Exhibit 99.1
MarketAxess Reports Third Quarter 2022 Results
NEW YORK | October 19, 2022 - MarketAxess Holdings Inc. (Nasdaq: MKTX) the operator of a leading electronic trading platform for fixed-income securities, and the provider of market data and post-trade services for the global fixed-income markets, today announced financial results for the third quarter of 2022.
| 3Q22 financial and operational highlights*
• Record levels of estimated market share driving strong growth in trading volume. Estimated market share records across composite corporate bond1 (+170 bps), high-yield (+400 bps), Eurobonds (+450 bps) and municipals (+270 bps).
• Revenues of $172.1 million, up 6%. Excluding the impact of foreign currency fluctuations, revenues would have increased approximately 9%.
• Total expenses of $95.8 million, up 9%. Excluding the impact of foreign currency fluctuations, expenses would have increased approximately 13%.
• Diluted EPS of $1.58 on net income of $59.3 million, compared to $1.52 in the prior year, representing an increase of 4%.
• $94.3 million in EBITDA, up 6%, and EBITDA margin of 54.8%, in line with the prior year.
• Board declared $0.70 per share dividend.
• Record 1,972 total active clients, up 7%, and a record 993 active international clients, up 6%, reflecting the continued expansion of our global liquidity pool.
• Record 11,530 active traders on the platform, up 6% from the prior year.
• Total trading average daily volume (“ADV”) of $31.4 billion, up 32%, driven by an 18% increase in total credit ADV to $11.0 billion and a 42% increase in U.S. Treasury ADV to $20.1 billion.
• $260 million in estimated transaction cost savings2 for clients via Open Trading®, our differentiated liquidity pool; $699 million in estimated transaction cost savings2 year-to-date, up 57%.
• Record $25 billion in portfolio trading volume, up from $9 billion in 3Q21 and $23 billion in 2Q22.
* All comparisons versus third quarter 2021 unless otherwise noted. |
Rick McVey, Chairman of the Board and CEO of MarketAxess, commented:
“We delivered another quarter of record market share gains across our expanded product set in the third quarter, driven by increased value for clients from Open Trading liquidity. Our diversified liquidity pool is helping both investor and dealer clients navigate through incredibly difficult and volatile fixed-income trading conditions. The foundation of our business has never been stronger with growing market share in existing as well as new products, an expanded global footprint and record numbers of active clients.
We believe the growth in both public and private debt around the world, combined with higher interest rates, creates a long runway for growth in fixed income e-trading in the years ahead. We are in a strong position to capitalize on this opportunity due to our significant global institutional client network and our unique capabilities in all-to-all trading.” |
Table 1: 3Q22 select financial results
| $ In millions, except |
Revenues | Operating Income |
Net Income | Diluted EPS | EBITDA | EBITDA Margin (%) |
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| 3Q22 |
$ | 172 | $ | 76 | $ | 59 | $ | 1.58 | $ | 94 | 55 | % | ||||||||||||
| 3Q21 |
$ | 162 | $ | 74 | $ | 58 | $ | 1.52 | $ | 89 | 55 | % | ||||||||||||
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| % Change |
6 | % | 3 | % | 2 | % | 4 | % | 6 | % | 0 | % | ||||||||||||
Table 1A: 3Q22 trading volume (ADV)
| CREDIT | RATES | |||||||||||||||||||||||||||||||||||||||||||
| $ in millions |
US/UK Trading Days3 |
Total ADV |
High-Grade | High-Yield | Emerging Markets |
Eurobonds | Other Credit |
Total Credit |
US Govt. Bonds |
Agcy./Other Govt. Bonds |
Total Rates |
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| 3Q22 |
64/64 | $ | 31,440 | $ | 5,124 | $ | 1,626 | $ | 2,592 | $ | 1,255 | $ | 377 | $ | 10,974 | $ | 20,133 | $ | 333 | $ | 20,466 | |||||||||||||||||||||||
| 3Q21 |
64/65 | $ | 23,836 | $ | 4,341 | $ | 1,299 | $ | 2,407 | $ | 1,173 | $ | 91 | $ | 9,311 | $ | 14,226 | $ | 299 | $ | 14,525 | |||||||||||||||||||||||
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| % Change |
32 | % | 18 | % | 25 | % | 8 | % | 7 | % | 314 | % | 18 | % | 42 | % | 11 | % | 41 | % | ||||||||||||||||||||||||
Table 1B: 3Q22 estimated market share
| CREDIT | RATES | |||||||||||||||||||||||||||||||
| (unaudited) |
High-Grade | High-Yield | High-Grade/High- YieldCombined |
Emerging Markets |
Eurobonds | Composite Corporate Bond1 |
