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MarketAxess' (MKTX) Q2 Earnings Beat on Higher Trading Volumes

·5 min read

MarketAxess Holdings Inc. MKTX reported second-quarter 2022 earnings per share of $1.78, which outpaced the Zacks Consensus Estimate by 4.1%. The bottom line improved 1% year over year.

Total revenues of $182 million increased 3% year over year in the second quarter but fell short of the consensus mark by 1.2%.

MKTX’s quarterly results gained momentum on the back of robust growth in trading volumes across all product categories, broad-based market share gains and impressive strength exhibited by its new products of U.S. Treasuries and municipal bonds. However, the second-quarter performance was partly offset by an elevated expense level.

MarketAxess Holdings Inc. Price, Consensus and EPS Surprise

MarketAxess Holdings Inc. Price, Consensus and EPS Surprise
MarketAxess Holdings Inc. Price, Consensus and EPS Surprise

  

MarketAxess Holdings Inc. price-consensus-eps-surprise-chart | MarketAxess Holdings Inc. Quote

Quarterly Operational Update

In the second quarter, MarketAxess’ active clients totaled 1,935, which improved 5% year over year. Meanwhile, international client firms totaled 982, up 6% year over year.

Commission revenues grew 4.5% year over year to $163.5 million in the quarter under review. All other revenues, comprising information services, post-trade services and other revenues, declined 5.5% year over year to $18.8 million.

U.S. high-grade trading volume of MarketAxess increased 11% year over year in the second quarter, while the average daily volume (ADV) of the same product category rose 13% year over year. Total other credit trading volume improved 15.8% year over year, while ADV of the same climbed 17% year over year.

Emerging markets' trading volume rose 11.5% year over year while its ADV climbed 13% year over year. The rates trading volume and ADV surged 61.2% and 64%, respectively, year over year in the quarter under review.

Total expenses of $97.4 million escalated 9% year over year primarily due to a rise in employee compensation and benefits coupled with increased technology and communication expenses.

Operating income declined 3% year over year to $85 million in the second quarter. Operating margin deteriorated 291 basis points year over year to 47%.

Balance Sheet (as of Jun 30, 2022)

MarketAxess exited the second quarter with cash, cash equivalents and investments of $324.8 million. The same stood at $542.8 million at the end of December 2021.

Total assets increased 2.4% from the 2021-end level to $1.6 billion.

Total stockholders’ equity of $1 billion declined 3.9% from the level as of Dec 31, 2021.

Cash Flows

During the second quarter, MarketAxess generated cash from operations of $93.6 million, which slid 3.2% year over year.

Free cash flows amounted to $62.8 million in the quarter, down 6.6% year over year.

Capital Deployment Update

MarketAxess bought back shares worth $48.7 million in the second quarter.

Management unveiled a quarterly cash dividend of 70 cents per share, which will be paid out on Aug 17, 2022, to shareholders of record as of Aug 3.

2022 Guidance Reiterated

Management maintained its guidance for operating expenses in the range of $385 million to $415 million this year. Capital expenditures are anticipated within $58-$62 million.

The effective tax rate for 2022 is expected to stay at the upper-end of the previously guided 24-26% range.

Zacks Rank

MarketAxess carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Finance Sector Releases

Of the Finance sector players that have reported second-quarter results so far, the bottom line of Synchrony Financial SYF and Nasdaq, Inc. NDAQ beat the Zacks Consensus Estimate.

Synchrony Financial’s second-quarter 2022 adjusted earnings per share of $1.60 surpassed the Zacks Consensus Estimate of $1.43. The bottom line, however, declined from the year-ago level of $2.12 per share. SYF’s net interest income increased 14.8% year over year to $3,802 million for the quarter under review, beating the Zacks Consensus Estimate of $3,680 million. Its total purchase volume for the second quarter jumped 12.1% year over year to $47,217 million.

Nasdaq reported second-quarter 2022 adjusted earnings per share of $2.07, beating the Zacks Consensus Estimate of $1.91 by 8.4%. The bottom line improved 8.9% year over year. Nasdaq’s revenues of $893 million increased 5.6% year over year. The top line beat the Zacks Consensus Estimate by 1.1%. The operating margin of 54% remained unchanged year over year.

Upcoming Release

Here is a company from the Finance space that you may want to consider, as our model shows that this has the right combination of elements to post an earnings beat this time around:

Carter Bankshares, Inc. CARE has an Earnings ESP of +4.47% and a Zacks Rank #1, currently. The Zacks Consensus Estimate for CARE's second-quarter 2022 earnings is pegged at $1.65 per share, which indicates an increase of 54.2% from the prior-year quarter.

Carter Bankshares beat earnings estimates in two of the trailing four quarters and missed the same twice.

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