MarketAxess Reports Fourth Quarter and Full Year 2023 Results
4Q23 select financial and operational highlights*
-
Total revenues of
$197.2 million , up 10.9%, includesPragma revenues of$7.6 million and an increase of$1.8 million from the impact of foreign currency fluctuations. -
Total expenses of
$120.2 million ,up 19.9%,includesPragma operating expenses of$8.7 million , acquisition-related expenses and costs associated with efficiency initiatives of$2.4 million and an increase of$1.7 million from the impact of foreign currency fluctuations. -
16.5% increase in diluted EPS to
$1.84 on net income of$69.6 million, up from diluted EPS of$1.58 on net income of$59.2 million in the prior year. The current quarter includes a benefit to earnings in the provision for income taxes from return-to-provision adjustments and the purchase of transferable tax credits by the Company. -
Record information services revenue of
$11.9 million , up 14.6%, and record post-trade revenue of$11.0 million , up 24.1%. Information services and post-trade revenues include increases from the impact of foreign currency fluctuations of$0.4 million and$0.6 million , respectively. -
Strong geographic and product diversification with a 10.8% increase in average daily volume (“ADV”) from international products (emerging markets and Eurobonds); record portfolio trading volume of
$41.8 billion , up 35.8%, and 7.8% growth in municipal bonds on record ADV, with a record$23.7 billion in tax-exempt trading volume. - 30.3% of eligible portfolio trading volume was executed over MarketAxess X-Pro, up from 18.2% in 3Q23, as client engagement with the new platform continues to grow.
- Record automated and algorithmic trading volume (+40.3%), trade count (+41.3%) and active client firms (+36.0%); record level of algorithmic responses (+40.0%).
-
Record 2,108 (+2.1%) active client firms, record 1,638(+3.7%) active
U.S. credit client firms; 1,053 (+2.3%) international active client firms and record 1,167 (+6.6%) active client firms trading three or more products. -
36% total credit Open Trading® share,1 down from 38% in the prior year. The Company delivered estimated price improvement2 via Open Trading of approximately
$173 million in the quarter and$702 million for full year 2023.
*All comparisons versus 4Q22 unless otherwise noted.
“In 2023, we made significant strides in enhancing our client franchise, increasing client engagement with MarketAxess X-Pro, our new trading platform, and delivering solid growth in ADV across new product areas and regions.
We have integrated our market leading data, protocols and liquidity pools for clients through X-Pro, designed to make client workflows more efficient. Our innovative proprietary data is powering X-Pro, and we believe, is helping our clients make better trading decisions. We are expanding our automated and algorithmic trading solutions by leveraging our newly acquired quantitative trading expertise to generate new client algorithms. These new algorithms solve for increasing investor demand for efficiency and the need to enhance profitability.
We made significant progress establishing the next generation of trading tools for clients to engage our integrated markets. We are entering 2024 with a more favorable backdrop for fixed-income, and our client franchise has never been stronger. We are focused on realizing the full potential of the investments we have made to drive continued growth in the quarters ahead.”
Table 1: 4Q23 select financial results
$ in millions, except per share data (unaudited) |
Revenues | Operating Income | Net Income | Diluted EPS |
Net Income Margin (%) |
EBITDA3 |
EBITDA Margin (%)3 |
4Q23 |
|
|
|
|
35.3% |
|
50.0% |
4Q22 |
|
|
|
|
33.3% |
|
51.7% |
% Change |
11% |
(1%) |
18% |
16% |
+200 bps |
7% |
(170) bps |
FY 2023 |
|
|
|
|
34.3% |
|
50.9% |
FY 2022 |
|
|
|
|
34.8% |
|
55.0% |
% Change |
5% |
(4%) |
3% |
3% |
(50) bps |
(3%) |
(410) bps |
Table 1A: 4Q23 trading volume (ADV)
CREDIT |
RATES |
||||||||||
$ in millions (unaudited) |
US/ Days4 |
Total ADV |
Total Credit |
High-Grade | High-Yield |
Emerging Markets |
Eurobonds |
Municipal Bonds |
Total Rates |
US Govt. Bonds |
Agcy./Other Govt. Bonds |
4Q23 |
62/63 |
|
|
|
|
|
|
|
|
|
|
4Q22 |
61/63 |
|
|
|
|
|
|
|
|
|
|
% Change |
|
(3%) |
9% |
13% |
(8%) |
10% |
13% |
8% |
(10%) |
(11%) |
20% |
Table 1B: 4Q23 estimated market share
