Marketaxess Holdings, Inc. · NASDAQ:MKTX
Marketaxess — Q2 2022 Earnings Presentation
22 slides from Marketaxess's earnings presentation, Jul 20, 2022
Slide 1: Q2 2022 Conference Call and Webcast
Q2 2022 Conference Call and Webcast July 20, 2022
Slide 2: Strategic Update
Strategic Update Rick McVey, Chairman and CEO 2
Slide 3: 2Q22 Strategic Update & Highlights
2Q22 Strategic Update & Highlights¹ • Record total credit trading volume; record composite corporate bond2 estimated market share of 20.2%. • Record combined U.S. high‐grade and U.S. high‐yield estimated market share, of 20.9%, up from 19.1%. Increase penetration in • Record U.S. high‐yield estimate
Slide 4: Market Conditions and U.S. Credit
Market Conditions and U.S. Credit LIQUID U.S. CORPORATE INDEX (LUCI) U.S. HIGH‐GRADE & U.S HIGH‐YIELD TRACE VOLUME Q2 YoY Change U.S. High‐Grade U.S. High‐Yield HG TRACE: 5% 3 Month Rolling Volatility (% log scale) Benchmark Spreads* 3‐Month Rolling Volatility 210 HY TRACE: ‐1% 12.8 3,000 Benchmark
Slide 5: Expanding the Client Network
Expanding the Client Network HIGHLIGHTS ACTIVE CLIENT FIRMS • Record 1,935 total active client firms, up 5% Active Domestic Firms Active International Firms – Record 982 international active client firms, up 6% 2,000 – Record Asia active client firms, up 12%, representing over 45% of 1,500 the incre
Slide 6: Improved Environment Driving Increased Client Cost Savings
Improved Environment Driving Increased Client Cost Savings1 Q2 YoY Growth HIGHLIGHTS OPEN TRADING AND TOTAL CREDIT TRADE COUNT OT Trade Count: 35% Total Credit Trade Count: 22% • Median bid/ask spread reflected in Composite+TM for U.S. Total Credit Trade Count Open Trading Trade Count 1,800 800 high
Slide 7: Strong YoY Estimated Market Share Gains
Strong YoY Estimated Market Share Gains U.S. HIGH‐GRADE U.S. HIGH‐YIELD EMERGING MARKETS (FINRA +300 bps TRACE‐REPORTABLE)1 24.0% +120 bps +280 bps 18.0% 17.3% 34.0% 14.3% 29.2% 22.3% 26.4% 28.0% 12.0% 22.0% 22.0% 21.1% 6.0% 16.0% 20.0% ‐‐ 10.0% 2Q21 2Q22 2Q21 2Q22 2Q21 2Q22 EUROBONDS MUNICIPAL BOND
Slide 8: The Long-Term E-Trading Opportunity
The Long‐Term E‐Trading Opportunity TOTAL ADDRESSABLE MARKET – 2022 ESTIMATES1 MarketAxess 2Q22 ADV Total Estimated Addressable Market ADV $5.8B $26.3B U.S. High‐Grade $1.8B $10.3B CORE PRODUCTS U.S. High‐Yield $1.7B $15.0B EM Hard Currency $1.1B $50.0B EM Local Currency $1.5B $9.9B Eurobonds $371M
Slide 9: Update on Growth Initiatives
Update on Growth Initiatives Chris Concannon, President and COO 9
Slide 10: Open Trading is at the Core of All Products and Protocols
Open Trading® is at the Core of All Products and Protocols OPEN TRADING HIGHLIGHTS UNIQUE OPEN TRADING FIRMS • Over 38,000 orders and $21 billion in notional value available through Open 1,900 Trading on average per day in 2Q22, up 32% and 33%, respectively • Estimated system‐wide cost savings of $1
Slide 11: Trading Automation Continues to Grow
Trading Automation Continues to Grow HIGHLIGHTS AUTO‐X TRADE VOLUME AND COUNT Q2 YoY Growth Trade Volume: 39% • Continued growth in trade automation despite increase in volatility Trade Volume Trade Count Trade Count: 40% • Record $57.6 billion in Auto‐X volume in 2Q22, up 39% from 2Q21 70 350 3‐Yea
Slide 12: Strong Momentum in Portfolio Trading Activity
Strong Momentum in Portfolio Trading Activity HIGHLIGHTS RECORD PORTFOLIO TRADING VOLUME • Record total Portfolio Trading volume of $22.8 billion in 25 $22.8 2Q22 Volume (in $ billions) 20 • Record $37 billion in Portfolio Trading volume in 1H22 $13.1 • Record 534 trades executed in 1H22 15 $13.9 •
Slide 13: Strength in Emerging Markets Continues
Strength in Emerging Markets Continues HIGHLIGHTS LOCAL MARKETS TRADING VOLUME Q2 YoY Growth 38% • Record emerging markets active clients of 1,371, up 7% 80 • Total emerging markets trading volume of $175.3 billion, up 70 11% on record estimated market share 60 Volume (in $ billions) • Record $27.3
Slide 14: Our Data Strategy: Integrated Solutions
Our Data Strategy: Integrated Solutions KEY PILLARS / Solutions CATALYSTS BENEFITS Best‐in‐class front office trading solutions and real‐time data Existing products: HG, HY, EM, Eurobonds New Products: Treasuries, Municipals • Improved trading Composite+TM decisions and Composite+™ / Automation outc
Slide 15: Financial Review
Financial Review Chris Gerosa, CFO 15
Slide 16: 2Q22 Financial Summary
2Q22 Financial Summary (in $ thousands) 2Q22 vs. COMMENTARY Financial Results 2Q22 1Q22 2Q21 2Q21 • Commission revenue benefited from strong estimated market Commissions 163,463 166,113 156,431 4.5% share gains, partiality offset by lower average fees per million, principally in U.S. high‐grade Info
Slide 17: Commission Revenue Detail
Commission Revenue Detail (in $ thousands, except transaction fee data) 2Q22 vs. Commissions 2Q22 1Q22 2Q21 2Q21 COMMENTARY (2Q22 vs. 2Q21) Transaction Fees U.S. High Grade U.S. High-Grade 51,576 52,878 56,413 (8.6%) • Reduction in transaction fees due to 18% decline in Other Credit 74,226 75,804 67
Slide 18: Expense Detail
Expense Detail (in $ thousands) COMMENTARY (2Q22 vs. 2Q21) • Total expenses of $97.4 million, up 9% on continued investment 2Q22 vs. Expense Summary 2Q22 1Q22 2Q21 2Q21 • Year‐over‐year increase in operating expenses Employee Compensation and Benefits 45,435 47,756 40,732 11.5% due to continued inve
Slide 19: Cash Flow and Capital Management
Cash Flow and Capital Management QUARTERLY OVERVIEW TTM FREE CASH FLOW 1 AND CAPITAL Q2 TTM FCF2 EXPENDITURES 5‐Year CAGR 11% • Total cash and investments of $325 million TTM Free Cash Flow TTM Capital Expenditures TTM Capital Expenditures (in $ millions) 350 100 • Trailing 12‐month capital expendit
Slide 20: Key Takeaways
Key Takeaways • Strong execution against growth strategy • Market conditions improving in global fixed income • Open Trading delivering increased cost savings for institutional clients • Broad‐based estimated record market share gains • Increasing momentum with product / geographic diversification •
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
\Y, aN Now you're in the market”