Richard M McVey, chairman and chief executive officer of MarketAxess

MarketAxess reports Q3 2011 record revenues of USD46.6m

MarketAxess Holdings Inc, the operator of a leading electronic trading platform for US and European high-grade corporate bonds emerging markets bonds and other types of fixed-income securities, has reported an increase in total revenues for the third quarter of 2011 of 24.5% to a record USD46.6 million, compared to USD37.4 million for the third quarter of 2010.

Pre-tax income was a record USD22.3 million, compared to USD13.5 million for the third quarter of 2010, an increase of 64.9%. Pre-tax margin was 47.9%, compared to 36.1% for the third quarter of 2010. Net income totalled USD13.4 million, or USD0.34 per share on a diluted basis, compared to USD8.6 million, or USD0.22 per share on a diluted basis, for the third quarter of 2010.

Commission revenue for the third quarter of 2011 totalled USD39.8 million on total trading volume of USD131.7 billion, compared to USD31.2 million in commission revenue on total trading volume of USD100.5 billion for the third quarter of 2010. U.S. high-grade trading volume as a percentage of FINRA’s high-grade TRACE trading volume increased to an estimated 11.6%, compared to an estimated 8.3% for the third quarter of 2010.
 
Technology products and services revenue, which includes revenue for technology licenses, support and professional services, increased 9.4% to USD3.8 million for the third quarter of 2011, compared to USD3.5 million for the third quarter of 2010. Other revenue, which consists of information and user access fees, investment income and other revenue, increased 5.6% to USD3.0 million, compared to USD2.8 million for the third quarter of 2010.
 
Total expenses for the third quarter of 2011 increased 1.6% to USD24.3 million, compared to USD23.9 million for the third quarter of 2010. The increase in expenses during the third quarter of 2011 was primarily due to higher marketing and advertising expense of USD0.6 million. During the third quarter of 2011, the Company’s Compensation Committee modified the cash incentive bonus accrual methodology to reflect lower than expected staffing levels and higher than expected operating income. Without the adjustment, employee compensation costs for the quarter would have been approximately USD1.9 million higher. For the first nine months of 2011, the total cash bonus provision is approximately 18% higher compared to the first nine months of 2010.

“We are very pleased to report another record quarter of revenues, pre-tax income and operating margin,” says Richard M McVey (pictured), chairman and chief executive officer of MarketAxess. “This represents the 10th consecutive quarter of record results and has been driven by strong US high grade market share gains and continued expense discipline.”

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