Municipals | US Govt. Bonds |
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| 3022 |
21.1 | % | 19.3 | % | 20.6 | % | 20.6 | % | 17.6 | % | 20.6 | % | 4.9 | % | 3.5 | % | ||||||||||||||||
| 3Q21 |
21.4 | % | 15.3 | % | 19.6 | % | 17.0 | % | 13.1 | % | 18.9 | % | 2.2 | % | 2.6 | % | ||||||||||||||||
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| Bps Change |
(30 | ) bps | +400 | bps | +100 | bps | +360 | bps | +450 | bps | +170 | bps | +270 | bps | +90 | bps | ||||||||||||||||
| 3Q19 Pre-Pandemic Levels |
20.2 | % | 11.9 | % | 17.9 | % | 11.5 | % | 9.0 | % | 15.7 | % | 0.7 | % | — | |||||||||||||||||
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| Bps Change 3Q22 vs. 3Q19 |
+90 | bps | +740 | bps | +270 | bps | +910 | bps | +860 | bps | +490 | bps | +420 | bps | +350 | bps | ||||||||||||||||
Overview of results
Revenues and Trading Volumes
Credit
| • | Total credit commission revenue of $147.6 million (including $31.3 million in fixed-distribution fees) increased $8.7 million, or 6%, compared to $138.9 million (including $30.6 million in fixed-distribution fees) in the prior year. The increase in total credit commission revenue was driven principally by higher trading volumes and strong estimated market share gains across most credit products, partially offset by lower average variable transaction fees per million (“FPM”). The decline in average FPM for total credit to $165.60, compared to $181.43 in the third quarter of 2021, was mainly due to the lower duration of bonds traded in U.S. high-grade, driven principally by higher bond yields, as well as product mix-shift. |
| • | 92% of credit volume on the platform was executed by institutional clients. |
| • | Record 37% of total credit trading volume was executed via Open Trading, up from 34% in the prior year. |
| • | Estimated total transaction cost savings2 via Open Trading were approximately $260 million, and $699 million year-to-date. Average transaction cost savings per million2 via Open Trading was $1,141. |
| • | Record composite corporate bond1 estimated market share of 20.6%, up from 18.9%. |
| • | 21.1% U.S. high-grade estimated market share on an 18% increase in ADV. |
| • | Record U.S. high-yield estimated market share of 19.3%, up from 15.3% in the prior year on ADV of $1.6 billion, representing an increase of 25%. |
| • | Emerging markets ADV of $2.6 billion, up 8%; up approximately 12% excluding the impact of foreign currency fluctuations. |
| • | Record Eurobonds estimated market share of 17.6% on ADV of $1.3 billion, up 7%. Excluding the impact of foreign currency fluctuations, Eurobonds ADV would have increased approximately 25%. |
| • | Record municipal bond estimated market share of 4.9%, up from 2.2%, on record trading volume of $23.1 billion. |
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Rates
| • | Total rates commission revenue of $5.5 million increased $1.6 million, or 42%, compared to the prior year, driven by a 42% increase in U.S. Treasury ADV to $20.1 billion on strong estimated market share gains. The average FPM for total rates products was $4.17, compared to $4.11 in the third quarter of 2021. |
| • | 3.5% U.S. Treasury estimated market share, up from 2.6%. |
| • | 226 active participants on the platform, up from 122 in the prior year. |
Information services & post-trade services
| • | Information services revenue of $9.7 million increased $0.1 million, or 1%, compared to the prior year. The increase in revenue was principally driven by new data contract revenue, mainly offset by the impact of foreign currency fluctuations. Excluding the impact of foreign currency fluctuations, information services revenue would have increased approximately 10%. |
| • | Post-trade services revenue of $9.0 million decreased $0.4 million, or 5%, compared to the prior year. The decrease in revenue was principally driven by the impact of currency fluctuations, which was offset by net new contract revenue and higher transaction reporting revenue on higher volumes. Excluding the impact of foreign currency fluctuations and one-time revenue activity, post-trade services revenue would have increased approximately 8%. |
Expenses
| • | Total expenses of $95.8 million increased $7.7 million, or 9%. The increase in expenses was driven principally by higher employee compensation and benefits as a result of the increase in headcount, increased investments to enhance the trading system and data products, as well as higher technology and communication expenses due to higher subscription costs, cloud hosting expense and platform licensing fees. Excluding the impact of foreign currency fluctuations, total expenses would have increased approximately 13%. |
