Marketaxess Reports Third Quarter 2020 Revenues of $164.0 Million, Operating Income of $87.8 Million and Diluted EPS of $1.78

New York, New York, UNITED STATES

Third Quarter Financial Highlights*

  • Revenues of $164.0 million, up 25%
  • Operating income of $87.8 million, up 33%
  • Operating margin of 53.5%, up from 50.1%
  • Net income of $67.8 million, up 26%
  • Diluted EPS of $1.78, up 25% from $1.42
  • Record Estimated U.S. high-grade market share of 22.2%, up from 20.2%
  • Record Estimated U.S. high-yield market share of 16.0%, up from 11.9%

*All comparisons versus third quarter 2019.

NEW YORK, Oct. 27, 2020 (GLOBE NEWSWIRE) -- MarketAxess Holdings Inc. (Nasdaq: MKTX), the operator of a leading electronic trading platform for fixed-income securities, and the provider of market data and post-trade services for the global fixed-income markets, today announced results for the quarter ended September 30, 2020.

“It is gratifying to see the strength in market share trends and Open Trading volumes in spite of the return to more normal credit market conditions in the third quarter,” said Rick McVey, Chairman and CEO of MarketAxess. “Trading automation and lower transaction costs on MarketAxess are driving a sustainable change in trading behavior among institutional market participants. Market share gains fueled strong revenue and earnings growth with higher operating margins during the quarter.”

Third Quarter Results

Total revenues for the third quarter of 2020 increased 25% to $164.0 million, compared to $131.6 million for the third quarter of 2019. Operating income was $87.8 million, compared to $66.0 million for the third quarter of 2019, an increase of 33%. Operating margin was 53.5%, compared to 50.1% for the third quarter of 2019. Net income totaled $67.8 million, or $1.78 per share on a diluted basis, compared to $54.0 million, or $1.42 per share, for the third quarter of 2019.

Commission revenue for the third quarter of 2020 increased 26% to $150.6 million, compared to $119.9 million for the third quarter of 2019. Variable transaction fees increased 28% to $123.2 million for the third quarter of 2020, compared to variable transaction fees of $96.0 million for the third quarter of 2019. U.S. high-grade trading volume as a percentage of FINRA’s high-grade TRACE trading volume increased to an estimated 22.2% for the third quarter of 2020, compared to an estimated 20.2% for the third quarter of 2019. Variable transaction fees in the third quarter of 2020 includes approximately $2.4 million of U.S. Treasuries trading commissions related to the November 2019 acquisition of LiquidityEdge LLC, now operating as MarketAxess Rates.

All other revenue, which consists of information services, post-trade services and other revenue, increased 14% to $13.4 million, compared to $11.7 million for the third quarter of 2019. The increase in all other revenue was principally due to new data sales and introduction of new Securities Finance Transaction Regulation (“SFTR”) reporting services of $1.1 million and the favorable impact of the weaker U.S. dollar of $0.6 million.

Total expenses for the third quarter of 2020 increased 16% to $76.2 million, compared to $65.6 million for the third quarter of 2019. The increase in total expenses was largely due to higher employee compensation and benefit costs, mainly due to an increase in headcount, of $4.9 million, depreciation and amortization of $2.3 million, clearing costs, mainly due to increased Open Trading activity and U.S. Treasury matched-principal trading, of $2.1 million, and professional and consulting fees of $1.3 million offset by a $1.4 million decrease in marketing and advertising expense. MarketAxess Rates expenses, including amortization of acquired intangibles expense, totaled $3.3 million during the third quarter of 2020.

The effective tax rate for the third quarter of 2020 was 23.0%, compared to 19.8% for the third quarter of 2019. The income tax provision for the third quarter of 2020 and 2019 reflected $5.9 million and $3.5 million, respectively, of excess tax benefits related to share-based compensation awards. In the third quarter of 2020, the Company recorded an additional provision for unrecognized tax benefits of $4.8 million.

Employee headcount was 599 as of September 30, 2020 compared to 527 as of December 31, 2019 and 511 as of September 30, 2019. The increase in headcount was due to the continued investment in the Company’s growth initiatives, including geographic expansion, trading automation, new trading protocols and the transition to self-clearing.


