Marketaxess Holdings, Inc. · NASDAQ:MKTX
Marketaxess — Q2 2019 Earnings Presentation
15 slides from Marketaxess's earnings presentation, Jul 24, 2019
Slide 1: Q2 2019 Conference Call and Webcast
Q2 2019 Conference Call and Webcast July 24, 2019
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation may contain forward-looking statements, including statements about the outlook and prospects for Company and industry growth, as well as statements about the Company’s future financial and operating performance. These and other statements that relate to f
Slide 3: 2Q19 Summary
2Q19 Summary1 FINANCIAL HIGHLIGHTS BUSINESS HIGHLIGHTS • Record revenues of $125 million, up 17% • MKTX added to the S&P 500 index • Expenses of $65 million, up 18% • Record total trading volume of $527 billion, up 25% • Record trading volume in U.S. high-yield, Eurobonds and • Operating income of $
Slide 4: Market Conditions
Market Conditions LIQUID U.S. CORPORATE INDEX (LUCI) U.S. HIGH-GRADE & HIGH-YIELD TRACE Q2 YoY Growth HG TRACE: 7% Benchmark Spread 3 Month Rolling Spread Volatility HG TRACE HY TRACE HY TRACE: 9% 180 2.7% 2,250 Benchmark Spread (bps) Rolling Spread Volatility 160 2,000 2.2% 140 1,750 1.7% $ billion
Slide 5: Open Trading
Open Trading™ HIGHLIGHTS Q2 YoY Growth OPEN TRADING ESTIMATED Liquidity Taker: 27% • Open Trading volume grew to 25% of total volume, up from 21% in TRANSACTION COST SAVINGS 1 Liquidity Provider: 46% 2Q18 Liquidity Taker Cost Savings Liquidity Provider Cost Savings 70 • $2.1 billion average daily vo
Slide 6: Breadth of Global Network
Breadth of Global Network Q2 YoY Growth of 46% EUROPEAN CLIENT VOLUMES HIGHLIGHTS U.S. Credit 30% Eurobonds Emerging Markets U.S. Credit Emerging Markets Eurobond 37% 64% • European client volume of $146 billion, up 46% 175 • Emerging market volume of $124 billion, up 27%; EM local 150 $25 markets t
Slide 7: Automation Driving Increase in Trading Activity
Automation Driving Increase in Trading Activity HIGHLIGHTS AUTO EXECUTED TRADE VOLUME AND COUNT Q2 YoY Growth Trade Volume: 314% • Approximately 2.4 million algo responses in 2Q19, up 81% Trade Volume Trade Count Trade Count: 184% from 2Q181 25,000 120 Trade Count (in thousands) Trade Volume ($ mill
Slide 8: New Business Initiatives and System Protocols
New Business Initiatives and System Protocols • Enhance our current clearing and settlement process by transitioning to self clearing in the U.S. Self Clearing and a new settlement agent outside of the U.S. • Significant cost savings and a more scalable cost structure • Initiative aimed at capturing
Slide 9: Quarterly Volume Growth
Quarterly Volume Growth GLOBAL 25% U.S. HIGH-GRADE 15% Q2 YoY Growth U.S. High-Grade Volume Market Share Q2 YoY Growth 550 300 20% 500 450 250 19% 400 Volume ($ billions) 350 200 18% Market Share $ billions 300 150 17% 250 200 100 16% 150 100 50 15% 50 -- -- 14% 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q
Slide 10: Earnings Performance
Earnings Performance ($ in thousands, except per share data) %Δ 2Q19 vs. 2Q19 1Q19 2Q18 2Q18 Revenues Commissions $ 114,124 $ 112,760 $ 96,113 18.7% Information Services 7,156 7,366 6,930 3.3% Post-trade Services 3,956 4,100 3,620 9.3% Other Income 254 265 301 (15.6%) Total Revenues 125,490 124,491
Slide 11: Commission Revenue Detail
Commission Revenue Detail %Δ ($ in thousands) 2Q19 vs. 2Q19 1Q19 2Q18 2Q18 Commissions Transaction Fees U.S. High-Grade $ 42,914 $ 42,501 $ 36,401 17.9% 1 Other Credit 47,233 46,034 34,765 35.9% 2 Liquid Products 615 557 488 26.0% Total Transaction Fees 90,762 89,092 71,654 26.7% Distribution Fees U
Slide 12: Expense Detail
Expense Detail ($ in thousands) %Δ 2Q19 vs. 2Q19 1Q19 2Q18 2Q18 Expenses Employee Compensation and Benefits $ 32,623 $ 32,658 $ 26,199 24.5% Depreciation and Amortization 6,345 6,082 5,790 9.6% Technology and Communications 6,474 5,782 5,793 11.8% Professional and Consulting 6,296 5,831 5,426 16.0%
Slide 13: Balance Sheet Data
Balance Sheet Data TTM FREE CASH FLOW AND CAPITAL ($ in thousands) 6/30/2019 12/31/2018 EXPENDITURES Assets TTM Free Cash Flow TTM Capital Expenditures 200 50 TTM Capital Expenditures ($ millions) Cash and Cash Equivalents $ 286,179 $ 246,322 Free Cash Flow ($ millions) 180 40 Investments 231,895 24
Slide 14: Summary
Summary • Electronic trading volumes showing strong momentum across all products and regions • Open Trading delivering meaningful transaction cost savings • Breadth of global network driving increase in penetration across products • Continued growth in contribution from international clients • Tradi
Slide 15: Now you're in the market
\Y, aN Now you're in the market”