Non-operating
| • | Other income (expense): Other income was $2.6 million, up from $0.5 million in the prior year. The current quarter included higher investment income of $1.3 million due to rising interest rates and $0.9 million of income from the Company’s unconsolidated equity investment. |
| • | Tax rate: The effective tax rate was 24.8%, compared to 22.2% in the prior year. The higher effective tax rate was driven by a $1.7 million decrease in estimated excess tax benefits related to share based compensation awards. |
Capital
| • | The Company had $352.0 million in cash, cash equivalents and investments; there are no outstanding borrowings under the Company’s credit facility. |
| • | The Board declared a quarterly cash dividend of $0.70 per share, payable on November 16, 2022 to stockholders of record as of the close of business on November 2, 2022. |
Other
| • | The Company had a record 1,972 total active client firms and a record 993 active international client firms, representing year-over-year increases of 7% and 6%, respectively. |
| • | The Company also had record active traders of 11,530 (up 6%), consisting of a record 6,121 domestic traders (up 4%) and a record 5,409 international traders (up 9%). |
| • | Employee headcount was 732 as of September 30, 2022, compared to 671 as of September 30, 2021, and 676 as of December 31, 2021. The increase in headcount was due to the continued investment in the Company’s growth initiatives, including geographic expansion, trading automation and new trading protocols. |
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Guidance for 2022
| • | Based on the progression of operating expenses and the impact of foreign currency fluctuations year-to-date, the Company is refining its previously stated full year 2022 expense guidance range of $385.0 million to $415.0 million, to a range of $390.0 million to $398.0 million, which at the midpoint implies 9% growth in full year 2022 expenses versus the prior year. The Company is also refining its previously stated full year 2022 capital expenditure guidance range of $58.0 million to $62.0 million, to a range of $48.0 million to $52.0 million, mainly due to a transition from purchasing to leasing fixed assets and the impact of foreign currency fluctuations year-to-date. |
| • | The Company is re-confirming that it expects the full year effective tax rate to be at the upper-end of the previously stated range of 24.0% to 26.0%. |
| 1 | Composite corporate bond estimated market share is defined as combined estimated market share across U.S. high-grade (derived from FINRA TRACE reported data), U.S. high-yield (derived from FINRA TRACE reported data), emerging markets (derived from FINRA TRACE-reportable emerging markets trading volume, principally U.S. dollar denominated corporates) and Eurobonds (derived from MarketAxess Post-Trade data which is currently estimated to represent approximately 70% of the total European market) product areas. |
| 2 | Estimated transaction cost savings consists of estimated liquidity taker cost savings (defined as the difference between the winning price and the best disclosed dealer cover price) and estimated liquidity provider cost savings (defined as the difference between the winning price and then current Composite+ bid or offer level, offer if the provider is buying, bid if provider is selling) at the time of the inquiry. |
| 3 | Please refer to the Company’s website at investor.marketaxess.com/volume for more information on trading days. |
Non-GAAP financial measures and other items
To supplement the Company’s unaudited financial statements presented in accordance with generally accepted accounting principles (“GAAP”), the Company uses certain non-GAAP measures of financial performance, including earnings before interest, taxes, depreciation and amortization (“EBITDA”), EBITDA margin and free cash flow. The Company believes that these non-GAAP financial measures, when taken into consideration with the corresponding GAAP financial measures, are important in understanding the Company’s operating results. See the attached schedule for a reconciliation of GAAP net income to EBITDA and EBITDA margin and GAAP cash flow from operating activities to free cash flow.