The Company’s board of directors declared a cash dividend of $0.60 per share of common stock outstanding, to be paid on November 25, 2020 to stockholders of record as of the close of business on November 11, 2020.

Share Repurchases

A total of 8,748 shares were repurchased in the third quarter of 2020 at a cost of $4.2 million.

Balance Sheet Data

As of September 30, 2020, total assets were $1.2 billion and included $341.6 million in cash, cash equivalents and investments.   Total stockholders’ equity as of September 30, 2020 was $897.5 million.

Non-GAAP Financial Measures and Other Items

To supplement the Company’s unaudited financial statements presented in accordance with generally accepted accounting principles (“GAAP”), the Company uses certain non-GAAP measures of financial performance, including earnings before interest, taxes, depreciation and amortization (“EBITDA”) and free cash flow. The Company believes that these non-GAAP financial measures, when taken into consideration with the corresponding GAAP financial measures, are important in understanding the Company's operating results. See the attached schedule for a reconciliation of GAAP net income to EBITDA and GAAP cash flow from operating activities to free cash flow.

Webcast and Conference Call Information

Rick McVey, Chairman and Chief Executive Officer, Chris Concannon, President and Chief Operating Officer and Tony DeLise, Chief Financial Officer, will host a conference call to discuss the Company’s financial results and outlook on Tuesday, October 27, 2020 at 10:00 a.m. EST. To access the conference call, please dial 855-425-4206 (U.S.) or 484-756-4249 (international). The Company will also host a live audio Webcast of the conference call on the Investor Relations section of the Company's website at A replay of the call will be made available by dialing 855-859-2056 (U.S.) or 404-537-3406 (international) and using the conference ID: 8278649 for one week after the announcement. The Webcast will also be archived on for 90 days following the announcement.

About MarketAxess

MarketAxess operates a leading, institutional electronic trading platform delivering expanded liquidity opportunities, improved execution quality and significant cost savings across global fixed-income markets. A global network of over 1,700 firms, including the world’s leading asset managers and institutional broker-dealers, leverages MarketAxess’ patented trading technology to efficiently trade bonds. MarketAxess’ award-winning Open Trading™ marketplace is regarded as the preferred all-to-all trading solution in the global credit markets, creating a unique liquidity pool for a broad range of credit market participants. Drawing on its deep data and analytical resources, MarketAxess provides automated trading solutions, market data products and a range of pre- and post-trade services.

MarketAxess is headquartered in New York and has offices in London, Amsterdam, Boston, Chicago, Los Angeles, Miami, San Francisco, São Paulo, Hong Kong and Singapore. For more information, please visit

Cautionary Note Regarding Forward-Looking Statements

This press release may contain forward-looking statements, including statements about the outlook and prospects for Company and industry growth, as well as statements about the Company’s future financial and operating performance. These and other statements that relate to future results and events are based on MarketAxess’ current expectations. The Company’s actual results in future periods may differ materially from those currently expected or desired because of a number of risks and uncertainties, including: risks relating to the COVID-19 pandemic, including the possible effects of the economic conditions worldwide resulting from the COVID-19 pandemic; global economic, political and market factors; the volatility of financial services markets generally; the level of trading volume transacted on the MarketAxess platform; the absolute level and direction of interest rates and the corresponding volatility in the corporate fixed-income market; the level and intensity of competition in the fixed-income electronic trading industry and the pricing pressures that may result; the variability of our growth rate; the rapidly evolving nature of the electronic financial services industry; our ability to introduce new fee plans and our clients’ response; our exposure to risks resulting from non-performance by counterparties to transactions executed between our clients in which we act as an intermediary in matched principal trades; risks related to self-clearing; our dependence on our broker-dealer clients; the loss of any of our significant institutional investor clients; our ability to develop new products and offerings and the market’s acceptance of those products; the effect of rapid market or technological changes on us and the users of our technology; our ability to successfully maintain the integrity of our trading platform and our response to system failures, capacity constraints and business interruptions; our vulnerability to cyber security risks; our ability to protect our intellectual property rights or technology and defend against intellectual property infringement or other claims; our ability to enter into strategic alliances and to acquire other businesses and successfully integrate them with our business; our ability to comply with new and existing laws, rules and regulations both domestically and internationally; our ability to maintain effective compliance and risk management methods; the strain of growth initiatives on management and other resources; our future capital needs and our ability to obtain capital when needed; limitations on our operating flexibility contained in our credit agreement; and other factors. The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. More information about these and other factors affecting MarketAxess’ business and prospects is contained in MarketAxess’ periodic filings with the Securities and Exchange Commission and can be accessed at

Media and Investor Relations Contacts:
David Cresci 
MarketAxess Holdings Inc.
William McBride
Kyle White
MarketAxess Holdings Inc.