CREDIT | RATES | ||||||
(unaudited) |
High-Grade | High-Yield |
High-Grade/High- Yield Combined |
Eurobonds5 |
Composite Corporate Bond6 |
Municipals |
US Govt. Bonds |
4Q23 |
20.9% |
17.2% |
20.0% |
15.7% |
19.4% |
5.8% |
2.3% |
4Q22 |
21.1% |
20.5% |
20.9% |
18.2% |
20.9% |
5.0% |
3.1% |
Bps Change |
(20) bps |
(330) bps |
(90) bps |
(250) bps |
(150) bps |
+80 bps |
(80) bps |
4Q23 overview of results
Revenues and trading volume
Credit
-
Total credit commission revenue of
$161.9 million (including$34.6 million in fixed-distribution fees) increased$8.2 million, or 5%, compared to$153.7 million (including$32.8 million in fixed-distribution fees) in the prior year. The increase in total credit commission revenue was driven principally byhigher estimated market volumes and a$1.8 million , or 5%,increase in total credit fixed-distribution fees, partially offset by lower estimated market share and lower average fee per million (“FPM”). The increase in total credit fixed-distribution fees was driven principally by new dealers on fixed fee plans and upgrades of dealers on existing fixed fee plans. The decline in FPM for total credit to$156.28 from$163.87 in the prior year was mainly due to product (lowerU.S. high-yield activity) and protocol (higher portfolio trading volume) mix-shift.-
Total credit ADV of
$13.1 billion , up 8.9% versus the prior year, and up 17.5% versus 3Q23 levels. U.S. high-grade ADV of$6.2 billion, up 13.3% from the prior year,and up 20.0% versus 3Q23.Estimated market share of 20.9%, down slightly from 21.1% in the prior year, but up from 20.0% in 3Q23.U.S. high-grade estimated market ADV increased 13.9% compared to the prior year, and increased 14.7% versus 3Q23.U.S. high-yield ADV of$1.7 billion , down 8.4% compared to the prior year, but up 27.7% from 3Q23 levels. Estimated market share of 17.2%, down from 20.5% in the prior year, but up from 16.1% in 3Q23.U.S. high-yield estimated market ADV increased 9.0% versus the prior year, and increased 19.4% compared to 3Q23. The decrease inU.S. high-yield estimated market share year-over-year was driven principally by an estimated 18.6% decrease in ETF market maker activity on the platform.-
Emerging markets ADV of
$2.9 billion , up 9.8% from the prior year,and up 4.6% from 3Q23 levels. The year-over-year increase was principally due to a 25.6% increase in local currency trading ADV. Emerging markets estimated market ADV increased 12.1% compared to the prior year, and increased 4.2% compared to 3Q23.7 -
Eurobonds ADVof
$1.8 billion , up 12.6% from the prior year, and up 19.1% from 3Q23. - Record municipal bondADV of
$539 million , up 7.8% from the prior year, and up 38.9% from 3Q23. The current quarter included a record$23.7 billion in tax-exempt trading volume. Estimated market share of 5.8%, up from 5.0% in the prior year and in line with 3Q23 levels. Estimated market ADV down 7.0% compared to the prior year, but up 38.5% compared to 3Q23. - Axess IQTM, the order and execution workflow solution designed for wealth management and private banking clients, achieved record ADV of
$140.6 million , up 67.0% from the prior year, and up 41.9% from 3Q23 levels. - Record
$41.8 billion intotal portfolio trading volume, up 35.8% fromthe prior year, and up 52.1% from 3Q23. Approximately$11.6 billion , or 30.3%, of our eligible portfolio trading volume was executed over X-Pro, our new trading platform, compared to approximately$4.8 billion , or 18.2%, in 3Q23. - 36% Open Trading share1 of total credit trading volume, down from 38% in the prior year, but up from 34% in 3Q23.
-
Total credit ADV of
Rates
-
Total rates commission revenue of
$4.8 million was in line with the prior year. A 10% decrease inratesADV to$16.5 billion was offset by an 11% increase in FPM for total rates products to$4.62 , compared to$4.16 in the prior year.
Information services & post-trade services
-
Record information services revenue of
$11.9 million increased$1.5 million, or 15%, compared to the prior year. The increase in revenue was principally driven by net new data contract revenue and the impact of foreign currency fluctuations. -
Record post-trade services revenue of
$11.0 million was up 24% compared to the prior year mainly due to the impact of price increases, higher end-of-year resubmissions revenue and the impact of foreign currency fluctuations.
