MarketAxess
Holdings Inc., an electronic trading platform for fixed-income securities, has
released its financial results for the third quarter of 2023. The report shows
a stable revenue of $172.3 million, identical to the previous year. However, an uptick of 10% in total expenses, primarily due to strategic investments, led to a
lower operating income of $66.9 million.
MarketAxess Reports Higher
Revenue but Lower Net Income
The
company's total revenue for the quarter remained unchanged at $172.3 million,
reflecting the impact of low credit spread volatility
Volatility
In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, or stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Trad
In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, or stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Trad
Read this Term. Operating income saw a
decline, standing at $66.9 million, mainly due to a boost of 10% in total
expenses. These expenses were primarily incurred to tap into long-term revenue
opportunities in the global fixed-income markets.
Despite the
increased expenses, MarketAxess maintains a robust financial position with
$553.3 million in cash, cash equivalents, and investments. The company has also
declared a quarterly cash dividend of $0.72 per share.
MarketAxess
reported a diluted EPS of $1.46, with a net income of $54.9 million. Compared
to last year's quarter, this represents a decrease of 4% in both metrics.
Table: 3Q 2023 select financial results
$ in millions, except per share data
(unaudited) | Revenues | Operating
Income | Net Income | Diluted EPS | Net Income
Margin (%) | EBITDA3 | EBITDA
Margin
(%)3 |
3Q23 | $172 | $67 | $55 | $1.46 | 31.9% | $83 | 48.1% |
3Q22 | $172 | $76 | $59 | $1.58 | 34.5% | $93 | 54.0% |
% Change | - | (12%) | (7%) | (8%) | (260) bps | (11%) | (590) bps |
YTD 2023 | $555 | $238 | $188 | $5.01 | 33.9% | $284 | 51.2% |
YTD 2022 | $540 | $249 | $191 | $5.07 | 35.3% | $303 | 56.2% |
% Change | 3% | (4%) | (2%) | (1%) | (140) bps | (6%) | (500) bps |
One of the
bright spots in the report was the record information services revenue of $11.8
million, marking an improvement of 21.5%. This growth is attributed to the increasing
adoption of the Composite+ data analytics
Analytics
Analytics may be defined as the detection, analysis, and relay of consequential patterns in data. Analytics also seeks to explain or accurately reflect the relationship between data and effective decision-making. In the trading space, analytics are applied in a predictive manner in an attempt to forecast the price more accurately. This predictive model of analytics generally involves the analysis of historical price patterns that are used in an attempt to determine certain price outcomes. Analy
Analytics may be defined as the detection, analysis, and relay of consequential patterns in data. Analytics also seeks to explain or accurately reflect the relationship between data and effective decision-making. In the trading space, analytics are applied in a predictive manner in an attempt to forecast the price more accurately. This predictive model of analytics generally involves the analysis of historical price patterns that are used in an attempt to determine certain price outcomes. Analy
Read this Term tool.
Diversification and
Trading Volume
The company
exhibited strong geographic and product diversification. Average daily volume
(ADV) from international products, including emerging markets and Eurobonds,
increased by 11.3%. Municipal bonds also saw a rise of 7.4% in ADV. Automated
trading volume and trade count broke previous records, surpassing full-year
2022 levels.
Table: 3Q 2023 trading volume
CREDIT | RATES |
$ in millions
(unaudited) | US/UK
Trading
Days4 | Total
ADV | Total
Credit | High-Grade | High-Yield | Emerging
Markets | Eurobonds | Municipal
Bonds | Total
Rates | US Govt.
Bonds | Agcy./Other
Govt. Bonds |
3Q23 | 63/64 | $29,285 | $11,156 | $5,179 | $1,294 | $2,799 | $1,484 | $388 | $18,129 | $17,713 | $416 |
3Q22 | 64/64 | $31,440 | $10,974 | $5,124 | $1,626 | $2,592 | $1,255 | $361 | $20,466 | $20,133 | $333 |
% Change | (7%) | 2% | 1% | (20%) | 8% | 18% | 7% | (11%) | (12%) | 25% |
The number
of active client firms reached a record 2,093, a positive lift of 6.1%. This
includes the highest number of active US credit client firms and international
active client firms, indicating a broadening customer base.
Future Outlook
The company
has refined its full-year 2023 expense guidance, now ranging from $432.0
million to $438.0 million, including an estimated $12.5 million of M&A-related
expenses. The effective tax rate for the full year is expected to be
approximately 23.5%, lower than the previously stated range.
Therefore,
while MarketAxess faces challenges due to low credit spread volatility and
increased expenses, its diversified product offerings and strong client
engagement provide a positive outlook for the future.
Recently, MarketAxxes cooperated with Bloomberg and Tradeweb to form a joint venture and establish an independent company with the goal of becoming the consolidated tape provider (CTP) for fixed-income instruments in the European Union.
