8-K

0000950123-08-001181.txt : 20080206 0000950123-08-001181.hdr.sgml : 20080206 20080206070117 ACCESSION NUMBER: 0000950123-08-001181 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20080206 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20080206 DATE AS OF CHANGE: 20080206 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MARKETAXESS HOLDINGS INC CENTRAL INDEX KEY: 0001278021 STANDARD INDUSTRIAL CLASSIFICATION: SECURITY BROKERS, DEALERS & FLOTATION COMPANIES [6211] IRS NUMBER: 522230784 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-50670 FILM NUMBER: 08579017 BUSINESS ADDRESS: STREET 1: 140 BROADWAY 42ND FLOOR CITY: NEW YORK STATE: NY ZIP: 10005 BUSINESS PHONE: 212-831-6000 MAIL ADDRESS: STREET 1: 140 BROADWAY 42ND FLOOR CITY: NEW YORK STATE: NY ZIP: 10005 FORMER COMPANY: FORMER CONFORMED NAME: MARKETAXESS HOLDING INC DATE OF NAME CHANGE: 20040129 8-K 1 y48114e8vk.htm FORM 8-K 8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 6, 2008

MarketAxess Holdings Inc.

(Exact name of registrant as specified in its charter)


Delaware	0-50670	52-2230784

(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

140 Broadway, 42^nd Floor New York, New York		10005

(Address of principal executive offices)		(Zip Code)


Registrant’s telephone number, including area code		(212) 813-6000

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):


o		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)


o		Soliciting material pursuant to Ruleaunder the Exchange Act (CFR.14a-12)


o		Pre-commencement communications pursuant to Ruled-2(b) under the Exchange Act (CFR 240.14d-2(b))


o		Pre-commencement communications pursuant to Rulee-4(c) under the Exchange Act (CFR 240.13e-4(c))

TABLE OF CONTENTS


Item 2.02 Results of Operations and Financial Condition
Item 9.01 Financial Statements and Exhibits
SIGNATURES
EXHIBIT INDEX
EX-99.1: PRESS RELEASE


Item 2.02		Results of Operations and Financial Condition

On February 6, 2008, MarketAxess Holdings Inc. (the “Company”) issued a press release announcing the Company’s financial results for its fiscal fourth quarter ended December 31, 2007. A copy of this press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

The information included in this Current Report on Form 8-K (including Exhibit 99.1 hereto) that is furnished pursuant to this Item 2.02 shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. In addition, the information included in this Current Report on Form 8-K (including Exhibit 99.1 hereto) that is furnished pursuant to this Item 2.02 shall not be incorporated by reference into any filing of the Registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference into such filing.


Item 9.01		Financial Statements and Exhibits

99.1

Press Release entitled “MarketAxess Reports Fourth Quarter Diluted EPS of $0.06 on Revenue of $22.4 Million” issued by MarketAxess Holdings Inc. on February 6, 2008.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	MARKETAXESS HOLDINGS INC.
Date: February 6, 2008	By:	/s/Richard M. McVey
		Name:	Richard M. McVey
		Title:	Chief Executive Officer

EXHIBIT INDEX


Exhibit
99.1		Press Release entitled “MarketAxess Reports Fourth Quarter Diluted EPS of $0.06 on Revenue of $22.4 Million” issued by MarketAxess Holdings Inc. on February 6, 2008.

EX-99.1 2 y48114exv99w1.htm EX-99.1: PRESS RELEASE EX-99.1

Exhibit 99.1

MARKETAXESS REPORTS FOURTH QUARTER DILUTED EPS OF $0.06 ON REVENUE OF $22.4 MILLION

Full Year 2007 Diluted EPS of $0.30, on Record Revenue of $93.6 Million

Fourth Quarter 2007 Financial Highlights*

•		Diluted earnings per share of $0.06, vs. $0.06.

•		Net income of $1.9 million, down 14.7%.

•		Revenues of $22.4 million, up 1.3%.

•		Pre-tax margin of 13.9%.

*		All comparisons versus fourth quarter 2006.

Full Year 2007 Financial Highlights**

•		Diluted earnings per share of $0.30, vs. $0.15.

•		Net income of $10.3 million, up 90.4%.

•		Revenues a record $93.6 million, up 12.4%.

•		Pre-tax margin of 18.4%.

**		All comparisons versus full year 2006.

NEW YORK, February 6, 2008 — MarketAxess Holdings Inc. (Nasdaq: MKTX), the operator of a leading electronic trading platform for U.S. and European high-grade corporate bonds, emerging markets bonds and other types of fixed-income securities, today announced results for the fourth quarter and full year ended December 31, 2007.

