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Introduction & Market Context
MarketAxess Holdings Inc (NASDAQ:MKTX) reported its first quarter 2025 results on May 7, showing a slight revenue decline but record trading volumes across several key business segments. The electronic trading platform for fixed-income securities faced a challenging quarter with total revenue of $208.6 million, down 1% year-over-year, while continuing to make progress on its strategic initiatives.
The company’s shares were trading down 1.24% at the time of the presentation, reflecting investors’ mixed reaction to the results. MarketAxess has been navigating a changing market environment with increased volatility, which has driven higher trading volumes in April 2025.
Quarterly Performance Highlights
MarketAxess achieved record average daily volume (ADV) in the first quarter, up 31% year-over-year, with total credit ADV increasing 6% to a record $15.9 billion. The company reported earnings per share of $0.40, down 79% from the prior year, though this figure rises to $1.87 when excluding notable items related to reserves for uncertain tax positions.
As shown in the following key performance indicators chart, the company saw significant growth across multiple trading protocols and products:
International products showed strong performance with record ADV of $6.3 billion, up 11% year-over-year. Emerging markets local ADV increased 8% to a record $1.5 billion, while municipal bond ADV surged 42% to $594 million. The company’s automated trading solutions also continued to gain traction, with Auto-X trading volume reaching a record $110 billion, up 17%.
Despite these volume increases, U.S. Credit estimated market share declined 130 basis points to 16.6%, though U.S. High-Grade estimated block market share improved by 50 basis points to 11.2%.
Detailed Financial Analysis
The company’s financial performance showed mixed results across different revenue streams and expense categories:
Total (EPA:TTEF) revenue of $208.6 million represented a 1% year-over-year decline, with commission revenue down 2% to $181.3 million. This was partially offset by services revenue, which grew 7% to $27.2 million. Operating income decreased 4% to $88.4 million, while net income fell 79% to $15.1 million, primarily due to a $54.9 million reserve for uncertain tax positions.
The commission revenue breakdown reveals varying performance across different product categories:
Variable transaction fees, which make up the bulk of commission revenue, decreased 2% to $148 million. Total credit variable commission revenue declined 4%, with a 10% decrease in fee per million partially offset by the 6% increase in total credit ADV. Meanwhile, rates commission revenue showed strong growth, up 34% on a 53% increase in total rates ADV to $27 billion.
On the expense side, MarketAxess maintained disciplined cost management with total expenses of $120.2 million, up just 2% year-over-year:
Strategic Initiatives
MarketAxess continues to focus on three strategic channels to drive growth: Client-Initiated, Portfolio Trading, and Dealer-Initiated. The company’s progress across these channels was highlighted in the presentation:
Record block trading ADV of U.S. high-grade, emerging markets, and eurobonds reached approximately $4 billion, up 24% year-over-year. Portfolio trading showed particularly impressive growth, with ADV of approximately $1 billion and significant market share gains in U.S. credit. The dealer-initiated channel also performed well, with record ADV of approximately $2 billion.
The company’s portfolio trading business has been a standout performer, with total portfolio trading ADV up 78% to $1.3 billion and U.S. credit portfolio trading market share increasing 550 basis points to 18.8%.
Capital Management and Forward Outlook
MarketAxess maintained a strong financial position with $642 million in cash, cash equivalents, and investments as of March 31, 2025. The company continued its shareholder return program, repurchasing 250,792 shares for $52 million through April 2025 and declaring a quarterly dividend of $0.76 per share.
Free cash flow remained robust at $344 million on a trailing twelve-month basis, supporting the company’s capital return initiatives and investments in trading system enhancements.
Looking ahead, MarketAxess reported significantly improved trading volumes in April 2025, with aggregate ADV up 68% compared to April 2024:
This surge in April trading volumes suggests a potentially stronger second quarter, driven by increased market volatility. The company expects its new capabilities, including targeted block solutions and the relaunch of the Mid-X matching protocol, to drive higher levels of U.S. credit market share in the coming quarters.
Key Takeaways
MarketAxess management emphasized several key points about the company’s position and outlook:
The improved operating environment has driven higher levels of ADV and market share in certain segments. The company believes it is well-positioned to assist clients through the current period of increased credit market volatility, with strong progress across its three strategic channels.
CEO Chris Concannon expressed confidence that new capabilities combined with increased volatility will drive higher levels of U.S. credit market share in the coming quarters, positioning the company for long-term shareholder value creation despite the mixed results in the first quarter of 2025.
Full presentation:
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