Webcast and conference call information
Rick McVey, Chairman and Chief Executive Officer, Chris Concannon, President and Chief Operating Officer and Christopher Gerosa, Chief Financial Officer, will host a conference call to discuss the Company’s financial results and outlook on Wednesday, October 19, 2022 at 10:00 a.m. ET. To access the conference call, please dial 888-660-6576 (U.S.) and use the ID 3629577 or 929-203-1995 (international) and use the ID 3629577. The Company will also host a live audio Webcast of the conference call on the Investor Relations section of the Company’s website at http://investor.marketaxess.com. The Webcast will be archived on http://investor.marketaxess.com for 90 days following the announcement.
About MarketAxess
MarketAxess (Nasdaq: MKTX) operates a leading electronic trading platform that delivers greater trading efficiency, a diversified pool of liquidity and significant cost savings to institutional investors and broker-dealers across the global fixed-income markets. Over 1,900 firms leverage MarketAxess’ patented technology to efficiently trade fixed-income securities. MarketAxess’ award-winning Open Trading® marketplace is widely regarded as the preferred all-to-all trading solution in the global credit markets. Founded in 2000, MarketAxess connects a robust network of market participants through the full trading lifecycle, including automated trading solutions, intelligent data products and a range of post-trade services. Learn more at www.marketaxess.com and on Twitter @MarketAxess.
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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. The Company’s actual results in future periods may differ materially from those currently expected or desired because of a number of risks and uncertainties, including: global economic, political and market factors; risks relating to the COVID-19 pandemic, including the possible effects of the economic conditions worldwide resulting from the COVID-19 pandemic; adverse effects as a result of climate change or other ESG risks that could affect our reputation; the level of trading volume transacted on the MarketAxess platform; the rapidly evolving nature of the electronic financial services industry; the level and intensity of competition in the fixed-income electronic trading industry and the pricing pressures that may result; reputational or credibility risks related to our data products and index business; the variability of our growth rate; our ability to introduce new fee plans and our clients’ response; our ability to attract clients or adapt our technology and marketing strategy to new markets; risks related to our growing international operations; our dependence on our broker-dealer clients; the loss of any of our significant institutional investor clients; our exposure to risks resulting from non-performance by counterparties to transactions executed between our clients in which we act as an intermediary in matched principal trades; risks related to self-clearing; the effect of rapid market or technological changes on us and the users of our technology; our dependence on third-party suppliers for key products and services; our ability to successfully maintain the integrity of our trading platform and our response to system failures, capacity constraints and business interruptions; the occurrence of design defects, errors, failures or delays with our platforms; our vulnerability to cyber security risks; our actual or perceived failure to comply with privacy and data protection laws; our ability to protect our intellectual property rights or technology and defend against intellectual property infringement or other claims; our ability to enter into strategic alliances and to acquire other businesses and successfully integrate them with our business; our dependence on our management team and our ability to attract and retain talent; limitations on our flexibility because we operate in a highly regulated industry; the increasing government regulation of us and our clients; risks related to the U.K.’s exit from the European Union; our exposure to costs and penalties related to our extensive regulation; our risks of litigation and securities laws liability; our future capital needs and our ability to obtain capital when needed; limitations on our operating flexibility contained in our credit agreement; and other factors. 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.