Total revenues for the fourth quarter of 2007 increased 1.3% to $22.4 million, compared to $22.1 million for the fourth quarter of 2006. Pre-tax income for the fourth quarter of 2007 was $3.1 million, compared to $3.6 million for the fourth quarter of 2006, a decrease of 13.6%. Net income for the fourth quarter of 2007 totaled $1.9 million, or $0.06 per share on a diluted basis, compared to $2.2 million, or $0.06 per share on a diluted basis, for the fourth quarter of 2006.

For the fourth quarter of 2007, pre-tax margin was 13.9%, compared to 16.3% for the fourth quarter of 2006.

Richard M. McVey, chairman and chief executive officer of MarketAxess, commented, “While we were not immune to the unstable market environment during the fourth quarter of 2007, our business model performed well, driven by a solid base of fixed commission revenues, higher variable fees per million in our U.S. high grade business and strong recurring revenue generation from our information and data business. Free cash flow generation from our businesses continues to be strong and was in excess of two times net income for the full year 2007. Institutional investor demand for the MarketAxess system is robust, as the number of client trade inquiries submitted in our core U.S. high-grade product in the fourth quarter of 2007 was consistent with the number of inquiries submitted in the pre-market dislocation levels in the first and second quarters of 2007.”

Mr. McVey continued “We remain confident that the long-term trend toward higher market share for electronic trading in credit markets is intact, and we believe that we are well positioned for a return to more normal trading conditions.”

For the full year ended December 31, 2007, total revenue increased 12.4% to a record $93.6 million, from $83.3 million for the full year ended December 31, 2006. Pre-tax income for 2007 was a record

$17.3 million, compared to $8.6 million for 2006, an increase of 100.5%. Net income for 2007 was $10.3 million, or $0.30 per diluted share, compared to $5.4 million, or $0.15 per diluted share, for 2006.

For the full-year 2007, pre-tax margin was 18.4%, compared to 10.3% for 2006.

2007 Business Highlights

	•		Our estimated share of FINRA (Financial Industry Regulatory Authority) high-grade TRACE trading volume increased to 9.4% for 2007, compared to 8.5% for 2006, including a new record estimated quarterly share of 11.1% for the second quarter of 2007.

	•		We were awarded “Best Multi-Dealer Credit Default Swaps Trading Platform” and “Best Multi-Dealer Corporate Bond Trading Platform” in both the United States and Europe by Credit Magazine based on a poll of fixed-income investors. This is the third consecutive year that MarketAxess has been recognized as the Best Multi-Dealer Corporate Bond Trading Platform.

	•		We significantly expanded our recurring revenue base with the successful introduction of our new European high-grade fee plan.

	•		We leveraged our success in client-to-dealer Emerging Markets (EM) trading across new trading protocols and markets. We launched DealerAxess^® inter-dealer trading in EM Credit Default Swaps (CDS) and launched client-to-dealer local market trading, initially in bonds denominated in the local currencies of Mexico, Brazil and Argentina, in December 2007.

	•		We diversified our revenues and expanded our technology services capabilities through our acquisition of substantially all the assets of Trade West Systems, LLC (TWS), a financial software innovator that provides gateway adapters to connect order management systems (OMS) and trading systems to fixed-income trading venues.

	•		We significantly increased client connectivity, with approximately 150 client OMS connections established by the end of 2007. Trades executed directly from OMS connections in 2007 more than doubled, to 22% of all trades executed over the platform.

