MKTX - Earnings call transcript Q3 2019 | MarketAxess Holdings Inc.

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Operator

Ladies and gentlemen, thank you for standing by. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded October 23, 2019.

I would now like to turn the call over to Dave Cresci, Investor Relations Manager at MarketAxess. sir. ahead, go Please

Dave Cresci

welcome MarketAxess and conference quarter call. to morning third the XXXX Good

Rick Chief the President Chairman review the Financial automation; McVey, For call, DeLise, Tony and discuss initiatives for Chief quarter; and then will will the the Executive results. Chris COO, Concannon, review and Officer, new in financial highlights will Officer,

events statements. condition I forward-looking that, results beliefs today’s call that turn remind me you company’s are nature, the Before their materially in and the include by call what These forward-looking uncertain. let regarding actual those represent over indicated is future may to Rick, company’s from statements may statements. The differ financial

also now I release, quarterly to XX, the report For for is of the that and and issued description factors would the the on December the was factors website. year our please a which some could direct ended our in statement in earnings Form forward-looking see discussion available risk of XX-K our you annual risk on company’s morning of affect disclaimer future this results, XXXX. read earlier

Now let call me to turn Rick. the over

Rick McVey

XXXX. $XXX we morning up by record regions. Good you $XXX billion. us morning joining discuss Trading financial billion, compared third electronic trading was across Open fully QX thank Total volume new quarter market This of results. XX% results a for our driven share and record broad-based XXXX and up volume to XX% gains and reported products to reached to volume year-over-year

of also XX% of the billion, accelerated U.S. with growth year-over-year. volumes Our $XXX trading activity international up outside in

XX.X% also record share market new high-grade of U.S. in the quarter. a Estimated reached

EPS to XX% up up a prior XX% $X.XX. were the for Operating million. and to margins to record Third expanded XX% Operating the diluted year. XX% from over quarter quarter million, was income $XXX up was $XX revenues

Justin week of our addition announced the Board to Last we Gmelich of Directors.

he Goldman for to Sachs, most was at of Credit. income, commodities and that recently was and Head Justin fixed the currencies prior Chief Global Operating Officer

to We are his advice thrilled strategic experience and Board. add our to

conditions. spreads mixed Market the market around spread bank of on remained Slide modestly. Credit volatility conditions to X relatively the monetary quarter. up continued policy during back world was decline treasuries rates were Interest quarter highlights central easing. the the flat and during credit over

New TRACE during last issuance XX% the favorable during duration maturities the issue volume robust was activity were up volumes the high-yield longer up other and with healthy was up high-grade versus with quarter in TRACE high-grade average the higher quarter third market year. volume of driven XX% category. mix improvement and shift product a capture and high-grade XX%. by Fee quarter TRACE in

up provides Trading volumes completed QX Over from Trading in Open product volumes most were were the up year strongly transactions year-over-year. emerging XXXX. areas, volume, Open where XXX% Trading X an XX% update total records of represents volume in billion, XX% up now ago. reached of the Open XXX,XXX our XX% Trading. Open grew Trading all Open year-over-year. markets, Slide quarter, quarter Trading XXX,XXX Open in notably up on new a $XXX from third in in

increasingly Trading liquidity reduce liquidity both are Dealers takers. to provide using to and Open risk as

saved marketplace, reducing a transaction million, new Open transaction million quarter $XXX By participants Liquidity in dealer to an Trading, year-over-year. last costs volume seamlessly our to creating $XX XX% from an connecting third in opportunities and daily As through trading estimated result, average year. XX% up grew all-to-all global Trading up dealer costs. the Open takers is

dealer the clients. $XX value saved and million providers In and quarter, proposition our cornerstone trading an XX%. investor combination estimated estimate that in liquidity The for up improved the savings is of transaction we addition, cost efficiency of

turn update let on trading initiatives new an automation. provide Now, to and me to Chris over the call

Chris Concannon

X outlines Slide Rick. you, Thank new our initiatives. business

focused are building we highlight While opportunities. on today. several initiatives long-term growth like trajectory growth of sustainable continues, to those I’d our

and we Markets investor starting trading to clients, strategies we a dealer issued this styles and coupled This see live are Live early that adoption both growing order-driven corporate with bonds. It’s and are Last group need dealers. more offers for launched new required the a of automated pilot different of protocol. underscores liquidity that with and clear week interest the investors newly liquid protocol for for in trading

an We to are trading which trading capabilities. capabilities, new list portfolio building existing enhancement is also actively our

fixed will of expect creation the portfolios, the we redemption income in month growth ETFs. or Our large unique well to launch portfolio including customized trading fixed as trading support solution income as which next portfolios,

engine fixed the developed has price ecosystem. fixed combination interest which ETF product has jointly partnership market The ETFs. income of of Our calculation into value more brought the our is proprietary pricing income ETF to award-winning fixed ETFs fair supporting evaluation launch market eNAV is community product, part which trading for with real-time Virtu. for Virtu’s brings – ultimately also data data This Composite our tool our with participants joint the income the across of

