Executive Summary

Revenue rose 20% year over year to $206.7M, with EPS up 30% to $1.90; operating leverage improved as operating income grew 30% and EBITDA margin expanded to 50.8% .
Strong breadth: total credit ADV +27% YoY (U.S. high grade +36%), record portfolio trading ADV ($1.1B), record rates commission revenue (+35%), and record municipal market share (8.7%) .
Management accelerated “high‑touch” strategy with X‑Pro, launching targeted block trading and reporting several hundred bps portfolio trading share gains vs Q2; 74% of portfolio trading volume executed on X‑Pro in September .
Q4-to-date monthly metrics show continued robust volumes but a dip in U.S. HG market share in October amid lower portfolio trading and client shift to blocks; preliminary credit fee capture improved m/m .
Governance catalyst: Founder and Executive Chairman Rick McVey to retire from the Board at year-end; Carlos Hernandez appointed Chairman effective Jan 1, 2025—a notable leadership transition for investor sentiment .

What Went Well and What Went Wrong

What Went Well

“We delivered significantly improved financial results… 20% growth in revenue… 30% increase in diluted EPS” driven by strong market volumes and cost discipline .
Product breadth: record portfolio trading ADV ($1.1B) and record rates commission revenue (+35%); Open Trading share rose to 35% with ~$119M client price improvement .
X‑Pro rollout: “record 74% of our portfolio trading volume was executed on X‑Pro in September” and targeted block trading solutions launched to minimize market impact .

What Went Wrong

U.S. high‑yield market share fell to 13.0% (down 310 bps YoY) amid mix shifts and lower HY activity; Eurobonds ADV decreased 10% QoQ despite strong YoY .
Variable credit FPM declined to $148.97 from $154.85 YoY due to protocol/product mix (higher portfolio trading, lower HY) despite longer duration helping HG fee capture .
October update flagged lower U.S. high‑grade share (18.0%) vs September as portfolio trading declined and blocks rose, highlighting near-term share volatility even as volumes and fee capture improved .

Financial Results

Metric	Q3 2023	Q2 2024	Q3 2024
Revenues ($USD Millions)	$172	$198	$207
Operating Income ($USD Millions)	$67	$81	$87
Net Income ($USD Millions)	$55	$65	$71
Diluted EPS ($)	$1.46	$1.72	$1.90
Net Income Margin (%)	31.9%	32.9%	34.6%
EBITDA ($USD Millions, non‑GAAP)	$83	$99	$105
EBITDA Margin (%) (non‑GAAP)	48.1%	50.0%	50.8%

Segment and revenue detail

Commission and Services Detail ($USD Thousands)	Q3 2023	Q2 2024	Q3 2024
Total Commission Revenue	$150,496	$171,679	$180,392
Variable Transaction Fees – Credit	$109,065	$127,645	$134,863
Variable Transaction Fees – Rates	$5,209	$5,719	$7,018
Other Commission (Pragma)	—	$5,076	$4,856
Fixed Distribution Fees – Credit	$36,167	$33,177	$33,584
Fixed Distribution Fees – Rates	$55	$62	$71
Information Services Revenue	$11,801	$12,544	$12,960
Post‑Trade Services Revenue	$9,833	$10,400	$10,382
Technology Services Revenue	$154	$3,037	$2,981

Trading volumes (ADV, $USD Millions)

ADV	Q3 2023	Q2 2024	Q3 2024
Total ADV	$29,285	$34,169	$40,516
Total Credit	$11,156	$13,743	$14,116
U.S. High‑Grade	$5,179	$6,436	$7,027
U.S. High‑Yield	$1,294	$1,337	$1,278
Emerging Markets	$2,799	$3,337	$3,333
Eurobonds	$1,484	$2,103	$1,891
Municipals	$388	$522	$577
Total Rates	$18,129	$20,426	$26,400
U.S. Gov’t Bonds	$17,713	$19,634	$25,302
Agency/Other Gov’t	$416	$792	$1,098

