MarketAxess (MKTX) came out with quarterly earnings of $1.72 per share, beating the Zacks Consensus Estimate of $1.69 per share. This compares to earnings of $1.63 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 1.78%. A quarter ago, it was expected that this operator of bond trading platforms would post earnings of $1.85 per share when it actually produced earnings of $1.92, delivering a surprise of 3.78%. Over the last four ...

While the sustainability of the immediate price change and future earnings expectations will mostly depend on management's discussion of business conditions on the earnings call, it's worth handicapping the probability of a positive EPS surprise. The consensus EPS estimate for the quarter has been revised 2.4% lower over the last 30 days to the current level. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period. Thus, a positive ...

MarketAxess Holdings Inc. (MKTX) recently announced the execution of the first portfolio trade for taxexempt municipal bonds, which took place earlier this month between a large asset manager and a bank. The new portfolio trading for tax-exempt municipal bonds is expected to bring certainty of execution and unparalleled efficiency for traders dealing with municipal bonds. With this new tool, clients can send lists to a single dealer or multiple parties, negotiate price movements and execute trades discreetl ...

What's the first image that comes to mind when prompted with the word "market"? It might be your online brokerage website, the stock pages of a newspaper's business section, the hectic trading floor of the New York Stock Exchange, or the even more hectic souks of Marrakesh (stay away from the aggressive watch salesmen!). For anyone with more than a few years of experience in the financial markets, you'll have observed much modernization in the way markets function. I'm old enough to remember buying my first ...

[PART I — Financial Information](index=4&type=section&id=PART%20I%20%E2%80%94%20Financial%20Information) Unaudited financial statements and management's discussion and analysis for Q1 2024 [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) Presents unaudited consolidated financial statements for Q1 2024, including core statements and detailed notes [Consolidated Statements of Financial Condition](index=4&type=section&id=Consolidated%20Statements%20of%20Financial%20Condition) Presents the company's financial position, including assets, liabilities, and equity as of March 31, 2024 Consolidated Statements of Financial Condition (In thousands) | Item | March 31, 2024 | December 31, 2023 | Change | % Change | | :--------------------------------------- | :------------- | :---------------- | :----- | :------- | | Total assets | $1,926,963 | $2,015,067 | $(88,104) | -4.4% | | Total liabilities | $608,730 | $722,104 | $(113,374) | -15.7% | | Total stockholders' equity | $1,318,233 | $1,292,963 | $25,270 | 2.0% | [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) Details the company's revenues, expenses, operating income, and net income for the quarter Consolidated Statements of Operations (Three Months Ended March 31, In thousands, except per share amounts) | Item | 2024 | 2023 | Change | % Change | | :--------------------------------------- | :----- | :----- | :----- | :------- | | Total revenues | $210,318 | $203,169 | $7,149 | 3.5% | | Total expenses | $117,818 | $107,813 | $10,005 | 9.3% | | Operating income | $92,500 | $95,356 | $(2,856) | -3.0% | | Net income | $72,615 | $73,628 | $(1,013) | -1.4% | | Basic net income per common share | $1.92 | $1.96 | $(0.04) | -2.0% | | Diluted net income per common share | $1.92 | $1.96 | $(0.04) | -2.0% | | Cash dividends declared per common share | $0.74 | $0.72 | $0.02 | 2.8% | [Consolidated Statements of Comprehensive Income](index=8&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Reports net income and other comprehensive income components for the quarter Consolidated Statements of Comprehensive Income (Three Months Ended March 31, In thousands) | Item | 2024 | 2023 | Change | % Change | | :--------------------------------------- | :----- | :----- | :----- | :------- | | Net income | $72,615 | $73,628 | $(1,013) | -1.4% | | Cumulative translation adjustment | $(4,241) | $5,755 | $(9,996) | -173.7% | | Net unrealized (loss) on securities available-for-sale, net of tax | $(40) | $(41) | $1 | -2.4% | | Comprehensive income | $68,334 | $79,342 | $(11,008) | -13.9% | [Consolidated Statements of Changes in Stockholders' Equity](index=9&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Outlines changes in equity from net income, stock-based compensation, repurchases, and dividends Consolidated Statements of Changes in Stockholders' Equity (Three Months Ended March 31, In thousands) | Item | Balance at Jan 1, 2024 | Net Income | Stock-based Compensation | Repurchases of Common Stock | Cash Dividend | Balance at Mar 31, 2024 | | :--------------------------------------- | :--------------------- | :--------- | :----------------------- | :-------------------------- | :------------ | :---------------------- | | Total Stockholders' Equity | $1,292,963 | $72,615 | $7,298 | $(10,147) | $(28,003) | $1,318,233 | - Stockholders' equity increased by **$25.27 million** from December 31, 2023, to March 31, 2024, primarily due to net income of **$72.6 million**, partially offset by cash dividends of **$28.0 million** and common stock repurchases of **$10.1 million**[11](index=11&type=chunk)[18](index=18&type=chunk) [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Summarizes cash inflows and outflows from operating, investing, and financing activities Consolidated Statements of Cash Flows (Three Months Ended March 31, In thousands) | Cash Flow Activity | 2024 | 2023 | Change | | :--------------------------------------- | :----- | :----- | :----- | | Net cash (used in)/provided by operating activities | $(4,949) | $7,527 | $(12,476) | | Net cash (used in) investing activities | $(15,830) | $(32,754) | $16,924 | | Net cash (used in) financing activities | $(52,543) | $(48,142) | $(4,401) | | Net decrease for the period | $(76,508) | $(70,024) | $(6,484) | - Net cash used in operating activities was **$(4.9) million** in Q1 2024, a decrease of **$12.5 million** compared to Q1 2023, primarily due to changes in net receivables from broker-dealers and a decrease in income and other tax liabilities[201](index=201&type=chunk) - Net cash used in investing activities decreased by **$16.9 million**, mainly due to lower net purchases of available-for-sale investments, partially offset by higher capital expenditures[202](index=202&type=chunk) [Notes to Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Provides detailed explanations of accounting policies and financial statement items [1. Organization and Principal Business Activity](index=13&type=section&id=1.%20Organization%20and%20Principal%20Business%20Activity) Describes MarketAxess's core business as an electronic trading platform for fixed-income markets - MarketAxess Holdings Inc. operates electronic trading platforms for global fixed-income markets, serving over **2,000 institutional investor** and broker-dealer firms. The company offers trading technology for various fixed-income securities, Open Trading protocols, and a range of trading-related products and services including market data, auto-execution, connectivity, and pre/post-trade services[25](index=25&type=chunk) [2. Significant Accounting Policies](index=13&type=section&id=2.