MarketAxess Reports Third Quarter 2022 Results

NEW YORK--(BUSINESS WIRE)--Oct. 19, 2022-- MarketAxess Holdings Inc. (Nasdaq: MKTX) the operator of a leading electronic trading platform for fixed-income securities, and the provider of market data and post-trade services for the global fixed-income markets, today announced financial results for the third quarter of 2022.

Rick McVey, Chairman of the Board and CEO of MarketAxess, commented:

“We delivered another quarter of record market share gains across our expanded product set in the third quarter, driven by increased value for clients from Open Trading liquidity. Our diversified liquidity pool is helping both investor and dealer clients navigate through incredibly difficult and volatile fixed-income trading conditions. The foundation of our business has never been stronger with growing market share in existing as well as new products, an expanded global footprint and record numbers of active clients.

We believe the growth in both public and private debt around the world, combined with higher interest rates, creates a long runway for growth in fixed income e-trading in the years ahead. We are in a strong position to capitalize on this opportunity due to our significant global institutional client network and our unique capabilities in all-to-all trading.”

3Q22 financial and operational highlights*

  • Record levels of estimated market share driving strong growth in trading volume. Estimated market share records across composite corporate bond1 (+170 bps), high-yield (+400 bps), Eurobonds (+450 bps) and municipals (+270 bps).
  • Revenues of $172.1 million, up 6%. Excluding the impact of foreign currency fluctuations, revenues would have increased approximately 9%.
  • Total expenses of $95.8 million, up 9%. Excluding the impact of foreign currency fluctuations, expenses would have increased approximately 13%.
  • Diluted EPS of $1.58 on net income of $59.3 million, compared to $1.52 in the prior year, representing an increase of 4%.
  • $94.3 million in EBITDA, up 6%, and EBITDA margin of 54.8%, in line with the prior year.
  • Board declared $0.70 per share dividend.
  • Record 1,972 total active clients, up 7%, and a record 993 active international clients, up 6%, reflecting the continued expansion of our global liquidity pool.
    • Record 11,530 active traders on the platform, up 6% from the prior year.
  • Total trading average daily volume (“ADV”) of $31.4 billion, up 32%, driven by an 18% increase in total credit ADV to $11.0 billion and a 42% increase in U.S. Treasury ADV to $20.1 billion.
  • $260 million in estimated transaction cost savings2 for clients via Open Trading®, our differentiated liquidity pool; $699 million in estimated transaction cost savings2 year-to-date, up 57%.
  • Record $25 billion in portfolio trading volume, up from $9 billion in 3Q21 and $23 billion in 2Q22.

*All comparisons versus third quarter 2021 unless otherwise noted.

Table 1: 3Q22 select financial results

$ in millions, except per share data
(unaudited)
Revenues Operating
Income
Net Income Diluted EPS EBITDA EBITDA
Margin (%)

3Q22

$172

$76

$59

$1.58

$94

55%

3Q21

$162

$74

$58

$1.52

$89

55%

% Change

6%

3%

2%

4%

6%

0%

Table 1A: 3Q22 trading volume (ADV)

      CREDIT RATES
$ in millions
(unaudited)
US/UK
Trading Days3
Total
ADV
High-Grade High-Yield Emerging
Markets
Eurobonds Other
Credit
Total
Credit
US Govt.
Bonds
Agcy./Other
Govt. Bonds
Total
Rates

3Q22

64/64

$31,440

$5,124

$1,626

$2,592

$1,255

$377

$10,974

$20,133

$333

$20,466

3Q21

64/65

$23,836

$4,341

$1,299

$2,407

$1,173

$91

$9,311

$14,226

$299

$14,525

% Change

 

32%

18%

25%

8%

7%

314%

18%

42%

11%

41%

Table 1B: 3Q22 estimated market share

  CREDIT RATES
(unaudited) High-Grade High-Yield High-Grade/High-
Yield Combined
Emerging
Markets
Eurobonds Composite
Corporate Bond1
Municipals US Govt.
Bonds

3Q22

21.1%

19.3%

20.6%

20.6%

17.6%

20.6%

4.9%

3.5%

3Q21

21.4%

15.3%

19.6%

17.0%

13.1%

18.9%

2.2%

2.6%

Bps Change

(30) bps

+400 bps

+100 bps

+360 bps

+450 bps

+170 bps

+270 bps

+90 bps

 