U.S. In MarketAxess. This a of capabilities acquisition treasuries August, leading announced acquisition and the brings to venue. we trading streaming trading LiquidityEdge, planned treasury liquidity

dealer serves to market we hope in LiquidityEdge to launch strategic the of client XXXX. primarily interdealer a the today, half treasury our opportunity grow the While by building to connections, business see dealers first custom which

enhancements coming further this in treasuries In have on approvals the these necessary all also U.S. close quarter. MarketAxess, acquisition regulatory launch now to the of the with later treasury trade phase the supports the LiquidityEdge addition our of expect weeks. expansion set capabilities, for and the to We acquisition first ability to hedging the

momentum growing that the efficiently cost tools to them demonstrates while achieving transaction and trading X savings. allow demanding investors increasingly work of dealers Institutional are more market. our automation in Slide

helping attractive backed cost low-touch trading tools AI powered automated Our with both, achieve by pricing data is our trading savings. combined them to

responses XXX,XXX in quarter year. Auto-Ex continues Investor of conducted increase rapidly our over third the year-over-year. to and our a quarter, XXX% a functionality took was million approximately in XX QX, XX is firms XX volume actively via up Over year-over-year. also using this place in adoption with up automated Auto-Ex with growth grow use our XX% from XX% algo now experiencing Auto-Ex our The trades functionality up dealer algorithms of prior X.X billion the year-over-year,

to liquidity solution. invest automated functionalities our continuing new in a provisioning We’re developing trading by

and for autoresponder will investors. and Thus, investors pricing Our respond to tool allow a automatically to request new their opportunities to set and via traders Portfolio be across marketplace automatically to on will their based rules managers all Trading costs savings enhancing unique for Open of liquidity predefined transaction able portfolios. monitor react anonymous, criteria.

launch expect month. to new We enhancement next this

Tony in financials Now detail. more let the me to turn the call to discuss over

Tony DeLise

to active our of volume across across significant volume Please volumes categories. market Thank and market turn X as our Slide products. four growth and product was you, XX% summary for each of year-over-year share clients, experienced Chris. up trading we trading trading Overall core

a up billion X.X quarter estimated for high-grade volumes. U.S. high-grade of and on XX% combination were point year-over-year Our U.S. percentage in TRACE increase the to $XXX volumes a market share higher

credit were higher combination share. up gains other trading estimated market a on market XX% volumes of year-over-year Our category and in volumes estimated

client inquiry corporate high higher Similar Our more the trading quarter, year. favored mix yield markets, the the during the than than quarter bonds and each were buying. to third in prior volume XX% second European emerging U.S.

days levels important XXX quarter, and QX, third of trading trading U.S. there XX running Open early Trading quarter is high-grade bond the remaining market on in volumes volume. transaction are market also also October municipal to levels. up October participation and source to year-over-year almost clients. below in from Realizing our are clients and and liquidity showing a look half in yield Trading dealer municipal based investor cost XXXX billion share seven is investment that bond XX% grew meaningful high this month. dividends. and volume quarter Our it currently savings third and third similar driving is $X.X in represents

performance. provide up services was $XXX our On was trading a a XX% XX% of volume Information X% a year-over-year. Slide commissions. in earnings constant X, up revenue Post-trade XX% a up Overall and basis summary XX%. uplifting record in revenue revenue services we on million increase was currency The basis resulted and a tax XX% XX%, the third the year-to-date on operating quarter was in third Expenses XX.X% constant was and margin rate and effective were The XX%. quarter. up X% was income up a reached year-over-year. on Operating XX.X% in up points currency percentage up XX% basis. and up quarterly X.X

full will near We XXXX our tax be for rate XX.X%. year lower end of expect guidance our effective the range of

a diluted share $X.XX, diluted the rise the EPS record price increase Our quarter the share and was for our accounted during count. average the in

the have volume Total in transaction variable Slide were and driven and per fee laid up year-over year, the in our increase out million. XX% fees overall volumes trading capture rate. we increase XX, revenue, XX% commission fees trading an by On

million high-grade to favorable second quarter-to-quarter due vary trade can to high-grade from was maturity. up factors U.S. the $XX yields duration the U.S. on variety fee lower per and due size. level, including years Our capture and from longer to duration of fee impact quarter

fee Our bonds. at other market basis, credit unchanged individual heavier and Fee $X a the on yield from in trading by to was volume increased attributable million product weighting resulting per sequential a emerging category sequentially. high level capture

support were detail. the continue up expenses quarter expense accounted both and for year-to-date, we the provides our and initiatives. absolute expenses the Compensation than and as XX% year-over-year up On XX% add Slide change year-to-date. growth with of to personnel basis, XX% you XX more for a the to benefits for quarter, and