Technology services
-
Total technology services revenue of
$2.5 million, up from$0.2 million in the prior year. The current quarter includes$2.3 million in revenue from the acquisition ofPragma .
Expenses
-
Total expenses of
$120.2 million , up 19.9%, includesPragma operating expenses of$8.7 million , acquisition-related expenses and costs associated with efficiency initiatives of$2.4 million and an increase of$1.7 million from the impact of foreign currency fluctuations.
Non-operating
-
Other income (expense): Other income was
$6.8 million, up from$1.8 million in the prior year. The current quarter included interest income of$6.3 million,compared to$3.3 million in the prior year, driven by higher interest rates. - Tax rate: The effective tax rate was 16.9%, compared to 25.4% in the prior year. The decrease in the effective tax rate was driven by return-to-provision adjustments and the purchase of transferable tax credits by the Company.
Capital
-
The Company had
$586.1 million in cash, cash equivalents and investments as ofDecember 31, 2023 , which includes the impact of thePragma acquisition. There were no outstanding borrowings under the Company’s credit facility. -
The Board declared a quarterly cash dividend of
$0.74 per share, an increase from$0.72 per share, payable onFebruary 28 , 2024 to stockholders of record as of the close of business onFebruary 14, 2024 .
Other
-
Employee headcount was 881 as of
December 31, 2023 , which includes 59 employees from thePragma acquisition, compared to 744 as ofDecember 31, 2022 and 853 as ofSeptember 30, 2023 .
Guidance for full year 2024
For the full year 2024, the Company is providing the following guidance which is based on foreign exchange rates as of
-
Revenue from
Pragma is expected to grow in the mid-single digits (percent). Pragma’s revenue in 4Q23 was$7.6 million . -
Expenses are expected to be in the range of
$480.0 million to$500.0 million and includes a full year ofPragma expenses estimated to range between$33.0 million to$35.0 million .Pragma expenses are expected to include amortization expense on acquired intangible assets of$4.8 million . Based on the midpoint of the stated guidance range, total expenses are expected to increase by approximately 12%, 6% excluding the impact ofPragma expenses. - The effective tax rate is expected to be between 24.0% and 25.0%.
-
Capital expenditures to support new protocols, products and trading platform enhancements are expected to be in the range of
$60.0 million to$65.0 million.
1 |
Open Trading share of total credit trading volume is derived by taking total Open Trading volume across all credit products where Open Trading is offered and dividing by total credit trading volume across all credit products where Open Trading is offered. |
2 |
Estimated price improvement consists of estimated liquidity taker price improvement (defined as the difference between the winning price and the best disclosed dealer cover price) and estimated liquidity provider price improvement (defined as the difference between the winning price and then current Composite+ bid or offer level, offer if the provider is buying, bid if provider is selling) at the time of the inquiry. |
3 |
EBITDA and EBITDA margin are non-GAAP financial measures. Refer to “Non-GAAP financial measures and other items” for a discussion of changes made to the calculation of EBITDA beginning in the first quarter of 2023. |
4 |
The number of |
5 |
Eurobonds estimated market ADV and estimated market share is derived from MarketAxess TraX data for Eurobonds and covered bonds market trading volume, which is currently estimated to represent approximately 80% of the total European market. |
6 |
Composite corporate bond estimated market share is defined as combined estimated market share across |
7 |
Emerging markets estimated market ADV is derived by combining MarketAxess TraX emerging markets trading volume (currently estimated to represent approximately 60% of total emerging markets) and FINRA TRACE-reportable emerging markets trading volume, principally |
Non-GAAP financial measures and other items
To supplement the Company’s unaudited financial statements presented in accordance with generally accepted accounting principles (“GAAP”), the Company uses certain non-GAAP measures of financial performance, including earnings before interest, taxes, depreciation and amortization (“EBITDA”), EBITDA margin and free cash flow. Starting with the first quarter of 2023, our calculation of EBITDA has been revised to adjust for interest income in addition to interest expense. In prior periods, we only adjusted for interest expense because interest income amounts were insignificant. Prior comparable periods have now been recast to conform to the current presentation. Likewise, starting with the first quarter of 2023, EBITDA margin is calculated by adjusting for interest income in addition to interest expense and prior comparable periods have been recast to conform to the current presentation. We define EBITDA margin as EBITDA divided by revenues. We define free cash flow as net cash provided by/(used in) operating activities excluding the net change in trading investments and net change in securities failed-to-deliver and securities failed-to-receive from broker-dealers, clearing organizations and customers, less expenditures for furniture, equipment and leasehold improvements and capitalized software development costs. The Company believes that these non-GAAP financial measures, when taken into consideration with the corresponding GAAP financial measures, provide additional information regarding the Company’s operating results because they assist both investors and management in analyzing and evaluating the performance of our business. See the attached schedule for a reconciliation of GAAP net income to EBITDA, GAAP net income margin to EBITDA margin and GAAP net cash provided by/(used in) operating activities to free cash flow.
