MarketAxess (MKTX) Up 5.5% Since Last Earnings Report: Can It Continue?

Core Viewpoint - MarketAxess reported a mixed performance in its recent earnings, with earnings per share slightly exceeding estimates but total revenues falling short of expectations. The company is experiencing both growth in certain areas and challenges in others, leading to a cautious outlook for the upcoming period [2][3][18]. Financial Performance - MarketAxess reported Q2 2024 earnings per share of $1.72, surpassing the Zacks Consensus Estimate by 1.8%, and showing a year-over-year growth of 5.5% [2]. - Total revenues reached $197.7 million, reflecting a 10% year-over-year increase but falling short of the consensus estimate of $198 million [2]. - Commission revenues totaled $171.7 million, an 8% increase year-over-year, but missed the consensus estimate of $173 million [4]. - Total expenses increased by 12% year-over-year to $116.3 million, driven by higher employee compensation and technology costs [5]. Trading Volumes - High-grade trading volume was $405.4 billion, a 15% year-over-year increase, but below the consensus estimate of $412.5 billion [7]. - Total credit trading volume advanced 14% year-over-year to $861.5 billion, exceeding the Zacks Consensus Estimate of $853.6 billion [9]. - Emerging markets trading volume rose 25% year-over-year, while Eurobonds trading volume increased by 10% [8]. Balance Sheet and Cash Flow - As of June 30, 2024, MarketAxess had cash and cash equivalents of $434.1 million, a decline of 3.8% from the end of 2023 [11]. - Cash generated from operations was $118.8 million, up from $105.3 million the previous year, with free cash flow recorded at $97.6 million, more than doubling year-over-year [12]. Capital Deployment - The company repurchased shares worth $33.5 million and approved a $200 million increase to its existing share repurchase plan [13]. - A quarterly cash dividend of 74 cents per share was approved, to be paid on September 4, 2024 [13]. Guidance - Management anticipates mid-single-digit revenue growth from the Pragma acquisition, with total expenses expected to remain at the lower end of the guided range of $480 million to $500 million [14][15].