Our and rise stock-based year-over-year provision in increase contributors in the XX, to higher bonus were main compensation expense benefits. the variable higher of headcount and compensation

of The million the a the expense high costs We the related XXXX We end an year. XXXX expect We’ll off expense year the up post transaction range for full that process, next expense of but budget kicked so roughly to million. range early end guidance transaction. guidance excludes liquidity it’s recently $XXX near the for of as about impact acquisition includes little guidance expenses. talk acquisition $X.X

That point out to like I’d two items. said,

the expense is LiquidityEdge, overlay increase of expenses hires function operating the XXXX. the senior were And trading deal-related step expenses the those to XXXX not need will approximately associated and expense in tied we and volume with to in roughly intangible amortization third expected in $X asset directly second, revenue. into expenses the operating repeat guidance. quarter added XX% XXXX with to million LiquidityEdge’s First, in

cash flow balance we million, as XX, Cash XX and reached September $XXX the months million. trailing of provide free Slide were information. XXth record $XXX On and investments sheet

During the program. million paid our repurchased dividend quarter, buyback of the and X,XXX quarterly shares also share under we $XX cash

$XXX quick LiquidityEdge $XX million including and $XXX reminder, price in cash is stock. the purchase a Just million, that million in

are readily the Based the third Board approved cash quarter on dividend. funding at quarterly available $X.XX position. results, has cash regular our portion We more

closing call to turn the Now let me back comments. for Rick some

Rick McVey

connectivity. trading the new Open Trading results credit great through in quarter third participants Tony. market driving trading from and The forward demonstrate progress the all markets for you, and global creating increased opportunities is down costs. Thank trading automation moving transaction

the treasuries, addition in of demonstrate excited slate expanded growing the growth. new opportunities. areas our to bonds, Markets portfolio our momentum products, large trading, future municipal core are and all in and potential In and Live investment new about for U.S. we

open would Now the be your we for happy to questions. line

Operator

Instructions] comes Fannon Jefferies. [Operator Dan you. from question of Our Thank first

Your line is open.

Dan Fannon

Good morning. you are guess, XXXX, that place think or contribution talk biggest if new have come what you about incrementally? to could Thanks. impact, initiatives of, you the of the Can kind about in slated in either you I terms talk started online. could several for, have

Chris Concannon

products. business, a like initiatives, don’t the given the it’s data largest exciting business, core our our like would some opportunity and eNAV trading; today. fixed some feeding mentioned arena really offer one is data portfolio we we of number obviously new income say, the LiquidityEdge in and market probably most market feeding I Well,

coming year clients. across largest and these sometime clients current offering our making available of So having close is corporate the an addition the weeks a to bonds in solution of next acquisition exciting then half dealer LiquidityEdge our first our

of about. I’d that sizeable initiatives. opportunity got and the to LiquidityEdge grow that a say what the rates we’re acquisition new most footprint lot is a But So excited we’ve said,

broad billion, opportunity $X.X that opportunities our a We in that’s If wonderful obviously, look municipal a of Rick volume munis. opportunity. clients joining set record in August at had and our of you mentioned,

Operator

you. Thank

question Repetto Richard next Our comes of Sandler from O’Neill.

line Your is open.

Richard Repetto

parts. morning, Yes. have Tony. and Chris but Rick Good two one and I have might question, it

Chris Concannon

Shocker, Rich.

Richard Repetto

responses but Trading, was Shocker. guess, quarter-over-quarter, about I down wrote responses trying is what algo favorite our but up. automation. were responses were fewer algo But I I I’m other, the automation. efficient, trades? The you more people Open trades their guess, the is a number just this see of to to thing getting the the automating more I you when just the noticed topic, And it just responses in about and And – better, talked all call, guess one

more LiquidityEdge, a think that this, bigger the of is And goes that initiative as that downplay the automation it. next moving that that trading? this far would and There’s with electronic, along share portfolio view thing the people as lot the big corporate this could really bond portfolio not pushes trading but guess, then part be market forward? I the that that’s And that’s you to

Chris Concannon

Okay.

algo are of Rich, above size. our really seeing, smaller execution current – largely trade solution is the I what the the the think, adoption we on auto So trade is – Auto-Ex in volume,

adopted focus So smaller their automate many ticket allow on tend Auto-Ex that of desk more target trades. feature. on have sizes It them allows larger, complicated the to large firms to that their to traders to just

the most for it. So to it’s are trading desks proven tool quite that deploying efficient be of