Fourth Quarter Results

Total revenue for the fourth quarter of 2007 increased 1.3% to $22.4 million, compared to $22.1 million for the fourth quarter of 2006. Commission revenue totaled $19.1 million on total trading volume of $68.4 billion for the fourth quarter of 2007, compared to $19.1 million in commission revenue on total trading volume of $92.0 billion for the fourth quarter of 2006. U.S. high-grade corporate bond commissions decreased 8.5% to $12.3 million on trading volume of $40.9 billion for the fourth quarter of 2007, compared to $13.5 million in commissions on trading volume of $56.5 billion for the fourth quarter of 2006. U.S. high-grade trading volume as a percentage of FINRA’s high-grade TRACE trading volume decreased to an estimated 9.0% for the fourth quarter of 2007, compared to an estimated 9.5% for the fourth quarter of 2006. Total U.S. high-grade trading volume includes single-dealer inquiries of $2.5 billion and $4.4 billion for the fourth quarter of 2007 and the fourth quarter of 2006, respectively. European high-grade corporate bond commissions increased 29.5% to $4.7 million on trading volume of $10.6 billion for the fourth quarter of 2007, compared to $3.7 million in commissions on trading volume of $22.1 billion for the fourth quarter of 2006. Other commissions, which include emerging markets, high yield, credit default swaps and agencies, increased 3.8% to $2.0 million on trading volume of $16.9 billion for the fourth quarter of 2007, compared to $1.9 million in commissions on $13.4 billion in trading volume for the fourth quarter of 2006. Other revenue, which consists of information and user access fees, license fees, interest income and other revenue, increased 9.9% to $3.3 million for the fourth quarter of 2007, compared to $3.0 million for the fourth quarter of 2006.

There were a total of 62 and 64 trading days in the U.S. and U.K., respectively, in the fourth quarter of 2007, compared to 62 and 63 trading days in the U.S. and U.K., respectively, in the fourth quarter of 2006.

Total expenses for the fourth quarter of 2007 increased 4.2% to $19.3 million, compared to $18.5 million for the fourth quarter of 2006. Employee compensation and benefits expense decreased 4.9% to $10.3 million, compared to $10.8 million for the fourth quarter of 2006. Professional and consulting expenses increased 85.6% to $2.1 million, compared to $1.2 million for the fourth quarter of 2006. General and administrative expenses increased 20.7% to $1.9 million, compared to $1.6 million for the fourth quarter of 2006.

Pre-tax income for the fourth quarter of 2007 was $3.1 million, compared to $3.6 million for the fourth quarter of 2006. Pre-tax margin was 13.9% for the fourth quarter of 2007, compared to 16.3% for the fourth quarter of 2006.

The effective tax rate for the fourth quarter of 2007 was 38.5%, compared to 37.6% for the fourth quarter of 2006.

Net income for the fourth quarter of 2007 was $1.9 million, or $0.06 per diluted share, compared to $2.2 million, or $0.06 per diluted share, for the fourth quarter of 2006.

Employee headcount as of December 31, 2007 was 182, compared to 176 as of December 31, 2006.

Full Year 2007 Results

For the year ended December 31, 2007, total revenue increased 12.4% to a record $93.6 million, compared to $83.3 million for 2006. Commission revenue increased 12.3% to a record $80.2 million on record total trading volume of $359.9 billion for 2007, compared to $71.4 million in commission revenue on total trading volume of $339.6 billion for 2006. U.S. high-grade corporate bond commissions increased 10.0% to a record $52.5 million on record trading volume of $209.2 billion for 2007, compared to $47.8 million in commissions on trading volume of $195.4 billion for 2006. U.S. high-grade trading volume as a percentage of FINRA’s high-grade TRACE trading volume increased to an estimated 9.4% for 2007, up from an estimated 8.5% for 2006. Total U.S. high-grade trading volume includes single-dealer inquiries of $15.1 billion and $19.0 billion for 2007 and 2006, respectively. European high-grade corporate bond commissions increased 22.5% to $18.8 million on trading volume of $77.4 billion for 2007, compared to $15.4 million in commissions on trading volume of $87.6 billion for 2006. Other commissions, which include emerging markets, high yield, credit default swaps and agencies, increased 6.4% to $8.8 million on trading volume of $73.3 billion for 2007, compared to $8.3 million in commissions on $56.6 billion in trading volume for 2006. Other revenue, which consists of information and user access fees, license fees, interest income and other revenue, increased 13.0% to $13.4 million for 2007, compared to $11.9 million for 2006.

There were a total of 250 and 253 trading days in the U.S. and U.K., respectively, in 2007, compared to 249 and 251 trading days in the U.S. and U.K., respectively, in 2006.

Total expenses for 2007 increased 2.2% to $76.4 million, compared to $74.7 million for 2006. Employee compensation and benefits expense increased 2.3% to $43.1 million for 2007, compared to $42.1 million for 2006. General and administrative expenses increased 10.5% to $5.9 million for 2007, compared to $5.3 million for 2006. Depreciation and amortization expense increased 6.6% to $7.2 million for 2007, compared to $6.7 million for 2006. Professional and consulting expenses declined 5.4% to $7.6 million for 2007, compared to $8.1 million for 2006.

Pre-tax income for 2007 increased 100.5% to $17.3 million, compared to $8.6 million for 2006. Pre-tax margin was 18.4% in 2007, compared to 10.3% for 2006.

