※ Market Axess® Q1 2022 Conference Call and Webcast April 20, 2022 ※ Market Axess® Strategic Update ❖Rick McVey, Chairman and CEO 2 1Q22 Strategic Update & Highlights¹ | --- | --- | |------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to None Commission File Number 001-34091 MARKETAXESS HOLDINGS INC. (Exact name of registrant as specified in its charter) Delaware 52-2230784 (State of incorporation) ...

Financial Performance & Growth - The company's revenue growth from 2016 to 2021 showed a 14% Compound Annual Growth Rate (CAGR)[4] - Operating income growth from 2016 to 2021 showed a 12% CAGR[4] - EBITDA growth from 2016 to 2021 showed a 13% CAGR[4] - The trailing 12-month free cash flow was $297 million[58] - The company returned $197 million in capital in 2021 through dividends and share repurchases[58] Market Penetration & Expansion - The company has over 1,870 active firms[28] - The company's estimated system-wide cost savings of $78 million for liquidity takers and $50 million for liquidity providers in 4Q21[36] - European client volume reached $687 billion, up 5% year-over-year[41, 43] - Emerging market volume reached $649 billion, up 16% year-over-year[41, 81] Open Trading & Automation - Open Trading credit volume reached $2717 billion in 2021, up 27%[36, 72] - Open Trading emerging markets volume reached $56 billion in 2021, up 43%[36] - Auto-X volume in 4Q21 was $444 billion, up 39% from 4Q20[45] - Auto-X represented 19% of credit trade count and 7% of credit trade volume in 4Q21[45]

Financial Data and Key Metrics Changes - MarketAxess reported fourth quarter revenue of $165 million, a 4% decrease from the prior year, attributed to a 6% decline in credit trading volume and lower fee capture [30][31] - Full year 2021 marked the 13th consecutive year of record revenues, with a 2-year compound growth rate for revenue at 17% and operating income at 16% [13][14] - Fourth quarter EBITDA was $86.3 million, and diluted EPS was $1.37 [32] Business Line Data and Key Metrics Changes - U.S. government bond volume reached a record of $4.1 trillion in 2021, with significant dealer and investor participation [11] - Municipal bond trading grew 42% to $6.6 billion in the fourth quarter, with MuniBrokers integration completed [25] - Open Trading facilitated over $15 billion in notional value daily, with nearly 1,700 firms active in the network [21] Market Data and Key Metrics Changes - Market conditions in 2021 were challenging due to historically low credit spreads and volatility, leading to a year-over-year decline in total credit market volumes [15] - Estimated market share for U.S. high-grade and high-yield is running similar to Q1 last year, while TRACE market volumes are down about 17% [17] - Emerging market share is running well above last year, with estimated volumes down about 7% [17] Company Strategy and Development Direction - The company aims to be the 1 portfolio trading provider in 2022, expanding its foundation for growth in new product areas [10] - Investments in geographic and product diversification are yielding a 24% 2-year compound revenue growth in areas outside the core U.S. corporate bond business [14] - The company is focused on enhancing its trading protocols and expanding its electronic trading solutions to capture a larger market share [23] Management's Comments on Operating Environment and Future Outlook - Management anticipates a return to more normal levels of interest rates and bond market volatility in the coming quarters [16] - The company believes that the extended period of quantitative easing has led to low volatility, which is expected to change with central banks preparing for rate increases [16] - Management expressed confidence in the future growth of electronic trading in fixed income markets, projecting that electronic market share could exceed 50% [18] Other Important Information - The company completed the acquisition of Regulatory Reporting Hub, driving post-trade services revenue to $9.4 million, up 43% year-over-year [26] - A new $150 million share repurchase program was authorized by the Board of Directors, following the exhaustion of a previous $100 million program [37] - The effective tax rate for the fourth quarter was 27.1%, with a full year effective tax rate of 22.8% [32] Q&A Session Summary Question: Expense guidance variability based on revenue changes - Management indicated that variable expenses are roughly 18% to 20% of the total expense base, allowing for adjustments based on market conditions [46][47] Question: Update on all-to-all trading for munis and rates - The all-to-all solution for munis constitutes about 46% of the muni business, with ongoing rollout for U.S. treasuries [48][49] Question: Electronifying securitized markets - Management acknowledged low electronification levels in securitized markets but sees potential for future product expansion [52] Question: Investment spend and headcount growth - Investments will focus on talent, trading system enhancements, and geographical expansion, with no items tabled for 2023 [55][56] Question: Buyback authorization and M&A outlook - The capital management strategy prioritizes investments in the trading platform while seeking opportunistic M&A opportunities [60][61] Question: Non-transactional revenue outlook - Information services are expected to continue double-digit growth, driven by new product launches [63][64] Question: Portfolio trading market evolution - Management aims to be 1 in portfolio trading, with expectations of increased demand as market volatility rises [73][74] Question: Treasury market structure and regulatory changes - Regulatory focus on the U.S. treasury market is expected to remain favorable for all-to-all trading solutions [104][105]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-34091 MARKETAXESS HOLDINGS INC. (Exact name of registrant as specified in its charter) Delaware 52-2230784 (State or other j ...