# # #
| Contacts | ||
| INVESTOR RELATIONS |
MEDIA RELATIONS | |
| Stephen Davidson MarketAxess Holdings Inc. +1 212 813 6313 sdavidson2@marketaxess.com |
Marisha Mistry MarketAxess Holdings Inc. +1 917 267 1232 mmistry@marketaxess.com | |
| William McBride RF | Binder +1 917 239 6726 | ||
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Table 2: Consolidated Statements of Operations
| In thousands, except per share data | Three Months Ended September 30, |
Nine Months Ended September 30, |
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| (unaudited) |
2022 | 2021 | % Change |
2022 | 2021 | % Change |
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| Revenues |
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| Commissions |
$ | 153,164 | $ | 142,826 | 7.2 | % | $ | 482,740 | $ | 475,095 | 1.6 | % | ||||||||||||
| Information services |
9,711 | 9,608 | 1.1 | 28,916 | 28,614 | 1.1 | ||||||||||||||||||
| Post-trade services |
9,000 | 9,444 | (4.7 | ) | 28,056 | 29,553 | (5.1 | ) | ||||||||||||||||
| Other |
237 | 215 | 10.2 | 686 | 629 | 9.1 | ||||||||||||||||||
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| Total revenues |
172,112 | 162,093 | 6.2 | 540,398 | 533,891 | 1.2 | ||||||||||||||||||
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| Expenses |
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| Employee compensation and benefits |
44,805 | 40,878 | 9.6 | 137,996 | 129,698 | 6.4 | ||||||||||||||||||
| Depreciation and amortization |
15,302 | 13,964 | 9.6 | 45,716 | 38,840 | 17.7 | ||||||||||||||||||
| Technology and communications |
14,169 | 10,665 | 32.9 | 38,851 | 31,245 | 24.3 | ||||||||||||||||||
| Professional and consulting fees |
7,560 | 10,847 | (30.3 | ) | 26,101 | 31,191 | (16.3 | ) | ||||||||||||||||
| Occupancy |
3,381 | 3,265 | 3.6 | 10,468 | 9,882 | 5.9 | ||||||||||||||||||
| Marketing and advertising |
1,797 | 1,821 | (1.3 | ) | 6,535 | 6,153 | 6.2 | |||||||||||||||||
| Clearing costs |
4,211 | 3,269 | 28.8 | 13,049 | 12,335 | 5.8 | ||||||||||||||||||
| General and administrative |
4,576 | 3,381 | 35.3 | 12,479 | 9,893 | 26.1 | ||||||||||||||||||
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| Total expenses |
95,801 | 88,090 | 8.8 | 291,195 | 269,237 | 8.2 | ||||||||||||||||||
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| Operating income |
76,311 | 74,003 | 3.1 | 249,203 | 264,654 | (5.8 | ) | |||||||||||||||||
| Other income (expense) |
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| Investment income |
1,433 | 108 | NM | 1,746 | 322 | NM | ||||||||||||||||||
| Interest expense |
(138 | ) | (314 | ) | (56.1 | ) | (648 | ) | (676 | ) | (4.1 | ) | ||||||||||||
| Equity in earnings of unconsolidated affiliate |
869 | — | NM | 1,060 | — | NM | ||||||||||||||||||
| Other, net |
388 | 697 | (44.3 | ) | 7,499 | (1,952 | ) | NM | ||||||||||||||||
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| Total other income (expense) |
2,552 | 491 | NM | 9,657 | (2,306 | ) | NM | |||||||||||||||||
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| Income before income taxes |
78,863 | 74,494 | 5.9 | 258,860 | 262,348 | (1.3 | ) | |||||||||||||||||
| Provision for income taxes |
19,556 | 16,536 | 18.3 | 67,862 | 56,645 | 19.8 | ||||||||||||||||||
