•   Record levels of estimated market share driving strong growth in trading volume.

•   Record composite corporate bond¹ estimated market share of 20.2%, up from 17.8%, reflecting broad-based estimated market share gains across global credit.

•   Record estimated combined U.S. high-grade and U.S. high-yield market share of 20.9%, up from 19.1% in the prior year.

•   Record estimated market share across U.S. high-yield, emerging markets, Eurobonds and U.S. Treasuries.

•   Revenues of $182.2 million, up 3%.

•   Total expenses of $97.4 million, up 9% on continued investment in the business.

•   $105.2 million in EBITDA and EBITDA margin of 57.7%, up from 56.3%.

•   Diluted EPS of $1.78, includes an $0.11 per share benefit from foreign currency transaction gains.

•   Declared $0.70 per share dividend; repurchased 178,801 shares for a total cost of $48.7 million.

•   Record 1,935 total active clients, up 5%, reflecting the continued expansion of our global liquidity pool.

•   Total trading average daily volume (“ADV”) of $35.4 billion, up 43%, driven principally by a 64% increase in U.S. Treasury ADV to $22.7 billion and a 15% increase in total credit ADV to $12.3 billion.

•   $238 million in estimated transaction cost savings² for clients via Open Trading^®, our differentiated liquidity pool; $439 million in estimated transaction cost savings² year-to-date.

•   Record $23 billion in portfolio trading volume, up from $4 billion in 2Q21 and $14 billion in 1Q22.

Rick McVey, Chairman of the Board and CEO of MarketAxess, commented:

“Record levels of market share in the quarter reflect the strides that we have made over the past year in executing our growth strategy, expanding our geographic diversification and establishing a broader global foundation for growth.

The macro backdrop is now much improved, with credit spreads and credit spread volatility moving back into more historical ranges, driving increased estimated cost savings for clients through Open Trading^®, our unique liquidity pool.

We believe that our strong growth in trading volume, broad-based market share gains, both year-over-year and sequentially, and increasing momentum in new product areas, including U.S. Treasuries and municipal bonds, are driving our improved performance.”

All comparisons versus second quarter 2021 unless otherwise noted.

$ in millions, except

per share data

(unaudited)

Operating

Income

Operating

Margin (%)

EBITDA

Margin (%)

2Q22

2Q21

2Q22 vs. 2Q21 % Change

$ in millions

(unaudited)

2Q22

2Q21

2Q22 vs. 2Q21 % Change

High-Grade/High-

Yield Combined

Composite

Corporate Bond¹

2Q22

1Q22

2Q21

2Q22 vs. 2Q21 BPS Change

2Q22 vs. 1Q22 BPS Change

U.S. high-grade: Commission revenue of $75.1 million (including $23.5 million in fixed-distribution fees) decreased $2.7 million, or 3%, compared to $77.8 million (including $21.4 million in fixed-distribution fees) in the prior year. Higher trading volumes and an increase in estimated market share were more than offset by lower average fees per million (“FPM”). The decline in average FPM for high-grade to $143.35, compared to $174.11 in the second quarter of 2021, was mainly due to the shorter duration of bonds traded (driven by higher bond yields and shorter years-to-maturity). There have been no changes to the U.S. high-grade fee plan.

Increase of approximately +120 basis points in estimated U.S. high-grade market share, from 21.1% in the prior year period.

Other credit: Commission revenue of $82.3 million (including $8.1 million in fixed-distribution fees) increased $7.4 million, or 10%, compared to $75.0 million (including $7.9 million in fixed-distribution fees) in the prior year. The increase was driven principally by strong estimated market share gains across all other credit products, slighly offset by lower average FPM. The FPM for other credit products was $185.93, compared to $194.49 in the second quarter of 2021. The decline in other credit FPM was due to a larger percentage of trading volume in local market emerging market bonds which have lower fees per million and dealer migration to fixed-distribution fee plans that command lower transaction fees.

Record U.S. high-yield estimated market share of 17.3%, up from 14.3% in the prior year on ADV of $1.8 billion, representing an increase 22%.

Record Eurobonds estimated market share of 15.1% on ADV of $1.5 billion, up 2%. Excluding the impact of foreign currency fluctuations, Eurobonds ADV would have increased approximately 13%.

Record emerging markets estimated market share on ADV of $2.8 billion, up 13%, with estimated market ADV down 10%. Excluding the impact of foreign currency fluctuations, emerging markets ADV would have increased approximately 14%.