– size. to seeing responding you’re they’re responses, smaller algo the an trade Auto-Ex With

to the seeing So makes Live you streams. But calls the of algos, growth sense. that growth in about volume a if our you less that’s see launch are we live transaction algo if tend market with in for that Markets, think and –

So a start as market. as join of streams we’ll result Markets in to be our seeing much the – it’s more algo a activity streams Live

when multiple up. think the the of automation overall roll offering we’re about really and starting you just we’re So market, that features,

to we interest that key automated bring today a function feature. talked of investor autoresponder the The into is about more an

to it get to Autoresponder is Open to actually the Trading today, RFQ, to – about them the other them are allowing using Auto-Ex requesting think responses respond offer you If RFQs in requests. we and Auto-Ex you anonymous allows those that feature. liquidity typically market, algo auto

see So auto higher to volume entire expect of volume well functionality. we growth transaction our as rates feeding as through

Rick McVey

an to overall early investors signs on in Rich, been I’ll a really And second four-part has just I continue part growing one, credit trading. I And think but do showing likely with to of of but and it’s turnover the so. portfolio of market-making increasing in the X% this important it’s agree that volume quarter. model trading certain risk is your place jump which new We answer, sort thesis that’s solution community. for a the and dealer situations portfolio part will growing want still our more TRACE. a be to relatively have roll rapidly, estimate in to finding of sure means are transferring we It trades clients, we in X% small TRACE of but with through to efficient the of out market

remember dealers these the we lot trying risk that trades portfolio a also to of secondary lot of a see. It’s important are manage, create activity tail around that that or and investors to

by share to new And bringing adoption the market. bigger is are is much which So and the solution, Trading I seeing a the the turnover participants increase risk. the Open in another in pieces way trading portfolio the then you’re that through of growth of in growth ETF into also way is move both that in part the volumes. trading think all-to-all our trading improving primarily other are But investors our already been dealers

new with this that it risk-transfer really think for also excited it we you the increasing model are volumes about only market healthy our emerging see turnover. we be not but prospect because whole will So of comes

Chris Concannon

Rich, add month. be on portfolio is up the bonds, trade to which And solution to launching unique. just I trading that to would offer ability our able X,XXX next clients we’re We’ll

market dealers. to to that them to five We allow also will up –

be our portfolio some We’ll So even spreadsheets it trades calculation. much pricing. way are of conduct currently it in improve environment, the front in that our to e-mailing and CP+ efficient allows more conducting putting investors a in clients, a also less-than-efficient

regulate going their forward. of costs price be their will they really trades portfolio able the portfolio transaction So and to

Operator

you. Thank

question Jeremy next comes Campbell Barclays. of Our from

line open. is Your

Jeremy Campbell

Thanks.

weak used remember to the it’s guys, a of be past bit over headwind a up I picked for you little volatility So but clearly year.

from So one in clients question year the hearing keep volatility down impact little settled about is the next a we bit.

like and trading, and market of volumes like launches, kind this past Trading know a there initiatives, increased versus the spreads I conceptual new of is like the net like your of cetera, year-over-year the between way product the your level growth shares et untangle algos Open would revolve capabilities use tailwinds year? in but of rise the market-based spotting, at and widening some portfolio to and organic Now really a ignore over

Rick McVey

that Yes. and well exceptionally year, we I’ll this during take share at the gains we back had first bracket volatility but of – market one, on of at last higher widening you spreads if look and year, fourth quarter quarter. we that did the significant

If far That environment share managed spreads in amount the gains, market credit you gain market share not a we’ve for usually significant has that for of of trend in narrow. to XXXX, the look environment. but ideal at spite products to been the is totality our so across

and one difficult And low there out the the very emerging geopolitical are credit and that and and you’re think risk years, right I that risk to in low think earnings a market consistent spreads But and into been we’ve has point would year-on-year outlook environments and that volatility gains many for been going a a share. revenue But volumes levels to rates volatility to could is change risks our the be growth. market do prolonged the overall drive different sector I through very share of XXXX, interest market market over theme hurry. plenty so period of of predict

the we that gain into new So market we’re share continue confident any in year. to will environment going

Chris Concannon

adding our the largest certainly that treasury markets would income we don’t and the I planet the just of portfolio U.S. our Rick, on one we fixed are And clients is to one that add which today. offer market,

we’re in competitor another rates growth large a market competitor market. a opportunities volumes large in market quite if you their dealer-to-client followed by client-to-dealer Bloomberg tapping organic in dealer-to-client constant, of the the really and into the – solution terms So in with market hold

So or huge us ahead tailwinds. we have a of without market with opportunity

Operator

Thank you.

of Our next Kyle question Voigt comes from KBW.

is Your line open.

