First Quarter Financial Highlights*
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
March 31, 2017.
“Our first quarter results delivered record revenue and
earnings, driven by record trading volumes across all four of our
core products. High-grade and emerging-market volumes
performed particularly well despite a challenging market
environment that saw record new issuance and unusually low market
volatility,” said Richard M. McVey, Chairman and CEO of
MarketAxess. “Open TradingTM adoption continues to accelerate as
clients around the world embrace it as the preferred all-to-all
liquidity solution in the global credit markets. Our strong results
underscore clients' growing reliance on our technology solutions to
access new trading connections and expanded liquidity options.”
First Quarter Results
Total revenues for the first quarter of 2017 increased 17.3% to
$103.9 million, compared to $88.6 million for the first quarter of
2016. Pre-tax income was $55.6 million, compared to $44.4
million for the first quarter of 2016, an increase of 25.3%.
Pre-tax margin was a record 53.5%, compared to 50.1% for the first
quarter of 2016. Net income totaled $42.5 million, or $1.11
per share on a diluted basis, compared to $29.0 million, or $0.77
per share, for the first quarter of 2016.
Commission revenue for the first quarter of 2017 increased 18.9%
to $94.0 million, compared to $79.1 million for the first quarter
of 2016. The growth in commission revenue was principally due to
growth in variable transaction fees, which increased 23.4% to $77.8
million on total trading volume of $394.4 billion for the first
quarter of 2017, compared to variable transaction fees of $63.1
million on total trading volume of $310.0 billion for the first
quarter of 2016. U.S. high-grade trading volume as a percentage of
FINRA’s high-grade TRACE trading volume increased to an estimated
15.9% for the first quarter of 2017, compared to an estimated 14.9%
for the first quarter of 2016. See Non-GAAP Financial Measures and
Other Items below.
All other revenue, which consists of information and post-trade
services, technology products and services, investment income and
other revenue, increased to $9.9 million, compared to $9.5 million
for the first quarter of 2016. The increase in all other
revenue was principally due to higher data revenue offset by an
unfavorable impact of $0.8 million caused by the stronger U.S.
dollar.
Total expenses for the first quarter of 2017 increased 9.2% to
$48.3 million, compared to $44.2 million for the first quarter of
2016. The increase in total expenses was largely due to higher
employee compensation and benefits costs of $2.9 million resulting
from additional headcount.
The effective tax rate for the first quarter of 2017 was 23.6%,
compared to 34.7% for the first quarter of 2016. The first
quarter 2017 income tax provision includes excess tax benefits
relating to a new standard for share-based compensation accounting
adopted effective January 1, 2017 of approximately $5.8
million.
Employee headcount was 391 as of March 31, 2017, compared to 383
as of December 31, 2016 and 357 as of March 31, 2016.
Dividend
The Company’s board of directors declared a cash dividend to
$0.33 per share of common stock outstanding, to be paid on May 25,
2017 to stockholders of record as of the close of business on May
11, 2017.
Share Repurchase Program
A total of 65,317 shares were repurchased in the first quarter
of 2017 at a cost of $12.2 million under the Company’s $75.0
million share repurchase program. As of March 31, 2017,
approximately $38.9 million was available for future repurchases
under the program.
Balance Sheet Data
As of March 31, 2017, total assets were $530.7 million and
included $356.2 million in cash, cash equivalents and
investments. Total stockholders’ equity as of March 31, 2017
was $482.4 million.
Guidance for 2017
The Company is reducing it full year overall effective tax rate
guidance for 2017 from a range of 32% and 34% to a range of 26% to
28%. The updated effective tax rate guidance reflects estimated
excess tax benefits to be recognized in 2017 under the new
share-based compensation accounting standard.
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
Richard M. McVey, chairman and chief executive officer, and
Antonio L. DeLise, chief financial officer, will host a conference
call to discuss the Company’s financial results and outlook on
Wednesday, April 26, 2017, at 10:00 a.m. Eastern time. 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
http://investor.marketaxess.com. A replay of the call will be made
available by dialing 855-859-2056 (U.S.) or 404-537-3406
(international) for one week after the announcement. The Webcast
will also be archived on http://investor.marketaxess.com for 90
days following the announcement.
About MarketAxess
MarketAxess operates a leading electronic trading platform that
enables fixed-income market participants to efficiently trade
corporate bonds and other types of fixed-income instruments using
MarketAxess’ patented trading technology. Over 1,200
institutional investor and broker-dealer firms are active users of
the MarketAxess trading platform, accessing global liquidity in
U.S. high-grade corporate bonds, emerging markets and high-yield
bonds, European bonds, U.S. agency bonds, municipal bonds, credit
default swaps and other fixed-income securities. MarketAxess
also offers a number of trading-related products and services,
including: market data to assist clients with trading decisions;
connectivity solutions that facilitate straight-through processing;
technology services to optimize trading environments; and execution
services for exchange-traded fund managers and other clients.
