MarketAxess Reports Fourth Quarter 2011 Revenues of $45.1 Million, Pre-Tax Income of $18.9 Million and Diluted EPS of $0.29
Fourth Quarter Financial Highlights*-
Revenues of $45.1 million, up 16.9%
-
Expenses of $26.3 million, up 8.7%, including one-time charges of $1.5
million
-
Pre-tax income of $18.9 million, up 30.6%
-
Pre-tax margin of 41.8%, up from 37.4%
-
EBITDA of $20.7 million, up 29.1%
-
Net income of $11.5 million, up 29.0%
*All comparisons versus fourth quarter 2010.
Full Year 2011 Financial Highlights**
-
Record revenues of $181.1 million, up 23.8%
-
Record pre-tax income of $78.7 million, up 54.7%
-
Record pre-tax margin of 43.5%, up from 34.8%
-
Record EBITDA of $85.6 million, up 49.2%
-
Net income of $47.7 million, up 51.8%
**All comparisons versus full year 2010.
NEW YORK--(BUSINESS WIRE)--Feb. 1, 2012--
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 fourth quarter and full year
ended
December 31, 2011.
“We closed the year on a strong note and are pleased to report record
revenues, pre-tax income and pre-tax margins for the full year of 2011,”
said Richard M. McVey, chairman and chief executive officer of
MarketAxess. “Our estimated U.S. high grade market share continued to
progress higher throughout 2011, culminating in a record 12.2% in the
fourth quarter. We believe that the ongoing changes to global market
structure, driven in part by regulatory reform, will continue to favor
e-trading in the cash and derivative credit markets.”
Fourth Quarter Results
Total revenues for the fourth quarter of 2011 increased 16.9% to $45.1
million, compared to $38.6 million for the fourth quarter of 2010.
Pre-tax income was $18.9 million, compared to $14.4 million for the
fourth quarter of 2010, an increase of 30.6%. Pre-tax margin was 41.8%,
compared to 37.4% for the fourth quarter of 2010. Net income totaled
$11.5 million, or $0.29 per share on a diluted basis, compared to $8.9
million, or $0.23 per share on a diluted basis, for the fourth quarter
of 2010.
Commission revenue for the fourth quarter of 2011 totaled $38.8 million
on total trading volume of $125.2 billion, compared to $32.3 million in
commission revenue on total trading volume of $104.3 billion for the
fourth quarter of 2010. U.S. high-grade trading volume as a percentage
of FINRA’s high-grade TRACE trading volume increased to an estimated
12.2%, compared to an estimated 9.6% for the fourth quarter of 2010.
All other revenue, which consists of technology products and services,
information and user access fees, investment income and other revenue,
increased slightly to $6.4 million, compared to $6.3 million for the
fourth quarter of 2010.
Total expenses for the fourth quarter of 2011 increased 8.7% to $26.3
million, compared to $24.2 million for the fourth quarter of 2010. The
increase in expenses during the fourth quarter of 2011 was primarily due
to a 100% reserve against accounts receivable due from MF Global Inc.
and a write-off of a minority investment. These two charges totaled $1.5
million, or $0.02 per share, in the aggregate.
The effective tax rate for the fourth quarter of 2011 was 38.8%,
compared to 38.1% for the fourth quarter of 2010.
Employee headcount as of December 31, 2011 was 232, compared to 227 as
of December 31, 2010.
Full Year 2011 Results
Total revenues for the year ended December 31, 2011 increased 23.8% to a
record $181.1 million, compared to $146.2 million for 2010. Pre-tax
income was a record $78.7 million, compared to $50.9 million for 2010,
an increase of 54.7%. Pre-tax margin was 43.5%, compared to 34.8% for
2010. Net income totaled $47.7 million, or $1.20 per share on a diluted
basis, compared to $31.4 million, or $0.80 per share on a diluted basis,
for 2010.
Commission revenue for the year ended December 31, 2011 increased 27.2%
to $155.4 million, compared to $122.2 million for 2010. Variable
transaction fees increased 27.3% to $91.7 million on total trading
volume of $525.0 billion, compared to variable transaction fees of $72.0
million on total trading volume of $402.3 billion for 2010.
All other revenue increased 6.7% to $25.7 million, compared to $24.0
million for 2010. The increase was primarily due to higher technology
integration consulting services and bulk data sales.
Total expenses for the year ended December 31, 2011 increased 7.4% to
$102.4 million, compared to $95.3 million for 2010. The increase was
primarily due to higher employee compensation and benefits expense of
$2.3 million, marketing and advertising expense of $1.8 million, and
professional and consulting fees of $1.6 million. Capital spending for
the year ended December 31, 2011 was $7.2 million.
The effective tax rate for 2011 was 39.4%, compared to 38.3% for 2010.
