MarketAxess Holdings Inc. MKTX has reported third-quarter 2024 earnings per share of $1.90, which surpassed the Zacks Consensus Estimate by 4.4%. The bottom line grew 30.1% year over year.
Total revenues of $206.7 million rose 20% year over year. The top line surpassed the consensus mark by a whisker.
The strong quarterly results were driven by improving U.S. high-grade, emerging markets and Eurobonds commission revenues. Higher service revenues added to the upside. Geographic expansion and product diversification drove the average daily volume (ADV) of emerging markets and Eurobonds. However, the upside was partly offset by an elevated expense level.
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MarketAxess Holdings Inc. Price, Consensus and EPS Surprise
MarketAxess Holdings Inc. price-consensus-eps-surprise-chart | MarketAxess Holdings Inc. Quote
Quarterly Operational Update
Commission revenues were $180.4 million, which increased 20% year over year, and beat the Zacks Consensus Estimate of $178.7 million and our estimate of $168.7 million. The improvement in the metric was driven by better commission revenues in the U.S. high-grade, Eurobonds and emerging markets. Information services’ revenues improved 10% year over year to $13 million. The figure beat the consensus mark of $12.8 million and our estimate of $12 million. The metric benefited on the back of net new data contract revenues.
Post-trade services revenues of $10.4 million improved 6% year over year, attributable to net new contract revenues. However, the reported figure missed the consensus mark by 2.5%. Revenues from the Pragma acquisition were $7.7 million.
Total expenses of $119.7 million escalated 14% year over year due to higher employee compensation and benefits, technology and communication and marketing and advertising expenses. However, the metric fell marginally short of our estimate of $119.9 million.
MKTX’s operating income rose 30% year over year to $87.1 million, beating our estimate of $74.7 million. EBITDA of $105 million improved 27% year over year and the EBITDA margin improved 270 bps to 50.8%.
Trading Volumes in Detail
The high-grade trading volume of MarketAxess was $449.7 billion, which improved 38% year over year and beat the Zacks Consensus Estimate of $449.7 billion. The ADV of the same product category improved 36% year over year to $7 billion, beating the consensus mark of $6.6 billion and our estimate of $6.3 billion.
However, high-yield trading volume improved 0.3% year over year, while its ADV fell 1% due to a reduced level of credit spread volatility.
Other credit trading volume jumped 49% to $37.6 billion, whereas ADV for the same product category rose 47% year over year to $587 million.
Trading volume and ADV of emerging markets rose 21% and 19%, respectively, on a year-over-year basis. The Eurobonds’ trading volume and ADV grew 49% and 47%, respectively.
Total credit trading volume of $905.3 billion advanced 29% year over year and surpassed the Zacks Consensus Estimate of $886.2 billion. Total credit ADV rose 27% to $14.1 billion, beating the consensus mark of $13.7 billion and our estimate of $13.3 billion.
Total rates’ trading volume jumped 48% and ADV of this product category improved 38% year over year.
Balance Sheet (As of Sept. 30, 2024)
MarketAxess exited the third quarter with cash and cash equivalents of $446.3 million, which declined 1.1% from the 2023 end. Total assets of $1.8 billion decreased 9% year over year.
The company had no outstanding borrowing under its credit facility at the third-quarter end. Total stockholders’ equity of $1.4 billion grew 7.2% from the 2023 end.
Cash Flows
Cash generated from operations amounted to $95.1 million compared to the previous year's figure of $79.2 million. The free cash flow was $86.3 million, which rose 15.4% year over year.
Capital Deployment Update
MarketAxess bought back shares worth $15 million. The capacity of $236.1 million was left under the company’s authorized repurchase program as of Oct. 31, 2024.
Management approved a quarterly cash dividend of 74 cents per share, which will be paid out on Dec. 4, 2024, to shareholders of record as of Nov. 20.
Zacks Rank
MarketAxess currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Finance Sector Players
Marsh & McLennan Companies, Inc. MMC posted third-quarter 2024 adjusted earnings per share of $1.63, which beat the Zacks Consensus Estimate by 1.2%. The bottom line advanced 3.8% year over year. Consolidated revenues rose 6% year over year to $5.7 billion. The figure also improved 5% on an underlying basis. The top line, however, fell 0.2% short of the consensus mark.
Marsh & McLennan’s adjusted operating income was $1.19 billion in the third quarter, which grew 12% year over year but missed our estimate of $1.21 billion.
Arthur J. Gallagher & Co. AJG reported third-quarter 2024 adjusted net earnings of $2.26 per share, meeting the Zacks Consensus Estimate. The bottom line increased 13% on a year-over-year basis. Total adjusted revenues of $2.7 billion missed the Zacks Consensus Estimate by 0.1%. However, the top line improved 11.1% year over year.
EBITDAC grew 14.3% from the prior-year quarter to $808.8 million.
Aon plc AON reported third-quarter 2024 adjusted earnings of $2.72 per share, which beat the Zacks Consensus Estimate by 11%. The bottom line advanced 17% year over year. Total revenues of $3.72 billion improved 26% year over year. The top line beat the consensus mark by 0.5%. It consisted of organic revenue growth of 7% and a 19% revenue rise from acquisitions.
Revenues are expected to register mid-single-digit or higher organic growth for 2024 and beyond. The company anticipates the adjusted operating margin to expand in 2024.
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