The effective tax rate for 2007 was 40.2%, compared to 37.0% for 2006.

Net income for 2007 was $10.3 million, or $0.30 per diluted share, compared to $5.4 million, or $0.15 per diluted share, for 2006.

Balance Sheet Data

As of December 31, 2007, total assets were $198.4 million and included $124.3 million in cash, cash equivalents and securities, and a deferred tax asset of $37.2 million. Total assets as of December 31, 2006 were $204.3 million and included $131.0 million in cash, cash equivalents and securities and a deferred tax asset of $38.9 million. Total stockholders’ equity as of December 31, 2007 was $174.4 million and book value per common share was $5.12, based on 34.1 million diluted shares outstanding.

Share Repurchases

For the full-year 2007, the Company repurchased 2.5 million shares of its common stock at an average price of $14.10 for a total of $34.6 million. During the fourth quarter of 2007, the Company repurchased 0.5 million shares of its common stock at an average price of $13.57 per share, for a total of $7.2 million. The $40 million share repurchase program, approved in November 2006, was completed in January 2008.

Guidance for 2008

The Company expects total expenses for 2008 to increase between 3% and 7% over full-year 2007 expenses of $76.3 million.

The Company expects its full-year 2008 capital spending, which includes hardware and software, to be in the range of $5.0 million to $7.0 million.

Webcast and Conference Call Information

Richard M. McVey, MarketAxess’ chairman and chief executive officer, T. Kelley Millet, president, and James N.B. Rucker, chief financial officer, will host a conference call to discuss the Company’s financial results and outlook this morning at 8:30 a.m. Eastern time. To access the conference call, please dial 800-299-6183 (U.S.) or 617-801-9713 (international). The passcode for all callers is 19424457. The Company will also host a live audio webcast of the conference call on the Investor Relations section of the Company’s website at www.marketaxess.com. An archive of the call will be available by dialing 888-286-8010 (U.S.) or 617-801-6888 (international) for one week after the announcement. The passcode for replay callers is 50359679. The web cast will also be archived at www.marketaxess.com for 90 days following the announcement.

About MarketAxess

MarketAxess operates one of the leading platforms for the electronic trading of corporate bonds and certain other types of fixed-income securities, serving as an electronic platform through which our more than 670 active institutional investor clients can access the liquidity provided by our 30 broker-dealer clients. MarketAxess’ multi-dealer trading platform allows our institutional investor clients to simultaneously request competitive, executable bids or offers from multiple broker-dealers, and to execute trades with the broker-dealer of their choice. MarketAxess offers our clients the ability to trade U.S. high-grade corporate bonds, European high-grade corporate bonds, credit default swaps, agencies, high-yield and emerging markets bonds. MarketAxess also provides data and analytical tools that help our clients make trading decisions, and we provide connectivity solutions that facilitate the trading process by electronically communicating order information between trading counterparties and we provide our clients with ancillary technology services. Our DealerAxess^{^®}trading service allows dealers to trade fixed-income securities with each other on our platform.

Cautionary Note Regarding Forward-Looking Statements

This press release may contain forward-looking statements, including statements about the outlook and prospects for Company and industry growth, as well as statements about the Company’s future financial and operating performance. These and other statements that relate to future results and events are based on MarketAxess’ current expectations. Actual results in future periods may differ materially from the those currently expected or desired because of a number of risks and uncertainties, including: our dependence on our broker-dealer clients; the level and intensity of competition in the fixed-income electronic trading industry and the pricing pressures that may result; the variability of our growth rate; our limited operating history; the level of trading volume transacted on the MarketAxess platform; the absolute level and direction of interest rates and the corresponding volatility in the corporate fixed-income market; our ability to develop new products and offerings and the market’s acceptance of those products; our ability to enter into strategic alliances and to acquire other businesses and successfully integrate them with our business; our future capital needs and our ability to obtain capital when needed; our exposure to risks resulting from non-performance by counterparties to transactions executed between our broker-dealer clients in which we act as an intermediary in matching back-to-back trades; and other factors. The Company’s actual results and financial condition may differ, perhaps materially, from the anticipated results and financial condition in any such forward-looking statements. The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. More information about these and other factors affecting MarketAxess’ business and prospects is contained in MarketAxess’ periodic filings with the Securities and Exchange Commission and can be accessed at www.marketaxess.com.