Please refer to Tables 6 and 7 for a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP measures.
Webcast and conference call information
General Notes Regarding the Data Presented
Reported
For periods beginning with
In addition, beginning with
Cautionary Note Regarding Forward-Looking Statements
This press release may contain forward-looking statements, including statements about the outlook and prospects for Company, market conditions and industry growth, as well as statements about the Company’s future financial and operating performance. These and other statements that relate to future results and events are based on MarketAxess’ current expectations. The Company’s actual results in future periods may differ materially from those currently expected or desired because of a number of risks and uncertainties, including: global economic, political and market factors; risks relating to the COVID-19 pandemic, including the possible effects of the economic conditions worldwide resulting from the COVID-19 pandemic; adverse effects as a result of climate change or other ESG risks that could affect our reputation; the level of trading volume transacted on the
About
Table 2: Consolidated Statements of Operations |
|
|||||||||||||||||||||||
|
|
Three Months Ended |
|
|
Year Ended |
|
||||||||||||||||||
|
|
|
|
|
|
|
||||||||||||||||||
In thousands, except per share data (unaudited) |
|
2023 |
|
|
2022 |
|
|
% Change |
|
|
2023 |
|
|
2022 |
|
|
% Change |
|
||||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commissions |
|
$ |
171,891 |
|
|
$ |
158,443 |
|
|
|
8.5 |
% |
|
$ |
662,964 |
|
|
$ |
641,183 |
|
|
|
3.4 |
% |
Information services |
|
|
11,917 |
|
|
|
10,398 |
|
|
|
14.6 |
|
|
|
46,383 |
|
|
|
39,314 |
|
|
|
18.0 |
|
Post-trade services |
|
|
10,950 |
|
|
|
8,821 |
|
|
|
24.1 |
|
|
|
40,178 |
|
|
|
36,877 |
|
|
|
9.0 |
|
Technology services |
|
|
2,490 |
|
|
|
240 |
|
|
NM |
|
|
|
3,022 |
|
|
|
926 |
|
|
|
226.3 |
|
|
Total revenues |
|
|
197,248 |
|
|
|
177,902 |
|
|
|
10.9 |
|
|
|
752,547 |
|
|
|
718,300 |
|
|
|
4.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee compensation and benefits |
|
|
57,356 |
|
|
|
44,108 |
|
|
|
30.0 |
|
|
|
206,926 |
|
|
|
182,104 |
|
|
|
13.6 |
|
Depreciation and amortization |
|
|
19,530 |
|
|
|
15,730 |
|
|
|
24.2 |
|
|
|
70,557 |
|
|
|
61,446 |
|
|
|
14.8 |
|
Technology and communications |
|
|
17,228 |
|
|
|
14,113 |
|
|
|
22.1 |
|
|
|
62,801 |
|
|
|
52,964 |
|
|
|
18.6 |
|
Professional and consulting fees |
|
|
7,604 |
|
|
|
7,848 |
|
|
|
(3.1 |
) |
|
|
31,935 |
|
|
|
33,949 |
|
|
|
(5.9 |
) |
Occupancy |
|
|
3,903 |
|
|
|
3,653 |
|
|
|
6.8 |
|
|
|
14,216 |
|
|
|
14,121 |
|
|
|
0.7 |
|
Marketing and advertising |
|
|
2,646 |
|
|
|
3,442 |
|
|
|
(23.1 |
) |
|
|
11,049 |
|
|
|
9,977 |
|
|
|
10.7 |
|
Clearing costs |
|
|
4,610 |
|
|
|
4,614 |
|
|
|
(0.1 |
) |
|
|
17,002 |
|
|
|
17,663 |
|
|
|
(3.7 |
) |
General and administrative |
|
|
7,344 |
|
|
|
6,721 |
|
|
|
9.3 |