 

 

 

 

 

 

 

 

3Q19 Pre-Pandemic Levels

20.2%

11.9%

17.9%

11.5%

9.0%

15.7%

0.7%

-

Bps Change 3Q22 vs. 3Q19

+90 bps

+740 bps

+270 bps

+910 bps

+860 bps

+490 bps

+420 bps

+350 bps

Overview of results

Revenues and Trading Volumes

Credit

  • Total credit commission revenue of $147.6 million (including $31.3 million in fixed-distribution fees) increased $8.7 million, or 6%, compared to $138.9 million (including $30.6 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 variable transaction fees per million (“FPM”). The decline in average FPM for total credit to $165.60, compared to $181.43 in the third quarter of 2021, was mainly due to the lower duration of bonds traded in U.S. high-grade, driven principally by higher bond yields, as well as product mix-shift.
    • 92% of credit volume on the platform was executed by institutional clients.
    • Record 37% of total credit trading volume was executed via Open Trading, up from 34% in the prior year.
      • Estimated total transaction cost savings2 via Open Trading were approximately $260 million, and $699 million year-to-date. Average transaction cost savings per million2 via Open Trading was $1,141.
    • Record composite corporate bond1 estimated market share of 20.6%, up from 18.9%.
    • 21.1% U.S. high-grade estimated market share on an 18% increase in ADV.
    • Record U.S. high-yield estimated market share of 19.3%, up from 15.3% in the prior year on ADV of $1.6 billion, representing an increase of 25%.
    • Emerging markets ADV of $2.6 billion, up 8%; up approximately 12% excluding the impact of foreign currency fluctuations.
    • Record Eurobonds estimated market share of 17.6% on ADV of $1.3 billion, up 7%. Excluding the impact of foreign currency fluctuations, Eurobonds ADV would have increased approximately 25%.
    • Record municipal bond estimated market share of 4.9%, up from 2.2%, on record trading volume of $23.1 billion.

Rates

  • Total rates commission revenue of $5.5 million increased $1.6 million, or 42%, compared to the prior year, driven by a 42% increase in U.S. Treasury ADV to $20.1 billion on strong estimated market share gains. The average FPM for total rates products was $4.17, compared to $4.11 in the third quarter of 2021.
    • 3.5% U.S. Treasury estimated market share, up from 2.6%.
      • 226 active participants on the platform, up from 122 in the prior year.

Information services & post-trade services

  • Information services revenue of $9.7 million increased $0.1 million, or 1%, 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 approximately 10%.
  • Post-trade services revenue of $9.0 million decreased $0.4 million, or 5%, compared to the prior year. The decrease in revenue was principally driven by the impact of currency fluctuations, which was offset by net new contract revenue and higher transaction reporting revenue on higher volumes. Excluding the impact of foreign currency fluctuations and one-time revenue activity, post-trade services revenue would have increased approximately 8%.

Expenses

  • Total expenses of $95.8 million increased $7.7 million, or 9%. 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, as well as higher technology and communication expenses due to higher subscription costs, cloud hosting expense and platform licensing fees. Excluding the impact of foreign currency fluctuations, total expenses would have increased approximately 13%.

Non-operating

  • Other income (expense): Other income was $2.6 million, up from $0.5 million in the prior year. The current quarter included higher investment income of $1.3 million due to rising interest rates and $0.9 million of income from the Company’s unconsolidated equity investment.
  • Tax rate: The effective tax rate was 24.8%, compared to 22.2% in the prior year. The higher effective tax rate was driven by a $1.7 million decrease in estimated excess tax benefits related to share based compensation awards.

Capital

  • The Company had $352.0 million in cash, cash equivalents and investments; there are no outstanding borrowings under the Company’s credit facility.
  • The Board declared a quarterly cash dividend of $0.70 per share, payable on November 16, 2022 to stockholders of record as of the close of business on November 2, 2022.