Dividend
The Company’s board of directors declared a quarterly cash dividend of
$0.11 per share of common stock outstanding or issuable upon conversion
of outstanding shares of non-voting common stock, to be paid on March 1,
2012 to stockholders of record as of the close of business on February
16, 2012. This represents an increase in the quarterly cash dividend of
$0.02 per share.
Share Repurchase Program Update
In October 2011, the Company’s board of directors approved a $35 million
share repurchase program. A total of 237,998 shares were repurchased in
the fourth quarter of 2011 at a cost of $6.9 million.
Balance Sheet Data
As of December 31, 2011, total assets were $349.5 million and included
$247.7 million in cash, cash equivalents and securities
available-for-sale. Total stockholders’ equity as of December 31, 2011
was $312.4 million.
Guidance for 2012
The Company expects total expenses for 2012 to be in the range of $107.0
million to $112.0 million and its full year 2012 capital spending to be
in the range of $8.0 million to $11.0 million. The Company also
anticipates that the overall effective tax rate for 2012 will be between
39% and 41%.
Non-GAAP Financial Measure
EBITDA is a non-GAAP financial measure. The Company believes that this
non-GAAP financial measure, when taken into consideration with the
corresponding GAAP financial measure, is important in understanding the
Company's operating results. See the attached schedule for a full
reconciliation of GAAP net income to EBITDA.
Webcast and Conference Call Information
Richard M. McVey, Chairman and Chief Executive Officer, and Antonio L.
DeLise, Chief Financial Officer, will host a conference call to discuss
the Company’s financial results and outlook on February 1, 2012, at
10:00 a.m. Eastern time. To access the conference call, please dial
866-700-7441 (U.S.) or 617-213-8839 (international). The passcode for
all callers is 47254237. 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 76245570. 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. Over 850 institutional investors are active users of the
MarketAxess trading platform, accessing the global liquidity provided by
MarketAxess’ 87 broker-dealer clients in U.S. high-grade corporate
bonds, European bonds, high yield and emerging markets bonds, agency
bonds, asset-backed and preferred securities 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.
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MarketAxess Holdings Inc.
Consolidated Statements of Operations
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Three Months Ended
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Twelve Months Ended
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December 31,
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December 31,
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2011
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2010
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2011
|
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2010
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|
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(In thousands, except per share data)
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(unaudited)
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Revenues
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Commissions
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U.S. high-grade
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$
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27,706
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|
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$
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22,234
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|
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$
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108,931
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|
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$
|
83,796
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Eurobond
|
|
|
|
|
4,133
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|
|
|
4,420
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|
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|
17,799
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|
|
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18,656
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Other
|
|
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|
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6,922
|
|
|
|
5,607
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|
|
|
28,714
|
|
|
|
19,728
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Total commissions
|
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|
|
38,761
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|
32,261
|
|
|
|
155,444
|
|
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122,180
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Technology products and services
|
|
|
|
|
3,439
|
|
|
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3,778
|
|
|
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14,310
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|
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|
13,648
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Information and user access fees
|
|
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1,960
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|
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1,722
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|
|
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7,199
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|
|
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6,681
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Investment income
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|
|
317
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|
|
|
285
|
|
|
|
1,229
|
|
|
|
1,192
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Other
|
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|
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658
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|
|
|
559
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|
|
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2,917
|
|
|
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2,527
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Total revenues
|
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|
|
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45,135
|
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38,605
|
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181,099
|
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146,228
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Expenses
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Employee compensation and benefits
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13,707
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13,998
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58,786
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56,446
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Depreciation and amortization
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1,793
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|
|
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1,552
|
|
|
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6,781
|
|
|
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6,350
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Technology and communications
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2,916
|
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2,669
|
|
|
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10,912
|
|
|
|
9,982
|
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Professional and consulting fees
|
|
|
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|
2,354
|
|
|
|
2,134
|
|
|
|
10,138
|
|
|
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8,503
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Occupancy
|
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726
|
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|
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646
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|
|
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2,921
|
|
|
|
2,997
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Marketing and advertising
|
|
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1,380
|
|
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|
1,009
|
|
|
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4,882
|
|
|
|
3,075
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General and administrative
|
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3,393
|
|
|
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2,152
|
|
|
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7,946
|
|
|
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7,965
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Total expenses
|
|
|
|
|
26,269
|
|
|
|
24,160
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|
|
|
102,366
|
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95,318
|
|
|
|
|
|
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Income before taxes
|
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18,866
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|
14,445
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78,733
|
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|
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50,910
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Provision for income taxes
|
|
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|
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7,323
|
|
|
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5,498
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|
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31,029
|
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|
19,482
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Net income
|
|
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|
$
|
11,543
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|
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$
|
8,947
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$
|
47,704
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|
|
$
|
31,428
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Per Share Data:
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Earnings per share:
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Basic
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$
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0.31
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$
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0.25
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$
|
1.29
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$
|
0.86
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Diluted
|
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$
|
0.29
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$
|
0.23
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$
|
1.20
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$
|
0.80
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|
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Cash dividends declared per common share
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$
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0.09
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$
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0.07
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$
|
0.36
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$
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0.28
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Weighted-average common shares:
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Basic
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37,629
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32,334
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37,006
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33,159
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Diluted
|
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39,814
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38,642
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39,608
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39,051
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MarketAxess Holdings Inc.