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| Net income |
$ | 59,307 | $ | 57,958 | 2.3 | $ | 190,998 | $ | 205,703 | (7.1 | ) | |||||||||||||
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| Per Share Data: |
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| Net income per common share |
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| Basic |
$ | 1.58 | $ | 1.54 | $ | 5.10 | $ | 5.49 | ||||||||||||||||
| Diluted |
$ | 1.58 | $ | 1.52 | $ | 5.07 | $ | 5.40 | ||||||||||||||||
| Cash dividends declared per common share |
$ | 0.70 | $ | 0.66 | $ | 2.10 | $ | 1.98 | ||||||||||||||||
| Weighted-average common shares: |
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| Basic |
37,479 | 37,529 | 37,464 | 37,502 | ||||||||||||||||||||
| Diluted |
37,567 | 38,084 | 37,666 | 38,114 | ||||||||||||||||||||
Page 6
Table 3: Commission Revenue Detail
| In thousands, except fee per million data | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (unaudited) |
2022 | 2021 | % Change | 2022 | 2021 | % Change | ||||||||||||||||||
| Variable transaction fees |
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| Credit |
$ | 116,309 | $ | 108,323 | 7.4 | % | $ | 370,793 | $ | 376,065 | (1.4 | )% | ||||||||||||
| Rates |
5,463 | 3,825 | 42.8 | 17,674 | 11,580 | 52.6 | ||||||||||||||||||
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| Total variable transaction fees |
121,772 | 112,148 | 8.6 | 388,467 | 387,645 | 0.2 | ||||||||||||||||||
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| Fixed distribution fees |
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| Credit |
31,328 | 30,609 | 2.3 | 94,098 | 87,251 | 7.8 | ||||||||||||||||||
| Rates |
64 | 69 | (7.2 | ) | 175 | 199 | (12.1 | ) | ||||||||||||||||
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| Total fixed distribution fees |
31,392 | 30,678 | 2.3 | 94,273 | 87,450 | 7.8 | ||||||||||||||||||
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| Total commission revenue |
$ | 153,164 | $ | 142,826 | 7.2 | $ | 482,740 | $ | 475,095 | 1.6 | ||||||||||||||
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| Average variable transaction fee per million |
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| Credit |
165.60 | 181.43 | (8.7 | ) | 168.00 | 186.14 | (9.7 | ) | ||||||||||||||||
| Rates |
4.17 | 4.11 | 1.4 | 4.09 | 3.94 | 3.8 | ||||||||||||||||||
Table 4: Trading Volume Detail*
| Three Months Ended September 30, | ||||||||||||||||||||||||
| In millions (unaudited) |
2022 | 2021 | % Change | |||||||||||||||||||||
| Volume | ADV | Volume | ADV | Volume | ADV | |||||||||||||||||||
| Credit |
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| High-grade |
$ | 327,916 | $ | 5,124 | $ | 277,837 | $ | 4,341 | 18.0 | % | 18.0 | % | ||||||||||||
| High-yield |
104,066 | 1,626 | 83,136 | 1,299 | 25.2 | 25.2 | ||||||||||||||||||
| Emerging markets |
165,910 | 2,592 | 154,034 | 2,407 | 7.7 | 7.7 | ||||||||||||||||||
| Eurobonds |
80,305 | 1,255 | 76,215 | 1,173 | 5.4 | 7.0 | ||||||||||||||||||
| Other credit |
24,159 | 377 | 5,824 | 91 | 314.8 | 314.3 | ||||||||||||||||||
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| Total credit trading |
702,356 | 10,974 | 597,046 | 9,311 | 17.6 | 17.9 | ||||||||||||||||||