Record municipal bond trading volume and ADV of $23.0 billion and $371 million, respectively, driven in part by an approximate 170-basis point increase in estimated market share.

Total credit: Commission revenue of $157.4 million increased $4.6 million, or 3%. A 15% increase in credit ADV to $12.3 billion, driven by strong estimated market share gains across credit products, was partially offset by lower average FPM. The average FPM for total credit products was $165.75, compared to $184.62 in the second quarter of 2021, reflecting the impact of lower U.S. high-grade average FPM discussed above.

Record total credit trading volume.

Record estimated combined U.S. high-grade and U.S. high-yield market share of 20.9%, up from 19.1% in the prior year.

Record composite corporate bond¹ estimated market share of 20.2%, up from 17.8%.

35% of total credit trading volume was executed via Open Trading.

$238 million ($439 million year-to-date) in estimated transaction cost savings² for clients delivered via Open Trading, representing $1,030 in average cost savings per million.

Record 1.6 million total credit trades executed, up from 1.3 million executed in the prior year.

92% of credit volume on the platform was executed by institutional clients.

Total rates commission revenue of $6.1 million increased $2.4 million, or 65%, compared to the prior year, driven by a 64% increase in U.S. Treasury ADV to $22.7 billion on strong estimated market share gains. The average FPM for total rates products was $4.21, compared to $4.07 in the second quarter of 2021.

Record U.S. Treasury estimated market share of 3.7%, up from 2.3%.

Combined information and post-trade services revenue of $18.5 million decreased $1.2 million, or 6%, compared to the prior year. The decrease in revenue was principally driven by the impact of currency fluctuations and planned customer attrition in connection with the Regulatory Reporting Hub integration. Adjusting for foreign currency fluctuations, combined information and post-trade services revenue would have increased approximately 3%.

Total expenses of $97.4 million increased $8.3 million, or 9%. The increase in expenses was driven principally by higher employee compensation and benefits as a result of the increase in headcount, increased investments to enhance the trading system and data products, as well as higher technology and communication expenses due to higher subscription costs, market data expense and platform licensing fees.

Other income: Other income was $4.8 million, representing a $5.9 million increase from the prior year. The current quarter included a $5.5 million foreign currency transaction gain that benefited earnings per share by $0.11.

Tax rate: The effective tax rate was 25.3%, compared to 21.8% in the prior year. The higher effective tax rate was driven by a $5.7 million decrease in estimated excess tax benefits related to share based compensation awards.

The Company has $324.8 million in cash, cash equivalents and investments; there are no outstanding borrowings under the Company’s credit facility.

A total of 178,801 shares were repurchased in the quarter at a cost of $48.7 million. A total of $100.0 million remains under the current authorization by the Company’s Board of Directors (the “Board”).

The Board declared a quarterly cash dividend of $0.70 per share, payable on August 17, 2022 to stockholders of record as of the close of business on August 3, 2022.

The Company had a record 1,935 total active client firms and a record 982 active international client firms, representing year-over-year increases of 5% and 6%, respectively.

Employee headcount was 684 as of June 30, 2022, compared to 637 as of June 30, 2021, and 676 as of December 31, 2021. The increase in headcount was due to the continued investment in the Company’s growth initiatives, including geographic expansion, trading automation and new trading protocols.

Based on the progression of operating expenses year-to-date, the Company is re-confirming its full year 2022 expense guidance range of $385.0 million to $415.0 million and capital expenditure guidance range of $58.0 million to $62.0 million. The Company expects the full year effective tax rate to be at the upper-end of the previously stated range of 24.0% to 26.0%.

MarketAxess, Virtu Financial and several leading liquidity providers in the fixed income ETF space, including Citadel Securities, Flow Traders, Jane Street Capital and asset manager BlackRock, announced the formation of a consortium to support the growth of RFQ-hub, a bilateral multi-asset and multi-dealer request for quote platform. RFQ-hub brings asset managers and liquidity providers together to help electronically deliver aggregated and competitive liquidity, streamline workflow and improve pricing with a focus on equity and fixed-income listed and OTC derivatives, structured products and exchange-traded funds.

State Street Global Advisors launched the SPDR MarketAxess Investment Grade 400 Corporate Bond ETF (LQIG). The MKTX 400 Index tracks the performance of 400 U.S. dollar denominated investment grade corporate bonds with higher-than-average liquidity relative to the broader U.S. corporate bond market. Powered by MarketAxess’ proprietary liquidity and pricing data – our Relative Liquidity Score and Composite+^™ pricing engine – the Index combines actionable liquidity with broad market exposure.