Other

  • The Company had a record 1,972 total active client firms and a record 993 active international client firms, representing year-over-year increases of 7% and 6%, respectively.
    • The Company also had record active traders of 11,530 (up 6%), consisting of a record 6,121 domestic traders (up 4%) and a record 5,409 international traders (up 9%).
  • Employee headcount was 732 as of September 30, 2022, compared to 671 as of September 30, 2021, and 676 as of December 31, 2021. The increase in headcount was due to the continued investment in the Company’s growth initiatives, including geographic expansion, trading automation and new trading protocols.

Guidance for 2022

  • Based on the progression of operating expenses and the impact of foreign currency fluctuations year-to-date, the Company is refining its previously stated full year 2022 expense guidance range of $385.0 million to $415.0 million, to a range of $390.0 million to $398.0 million, which at the midpoint implies 9% growth in full year 2022 expenses versus the prior year. The Company is also refining its previously stated full year 2022 capital expenditure guidance range of $58.0 million to $62.0 million, to a range of $48.0 million to $52.0 million, mainly due to a transition from purchasing to leasing fixed assets and the impact of foreign currency fluctuations year-to-date.
  • The Company is re-confirming that it expects the full year effective tax rate to be at the upper-end of the previously stated range of 24.0% to 26.0%.

1

Composite corporate bond estimated market share is defined as combined estimated market share across U.S. high-grade (derived from FINRA TRACE reported data), U.S. high-yield (derived from FINRA TRACE reported data), emerging markets (derived from FINRA TRACE-reportable emerging markets trading volume, principally U.S. dollar denominated corporates) and Eurobonds (derived from MarketAxess Post-Trade data which is currently estimated to represent approximately 70% of the total European market) product areas.

2

Estimated transaction cost savings consists of estimated liquidity taker cost savings (defined as the difference between the winning price and the best disclosed dealer cover price) and estimated liquidity provider cost savings (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.

3

Please refer to the Company’s website at investor.marketaxess.com/volume for more information on trading days.

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, are important in understanding the Company's operating results. See the attached schedule for a reconciliation of GAAP net income to EBITDA and EBITDA margin and GAAP cash flow from operating activities to free cash flow.

Webcast and conference call information

Rick McVey, Chairman and Chief Executive Officer, Chris Concannon, President and Chief Operating Officer and Christopher Gerosa, Chief Financial Officer, will host a conference call to discuss the Company’s financial results and outlook on Wednesday, October 19, 2022 at 10:00 a.m. ET. To access the conference call, please dial 888-660-6576 (U.S.) and use the ID 3629577 or 929-203-1995 (international) and use the ID 3629577. 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.

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 1,900 firms leverage MarketAxess’ patented technology to efficiently trade fixed-income securities. 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 the full trading lifecycle, including automated trading solutions, intelligent data products and a range of post-trade services. Learn more at www.marketaxess.com and on Twitter @MarketAxess.

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. 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 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; reputational or credibility risks related to our data products and index business; 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; 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; our vulnerability to cyber security risks; 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 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; our future capital needs and our ability to obtain capital when needed; limitations on our operating flexibility contained in our credit agreement; 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.

Table 2: Consolidated Statements of Operations  
In thousands, except per share data  

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 
(unaudited)  

2022

 

2021

 

%
Change

 

 

2022

 

2021

 

%
Change

 
Revenues                            
Commissions  

$

153,164

 

 

$

142,826

 

 

7.2

 

%

 

$

482,740

 

 

$

475,095

 

 

1.6

 

%

Information services  

 

9,711

 

 

 

9,608

 

 

1.1

 

   

 

28,916

 

 

 

28,614

 

 

1.1

 

 
Post-trade services  

 

9,000

 

 

 

9,444

 

 

(4.7

)

   

 

28,056

 

 

 

29,553

 

 

(5.1

)

 
Other  

 

237

 

 

 

215

 

 

10.2

 

   

 

686

 

 

 

629

 

 

9.1

 

 
Total revenues  

 

172,112

 

 

 

162,093

 

 

6.2

 

   

 

540,398

 

 

 

533,891

 

 

1.2

 

 
                             
Expenses                            
Employee compensation and benefits  

 

44,805

 

 

 

40,878

 

 

9.6

 

   

 

137,996

 

 

 

129,698

 

 

6.4

 

 
Depreciation and amortization  

 

15,302

 

 

 

13,964

 

 

