Low volatility hits Q2 MarketAxess earnings

378

Bond market operator, MarketAxess, reported revenues of US$176.3 million in the second quarter of 2021, down 4.6% against Q2 2020.

“Second quarter results were heavily impacted by low levels of credit market volatility in a very tough year over year comparison for MarketAxess,” said chairman and CEO Rick McVey. “We are proud of the company’s record results achieved last spring, during elevated credit spread volatility and high market volume caused by the pandemic and, though we were not able to duplicate those results, we believe the company’s long-term revenue and earnings growth rates remain on track. In addition to consistent long-term growth in our core business, we are excited about the progress we are making in our international business, emerging markets, municipal bonds, and new trading protocols. We believe our investments are creating a much broader foundation for future growth that will be evident when more normal levels of volatility return to fixed income markets.”

Total revenues for the second quarter of 2021 decreased 4.6% to US$176.3 million, compared to US$184.8 million for the second quarter of 2020. Operating income was US$87.2 million, compared to US$104.1 million for the second quarter of 2020, a decrease of 16.3%. Operating margin was 49.4%, compared to 56.4% for the second quarter of 2020. Net income totalled US$67.3 million.

Commission revenue for the second quarter of 2021 decreased 9.1% to US$156.4 million, compared to US$172.1 million for the second quarter of 2020. Variable transaction fees decreased 13% to US$127.1 million for the second quarter of 2021, compared to variable transaction fees of US$146 million for the second quarter of 2020. Commission revenue includes US$1.1 million generated by MuniBrokers, which was acquired in April 2021.

U.S. investment-grade trading volume as a percentage of FINRA’s investment-grade TRACE trading volume was an estimated 21.1% for the second quarter of 2021, compared to an estimated 21.5% for the second quarter of 2020. Estimated US credit TRACE trading volume decreased by 18.7% year-over-year.

All other revenue, which consists of information services, post-trade services and other revenue, increased to US$19.9 million, compared to US$12.7 million for the second quarter of 2020. The increase in all other revenue was principally due to US$3.8 million of regulatory trade reporting revenue generated by Regulatory Reporting Hub, which was acquired from Deutsche Börse Group in November 2020, and US$1.3 million of revenue due to the weaker U.S. dollar to U.K. pound sterling exchange rate.

Total expenses for the second quarter of 2021 increased 10.5% to US$89.2 million, compared to US$80.7 million for the second quarter of 2020. The increase in total expenses was largely due to higher depreciation and amortization of US$4.8 million, which includes US$2.8 million of acquired intangibles expense; higher professional and consulting fees of US$2.6 million, mainly attributable to non-recurring integration costs associated with the Regulatory Reporting Hub transaction of US$1.3 million and self-clearing consulting fees of US$0.7 million; and higher technology and communication costs of US$2 million which was partially offset by a decrease in clearing costs of US$1.3 million.

Employee headcount was 637 as of 30 June 2021, compared to 561 as of 30 June 2020, which was due to the continued investment in the Company’s growth initiatives, including geographic expansion, trading automation, new trading protocols and the transition to self-clearing.

©Markets Media Europe, 2021
TOP OF PAGE