Financial Performance - Revenues decreased by 1% to $162.1 million[2] - Operating income decreased by 16% to $74.0 million[2] - EBITDA decreased by 9% to $88.8 million[2] - Diluted EPS decreased by 15% to $1.52[2] Market Share and Volume - Estimated U S high-grade market share decreased to 21 4% from 22 2%[3] - Estimated U S high-yield market share decreased to 15 3% from 16 0%[3] - U S High-Grade TRACE volume decreased by 6% year-over-year[10] - U S High-Yield TRACE volume decreased by 3% year-over-year[10] International Growth - Emerging markets hard currency volume increased by 17% to $108.9 billion[13] - Emerging markets local markets volume increased by 25% to $45.5 billion[13] - Eurobond volume increased by 22% to $76.2 billion[13] - Eurobond estimated market share increased to 13.1% from 9.5%[13] Open Trading and Automation - Average daily Open Trading volume decreased by 5% to $2.9 billion[21] - Dealer initiated Open Trading volume increased by 20% to $59.3 billion[21] - Auto-X volume increased by 39% to a record $42 billion[26] - MarketAxess municipal bond volume increased by 92% to $5.4 billion[25] Post-Trade and Information Services - Post-trade revenue increased by 101% to $9.4 million[33] - Information services revenue increased by 13% to $9.6 million[33]

MarketAxess Holdings Inc. (NASDAQ:MKTX) Q3 2021 Earnings Conference Call October 20, 2021 10:00 AM ET Company Participants Dave Cresci - IR Manager Rick McVey - Chairman and CEO Chris Gerosa - CFO Chris Concannon - President and COO Conference Call Participants Dan Fannon - Jefferies Rich Repetto - Piper Sandler Kyle Voigt - KBW Michael Cyprys - Morgan Stanley Patrick O'Shaughnessy - Raymond James Alex Blostein - Goldman Sachs Operator Ladies and gentlemen, thank you for standing by. At this time, all parti ...

(Exact name of registrant as specified in its charter) Delaware 52-2230784 (State or other jurisdiction of incorporation or organization) FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-34091 MARKETAXESS HOLDINGS INC. UNITED STATES SECURITIES AND EX ...

MarketAxess Holdings Inc. (NASDAQ:MKTX) Q2 2021 Earnings Conference Call July 21, 2021 10:00 AM ET Company Participants Dave Cresci - IR Manager Rick McVey - Chairman and CEO Chris Concannon - President and COO Tony DeLise - CFO Conference Call Participants Rich Repetto - Piper Sandler Patrick O'Shaughnessy - Raymond James Dan Fannon - Jefferies Kyle Voigt - KBW Chris Allen - Compass Point Alex Blostein - Goldman Sachs Sean Horgan - Rosenblatt Securities Michael Cyprys - Morgan Stanley Operator Ladies and g ...

[PART I — Financial Information](index=3&type=section&id=PART%20I%20%E2%80%94%20Financial%20Information) [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited consolidated financial statements of MarketAxess Holdings Inc. for the quarter ended March 31, 2021, including the statements of financial condition, operations, comprehensive income, changes in stockholders' equity, and cash flows, along with detailed notes explaining significant accounting policies, regulatory capital, fair value measurements, acquisitions, and other financial details [Consolidated Statements of Financial Condition](index=3&type=section&id=Consolidated%20Statements%20of%20Financial%20Condition) Fair Value of Assets and Liabilities (As of March 31, 2021) | Metric | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | Change (in thousands) | % Change | | :----------------------------------- | :----------------------------- | :------------------------------ | :-------------------- | :------- | | Total assets | $1,545,869 | $1,331,429 | $214,440 | 16.1% | | Total liabilities | $557,636 | $376,368 | $181,268 | 48.2% | | Total stockholders' equity | $988,233 | $955,061 | $33,172 | 3.5% | | Receivables from broker-dealers, clearing organizations and customers | $564,957 | $279,915 | $285,042 | 101.8% | | Payables to broker-dealers, clearing organizations and customers | $308,268 | $133,326 | $174,942 | 131.2% | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) Consolidated Statements of Operations | Metric | Three Months Ended March 31, 2021 (in thousands) | Three Months Ended March 31, 2020 (in thousands) | Change (in thousands) | % Change | | :----------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :------- | | Total revenues | $195,464 | $168,978 | $26,486 | 15.7% | | Total expenses | $91,990 | $77,889 | $14,101 | 18.1% | | Operating income | $103,474 | $91,089 | $12,385 | 13.6% | | Net income | $80,457 | $74,816 | $5,641 | 7.5% | | Basic EPS | $2.15 | $2.01 | $0.14 | 7.0% | | Diluted EPS | $2.11 | $1.96 | $0.15 | 7.7% | | Cash dividends declared per common share | $0.66 | $0.60 | $0.06 | 10.0% | [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Consolidated Statements of Comprehensive Income | Metric | Three Months Ended March 31, 2021 (in thousands) | Three Months Ended March 31, 2020 (in thousands) | Change (in thousands) | % Change | | :---------------------------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :------- | | Net income | $80,457 | $74,816 | $5,641 | 7.5% | | Net cumulative translation adjustment and