Sign in
MH

MARKETAXESS HOLDINGS INC (MKTX)·Q2 2025 Earnings Summary

Executive Summary

  • Record quarter: revenue $219.5M (+11% YoY) and commission revenue $191.8M (+12%), with EBITDA margin 50.5% and net income margin 32.4% .
  • Results modestly beat consensus: revenue $219.5M vs. $219.2M estimate*, EPS (Primary/normalized) $2.00 vs. $1.96 estimate*; GAAP diluted EPS $1.91 *.
  • Strong operational momentum across strategic channels: record U.S. credit block trading ADV (+37%), portfolio trading ADV (+69% to $1.5B), and dealer-initiated ADV (+40%) .
  • Guidance and capital: quarterly dividend maintained at $0.76; FY2025 GAAP tax-rate guidance raised in Q1 to 41–42% and ex-notables to 26–27%; OpEx expected at low-end of $505–$525M per Q1 update .

What Went Well and What Went Wrong

  • What Went Well

    • “Strong progress with our new initiatives, combined with a favorable market backdrop, helped drive record levels of revenue and ADV across most product areas and regions in the quarter.” — CEO Chris Concannon .
    • Record growth across channels: U.S. credit block trading ADV (+37%), eurobonds block ADV (+100%), portfolio trading ADV (+69%), dealer-initiated ADV (+40%) .
    • Rates strength: U.S. government bond commission revenue +49% YoY; total rates commission revenue +40% on 58% ADV growth .

  • What Went Wrong

    • Fee capture pressure: Total credit FPM fell to $138 (–7% YoY; –1% QoQ) and rates FPM to 4.03 (–9% YoY; –4% QoQ) due to protocol/product mix .
    • Expense growth: total expenses $127.6M (+10% YoY), including FX +$1.7M; ex-notables expenses +6% YoY .
    • Effective tax rate for Q2 rose to 26.9% (vs. 24.8% PY), reflecting accruals tied to the uncertain tax position reserve established in Q1 .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$202.4 $208.6 $219.5
Diluted EPS (GAAP) ($)$1.73 $0.40 $1.91
Diluted EPS excl. notable items ($)$1.73 $1.87 $2.00
Net Income Margin %32.2% 7.2% 32.4%
EBITDA Margin %47.8% 51.5% 50.5%
Segment Revenue ($USD Millions)Q1 2025Q2 2025
Commission – Credit$169.1 $176.6
Commission – Rates$7.0 $8.1
Commission – Other$5.2 $7.1
Information Services$12.9 $13.1
Post-Trade Services$11.1 $11.1
Technology Services$3.2 $3.5
Total Revenue$208.6 $219.5
KPIs and Trading MetricsQ2 2024Q2 2025
Total Trading ADV ($B)34.2 49.0
Total Credit ADV ($B)13.7 16.8
U.S. Gov’t Bonds ADV ($B)19.6 30.8
Portfolio Trading ADV ($B)0.9 1.5
Dealer-Initiated ADV ($B)1.3 1.8
U.S. Credit Block Trading ADV ($B)2.32 3.17
Credit FPM ($ per $MM)$148 $138
Rates FPM ($ per $MM)4.45 4.03
Estimates vs. ActualsQ4 2024Q1 2025Q2 2025
Revenue Estimate ($M)*202.65*209.98*219.17*
Revenue Actual ($M)202.40 208.58 219.46
EPS (Primary) Estimate ($)*1.687*1.813*1.964*
EPS (Primary) Actual ($)1.73 1.87 2.00