|
|
|
23,042 |
|
|
|
19,200 |
|
|
|
20.0 |
|
Total expenses |
|
|
120,221 |
|
|
|
100,229 |
|
|
|
19.9 |
|
|
|
437,528 |
|
|
|
391,424 |
|
|
|
11.8 |
|
Operating income |
|
|
77,027 |
|
|
|
77,673 |
|
|
|
(0.8 |
) |
|
|
315,019 |
|
|
|
326,876 |
|
|
|
(3.6 |
) |
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
6,274 |
|
|
|
3,294 |
|
|
|
90.5 |
|
|
|
22,425 |
|
|
|
5,040 |
|
|
|
344.9 |
|
Interest expense |
|
|
(1,636 |
) |
|
|
(52 |
) |
|
NM |
|
|
|
(1,983 |
) |
|
|
(700 |
) |
|
|
183.3 |
|
|
Equity in earnings of unconsolidated affiliate |
|
|
156 |
|
|
|
66 |
|
|
|
136.4 |
|
|
|
735 |
|
|
|
1,126 |
|
|
|
(34.7 |
) |
Other, net |
|
|
1,991 |
|
|
|
(1,553 |
) |
|
NM |
|
|
|
(3,496 |
) |
|
|
5,946 |
|
|
NM |
|
||
Total other income (expense) |
|
|
6,785 |
|
|
|
1,755 |
|
|
|
286.6 |
|
|
|
17,681 |
|
|
|
11,412 |
|
|
|
54.9 |
|
Income before income taxes |
|
|
83,812 |
|
|
|
79,428 |
|
|
|
5.5 |
|
|
|
332,700 |
|
|
|
338,288 |
|
|
|
(1.7 |
) |
Provision for income taxes |
|
|
14,185 |
|
|
|
20,202 |
|
|
|
(29.8 |
) |
|
|
74,645 |
|
|
|
88,064 |
|
|
|
(15.2 |
) |
Net income |
|
$ |
69,627 |
|
|
$ |
59,226 |
|
|
|
17.6 |
|
|
$ |
258,055 |
|
|
$ |
250,224 |
|
|
|
3.1 |
|
Per Share Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
1.85 |
|
|
$ |
1.58 |
|
|
|
|
|
|
$ |
6.87 |
|
|
$ |
6.68 |
|
|
|
|
|
Diluted |
|
$ |
1.84 |
|
|
$ |
1.58 |
|
|
|
|
|
|
$ |
6.85 |
|
|
$ |
6.65 |
|
|
|
|
|
Cash dividends declared per common share |
|
$ |
0.72 |
|
|
$ |
0.70 |
|
|
|
|
|
|
$ |
2.88 |
|
|
$ |
2.80 |
|
|
|
|
|
Weighted-average common shares: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
37,730 |
|
|
|
37,480 |
|
|
|
|
|
|
|
37,546 |
|
|
|
37,468 |
|
|
|
|
|
Diluted |
|
|
37,809 |
|
|
|
37,573 |
|
|
|
|
|
|
|
37,654 |
|
|
|
37,643 |
|
|
|
|
|
NM - not meaningful |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 3: Commission Revenue Detail |
||||||||||||||||||||||||
In thousands, except fee per million data |
|
|
Three Months Ended |
|
|
Year Ended |
|
|||||||||||||||||
(unaudited) |
|
|
2023 |
|
|
2022 |
|
|
% Change |
|
|
2023 |
|
|
2022 |
|
% Change |
|
||||||
Variable transaction fees |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit |
|
|
$ |
127,283 |
|
|
$ |
120,887 |
|
|
|
5.3 |
% |
|
$ |
496,028 |
|
|
$ |
491,680 |
|
|
0.9 |
% |
Rates |
|
|
|
4,735 |
|
|
|
4,667 |
|
|
|
1.5 |
|
|
|
20,749 |
|
|
|
22,341 |
|
|
(7.1 |
) |
Other |
|
|
|
4,979 |
|
|
– |
|
|
NM |
|
|
|
4,979 |
|
|
– |
|
NM |
|
||||
Total variable transaction fees |
|
|
|
136,997 |
|
|
|
125,554 |
|
|
|
9.1 |
|
|
|
521,756 |
|
|
|
514,021 |
|
|
1.5 |
|
Fixed distribution fees |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit |
|
|
$ |
34,581 |
|
|
|
32,817 |
|
|
|
5.4 |
|
|
|
140,700 |
|
|
|
126,915 |
|
|
10.9 |
|
Rates |
|
|
|
57 |
|
|
|
72 |
|
|
|
(20.8 |
) |
|
|
252 |
|
|
|
247 |
|
|
2.0 |
|
Other |
|
|
|
256 |
|
|
– |
|
|
NM |
|
|
|
256 |
|
|
– |
|
NM |
|
||||
Total fixed distribution fees |
|
|
|
34,894 |
|
|
|
32,889 |
|
|
|
