MarketAxess Reports Third Quarter 2012 Revenues of $48.3 Million, Pre-Tax Income of $21.2 Million and Record Diluted EPS of $0.36 Third Quarter Financial Highlights^* *Revenues of $48.3 million, up 3.6% *Expenses of $27.0 million, up 11.5% *Record diluted EPS of $0.36, up from $0.34 *Record estimated U.S. high grade market share of 12.5%, up from 11.6% ^*All comparisons versus third quarter 2011. Business Wire NEW YORK -- November 02, 2012 MarketAxess Holdings Inc. (Nasdaq: MKTX), the operator of a leading electronic trading platform for U.S. and European corporate bonds, emerging markets bonds and other types of fixed-income securities, today announced results for the third quarter ended September 30, 2012. “We are pleased with our solid market share gains in U.S. high-grade this quarter and the continued strong growth in high-yield and emerging markets trading volume. U.S. high-grade TRACE volume also rebounded significantly in the past two months, following softer volumes in August,” said Richard M. McVey, chairman and chief executive officer of MarketAxess. “As announced earlier this morning, MarketAxess has agreed to buy Xtrakter Limited, a provider of regulatory transaction reporting, trade matching services and data services to the European securities market. We believe this acquisition will provide MarketAxess European clients with an expanded set of technology solutions ahead of incoming regulatory mandates from MiFID II in Europe.” Third Quarter Results Total revenues for the third quarter of 2012 increased 3.6% to $48.3 million, compared to $46.6 million for the third quarter of 2011. Pre-tax income was $21.2 million, compared to $22.3 million for the third quarter of 2011, a decrease of 4.9%. Net income totaled $13.5 million, or a record $0.36 per share on a diluted basis, compared to $13.4 million, or $0.34 per share on a diluted basis, for the third quarter of 2011. Commission revenue for the third quarter of 2012 totaled $42.4 million on total trading volume of $137.8 billion, compared to $39.8 million in commission revenue on total trading volume of $131.7 billion for the third quarter of 2011. U.S. high-grade trading volume as a percentage of FINRA’s U.S. high-grade TRACE trading volume increased to a record estimated 12.5%, compared to an estimated 11.6% for the third quarter of 2011. All other revenue, which consists of technology products and services, information and user access fees, investment income and other revenue, was $5.9 million, down 12.8% from $6.7 million for the third quarter of 2011. The decline was primarily due to lower technology professional service fees. Total expenses for the third quarter of 2012 increased 11.5% to $27.0 million, compared to $24.3 million for the third quarter of 2011. This increase was primarily due to higher professional and consulting costs and employee compensation and benefits costs. Professional and consulting fees in the third quarter of 2012 include $0.5 million of Xtrakter acquisition-related costs. Employee compensation and benefits costs for the prior year period reflected a downward adjustment to the year-to-date cash incentive bonus accrual. The effective tax rate for the third quarter of 2012 was 36.4%, compared to 39.7% for the third quarter of 2011. The decline in the effective tax rate was due principally to a refinement in certain state tax apportionment methodology resulting in a decrease in the 2012 projected tax rate. Employee headcount as of September 30, 2012 was 235, compared to 234 as of September 30, 2011. Dividend The Company’s board of directors declared a quarterly cash dividend of $0.11 per share of common stock outstanding, to be paid on November 26, 2012 to stockholders of record as of the close of business on November 12, 2012. Balance Sheet Data As of September 30, 2012, total assets were $304.9 million and included $204.3 million, or $5.44 per diluted share, in cash, cash equivalents and securities available-for-sale. Total stockholders’ equity as of September 30, 2012 was $271.9 million. Guidance for 2012 The Company expects that its full year 2012 expenses and capital spending will be at the high end of the guidance ranges of $107.0 million to $112.0 million and $8.0 million to $11.0 million, respectively. The Company also anticipates that the overall effective tax rate for 2012 will be between 39% and 41%. Non-GAAP Financial Measure EBITDA is a non-GAAP financial measure. The Company believes that this non-GAAP financial measure, when taken into consideration with the corresponding GAAP financial measure, is important in understanding the Company's operating results. See the attached schedule for a full reconciliation of GAAP net income to EBITDA. 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 November 2, 2012, at 9:00 a.m. Eastern time. To access the conference call, please dial 877-299-4454 (U.S.) or +1-617-597-5447 (international). The passcode for all callers is 42452936. 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://www.marketaxess.com. A replay of the call will be made available by dialing 888-286-8010 (U.S.) or +1-617-801-6888 (international) for one week after the announcement. The passcode for replay callers is 41146492. The Webcast will also be archived on http://www.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 1,000 investor and broker-dealer firms are active users of the MarketAxess trading platform, accessing global liquidity in U.S. high-grade corporate bonds, European bonds, high yield and emerging markets bonds, agency bonds, asset-backed and preferred securities and credit default swaps. 