MarketAxess Reports Q3 Earnings: Lower Income, Record Volume

<p>MarketAxess
Holdings Inc., an electronic trading platform for fixed-income securities, has
released its financial results for the third quarter of 2023. The report shows
a stable revenue of $172.3 million, identical to the previous year. However, a
10% increase in total expenses, primarily due to strategic investments, led to a
lower operating income of $66.9 million.</p><p>MarketAxess Reports Higher
Revenue but Lower Net Income</p><p>The
company's total revenue for the quarter remained unchanged at $172.3 million,
reflecting the impact of low credit spread <a href="https://www.financemagnates.com/terms/v/volatility/">volatility</a>. Operating income saw a
decline, standing at $66.9 million, mainly due to a 10% increase in total
expenses. These expenses were primarily incurred to tap into long-term revenue
opportunities in the global fixed-income markets.</p><p>Despite the
increased expenses, <a href="https://www.financemagnates.com/tag/marketaxess/" target="_blank" rel="follow">MarketAxess </a>maintains a robust financial position with
$553.3 million in cash, cash equivalents, and investments. The company has also
declared a quarterly cash dividend of $0.72 per share.</p><p>MarketAxess
reported a diluted EPS of $1.46, with a net income of $54.9 million. Compared
to last year's quarter, this represents a 4% decrease in both metrics.</p><p>Table: 3Q 2023 select financial results</p><p>One of the
bright spots in the report was the record information services revenue of $11.8
million, marking a 21.5% increase. This growth is attributed to the increasing
adoption of the Composite+ data <a href="https://www.financemagnates.com/terms/a/analytics/">analytics</a> tool.</p><p>Diversification and
Trading Volume</p><p>The company
exhibited strong geographic and product diversification. Average daily volume
(ADV) from international products, including emerging markets and Eurobonds,
increased by 11.3%. Municipal bonds also saw a 7.4% growth in ADV. Automated
trading volume and trade count broke previous records, surpassing full-year
2022 levels.</p><p>Table: 3Q 2023 trading volume</p><p>The number
of active client firms also reached a record 2,093, a 6.1% increase. This
includes the highest number of active US credit client firms and international
active client firms, indicating a broadening customer base.</p><p>Future Outlook</p><p>The company
has refined its full-year 2023 expense guidance, now ranging from $432.0
million to $438.0 million, including an estimated $12.5 million of M&amp;A-related
expenses. The effective tax rate for the full year is expected to be
approximately 23.5%, lower than the previously stated range.</p><p>Therefore,
while MarketAxess faces challenges due to low credit spread volatility and
increased expenses, its diversified product offerings and strong client
engagement provide a positive outlook for the future.</p><p>Recently, <a href="https://www.financemagnates.com/institutional-forex/bloomberg-marketaxess-and-tradeweb-join-forces-to-provide-trade-data/" target="_blank" rel="follow">MarketAxxes cooperated with Bloomberg and Tradeweb</a> to form a joint venture and establish an independent company with the goal of becoming the consolidated tape provider (CTP) for fixed-income instruments in the European Union. </p>

This article was written by Damian Chmiel at www.financemagnates.com.