6.1 |
|
|
|
141,208 |
|
|
|
127,162 |
|
|
11.0 |
|
Total commission revenue |
|
|
$ |
171,891 |
|
|
$ |
158,443 |
|
|
|
8.5 |
|
|
$ |
662,964 |
|
|
$ |
641,183 |
|
|
3.4 |
|
Average variable transaction fee per million |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit |
|
|
$ |
156.28 |
|
|
$ |
163.87 |
|
|
|
(4.6 |
)% |
|
$ |
158.61 |
|
|
$ |
166.96 |
|
|
(5.0 |
)% |
Rates |
|
|
|
4.62 |
|
|
|
4.16 |
|
|
|
11.1 |
|
|
|
4.46 |
|
|
|
4.10 |
|
|
8.8 |
|
Table 4: Trading Volume Detail* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
||||||||||||||||||||
In millions (unaudited) |
|
|
2023 |
|
|
2022 |
|
|
% Change |
|
||||||||||||||
|
|
|
Volume |
|
|
ADV |
|
|
Volume |
|
|
ADV |
|
|
Volume |
|
ADV |
|
||||||
Credit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High-grade |
|
|
$ |
385,301 |
|
|
$ |
6,215 |
|
|
$ |
334,735 |
|
|
$ |
5,487 |
|
|
|
15.1 |
% |
|
13.3 |
% |
High-yield |
|
|
|
102,501 |
|
|
|
1,653 |
|
|
|
110,091 |
|
|
|
1,805 |
|
|
|
(6.9 |
) |
|
(8.4 |
) |
Emerging markets |
|
|
|
181,445 |
|
|
|
2,927 |
|
|
|
162,597 |
|
|
|
2,666 |
|
|
|
11.6 |
|
|
9.8 |
|
Eurobonds |
|
|
|
111,330 |
|
|
|
1,767 |
|
|
|
98,853 |
|
|
|
1,569 |
|
|
|
12.6 |
|
|
12.6 |
|
Other credit |
|
|
|
33,854 |
|
|
|
546 |
|
|
|
31,404 |
|
|
|
515 |
|
|
|
7.8 |
|
|
6.0 |
|
Total credit trading |
|
|
|
814,431 |
|
|
|
13,108 |
|
|
|
737,680 |
|
|
|
12,042 |
|
|
|
10.4 |
|
|
8.9 |
|
Rates |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
998,542 |
|
|
|
16,106 |
|
|
|
1,099,596 |
|
|
|
18,026 |
|
|
|
(9.2 |
) |
|
(10.7 |
) |
Agency and other government bonds |
|
|
|
26,684 |
|
|
|
427 |
|
|
|
22,138 |
|
|
|
356 |
|
|
|
20.5 |
|
|
19.9 |
|
Total rates trading |
|
|
|
1,025,226 |
|
|
|
16,533 |
|
|
|
1,121,734 |
|
|
|
18,382 |
|
|
|
(8.6 |
) |
|
(10.1 |
) |
Total trading |
|
|
$ |
1,839,657 |
|
|
$ |
29,641 |
|
|
$ |
1,859,414 |
|
|
$ |
30,424 |
|
|
|
(1.1 |
) |
|
(2.6 |
) |
Number of |
|
|
|
|
|
|
62 |
|
|
|
|
|
|
61 |
|
|
|
|
|
|
|
|
||
Number of |
|
|
|
|
|
|
63 |
|
|
|
|
|
|
63 |
|
|
|
|
|
|
|
|
||
|
|
|
Year Ended |
|
||||||||||||||||||||
In millions (unaudited) |
|
|
2023 |
|
|
2022 |
|
|
% Change |
|
||||||||||||||
|
|
|
Volume |
|
|
ADV |
|
|
Volume |
|
|
ADV |
|
|
Volume |
|
ADV |
|
||||||
Credit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High-grade |
|
|
$ |
1,457,559 |
|
|
$ |
5,854 |
|
|
$ |
1,364,530 |
|
|
$ |
5,480 |
|
|
|
6.8 |
% |
|
6.8 |
% |
High-yield |
|
|
|
398,275 |
|
|
|
1,599 |
|
|
|
424,812 |
|
|
|
1,706 |
|
|
|
(6.2 |
) |
|
(6.3 |
) |
Emerging markets |
|
|
|
717,877 |
|
|
|
2,883 |
|
|
|
693,560 |
|
|
|
2,785 |
|
|
|
3.5 |
|
|
3.5 |
|
Eurobonds |
|
|
|
441,171 |
|
|
|
1,758 |
|
|
|
362,713 |
|
|
|
1,451 |
|
|
|
21.6 |
|
|
21.2 |
|
Other credit |
|
|
|
112,451 |
|
|
|
451 |
|
|
|
99,225 |
|
|
|
398 |
|
|
|
13.3 |
|
|
13.3 |
|
Total credit trading |
|
|
|
3,127,333 |
|
|
|
12,545 |
|
|
|
2,944,840 |
|
|
|
11,820 |
|
|
|
6.2 |
|
|
6.1 |
|
Rates |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,545,850 |