Consolidated Condensed Balance Sheet
Data
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December 31, 2011
|
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December 31, 2010
|
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(In thousands)
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(unaudited)
|
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Assets
|
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|
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Cash and cash equivalents
|
|
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|
$
|
169,620
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$
|
124,994
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Securities available-for-sale
|
|
|
|
|
78,110
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|
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72,552
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Accounts receivable, net
|
|
|
|
|
36,170
|
|
|
|
25,682
|
|
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All other assets
|
|
|
|
|
65,558
|
|
|
|
76,293
|
|
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Total assets
|
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|
$
|
349,458
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|
|
$
|
299,521
|
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|
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Liabilities and Stockholders' Equity
|
|
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|
|
|
|
|
|
|
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|
|
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|
|
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Total liabilities
|
|
|
|
$
|
37,019
|
|
|
$
|
34,730
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|
|
Series B Preferred Stock
|
|
|
|
|
-
|
|
|
|
30,315
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|
|
Total stockholders' equity
|
|
|
|
|
312,439
|
|
|
|
234,476
|
|
|
|
Total liabilities and stockholders' equity
|
|
|
|
$
|
349,458
|
|
|
$
|
299,521
|
|
|
|
|
|
|
|
|
|
|
|
|
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MarketAxess Holdings Inc.
Reconciliation of Non-GAAP Financial
Measures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Twelve Months Ended
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011
|
|
|
2010
|
|
|
2011
|
|
|
2010
|
|
|
|
|
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($ in thousands)
|
|
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|
|
|
|
|
|
|
|
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|
|
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|
|
|
|
|
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(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
$
|
11,543
|
|
|
$
|
8,947
|
|
|
$
|
47,704
|
|
|
$
|
31,428
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Add back:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
|
|
13
|
|
|
|
18
|
|
|
|
58
|
|
|
|
78
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
|
|
7,323
|
|
|
|
5,498
|
|
|
|
31,029
|
|
|
|
19,482
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
1,793
|
|
|
|
1,552
|
|
|
|
6,781
|
|
|
|
6,350
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before interest, taxes, depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and amortization (EBITDA)
|
|
|
|
$
|
20,672
|
|
|
$
|
16,015
|
|
|
$
|
85,572
|
|
|
$
|
57,338
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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MarketAxess Holdings Inc.
Volume Statistics
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Total Trading Volume
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Three Months Ended
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Twelve Months Ended
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December 31,
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December 31,
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2011
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2010
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2011
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2010
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(In millions)
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(unaudited)
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U.S. high-grade - multi dealer 1 |
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fixed-rate
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$
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73,181
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$
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61,982
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$
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311,758
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$
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235,698
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floating-rate
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2,278
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1,346
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11,802
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7,698
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Eurobond
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8,042
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10,780
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36,933
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50,251
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Other1 |
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41,699
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30,215
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164,514
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108,610
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Total
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$
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125,200
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$
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104,323
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$
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525,007
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$
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402,257
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Average Daily Volume
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Three Months Ended
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Twelve Months Ended
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December 31,
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December 31,
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2011
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2010
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2011
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2010
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(In millions)
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(unaudited)
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U.S. high-grade1 |
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$
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1,237
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$
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1,021
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$
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1,294
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$
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974
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Eurobond
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128
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168
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147
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199
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Other1 |
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684
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487
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658
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434
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Total
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$
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2,049
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$
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1,676
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$
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2,099
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$
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1,607
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Number of U.S. Trading Days2 |
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61
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62
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250
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250
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Number of U.K. Trading Days 3 |
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63
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64
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251
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253
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1 Consistent with FINRA TRACE reporting standards, both sides of
trades are included in the Company's
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reported volumes when the Company executes trades on a riskless
principal basis between two counterparties.
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2 The number of U.S. trading days is based on the SIFMA holiday
recommendation calendar.
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3 The number of U.K. trading days is based on the U.K. Bank
holiday schedule.
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Source: MarketAxess Holdings Inc.
Media and Investor Relations:
MarketAxess Holdings Inc.
Tony
DeLise, +1-212-813-6017
or
Florencia Panizza, +1-212-813-6029
or
William
McBride & Associates
William McBride, +1-917-239-6726