MarketAxess reports record revenue in 2021

Dan Barnes

Bond market operator MarketAxess saw total revenues for 2021 increase 1.4% to a record US$699 million, compared to US$689.1 million for 2020. Operating income was US$337.2 million, compared to US$374.7 million for 2020, a decrease of 10%.

Commission revenue for the year ended 31 December 2021 decreased 2.1% to US$621 million, compared to US$634.4 million for 2020. Variable transaction fees fell 4.7% to US$501.6 million, compared to variable transaction fees of US$526.3 million for 2020.

Commission revenue includes US$3.5 million generated by MuniBrokers, which was acquired in April 2021. Combined US investment grade (IG) and high yield (HY) trading volume as a percentage of FINRA’s combined IG and HY TRACE trading volume was an estimated 19.3% for the year ended 31 December 2021, compared to an estimated 19.5% for 2020.

Other revenue including information services and post-trade services rose 42.5% to US$77.9 million in 2021, compared to US$54.7 million for 2020. The US$23.3 million increase in all other revenue was principally due to an incremental US$13 million of regulatory trade reporting revenue generated by Regulatory Reporting Hub which was acquired on November 30, 2020 and US$3.8 million of revenue due to new data contracts.

Chris Gerosa, chief financial officer, MarketAxess.

Speaking to analysts on the firm’s earnings call, Chris Gerosa, chief financial officer at MarketAxess, said, “CP+ and AxessAll have been really the drivers in that growth engine in 2021. We’re launching really two new products entering into ’22. Our CP+ Total Markets, which really expands the overall coverage and another product, Tradability, which really allows people to understand the true depth of the market and how to execute in the market. It’s quite valuable in portfolio construction, sizing orders as you enter the market. So really critical information that we’re launching here in ’22. So excited about the opportunities, continued growth in CP+ and then the new product Total Markets.”

Costs for 2021 increased 15.1% to US$361.7 million, compared to US$314.4 million for 2020, principally due to higher depreciation and amortisation of US$17.5 million, which includes acquired intangibles expense of US$9.7 million; higher employee compensation and benefits costs of US$14 million, mainly due to an increase in headcount; professional and consulting fees of US$9.6 million; technology and communications costs of US$8.4 million; offset by a decrease in clearing costs of US$5 million. Expenses in 2021 reflect incremental operating expenses and costs associated with the MuniBrokers and Regulatory Reporting Hub businesses totalling US$21.9 million. Excluding MuniBrokers and Regulatory Reporting Hub expenses, total expenses for the year were up 8.1%.

Revenues for the fourth quarter of 2021 fell 3.7% to US$165.1 million, compared to US$171.3 million for the fourth quarter of 2020, while operating income was US$72.6 million, against US$91.7 million for the fourth quarter of 2020, a drop of 20.8%.

Information services, post-trade and other services generated US$19.1 million, compared to US$15.5 million for the fourth quarter of 2020.

Expenses for the Q4 increased 16.1% to US$92.5 million largely due to higher employee compensation and benefit costs of US$4.7 million through an increase in headcount amongst other factors.

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