foreign currency exchange hedge, net of tax | $(1,932) | $(3,859) | $1,927 | -49.9% | | Net unrealized (loss) on securities available-for-sale, net of tax | — | $(491) | $491 | -100.0% | | Comprehensive income | $78,525 | $70,466 | $8,059 | 11.4% | [Consolidated Statements of Changes in Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Total stockholders' equity **increased from $955.1 million at January 1, 2021, to $988.2 million at March 31, 2021**, driven by **net income of $80.5 million**, **stock-based compensation of $7.4 million**, and **exercise of stock options of $244 thousand**, partially offset by **withholding tax payments of $(27.4) million**, **common stock repurchases of $(520) thousand**, and **cash dividends of $(25.1) million**[16](index=16&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows | Cash Flow Activity | Three Months Ended March 31, 2021 (in thousands) | Three Months Ended March 31, 2020 (in thousands) | Change (in thousands) | % Change | | :------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :------- | | Net cash (used in) provided by operating activities | $(23,159) | $120,369 | $(143,528) | -119.2% | | Net cash (used in) provided by investing activities | $(12,332) | $24,557 | $(36,889) | -150.2% | | Net cash (used in) financing activities | $(18,850) | $(49,822) | $30,972 | -62.2% | | Net (decrease) increase for the period | $(55,368) | $91,744 | $(147,112) | -160.4% | | Cash and cash equivalents including restricted cash, End of period | $552,682 | $365,997 | $186,685 | 51.0% | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) [1. Organization and Principal Business Activity](index=8&type=section&id=1.%20Organization%20and%20Principal%20Business%20Activity) - MarketAxess operates leading electronic trading platforms for global fixed-income markets, serving **over 1,800 institutional investor and broker-dealer firms**. Key offerings include Open Trading® protocols for corporate bonds, Composite+™ pricing, auto-execution, connectivity solutions, and pre- and post-trade services like regulatory transaction reporting[20](index=20&type=chunk) [2. Significant Accounting Policies](index=8&type=section&id=2.%20Significant%20Accounting%20Policies) - The company's revenue streams include commissions, information services, post-trade services, and other revenues. Commission revenue is primarily from **variable transaction fees** (disclosed trading, Open Trading - matched principal, U.S. Treasuries - matched principal) and **distribution/unused minimum fees**[33](index=33&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk) Commission Revenue by Fee Type (Three Months Ended March 31) | Commission Revenue by Fee Type | 2021 (in thousands) | 2020 (in thousands) | Change (in thousands) | % Change | | :----------------------------- | :------------------ | :------------------ | :-------------------- | :------- | | Variable transaction fees | $148,398 | $129,166 | $19,232 | 14.9% | | Distribution fees and unused minimum fees | $27,440 | $26,788 | $652 | 2.4% | | Total commissions | $175,838 | $155,954 | $19,884 | 12.7% | Information Services Revenue by Timing of Recognition (Three Months Ended March 31) | Information Services Revenue | 2021 (in thousands) | 2020 (in thousands) | Change (in thousands) | % Change | | :--------------------------- | :------------------ | :------------------ | :-------------------- | :------- | | Services transferred over time | $9,045 | $7,806 | $1,239 | 15.9% | | Services transferred at a point in time | $117 | $836 | $(719) | -86.0% | | Total information services revenues | $9,162 | $8,642 | $520 | 6.0% | Post-Trade Services Revenue by Timing of Recognition (Three Months Ended March 31) | Post-Trade Services Revenue | 2021 (in thousands) | 2020 (in thousands) | Change (in thousands) | % Change | | :-------------------------- | :------------------ | :------------------ | :-------------------- | :------- | | Services transferred over time | $10,020 | $4,150 | $5,870 | 141.4% | | Services transferred at a point in time | $241 | $3 | $238 | 7933.3% | | Total post-trade services revenues | $10,261 | $4,153 | $6,108 | 147.1% | [3. Regulatory Capital Requirements](index=13&type=section&id=3.%20Regulatory%20Capital%20Requirements) - As of March 31, 2021, the Company's regulated subsidiaries maintained **aggregate net capital and financial resources of $493.5 million in excess of the required levels of $31.1 million**, demonstrating strong compliance with regulatory requirements[44](index=44&type=chunk) - A U.S. broker-dealer subsidiary held **$50.1 million in a special reserve bank account** for customer benefit, as required by Rule 15c3-3[45](index=45&type=chunk) [4. Fair Value Measurements](index=13&type=section&id=4.