|
|
|
18,256 |
|
|
|
5,347,607 |
|
|
|
21,476 |
|
|
|
(15.0 |
) |
|
(15.0 |
) |
Agency and other government bonds |
|
|
|
106,933 |
|
|
|
427 |
|
|
|
96,782 |
|
|
|
388 |
|
|
|
10.5 |
|
|
10.1 |
|
Total rates trading |
|
|
|
4,652,783 |
|
|
|
18,683 |
|
|
|
5,444,389 |
|
|
|
21,864 |
|
|
|
(14.5 |
) |
|
(14.5 |
) |
Total trading |
|
|
$ |
7,780,116 |
|
|
$ |
31,228 |
|
|
$ |
8,389,229 |
|
|
$ |
33,684 |
|
|
|
(7.3 |
) |
|
(7.3 |
) |
Number of |
|
|
|
|
|
|
249 |
|
|
|
|
|
|
249 |
|
|
|
|
|
|
|
|
||
Number of |
|
|
|
|
|
|
251 |
|
|
|
|
|
|
250 |
|
|
|
|
|
|
|
|
||
1 The number of |
||||||||||||||||||||||||
2 The number of |
||||||||||||||||||||||||
*Consistent with FINRA TRACE reporting standards, both sides of trades are included in the Company's reported volumes when the Company executes trades on a matched principal basis between two counterparties. Consistent with industry standards, |
||||||||||||||||||||||||
NM - not meaningful |
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
Table 5: Consolidated Condensed Balance Sheet Data |
|
|
|
|
|
|
|
|
|
|
|
As of |
|
|
|||||
In thousands (unaudited) |
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
451,280 |
|
|
$ |
430,746 |
|
|
Cash segregated under federal regulations |
|
|
45,122 |
|
|
|
50,947 |
|
|
Investments, at fair value |
|
|
134,861 |
|
|
|
83,792 |
|
|
Accounts receivable, net |
|
|
89,839 |
|
|
|
78,450 |
|
|
Receivables from broker-dealers, clearing organizations and customers |
|
|
687,936 |
|
|
|
476,335 |
|
|
|
|
|
236,706 |
|
|
|
154,789 |
|
|
Intangible assets, net of accumulated amortization |
|
|
119,108 |
|
|
|
98,065 |
|
|
Furniture, equipment, leasehold improvements and capitalized software, net |
|
|
102,671 |
|
|
|
100,256 |
|
|
Operating lease right-of-use assets |
|
|
63,045 |
|
|
|
66,106 |
|
|
Prepaid expenses and other assets |
|
|
84,499 |
|
|
|
68,289 |
|
|
Total assets |
|
$ |
2,015,067 |
|
|
$ |
1,607,775 |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and stockholders' equity |
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
Accrued employee compensation |
|
$ |
60,124 |
|
|
$ |
56,302 |
|
|
Payables to broker-dealers, clearing organizations and customers |
|
|
537,398 |
|
|
|
303,993 |
|
|
Income and other tax liabilities |
|
|
7,892 |
|
|
|
28,448 |
|
|
Accounts payable, accrued expenses and other liabilities |
|
|
37,013 |
|
|
|
55,263 |
|
|
Operating lease liabilities |
|
|
79,677 |
|
|
|
82,676 |
|
|
Total liabilities |
|
|
722,104 |
|
|
|
526,682 |
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity |
|
|
|
|
|
|
|
|
|
Common stock |
|
|
123 |
|
|
|
123 |
|
|
Additional paid-in capital |
|
|
333,292 |
|
|
|
345,468 |
|
|
|
|
|
(260,298 |
) |
|
|
(328,326 |
) |
|
Retained earnings |
|
|
1,244,216 |
|
|
|
1,101,525 |
|
|
Accumulated other comprehensive loss |
|
|
(24,370 |
) |
|
|
(37,697 |
) |
|
Total stockholders' equity |
|
|
1,292,963 |
|
|
|
1,081,093 |
|
|