KPIs (estimated market share)

KPI	Q3 2023	Q2 2024	Q3 2024
U.S. High‑Grade Share	20.0%	18.7%	19.5%
U.S. High‑Yield Share	16.1%	13.5%	13.0%
HG/HY Combined	19.1%	17.6%	18.1%
Municipals Share	5.5%	7.4%	8.7%
U.S. Gov’t Bonds Share	2.5%	2.3%	2.6%

Additional operational KPIs

KPI	Q2 2024	Q3 2024
Open Trading Share of Credit	34%	35%
Portfolio Trading ADV ($USD Billions)	Record $55.0 (volume)	Record $1.1 (ADV)
Automation Share of Total Credit Volume	10%	11%
Automation Share of Total Credit Trade Count	27%	Record trade count; dealers’ algo responses +24% YoY

Note: EBITDA and EBITDA margin are non‑GAAP; see company’s reconciliation .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Operating Expenses	FY 2024	$480M–$500M (tracking to low end)	“More or less in line” with prior guidance, slightly below low end; variable costs rising offset by fixed timing shifts	Maintained (with mix shift)
Quarterly Dividend per Share	Q4 2024	$0.74 (Q3 declared)	$0.74 payable Dec 4, 2024; record Nov 20, 2024	Maintained
Share Repurchase Authorization	Ongoing	$250M authorized Aug 2024	$236.1M remaining as of Oct 31, 2024	Utilized (remaining updated)

Earnings Call Themes & Trends

Topic	Q1 2024 (Prior Two Quarters: Q1)	Q2 2024 (Q‑1)	Q3 2024 (Current)	Trend
X‑Pro rollout & high‑touch strategy (blocks, portfolio)	Strategy focus on X‑Pro enhancements, portfolio trading growth; targeting large-sized trades	Staged rollout across products; AI dealer selection tool introduced; global PT solution; interoperability focus	Initial rollout to international base; several hundred bps PT share gains vs Q2; 74% PT volume on X‑Pro in Sept; targeted block trading launched	Accelerating feature delivery; early share gains in PT; block solution in pilot
Portfolio trading competitiveness	PT volume up 40.6% YoY	Record PT volume; share gain targeted; benchmark trading features	Candidly “not on par” yet; upgrades rolling out; expect crossover in Q1 2025	Improving but still catching up; roadmap into Q1 2025
Dealer services & ICE partnership	—	ICE Bonds connectivity announced to bring retail micro-lot liquidity; complementary pools	ICE muni and corporates live; strong feedback; expanded integration planned	Building dealer/single-price auction (Mid‑X) & RFQ enhancements
S&P Global data partnership	—	—	Strategic fixed income data partnership combining CP+ with S&P evaluated pricing; go‑live end Q1/early Q2	Expands data footprint; boosts pre‑trade analytics
Emerging Markets (EM) strength	Record EM commission/ADV; LATAM/APAC growth	EM ADV +23%; local markets RFM up 45%	EM ADV +19%; record blocks; Open Trading EM liquidity ~45% of taker liquidity; broad client diversification	Sustained multi‑year growth; early electronification
Macro: velocity/new issue	HG ADV +18%; HY new issuance +116.5% YoY	Velocity trending up; improving macro backdrop	Robust new issuance (HG +27%, HY +86% YTD); velocity above 80% with 91% Sept exit rate; rates volatility supporting record rates ADV	Constructive macro tailwinds; volatility likely to pick up
Automation suite	Record volume/trade count; dealer algo responses +50.2%	10% of credit volume; 27% of trade count; 10M dealer algo responses (+38%)	11% of credit volume; record trade count; 10M+ responses (+24%)	Growing penetration and breadth

Management Commentary

“We delivered significantly improved financial results in the third quarter… We are looking to build on these gains… targeted block trading solutions… enhancing our dealer liquidity solutions… extending automation services” (CEO) .
“We delivered revenue of $207 million, up 20%… resulted in the first quarter of positive operating leverage since the fourth quarter of 2020, with incremental margins of approximately 60%” (CFO) .
“We have now launched the key elements of our targeted block trading capability to attack the highest value client order flow, representing 40% of the U.S. high‑grade market” (CEO) .
“Open Trading continues to be the largest single source of secondary liquidity in the U.S. credit markets” (Executive remarks) .
Leadership: “Rick McVey… will retire at the end of the year. Carlos Hernandez will succeed… as Chairman… effective January 1, 2025” .