%20Fair%20Value%20Measurements) Fair Value of Assets and Liabilities (As of March 31, 2021) | Category | Level 1 (in thousands) | Level 2 (in thousands) | Level 3 (in thousands) | Total (in thousands) | | :------------------------ | :--------------------- | :--------------------- | :--------------------- | :------------------- | | Money market funds | $11,327 | — | — | $11,327 | | Trading securities (Corporate debt) | — | $13,806 | — | $13,806 | | Mutual funds held in rabbi trust | — | $10,502 | — | $10,502 | | Foreign currency forward position | — | $(1,349) | — | $(1,349) | | Total | $11,327 | $22,959 | — | $34,286 | - The Company uses foreign currency forward contracts to hedge its net investment in U.K. subsidiaries, with a **notional value of $196.1 million** and a **fair value liability of $(1.3) million** as of March 31, 2021[52](index=52&type=chunk) [5. Receivables from and Payables to Broker-dealers, Clearing organizations and Customers](index=16&type=section&id=5.%20Receivables%20from%20and%20Payables%20to%20Broker-dealers,%20Clearing%20organizations%20and%20Customers) Receivables from Broker-dealers, Clearing Organizations and Customers (in thousands) | Category | March 31, 2021 | December 31, 2020 | | :------------------------------------------ | :------------- | :---------------- | | Securities failed-to-deliver - broker-dealers | $155,693 | $93,294 | | Securities failed-to-deliver - customers | $288,235 | $87,685 | | Deposits with clearing organizations and broker-dealers | $111,594 | $97,043 | | Other | $9,435 | $1,893 | | Total | $564,957 | $279,915 | Payables to Broker-dealers, Clearing Organizations and Customers (in thousands) | Category | March 31, 2021 | December 31, 2020 | | :------------------------------------------ | :------------- | :---------------- | | Securities failed-to-receive - broker-dealers | $156,322 | $70,917 | | Securities failed-to-receive - customers | $144,958 | $60,784 | | Other | $6,988 | $1,625 | | Total | $308,268 | $133,326 | [6. Acquisitions](index=16&type=section&id=6.%20Acquisitions) - On November 30, 2020, MarketAxess acquired Regulatory Services GmbH for **$22.5 million cash** and up to **$24.6 million in contingent consideration**, recording **$37.4 million in amortizable intangible assets**[54](index=54&type=chunk) - On April 9, 2021, the Company acquired MuniBrokers LLC for **$17.0 million cash** and up to **$25.0 million in contingent consideration**[55](index=55&type=chunk) [7. Goodwill and Intangible Assets](index=16&type=section&id=7.%20Goodwill%20and%20Intangible%20Assets) - Goodwill remained stable at **$147.4 million** as of March 31, 2021, and December 31, 2020[56](index=56&type=chunk) Amortizable Intangible Assets (in thousands) | Category | March 31, 2021 Net Carrying Amount | December 31, 2020 Net Carrying Amount | | :------------------------ | :--------------------------------- | :---------------------------------- | | Customer relationships | $90,918 | $95,327 | | Technology and other intangibles | $27 | $27 | | Total | $90,945 | $95,354 | - Amortization expense for identifiable intangible assets **increased significantly to $2.7 million** for the three months ended March 31, 2021, from **$0.7 million** in the prior year[56](index=56&type=chunk) [8. Income Taxes](index=17&type=section&id=8.%20Income%20Taxes) Provision for Income Taxes (Three Months Ended March 31) | Category | 2021 (in thousands) | 2020 (in thousands) | Change (in thousands) | % Change | | :-------------------- | :------------------ | :------------------ | :-------------------- | :------- | | Total current provision | $20,753 | $14,123 | $6,630 | 46.9% | | Total deferred provision | $591 | $2,763 | $(2,172) | -78.6% | | Provision for income taxes | $21,344 | $16,886 | $4,458 | 26.4% | | Effective tax rate | 21.0% | 18.4% | 2.6 pp | 14.1% | - The Company recognized **excess tax benefits on share-based payments of $4.0 million** in Q1 2021, down from **$6.3 million** in Q1 2020[57](index=57&type=chunk) [9. Stock-Based Compensation Plans](index=17&type=section&id=9.%20Stock-Based%20Compensation%20Plans) Total Stock-Based Compensation Expense (Three Months Ended March 31) | Category | 2021 (in thousands) | 2020 (in thousands) | Change (in thousands) | % Change | | :------------------------ | :------------------ | :------------------ | :-------------------- | :------- | | Employees | $7,103 | $6,399 | $704 | 11.0% | | Non-employee directors | $321 | $278 | $43 | 15.5% | | Total stock-based compensation | $7,424 | $6,677 | $747 | 11.2% | - During Q1 2021, the Company granted **32,251 restricted stock/units**, **15,982 stock options**, and performance-based shares with an expected payout of **12,185 shares**[60](index=60&type=chunk) - As of March 31, 2021, total unrecognized compensation cost for non-vested awards was **$50.9 million**, expected to be recognized over a weighted-average period of **2.2 years**[61](index=61&type=chunk) [10. Earnings Per Share](index=18&type=section&id=10.%20Earnings%20Per%20Share) Earnings Per Share (Three Months Ended March 31) | Metric | 2021 (in thousands, except per share amounts) | 2020 (in thousands, except per share amounts) | | :-------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Basic weighted average shares outstanding | 37,470 | 37,303 | | Dilutive effect of stock options and restricted stock | 685 | 772 | | Diluted weighted average shares outstanding | 38,155 | 38,075 | | Basic earnings per share | $2.15 | $2.01 | | Diluted earnings per share | $2.11 | $1.96 | [11. Credit Agreements and Short-term Financing](index=18&type=section&id=11.