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Introduction & Market Context
MarketAxess Holdings Inc (NASDAQ:MKTX) presented its second quarter 2025 earnings results on August 6, 2025, reporting record revenue and trading volumes across multiple product categories. Despite the strong operational performance, the stock fell 7.3% to $192.64 during regular trading hours, with pre-market trading showing an initial decline of 4.96%.
The electronic bond trading platform operator continues to execute on its three-channel strategy focusing on client-initiated trading, portfolio trading, and dealer-initiated trading, all of which showed significant growth during the quarter. However, the market reaction suggests investors may have had even higher expectations or concerns about future growth prospects.
Quarterly Performance Highlights
MarketAxess reported robust financial results for Q2 2025, with revenue increasing by 11% year-over-year to a record $219 million (10% growth excluding foreign exchange impacts). Commissions revenue, which represents the core of the company’s business, grew by 12% to a record $192 million.
Earnings per share rose by 11% to $1.91, or $2.00 excluding notable items, continuing the positive momentum from Q1 2025 when the company beat EPS forecasts with $1.87 against an expected $1.80. The company also generated $360 million in trailing twelve-month free cash flow.
As shown in the following comprehensive overview of the quarter’s performance:
On the operational front, MarketAxess achieved significant growth in trading volumes. Total (EPA:TTEF) trading average daily volume (ADV) increased by 43% to $49.0 billion, while total credit ADV increased by 22% to $16.8 billion. Both emerging markets and eurobonds ADV grew by 23%, reaching record levels.
Strategic Channel Performance
MarketAxess’s growth strategy is centered around three strategic channels: Client-Initiated, Portfolio Trading, and Dealer-Initiated. All three channels demonstrated strong performance during Q2 2025.
The Client-Initiated channel saw record block trading ADV of $5,327 million, representing 38% year-over-year growth and a 16% three-year CAGR. U.S. credit volumes were up 37%, emerging markets up 27%, and eurobonds up an impressive 100%.
The Portfolio Trading channel achieved record ADV of $1,481 million, a 69% increase year-over-year, while the Dealer-Initiated channel saw ADV reach $1,795 million, representing 40% growth.
The following chart illustrates the strong growth across all three strategic channels:
The company’s key performance indicators across these channels show significant improvements in market share and client adoption. U.S. Credit Estimated Market Share increased by 10 basis points to 18.1%, while U.S. High-Grade Estimated Block Market Share increased by 180 basis points to 12.5%. The number of client firms enabled for algorithmic trading approximately doubled year-over-year.
As shown in the detailed breakdown of key performance indicators:
International Growth & Emerging Markets
International expansion, particularly in emerging markets, continues to be a key growth driver for MarketAxess. The company reported 23% growth in emerging markets and eurobonds ADV, with multiple levers across strategic channels driving record trading volumes.
Open Trading/Disclosed RFQ grew by 9%, Block Trading by 37%, Portfolio Trading by 103%, and Dealer-Initiated by 34%, resulting in an overall growth of 21% in these markets.
The company’s emerging markets franchise is particularly strong, with approximately $201 billion traded in the first half of 2025, representing 14% year-over-year growth. Block-sized trades in emerging markets reached $140 billion, up 23% year-over-year.
The following chart provides a visualization of MarketAxess’s local market trading volume and growth in emerging markets:
Financial Analysis
MarketAxess’s detailed financial results show strength across multiple revenue streams. Total revenues reached $219.462 million, up 11% year-over-year (10% excluding FX). Commissions, which make up the bulk of the company’s revenue, increased by 12% to $191.770 million.
Total expenses grew by 10% to $127.598 million (8% excluding FX), resulting in operating income of $91.864 million, up 13% (12% excluding FX). Net income increased by 10% to $71.180 million.
The following financial summary provides a comprehensive overview of the company’s Q2 2025 performance:
A detailed breakdown of commission revenue shows 12% growth in credit variable commission revenue to $143 million, a 40% increase in rates commission revenue to $8 million, and a 39% increase in other commission revenue to $7 million.
The commission revenue detail is illustrated in the following chart:
Capital Management
MarketAxess continues to maintain a strong balance sheet and return capital to shareholders. As of June 30, 2025, the company had $621 million in cash, cash equivalents, corporate bond, and U.S. Treasury investments.
The company repurchased 379,667 shares for $80 million year-to-date through July 2025, including 167,783 shares for $37 million in Q2 2025. The quarterly cash dividend was maintained at $0.76 per share, with trailing twelve-month capital returned to investors through dividends totaling $112 million.
The following chart illustrates the company’s capital management and cash flow:
Forward-Looking Statements
Looking ahead, MarketAxess remains focused on innovation and execution across its three strategic channels. The company highlighted progress with new initiatives that are expected to increase U.S. credit market share.
CEO Chris Concannon emphasized the company’s focus on driving growth through multiple levers across strategic channels, particularly in international markets. The company’s strategy includes enhancing block trading solutions, low-touch automation, leveraging differentiated data, and optimizing user interfaces.
Despite the positive operational results, the significant stock decline suggests investors may be concerned about the company’s ability to maintain its growth trajectory or about increasing competition in the electronic bond trading space. The high P/E ratio of 31.05 mentioned in previous earnings reports also indicates that the market has high growth expectations for MarketAxess, making any perceived slowdown potentially more impactful on the stock price.
The key takeaways from the presentation are summarized in the following slide:
In conclusion, MarketAxess delivered strong operational and financial performance in Q2 2025, with record revenue and trading volumes across multiple products and strategic channels. However, the negative market reaction suggests that investors may be looking for even stronger growth or may have concerns about the company’s future prospects in an increasingly competitive landscape.
Full presentation:
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