%20Significant%20Accounting%20Policies) Outlines key accounting principles and revenue recognition methods applied in financial statements - The consolidated financial statements are unaudited and prepared in accordance with U.S. GAAP and SEC rules for Form 10-Q, reflecting normal and recurring adjustments. Key policies include defining cash equivalents as short-term interest-bearing investments (maturities ≤ 3 months), classifying investments as available-for-sale or trading, and assessing impairment losses on available-for-sale debt securities[26](index=26&type=chunk)[27](index=27&type=chunk)[28](index=28&type=chunk)[29](index=29&type=chunk) - Revenue is disaggregated into four streams: Commissions (variable transaction fees, distribution fees, monthly minimums), Information services (data licensing, consulting, software licenses), Post-trade services (regulatory reporting, trade publication, matching), and Technology services (Pragma's services, telecommunications line charges)[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk) Commission Revenue by Fee Type (Three Months Ended March 31, In thousands) | Fee Type | 2024 | 2023 | Change | % Change | | :--------------------------------------- | :----- | :----- | :----- | :------- | | Variable transaction fees | $151,519 | $147,228 | $4,291 | 2.9% | | Distribution fees and unused minimum fees | $33,354 | $34,763 | $(1,409) | -4.1% | | Total commissions | $184,873 | $181,991 | $2,882 | 1.6% | - The company capitalizes certain costs for internal use software development and cloud computing arrangements, amortizing them over 3-5 years and 1-5 years, respectively. Foreign currency assets/liabilities are translated at period-end rates, and revenues/expenses at average monthly rates, with translation gains/losses in OCI and transaction gains/losses in other, net[35](index=35&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk)[38](index=38&type=chunk) - The FASB issued ASU 2023-09 (Income Taxes) and ASU 2023-07 (Segment Reporting), effective for the Company's 2025 and 2024 Annual Reports on Form 10-K, respectively. The Company is currently evaluating the impact of adopting these ASUs[56](index=56&type=chunk)[57](index=57&type=chunk) [3. Regulatory Capital Requirements](index=21&type=section&id=3.%20Regulatory%20Capital%20Requirements) Details the capital adequacy of MarketAxess's regulated subsidiaries - As of March 31, 2024, MarketAxess's U.S. and foreign regulated subsidiaries maintained aggregate net capital and financial resources of **$545.0 million** in excess of the required levels of **$35.7 million**. One U.S. broker-dealer subsidiary had **$45.6 million** in its special reserve bank account and net capital **$304.5 million** in excess of its **$7.9 million** requirement[60](index=60&type=chunk)[61](index=61&type=chunk) [4. Fair Value Measurements](index=21&type=section&id=4.%20Fair%20Value%20Measurements) Explains the valuation methods for financial assets and liabilities measured at fair value Fair Value Measurements (As of March 31, 2024, In thousands) | Asset Type | Level 1 | Level 2 | Level 3 | Total | | :--------------------------------------- | :------ | :------ | :------ | :------ | | Money market funds | $18,571 | — | — | $18,571 | | Securities available-for-sale (Corporate debt) | — | $25,389 | — | $25,389 | | Trading securities (U.S. Treasuries) | — | $99,427 | — | $99,427 | | Mutual funds held in rabbi trust | — | $11,015 | — | $11,015 | | Total assets | $18,571 | $135,831 | — | $154,402 | | Foreign currency forward position (Liability) | — | $196 | — | $196 | - The company's financial assets and liabilities measured at fair value primarily consist of Level 2 securities, valued using market approaches. These include corporate debt, U.S. Treasuries, mutual funds in a rabbi trust, and foreign currency forward contracts. There were no transfers between fair value levels during the three months ended March 31, 2024 and 2023[66](index=66&type=chunk)[68](index=68&type=chunk) Investments Summary (As of March 31, 2024, In thousands) | Investment Type | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | | :--------------------------------------- | :------------- | :--------------------- | :---------------------- | :--------- | | Corporate debt (Available-for-sale) | $25,473 | $25 | $(109) | $25,389 | | U.S. Treasuries (Trading securities) | $99,682 | — | $(255) | $99,427 | | Mutual funds held in rabbi trust | $10,818 | $629 | $(432) | $11,015 | | Total investments | $135,973 | $654 | $(796) | $135,831 | - For the three months ended March 31, 2024, the company recorded a net realized gain of **$1.3 million** and a net unrealized loss of **$2.1 million** on foreign currency forward contracts. Total unrealized gains on investments were **$346 thousand**, and realized gains were **$37 thousand**[70](index=70&type=chunk)[72](index=72&type=chunk) [5. Receivables from and Payables to Broker-dealers, Clearing Organizations and Customers](index=26&type=section&id=5.%20Receivables%20from%20and%20Payables%20to%20Broker-dealers%2C%20Clearing%20Organizations%20and%20Customers) Presents balances related to trading activities with broker-dealers, clearing organizations, and customers Receivables from Broker-dealers, Clearing Organizations and Customers (As of, In thousands) | Item | March 31, 2024 | December 31, 2023 | | :--------------------------------------- | :------------- | :---------------- | | Securities failed-to-deliver – broker-dealers and clearing organizations | $262,239 | $282,125 | | Securities failed-to-deliver – customers | $282,172 | $284,322 | | Deposits with clearing organizations and broker-dealers | $112,713 | $115,151 | | Other | $5,764 | $6,338 | | Total Receivables | $662,888 | $687,936 | Payables to Broker-dealers, Clearing Organizations and Customers (As of, In thousands) | Item | March 31, 2024 | December 31, 2023 | | :--------------------------------------- | :------------- | :---------------- | | Securities failed-to-receive – broker-dealers and clearing organizations | $169,798 | $125,022 | | Securities failed-to-receive – customers | $287,086 | $405,186 | | Other | $8,819 | $7,190 | | Total Payables | $465,703 | $537,398 | [6. Acquisitions and Equity Investments](index=27&type=section&id=6.%20Acquisitions%20and%20Equity%20Investments) Details recent acquisitions and investments, including goodwill and intangible assets - On October 2, 2023, MarketAxess acquired Pragma LLC and Pragma Financial Systems LLC for **$125.0 million**, comprising **$81.2 million** in cash and **$43.8 million** in common stock. The acquisition resulted in **$81.9 million** in goodwill, primarily for assembled workforce and future technology/synergies, and **$38.9 million** in intangible assets (developed technology, customer relationships, tradename)[79](index=79&type=chunk)[80](index=80&type=chunk) - The company holds a minority ownership stake in RFQ–hub Holdings LLC, accounted for under the equity method. For Q1 2024, its proportionate share of net earnings was **$0.4 million**, up from $0.2 million in Q1 2023. In April 2024, MarketAxess agreed to acquire an additional **49.0% interest** for **$37.9 million**, which will increase its stake to **92.0%** and give it a controlling interest[83](index=83&type=chunk)[121](index=121&type=chunk) [7. Goodwill and Intangible Assets](index=28&type=section&id=7.%20Goodwill%20and%20Intangible%20Assets) Provides information on the company's goodwill and amortizable intangible assets Intangible Assets Subject to Amortization (As of, In thousands) | Item | March 31, 2024 Cost | March 31, 2024 Accumulated Amortization | March 31, 2024 Net Carrying Amount | December 31, 2023 Cost | December 31, 2023 Accumulated Amortization | December 31, 2023 Net Carrying Amount | | :--------------------------------------- | :------------------ | :-------------------------------------- | :---------------------------------- | :------------------- | :--------------------------------------- | :--------------------------------------- | | Customer relationships | $139,463 | $(54,366) | $85,097 | $140,348 | $(50,987) | $89,361 | | Technology and other intangibles | $41,130 | $(12,651) | $28,479 | $41,130 | $(11,383) | $29,747 | | Total | $180,593 | $(67,017) | $113,576 | $181,478 | $(62,370) | $119,108 | - Goodwill remained at **$236.7 million** as of March 31, 2024, and December 31, 2023. Amortization expense for identifiable intangible assets increased to **$5.0 million** for Q1 2024, up from $4.1 million in Q1 2023. Annual estimated amortization expense is projected to be **$19.8 million** for 2024[85](index=85&type=chunk) [8. Income Taxes](index=29&type=section&id=8.