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. MarketAxess maintains its headquarters in New York and has offices in London, Chicago, Salt Lake City, Hong Kong, Singapore and São Paulo. For more information, please visitwww.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. Actual results in future periods may differ materially from those currently expected or desired because of a number of risks and uncertainties, including: 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; 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; our ability to develop new products and offerings and the market’s acceptance of those products; our exposure to risks resulting from non-performance by counterparties to transactions executed between our clients in which we act as an intermediary in matching back-to-back trades; our dependence on our broker-dealer clients; our ability to enter into strategic alliances and to acquire other businesses and successfully integrate them with our business; our future capital needs and our ability to obtain capital when needed; and other factors. The Company’s actual results and financial condition may differ, perhaps materially, from the anticipated results and financial condition in any such forward-looking statements. 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 Nine Months Ended September 30, September 30, 2012 2011 2012 2011 (In thousands, except per share data) (unaudited) Revenues Commissions $ 42,379 $ 39,822 $ 129,971 $ 116,683 Technology products and 2,979 3,779 9,107 10,871 services Information and 1,896 1,831 5,557 5,239 user access fees Investment 251 303 822 912 income Other 752 829 2,360 2,259 Total revenues 48,257 46,564 147,817 135,964 Expenses Employee compensation and 14,636 13,707 45,782 45,079 benefits Depreciation and 2,081 1,799 5,896 4,988 amortization Technology and 3,262 2,772 9,232 7,996 communications Professional and 3,202 2,247 9,063 7,784 consulting fees Occupancy 732 721 2,248 2,195 Marketing and 1,067 1,280 4,246 3,502 advertising General and 2,068 1,742 6,193 4,553 administrative Total expenses 27,048 24,268 82,660 76,097 Income before 21,209 22,296 65,157 59,867 taxes Provision for 7,727 8,852 25,553 23,706 income taxes Net income $ 13,482 $ 13,444 $ 39,604 $ 36,161 Per Share Data: Earnings per share: Basic $ 0.37 $ 0.36 $ 1.08 $ 0.98 Diluted $ 0.36 $ 0.34 $ 1.05 $ 0.91 Cash dividends declared per $ 0.11 $ 0.09 $ 0.33 $ 0.27 common share Weighted-average common shares: Basic 36,500 37,126 36,521 36,798 Diluted 37,541 39,828 37,892 39,539 MarketAxess Holdings Inc. Consolidated Condensed Balance Sheet Data September 30, December 31, 2011 2012 (In thousands) (unaudited) Assets Cash and cash equivalents $ 150,101 $ 169,620 Securities available-for-sale 54,181 78,110 Accounts receivable, net 33,414 36,170 All other assets 67,232 65,558 Total assets $ 304,928 $ 349,458 Liabilities and Stockholders' Equity Total liabilities $ 32,994 $ 37,019 Total stockholders' equity 271,934 312,439 Total liabilities and $ 304,928 $ 349,458 stockholders' equity MarketAxess Holdings Inc. Reconciliation of Non-GAAP Financial Measures Three Months Ended Nine Months Ended September 30, September 30, 2012 2011 2012 2011 (In thousands) (unaudited) Net income $ 13,482 $ 13,444 $ 39,604 $ 36,161 Add back: Interest expense 55 14 128 46 Provision for 7,727 8,852 25,553 23,706 income taxes Depreciation and 2,081 1,799 5,896 4,988 amortization Earnings before interest, taxes, depreciation and amortization $ 23,345 $ 24,109 $ 71,181 $ 64,901 (EBITDA) MarketAxess Holdings Inc. Volume and Fee Per Million Statistics Three Months Ended Nine Months Ended September 30, September 30, 2012 2011 2012 2011 Total Trading Volume ($ in millions) (unaudited) U.S. high-grade - multi dealer ^1 fixed-rate $ 83,193 $ 79,233 $ 265,876 $ 238,577 floating-rate 2,795 2,761 9,104 9,524 Eurobond 6,016 7,580 26,543 28,891 Other ^1,2 45,748 42,092 138,995 122,814 Total $ 137,752 $ 131,666 $ 440,518 $ 399,806 Average Daily Volume ($ in millions) (unaudited) U.S. $ 1,365 $ 1,281 $ 1,463 $ 1,313 high-grade ^1 Eurobond 94 117 141 154 Other ^1,2 726 658 739 650 Total $ 2,185 $ 2,056 $ 2,344 $ 2,116 Number of U.S. Trading 63 64 188 189 Days ^ 3 Number of U.K. Trading 64 65 188 188 Days ^ 4 Average Variable Transaction Fee Per Millon U.S. high-grade - multi dealer fixed-rate $ 209 $ 195 $ 203 $ 188 floating-rate 37 24 30 21 Total U.S. 203 189 198 182 high-grade Eurobond 79 108 71 101 Other 216 175 208 177 Total $ 202 $ 180 $ 193 $ 174 1 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. 2 Effective January 2012, the Company no longer reports credit default swaps trading volumes. Credit default swap volumes previously reported in "Other" trading volume have not been removed. 3 The number of U.S. trading days is based on the SIFMA holiday recommendation calendar. 4 The number of U.K. trading days is based on the U.K. Bank holiday schedule. Contact: Media and Investor Relations: MarketAxess Holdings Inc. Tony DeLise, +1-212-813-6017 or Florencia Panizza, +1-212-813-6029 or William McBride & Associates William McBride, +1-917-239-6726
MarketAxess Reports Third Quarter 2012 Revenues of $48.3 Million, Pre-Tax Income of $21.2 Million and Record Diluted EPS of
Press spacebar to pause and continue. Press esc to stop.