9.6

 

   

 

45,716

 

 

 

38,840

 

 

17.7

 

 
Technology and communications  

 

14,169

 

 

 

10,665

 

 

32.9

 

   

 

38,851

 

 

 

31,245

 

 

24.3

 

 
Professional and consulting fees  

 

7,560

 

 

 

10,847

 

 

(30.3

)

   

 

26,101

 

 

 

31,191

 

 

(16.3

)

 
Occupancy  

 

3,381

 

 

 

3,265

 

 

3.6

 

   

 

10,468

 

 

 

9,882

 

 

5.9

 

 
Marketing and advertising  

 

1,797

 

 

 

1,821

 

 

(1.3

)

   

 

6,535

 

 

 

6,153

 

 

6.2

 

 
Clearing costs  

 

4,211

 

 

 

3,269

 

 

28.8

 

   

 

13,049

 

 

 

12,335

 

 

5.8

 

 
General and administrative  

 

4,576

 

 

 

3,381

 

 

35.3

 

   

 

12,479

 

 

 

9,893

 

 

26.1

 

 
Total expenses  

 

95,801

 

 

 

88,090

 

 

8.8

 

   

 

291,195

 

 

 

269,237

 

 

8.2

 

 
Operating income  

 

76,311

 

 

 

74,003

 

 

3.1

 

   

 

249,203

 

 

 

264,654

 

 

(5.8

)

 
Other income (expense)                            
Investment income  

 

1,433

 

 

 

108

 

 

NM

 

   

 

1,746

 

 

 

322

 

 

NM

 

 
Interest expense  

 

(138

)

 

 

(314

)

 

(56.1

)

   

 

(648

)

 

 

(676

)

 

(4.1

)

 
Equity in earnings of unconsolidated affiliate  

 

869

 

 

 

 

 

NM

 

   

 

1,060

 

 

 

 

 

NM

 

 
Other, net  

 

388

 

 

 

697

 

 

(44.3

)

   

 

7,499

 

 

 

(1,952

)

 

NM

 

 
Total other income (expense)  

 

2,552

 

 

 

491

 

 

NM

 

   

 

9,657

 

 

 

(2,306

)

 

NM

 

 
Income before income taxes  

 

78,863

 

 

 

74,494

 

 

5.9

 

   

 

258,860

 

 

 

262,348

 

 

(1.3

)

 
Provision for income taxes  

 

19,556

 

 

 

16,536

 

 

18.3

 

   

 

67,862

 

 

 

56,645

 

 

19.8

 

 
Net income  

$

59,307

 

 

$

57,958

 

 

2.3

 

   

$

190,998

 

 

$

205,703

 

 

(7.1

)

 
                             
Per Share Data:                            
Net income per common share                            
Basic  

$

1.58

 

 

$

1.54

 

       

$

5.10

 

 

$

5.49

 

     
Diluted  

$

1.58

 

 

$

1.52

 

       

$

5.07

 

 

$

5.40

 

     
Cash dividends declared per common share  

$

0.70

 

 

$

0.66

 

       

$

2.10

 

 

$

1.98

 

     
Weighted-average common shares:                            
Basic  

 

37,479

 

 

 

37,529

 

       

 

37,464

 

 

 

37,502

 

     
Diluted  

 

37,567

 

 

 

38,084

 

       

 

37,666

 

 

 

38,114

 

     
Table 3: Commission Revenue Detail
In thousands, except fee per million data  

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 
(unaudited)  

2022

 

2021

 

% Change

 

 

2022

 

2021

 

% Change

 
Variable transaction fees                            
Credit  

$

116,309

 

$

108,323

 

7.4

 

%

 

$

370,793

 

$

376,065

 

(1.4

)

%

Rates  

 

5,463

 

 

3,825

 

42.8

 

   

 

17,674

 

 

11,580

 

52.6

 

 
Total variable transaction fees  

 

121,772

 

 

112,148

 

8.6

 

   

 

388,467

 

 

387,645

 

0.2

 

 
Fixed distribution fees                            
Credit  

 

31,328

 

 

30,609

 

2.3

 

   

 

94,098

 

 

87,251

 

7.8

 

 
Rates  

 

64

 

 

69

 

(7.2

)