%20Income%20Taxes) Discusses the effective tax rate and ongoing tax examinations - The effective tax rate for MarketAxess was **24.9%** for Q1 2024, slightly down from 25.0% for Q1 2023. The company is currently under New York State and New York City income tax examinations for prior tax years[88](index=88&type=chunk)[89](index=89&type=chunk) [9. Stock-Based Compensation Plans](index=29&type=section&id=9.%20Stock-Based%20Compensation%20Plans) Outlines the company's equity incentive plans and related compensation expenses Total Stock-Based Compensation Expense (Three Months Ended March 31, In thousands) | Item | 2024 | 2023 | | :--------------------------------------- | :----- | :----- | | Employees | $6,893 | $7,100 | | Non-employee directors | $405 | $388 | | Total stock-based compensation | $7,298 | $7,488 | - As of March 31, 2024, there were **2,330,396 shares** available for grant under the 2020 Equity Incentive Plan. Total unrecognized compensation cost related to non-vested awards was **$68.0 million**, expected to be recognized over a weighted-average period of **2.4 years**[90](index=90&type=chunk)[93](index=93&type=chunk) - During Q1 2024, the company granted **126,965 restricted stock units**, **20,793 stock options**, and performance stock units with an expected payout of **30,811 shares**. The weighted-average fair value for stock options granted was **$77.16 per share**[92](index=92&type=chunk) [10. Earnings Per Share](index=30&type=section&id=10.%20Earnings%20Per%20Share) Presents basic and diluted earnings per share calculations and related share data Weighted Average Shares Outstanding (Three Months Ended March 31, In thousands, except per share amounts) | Item | 2024 | 2023 | | :--------------------------------------- | :----- | :----- | | Basic weighted average shares outstanding | 37,740 | 37,478 | | Dilutive effect of stock options and full value awards | 50 | 167 | | Diluted weighted average shares outstanding | 37,790 | 37,645 | | Basic earnings per share | $1.92 | $1.96 | | Diluted earnings per share | $1.92 | $1.96 | - Stock options and full value awards totaling **571,145 shares** in Q1 2024 (vs. 179,147 in Q1 2023) were excluded from diluted EPS computation due to their antidilutive effect[96](index=96&type=chunk) [11. Credit Agreements and Short-term Financing](index=31&type=section&id=11.%20Credit%20Agreements%20and%20Short-term%20Financing) Describes the company's revolving credit facility and short-term borrowing arrangements - MarketAxess replaced its 2021 Credit Agreement with a new **$750.0 million** revolving credit facility (2023 Credit Agreement) on August 9, 2023, maturing on August 9, 2026. As of March 31, 2024, the company had **$749.9 million** in available borrowing capacity and was in compliance with all covenants[100](index=100&type=chunk)[101](index=101&type=chunk) - Operating subsidiaries maintain uncommitted collateralized agreements for up to **$500.0 million** and may receive overnight financing via bank overdrafts. No borrowings were outstanding under these agreements as of March 31, 2024[102](index=102&type=chunk)[103](index=103&type=chunk)[104](index=104&type=chunk) [12. Leases](index=32&type=section&id=12.%20Leases) Details operating lease costs, terms, and future payment obligations Operating Lease Cost (Three Months Ended March 31, In thousands) | Lease Cost Component | 2024 | 2023 | | :--------------------------------------- | :----- | :----- | | Operating lease cost - office space | $2,753 | $3,111 | | Operating lease cost - equipment | $98 | — | | Variable lease costs | $587 | $51 | | Total operating lease cost | $3,438 | $3,162 | - The weighted average remaining lease term for operating leases is **9.4 years** with a discount rate of **6.0%** as of March 31, 2024. Total future contractual operating lease payments are **$102.7 million**, with **$9.9 million** due in the remainder of 2024[109](index=109&type=chunk) [13. Commitments and Contingencies](index=33&type=section&id=13.%20Commitments%20and%20Contingencies) Addresses legal proceedings, regulatory matters, and credit risk exposures - MarketAxess is involved in various lawsuits, proceedings, and regulatory examinations in the normal course of business. Based on current information, the outcome of outstanding matters is not expected to have a material adverse impact on the company's financial position, though ultimate exposure cannot be precisely determined[111](index=111&type=chunk)[112](index=112&type=chunk) - The company is exposed to credit risk as a matched principal trading counterparty, but recorded no liabilities or losses from counterparty failures for the three months ended March 31, 2024 and 2023[113](index=113&type=chunk) [14. Share Repurchase Programs](index=33&type=section&id=14.%20Share%20Repurchase%20Programs) Reports on the company's common stock repurchase activities and remaining authorization - During Q1 2024, MarketAxess repurchased **46,844 shares** of common stock for **$10.1 million** under its **$150.0 million** share repurchase program authorized in January 2022. As of March 31, 2024, **$89.9 million** of capacity remained under the program[115](index=115&type=chunk)[240](index=240&type=chunk) [15. Segment and Geographic Information](index=33&type=section&id=15.%20Segment%20and%20Geographic%20Information) Explains the company's single operating segment and revenue attribution by geographic area - MarketAxess operates as a single business segment due to the integrated nature of its products and services. Revenues are attributed to geographic areas based on subsidiary location, with the U.K. being the only individual foreign country accounting for **10% or more** of total revenues or long-lived assets[116](index=116&type=chunk)[119](index=119&type=chunk) Revenues by Geographic Area (Three Months Ended March 31, In thousands) | Geographic Area | 2024 | 2023 | | :--------------------------------------- | :----- | :----- | | Americas | $166,833 | $161,573 | | Europe | $37,728 | $36,736 | | Asia | $5,757 | $4,860 | | Total | $210,318 | $203,169 | [16. Cash and Cash Equivalents and Restricted Cash](index=34&type=section&id=16.%20Cash%20and%20Cash%20Equivalents%20and%20Restricted%20Cash) Reconciles cash, cash equivalents, and restricted cash balances Reconciliation of Cash and Cash Equivalents and Restricted Cash (As of, In thousands) | Item | March 31, 2024 | December 31, 2023 | | :--------------------------------------- | :------------- | :---------------- | | Cash and cash equivalents | $376,679 | $451,280 | | Cash segregated for regulatory purposes | $45,629 | $45,122 | | Deposits with clearing organizations and broker-dealers | $112,713 | $115,151 | | Other deposits | $143 | $119 | | Total | $535,164 | $611,672 | [17. Subsequent Events](index=34&type=section&id=17.