MarketAxess Holdings Inc.
Consolidated Statements of Operations
 Three Months Ended  Nine Months Ended 
 September 30,  September 30, 
 2020 2019 2020 2019 
 (In thousands, except per share data) 
Commissions$150,586  $119,869  $478,632  $346,753 
Information services 8,501   7,693   25,570   22,215 
Post-trade services 4,689   3,784   12,896   11,840 
Other 230   251   681   770 
Total revenues 164,006   131,597   517,779   381,578 
Employee compensation and benefits 37,583   32,681   120,413   97,962 
Depreciation and amortization 9,032   6,700   25,404   19,127 
Technology and communications 8,417   7,381   25,170   19,637 
Professional and consulting fees 8,269   7,018   22,009   19,145 
Occupancy 3,445   2,802   10,205   8,549 
Marketing and advertising 1,148   2,506   5,633   8,472 
Clearing costs 4,838   2,782   16,061   7,969 
General and administrative 3,467   3,762   9,853   10,686 
Total expenses 76,199   65,632   234,748   191,547 
Operating income 87,807   65,965   283,031   190,031 
Other income (expense)               
Investment income 344   2,211   2,327   6,296 
Interest expense (1,046)     (1,046)   
Other, net 860   (838)  (242)  (860)
Total other income 158   1,373   1,039   5,436 
Income before income taxes 87,965   67,338   284,070   195,467 
Provision for income taxes 20,189   13,336   57,624   40,838 
Net income$67,776  $54,002  $226,446  $154,629 
Per Share Data:               
Net income per common share               
Basic$1.81  $1.46  $6.06  $4.17 
Diluted$1.78  $1.42  $5.94  $4.08 
Cash dividends declared per common share$0.60  $0.51  $1.80  $1.53 
Weighted-average common shares:               
Basic 37,386   37,066   37,343   37,053 
Diluted 38,160   37,995   38,129   37,913 

MarketAxess Holdings Inc.
Commission Revenue Details
 Three Months Ended  Nine Months Ended 
 September 30,  September 30, 
 2020  2019  2020  2019 
 Total Commissions Revenue 
 (In thousands) 
Variable transaction fees               
U.S. high-grade$60,861  $45,409  $194,039  $130,824 
Other credit 1 59,131   50,009   191,718   143,276 
Total credit 119,992   95,418   385,757   274,100 
Rates 2 3,191   567   12,623   1,739 
Total variable transaction fees 123,183   95,985   398,380   275,839 
Distribution fees               
U.S. high-grade 20,760   17,777   60,369   53,238 
Other credit1 6,586   5,986   19,573   17,318 
Total credit 27,346   23,763   79,942   70,556 
Rates2 57   121   310   358 
Total distribution fees 27,403   23,884   80,252   70,914 
Total commissions$150,586  $119,869  $478,632  $346,753 
 Average Variable Transaction Fee Per Million 
U.S. high-grade - fixed-rate$204.24  $181.45  $190.68  $169.10 
U.S. high-grade - floating-rate 47.75   56.08   50.60   65.80 
Total U.S. high-grade 199.39   173.35   184.83   162.57 
Other credit 1 208.27   196.04   203.75   194.12 
Total credit 203.67   184.55   193.78   177.66 
Rates2 4.19   48.65   3.99   44.46 
1 Other credit includes high-yield, emerging markets, Eurobonds and municipal bonds. 
2 Rates includes U.S. Government bonds, agencies and other government bonds. 