   

 

175

 

 

199

 

(12.1

)

 
Total fixed distribution fees  

 

31,392

 

 

30,678

 

2.3

 

   

 

94,273

 

 

87,450

 

7.8

 

 
Total commission revenue  

$

153,164

 

$

142,826

 

7.2

 

   

$

482,740

 

$

475,095

 

1.6

 

 
Average variable transaction fee per million                            
Credit  

 

165.60

 

 

181.43

 

(8.7

)

   

 

168.00

 

 

186.14

 

(9.7

)

 
Rates  

 

4.17

 

 

4.11

 

1.4

 

   

 

4.09

 

 

3.94

 

3.8

 

 
Table 4: Trading Volume Detail*                            
   

Three Months Ended September 30,

 
In millions (unaudited)  

2022

 

2021

 

% Change

 
   

Volume

 

ADV

 

Volume

 

ADV

 

Volume

 

 

ADV

 
Credit                            
High-grade  

$

327,916

 

$

5,124

 

$

277,837

 

$

4,341

 

18.0

%

 

18.0

%

High-yield  

 

104,066

 

 

1,626

 

 

83,136

 

 

1,299

 

25.2

   

25.2

 
Emerging markets  

 

165,910

 

 

2,592

 

 

154,034

 

 

2,407

 

7.7

   

7.7

 
Eurobonds  

 

80,305

 

 

1,255

 

 

76,215

 

 

1,173

 

5.4

   

7.0

 
Other credit  

 

24,159

 

 

377

 

 

5,824

 

 

91

 

314.8

   

314.3

 
Total credit trading  

 

702,356

 

 

10,974

 

 

597,046

 

 

9,311

 

17.6

   

17.9

 
Rates                            
U.S. Government Bonds  

 

1,288,543

 

 

20,133

 

 

910,439

 

 

14,226

 

41.5

   

41.5

 
Agency and other government bonds  

 

21,281

 

 

333

 

 

19,295

 

 

299

 

10.3

   

11.4

 
Total rates trading  

 

1,309,824

 

 

20,466

 

 

929,734

 

 

14,525

 

40.9

   

40.9

 
Total trading  

$

2,012,180

 

$

31,440

 

$

1,526,780

 

$

23,836

 

31.8

   

31.9

 
Number of U.S. Trading Days1      

 

64

     

 

64

           
Number of U.K. Trading Days2      

 

64

     

 

65

           
                             
   

Nine Months Ended September 30,

 
In millions (unaudited)  

2022

 

2021

 

% Change

 
   

Volume

 

ADV

 

Volume

 

ADV

 

Volume

 

 

ADV

 
Credit                            
High-grade  

$

1,029,794

 

$

5,478

 

$

965,291

 

$

5,135

 

6.7

%

 

6.7

%

High-yield  

 

314,721

 

 

1,674

 

 

287,111

 

 

1,527

 

9.6

   

9.6

 
Emerging markets  

 

530,964

 

 

2,824

 

 

488,895

 

 

2,601

 

8.6

   

8.6

 
Eurobonds  

 

263,862

 

 

1,411

 

 

260,082

 

 

1,376

 

1.5

   

2.5

 
Other credit  

 

67,820

 

 

361

 

 

19,004

 

 

101

 

256.9

   

257.4

 
Total credit trading  

 

2,207,161

 

 

11,748

 

 

2,020,383

 

 

10,740

 

9.2

   

9.4

 
Rates                            
U.S. Government Bonds  

 

4,248,009

 

 

22,596

 

 

2,891,042

 

 

15,378

 

46.9

   

46.9

 
Agency and other government bonds  

 

74,644

 

 

397

 

 

47,827

 

 

254

 

56.1

   

56.3

 
Total rates trading  

 

4,322,653

 

 

22,993

 

 

2,938,869

 

 

15,632

 

47.1

   

47.1

 
Total trading  

$

6,529,814

 

$

34,741

 

$

4,959,252

 

$

26,372

 

31.7

   

31.7

 
Number of U.S. Trading Days1      

 

188

     

 

188

           
Number of U.K. Trading Days2      

 

187

     

 

189

           
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.
Table 5: Consolidated Condensed Balance Sheet Data        
    As of
In thousands (unaudited)   September 30, 2022   December 31, 2021
         