%20Credit%20Agreements%20and%20Short-term%20Financing) - The Company entered into a **new $500.0 million revolving credit facility** on November 13, 2020, maturing November 12, 2021, with **$499.0 million available borrowing capacity** as of March 31, 2021[64](index=64&type=chunk) - A U.S. broker-dealer subsidiary has an **uncommitted $200.0 million collateralized agreement** with its settlement bank, with no borrowings outstanding as of March 31, 2021[66](index=66&type=chunk) - A U.K. subsidiary utilized **$34.3 million in overnight bank overdrafts** as of March 31, 2021, incurring **$0.2 million in interest expense** during Q1 2021[67](index=67&type=chunk) [12. Leases](index=19&type=section&id=12.%20Leases) Lease Cost (Three Months Ended March 31) | Lease Cost Component | 2021 (in thousands) | 2020 (in thousands) | | :------------------------------------ | :------------------ | :------------------ | | Operating lease cost | $3,323 | $3,449 | | Operating lease cost for subleased/assigned properties | $497 | $536 | | Variable lease costs | $6 | $16 | | Sublease income subleased/assigned properties | $(502) | $(536) | | Net lease cost | $3,324 | $3,465 | - As of March 31, 2021, the **weighted average remaining lease term was 12.0 years** with a **weighted average discount rate of 5.9%**. Total operating lease liabilities were **$92.75 million**[70](index=70&type=chunk) [13. Commitments and Contingencies](index=20&type=section&id=13.%20Commitments%20and%20Contingencies) - The Company is involved in various lawsuits, proceedings, and regulatory examinations in the normal course of business, but the **outcome is not expected to have a material adverse impact** on its financial position[71](index=71&type=chunk)[72](index=72&type=chunk) - The Company is exposed to credit risk from matched principal trading activities, but **recorded no liabilities or losses from counterparty failures** in Q1 2021 or Q1 2020[73](index=73&type=chunk) [14. Share Repurchase Program](index=20&type=section&id=14.%20Share%20Repurchase%20Program) - A **new $100.0 million share repurchase program** was authorized in January 2021, commencing April 1, 2021, replacing the expired program[75](index=75&type=chunk) - For the three months ended March 31, 2021, the Company repurchased **1,050 shares of common stock at a cost of $0.5 million** under the prior program[75](index=75&type=chunk) [15. Segment and Geographic Information](index=20&type=section&id=15.%20Segment%20and%20Geographic%20Information) - The Company operates as a **single business segment** due to the integrated nature of its products and services[76](index=76&type=chunk) Revenues by Geographic Area (Three Months Ended March 31) | Geographic Area | 2021 (in thousands) | 2020 (in thousands) | Change (in thousands) | % Change | | :---------------- | :------------------ | :------------------ | :-------------------- | :------- | | Americas | $160,119 | $142,637 | $17,482 | 12.3% | | Europe | $29,544 | $22,419 | $7,125 | 31.8% | | Asia | $5,801 | $3,922 | $1,879 | 47.9% | | Total | $195,464 | $168,978 | $26,486 | 15.7% | Long-Lived Assets by Geographic Area (As of) | Geographic Area | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | | :---------------- | :---------------------------- | :------------------------------- | | Americas | $70,812 | $68,707 | | Europe | $17,838 | $16,491 | | Asia | $5 | $6 | | Total | $88,655 | $85,204 | [16. Cash and Cash Equivalents and Restricted Cash](index=21&type=section&id=16.%20Cash%20and%20Cash%20Equivalents%20and%20Restricted%20Cash) Reconciliation of Cash and Cash Equivalents and Restricted Cash (in thousands) | Location | March 31, 2021 | December 31, 2020 | | :------------------------------------------------ | :------------- | :---------------- | | Cash and cash equivalents | $390,915 | $460,858 | | Cash segregated under federal regulations | $50,083 | $50,059 | | Deposits with clearing organizations and broker-dealers | $111,594 | $97,043 | | Other deposits | $90 | $90 | | Total | $552,682 | $608,050 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition and results of operations, highlighting key business activities, market factors, competitive landscape, regulatory environment, and technology trends. It includes a detailed analysis of revenues, expenses, and other financial metrics for the three months ended March 31, 2021, compared to the prior year, along with discussions on liquidity, capital resources, and non-GAAP financial measures [Forward-Looking Statements](index=22&type=section&id=Forward-Looking%20Statements) - The report contains forward-looking statements based on management's current expectations and assumptions, which are subject to inherent uncertainties, risks, and changes in circumstances. The Company undertakes no obligation to revise or update these statements, except as required by law[82](index=82&type=chunk) [Executive Overview](index=22&type=section&id=Executive%20Overview) - MarketAxess operates leading electronic trading platforms for global fixed-income markets, offering