MarketAxess Holdings Inc.
Consolidated Condensed Balance Sheet Data
 As of 
 September 30, 2020  December 31, 2019 
 (In thousands) 
Cash and cash equivalents$310,368  $270,124 
Cash segregated under federal regulations 50,033    
Investments, at fair value 31,274   230,477 
Accounts receivable, net 81,706   62,017 
Receivables from broker-dealers, clearing organizations and customers 380,853    
Goodwill 147,388   146,861 
Intangible assets, net of accumulated amortization 58,873   60,986 
Furniture, equipment, leasehold improvements and capitalized
software, net
 82,074   71,795 
Operating lease right-of-use assets 76,692   81,399 
Prepaid expenses and other assets 26,191   30,770 
Deferred tax assets, net 52   501 
Total assets$1,245,504  $954,930 
Liabilities and stockholders' equity       
Accrued employee compensation$50,926  $47,365 
Payables to broker-dealers, clearing organizations and customers 138,120    
Income and other tax liabilities 34,822   16,690 
Deferred revenue 5,092   3,499 
Accounts payable, accrued expenses and other liabilities 25,297   19,294 
Operating lease liabilities 93,708   97,991 
Total liabilities 347,965   184,839 
Stockholders' equity       
Common stock 122   122 
Additional paid-in capital 327,646   342,541 
Treasury stock (168,841)  (153,388)
Retained earnings 749,211   591,086 
Accumulated other comprehensive loss (10,599)  (10,270)
Total stockholders' equity 897,539   770,091 
Total liabilities and stockholders' equity$1,245,504  $954,930 

MarketAxess Holdings Inc.
Reconciliation of Non-GAAP Financial Measures
 Three Months Ended  Nine Months Ended 
 September 30,  September 30, 
 2020  2019  2020  2019 
 Earnings Before Interest, Taxes, Depreciation and Amortization 
 (In thousands) 
Net income$67,776  $54,002  $226,446  $154,629 
Add back:               
Interest expense 1,046      1,046    
Provision for income taxes 20,189   13,336   57,624   40,838 
Depreciation and amortization 9,032   6,700   25,404   19,127 
Earnings before interest, taxes, depreciation and
$98,043  $74,038  $310,520  $214,594 
 Free Cash Flow 
 (In thousands) 
Cash flows from operating activities$(48,353) $67,692  $176,869  $176,794 
Exclude: Net change in trading investments 638   9,225   (62,636)  371 
Exclude: Net change in fail-to-deliver/receive
from broker-dealers, clearing organizations and customers
 164,797      164,797    
Less: Purchases of furniture, equipment and
leasehold improvements
 (3,758)  (2,569)  (13,022)  (8,683)
Less: Capitalization of software development costs (8,121)  (6,553)  (21,124)  (13,863)
Free cash flow$105,203  $67,795  $244,884  $154,619 

MarketAxess Holdings Inc.
Volume Statistics*
 Three Months Ended
September 30,
 Nine Months Ended
September 30,
 2020  2019 2020  2019 
 Total Trading Volume 
 (In millions) 
U.S. high-grade - fixed-rate$295,781  $245,027 $1,005,975  $753,885 
U.S. high-grade - floating-rate 9,450   16,918  43,830   50,830 
Total U.S. high-grade 305,231   261,945  1,049,805   804,715 
Other credit 283,920   255,097  940,939   738,091 
Total credit 589,151   517,042  1,990,744   1,542,806 
Rates 760,676   11,661  3,161,148   39,111 
 Average Daily Volume 
 (In millions) 
U.S. high-grade$4,770  $4,093 $5,555  $4,280 
Other credit 4,421   3,971  4,972   3,921 
Total credit 9,191   8,064  10,527   8,201 
Rates 11,885   182  16,726   208 
Number of U.S. Trading Days 1 64   64  189   188 
Number of U.K. Trading Days 2 65   65  190   189 
1 The number of U.S. trading days is based on the SIFMA holiday recommendation calendar. 
2 The number of U.K. trading days is based on the U.K. Bank holiday schedule. 
*Consistent with FINRA TRACE reporting standards, both sides of trades are included in the Company's reported volumes when the Company executes trades on a matched principal basis between two counterparties. Consistent with industry standards, U.S. Government Bond trades are single-counted.