Kyle Voigt

just more already Maybe And morning. feedback? maybe it’s week client ago, seeing Markets, kind but those being one can early live talk you know maybe and in Live on quotes order I some good that bonds attractive you Hi, book? are about a importantly, launched posted of just for

maybe to new talk on of where kind you on in just just second more about details about for what a incentives you And landed if part wondering that then can example? for there offering? underwriters pricing And is issues, for that

Chris Concannon

for are of a the Pretty long people Kyle. to working of activity we week. There its we’re lot Thanks at make launch still Live fruition the to in excited Sure. last the product just reminder, it’s Markets. hours about pilot excited about that are but question, come here MarketAxess that form, seeing. A

daily some great activity seeing trading the on platform, factors. We’re key

We’re the pricing seeing coming platform. into two-sided

We’re Those are seen – that typically we in issue see new issue. a trades. also trades we’ve new wouldn’t

functionality reserve seeing a which also any without the clients We’re or information. market feature hidden to inside site price using we offer, for that or disclosing clients the is order rest key size and

quite the And for its very days, the near-term. And still pilot a about form but excited you in feedback. it’s early again, So cover want to reminder, pricing? client Tony, the do

Tony DeLise

up pick I’ll the pricing. on Yes,

liquidity the that’s is model. trade spread Live difference you’ll a we a providers. tighter we this speaking, So the best. Markets, the some be are remember, we cases. a But And trading. with that, liquid Also It’s schedules, more for in model little looking incentives liquidity it’s – at bid-offer sizes, scales up or we rebates recall these when in incorporating think the Kyle, set we’re trading This of spread. larger little typically end the is – expect take-or-pay it’ll just here, or twist, most bid-ask markup generally

place. look models in does different fee other the it have we than So

high-grade is per see. be U.S. capture what million going The to going pinpoint, fee capture as lower. early it’s than lower The rates you and It’s the be tough said, days. is Chris rate, to headline, to

high-grade share as all right week lower be additive than is remember, landing. quarters capture But a than fee to launch revenue. less go U.S. headline, the it’ll on here. I’m capture the rate. that the have now, sure We’re But just again, one, it’s more we’ll where into

Operator

Thank from Chris you. comes Allen our question And Compass next Point. of

open. Your is line

Chris Allen

just query. morning, Good ask guys. I another wanted to

dealers, electronification of – give you basically competitors the noticed gains. share share from and strong you You it in into share share from? color there some just you from where would us noted while electronic Can strong are further Is coming gains buckets? are the specific the taking each Any taking color other market markets, helpful. volumes incoming be

Rick McVey

Yes.

because yield of slightly high and adoption at electronic euros, with look and in business trading areas growth trading, it’s stages kind away teens is from those great to you dealers, phone-based which but we they high story and plenty are investors different still low if one, yield think there’s in by in see markets early runway electronification think trading us. each of are EM, and to further in EM and I still front of electronic moving more a of in of

liquidity combination Trading position really automation trading Open electronic confident taking European There remember, in part European we’re with of the from has euros, story of products. increased further region. but some trading, us the the other With market active of think, adoption the region. the platforms in And are clients we’re is I in of our the multiple is our share tools and certainly

piece a activity the only we do exceptionally credit We’ve EM the in well. in story. well done see as and are euros European U.S. So of clients, cross-regional with

So that’s really international about encouraged story developing. the

Chris Concannon

our dealers more just platform. between dealers concept out, Rick doing I’ll Really, where onto add and of the as converting Chris, the it’s for current that what away both clients doesn’t the on and parties. platform And is, liquidity just happen more from more from efficient electronic we’re phone moving pointed volume

well. their and cost their solutions to expense as feel able are algo pressures investors own while benefit are reducing We’re the seeing they dealers that feeling costs from offering reduce

it we’re client. both benefit dealer a as for and seeing So net

an both for more our dealer anonymous importantly, more solution client. dealers is valuable adopted source to And by been It being in a liquidity OT way. and a has

delivered through being client the benefits both platform. to seeing the are adoption dealer So of that and we’re

Operator

you. Thank

from Hugh comes Buckingham question Miller of Research. next Our

Your open. line is

Hugh Miller

questions. Thanks my morning. for Good taking

Rick McVey

Hugh. morning, Good

Hugh Miller

and on wanted early on off, Is the that So what guys that with some a mentioned of kind capture Markets, guess, start likely of fee more of types the kind more to you securities of function lower would I had appreciate Live I color you to provide. more did of trade you a of some rebates the are of on the just function into could a more is that that providing? Live beyond dissemination? any more that goes maybe Markets? a color of And horizon you just time broader-based which pilot kind Or provide

