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MarketAxess Beats on Q3 Earnings, Revs in Line - Analyst Blog

Posted
10/29/2013 1:29:00 PM
By: Zacks.com
Referenced Stocks:AXP;EEFT;MKTX;NDAQ

MarketAxess Holdings Inc. ( MKTX ) reported its third-quarter 2013 operating net income of 44 cents per share, surpassing the Zacks Consensus Estimate by 9.1%. The results also surged 29.7% from the year-ago quarter.

Bottom-line growth was primarily driven by a sturdy top-line performance.

Operational Update

MarketAxess' total revenues grossed $61.1 million and were in line with the Zacks Consensus Estimate. The figure outpaced the prior-year quarter by 31.7%. Top-line improvement stemmed from higher commission revenues (up 22.3% year over year) as well as higher information and post-trade service revenues.

The significant surge in revenues from information and post-trade services was primarily driven by the Xtrakter acquisition.  

Total expenses of MarketAxess rose 39.5% during the reported quarter. The increase was attributable to operating expenses associated with the Xtrakter purchase as well as higher variable incentive compensation, technology consulting costs and employee recruiting fees.

The company reported pretax income of $26.4 million for the third quarter, up 22.7% year over year.

Pre-tax margin of MarketAxess contracted 310 basis points year over year to 43.2%.

Total Trading volume of MarketAxess increased 26.6% from the prior-year quarter to $174.4 billion.

Financial Update

MarketAxess exited the third quarter of 2013 with total assets of $332.7 million, increasing 18.9% from the 2012 year end-level.

Total cash and cash equivalents of $119 million as of Sep 30, 2013 declined 7.7% from the 2012 year end-level.

At the end of the reported quarter, MarketAxess had total stockholder's equity of $286.6 million, up 18.1% from the end of 2012.

Dividend Update

The board of directors of MarketAxess approved a quarterly cash dividend of 13 cents per share which will be paid on Nov 21 to the stockholders of record as on Nov 7, 2013.

Guidance

MarketAxess expects its full year-2013 expense from continuing operations to lie in the range of $130-$133 million, accounting for the Greenline divestiture and related discontinued operations. The full-year effective tax rate guidance range is also updated to 36-37%.  

Business Update

On Oct 8, MarketAxess divested Greenline Financial Technologies Inc., a fully owned subsidiary, to CameronTec Intressenter AB for $11 million.

Performances by Other Companies

Nasdaq OMX Group Inc. ( NDAQ ) reported third-quarter 2013 operating earnings per share of 66 cents. The results beat the Zacks Consensus Estimate as well as the year-ago earnings figure by 4 cents.

Among others in the finance space, Euronet Worldwide Inc. ( EEFT ) reported third-quarter operating net income of 51 cents per share, surpassing the Zacks Consensus Estimate by 6.3% and the year-ago results by 31.6%.

American Express Company ( AXP ), with a Zacks Rank #2 (Buy) reported its third-quarter net earnings per share of $1.25, beating the Zacks Consensus Estimate by 2.4%.

Zacks Rank

MarketAxess presently carries a Zacks Rank #2 (Buy).



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