Assets        
Cash and cash equivalents  

$

318,699

 

 

$

506,735

 

Cash segregated under federal regulations  

 

50,523

 

 

 

50,159

 

Investments, at fair value  

 

33,294

 

 

 

36,078

 

Accounts receivable, net  

 

87,550

 

 

 

63,881

 

Receivables from broker-dealers, clearing organizations and customers  

 

584,654

 

 

 

408,346

 

Goodwill  

 

154,789

 

 

 

154,789

 

Intangible assets, net of accumulated amortization  

 

99,887

 

 

 

116,377

 

Furniture, equipment, leasehold improvements and capitalized software, net  

 

93,512

 

 

 

96,061

 

Operating lease right-of-use assets  

 

66,662

 

 

 

70,960

 

Prepaid expenses and other assets  

 

70,177

 

 

 

27,066

 

Total assets  

$

1,559,747

 

 

$

1,530,452

 

         
Liabilities and stockholders' equity        
Liabilities        
Accrued employee compensation  

$

45,217

 

 

$

59,719

 

Payables to broker-dealers, clearing organizations and customers  

 

336,885

 

 

 

229,325

 

Income and other tax liabilities  

 

28,257

 

 

 

40,456

 

Accounts payable, accrued expenses and other liabilities  

 

47,362

 

 

 

71,218

 

Operating lease liabilities  

 

83,286

 

 

 

88,425

 

Total liabilities  

 

541,007

 

 

 

489,143

 

         
Stockholders' equity        
Common stock  

 

123

 

 

 

123

 

Additional paid-in capital  

 

330,294

 

 

 

330,262

 

Treasury stock  

 

(320,252

)

 

 

(232,712

)

Retained earnings  

 

1,068,662

 

 

 

956,966

 

Accumulated other comprehensive loss  

 

(60,087

)

 

 

(13,330

)

Total stockholders' equity  

 

1,018,740

 

 

 

1,041,309

 

Total liabilities and stockholders' equity  

$

1,559,747

 

 

$

1,530,452

 

Table 6: Reconciliation of Net Income to EBITDA
                 
   

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

In thousands (unaudited)  

2022

 

2021

 

2022

 

2021

                 
Net income  

$

59,307

 

 

$

57,958

 

 

$

190,998

 

 

$

205,703

 

Add back:                
Interest expense  

 

138

 

 

 

314

 

 

 

648

 

 

 

676

 

Provision for income taxes  

 

19,556

 

 

 

16,536

 

 

 

67,862

 

 

 

56,645

 

Depreciation and amortization  

 

15,302

 

 

 

13,964

 

 

 

45,716

 

 

 

38,840

 

EBITDA  

$

94,303

 

 

$

88,772

 

 

$

305,224

 

 

$

301,864

 

                 
EBITDA margin1  

 

54.8

%

 

 

54.8

%

 

 

56.5

%

 

 

56.5

%

Table 7: Reconciliation of Cash Flows from Operating Activities to Free Cash Flow
                 
   

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

In thousands (unaudited)  

2022

 

2021

 

2022

 

2021

                 
                 
Cash flows from operating activities  

$

85,098

 

 

$

62,813

 

 

$

155,005

 

 

$

136,380

 

Exclude: Net change in trading investments  

 

(445

)

 

 

 

 

 

(445

)

 

 

5,569

 

Exclude: Net change in fail-to-deliver/receive from broker-dealers, clearing organizations and customers  

 

(2,227

)

 

 

55,195

 

 

 

45,939

 

 

 

121,969

 

Less: Purchases of furniture, equipment and leasehold improvements  

 

(3,961

)

 

 

(4,758

)

 

 

(6,642

)

 

 

(14,567

)

Less: Capitalization of software development costs  

 

(8,548

)

 

 

(8,191

)

 

 

(27,109

)

 

 

(24,650

)

Free cash flow  

$

69,917

 

 

$

105,059

 

 

$

166,748

 

 

$

224,701

 

                 
1 EBITDA margin is derived by dividing EBITDA by revenue for the applicable period.

 

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

William McBride
RF | Binder
+1 917 239 6726

Source: MarketAxess Holdings Inc.