Marketaxess Holdings, Inc. · NASDAQ:MKTX
Marketaxess — Q4 2022 Earnings Presentation
20 slides from Marketaxess's earnings presentation, Jan 25, 2023
Slide 1: Q4 & FY2022 Conference Call and Webcast
Q4 & FY2022 Conference Call and Webcast January 25, 2023
Slide 2: Strategic Update
Strategic Update ❖ Rick McVey, Chairman and CEO 2
Slide 3: 4Q22 Results Snapshot
4Q22 Results Snapshot (in $ millions, except EPS data) Revenue Operating Expenses Operating Income +8% $177.9 +8% $100.2 +7% $77.7 (+10% ex. FX) EPS NI & EBITDA1 NI & EBITDA Margin1 +14% $59.2 +170 bps 33.3% +15% $1.58 +10% $95.2 +120 bps 53.5% Key Themes • Strong fourth quarter, with third consecut
Slide 4: Executing Our Growth Strategy in 4Q22
Executing Our Growth Strategy1 in 4Q22 • Total credit trade ADV, of $12.0 billion, up 24%; third highest quarter ever. • Record composite corporate bond2 estimated market share of 20.9% (+210 bps). Increase penetration in • Record U.S. high-yield estimated market share of 20.5% (+500 bps) on 33% inc
Slide 5: Market Conditions and U.S. Credit
Market Conditions and U.S. Credit COMPOSITE CORPORATE BOND ESTIMATED U.S. HIGH GRADE TRACE TRADE COUNT AND TRACE MARKET SHARE 1 AVG. TRADE SIZE Trade Count Average Trade Size Q4 Record Estimated Share of 20.9% 6,000 700 TRACE Average Trade Size (in $ 000s) 25.0% TRACE Trade Count (in 000s) 5,000 600
Slide 6: Strong Long-Term Estimated Market Share Gains
Strong Long-Term Estimated Market Share Gains RECORD COMPOSITE CORPORATE U.S. HIGH-GRADE RECORD U.S. HIGH-YIELD BOND1 +590 bps +120 bps +990 bps 20.9% 21.1% 20.5% 19.9% 10.6% 15.0% 4Q19 4Q22 4Q19 4Q22 4Q19 4Q22 RECORD EMERGING MARKETS (FINRA TRACE-REPORTABLE)2 RECORD EUROBONDS RECORD MUNICIPAL BONDS
Slide 7: Update on Key Business Trends
Update on Key Business Trends ❖ Chris Concannon, President and COO 7
Slide 8: Investing to Capture the Long-Term E-Trading Opportunity
Investing to Capture the Long-Term E-Trading Opportunity TOTAL ADDRESSABLE MARKET – 2022 ESTIMATES1 MarketAxess 4Q22 ADV Total Estimated Addressable Market ADV $5.5B $26.0B U.S. High-Grade $1.8B $8.8B CORE PRODUCTS U.S. High-Yield $1.7B $15.0B EM Hard Currency2 $1B $50.0B EM Local Currency 2 $1.6B $
Slide 9: Open Trading is at the Core of All Products and Protocols
Open Trading is at the Core of All Products and Protocols Q4 YoY Growth 4Q22 OPEN TRADING HIGHLIGHTS OPEN TRADING U.S. HIGH-YIELD VOLUME & PERCENT Volume: 41% PENETRATION Penetration: +360 bps • Record 38% of total credit trading volume executed 60,000 Open Trading U.S. High-Yield Volume Open Tradin
Slide 10: Trading Automation Continues to Grow
Trading Automation Continues to Grow 4Q22 AUTOMATION HIGHLIGHTS AUTO-X TRADE VOLUME AND COUNT Q4 YoY Growth Trade Volume: 39% • Record $62 billion in Auto-X volume, up 39% Trade Volume Trade Count Trade Count: 58% – Record 383,495 trades completed using automated execution, up 70 450 3-Year CAGR fro
Slide 11: Strong Momentum in Portfolio Trading Activity
Strong Momentum in Portfolio Trading Activity 4Q22 PORTFOLIO TRADING HIGHLIGHTS PORTFOLIO TRADING VOLUME • Record total Portfolio Trading volume of $31 billion, 35 $30.8 increase of 135% 30 Q4 YoY Growth Volume (in $ billions) • Portfolio Trading represented ~5.7% of total TRACE1, vs. 25 Trade Volum
Slide 12: Financial Review
Financial Review ❖ Chris Gerosa, CFO 12
Slide 13: 4Q22 Financial Summary
4Q22 Financial Summary (in $ thousands, except EPS data) COMMENTARY* 4Q22 vs. • Commission revenue benefited from strong estimated market share Financial Results 4Q22 3Q22 4Q21 gains and higher volumes, partiality offset by lower average fees per 4Q21 million, principally in U.S. high-grade Commissi
Slide 14: 4Q22 Commission Revenue Detail
4Q22 Commission Revenue Detail (in $ thousands, except transaction fees per million data) COMMENTARY* Credit 4Q22 vs. Commissions 4Q22 3Q22 4Q21 4Q21 • Increase in transaction fees due to strong market Transaction Fees share gains and higher volumes, partially offset by lower fees per million in U.S
Slide 15: 4Q22 Expense Detail
4Q22 Expense Detail (in $ thousands) COMMENTARY* • Total expenses of $100 million, up 8% on continued 4Q22 vs. investment, up 12% excluding the impact of foreign Expense Summary 4Q22 3Q22 4Q21 4Q21 currency fluctuations Employee Compensation and Benefits $ 44,108 $ 44,805 $ 41,218 7.0% • Year-over-y
Slide 16: Cash Flow and Capital Management
Cash Flow and Capital Management QUARTERLY OVERVIEW TTM FREE CASH FLOW 1 AND CAPITAL Q4 TTM FCF2 EXPENDITURES 5-Year CAGR: 10% • Total cash and investments of $514.5 million TTM Free Cash Flow TTM Capital Expenditures TTM Capital Expenditures (in $ millions) • Trailing 12-month capital expenditures
Slide 17: FY 2023 Guidance
FY 2023 Guidance EXPENSES 2023 OPERATING EXPENSE GROWTH • Expected range of $418.0 million to $446.0 million BREAKDOWN – Based on the midpoint of the stated guidance range, operating Other Investment expenses are expected to increase by approximately 10% in 2023 25% – Approximately 65% of the antici
Slide 18: Key Takeaways
Key Takeaways • Strong execution against growth strategy; increasing momentum with product and geographic diversification • Third consecutive quarter of broad-based record estimated market share across multiple products driving an acceleration of revenue growth rates • Recent trends improving for du
Slide 19: 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 20: Now you're in the market
\Y, oN Now you're in the market”