Q&A Highlights

Block trading rollout and timing: initial launch with pilot clients; expect 2025 ramp with sequential enhancements; focus on minimizing information leakage via AI dealer selection and proprietary data (CP Inquiry) .
Fee per million (FPM) sensitivities: +~$15 per million HG for each +1 year increase in weighted average years to maturity; +$3–$5 per million for first 100 bps decline in yields; Q3 weighted average years to maturity around ~9 years vs ~8 in Q2 .
S&P Global partnership mechanics and benefits: CP+ powering evaluated pricing; MarketAxess receiving reference data; rollout targeted end Q1/early Q2 to strengthen pre‑trade analytics and ETF pricing linkages .
Dealer-to-dealer strategy: expanding RFQ with automation, “Work Up” protocol for size extension, and Mid‑X single price auctions—strong traction in Eurobonds; bringing to U.S. in 2025 .
Macro drivers of velocity: yields attractive, robust new issue calendar, higher turnover; volatility expected to help spread dispersion and economics; credit volatility yet to catch up with rates .

Estimates Context

Wall Street consensus estimates via S&P Global were unavailable in this session due to API limits; we attempted retrieval and could not obtain Q3 2024 EPS/revenue consensus for beat/miss comparison [functions.GetEstimates error].
Investors should note results showed double-digit YoY growth across revenue and EPS; however, without S&P Global consensus, we cannot quantify the beat/miss versus Street expectations here.

Key Takeaways for Investors

Positive operating leverage returned: incremental margins ~60%, with EBITDA margin expanding to 50.8%; breadth across products and regions reduces reliance on U.S. credit share .
Execution on X‑Pro high‑touch strategy is the core near-term narrative: early portfolio trading share gains and block trading launch target the ~40% TRACE block segment—key for reclaiming U.S. high‑grade share .
Mix dynamics still matter: portfolio trading and lower HY weigh on FPM, but longer duration and potential yield declines can lift HG fee capture per disclosed sensitivities; watch curve steepening and rate path .
EM franchise is a secular growth engine: record blocks, expanding protocols (RFM), and growing Open Trading liquidity; diversified client base (EMEA/APAC/LatAm) supports resilience .
Dealer services and connectivity are building optionality: ICE Bonds integration and Mid‑X expansion broaden liquidity access; potential treasury clearing developments with ICE warrant monitoring .
October KPIs caution: U.S. HG share dipped as blocks rose and PT fell; yet total ADV and fee capture improved—expect share volatility near-term but limited revenue impact per management .
Governance change is a notable catalyst: McVey’s retirement and Hernandez’s appointment may prompt investor reevaluation; continuity via International Board role and strategic focus retained .

Appendix: Additional Capital and Balance Sheet Highlights

Cash, cash equivalents, corporate bond and U.S. Treasury investments: $602.5M at Sep 30, 2024 (up from $558.8M at Jun 30, 2024); no credit facility borrowings .
Free cash flow: $86.3M in Q3; $214.8M YTD vs $165.0M YTD prior year (non‑GAAP reconciliation provided) .
Declared quarterly dividend: $0.74 per share payable Dec 4, 2024; record Nov 20, 2024 .

Citations: All quantitative and qualitative statements sourced from company 8‑K, press releases, and earnings call transcript as referenced above. Non‑GAAP items per company reconciliation . October monthly metrics per press release . Q2 and Q1 trend references per 8‑K press releases and Q2 call .

MARKETAXESS HOLDINGS INC (MKTX)·Q3 2024 Earnings Summary