Marketaxess Holdings, Inc. · NASDAQ:MKTX
Marketaxess — Q4 2024 Earnings Presentation
28 slides from Marketaxess's earnings presentation, Feb 6, 2025
Slide 1: 4Q & FY 2024 Earnings Conference Call
4Q & FY 2024 Earnings Conference Call February 6, 2025
Slide 2: Strategic Update
Strategic Update ❖ Chris Concannon, CEO 2
Slide 3: Strategic update: solid financial performance in FY 2024
Strategic update: solid financial performance in FY 2024¹ • Strongest annual revenue growth since 20202 • Record total ADV, record commission revenue2, record services2,3 revenue FINANCIAL • 9% growth in revenue to a record $817.1 million PERFORMANCE • 6% growth in diluted earnings per share to $7.2
Slide 4: What we delivered in 2024: record levels of credit and rates ADV
What we delivered in 2024: record levels of credit and rates ADV RECORD MKTX TOTAL CREDIT ADV RECORD MKTX U.S. TREASURIES ADV U.S. High-Grade U.S. High-Yield Emerging Markets Eurobonds Municipals +21% +13% $14,173 $22,044 $12,545 +22% +14% $18,256 +19% (16)% +17% 2023 2024 2023 2024 4
Slide 5: Strong progress with portfolio trading and high-touch block strategy
What we delivered in 2024: strong progress with our portfolio trading and high-touch block strategy MKTX TOTAL PORTFOLIO TRADING ADV1 MKTX EM & EUROBONDS BLOCK TRADING VOLUME2 U.S. High-Grade U.S. High-Yield Emerging Markets Emerging Markets Eurobonds Eurobonds Municipals +92% +29% $951 Million $93
Slide 6: Driving growth in 2025: enhanced functionality, differentiated data and client solutions
Driving growth in 2025: enhanced functionality, differentiated data and innovative client solutions Focusing on three strategic channels Optimizing trade execution and client workflow in key products & protocols o High-touch: rollout of block trading solutions for larger trades/EM & Eurobonds Client
Slide 7: Driving growth in 2025: realizing benefits of investments, tech modernization and acquisitions
Driving growth in 2025: realizing the benefits of our investments, tech modernization and acquisitions KEY MILESTONES / EXECUTION TIMING KEY COMPONENTS OF OUR STRATEGY TO GROW MARKET SHARE Strategic Channel Completed 2025 High-Touch Solutions High-Touch Solutions ✓ Rollout of block trading solution
Slide 8: Enhancing growth across all channels in U.S. high-grade
Driving growth in 2025 and beyond: enhancing growth across all channels in U.S. high-grade The U.S. High-Grade Market The U.S. High-Grade E-Opportunity ~$35 Billion in U.S. High-Grade TRACE ADV in 4Q24 ~$1.1 Billion Total U.S. High-Grade Revenue Opportunity2 5%1 2%1 ~$50 million 27% 28% ~$310 millio
Slide 9: Update on our trading businesses
Update on our trading businesses ❖ Rich Schiffman, Global Head of Trading Solutions 9
Slide 10: Update on our trading businesses: key performance indicators
Update on our trading businesses: key performance indicators Key Performance Indicators FY 2024 FY 2023 Growth Client-Initiated1 Record U.S. Credit ADV $8.2B $7.5B +9.8% Notional Trading / ADV Record Intl. Product Trading ADV (EM & Eurobonds) $5.4B $4.6B +17.3% Record EM Local Markets ADV $1.4B $1.2
Slide 11: Financial review
Financial review ❖ Ilene Fiszel Bieler, CFO 11
Slide 12: 4Q24 financial summary
4Q24 financial summary (in $ thousands, except EPS data) Financial Results 4Q24 3Q24 4Q23 YoY % Δ 4Q24 PERFORMANCE 4 Total Revenues $ 202,404 $ 206,715 $ 197,248 3% • 2% commission revenue growth driven by increased Commissions 174,766 180,392 171,891 2% market volumes, partially offset by lower mar
Slide 13: 4Q24 commission revenue detail
4Q24 commission revenue detail COMMISSION REVENUE DETAIL 4Q24 PERFORMANCE 2 (in $ thousands, except transaction fees per million data) Financial Results 4Q24 3Q24 4Q23 YoY % Δ Credit Variable Transaction Fees $ 141,848 $ 146,737 $ 136,997 4% Credit 129,351 134,863 127,283 2% • Total credit variable
Slide 14: 4Q24 expense detail
4Q24 expense detail (in $ thousands) +2% 4Q24 PERFORMANCE 1 +2% • Total expenses of $122 million, up 2% as we $119,660 $122,428 $120,221 anniversary the Pragma acquisition. G&A $7,344 $4,610 $5,839 $7,242 $4,443 Mark. Clearing & Adv. Occupancy $2,646 $2,898 $4,387 $3,835 $3,972 $3,716 • Increase of
