MarketAxess(MKTX) - 2025 Q4 - Annual Results

Revenue and Trading Performance - Record total revenue of $846 million in 2025, a 4% increase year-over-year, with a 10% increase in revenue outside U.S. credit products[1][6][8] - Block trading average daily volume (ADV) increased by 24% to a record $5 billion in 2025[1][6][9] - Portfolio trading ADV rose by 48% to a record $1.4 billion, with U.S. credit portfolio trading ADV increasing by 43%[1][6][9] - Dealer-initiated ADV increased by 33% to $1.7 billion, including a 29% increase in dealer request for quote (RFQ) ADV[1][6][9] - Total revenues for Q4 2025 reached $209.40 million, a 4% increase from $202.40 million in Q4 2024[34] - Commission revenue for Q4 2025 was $181.33 million, up 4% from $174.76 million in Q4 2024[35] - Total trading volume for Q4 2025 was $2,355.10 million, a decrease of 8% compared to $2,549.92 million in Q4 2024[36] - Average daily trading volume (ADV) for credit in Q4 2025 was 15,381 million, an increase of 11% from 13,883 million in Q4 2024[36] Expenses and Income - Total expenses for 2025 were $504 million, a 6% increase year-over-year, including $4.5 million from foreign currency fluctuations[1][9][21] - Total expenses for Q4 2025 were $133.39 million, an increase of 9% from $122.42 million in Q4 2024[34] - Other income decreased to $3.8 million from $4.6 million due to lower interest income and higher interest expense[24] - Net income for Q4 2025 was $92.39 million, compared to $65.14 million in Q4 2024, reflecting a significant increase[34] - Full year net income for FY 2025 was $246,912 thousand, a decrease of 9.9% compared to $274,181 thousand in FY 2024[39] - The company reported a 28% increase in total other income for the year, reaching $25.16 million compared to $19.68 million in 2024[34] Earnings and Shareholder Returns - Diluted earnings per share (EPS) for 2025 was $6.64, down 9% from the previous year[1][9][8] - The company declared cash dividends of $3.04 per common share for the year, up from $2.96 in the previous year[34] - The Board authorized a share repurchase of up to $400.0 million, with $300.0 million executed through an ASR agreement, resulting in the repurchase of 1,980,715 shares at a cost of $360.0 million for the full year 2025[24] - A quarterly cash dividend of $0.78 per share was declared, payable on March 4, 2026[24] Tax and Financial Metrics - The effective tax rate for 2025 was 15.8%, with an effective tax rate of 23.4% excluding notable items[1][8][21] - The effective tax rate was (15.8%), down from 23.0% in the prior year, with a notable items-adjusted rate of 23.4%[24] - The effective tax rate for FY 2025 was 32.7%, compared to 24.0% in FY 2024, indicating an increase in the tax burden[39] - The effective tax rate for 2026 is expected to be between 24.0% and 26.0%[28] Assets and Liabilities - Cash and cash equivalents totaled $678.9 million as of December 31, 2025, down from $698.6 million a year earlier, with $220.0 million in borrowings outstanding[24] - Total assets increased to $1,808,606 thousand as of December 31, 2025, compared to $1,789,216 thousand in 2024, reflecting a growth of 1.1%[38] - Total liabilities rose significantly to $650,347 thousand in 2025 from $400,556 thousand in 2024, marking a 62.2% increase[38] - Operating lease liabilities decreased to $64,938 thousand in 2025 from $72,654 thousand in 2024, a reduction of 10.4%[38] - Goodwill increased to $283,667 thousand in 2025 from $236,706 thousand in 2024, representing a growth of 19.8%[38] Future Projections - Services revenue is expected to grow in the mid-single digits percentage range for the full year 2026[28] - Total expenses, excluding notable items, are projected to be between $530.0 million and $545.0 million, indicating an 8% increase based on the midpoint[28] - Capital expenditures for new protocols and trading platform enhancements are anticipated to be in the range of $65.0 million to $75.0 million[28] Non-GAAP Measures - The Company utilizes non-GAAP financial measures, including EBITDA and free cash flow, to provide additional insights into its operating results[26] - EBITDA for Q4 2025 was $94,908 thousand, while FY 2025 EBITDA totaled $420,784 thousand, indicating a year-over-year increase from $409,925 thousand in FY 2024[40] - Free cash flow for Q4 2025 was $75,056 thousand, with a full year total of $346,884 thousand, compared to $328,183 thousand in FY 2024, showing a growth of 5.2%[42]