Marketaxess Holdings, Inc. · NASDAQ:MKTX
Marketaxess — Q1 2024 Earnings Presentation
23 slides from Marketaxess's earnings presentation, May 7, 2024
Slide 1: 1Q24 Earnings Conference Call
1Q24 Earnings Conference Call May 7, 2024
Slide 2: Strategic Update
Strategic Update ❖ Chris Concannon, CEO 2
Slide 3: 1Q24 Highlights
1Q24 Highlights U.S. HIGH-GRADE CREDIT SPREAD VOLATILITY NEAR POST-GLOBAL FINANCIAL CRISIS LOWS U.S. High-Grade Spread Volatility Post-GFC Spread Volatility Low LUCI HG Benchmark Spread Volatility (bps) 7 12 Continued Expansion of the Client Franchise 1Q23 Spread Range: 43 bps 1Q24 Spread Range: 15
Slide 4: Growth in the U.S. High-Grade Market in April 2024
Growth in the U.S. High-Grade Market in April 2024… Strong Growth in U.S. High-Grade TRACE Market …Coupled with Elevated U.S. High-Grade TRACE Average Daily Trading Volume… Market Average Daily Trade Count Client-to-Dealer Dealer-Initiated Portfolio Trading April YoY Growth 50 C2D: +25% 140 Dealer-I
Slide 5: Was Driven In Part By Strong Growth in Portfolio Trading
…Was Driven In Part By Strong Growth in Portfolio Trading ESTIMATED PORTFOLIO TRADING MARKET1 VOLUME AND COMMENTARY ESTIMATED SHARE OF MARKET • Strong increase in portfolio trading volume in April to Total TRACE Portfolio Trade Volume Estimated % of Total HG + HY TRACE approximately 10% of U.S. high
Slide 6: Framing the U.S. High-Grade Market Opportunity
Framing the U.S. High-Grade Market Opportunity The U.S. High-Grade Market The U.S. High-Grade E-Opportunity ~$39 Billion in U.S. High-Grade TRACE ADV in 1Q24 ~$1.1 Billion Total U.S. High-Grade Revenue Opportunity2 8%1 2%1 ~$90 million 26% 31% 58% 64% ~$340 million ~$620 million 8% 3% ~$30 million C
Slide 7: We Are Building the Complete Client Toolkit for the Future
We Are Building the Complete Client “Toolkit” for the Future MarketAxess Powerful Data & X-Pro Analytics Our Global Automation & Network Algorithms 7
Slide 8: Update on Our Markets
Update on Our Markets ❖ Rich Schiffman, Global Head of Trading Solutions 8
Slide 9: Continued Strong Expansion of the Client Network
Continued Strong Expansion of the Client Network RECORD ACTIVE CLIENT FIRMS; ACTIVE U.S. CREDIT AND CLIENT RECORD PERCENT CONTRIBUTION FROM HEDGE FUND AND FIRMS TRADING 3 OR MORE PRODUCTS PRIVATE BANK CLIENTS TO TOTAL CREDIT TRADE VOLUME Active Clients Trading 3 or More Products Active U.S. Credit C
Slide 10: Integrating Our Full Ecosystem Through Automation
Integrating Our Full Ecosystem Through Automation 1Q24 COMMENTARY RECORD AUTO-X TRADE VOLUME AND COUNT Q1 YoY Growth Trade Volume: 36% • Record ~$94 billion automation volume, up 36%; record Trade Volume Trade Count Trade Count: 41% ~561 thousand trade count, up 41%. 100 3-Year CAGR 600 90 Trade Vol
Slide 11: Strong Geographic and Product Expansion
Strong Geographic and Product Expansion RECORD INTERNATIONAL CLIENT TRADE VOLUME AND TRADE COUNT AXESS IQ (PRIVATE BANK TRADING SOLUTIONS) TRADE VOLUME International Trade Volume International Trade Count AND RECORD TRADE COUNT Axess IQ Trade Volume Axess IQ Trade Count 350 700 9 70 Q1 YoY Growth 3-
Slide 12: Leveraging Open Trading as a Liquidity Destination