Values marked with * retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Effective Tax Rate (GAAP)FY 202523.5–24.5% (Q4 2024 PR) 41–42% (Q1 PR/Call) Raised
Effective Tax Rate (ex-notables)FY 202523.5–24.5% (Q4 2024 PR) 26–27% (Q1 PR/Call) Updated
Operating ExpensesFY 2025$505–$525M (Q4 2024 PR) Low-end of $505–$525M (Q1 Call) Lower end targeted
Services Revenue GrowthFY 2025Mid-single digits (Q4 2024 PR) Maintained (Q1 Call) Maintained
Capital ExpendituresFY 2025$65–$70M (Q4 2024 PR) Maintained (Q1 Call) Maintained
DividendQ2 2025$0.76 declared in Q1 $0.76 payable Sep 3, 2025 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
AI/Technology (CP+)Data/analytics demand; CP+ adoption; X-Pro rollout CP+ powers Mid-X matching; continued data growth in Info Services Improving
Portfolio TradingRecord ADV; share gains IG/HY; X-Pro usability ADV +69% to $1.5B; estimated market share 17.5% (U.S. credit PT) Strong momentum
Dealer-InitiatedDealer RFQ record ADV; Mid-X migration to Pragma tech planned Dealer-initiated ADV +40% to $1.8B; Mid-X launch in US Credit announced Expanding
Fee Capture/FPMDeclines driven by protocol mix (PT, dealer-to-dealer) Credit FPM $138 (–7% YoY); Rates FPM 4.03 (–9% YoY) Pressure persists
Macro/VolatilityElevated turnover, widened spreads; tariff-related spikes Favorable backdrop driving volume records across products Supportive
Tax/RegulatoryUncertain tax position reserve established; ETR guidance raised Q2 ETR 26.9% reflecting accruals Stabilizing operationally

Management Commentary

  • CEO Perspective: “We made significant strides in enhancing our client franchise, increasing client engagement with X-Pro, and delivering on our new initiatives across our client-initiated, portfolio trading and dealer-initiated channels.” .
  • Channels Strategy: “Strong progress with our new initiatives… helped drive record levels of revenue and ADV across most product areas and regions.” .
  • Product rollout: Mid-X in US Credit launching, leveraging CP+ mid-point matching to support dealer risk recycling .
  • Q1 context: Elevated velocity and increased automation; Open Trading at record levels; portfolio and dealer-initiated protocols are central to share gains .

Q&A Highlights

Note: The Q2 2025 earnings call transcript could not be retrieved due to a document database inconsistency; highlights below reflect Q1 2025 themes.

  • Share gains drivers and environment dependence: Management emphasized protocol-agnostic strategy and favorable volatility backdrop supporting turnover and liquidity needs .
  • Fee capture dynamics: Lower capture from growth protocols (PT, dealer-to-dealer) offset by stability in core client-to-dealer RFQ pricing; product mix and duration effects discussed .
  • Portfolio trading innovation: X-Pro workflow, pre-trade analytics, net hedging, auto-spotting driving adoption; majority of PT now executed on X-Pro .
  • Block trading rollout: Targeted RFQ and high-touch solutions aim to reduce information leakage and improve execution outcomes; strong client feedback .
  • Alternative liquidity providers: Increased engagement seeking anonymous all-to-all RFQ; data/API demand rising .

Estimates Context

  • Q2 2025: Revenue $219.46M vs. $219.17M estimate* (small beat); Primary EPS $2.00 vs. $1.964* (beat). GAAP diluted EPS reported was $1.91 *.
  • Trajectory: Q1 2025 EPS 1.87 vs. 1.813* (beat), revenue 208.58 vs. 209.98* (slight miss); Q4 2024 EPS 1.73 vs. 1.687* (beat), revenue 202.40 vs. 202.65* (in-line to slight miss). Values retrieved from S&P Global.

Key Takeaways for Investors

  • Mix shift implications: Continued growth in PT and dealer-initiated channels is accretive to volume/revenue but dilutive to FPM; core RFQ pricing remains stable per management .
  • Execution momentum: Record ADV across credit and rates, with block trading and PT enhancements accelerating share capture opportunities into 2H25 .
  • Product catalysts: Mid-X US Credit launch and X-Pro expansion underpin dealer engagement and workflow efficiency; CP+ analytics differentiation supports pricing/execution .
  • Financial leverage: EBITDA margin at ~50% and disciplined OpEx (targeting low-end FY range) provide earnings resilience despite fee capture pressure .
  • Tax normalization path: Q2 ETR 26.9% reflects accrual mechanics post Q1 reserve; ex-notables ETR guidance 26–27% offers cleaner EPS trajectory for modeling .
  • Capital returns: Ongoing buybacks ($80M YTD through July) and dividend maintenance ($0.76) signal confidence; $145M repurchase authorization remaining as of July 31 .
  • Trading lens: Short-term, momentum in rates and credit ADV plus product launches are positive trading catalysts; medium-term thesis hinges on protocol-led share gains and data/analytics edge .