Tony DeLise

Yes.

more the or type bid-ask. the activity, So after spread. typically benchmark Again, It’s a those it’s most have tighter of issues new a how it’s trading bid-ask a several of issue typically whether larger Again, active typically new first They our that we’re are think tighter trade up Hugh, bonds. come The it’s schedules. function set out. less. tight the the we bid-ask bonds and of story sizes bonds, weeks charge after about going that here, we bonds. it’s fee And bonds community spread, in

of more that. it’s So reflective

It will couple quarters, on Markets. but run expectation Live see the of We again, some think lower in and let’s We the on place and Live incentives do promote Markets right get have rebates a going we’re we up starting of in the running. to rate. how here And to type the see thing it’s that bonds is come at to capture for liquidity place, we that off a platform. based and

Rick McVey

share Hugh, been market the to of our very that, has historically part to And market is where a that this just low. remember add

existing So sizes. often it’s for where market bid-offer tight and blocked not and and issued in transitioning the bonds cannibalizing trade newly a trading case in activity bonds are we’re Live trade benchmark These trade Markets. share that

to So market and in historically added it observe of we the likely the and volume fee do be volume, do. the protocol, share attack been to are has part we If and though the will capture part about what even of designed transparent our be meaningful we a rest where in fee revenue a of RFQ elsewhere. than low, commit we like that is the we our lower always what is area, becomes Live to it’s Markets capture will to just our

Hugh Miller

how – XQ about or so we million much. should the know in was be Thank roll some And that very much changes of for costs XQ? XXXX? housekeeping into distribution you early Any as fees helpful. LiquidityEdge, That’s of follow-up let we you just just deal on XQ items that thinking then here. you can just versus then about $X.X that the mentioned us And

Tony DeLise

Sure. Happy both of take to those.

variable So distribution on have give and of choice of guidance bit all fees always on we If fees, giving products of choices in distribution most little and fee we’re dealers plans, – all couple because have the are different fees the variable. some them and we of are distribution cautious there it’s about minimum some them commitments.

a So it’s little bit difficult to predict.

up, distribution tracking depending in one does monthly minimum thing, terms minimum vary activity. have on caution those around substance anything unused fees minimum plans on fee of fees. It but I Looking now, We swing the report of looking on within movement dealers not is are period-to-period we out bid real unused right commitments. where fees

are we those caution tracking going significance, anything do QX, but I minimum into unused can not I do caution period-to-period. move of again, So fees

cost the around of that’s on part and be question are the LiquidityEdge. mentioned I Second million, range. guidance our full for that included in $X.X transaction expected expense the year to

majority quarter. high closing quarter. end closer work as first The some to expense through third to large of the came came the through the million guidance we’re inclusive in get that but that There’s in the we million. $X.X of There’s the of residual it of pointing majority some of that valuation date. $XXX you XXXX completing, So range we’re the

Operator

Shutler Chris of question next from our comes And with Blair. – William

open. is line Your

Chris Shutler

Hey morning. guys, good

Rick McVey

Good morning, Chris.

Chris Shutler

might on they or Can use the desks actually tool? two autoresponder an And think a kind Maybe solution? you parameters do that and investor a trading functionality today detail the of give are how set? provide many client might that you how some more example of adopting capable of

Chris Concannon

manually using great be autoresponder, be load use with understand Auto-Ex our a that’s of to would going typically actually that having comfort which for interested have do bonds they Really, are on today. autoresponder watchlist to today well. the they’ll settings autoresponder That’s the levels already they in But market the as list price it’s will way a It a a more both. will and allow that sold have can other some monitor client with Chris. client they RFQs in in going combination can parameter the without because the question, a and they and a functionality the that are client likely responding,

already on clients was, an RFQ just of of bonds, autoresponder time have feedback watch in I’d this to engage process. like Most list the I don’t then but to

RFQ. So them to Certainly, a certain being certain to in in is be for fully manner this and in bond, we pricing where pricing allows fully or they liquidity is can make function that they either them them can RFQs automated for sure button, literally respond they they priced a are right that manually data using CP+ RFQ as well, formed, to and limits hear criteria a will But They it a to guide so the which other actually our market. have this other do RFQs but today, allows that around as way an how back. have respond simply accept to feed limits. is the automate have they

Operator

from our question comes James. O’Shaughnessy Patrick And Raymond with next

Your line is open.