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| Rates |
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| U.S. Government Bonds |
1,288,543 | 20,133 | 910,439 | 14,226 | 41.5 | 41.5 | ||||||||||||||||||
| Agency and other government bonds |
21,281 | 333 | 19,295 | 299 | 10.3 | 11.4 | ||||||||||||||||||
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| Total rates trading |
1,309,824 | 20,466 | 929,734 | 14,525 | 40.9 | 40.9 | ||||||||||||||||||
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| Total trading |
$ | 2,012,180 | $ | 31,440 | $ | 1,526,780 | $ | 23,836 | 31.8 | 31.9 | ||||||||||||||
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| Number of U.S. Trading Days1 |
64 | 64 | ||||||||||||||||||||||
| Number of U.K. Trading Days2 |
64 | 65 | ||||||||||||||||||||||
| Nine Months Ended September 30, | ||||||||||||||||||||||||
| In millions (unaudited) |
2022 | 2021 | % Change | |||||||||||||||||||||
| Volume | ADV | Volume | ADV | Volume | ADV | |||||||||||||||||||
| Credit |
||||||||||||||||||||||||
| High-grade |
$ | 1,029,794 | $ | 5,478 | $ | 965,291 | $ | 5,135 | 6.7 | % | 6.7 | % | ||||||||||||
| High-yield |
314,721 | 1,674 | 287,111 | 1,527 | 9.6 | 9.6 | ||||||||||||||||||
| Emerging markets |
530,964 | 2,824 | 488,895 | 2,601 | 8.6 | 8.6 | ||||||||||||||||||
| Eurobonds |
263,862 | 1,411 | 260,082 | 1,376 | 1.5 | 2.5 | ||||||||||||||||||
| Other credit |
67,820 | 361 | 19,004 | 101 | 256.9 | 257.4 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total credit trading |
2,207,161 | 11,748 | 2,020,383 | 10,740 | 9.2 | 9.4 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Rates |
||||||||||||||||||||||||
| U.S. Government Bonds |
4,248,009 | 22,596 | 2,891,042 | 15,378 | 46.9 | 46.9 | ||||||||||||||||||
| Agency and other government bonds |
74,644 | 397 | 47,827 | 254 | 56.1 | 56.3 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total rates trading |
4,322,653 | 22,993 | 2,938,869 | 15,632 | 47.1 | 47.1 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total trading |
$ | 6,529,814 | $ | 34,741 | $ | 4,959,252 | $ | 26,372 | 31.7 | 31.7 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Number of U.S. Trading Days1 |
188 | 188 | ||||||||||||||||||||||
| Number of U.K. Trading Days2 |
187 | 189 | ||||||||||||||||||||||
| 1 | The number of U.S. trading days is based on the SIFMA holiday recommendation calendar. |
| 2 | The number of U.K. trading days is based on the U.K. Bank holiday schedule. |
| * | Consistent with FINRA TRACE reporting standards, both sides of trades are included in the Company’s reported volumes when the Company executes trades on a matched principal basis between two counterparties. Consistent with industry standards, U.S. Government Bond trades are single-counted. |
Page 7
Table 5: Consolidated Condensed Balance Sheet Data
| As of | ||||||||
| In thousands (unaudited) |
September 30, 2022 | December 31, 2021 | ||||||
| Assets |
||||||||
| Cash and cash equivalents |
$ | 318,699 | $ | 506,735 | ||||
| Cash segregated under federal regulations |
50,523 | 50,159 | ||||||
| Investments, at fair value |
33,294 | 36,078 | ||||||
| Accounts receivable, net |
87,550 | 63,881 | ||||||
| Receivables from broker-dealers, clearing organizations and customers |
