MarketAxess’ revenue growth stalls, net profit down 11%

MarketAxess Holdings Inc. (Nasdaq: MKTX), an operator of electronic trading platform for fixed-income securities, has reported its quarterly results for the period ending September 30, 2023.

Despite low credit spread volatility, the company maintained revenue levels, while expanses surged as part of its strategic expansion within the global fixed-income domain. Specifically, MarketAxess reported a revenue figure of $172.3 million, the same as it had been in 2022. This was while there was a notable 10.0% hike in total expenses, attributed mainly to investments for the long-haul revenue prospects in the global fixed-income markets. The operational income stood at $66.9 million.

Interestingly, MarketAxess reported diluted EPS at $1.46, based on a net income of $54.9 million, while highlighting a record $11.8 million from information services revenue – a 21.5% jump amid the increased demand on its Composite+™ tool.

The diversification in both geography and product was evident. The company reported an 11.3% bump in average daily volume (ADV) from international products, which includes emerging markets and Eurobonds. On top of this, there was a 7.4% uptick in the municipal bonds ADV, consolidating an estimated market share of 5.8%.

Other business highlights show that the automated trading volume surged by 45.7%, trade count by 54.5%, and active client firms by 24.6%. Also, a notable leap was seen in algorithmic responses by 40.7%. By October 4, 2023, the automated trade volume and count had already exceeded the entire 2022 numbers.

Another crucial facet was the performance in the credit segment. The total credit commission revenue was pegged at $145.2 million, a minor dip of 2% YoY. The FPM (fee per million) for total credit was $154.85, descending from $165.60 in Q3 2022, primarily attributed to shifts in other credit products.

In terms of market activity, the last week of September 2023 emerged as the company’s second most voluminous week ever, given a spike in volatility towards the month’s end. The U.S. high-grade ADV stood at $5.2 billion, a growth of 1.1%, with an estimated market share of 20.0%.

On the expenditure side, total expenses summed up to $105.4 million, with a rise mainly due to an increased workforce by 17%, focusing mainly on technological and customer-centric roles, and a spike in professional fees.

MarketAxess reported an employee headcount of 853 as of September 30, 2023, a rise from 732 from the same period last year. This has been attributed to the company’s strategic push into new regions, trading automation, and exploring fresh trading protocols.

Based in New York, MarketAxess operates an electronic trading platform for fixed-income securities as well as provides market data and post-trade services for the fixed-income markets.