate                 2,845                    870
    Eurobond                               16,019                  9,092
    Other 1                                21,672                 14,140
        Total                             $99,202                $60,071
                                          =======                =======



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


                                           Three Months Ended
                                               March 31,
                                               ---------


                                             2010                   2009
                                             ----                   ----

                                            ($ in millions)
                                              (unaudited)

    U.S. high-grade 1                      $1,008                   $604
    Eurobond                                  254                    144
    Other 1                                   355                    232
        Total                              $1,617                   $980
                                           ======                   ====

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

    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.