Slide 15: Capital management and cash flow
Capital management and cash flow (in $ millions, except shares repurchased and cash dividend data ) TTM QUARTERLY DIVIDENDS CAPITAL MANAGEMENT TTM Quarterly Dividends (in $ millions) 115 • Total cash, cash equivalents, corporate bond and U.S. 100 Treasury investments of $699 million as of December 3
Slide 16: FY 2025 guidance
FY 2025 guidance1 (in $ millions) Metric Full-Year 2025 Guidance1 Services Revenue2 Expect revenue growth in the mid-single digits (%) Total Expenses $505 million to $525 million, up ~8% from FY 2024 to the midpoint of 2025 guidance Effective Tax Rate 23.5% to 24.5% Capital Expenditures $65 million
Slide 17: Key takeaways
Key takeaways • Solid financial performance in 2024 • Portfolio trading and high-touch block strategy showing progress in 2024 • Focus in 2025 is on realizing the benefits of our recent investments, technology modernization and acquisitions across: Client-Initiated Solutions Portfolio Trading Dealer
Slide 18: Appendix
Appendix 18
Slide 19: Macro conditions
Macro conditions HIGH-GRADE AND HIGH-YIELD SPREAD RANGES TURNOVER IN U.S. HIGH-GRADE High-Grade Spread Range High-Yield Spread Range High-Grade Spread Range Avg. High-Yield Spread Range Avg. 55 250 120% Benchmark Spreads (bps) Annualized Turnover (%) Benchmark Spreads (bps) 44 200 100% 33 150 80% 22
Slide 20: Our client network continues to expand
Our client network continues to expand # OF ACTIVE CLIENT FIRMS, ACTIVE U.S. CREDIT AND CLIENT FIRMS PERCENT CONTRIBUTION FROM HEDGE FUND AND PRIVATE BANK TRADING 3 OR MORE PRODUCTS CLIENTS TO TOTAL CREDIT TRADE VOLUME Active Clients Trading 3 or More Products Active U.S. Credit Clients Total Active
Slide 21: Strong geographic and product / protocol expansion
Strong geographic and product / protocol expansion 3-Year CAGR Trade Volume: 13% EMERGING MARKETS AND EUROBONDS TRADE VOLUME HEDGE FUND, DEALER-INITIATED1 AND PRIVATE BANK TRADE VOLUME Trade Count: 19% AND TRADE COUNT Hedge Fund Dealer-Initiated Private Bank Emerging Markets, Eurobonds Trade Volume
Slide 22: Continued strong contribution from our emerging markets franchise
Continued strong contribution from our emerging markets franchise 4Q24 COMMENTARY¹ EMERGING MARKETS TRADE VOLUME BY REGION North America EMEA APAC LATAM • 18% growth in commission revenue. 250 Q4 YoY Growth: Trade Volume (in $ billions) • 1,495 active client firms. 200 18% 150 • Continued strong LAT
Slide 23: Leveraging Open Trading as a liquidity destination
Leveraging Open Trading as a liquidity destination 4Q24 COMMENTARY¹ TOTAL CREDIT OPEN TRADING TRADE VOLUME AND TOTAL CREDIT OPEN TRADING TRADE COUNT • Open Trading ADV of ~$4 billion, up 2%. Open Trading Total Credit Volume Open Trading Total Credit Trade Count 300 1,000 Trade Volume (in $ billions)
Slide 24: Integrating our full ecosystem through automation
Integrating our full ecosystem through automation 4Q24 COMMENTARY¹ AUTO-X ACTIVE CLIENT FIRMS • 245 automation active client firms, up 32%. 280 Q4 YoY Growth: 32% 240 3-Year CAGR: 28% # Active Client Firms • Record automation volume of ~$100 billion, up 15%, and record 200 160 trade count of ~650 th
Slide 25: 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 4Q24 3Q24 4Q23 FY 2024 FY 2023 Net income $ 65,139 $ 71,489 $ 69,627 $ 274,181 $ 258,055 Add back: Interest income (6,719) (6,953) (6,274) (26,046) (22,425) Interest expense 318 346 1,636 1,601 1,983 Provision for income t
Slide 26: Reconciliation of net cash provided by operating activities to free cash flow
Reconciliation of net cash provided by operating activities to free cash flow 4Q24 3Q24 4Q23 FY 2024 FY 2023 Net cash provided by operating activities $ 176,248 $ 95,089 $ 141,685 $ 385,237 $ 333,767 Exclude: Net change in trading investments - 784 948 629 25,248 Exclude: Net change in fail-to-deliv
Slide 27: 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 28: Now you're in the market
\Y, NX Now you're in the market”