Marketaxess Holdings, Inc. · NASDAQ:MKTX
Marketaxess — Q3 2022 Earnings Presentation
22 slides from Marketaxess's earnings presentation, Oct 19, 2022
Slide 1: Q3 2022 Conference Call and Webcast
Q3 2022 Conference Call and Webcast October 19, 2022
Slide 2: Strategic Update
Strategic Update Rick McVey, Chairman and CEO 2
Slide 3: 3Q22 Strategic Update & Highlights
3Q22 Strategic Update & Highlights¹ • Record composite corporate bond2 estimated market share of 20.6%, up 170 bps. • Record U.S. high-yield estimated market share of 19.3%, up from 15.3%, on 25% increase in ADV. Increase penetration in • +360 bps point increase in emerging markets estimated market
Slide 4: Market Conditions and U.S. Credit
Market Conditions and U.S. Credit LIQUID U.S. CORPORATE INDEX (LUCI) & INVESTMENT CORP. BOND INDEX DURATION AND U.S. DOLLAR INDEX GRADE ETF (LQD) Benchmark Spreads* LQD Price Corporate Bond Index Duration U.S. Dollar Index 210 150 10 160 9 150 190 140 Benchmark Spreads (bps) Corporate Bond Duration
Slide 5: Strong Estimated Market Share Gains
Strong Estimated Market Share Gains RECORD COMPOSITE CORPORATE U.S. HIGH-GRADE RECORD U.S. HIGH-YIELD (30) bps +400 bps BOND1 +170 bps 21.4% 19.3% 21.1% 20.6% 15.3% 18.9% 20.2% 15.7% 11.9% 3Q19 3Q21 3Q22 3Q19 3Q21 3Q22 3Q19 3Q21 3Q22 EMERGING MARKETS2 RECORD EUROBONDS RECORD MUNICIPAL BONDS U.S. TRE
Slide 6: The Long-Term E-Trading Opportunity
The Long-Term E-Trading Opportunity TOTAL ADDRESSABLE MARKET – 2022 ESTIMATES1 MarketAxess 3Q22 ADV Total Estimated Addressable Market ADV $5.1B $24.3B U.S. High-Grade $1.6B $8.4B CORE PRODUCTS U.S. High-Yield $1.6B $15.0B EM Hard Currency2 $1B $50.0B 2 EM Local Currency $1.3B $7.1B Eurobonds $361M
Slide 7: Update on Growth Initiatives
Update on Growth Initiatives Chris Concannon, President and COO 7
Slide 8: Open Trading is at the Core of All Products and Protocols
Open Trading is at the Core of All Products and Protocols Q3 YoY Growth OPEN TRADING HIGHLIGHTS OPEN TRADING U.S. HIGH-YIELD VOLUME & PERCENT Volume: 39% • $260 million in estimated transaction cost savings1 via PENETRATION Penetration: +500 bps Open Trading U.S. High-Yield Volume Open Trading % Pen
Slide 9: Trading Automation Continues to Grow
Trading Automation Continues to Grow HIGHLIGHTS AUTO-X TRADE VOLUME AND COUNT Q3 YoY Growth Trade Volume: 22% • $52 billion in Auto-X volume in 3Q22, up 22% from 3Q21 Trade Volume Trade Count Trade Count: 29% – 290,000 trades completed using automated execution, up from 70 350 225,000 trades in 3Q21
Slide 10: Strong Momentum in Portfolio Trading Activity
Strong Momentum in Portfolio Trading Activity HIGHLIGHTS PORTFOLIO TRADING VOLUME • Record total Portfolio Trading volume of $25 billion in 3Q22 30 $24.7 • Record $61 billion in Portfolio Trading volume in 3Q22 YTD 25 Volume (in $ billions) $22.8 • Record 915 trades executed in 3Q22 YTD 20 • Record
Slide 11: Emerging Markets Strength
Emerging Markets Strength HIGHLIGHTS LOCAL MARKETS TRADING VOLUME Q3 YoY Growth Reported: 33% • Total emerging markets trading volume of $166 billion, up 80 Constant Currency: 47% 8% (+12% constant currency) 70 60 • Emerging markets local markets trading volume of $60 Volume (in $ billions) 50 billi
Slide 12: Financial Review
Financial Review Chris Gerosa, CFO 12
Slide 13: 3Q22 Financial Summary
3Q22 Financial Summary (in $ thousands, except EPS data) COMMENTARY Financial Results 3Q22 2Q22 3Q21 3Q22 vs. • Commission revenue benefited from strong estimated market 3Q21 share gains, partiality offset by lower average fees per million, principally in U.S. high-grade Commissions 153,164 163,463
Slide 14: Commission Revenue Detail
Commission Revenue Detail (in $ thousands, except transaction fees per million data) COMMENTARY 3Q22 vs. Credit Commissions 3Q22 2Q22 3Q21 3Q21 • Increase in transaction fees due to strong market Variable Transaction Fees share gains, partially offset by lower fees per million Total Credit 116,309 1
Slide 15: Expense Detail
Expense Detail (in $ thousands) COMMENTARY • Total expenses of $96 million, up 9% on continued investment, up 13% excluding the impact of foreign 3Q22 vs. currency fluctuations Expense Summary 3Q22 2Q22 3Q21 3Q21 • Year-over-year increase in operating expenses due Employee Compensation and Benefits
Slide 16: Cash Flow and Capital Management
Cash Flow and Capital Management QUARTERLY OVERVIEW TTM FREE CASH FLOW 1 AND CAPITAL Q3 TTM FCF2 EXPENDITURES 5-Year CAGR: 10% • Total cash and investments of $352.0 million TTM Free Cash Flow TTM Capital Expenditures TTM Capital Expenditures (in $ millions) 350 100 • Trailing 12-month capital expen
Slide 17: Key Takeaways
Key Takeaways • Strong execution against growth strategy; increasing momentum with product and geographic diversification • Second consecutive quarter of broad-based record estimated market share across multiple products • Open Trading delivering liquidity, and significant price improvement opportun
Slide 18: Appendix
>« Market Axess: Appendix
Slide 19: Expanding the Client Network
Expanding the Client Network HIGHLIGHTS ACTIVE CLIENT FIRMS Record 1,972 • Record 1,972 total active client firms, up 7% Active Domestic Firms Active International Firms Active Clients – Record 993 international active client firms, up 6% 2,000 – Record 238 Asia active client firms, up 11%, represen
Slide 20: Total Credit Fee Per Million & Total Credit Distribution Fees
Total Credit Fee Per Million & Total Credit Distribution Fees (in $ millions, except variable fee per million data) Total Credit Historical Avg. Variable Fee Per Million & Total Credit Distribution Fees FY 2018 FY 2019 Total Credit Avg. Variable Fee Per Million (Annual) $175.77 $178.35 1Q18 2Q18 3Q1
Slide 21: Disclosures
Disclosures ©2022 MarketAxess Holdings Inc. (the "Company"). MarketAxess Corporation is a member of FINRA and SIPC. MarketAxess Canada Company is a member of IIROC. MarketAxess Europe Limited (04017160), MarketAxess Capital Limited (09777893), and MarketAxess Post-Trade Limited (01917944) are incorp
Slide 22: Now you're in the market
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