Leveraging Open Trading as a Liquidity Destination TOTAL CREDIT OPEN TRADING TRADE VOLUME AND HEDGE FUND CLIENTS PROVIDING LIQUIDITY ON OPEN TOTAL CREDIT OPEN TRADING TRADE COUNT TRADING Open Trading Total Credit Volume Open Trading Total Credit Trade Count # of Hedge Funds Providing Liquidity 300 9
Slide 13: Financial Review
Financial Review ❖ Stephen Davidson, Head of Investor Relations 13
Slide 14: 1Q24 Financial Summary
1Q24 Financial Summary (in $ thousands, except EPS data) 1Q24 vs. COMMENTARY3 Financial Results 1Q24 4Q23 1Q23 • Commission revenue benefited from strong U.S. high-grade market 1Q23 volumes, record ADV across emerging markets, Eurobonds and Commissions $ 184,873 $ 171,891 $ 181,991 1.6 % municipal b
Slide 15: 1Q24 Commission Revenue Detail
1Q24 Commission Revenue Detail (in $ thousands, except transaction fees per million data) COMMENTARY2 1Q24 vs. Commissions 1Q24 4Q23 1Q23 1Q23 Credit Variable Transaction Fees • Increase in total credit variable transaction fees Credit $ 141,504 $ 127,283 $ 140,970 0.4 % principally due to strong gr
Slide 16: 1Q24 Expense Detail
1Q24 Expense Detail (in $ thousands) COMMENTARY1 1Q24 vs. Expense Summary 1Q24 4Q23 1Q23 1Q23 • Total expenses of $117.8 million, including $7.9 million impact of Pragma and $0.6 million Employee Compensation and Benefits $ 61,264 $ 57,356 $ 52,315 17.1% negative impact from currency fluctuations De
Slide 17: Cash Flow and Capital Management
Cash Flow and Capital Management QUARTERLY OVERVIEW TTM FREE CASH FLOW 1 AND CAPITAL Q1 TTM FCF2 EXPENDITURES 5-Year CAGR: 6% • Total cash and investments of $513 million as of March TTM Free Cash Flow TTM Capital Expenditures TTM Capital Expenditures (in $ millions) 31, 2024 350 100 TTM Free Cash F
Slide 18: Key Takeaways
Key Takeaways • Stronger new issuance, higher rates and higher velocity of trading are indicators of a strong and growing market • We are disappointed with recent trends in estimated market share, and we recognize the importance of being equally strong in the faster growing areas of the market • We
Slide 19: Appendix
>« Market Axess: Appendix
Slide 20: Reconciliation of Net Income to EBITDA and Net Income Margin to EBITDA Margin
Reconciliation of Net Income to EBITDA and Net Income Margin to EBITDA Margin Reconciliation of Net Income to EBITDA and Net 1Q24 4Q23 1Q23 Income Margin to EBITDA Margin Net income $ 72,615 $ 69,627 $ 73,628 Add back: Interest income (5,973) (6,274) (4,249) Interest expense 316 1,636 130 Provision
Slide 21: Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow Reconciliation of Net Cash Provided by 1Q24 4Q23 1Q23 Operating Activities to Free Cash Flow Net cash provided by operating activities $ (4,949) $ 79,161 $ 7,527 Exclude: Net change in trading investments (255) 24,771 419
Slide 22: Disclosures
Disclosures ©2024 MarketAxess Holding Inc. (the "Company"). MarketAxess Corporation and Pragma LLC are members of FINRA and SIPC. MarketAxess Canada Company is a member of the New SRO. MarketAxess Europe Limited (04017160), MarketAxess Capital Limited (09777893), and MarketAxess Post-Trade Limited (
Slide 23: Now you're in the market
\Y, oN Now you're in the market”