The company achieved a record daily trading volume of $14.4 billion in February 2023, marking a 25% increase from the previous year.
On December 20th, 2022, we publicly recommended MarketAxess Holdings Inc. (MKTX) as a stock to buy. Our stock prediction proved to be fruitful as the investment generated a 43.08% return in just three months, despite the market being very volatile during that period. MarketAxess is a global leader in providing electronic trading platforms and related services for fixed-income securities. The company is headquartered in New York City and operates in the Americas, Europe, and Asia-Pacific regions. With over 20 years of experience in the industry, MarketAxess has established a stellar reputation for its innovative solutions and exceptional customer service.
One of the primary issues that MKTX faces is the need to adapt to the rapidly evolving technological landscape. With the advent of blockchain technology and the increasing adoption of artificial intelligence and machine learning, the company must remain vigilant to stay ahead of the competition. Additionally, MarketAxess must navigate the complex regulatory environment that governs the global capital markets to ensure that it remains compliant with all relevant laws and regulations. Moreover, MarketAxess has an impressive track record of expanding its product offerings and geographic footprint through strategic acquisitions. For instance, in 2021, the company acquired MuniBrokers LLC, a leading platform for municipal bond trading, which expanded its capabilities in the U.S. municipal bond market.
MKTX New CEO
In January of this year, MKTX announced that Chris Concannon was appointed to CEO, a seasoned leader with extensive expertise in electronic markets as the industry transitions to an era of increasingly automated, data-driven trading. Mr. Concannon formerly served as President and Chief Operating Officer of Cboe Global Markets, Inc., a post he assumed upon Cboe's purchase of Bats Global Markets, Inc. in 2017. Mr. Concannon has been the Chief Executive Officer of Bats since 2015, before its acquisition by Cboe. He has over 20 years of experience as an executive at Nasdaq, Virtu Financial, and Instinet, as well as an attorney at Morgan, Lewis & Bockius, LLP, and the Securities and Exchange Commission.
MKTX Dividend Paid on Feb 22, 2023
A modest 42% of MarketAxess Holdings' profits have been distributed as dividends. The company has paid a total of US$2.88 per share over the past 12 months, as its quarterly dividend payment per share is US$0.72. Since it's simpler to increase dividends when earnings per share are increasing, MarketAxess Holdings's earnings per share have been increasing at a rate of 11% annually for the previous five years and concurrently the company has also boosted its dividend by an average of 21% a year over the past ten years. In recent years, per-share earnings and dividends have both been increasing quickly.
MKTX 4Q22 Earnings
MarketAxess Holdings Inc. (MKTX) reported its Q4 2022 financial results, showing an 8% increase in revenues to $177.9 million compared to the same period last year. The company's total credit average variable transaction fees per million ("FPM") decreased by 9%, which was driven primarily by the lower duration of bonds traded in U.S. high-grade, leading to lower transaction fees. However, excluding the impact of foreign currency fluctuations, revenues would have increased by approximately 10%. MKTX's estimated market share also increased, with record figures across composite corporate bonds (+210 bps), high-yield (+500 bps), emerging markets (+290 bps), Eurobonds (+500 bps), and municipal bonds (+260 bps). The company's total credit average daily volume increased by 24% to $12.0 billion, representing the third-highest quarter ever, while operating income increased by 7% to $77.7 million, and operating margin was 43.7%.
The company's net income for the quarter was $59.2 million, which was a 15% increase in diluted EPS to $1.58, and a net income margin of 33.3%. Additionally, MKTX's EBITDA increased by 10% to $95.2 million, with an EBITDA margin of 53.5%, up from 52.3% in the prior year. The company also set a record of 2,068 total active firms, up 10%, and 11,679 total traders, up 6%.
MKTX's Open Trading feature continued to be successful, accounting for a record 38% of total credit trading volume, up from 36% in the prior year, with an estimated price improvement of approximately $246 million. MarketAxess also delivered record revenues of $718.3 million for the full-year 2022, up 3%, despite a 10% decline in total credit average FPM, and achieved record commission revenue across high-yield, emerging markets, Eurobonds, municipal bonds, and U.S. Treasuries.
Overall, MKTX's Q4 2022 results showed a strong performance, with increased revenues, estimated market share, and trading volume across most of its product areas, which can be attributed to its unique all-to-all liquidity pool feature in Open Trading. The company is well-positioned to take advantage of a favorable backdrop for fixed income in 2023, creating an attractive operating environment for its business model.
Was 2022 a good year for MKTX?