expanded liquidity, improved execution, and cost savings to **over 1,800 institutional investor and broker-dealer firms**[83](index=83&type=chunk) - Key strategic objectives include **expanding the participant network**, **increasing secondary market liquidity through innovative technology like Open Trading and Live Markets**, **strengthening service and data offerings**, and **pursuing strategic alliances or acquisitions**[86](index=86&type=chunk)[92](index=92&type=chunk) [Critical Factors Affecting Our Industry and Our Company](index=23&type=section&id=Critical%20Factors%20Affecting%20Our%20Industry%20and%20Our%20Company) - Improving economic conditions in Q1 2021 led to lower volatility, tightening credit spreads, and a rising interest rate environment. U.S. high-grade corporate bond market volumes **increased 7.5%**, while U.S. high-yield corporate bond market volumes **decreased 5.5%** compared to Q1 2020[88](index=88&type=chunk) - The COVID-19 pandemic led to a global work-from-home mandate, with Open Trading liquidity proving essential. The Company maintained business continuity and expects sufficient liquidity for the next twelve months, having **increased its dividend for the 12th consecutive year**[89](index=89&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk) - The electronic financial services industry is highly competitive, with competition based on liquidity, price improvement, transaction costs, and execution quality. Regulatory changes, including Brexit and SEC reviews of electronic trading platforms, may impact the business, potentially increasing compliance costs but also demand for electronic platforms[93](index=93&type=chunk)[94](index=94&type=chunk)[96](index=96&type=chunk)[97](index=97&type=chunk)[98](index=98&type=chunk) - Automated trading volumes **rose to $39.1 billion in Q1 2021, up 24.2% YoY**, with algorithmic responses **increasing 56.7%**, indicating continued demand for and growth in automated trading solutions[100](index=100&type=chunk) [Trends in Our Business](index=25&type=section&id=Trends%20in%20Our%20Business) - Revenue is primarily driven by **commissions from transactions**, influenced by factors such as participant numbers, price competitiveness, available markets, overall market activity, and commission levels[102](index=102&type=chunk)[107](index=107&type=chunk) - Commission revenue is calculated as a percentage of notional dollar volume, varying by bond type, size, yield, maturity, and client incentives. Open Trading commissions are earned through price differences in matched principal trades[103](index=103&type=chunk)[104](index=104&type=chunk) - Information services revenue comes from data licensing, professional services, and software licenses, recognized over time for subscriptions or at a point in time for one-off services. Post-trade services revenue is from regulatory reporting, trade publication, and matching, recognized as transactions are processed[109](index=109&type=chunk)[110](index=110&type=chunk) - Key expenses include employee compensation and benefits, depreciation and amortization, technology and communications, professional and consulting fees, occupancy, marketing and advertising, clearing costs, and general and administrative expenses[112](index=112&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk)[115](index=115&type=chunk)[116](index=116&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk)[119](index=119&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) Summary of Financial Results (Three Months Ended March 31) | Metric | 2021 (in thousands) | 2020 (in thousands) | $ Change (in thousands) | % Change | | :------------------------ | :------------------ | :------------------ | :---------------------- | :------- | | Revenues | $195,464 | $168,978 | $26,486 | 15.7% | | Expenses | $91,990 | $77,889 | $14,101 | 18.1% | | Operating income | $103,474 | $91,089 | $12,385 | 13.6% | | Other income (expense) | $(1,673) | $613 | $(2,286) | N/M | | Income before income taxes | $101,801 | $91,702 | $10,099 | 11.0% | | Provision for income taxes | $21,344 | $16,886 | $4,458 | 26.4% | | Net income | $80,457 | $74,816 | $5,641 | 7.5% | | Diluted EPS | $2.11 | $1.96 | $0.15 | 7.7% | - Total revenues **increased by 15.7% to $195.5 million**, driven by a **12.7% increase in commissions** and a **147.1% increase in post-trade services**, partially offset by a **25.8% decrease in rates variable transaction fees**[128](index=128&type=chunk)[29](index=29&type=chunk) Trading Volume Data (Three Months Ended March 31) | Trading Volume Data | 2021 (in millions) | 2020 (in millions) | $ Change (in millions) | % Change | | :-------------------------- | :----------------- | :----------------- | :--------------------- | :------- | | Total U.S. high grade | $363,441 | $329,994 | $33,447 | 10.1% | | Other credit | $391,020 | $329,753 | $61,267 | 18.6% | | Total credit | $754,461 | $659,747 | $94,714 | 14.4% | | Rates | $1,120,868 | $1,444,878 | $(324,010) | -22.4% | - Total expenses **increased by 18.1% to $92.0 million**, primarily due to higher **employee compensation and benefits ($6.9 million)**, **depreciation