Release Date: May 07, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• MarketAxess Holdings Inc (MKTX, Financial) reported record commission revenue in international and new product areas, including emerging markets, municipals, and US government bonds.
• The company achieved a single-day trading record of $102 billion in US government bonds on April 9, driven by increased velocity and institutional clients leveraging new algorithms.
• Services revenue grew by 7%, with strong growth in information services revenue and technology services revenue.
• MarketAxess Holdings Inc (MKTX) demonstrated cost discipline with expenses increasing only 2%, benefiting from lower variable costs.
• The company made significant progress in expanding its algo suite for rates and plans to launch an enhanced RFQ solution soon.

Negative Points

• US credit market share across key protocols remains a challenge, partially offsetting growth in other areas.
• Commission revenue decreased by 2%, largely due to lower fee per million and market share in US credit.
• The effective tax rate is expected to increase due to a new reserve for uncertain tax positions, impacting future financials.
• Total revenue was relatively flat compared to the prior year, with only a slight decrease from $210 million to $209 million.
• The balance sheet saw a decline in cash equivalents and investments, primarily due to cash incentive compensation payouts and share repurchase activity.

Q & A Highlights

Q: Can you unpack the outlook for increased share gain moving forward? How dependent are share gains on the current environment, and what impact do new capabilities have on share gains? A: Christopher Concannon, CEO: The current market environment, characterized by uncertainty and volatility, is favorable for our business model. We are seeing increased liquidity needs from clients, which benefits us. Our growth opportunity is expanding due to our protocol-agnostic approach, offering multiple execution solutions. We are excited about upcoming product releases, including our high touch block solution and Mid-X launch, which should drive further growth.

Q: What did you observe in April's market environment, and how did it impact client behavior and trading volumes? A: Christopher Concannon, CEO: April saw accelerated market velocity with record volumes, particularly in high yield. The market sustained this level of activity due to electronic trading penetration. While volatility has decreased from its peak, it remains at a heightened level, and spreads are wider than earlier in the year. Clients continue to seek liquidity, which supports our open trading solutions.

Q: Can you update us on fee capture, particularly for high-grade bonds, and explain the year-on-year and quarter-on-quarter declines? A: Christopher Concannon, CEO: Our focus on multiple protocols, including portfolio trading and dealer-to-dealer business, impacts fee capture as these come at lower rates. However, they are growth areas for us. Ilene Bieler, CFO, added that April saw an increase in fee per million due to favorable product mix and higher duration, despite some offset from increased portfolio trading.

Q: What is driving the strength in your portfolio trading (PT) solution, and what are the future enhancements planned? A: Christopher Concannon, CEO: Our investments in PT are yielding returns, with enhancements like X-Pro improving workflow and analytics. Clients appreciate features like net hedging and autospotting. Future enhancements will focus on data and analytics to optimize portfolio trading decisions. We are excited about the continued growth and innovation in this area.

Q: How do you see the rollout of X-Pro in Europe influencing portfolio trading usage, and what is your outlook for PT market share growth? A: Christopher Concannon, CEO: X-Pro is crucial for our tech migration, offering enhanced data and analytics. Its rollout in Europe should boost PT volumes, as seen in the US. We expect PT to be a key liquidity tool, with more dealers entering the space. The growth of credit futures and ETFs will further support PT expansion in both US and European markets.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.