In 2022, the company saw a 2% increase in its total credit commission revenue of $618.6 million, with a record $11.8 billion in total credit trading average daily volume (ADV), up 13% from the prior year. The growth in revenue was driven by higher trading volumes, strong estimated market share gains, and increased trading by institutional clients. The company also saw a record 19.9% estimated market share for composite corporate bonds and a 10% increase in U.S. high-grade ADV to a record $5.5 billion.
Open Trading executed a record 36% of total credit trading volume. The company's total rates commission revenue was $22.6 million, a 34% increase from the prior year, and information services revenue was $39.3 million, a 3% increase, driven by new data contracts. Post-trade services revenue was $36.9 million, a 5% decrease, due to the impact of foreign currency fluctuations and planned customer attrition. Total expenses of $391.4 million increased by 8%, driven by higher employee compensation, investments to enhance the trading system and data products, and higher technology and communication expenses. The company had $514.5 million in cash, cash equivalents, and investments, with no outstanding borrowings under its credit facility.
Projections for 2023
Based on the foreign exchange rates as of December 31, 2022, the Company has provided its financial guidance for the full year 2023. Total expenses are expected to be in the range of $418.0 million to $446.0 million. The midpoint of the stated guidance range indicates that operating expenses will increase by about 10%. The Company's overall effective tax rate is expected to be between 25.0% and 26.0%. Additionally, capital expenditures to support new protocols, products, and trading platform enhancements are projected to be in the range of $52.0 million to $58.0 million for 2023.
MKTX Stock Prediction Based on AI Analytics
Our subscribers get exclusive market insights based on artificial intelligence and are updated daily about the best market opportunities before they happen. We have posted several articles highlighting the AI predictive systems accuracy with MKTX multiple times already in 2023. There was an accurate month-long prediction of 15.17% that was published in January 2023 and another 1-month prediction in February 2023 that profited 34.32%. Subscribers who purchased MKTX based on our quarterly AI prediction published on December 20th would have successfully recorded a profit of 43.08%. When you read your daily predictions as a subscriber, you may identify greater possibilities by watching for repetition of particular stock recommendations that stay in the AI forecasts. Another sign is if the stock choice appears in many anticipated time periods, particularly multiple predictions released each morning EST. Over this timeframe, MarketAxess has experienced an increase in its trading volumes due to the strength of its diversified product offerings and the success of its Open Trading platform. As a result, the company achieved a record daily trading volume of $14.4 billion in February 2023, marking a 25% increase from the previous year. Plus, management is optimistic about the company's future performance, citing expected gains in market share, favorable market conditions, and stable fees as factors that will support growth in 2023.
Furthermore, MKTX stock has been accessible in many predictions across a variety of time intervals. You can improve decision-making, outcome modeling and forecasting, and market information by combining big data analytics with our AI-powered stock prediction system. The main advantage of using AI for stock market analysis is that it can examine more assets objectively and continuously at all times of the day guiding you on how to make a profit even when the markets are as bearish as they are these days.
Based on the historical accuracy of each prior financial asset forecast, as well as current market parameters important to stock price, the AI-powered stock market analysis computes the Signal Confidence (SC), which is expressed as a percentage out of 100%. This particular stock prediction has a Signal Confidence (SC) of 72%. When combined with machine learning, these incredibly complex mathematical functions for statistical programming and modeling are capable of comparing their current coefficients and algorithms to newly added data and then adapting to improve model accuracy through a validation and reflection process.
The AI stock prediction system analyzes empirical data on financial market irregularities linked to trader overreaction and underreaction to produce circadian forecasts in various frames. Every day, you will be updated with the best potential stock opportunities identified by AI that are offered from the short-term to longer-term time frames
As a general rule of thumb, longer-term predictions tend to be much more accurate and the profits generated tend to be more substantial making our AI trading signals ideal for value-based investors. When combined with machine learning, these incredibly intricate mathematical functions for statistical programming and modeling are capable of comparing their current coefficients and algorithms to newly added data and then adapting to improve the models' accuracy through a process of validation and reflection.
Stock Ticker | Open: Dec 20, 2022 | Close: Mar 20, 2023 | ROI% |
MarketAxess Holdings Inc. (MKTX) | $270.19 | $386.59 | 43.08% |
As previously noted, this stock received several recommendations throughout a range of time intervals. Always exercise discretion when studying the market. Prior to putting any financial plans into action, you should always conduct your own due diligence and seek assistance from a licensed financial advisor.
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Sources:
1. MarketAxess Holdings Inc Investor Relations, "Dividend history" (2023)
2. MarketAxess Holdings Inc Investor Relations, "MarketAxess Reports Fourth Quarter and Full-Year 2022 Results" (2023)
3. MarketAxess Holdings Inc Investor Relations, "MarketAxess Promotes Chris Concannon to Chief Executive Officer; Richard M. McVey to Become Executive Chairman" (2023)
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