and amortization ($3.7 million)**, **technology and communications ($1.9 million)**, and **professional and consulting fees ($4.0 million)**[136](index=136&type=chunk)[137](index=137&type=chunk)[138](index=138&type=chunk) - Other income (expense) shifted from a **$0.6 million income in Q1 2020 to a $(1.7) million expense in Q1 2021**, mainly due to a **$1.2 million decrease in investment income** and a **$0.9 million increase in other, net expenses** (including credit facility administration costs)[141](index=141&type=chunk)[142](index=142&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) - Cash and cash equivalents and investments totaled **$415.2 million** at March 31, 2021. The Company has a **$500.0 million revolving credit facility** with **$499.0 million available capacity** and a **$200.0 million uncommitted collateralized agreement**[145](index=145&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk) - Net cash used in operating activities was **$(23.2) million in Q1 2021**, a significant decrease from **$120.4 million provided in Q1 2020**, primarily due to increased net receivables from broker-dealers and lower proceeds from trading investments[150](index=150&type=chunk) - The Company's subsidiaries maintained **aggregate net capital and financial resources $493.5 million in excess of required levels ($31.1 million)** as of March 31, 2021[155](index=155&type=chunk) - A **new $100.0 million share repurchase program** commenced April 1, 2021, and a **quarterly cash dividend of $0.66 per share** was approved for May 2021[159](index=159&type=chunk)[160](index=160&type=chunk) [Non-GAAP Financial Measures](index=35&type=section&id=Non-GAAP%20Financial%20Measures) Reconciliation of Net Income to EBITDA (Three Months Ended March 31) | Metric | 2021 (in thousands) | 2020 (in thousands) | | :------------------------------------------ | :------------------ | :------------------ | | Net income | $80,457 | $74,816 | | Add back: Interest expense | $191 | — | | Add back: Provision for income taxes | $21,344 | $16,886 | | Add back: Depreciation and amortization | $11,779 | $8,067 | | Earnings before interest, taxes, depreciation and amortization (EBITDA) | $113,771 | $99,769 | Reconciliation of Cash Flow from Operating Activities to Free Cash Flow (Three Months Ended March 31) | Metric | 2021 (in thousands) | 2020 (in thousands) | | :------------------------------------------ | :------------------ | :------------------ | | Net cash (used in) provided by operating activities | $(23,159) | $120,369 | | Exclude: Net change in trading investments | $(5,495) | $(56,394) | | Exclude: Net change in fail-to-deliver/receive from broker-dealers, clearing organizations and customers | $93,370 | — | | Less: Purchases of furniture, equipment and leasehold improvements | $(4,257) | $(4,291) | | Less: Capitalization of software development costs | $(8,075) | $(6,778) | | Free Cash Flow | $52,384 | $52,906 | [Effects of Inflation](index=35&type=section&id=Ef%20fects%20of%20Inflation) - The majority of the Company's assets are short-term and not significantly affected by inflation. However, inflation may increase expenses like employee compensation, office leasing, and communications, which may not be recoverable in service prices[164](index=164&type=chunk) [Contractual Obligations and Commitments](index=36&type=section&id=Contractual%20Obligations%20and%20Commitments) Contractual Obligations and Commitments (As of March 31, 2021, in thousands) | Obligation | Total | Less than 1 year | 1 - 3 years | 3 - 5 years | More than 5 years | | :------------------------ | :---- | :--------------- | :---------- | :---------- | :---------------- | | Operating leases | $131,664 | $9,177 | $21,143 | $22,249 | $79,095 | | Foreign currency forward contract | $197,434 | $197,434 | — | — | — | | Total | $329,098 | $206,611 | $21,143 | $22,249 | $79,095 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details the Company's exposure to various market risks, including general market volatility, interest rate fluctuations, foreign currency exchange rate changes, derivative instruments, and credit risk from its trading activities [Market Risk](index=37&type=section&id=Market%20Risk) - The global financial services business is inherently risky and volatile, affected by national and international factors that can lead to reduced trading volume and revenues. As of March 31, 2021, the Company held **$13.8 million in corporate bonds** classified as trading securities, exposing it to potential substantial losses from adverse market movements[167](index=167&type=chunk)[168](index=168&type=chunk) [Interest Rate Risk](index=37&type=section&id=Interest%20Rate%20Risk) - With **$415.2 million in cash, cash equivalents, and investments**, a hypothetical **100 basis point decrease in interest rates** would reduce investment income by approximately **$4.1 million**. A similar change would impact the fair value of the trading securities portfolio by approximately **$0.1 million**[169](index=169&type=chunk)[170](index=170&type=chunk) [Foreign Currency Exchange Rate