Patrick O’Shaughnessy

the in you to Does ownership any platform? guys really of the buy your your event Curious convey morning. terms are you about think guys you see? participate side how and side being independent in sell about that attracting Hey, good structure

Rick McVey

Well, would things, a Patrick. couple of point I out

been have independent We now.

clients. now the and both for clients, And anniversary Altobello can so investors tremendous brings dealers Board out and of and would our the year Gmelich company, our a Prager us to Nancy also just opinion, number for our really dealer able adding is positive mind. like investor XXth consideration Richie advice this One, does, Board about take people outside for of balanced strategy firm. our decision-making about we’re asset important point company. strategic our priorities We’re and in things to a Justin both our I to that Directors as very and with the to public in into celebrate it and be our a we a

interacts really pleased collaborates the management Board company strategy. the with and way with on the we’re So team

some have continue. decline in going one just a be and transition dealer expect in will of ownership the We right now majority on what level LSE which we’re agnostic On it’s right And value, reading of think platform the does is on them who are competitors obviously, dealer order side, likely ultimately, dealer the would ownership, dealer we terms flow of based longer to high-quality through our that of that side kind the is shareholder term. the the is playing most where pricing. What dealers delivering client the field that now.

well. we to field that, as helps that level a bit So the playing think

Chris Concannon

just add the that by our because every them, investors when And them, encouraged we of at one of look list users I shareholders, most of of very would investor platform. are am I not informed if

the very market a investment you informed that’s where vertically you a investors. using if by are do you’re clients theses They our owned run exchange, around the they our – because a have circumstance example. are for unique hard that integrated if actively to And we So have largest market. largest also are

Operator

question [Operator next with Barclays. Instructions] Our Jeremy comes Campbell from

Your line open. is

Jeremy Campbell

guys. Hey,

trading. adoption more the could cadence because volume to stronger similar or pipes? since I a I’m autoresponder to to clients usage wondering a question do to it we’re to automated time? firms on new read-through volume adopt and volumes? auto lead getting a hurdle more they auto come Just velocity follow-up then is see trading big tend had robust turned the through firms Chris’ with going of to increase be – and and used on of just kind are earlier a you lot trading over execution, if When the ask Or see

Chris Concannon

or different for bonds savings, question. quality, size lot see Auto-Ex out their the a really Most increasing It’s get The great liquidity. of types process rolling of clients Auto-Ex of the at the set would the pricing certain Auto-Ex. do of is clients it a transaction comfortable with cost today it some the sale execution out bonds, a we try further long. do bonds and on before Typically, analytics small importantly, of to around feature, look adopt

and Auto-Ex or to do seeing similar upwards their a autoresponder. those client feature, We’d tickets sizes some million, but we’re the on cycle typically $X having adopted on time Auto-Ex adopting benefits there’s autoresponder. feature limit expect million they see we and a increase $X Auto-Ex million rollout So and over sales smaller size Obviously, of features. some larger would on already long a see to around the $X ticket clients launch of then million $X an

Operator

Point. from follow-up Allen And our Compass Chris of next comes

line open. Your is

Chris Allen

it. Yes. missed

are moving wondering So Just the I about guys was you past LiquidityEdge the revenues quarter? to during think they trying how billed provide forward? for if just

Tony DeLise

Yes.

we the numbers. did the So revenue you we provide give but specifically, didn’t Chris, volume

covered, So roughly third It’s a did daily that if that on volume average we bubbling the billion the slide capture, when you day. XX also ago fee their provide look – the you million, Chris per last acquisition. at quarter. around color had we you’ll million. And it’s $X.XX $XX months look the two per one see that in some the And fee call been when announcing – months on

do and revenue the is So see that in you can million, around $X can the third that math, million quarter. $X.X you

you years in that some well. $X revenue. the we growth revenue can like volume there for well. on the it you information Also, is was see looks There and for results million put together as as what It prior gave public of So pieces XXXX.

Operator

Chris our Shutler William Blair. And is follow-up next from of

open. is line Your

Chris Shutler

you it, do LiquidityEdge, to Hey, own the guys. change wanted disclosures? just going Real confirm, once On quick you’re to how one.

Rick McVey

Yes.

monthly stick theme going volume of that we’re to again going what delivering fully we’re Chris, and with being the transparent do, and So reporting. timely with to keeping information, with

treasury rates, treasury you’ll but will that is reporting. reporting it see in be will today, U.S. report of be We existing three when largely which reporting. you other We’re be the are we U.S. have third to there, some going government and high-grade be categories to the credits, XX% going buckets, bond rates. look those at and the U.S. it do category have in will And that volume agency

Operator

Repetto follow-up comes Richard next from our And with Sandler O’Neill.

Your line is open.