MarketAxess
Holdings Inc., an electronic trading platform for fixed-income securities, has
released its financial results for the third quarter of 2023. The report shows
a stable revenue of $172.3 million, identical to the previous year. However, an uptick of 10% in total expenses, primarily due to strategic investments, led to a
lower operating income of $66.9 million.
MarketAxess Reports Higher
Revenue but Lower Net Income
The
company's total revenue for the quarter remained unchanged at $172.3 million,
reflecting the impact of low credit spread volatility
Volatility
In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, or stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Trad
In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, or stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Trad
Read this Term. Operating income saw a
decline, standing at $66.9 million, mainly due to a boost of 10% in total
expenses. These expenses were primarily incurred to tap into long-term revenue
opportunities in the global fixed-income markets.
Despite the
increased expenses, MarketAxess maintains a robust financial position with
$553.3 million in cash, cash equivalents, and investments. The company has also
declared a quarterly cash dividend of $0.72 per share.
MarketAxess
reported a diluted EPS of $1.46, with a net income of $54.9 million. Compared
to last year's quarter, this represents a decrease of 4% in both metrics.
Table: 3Q 2023 select financial results
$ in millions, except per share data
(unaudited) | Revenues | Operating
Income | Net Income | Diluted EPS | Net Income
Margin (%) | EBITDA3 | EBITDA
Margin
(%)3 |
3Q23 | $172 | $67 | $55 | $1.46 | 31.9% | $83 | 48.1% |
3Q22 | $172 | $76 | $59 | $1.58 | 34.5% | $93 | 54.0% |
% Change | - | (12%) | (7%) | (8%) | (260) bps | (11%) | (590) bps |
YTD 2023 | $555 | $238 | $188 | $5.01 | 33.9% | $284 | 51.2% |
YTD 2022 | $540 | $249 | $191 | $5.07 | 35.3% | $303 | 56.2% |
% Change | 3% | (4%) | (2%) | (1%) | (140) bps | (6%) | (500) bps |
One of the
bright spots in the report was the record information services revenue of $11.8
million, marking an improvement of 21.5%. This growth is attributed to the increasing
adoption of the Composite+ data analytics
Analytics
Analytics may be defined as the detection, analysis, and relay of consequential patterns in data. Analytics also seeks to explain or accurately reflect the relationship between data and effective decision-making. In the trading space, analytics are applied in a predictive manner in an attempt to forecast the price more accurately. This predictive model of analytics generally involves the analysis of historical price patterns that are used in an attempt to determine certain price outcomes. Analy
Analytics may be defined as the detection, analysis, and relay of consequential patterns in data. Analytics also seeks to explain or accurately reflect the relationship between data and effective decision-making. In the trading space, analytics are applied in a predictive manner in an attempt to forecast the price more accurately. This predictive model of analytics generally involves the analysis of historical price patterns that are used in an attempt to determine certain price outcomes. Analy
Read this Term tool.
Diversification and
Trading Volume
The company
exhibited strong geographic and product diversification. Average daily volume
(ADV) from international products, including emerging markets and Eurobonds,
increased by 11.3%. Municipal bonds also saw a rise of 7.4% in ADV. Automated
trading volume and trade count broke previous records, surpassing full-year
2022 levels.
Table: 3Q 2023 trading volume
CREDIT | RATES |
$ in millions
(unaudited) | US/UK
Trading
Days4 | Total
ADV | Total
Credit | High-Grade | High-Yield | Emerging
Markets | Eurobonds | Municipal
Bonds | Total
Rates | US Govt.
Bonds | Agcy./Other
Govt. Bonds |
3Q23 | 63/64 | $29,285 | $11,156 | $5,179 | $1,294 | $2,799 | $1,484 | $388 | $18,129 | $17,713 | $416 |
3Q22 | 64/64 | $31,440 | $10,974 | $5,124 | $1,626 | $2,592 | $1,255 | $361 | $20,466 | $20,133 | $333 |
% Change | (7%) | 2% | 1% | (20%) | 8% | 18% | 7% | (11%) | (12%) | 25% |
The number
of active client firms reached a record 2,093, a positive lift of 6.1%. This
includes the highest number of active US credit client firms and international
active client firms, indicating a broadening customer base.
Future Outlook
The company
has refined its full-year 2023 expense guidance, now ranging from $432.0
million to $438.0 million, including an estimated $12.5 million of M&A-related
expenses. The effective tax rate for the full year is expected to be
approximately 23.5%, lower than the previously stated range.
Therefore,
while MarketAxess faces challenges due to low credit spread volatility and
increased expenses, its diversified product offerings and strong client
engagement provide a positive outlook for the future.
Recently, MarketAxxes cooperated with Bloomberg and Tradeweb to form a joint venture and establish an independent company with the goal of becoming the consolidated tape provider (CTP) for fixed-income instruments in the European Union.