Risk](index=37&type=section&id=Foreign%20Currency%20Exchange%20Rate%20Risk) - Approximately **12.9% of revenue** and **27.3% of expenses** were non-U.S. dollar denominated in the past year, primarily British Pound Sterling. A hypothetical **10% increase or decrease in the U.S. dollar** against other currencies would impact revenue by approximately **$9.2 million** and operating expenses by approximately **$9.0 million**[173](index=173&type=chunk) [Derivative Risk](index=37&type=section&id=Derivative%20Risk) - The Company's derivative risk is limited to foreign currency forward contracts used to hedge exposure to U.S. dollar versus British Pound Sterling fluctuations, with a **notional value of $197.4 million** as of March 31, 2021[174](index=174&type=chunk) [Credit Risk](index=38&type=section&id=Credit%20Risk) - The Company is exposed to credit and performance risks as a matched principal trading counterparty, particularly with increasing Open Trading transactions. Policies and procedures are in place to manage this risk, but there's no assurance they will fully mitigate exposure[177](index=177&type=chunk)[178](index=178&type=chunk) - Cash and cash equivalents are concentrated at three major global banks, exposing the Company to credit risk related to these deposits[179](index=179&type=chunk) [Item 4. Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) This section reports on the effectiveness of the Company's disclosure controls and procedures and any changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=38&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - Management, including the CEO and CFO, concluded that the Company's **disclosure controls and procedures were effective** as of March 31, 2021[180](index=180&type=chunk) [Changes in Internal Control over Financial Reporting](index=38&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - There were **no changes in internal control over financial reporting** during the quarter ended March 31, 2021, that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[181](index=181&type=chunk) [PART II — Other Information](index=39&type=section&id=PART%20II%20%E2%80%94%20Other%20Information) [Item 1. Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) This section addresses the Company's involvement in legal proceedings and regulatory examinations, assessing potential liabilities and contingencies - The Company is involved in various lawsuits, proceedings, and regulatory examinations in the normal course of business, but the **outcome is not expected to have a material adverse impact** on its financial position[184](index=184&type=chunk) [Item 1A. Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) This section refers to the Company's risk factors, noting any material changes from previous filings - There have been **no material changes in the Company's risk factors** from those disclosed in its most recent Form 10-K for the year ended December 31, 2020[185](index=185&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=39&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section provides information on any unregistered sales of equity securities and details of issuer purchases of equity securities, including share repurchase programs - There were **no unregistered sales of equity securities** during the period[186](index=186&type=chunk) Issuer Purchases of Equity Securities (Quarter Ended March 31, 2021) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (in thousands) | | :----------------------------------- | :----------------------------- | :--------------------------- | :------------------------------------------------------------------------------- | :---------------------------------------------------------------------------------------------------- | | January 1, 2021 - January 31, 2021 | 41,781 | $538.50 | — | $71,794 | | February 1, 2021 - February 28, 2021 | 10,686 | $552.60 | — | $71,794 | | March 1, 2021 - March 31, 2021 | 1,056 | $496.17 | 1,050 | $71,273 | | Total | 53,523 | $540.48 | 1,050 | | - A **new $100.0 million share repurchase program** was authorized in January 2021, commencing April 1, 2021[188](index=188&type=chunk) [Item 3. Defaults Upon Senior Securities](index=39&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section confirms whether there have been any defaults upon senior securities - There were **no defaults upon senior securities**[189](index=189&type=chunk) [Item 4. Mine Safety Disclosures](index=40&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states the applicability of mine safety disclosures - Mine safety disclosures are **not applicable** to the Company[190](index=190&type=chunk) [Item 5. Other Information](index=41&type=section&id=Item%205.%20Other%20Information) This section reports any other information not covered in previous items - No other information is reported in this section[191](index=191&type=chunk) [Item 6. Exhibits](index=41&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q report - The exhibits include certifications by the CEO and CFO (pursuant to Exchange Act Rule 13a-14(a) and 18 U.S.C. Section 1350) and Inline XBRL documents[192](index=192&type=chunk)