%20Subsequent%20Events) Discloses significant events occurring after the balance sheet date - On April 19, 2024, MarketAxess agreed to acquire an additional **49.0% interest** in RFQ–hub Holdings LLC for approximately **$37.9 million** in cash, increasing its controlling stake to **92.0%**. The acquisition is expected to close in the second half of 2024, pending regulatory approvals[121](index=121&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion and analysis of Q1 2024 financial condition, operations, critical factors, and liquidity [Executive Overview](index=35&type=section&id=Executive%20Overview) Introduces MarketAxess's business, strategy, and market position in fixed-income trading - MarketAxess operates leading electronic trading platforms for global fixed-income markets, offering trading efficiency, diversified liquidity, and cost savings. The company serves over **2,000 institutional investor** and broker-dealer firms, leveraging patented technology for various fixed-income securities, including U.S. high-grade, high-yield, emerging market debt, and Eurobonds[123](index=123&type=chunk) - The company's strategy includes automated and algorithmic trading solutions, integrated data offerings, and the X-Pro trading platform. The recent acquisition of Pragma is expected to accelerate AI-driven execution algorithms. MarketAxess aims to capitalize on the large and growing market with low electronic trading penetration through its Open Trading protocols, which enhance price improvement and liquidity[124](index=124&type=chunk)[125](index=125&type=chunk) [Critical Factors Affecting Our Industry and Our Company](index=36&type=section&id=Critical%20Factors%20Affecting%20Our%20Industry%20and%20Our%20Company) Examines economic, competitive, regulatory, and technological influences on the company [Economic, Political and Market Factors](index=36&type=section&id=Economic%2C%20Political%20and%20Market%20Factors) Discusses external economic and market conditions impacting the fixed-income industry - The fixed-income securities industry is volatile, influenced by credit market conditions, interest rates, new issue calendars, and economic/political stability. In Q1 2024, a strong new issue calendar (U.S. high-grade up **34.0%**, high-yield up **116.5%**) negatively impacted MarketAxess's market share in the short term, particularly in U.S. high-yield volumes due to decreased ETF market maker activity and institutional investor secondary market trading[129](index=129&type=chunk)[130](index=130&type=chunk) - Inflation impacts expenses like employee compensation and technology, which may not be recoverable in service prices. The company expects current cash, investments, and credit facilities to meet liquidity needs for at least the next 12 months, ending Q1 2024 with **$749.9 million** in available borrowing capacity[132](index=132&type=chunk)[133](index=133&type=chunk) [Competitive Landscape](index=36&type=section&id=Competitive%20Landscape) Analyzes the competitive environment in electronic financial services and MarketAxess's position - The electronic financial services market is highly competitive, with competition from direct broker-dealer trading and other multi-dealer/all-to-all platforms. MarketAxess competes on client network, liquidity, transaction costs, product breadth, and platform quality. Increased demand for portfolio trading and matching sessions on competing platforms could reduce MarketAxess's market share[134](index=134&type=chunk)[135](index=135&type=chunk)[136](index=136&type=chunk) [Regulatory Environment](index=37&type=section&id=Regulatory%20Environment) Outlines the regulatory framework and its impact on MarketAxess's operations and compliance - MarketAxess is subject to extensive U.S. and international regulations. Proposed SEC rules may expand Regulation ATS and SCI to government securities ATSs and amend the 'exchange' definition to include communication protocol systems, potentially requiring compliance for all trading protocols. The SEC's T+1 settlement cycle (effective May 2024) will reduce exposure but increase operational costs for cross-border transactions[138](index=138&type=chunk) - Brexit has led to divergent U.K. and E.U. financial regulations, increasing compliance costs and complexity. The E.U.'s Digital Operational Resilience Act (DORA), applicable in 2025, will require additional financial and operational resources. However, new regulations may also increase demand for compliant electronic trading platforms[139](index=139&type=chunk)[140](index=140&type=chunk) [Technology Environment](index=37&type=section&id=Technology%20Environment) Focuses on technological advancements, product development, and cybersecurity risks - MarketAxess's future success depends on enhancing existing products, developing new technologies, and responding to technological advances. The company introduced MarketAxess X-Pro in 2023 and continues to invest in technology infrastructure. Automated and algorithmic trading solutions are experiencing growing demand; Auto-X trading volumes rose **36.4%** to **$93.6 billion** in Q1 2024, with active client firms up **60.4%**[142](index=142&type=chunk)[143](index=143&type=chunk) - The company continuously invests in cybersecurity infrastructure and employee training to mitigate cybersecurity threats, which could impact revenue, operating income, and costs[144](index=144&type=chunk) [Trends in Our Business](index=38&type=section&id=Trends%20in%20Our%20Business) Identifies key trends influencing MarketAxess's revenue and profitability - The majority of MarketAxess's revenue comes from commissions and monthly distribution fees, which are influenced by factors such as interest rate levels, new bond issues, corporate bond spread volatility, participant numbers, pricing competitiveness, market availability, bond duration, and fee plans/protocols. A general decline in trading volumes would negatively impact revenues and profitability[146](index=146&type=chunk)[155](index=155&type=chunk) - Trading volumes and average variable transaction fee per million decreased compared to Q1 2023, as detailed in the 'Results of Operations' section[147](index=147&type=chunk) [Components of Our Results of Operations](index=38&type=section&id=Components%20of%20Our%20Results%20of%20Operations) Breaks down the various revenue and expense categories contributing to financial results [Commission Revenue](index=38&type=section&id=Commission%20Revenue) Explains how commission revenue is generated across different fixed-income products - Commissions are recognized on a trade date basis, calculated as a percentage of notional dollar volume, and vary by bond type, size, yield, maturity, and client incentives. Open Trading commissions are earned through price differences between matched principal trades[148](index=148&type=chunk)[149](index=149&type=chunk) - Credit commissions (U.S. high-grade, high-yield, emerging markets, Eurobonds, municipal bonds, leveraged loans) incorporate variable transaction fees and fixed distribution fees, with average fees per million subject to changes in yield, duration, product mix, or trading protocols. Rates commissions (U.S. Treasury, agency, European government bonds) are typically volume-tiered[150](index=150&type=chunk)[151](index=151&type=chunk)[152](index=152&type=chunk)[153](index=153&type=chunk) - Other commissions, including equities and foreign exchange, are generated by Pragma's algorithmic trading services and are volume-tiered variable transaction fees[157](index=157&type=chunk) [Information Services](index=40&type=section&id=Information%20Services) Describes revenue sources from data licensing, consulting, and software services - Information services revenue is derived from data licensing, professional/consulting services, technology software licenses, and maintenance/support. Subscription-based services are recognized ratably over the contract period, while one-time services are recognized when provided. Billing is typically monthly, quarterly, or annually, with advance payments deferred[158](index=158&type=chunk) [Post-trade Services](index=40&type=section&id=Post-trade%20Services) Details revenue from regulatory reporting, trade publication, and post-trade matching - Post-trade services revenue comes from regulatory transaction reporting, trade publication, and post-trade matching. Revenue is recognized as transactions are processed, with one-time implementation fees