# # #

Media and Investor Relations Contacts:
Stephen Davidson
MarketAxess Holdings Inc.
+1-212-813-6021

Sharron Silvers
Gavin Anderson & Co.
+1-212-515-1931

MarketAxess Holdings Inc.
Consolidated Statements of Operations


	Three Months Ended				Twelve Months Ended
	December 31				December 31
	2007		2006		2007		2006
	($ in thousands, except per share data)
	(unaudited)		(unaudited)		(unaudited)		(audited)
Revenues
Commissions
U.S. high-grade	$	12,345	$	13,498	$	52,541	$	47,752
European high-grade		4,729		3,651		18,828		15,368
Other		2,013		1,939		8,845		8,310

Total commissions		19,087		19,088		80,214		71,430
Information and user access fees		1,520		1,369		5,877		5,477
License fees		30		124		688		866
Investment income		1,430		1,283		5,242		4,595
Other		309		216		1,622		948

Total revenues		22,376		22,080		93,643		83,316


Expenses
Employee compensation and benefits		10,280		10,814		43,051		42,078
Depreciation and amortization		1,694		1,703		7,170		6,728
Technology and communications		1,868		1,905		7,463		7,704
Professional and consulting fees		2,134		1,150		7,639		8,072
Occupancy		852		763		3,275		3,033
Marketing and advertising		541		576		1,905		1,769
General and administrative		1,907		1,580		5,889		5,328

Total expenses		19,276		18,491		76,392		74,712


Income before taxes		3,100		3,589		17,251		8,604
Provision for income taxes		1,192		1,351		6,931		3,183

Net income	$	1,908	$	2,238	$	10,320	$	5,421


Per Share Data:
Earnings per share:
Basic	$	0.06	$	0.07	$	0.32	$	0.18
Diluted	$	0.06	$	0.06	$	0.30	$	0.15

Weighted-average common shares:
Basic		32,601		31,430		32,293		30,563
Diluted		34,074		35,225		34,453		35,077

MarketAxess Holdings Inc.
Consolidated Condensed Balance Sheet Data


	December 31, 2007		December 31, 2006
	($ in thousands)
	(unaudited)		(unaudited)
Assets
Cash and cash equivalents	$	72,711	$	82,000
Securities available for sale		51,579		49,015
Deferred tax assets, net		37,207		38,901
All other assets		36,869		34,362

Total assets	$	198,366	$	204,278


Liabilities and Stockholders’ Equity

Total liabilities	$	23,969	$	18,993
Total stockholders’ equity		174,397		185,285


Total liabilities and stockholders’ equity	$	198,366	$	204,278

MarketAxess Holdings Inc.
Volume Statistics


	Total Trading Volume				Total Trading Volume
	Three Months Ended				Twelve Months Ended
	December 31				December 31
	2007		2006		2007		2006
	($ in millions)				($ in millions)
	(unaudited)		(unaudited)		(unaudited)		(audited)
U.S. high-grade — multi dealer ¹	$	38,425	$	52,077	$	194,156	$	176,424
U.S. high-grade — single dealer		2,492		4,384		15,064		19,010
European high-grade		10,562		22,125		77,419		87,614
Other¹		16,920		13,372		73,305		56,585

Total	$	68,399	$	91,958	$	359,944	$	339,633


	Average Daily Volume				Average Daily Volume
	Three Months Ended				Twelve Months Ended
	December 31				December 31
	2007		2006		2007		2006
	($ in millions)				($ in millions)
	(unaudited)		(unaudited)		(unaudited)		(audited)
U.S. high-grade ¹	$	660	$	911	$	837	$	785
European high-grade		165		351		306		349
Other¹		273		216		293		227

Total	$	1,098	$	1,478	$	1,436	$	1,361


Number of U.S. Trading Days ²		62		62		250		249
Number of U.K. Trading Days ³		64		63		253		251


¹		Beginning with June 2006 monthly trading volumes, volumes from the Company’s DealerAxess^® interdealer trading service are included in the Company’s reported U.S. high-grade or “Other” trading volumes, as appropriate. Consistent with current market practice, all DealerAxess^® trading activity is conducted anonymously, and MarketAxess Corporation acts as riskless principal in all DealerAxess^® transactions; accordingly, and consistent with FINRA TRACE reporting standards, both sides of each DealerAxess^® trade are included in the Company’s reported trading volumes.

²		The number of U.S. trading days is based on the SIFMA holiday recommendation calendar.

³		The number of U.K. trading days is based on the U.K. Bank holiday schedule.

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Table of Contents

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