Total liabilities and stockholders' equity |
|
$ |
2,015,067 |
|
|
$ |
1,607,775 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Table 6: Reconciliation of Net Income to EBITDA and Net Income Margin to EBITDA Margin |
|
|
||||||||||||||||
|
|
Three Months Ended
|
|
Year Ended
|
||||||||||||||
In thousands (unaudited) |
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
|
2022 |
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
69,627 |
|
|
$ |
59,226 |
|
|
|
$ |
258,055 |
|
|
$ |
250,224 |
|
|
Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
(6,274 |
) |
|
|
(3,294 |
) |
|
|
|
(22,425 |
) |
|
|
(5,040 |
) |
|
Interest expense |
|
|
1,636 |
|
|
|
52 |
|
|
|
|
1,983 |
|
|
|
700 |
|
|
Provision for income taxes |
|
|
14,185 |
|
|
|
20,202 |
|
|
|
|
74,645 |
|
|
|
88,064 |
|
|
Depreciation and amortization |
|
|
19,530 |
|
|
|
15,730 |
|
|
|
|
70,557 |
|
|
|
61,446 |
|
|
EBITDA |
|
$ |
98,704 |
|
|
$ |
91,916 |
|
|
|
$ |
382,815 |
|
|
$ |
395,394 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income margin1 |
|
|
35.3 |
% |
|
|
33.3 |
% |
|
|
|
34.3 |
% |
|
|
34.8 |
% |
|
Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
(3.2 |
) |
|
|
(1.8 |
) |
|
|
|
(3.0 |
) |
|
|
(0.8 |
) |
|
Interest expense |
|
|
0.8 |
|
|
|
— |
|
|
|
|
0.3 |
|
|
|
0.1 |
|
|
Provision for income taxes |
|
|
7.2 |
|
|
|
11.4 |
|
|
|
|
9.9 |
|
|
|
12.3 |
|
|
Depreciation and amortization |
|
|
9.9 |
|
|
|
8.8 |
|
|
|
|
9.4 |
|
|
|
8.6 |
|
|
EBITDA margin2 |
|
|
50.0 |
% |
|
|
51.7 |
% |
|
|
|
50.9 |
% |
|
|
55.0 |
% |
|
|
|
|
|
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 7: Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow |
|
|
||||||||||||||||
|
|
Three Months Ended
|
|
Year Ended
|
||||||||||||||
In thousands (unaudited) |
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
|
2022 |
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
$ |
141,685 |
|
|
$ |
134,226 |
|
|
|
$ |
333,767 |
|
|
$ |
289,231 |
|
|
Exclude: Net change in trading investments |
|
|
948 |
|
|
|
49,972 |
|
|
|
|
25,248 |
|
|
|
49,527 |
|
|
Exclude: Net change in fail-to-deliver/receive from broker-dealers, clearing organizations and customers |
|
|
(34,354 |
) |
|
|
(71,933 |
) |
|
|
|
(46,696 |
) |
|
|
(25,994 |
) |
|
Less: Purchases of furniture, equipment and leasehold improvements |
|
|
(2,071 |
) |
|
|
(6,500 |
) |
|
|
|
(9,326 |
) |
|
|
(13,142 |
) |
|
Less: Capitalization of software development costs |
|
|
(11,320 |
) |
|
|
(11,621 |
) |
|
|
|
(43,122 |
) |
|
|
(38,730 |
) |
|
Free cash flow |
|
$ |
94,888 |
|
|
$ |
94,144 |
|
|
|
$ |
259,871 |
|
|
$ |
260,892 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Net income margin is derived by dividing net income by total revenues for the applicable period. |
|
|
||||||||||||||||
2 EBITDA margin is derived by dividing EBITDA by total revenues for the applicable period. |
|
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20240130783344/en/
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