Richard Repetto

I be One is guess, portfolio at? me, What on think all-to-all And it’s the trading? a it you more the question be on trading. going excuse going priced for – substitute do to automated trading? to

Chris Concannon

our It’s ask in Rich. to going our August, about answer was muni trading. great record to were but I’m I hoping question, a happy you portfolio

Richard Repetto

can’t I I only ask have question. that. one

Chris Concannon

we be going The both dealer cheaper and who The it’s within a way trade of functionality attractive certain item. of that But per-ticket portfolio. Rick people portfolio. pricing is we’re benefit transact it it the create, will do large tails designed than get obviously bonds the to is mentioned, a doing to the the post-portfolio it for unwind clients as we’ll make think

So missing – a the think it it’s will lunch be we is small, it market at TRACE priced that the see aggressively, to are volume it’s large but relative because market we certainly, we and today, today. do

So will and really it’s be dealer client. aggressively, both it for priced initially and

benefit dealers in I think on the having pricing portfolio to the portfolio. of priced is the variety comp with biggest being able a offer

not will clients environment a current see one-to-one their the to their trading So very is pricing. typically benefit and where it’s pricing efficient

Richard Repetto

to happy I’m hear Okay. anything about…

Chris Concannon

billion. in a we If $X.X did August that question on hit record munis, of was a

So Rich, muni thank you, question. for that

Operator

I apologize.

from Voigt. comes Our next Kyle question

Your KBW. line is open, with

Kyle Voigt

follow-up. Thanks for taking the

growth saw some you in the market in So quarter. data good

if was And providing the maybe there the at to an just related on you’re partnership? uptake uptick all that then seeing partnership. of Refinitiv Just wondering update just kind if through

you in all. a said bit if to related the the there, it’s Thanks. but that past Refinitiv cycles at sales maybe think wondered little longer I yes,

Chris Concannon

in impact Refinitiv way seeing of uptick in third while data, to lot now. the financials really we relationship, quarter market No. the right its – activity not Really, making the is related a we’re really the think to

in We’re seeing, sales obviously, Europe.

a having benefit Our treasury we It we municipal feed interesting I well. currently, is Trax a $X.X have munis, be data business but grow don’t opportunity hit us. see product. heard we’ll in And excited market data call, the in as we’re to about new our as record billion. on an out data that a of products It’s you new know the Obviously, continue a if be for our we of will to some to offer. data but August.

Tony DeLise

new to quarter, data carryover the the impact of add, just a back little granular, contracts to from, combination just quarter in to during the third that of just second growth Kyle, the year. more get

$X.X this So of value all million. That’s on higher year. we year, closed XX% than of data contract about last

obviously the months, through higher So last year. we’re in run much rate a than nine

contract had of is data most sales just impact some – the the onetime carryover from increase We that was that impact much just also the new activity. historical during there lower in quarter, but

Kyle Voigt

because on territory one ask I Antonio, a you. expenses. And in more just just Got can we’re follow-up here,

next million maybe kind that next the you on aren’t the quantify one-offs Can related half? management pro We’re called acquisition, well to coming additional going trying out executive at for $X.X items for all you those? of for XXXX as the run the are second out the – looking to you the sign as of year, there. million reoccur through expense couple the that noted in some $X.X So of model of it’s and to fees rate a year, members including

how year? then should recur. growth type kind management of executive that we subterritory expect the be quantify can much And expense you hires kind of organic then next expense basis to in just was that into thinking on we growth for And in for organic rate the run XXXX shouldn’t high-single-digit more

Tony DeLise

of Technology it’s Chris. said, do. Mike the senior more every year. guidance XXXX. thing, been They I you hired to the early we Chief Huggins, right our – as get to things He’s happen We component, Officer; hired Chief as tremendous. the which those to question So Officer; the give on new new don’t a into higher did Oliver there, Risk Baker were But we the your part right little comprehensive first

function… step that So

Rick McVey

enough. stop can no, No, That’s good just there. you

Tony DeLise

around – Yes. Okay. expense function, $XX around was in step XXXX. million right in That that

million expense at five-year historical on has you’re you higher tack you the for You senior the the something And the say, impact million you year, and XX% me And $XXX XXXX. the including look this XX%. you humor impact to CAGR, deal take in X% LiquidityEdge at increase down just deal-related and of costs, like year-over-year or around $X.X the million. our close the $XX CAGR you’re even been a cost, out if

call, five-year to going CAGR amortization an lot view basis. – including LiquidityEdge we’ll of our lower right than at on stop color definitely that bit So more the actually on adjusted the the a But lot on provide little I’m more and a including we again, just information, intangibles. January were now.

Operator

At showing to back no for to the turn would comments. Rick this like I McVey time, I’m closing Mr. over call questions. further

Rick McVey

us very this you quarter. morning, to much next again, forward for talking you, joining Thank we to and look

Operator

today’s conference. gentlemen, and Ladies participation in your you thank for

Everyone, wonderful have disconnect. now may You day. a

MarketAxess (MKTX) 23 Oct 192019 Q3 Earnings call transcript