MarketAxess and MSCI agreed to enter into a strategic collaboration to create innovative portfolio analytics solutions and co-branded fixed-income indexes incorporating MarketAxess’ liquidity data, including Relative Liquidity Score and Tradability. In addition, MarketAxess plans to leverage MSCI’s ESG ratings to identify and create more liquid and sustainable fixed-income portfolios for its global institutional clients.

Composite corporate bond estimated market share is defined as combined estimated market share across U.S. high-grade (derived from FINRA TRACE reported data), U.S. high-yield (derived from FINRA TRACE reported data), emerging markets (derived from FINRA TRACE-reportable emerging markets volume) and Eurobonds (derived from MarketAxess TRAX data which is estimated to represent approximately 75% of the total European market) product areas.

Estimated liquidity taker cost savings is defined as the difference between the winning price and the best disclosed dealer cover price. Estimated liquidity provider cost savings is defined as the difference between the winning price and then current Composite+ bid or offer level (offer if the provider is buying, bid if provider is selling) at the time of the inquiry.

Stephen Davidson

MarketAxess Holdings Inc.

+1 212 813 6313

sdavidson2@marketaxess.com

Marisha Mistry

MarketAxess Holdings Inc.

+1 917 267 1232

mmistry@marketaxess.com

William McBride

RF | Binder

+1 917 239 6726

Revenues

Commissions

Information services

Post-trade services

Other

Total revenues

Expenses

Employee compensation and benefits

Depreciation and amortization

Technology and communications

Professional and consulting fees

Occupancy

Marketing and advertising

Clearing costs

General and administrative

Total expenses

Operating income

Other income (expense)

Investment income

Interest expense

Equity in earnings of unconsolidated affiliate

Other, net

Total other income (expense)

Income before income taxes

Provision for income taxes

Net income

Per Share Data:

Net income per common share

Basic

Diluted

Cash dividends declared per common share

Weighted-average common shares:

Basic

Diluted

Transaction Fees

U.S. high-grade

Other credit ¹

Total credit

Rates ²

Total transaction fees

Distribution Fees

U.S. high-grade

Other credit¹

Total credit

Rates²

Total distribution fees

Total commissions

U.S. high-grade - fixed-rate

U.S. high-grade - floating-rate

Total U.S. high-grade

Other credit ¹

Total credit

Rates²

Other credit includes high-yield, emerging markets, Eurobonds and municipal bonds.    

Rates includes U.S. Government bonds, agencies and other government bonds.    

Assets

Cash and cash equivalents

Cash segregated under federal regulations

Investments, at fair value

Accounts receivable, net

Receivables from broker-dealers, clearing organizations and customers

Goodwill

Intangible assets, net of accumulated amortization

Furniture, equipment, leasehold improvements and capitalized software, net

Operating lease right-of-use assets

Prepaid expenses and other assets

Total assets

Liabilities and stockholders’ equity

Liabilities

Accrued employee compensation

Payables to broker-dealers, clearing organizations and customers

Income and other tax liabilities

Accounts payable, accrued expenses and other liabilities

Operating lease liabilities

Total liabilities

Stockholders’ equity

Common stock

Additional paid-in capital

Treasury stock

Retained earnings

Accumulated other comprehensive loss

Total stockholders’ equity

Total liabilities and stockholders’ equity

Net income

Add back:

Interest expense

Provision for income taxes

Depreciation and amortization

Earnings before interest, taxes, depreciation and amortization (“EBITDA”)

EBITDA margin¹

Cash flows from operating activities

Exclude: Net change in trading investments

Exclude: Net change in fail-to-deliver/receive from broker-dealers, clearing organizations and customers

Less: Purchases of furniture, equipment and leasehold improvements

Less: Capitalization of software development costs

Free cash flow

EBITDA margin is derived by dividing EBITDA by revenue for the applicable period.

U.S. high-grade - fixed-rate

U.S. high-grade - floating-rate

Total U.S. high-grade

Other credit

Total credit

Rates

U.S. high-grade

Other credit

Total credit

Rates

Number of U.S. Trading Days ¹

Number of U.K. Trading Days ²

The number of U.S. trading days is based on the SIFMA holiday recommendation calendar.    

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.