Marketaxess Holdings, Inc. · NASDAQ:MKTX
Marketaxess — Q3 2024 Earnings Presentation
23 slides from Marketaxess's earnings presentation, Nov 6, 2024
Slide 1: 3Q24 Earnings Conference Call
3Q24 Earnings Conference Call November 6, 2024
Slide 2: Strategic Update
Strategic Update ❖ Chris Concannon, CEO 2
Slide 3: 3Q24 Highlights
3Q24 Highlights1 • 20% growth in revenue2 • 20% growth in commission revenue2 Financial − 24% growth in U.S. high-grade, 18% growth in emerging markets, 25% growth in Performance Eurobonds, 28% growth in municipals; record total rates commission revenue, up 35% • 21% growth in services revenue2,3 •
Slide 4: Strong Growth in 3Q24 Across the Platform
Strong Growth in 3Q24 Across the Platform MKTX Total Credit ADV Record MKTX U.S. Treasuries ADV +27% +43% $25,302 $14,116 +49% $11,156 +27% $17,713 +19% (1)% +36% 3Q23 3Q24 3Q23 3Q24 U.S. High-Grade U.S. High-Yield Emerging Markets U.S. Treasuries Eurobonds Municipal Bonds 4
Slide 5: Continued Strong Contribution From Our EM Franchise
Continued Strong Contribution From Our EM Franchise 3Q24 COMMENTARY 1 EMERGING MARKETS TRADE VOLUME BY CLIENT LOCATION • Emerging markets commission revenue up 18%. North America EMEA APAC LATAM • Record LATAM and APAC emerging markets trade volume, 250 Q3 YoY Growth: 21% Trade Volume (in $ billions
Slide 6: Key Components of Our Strategy to Grow Market Share
Strategic Priorities to Drive Market Share Growth Key Milestones / Execution Timing Completed Expected in 4Q / Early 2025 Key Components of Our Strategy to Grow Market Share X-Pro ✓ Initial roll-out of global PT1 on X-Pro • Initial roll-out of traditional RFQ on X-Pro in ✓ Upgrade of X-Pro screen fe
Slide 7: Constructive Macro Conditions
Constructive Macro Conditions HIGH-GRADE AND HIGH-YIELD SPREAD RANGES TURNOVER IN U.S. HIGH-GRADE TRENDING UP High-Grade Spread Range High-Yield Spread Range High-Grade Spread Range Avg. High-Yield Spread Range Avg. 72 300 120% Benchmark Spreads (bps) Benchmark Spreads (bps) 60 250 Annualized Turnov
Slide 8: Update on Our Markets
Update on Our Markets ❖ Rich Schiffman, Global Head of Trading Solutions 8
Slide 9: Strong Geographic and Product / Workflow Expansion
Strong Geographic and Product / Workflow Expansion INTERNATIONAL1 CLIENT TRADE VOLUME AND TRADE COUNT RECORD HEDGE FUND, DEALER INITIATED2, AND PRIVATE BANK TRADE VOLUME International Trade Volume International Trade Count Hedge Fund Dealer Initiated Private Bank 350 Q3 YoY Growth 3-Year CAGR 700 30
Slide 10: Leveraging Open Trading as a Liquidity Destination
Leveraging Open Trading as a Liquidity Destination 3Q24 COMMENTARY 1 TOTAL CREDIT OPEN TRADING TRADE VOLUME AND RECORD TRADE COUNT • Open Trading ADV of ~$4 billion, up 30%. Open Trading Total Credit Volume Open Trading Total Credit Trade Count 300 1,000 Trade Volume (in $ billions) • Total credit O
Slide 11: Integrating Our Full Ecosystem Through Automation
Integrating Our Full Ecosystem Through Automation RECORD AUTO-X ACTIVE CLIENT FIRMS 3Q24 COMMENTARY 1 • Record 249 automation active client firms, up 49%. 250 Q3 YoY Growth: 49% 3-Year CAGR: 30% • Record ~$96 billion automation volume, up 28%; record 200 # Active Client Firms ~612 thousand trade cou
Slide 12: Financial Review
Financial Review ❖ Ilene Fiszel Bieler, CFO 12
Slide 13: 3Q24 Financial Summary
3Q24 Financial Summary 3Q24 PERFORMANCE3 3Q24 vs. • Return to positive operating leverage on strength of market Financial Results 3Q24 2Q24 3Q23 volumes while maintaining disciplined expense management. 3Q23 Commissions $ 180,392 $ 171,679 $ 150,496 20 % • 20% growth in commission revenue driven by
Slide 14: 3Q24 Commission Revenue Detail
3Q24 Commission Revenue Detail (in $ thousands, except transaction fees per million data) 3Q24 PERFORMANCE2 3Q24 vs. Commissions 3Q24 2Q24 3Q23 3Q23 Credit Variable Transaction Fees • 27% increase in total credit ADV, partially offset by a 4% decrease in total credit fee per million. Credit $ 134,86
Slide 15: 3Q24 Expense Detail
3Q24 Expense Detail (in $ thousands) 3Q24 PERFORMANCE1 3Q24 vs. Expense Summary 3Q24 2Q24 3Q23 3Q23 • Total expenses of $119.7 million, including $8.2 million impact from Pragma. Employee Compensation and Benefits $ 58,431 $ 56,790 $ 48,872 20 % – Pragma technologists working on several strategic pr
Slide 16: Capital Management & Cash Flow
Capital Management & Cash Flow TTM QUARTERLY DIVIDENDS CAPITAL MANAGEMENT TTM Quarterly Dividends (in $ millions) 115 100 • Total cash, cash equivalents, corporate bond and U.S. treasury investments of $602 million as of 85 September 30, 2024. 70 • Total of 296,505 shares repurchased year-to-date 55
Slide 17: Key Takeaways
Key Takeaways • Strong financial performance driven by strength of market volumes • Robust new issue calendar and increase in velocity of trading in U.S. high- grade contributing to more constructive market backdrop • Initial roll-out of X-Pro to international client base underway; upgrade of X-Pro
Slide 18: Appendix
>« Market Axess: Appendix
Slide 19: 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 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 YTD YTD 3Q24 2Q24 3Q23 Income Margin to EBITDA Margin 2024 2023 Net income $ 71,489 $ 64,938 $ 54,941 $ 209,042 $ 188,428 Add back: Interest income (6,953) (6,401) (6,590) (19
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 YTD YTD 3Q24 2Q24 3Q23 Operating Activities to Free Cash Flow 2024 2023 Net cash provided by operating activities $ 95,089 $ 118,849 $ 79,161 $ 208,989 $ 192,082 Exclude: Net change i
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”