recognized upon completion. Billing is generally monthly in arrears[159](index=159&type=chunk) [Technology Services](index=40&type=section&id=Technology%20Services) Covers revenue from Pragma's services and telecommunications line charges - Technology services revenue primarily includes services from Pragma and telecommunications line charges to broker-dealer clients. Revenue is recognized as transactions are processed, with advance billings deferred[160](index=160&type=chunk) [Expenses](index=40&type=section&id=Expenses) Analyzes the primary cost drivers, including compensation, technology, and professional fees - Key expenses include employee compensation and benefits (salaries, stock-based compensation, incentives), depreciation and amortization (computer hardware, software, leasehold improvements, intangible assets), technology and communications (software, licenses, cloud hosting, data feeds), professional and consulting fees (accounting, legal, IT), occupancy (rent, utilities), marketing and advertising, clearing costs, and general and administrative expenses[161](index=161&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk)[165](index=165&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk) - Expenses are expected to grow due to increased headcount for new products and expansion, higher depreciation/amortization from platform investments, increased technology/communication costs, regulatory complexity, acquisitions, and inflation[168](index=168&type=chunk) [Other Income (Expense)](index=41&type=section&id=Other%20Income%20%28Expense%29) Reports non-operating income and expenses, such as interest and foreign currency effects - Other income (expense) includes interest income (from cash, equivalents, deposits, investments), interest expense (on short-term borrowings), equity in earnings of unconsolidated affiliates, and other, net (realized/unrealized gains/losses on trading securities and foreign currency forward contracts, foreign currency transaction gains/losses, investment advisory fees, credit facility fees, revaluations of contingent consideration)[169](index=169&type=chunk)[170](index=170&type=chunk) [Critical Accounting Estimates](index=41&type=section&id=Critical%20Accounting%20Estimates) Highlights key accounting judgments, particularly for stock-based compensation - Critical accounting estimates include stock-based compensation, particularly for performance shares and performance stock units (PSUs) granted under the 2020 Plan. PSUs are earned based on predetermined metrics (pre-tax adjusted operating margin, U.S. credit market share, revenue growth excluding U.S. credit) over a three-year period, with compensation expense measured using fair value at grant date and estimates of future performance[171](index=171&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk) - As of March 31, 2024, a **10.0%** change in expected final share payouts for PSUs would increase or decrease life-to-date compensation expense by **$1.7 million**. Estimated final share payouts for 2022 and 2023 awards decreased **9.2%** compared to December 31, 2023[173](index=173&type=chunk) [Segment Results](index=41&type=section&id=Segment%20Results) Confirms MarketAxess operates as a single business segment for reporting purposes - MarketAxess operates as a single business segment, providing electronic trading platforms for fixed-income securities and related services. Geographic or client sector results are not considered meaningful for understanding the business[175](index=175&type=chunk) [Results of Operations](index=42&type=section&id=Results%20of%20Operations) Compares financial performance for the three months ended March 31, 2024 and 2023 [Three Months Ended March 31, 2024 Compared to Three Months Ended March 31, 2023](index=42&type=section&id=Three%20Months%20Ended%20March%2031%2C%202024%20Compared%20to%20Three%20Months%20Ended%20March%2031%2C%202023) Provides a comparative analysis of financial results for the current and prior year quarters Financial Results (Three Months Ended March 31, In thousands, except per share amounts) | Item | 2024 | 2023 | $ Change | % Change | | :--------------------------------------- | :----- | :----- | :------- | :------- | | Revenues | $210,318 | $203,169 | $7,149 | 3.5% | | Expenses | $117,818 | $107,813 | $10,005 | 9.3% | | Operating income | $92,500 | $95,356 | $(2,856) | -3.0% | | Net income | $72,615 | $73,628 | $(1,013) | -1.4% | | Diluted net income per common share | $1.92 | $1.96 | $(0.04) | -2.0% | - Changes in average foreign currency exchange rates increased revenues by **$0.8 million** and expenses by **$0.6 million** for Q1 2024 compared to Q1 2023[176](index=176&type=chunk) [Revenues](index=42&type=section&id=Revenues) Details revenue performance by type and trading volume across various products Revenues by Type (Three Months Ended March 31, In thousands) | Revenue Type | 2024 | % of Revenues 2024 | 2023 | % of Revenues 2023 | $ Change | % Change | | :--------------------------------------- | :----- | :----------------- | :----- | :----------------- | :------- | :------- | | Commissions | $184,873 | 87.9% | $181,991 | 89.6% | $2,882 | 1.6% | | Information services | $11,881 | 5.6% | $11,010 | 5.4% | $871 | 7.9% | | Post-trade services | $10,730 | 5.1% | $9,980 | 4.9% | $750 | 7.5% | | Technology services | $2,834 | 1.4% | $188 | 0.1% | $2,646 | NM | | Total revenues | $210,318 | 100.0% | $203,169 | 100.0% | $7,149 | 3.5% | Commission Revenues by Type (Three Months Ended March 31, In thousands) | Commission Type | 2024 | 2023 | $ Change | % Change | | :--------------------------------------- | :----- | :----- | :------- | :------- | | Variable transaction fees - Credit | $141,504 | $140,970 | $534 | 0.4% | | Variable transaction fees - Rates | $5,166 | $6,258 | $(1,092) | -17.4% | | Variable transaction fees - Other | $4,849 | — | $4,849 | NM | | Fixed distribution fees - Credit | $33,288 | $34,684 | $(1,396) | -4.0% | | Fixed distribution fees - Rates | $66 | $79 | $(13) | -16.5% | | Total commissions | $184,873 | $181,991 | $2,882 | 1.6% | - Credit variable transaction fees increased by **$0.5 million** due to a **7.4%** increase in total credit trading volume, partially offset by a **6.6%** decrease in average variable transaction fee per million. Rates variable transaction fees decreased by **$1.1 million** due to a **29.0%** decrease in trading volumes[179](index=179&type=chunk) Trading Volume Data (Three Months Ended March 31, In millions) | Product | 2024 | 2023 | $ Change | % Change | | :--------------------------------------- | :------- | :------- | :------- | :------- | | High-grade | $455,998 | $392,715 | $63,283 | 16.1% | | High-yield | $85,379 | $122,873 | $(37,494) | -30.5% | | Emerging markets | $221,427 | $191,841 | $29,586 | 15.4% | | Eurobonds | $128,849 | $118,366 | $10,483 | 8.9% | | Other credit | $26,335 | $28,683 | $(2,348) | -8.2% | | Total credit | $917,988 | $854,478 | $63,510 | 7.4% | | U.S. government bonds | $1,045,796 | $1,491,292 | $(445,496) | -29.9% | | Agency and other government bonds | $31,626 | $27,061 | $4,565 | 16.9% | | Total rates | $1,077,422 | $1,518,353 | $(440,931) | -29.0% | | Total trading volume | $1,995,410 | $2,372,831 | $(377,421) | -15.9% | - U.S. high-grade volume increased **16.1%** due to higher estimated market volumes, despite a decrease in market share to **19.3%**. U.S. high-yield volume decreased **30.5%** due to lower market share, driven by reduced ETF market maker activity and low credit spread volatility. Rates trading volume decreased **29.0%** primarily due to a decrease in market share[183](index=183&type=chunk) Average Variable Transaction Fee Per Million (Three Months Ended March 31) | Product | 2024 | 2023 | $ Change | % Change | | :--------------------------------------- | :----- | :----- | :------- | :------- | | Credit | $154.15 | $164.98 | $(10.83) | -6.6% | | Rates | $4.79 | $4.12 | $0.67 | 16.3% | - Information services revenue increased by **$0.9 million**, mainly from new data contracts and foreign currency fluctuations. Post-trade services revenue increased by **$0.8 million** due to new contracts and foreign currency. Technology services revenue increased by **$2.6 million**, driven by Pragma[185](index=185&type=chunk)[186](index=186&type=chunk) [Expenses](index=45&type=section&id=Expenses) Analyzes the primary cost drivers, including compensation, technology, and professional fees Expenses (Three Months Ended March 31, In thousands) | Expense Type | 2024 | 2023 | $ Change | % Change | | :--------------------------------------- | :----- | :----- | :------- | :------- | | Employee compensation and benefits | $61,264 | $52,315 | $8,949 | 17.1% | | Depreciation and amortization | $18,200 | $16,461 | $1,739 | 10.6% | | Technology and communications | $17,051 | $14,999 | $2,052 | 13.7% | | Professional and consulting fees | $6,395 | $7,127 | $(732) | -10.3% | | Occupancy | $3,425 | $3,611 | $(186) | -5.2% | | Marketing and advertising | $1,833 | $2,995 | $(1,162) | -38.8% | | Clearing costs | $4,911 | $4,545 | $366 | 8.1% | | General and administrative | $4,739 | $5,760 | $(1,021) | -17.7% | | Total expenses | $117,818 | $107,813 | $10,005 | 9.3% | - Employee compensation and benefits increased by **$8.9 million** due to higher headcount, salaries, taxes, benefits, and incentive compensation. Depreciation and amortization rose by **$1.7 million**, mainly from increased software development and intangible asset amortization. Technology and communications expenses increased by **$2.1 million** due to Pragma-related connectivity, software subscriptions, and market data costs[188](index=188&type=chunk)[189](index=189&type=chunk) - Professional and consulting fees decreased by **$0.7 million** due to lower IT consultant expense, partially offset by higher audit/tax and acquisition-related legal/consulting fees. Marketing expenses decreased by **$1.2 million** due to lower advertising. General and administrative expenses decreased by **$1.0 million** due to lower vendor dispute reserves, value-added taxes, and travel/entertainment[190](index=190&type=chunk)[191](index=191&type=chunk) [Other Income (Expense)](index=47&type=section&id=Other%20Income%20%28Expense%29) Reports non-operating income and expenses, such as interest and foreign currency effects Other Income (Expense) (Three Months Ended March 31, In thousands) | Item | 2024 | 2023 | $ Change | % Change | | :--------------------------------------- | :----- | :----- | :------- | :------- | | Interest income | $5,973 | $4,249 | $1,724 | 40.6% | | Interest expense | $(316) | $(130) | $(186) | 143.1% | | Equity in earnings of unconsolidated affiliate | $370 | $204 | $166 | 81.4% | | Other, net | $(1,810) | $(1,484) | $(326) | 22.0% | | Total other income (expense) | $4,217 | $2,839 | $1,378 | 48.5% | - Interest income increased by **$1.7 million** due to higher interest rates. Interest expense increased by **$0.2 million** due to higher short-term borrowing financing charges. Other, net decreased by **$0.3 million** due to higher credit facility fees[192](index=192&type=chunk)[193](index=193&type=chunk) [Provision for Income Taxes](index=47&type=section&id=Provision%20for%20Income%20Taxes) Discusses the effective tax rate and ongoing tax examinations Provision for Income Taxes (Three Months Ended March 31, In thousands) | Item | 2024 | 2023 | $ Change | % Change | | :--------------------------------------- | :----- | :----- | :------- | :------- | | Provision for income taxes | $24,102 | $24,567 | $(465) | -1.9% | | Effective tax rate | 24.9% | 25.0% | | | - The consolidated effective tax rate can fluctuate based on the geographic mix of earnings, changes in tax legislation, and the timing/amount of excess tax benefits from share-based payments[195](index=195&type=chunk) [Liquidity and Capital Resources](index=48&type=section&id=Liquidity%20and%20Capital%20Resources) Assesses the company's cash flows, financial position, and ability to meet obligations [Cash Flows for the Three Months Ended March 31, 2024 Compared to the Three Months Ended March 31, 2023](index=48&type=section&id=Cash%20Flows%20for%20the%20Three%20Months%20Ended%20March%2031%2C%202024%20Compared%20to%20the%20Three%20Months%20Ended%20March%2031%2C%202023) Compares cash flow activities from operations, investing, and financing for the quarters Cash Flows (Three Months Ended March 31, In thousands) | Cash Flow Activity | 2024 | 2023 | $ Change | % Change | | :--------------------------------------- | :----- | :----- | :------- | :------- | | Net cash (used in)/provided by operating activities | $(4,949) | $7,527 | $(12,476) | NM | | Net cash (used in) investing activities | $(15,830) | $(32,754) | $16,924 | -51.7% | | Net cash (used in) financing activities | $(52,543) | $(48,142) | $(4,401) | 9.1% | | Effect of exchange rate changes on cash and cash equivalents | $(3,186) | $3,345 | $(6,531) | NM | | Net decrease for the period | $(76,508) | $(70,024) | $(6,484) | 9.3% | - The **$12.5 million** decrease in net cash from operating activities was primarily due to changes in net receivables from broker-dealers and a **$14.9 million** decrease in income and other tax liabilities, partially offset by lower accounts receivable. The **$16.9 million** decrease in net cash used in investing activities was mainly due to lower net purchases of available-for-sale investments, offset by higher capital expenditures[201](index=201&type=chunk)[202](index=202&type=chunk) - The **$4.4 million** increase in net cash used in financing activities was mainly due to higher common stock repurchases (**$10.1 million**) and cash dividends (**$1.1 million**), partially offset by lower withholding tax payments and higher stock option exercises[202](index=202&type=chunk) [Other Factors Influencing Liquidity and Capital Resources](index=50&type=section&id=Other%20Factors%20Influencing%20Liquidity%20and%20Capital%20Resources) Discusses additional elements impacting the company's financial flexibility and capital - MarketAxess believes current resources are adequate for short-term liquidity needs, including capital expenditures. Future liquidity will depend on self-clearing operations, product development, expansion, and new business opportunities. The company may pursue equity or debt financing, which could lead to dilution or restrictive covenants[205](index=205&type=chunk) - As of March 31, 2024, subsidiaries maintained **$545.0 million** in excess of required net capital/financial resources. Unrestricted cash held by non-U.S. subsidiaries was **$216.9 million**. The company has **$89.9 million** remaining capacity under its share repurchase program and approved a **$0.74 per share** quarterly cash dividend payable June 5, 2024[206](index=206&type=chunk)[207](index=207&type=chunk)[212](index=212&type=chunk)[213](index=213&type=chunk) [Non-GAAP Financial Measures](index=51&type=section&id=Non-GAAP%20Financial%20Measures) Presents and reconciles non-GAAP metrics like EBITDA and free cash flow for performance insight - MarketAxess uses non-GAAP financial measures: EBITDA, EBITDA margin, and free cash flow, to provide additional insight into operating results. EBITDA is net income adjusted for interest, taxes, depreciation, and amortization. Free cash flow is net cash from operating activities, excluding changes in trading investments and failed-to-deliver/receive, less capital expenditures[215](index=215&type=chunk) Reconciliation of Net Income to EBITDA (Three Months Ended March 31, In thousands) | Item | 2024 | 2023 | | :--------------------------------------- | :----- | :----- | | Net income | $72,615 | $73,628 | | Interest income | $(5,973) | $(4,249) | | Interest expense | $316 | $130 | | Provision for income taxes | $24,102 | $24,567 | | Depreciation and amortization | $18,200 | $16,461 | | EBITDA | $109,260 | $110,537 | | Net income margin | 34.5% | 36.2% | | EBITDA margin | 51.9% | 54.4% | Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow (Three Months Ended March 31, In thousands) | Item | 2024 | 2023 | | :--------------------------------------- | :----- | :----- | | Net cash (used in)/provided by operating activities | $(4,949) | $7,527 | | Exclude: Net change in trading investments | $(255) | $419 | | Exclude: Net change in fail-to-deliver/receive from broker-dealers, clearing organizations and customers | $51,288 | $46,767 | | Less: Purchases of furniture, equipment and leasehold improvements | $(1,197) | $(217) | | Less: Capitalization of software development costs | $(13,963) | $(10,690) | | Free Cash Flow | $30,924 | $43,806 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=52&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Details MarketAxess's exposure to market, interest rate, currency, credit, and derivative risks and their financial impact [Market Risk](index=52&type=section&id=Market%20Risk) Assesses the impact of general market volatility on trading volumes and asset values - The global financial services business is inherently risky and volatile, affected by economic and political factors that can reduce trading volume and revenues. As of March 31, 2024, MarketAxess held **$99.4 million** in U.S. Treasuries (trading securities) and **$25.4 million** in corporate bonds (available-for-sale). A **10.0%** decrease in market value for these could result in losses of approximately **$9.9 million** and **$2.5 million**, respectively[218](index=218&type=chunk)[219](index=219&type=chunk) [Interest Rate Risk](index=52&type=section&id=Interest%20Rate%20Risk) Evaluates the sensitivity of interest income and investment fair values to rate changes - As of March 31, 2024, cash, cash equivalents, restricted cash, and deposits totaled **$535.2 million**. A hypothetical **100 basis point** change in interest rates would increase or decrease annual interest income by approximately **$5.4 million**. A similar change would decrease or increase the fair value of the available-for-sale portfolio by **$0.3 million** (recognized in OCI) and the trading securities portfolio by **$0.8 million** (recognized in other, net)[220](index=220&type=chunk)[221](index=221&type=chunk)[222](index=222&type=chunk) [Foreign Currency Exchange Rate Risk](index=52&type=section&id=Foreign%20Currency%20Exchange%20Rate%20Risk) Examines the impact of currency fluctuations on revenues and expenses from international operations - MarketAxess conducts operations in multiple countries, with substantial portions of revenues and expenses denominated in non-U.S. dollar currencies, primarily British Pound Sterling. A hypothetical **10.0%** increase or decrease in the U.S. dollar against other currencies would have increased or decreased revenue by approximately **$12.1 million** and operating expenses by approximately **$11.3 million** over the past year[223](index=223&type=chunk)[224](index=224&type=chunk) [Credit Risk](index=53&type=section&id=Credit%20Risk) Addresses counterparty default risk in matched principal trading and cash concentrations - MarketAxess is exposed to credit and performance risks as a matched principal trading counterparty, including the risk of counterparty default. The number of matched principal transactions is expected to increase, potentially increasing this risk. The company has policies and controls to manage credit risk, but their effectiveness is not assured, and insurance policies may not cover such risks[226](index=226&type=chunk)[227](index=227&type=chunk)[228](index=228&type=chunk) - Cash and cash equivalents are concentrated at three major global banks, exposing the company to credit risk related to these deposits[229](index=229&type=chunk) [Derivative Risk](index=53&type=section&id=Derivative%20Risk) Details the company's use of foreign currency forward contracts to hedge exchange rate exposure - The company's derivative risk is limited to foreign currency forward contracts used to economically hedge foreign exchange gains and losses, primarily related to British Pound Sterling exposure. As of March 31, 2024, the notional amount of outstanding foreign currency forward contracts was **$63.3 million**[230](index=230&type=chunk) [Item 4. Controls and Procedures](index=54&type=section&id=Item%204.%20Controls%20and%20Procedures) Evaluates disclosure controls and internal control over financial reporting, confirming effectiveness and no material changes in Q1 2024 [Evaluation of Disclosure Controls and Procedures](index=54&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Confirms the effectiveness of controls ensuring timely and accurate information disclosure - Management, including the CEO and Interim CFO, evaluated the effectiveness of disclosure controls and procedures as of March 31, 2024, concluding they are effective in ensuring timely and accurate information disclosure[232](index=232&type=chunk) [Changes in Internal Control over Financial Reporting](index=54&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) States that no material changes to internal control over financial reporting occurred - No changes in internal control over financial reporting were identified during the quarter ended March 31, 2024, that materially affected or are reasonably likely to materially affect the company's internal control over financial reporting[233](index=233&type=chunk) [PART II — Other Information](index=55&type=section&id=PART%20II%20%E2%80%94%20Other%20Information) This section covers legal proceedings, risk factors, equity security sales, and other disclosures [Item 1. Legal Proceedings](index=55&type=section&id=Item%201.%20Legal%20Proceedings) Summarizes ongoing legal and regulatory matters, assessing their expected non-material financial impact on the company - MarketAxess and its subsidiaries are involved in various lawsuits, proceedings, and regulatory examinations. The company assesses liabilities and contingencies, and based on currently available information, the outcome of outstanding matters is not expected to have a material adverse impact on its financial position[236](index=236&type=chunk) [Item 1A. Risk Factors](index=55&type=section&id=Item%201A.%20Risk%20Factors) Reports no material changes to risk factors previously disclosed in the company's latest Form 10-K - There have been no material changes in the company's risk factors from those disclosed in its Form 10-K for the year ended December 31, 2023[237](index=237&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=55&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Reports no unregistered equity sales and details common stock repurchases in Q1 2024 under its program and for tax obligations [Recent Sales of Unregistered Securities](index=55&type=section&id=Recent%20Sales%20of%20Unregistered%20Securities) Confirms no unregistered sales of equity securities occurred in the reporting quarter - There were no recent sales of unregistered securities during the quarter ended March 31, 2024[238](index=238&type=chunk) [Issuer Purchases of Equity Securities](index=55&type=section&id=Issuer%20Purchases%20of%20Equity%20Securities) Details common stock repurchases under the program and for tax withholding obligations Issuer Purchases of Equity Securities (Quarter Ended March 31, 2024) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (In thousands) | | :--------------------------------------- | :----------------------------- | :--------------------------- | :------------------------------------------------------------------------------- | :--------------------------------------------------------------------------------------- | | January 1, 2024 - January 31, 2024 | 54,206 | $270.24 | — | $100,016 | | February 1, 2024 - February 29, 2024 | 22,258 | $216.05 | 14,597 | $96,867 | | March 1, 2024 - March 31, 2024 | 32,814 | $216.94 | 32,247 | $89,869 | | Total | 109,278 | $243.20 | 46,844 | | - During Q1 2024, MarketAxess repurchased **109,278 shares** of common stock, including **46,844 shares** under its **$150.0 million** share repurchase program and **62,434 shares** for employee tax withholding obligations. As of March 31, 2024, **$89.9 million** remained available under the repurchase program[239](index=239&type=chunk)[240](index=240&type=chunk) [Item 3. Defaults Upon Senior Securities](index=56&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Confirms no defaults occurred on senior securities during the reporting period - There were no defaults upon senior securities[241](index=241&type=chunk) [Item 4. Mine Safety Disclosures](index=56&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) States that mine safety disclosures are not applicable to the company's operations - Mine Safety Disclosures are not applicable to MarketAxess Holdings Inc[242](index=242&type=chunk) [Item 5. Other Information](index=56&type=section&id=Item%205.%20Other%20Information) Reports no Rule 10b5-1 or non-Rule 10b5-1 trading arrangements by directors or officers in Q1 2024 - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement for the purchase or sale of company securities in Q1 2024[243](index=243&type=chunk) [Item 6. Exhibits](index=57&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed with the Form 10-Q, including various agreements and certifications - The exhibit index includes Letter Agreements, Severance Protection Agreements, Proprietary Information and Non-Competition Agreements, various forms of 2024 Restricted Stock Unit and Performance Stock Unit Agreements, 2024 Incentive Stock Option Agreements, and certifications by the Chief Executive Officer and Interim Chief Financial Officer[244](index=244&type=chunk)

Financial Data and Key Metrics Changes - The company reported total revenue of $210 million for Q1 2024, reflecting a 4% increase year-over-year, which includes $8 million from the Pragma acquisition [49] - Earnings per share (EPS) for the quarter was $1.92, with operating expenses tracking towards the low end of the guidance range of $480 million to $500 million for the full year [50][27] - Information services revenue increased by 8% to $12 million, driven by new contracts and strong adoption of data products [25] Business Line Data and Key Metrics Changes - US high-grade commission revenue grew by 8%, while commission revenue in emerging markets, Eurobonds, and municipal bonds reached record levels, offsetting lower US high-yield activity [10] - Trading volume from hedge fund and private bank clients increased by 23% year-over-year, representing 18% of total credit volume, up from 16% [19] - The company experienced record international client trade volume, with trade volume up 13% year-over-year and trade count up 10% [20] Market Data and Key Metrics Changes - Non-US credit revenue reached a record $92 million, accounting for 44% of total revenue [33] - Emerging markets trading volume increased by 15% year-over-year, with local currency trading volumes up by 28% [44] - Open Trading's average daily volume (ADV) was $4.4 billion, representing 34% of total credit volume, down from 37% in the prior year [46] Company Strategy and Development Direction - The company aims to strengthen its position in faster-growing market segments while maintaining leadership in the institutional investor RFQ market [9] - Investments in portfolio trading solutions and enhancements to the X-Pro platform are key strategic focuses to improve trading efficiency and client engagement [13][18] - The company is committed to building a comprehensive client toolkit to address the evolving needs of traders in the credit markets [18] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment with recent trends in estimated market share in US credit but remains optimistic about recovery with normal levels of spread volatility [8][35] - The company anticipates that strong new issuance and increased trading velocity will contribute to a healthy and growing fixed income market [53] - Management highlighted the importance of addressing demand for immediacy and efficiency across all products and market environments [39] Other Important Information - The company repurchased 47,000 shares for a total of $10 million during the quarter, with $90 million remaining on the current Board authorization for buybacks [75] - The effective tax rate for the quarter was 24.9%, and the company paid approximately $110 million in dividends over the trailing 12 months [50][52] Q&A Session Summary Question: Update on portfolio trading and X-Pro rollout - Management noted that X-Pro now accounts for about 16% of total US credit volume and 60% of portfolio trading volume, with plans for broader rollout across all clients [136][135] Question: Competitive landscape for dealer-initiated trading - Management acknowledged the competitive nature of the dealer-initiated trading space and emphasized ongoing efforts to enhance tools and protocols for dealers [62][61] Question: Insights on high-yield market share fluctuations - Management indicated that recent fluctuations in high-yield market share were influenced by lower ETF market maker activity and a lack of engagement from systematic traders [94][93] Question: Progress on Pragma acquisition - Management expressed optimism about the integration of Pragma and its potential to enhance automation and trading solutions for both buy-side and sell-side clients [112][113] Question: Future expectations for portfolio trading - Management expects portfolio trading to remain a significant part of the market, with ongoing enhancements to the X-Pro platform aimed at improving efficiency and client satisfaction [89][88]

MarketAxess Holdings Inc. (MKTX) reported first-quarter 2024 earnings per share of $1.92, which surpassed the Zacks Consensus Estimate by 3.8%. Yet, the bottom line slipped 2% year over year.Total revenues of $210 million rose 4% year over year. However, the top line fell short of the consensus mark by a whisker.The quarterly results were driven by a solid improvement in U.S. high-grade commission revenues. Geographic expansion and product diversification drove the average daily volume (“ADV”) of emerging m ...

MarketAxess (MKTX) reported $210.32 million in revenue for the quarter ended March 2024, representing a year-over-year increase of 3.5%. EPS of $1.92 for the same period compares to $1.96 a year ago.The reported revenue represents a surprise of -0.29% over the Zacks Consensus Estimate of $210.94 million. With the consensus EPS estimate being $1.85, the EPS surprise was +3.78%.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Stre ...

MarketAxess (MKTX) came out with quarterly earnings of $1.92 per share, beating the Zacks Consensus Estimate of $1.85 per share. This compares to earnings of $1.96 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 3.78%. A quarter ago, it was expected that this operator of bond trading platforms would post earnings of $1.72 per share when it actually produced earnings of $1.84, delivering a surprise of 6.98%.Over the last four q ...

Exhibit 99.1 MarketAxess Reports First Quarter 2024 Financial Results Record Emerging Markets, Eurobonds and Municipal Bonds Quarterly Commission Revenue NEW YORK | May 7, 2024—MarketAxess Holdings Inc. (Nasdaq: MKTX), the operator of a leading electronic trading platform for fixed-income securities, today announced financial results for the first quarter ended March 31, 2024. 1Q24 select financial and operational highlights* Chris Concannon, CEO of MarketAxess, commented: "In the first quarter, we delivere ...