584,654 | 408,346 | ||||||
| Goodwill |
154,789 | 154,789 | ||||||
| Intangible assets, net of accumulated amortization |
99,887 | 116,377 | ||||||
| Furniture, equipment, leasehold improvements and capitalized software, net |
93,512 | 96,061 | ||||||
| Operating lease right-of-use assets |
66,662 | 70,960 | ||||||
| Prepaid expenses and other assets |
70,177 | 27,066 | ||||||
|
|
|
|
|
|||||
| Total assets |
$ | 1,559,747 | $ | 1,530,452 | ||||
|
|
|
|
|
|||||
| Liabilities and stockholders’ equity |
||||||||
| Liabilities |
||||||||
| Accrued employee compensation |
$ | 45,217 | $ | 59,719 | ||||
| Payables to broker-dealers, clearing organizations and customers |
336,885 | 229,325 | ||||||
| Income and other tax liabilities |
28,257 | 40,456 | ||||||
| Accounts payable, accrued expenses and other liabilities |
47,362 | 71,218 | ||||||
| Operating lease liabilities |
83,286 | 88,425 | ||||||
|
|
|
|
|
|||||
| Total liabilities |
541,007 | 489,143 | ||||||
|
|
|
|
|
|||||
| Stockholders’ equity |
||||||||
| Common stock |
123 | 123 | ||||||
| Additional paid-in capital |
330,294 | 330,262 | ||||||
| Treasury stock |
(320,252 | ) | (232,712 | ) | ||||
| Retained earnings |
1,068,662 | 956,966 | ||||||
| Accumulated other comprehensive loss |
(60,087 | ) | (13,330 | ) | ||||
|
|
|
|
|
|||||
| Total stockholders’ equity |
1,018,740 | 1,041,309 | ||||||
|
|
|
|
|
|||||
| Total liabilities and stockholders’ equity |
$ | 1,559,747 | $ | 1,530,452 | ||||
|
|
|
|
|
|||||
Page 8
Table 6: Reconciliation of Net Income to EBITDA
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| In thousands (unaudited) |
2022 | 2021 | 2022 | 2021 | ||||||||||||
| Net income |
$ | 59,307 | $ | 57,958 | $ | 190,998 | $ | 205,703 | ||||||||
| Add back: |
||||||||||||||||
| Interest expense |
138 | 314 | 648 | 676 | ||||||||||||
| Provision for income taxes |
19,556 | 16,536 | 67,862 | 56,645 | ||||||||||||
| Depreciation and amortization |
15,302 | 13,964 | 45,716 | 38,840 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| EBITDA |
$ | 94,303 | $ | 88,772 | $ | 305,224 | $ | 301,864 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| EBITDA margin1 |
54.8 | % | 54.8 | % | 56.5 | % | 56.5 | % | ||||||||
Table 7: Reconciliation of Cash Flows from Operating Activities to Free Cash Flow
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| In thousands (unaudited) |
2022 | 2021 | 2022 | 2021 | ||||||||||||
| Cash flows from operating activities |
$ | 85,098 | $ | 62,813 | $ | 155,005 | $ | 136,380 | ||||||||
| Exclude: Net change in trading investments |
(445 | ) | — | (445 | ) | 5,569 | ||||||||||
| Exclude: Net change in fail-to-deliver/receive from broker-dealers, clearing organizations and customers |
(2,227 | ) | 55,195 | 45,939 | 121,969 | |||||||||||
| Less: Purchases of furniture, equipment and leasehold improvements |
(3,961 | ) | (4,758 | ) | (6,642 | ) | (14,567 | ) | ||||||||
| Less: Capitalization of software development costs |
(8,548 | ) | (8,191 | ) | (27,109 | ) | (24,650 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Free cash flow |
$ | 69,917 | $ | 105,059 | $ | 166,748 | $ | 224,701 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 1 | EBITDA margin is derived by dividing EBITDA by revenue for the applicable period. |
Page 9