Through its Trax® division, MarketAxess also offers a range of pre-
and post-trade services, including trade matching, regulatory
transaction reporting and market and reference data, across a range
of fixed-income products. Trax is the trading name of
Xtrakter Ltd., a MarketAxess group company.
MarketAxess maintains its headquarters in New York and has
offices in London, Boston, Chicago, Los Angeles, Miami, Salt Lake
City, San Francisco, São Paulo, Hong Kong and Singapore. For more
information, please visit www.marketaxess.com.
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: 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; 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 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 www.marketaxess.com.
|
|
|
MarketAxess Holdings Inc. |
|
|
Consolidated Statements of
Operations |
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
|
2017 |
|
|
2016 |
|
|
|
(In thousands, except per share
data) |
|
|
(unaudited) |
|
Revenues |
|
|
|
|
|
Commissions |
$ |
94,022 |
|
$ |
79,093 |
|
|
Information and post-trade services |
|
7,816 |
|
|
7,779 |
|
|
Investment income |
|
747 |
|
|
418 |
|
|
Other |
|
1,306 |
|
|
1,283 |
|
|
Total revenues |
|
103,891 |
|
|
88,573 |
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
Employee
compensation and benefits |
|
27,401 |
|
|
24,527 |
|
|
Depreciation and amortization |
|
4,693 |
|
|
4,681 |
|
|
Technology and communications |
|
4,585 |
|
|
4,304 |
|
|
Professional and consulting fees |
|
4,279 |
|
|
3,862 |
|
|
Occupancy |
|
1,404 |
|
|
1,161 |
|
|
Marketing
and advertising |
|
1,886 |
|
|
1,778 |
|
|
Clearing
costs |
|
1,327 |
|
|
1,766 |
|
|
General
and administrative |
|
2,709 |
|
|
2,124 |
|
|
Total expenses |
|
48,284 |
|
|
44,203 |
|
|
|
|
|
|
|
|
Income before income
taxes |
|
55,607 |
|
|
44,370 |
|
|
Provision
for income taxes |
|
13,144 |
|
|
15,407 |
|
|
Net income |
$ |
42,463 |
|
$ |
28,963 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share
Data: |
|
|
|
|
|
Net
income per common share |
|
|
|
|
|
Basic |
$ |
1.15 |
|
$ |
0.79 |
|
|
Diluted |
$ |
1.11 |
|
$ |
0.77 |
|
|
|
|
|
|
|
|
Cash
dividends declared per common share |
$ |
0.33 |
|
$ |
0.26 |
|
|
|
|
|
|
|
|
Weighted-average common shares: |
|
|
|
|
|
Basic |
|
36,850 |
|
|
36,775 |
|
|
Diluted |
|
38,112 |
|
|
37,671 |
|
|
|
|
|
|
|
|
|
|
|
MarketAxess Holdings Inc. |
|
|
Commission Revenue Details |
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
|
2017 |
|
|
2016 |
|
|
|
|
|
|
|
|
|
Total Commissions
Revenue |
|
|
(In thousands) |
|
|
(unaudited) |
|
Transaction Fees |
|
|
|
|
|
U.S.
high-grade |
$ |
35,523 |
|
$ |
31,568 |
|
|
Other
credit 1 |
|
41,695 |
|
|
30,921 |
|
|
Liquid
products 2 |
|
630 |
|
|
620 |
|
|
Total
transaction fees |
|
77,848 |
|
|
63,109 |
|
|
|
|
|
|
|
|
Distribution Fees |
|
|
|
|
|
U.S.
high-grade |
|
15,750 |
|
|
14,224 |
|
|
Other
credit1 |
|
280 |
|
|
1,500 |
|
|
Liquid
products2,3 |
|
144 |
|
|
260 |
|
|
Total
distribution fees |
|
16,174 |
|
|
15,984 |
|
|
Total Commissions |
$ |
94,022 |
|
$ |
79,093 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Variable
Transaction Fee Per Million |
|
|
(unaudited) |
|
U.S. high-grade -
fixed-rate |
$ |
166 |
|
$ |
184 |
|
|
U.S. high-grade -
floating-rate |
|
55 |
|
|
36 |
|
|
Total
U.S. high-grade |
|
162 |
|
|
178 |
|
|
Other credit |
|
261 |
|
|
264 |
|
|
Liquid
products |
|
41 |
|
|
40 |
|
|
Total |
|
197 |
|
|
204 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Other
credit includes high-yield, emerging markets, Eurobonds and
municipal bonds. |
|
|
2 Liquid
products includes U.S. agencies and European government bonds. |
|
|
|
|
3 Includes CDS
SEF-related revenue. |
|
|
|
|
|
|
|
|
|
|
|
MarketAxess Holdings Inc. |
|
Consolidated Condensed Balance Sheet
Data |
|
|
|
|
As of |
|
|
|
|
March 31, 2017 |
|
December 31, 2016 |
|
|
|
|
(In thousands) |
|
|
|
|
(unaudited) |
|
Assets |
|
|
|
|
|
Cash and
cash equivalents |
$ |
137,655 |
|
$ |
168,243 |
|
|
Investments, at fair value |
|
218,559 |
|
|
194,404 |
|
|
Accounts
receivable, net |
|
56,642 |
|
|
50,668 |
|
|
All other
assets |
|
117,858 |
|
|
114,727 |
|
|
|
Total
assets |
$ |
530,714 |
|
$ |
528,042 |
|
|
|
|
|
|
|
|
Liabilities and stockholders'
equity |
|
|
|
|
|
Total
liabilities |
$ |
48,359 |
|
$ |
60,029 |
|
|
Total
stockholders' equity |
|
482,355 |
|
|
468,013 |
|
|
|
Total
liabilities and stockholders' equity |
$ |
530,714 |
|
$ |
528,042 |
|
|
|
|
|
|
|
|
|
|
|
MarketAxess Holdings Inc. |
|
|
Reconciliation of Non-GAAP Financial
Measures |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
(In thousands) |
|
|
(unaudited) |
|
|
|
|
|
|
|
|
Earnings Before
Interest, Taxes, Depreciation and
Amortization |
|
|
|
|
|
|
|
Net
income |
$ |
42,463 |
|
|
$ |
28,963 |
|
|
|
Add back: |
|
|
|
|
|
Interest
expense |
|
- |
|
|
|
- |
|
|
|
Provision
for income taxes |
|
13,144 |
|
|
|
15,407 |
|
|
|
Depreciation and amortization |
|
4,693 |
|
|
|
4,681 |
|
|
|
Earnings before
interest, taxes, depreciation and
amortization |
$ |
60,300 |
|
|
$ |
49,051 |
|
|
|
|
|
|
|
|
|
|
Free Cash
Flow |
|
|
(In thousands) |
|
|
(unaudited) |
|
Cash flow from
operating activities |
$ |
30,549 |
|
|
$ |
(57,383 |
) |
|
|
Add back: |
|
|
|
|
|
Net
purchases of corporate debt trading investments |
|
1,196 |
|
|
|
73,235 |
|
|
|
|
|
|
|
|
|
Excess
tax benefits from share-based compensation previously recorded
under financing activities |
|
- |
|
|
|
4,640 |
|
|
|
Less: |
|
|
|
|
|
Purchases
of furniture, equipment and leasehold improvements |
|
(4,149 |
) |
|
|
(2,652 |
) |
|
|
Capitalization of software development costs |
|
(3,172 |
) |
|
|
(3,035 |
) |
|
|
Free cash
flow |
$ |
24,424 |
|
|
$ |
14,805 |
|
|
|
|
|
|
|
|
|
|
|
|
MarketAxess Holdings Inc. |
|
|
Volume Statistics* |
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
|
2017 |
|
|
2016 |
|
|
|
|
|
|
|
|
|
Total Trading
Volume |
|
|
(In millions) |
|
|
(unaudited) |
|
U.S. high-grade -
fixed-rate |
$ |
211,974 |
|
$ |
170,219 |
|
|
U.S. high-grade -
floating-rate |
|
7,420 |
|
|
7,507 |
|
|
Total
U.S. high-grade |
|
219,394 |
|
|
177,726 |
|
|
Other credit |
|
159,724 |
|
|
116,974 |
|
|
Liquid
products |
|
15,306 |
|
|
15,320 |
|
|
Total |
$ |
394,424 |
|
$ |
310,020 |
|
|
|
|
|
|
|
|
|
Average Daily
Volume |
|
|
(In millions) |
|
|
(unaudited) |
|
U.S. high-grade |
$ |
3,539 |
|
$ |
2,914 |
|
|
Other credit |
|
2,557 |
|
|
1,909 |
|
|
Liquid
products |
|
247 |
|
|
251 |
|
|
Total |
$ |
6,343 |
|
$ |
5,074 |
|
|
|
|
|
|
|
|
Number of U.S. Trading
Days 1 |
|
62 |
|
|
61 |
|
|
Number of U.K. Trading
Days 2 |
|
64 |
|
|
62 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 riskless principal basis
between two counterparties. |
|
|
|
|
|
|
|
|
|
|
Media and Investor Relations Contacts:
Tony DeLise
MarketAxess Holdings Inc.
+1-212-813-6017
Mary Sedarat
MarketAxess Holdings Inc.
+1-212-813-6226
William McBride
RF|Binder
+1-917-239-6726
MarketAxess (NASDAQ:MKTX)
Historical Stock Chart
From Aug 2024 to Sep 2024
MarketAxess (NASDAQ:MKTX)
Historical Stock Chart
From Sep 2023 to Sep 2024