MKTX - Earnings call transcript Q1 2024 | MarketAxess Holdings Inc.

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the MarketAxess First Quarter 2024 Earnings Conference Call. [Operator Instructions]

As a reminder, this conference call is being recorded on May 7, 2024. I would now like to turn the call over to Steve Davidson, Head of Investor Relations at MarketAxess. sir. ahead, go Please

Stephen Davidson

welcome MarketAxess and Earnings Quarter Conference Call. to morning, First the XXXX Good

Chris Executive and Rich Concannon, you call, our results. update the For Chief performance the will strategic of Solutions, of on review you Head financial on with this Officer, update the I Global company. quarter, Schiffman, markets Trading will then a provide will the

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

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

turn to Chris. call let the Now me over

Christopher Concannon

for results. to joining thank our first review quarter Good and morning, you us

Turning total Pragma the We benefit was X acquisition, share my of and delivered to Slide revenue strategic update. $X.XX. our of X% growth, including earnings per

of recent our the importance to market have estimated of share levels with in quick we share credit, trends faster-growing not equally being to of the a happy strong we and growth. return U.S. While recognize we in higher are market strategy areas in the

in institutional building of the investor on faster-growing RFQ these our while market attacking areas maintaining are market. and the leadership We

in this is franchise credit our of the segment global liquidity markets, single largest underpinned Our client by source Trading. Open market of in strength and the leading the

had expand. X,XXX First, pipe firms. continued a quarter, We in our global to franchise client record the active

grew product commission bonds, to U.S. X%, levels record helping several emerging U.S. of record offset and Next, in of areas. commission municipal across revenue delivered impact we commission and revenues revenue lower high-grade the credit delivered we Eurobonds activity. high-yield markets,

continue the of our The revenue in a and benefits pay record quarter, million was product dividends. revenue. credit representing record a to $XX XX% of Non-U.S. total geographic diversification

disciplined Last, with expense we of protocols. dealer-centric ideal volatility, only which continue the growth historically to We increasing these impact conditions our results for operating credit including of expenses backdrop low against of and market management be created the a around delivered total trading X%, levels Pragma. of has portfolio spread

also will due volatility activity normal believe, and levels our with ETF low U.S. to liquidity of that estimated our high-yield diversified the funds, participants platform. recover have impacted hedge market on decreasing levels of more We volatility These in share our however, business. spread

estimated half improvement to see We in April. the of in an back were pleased share high-yield

trading this more very We strong is to smaller should and our of in income in need. key yields, today. significantly continue are sheets. very year are the new our balance a dealers market as ] we bond positioned with with All asset well a issuance attribute by indicator growth well increase to This This new means less, only clients encouraged the higher trend is more increased issuance are of class. our that making attractive need the velocity with and velocity. fixed the Strong do [ trading healthy trading start market, calendar of as much an to address

portfolio recycle compared and client the linked segments market expanded typically significantly X% trade at trading closely the Slide Since X X-year to interdealer portfolio market. and illustrates trading and growth risk flow. XX% XX%, is because these CAGRs of a dealer-initiated from overall trading April. XXXX, The grown for portfolio dealer-initiated flow dealers in in initiative how respectively, have of the

For of clients. the end for we and indicate at share portfolio gains the have we that have investments we saw solution solution made competitive substantial trading our April PT our designed in trading, a very

to are of PT deploy as still enhancements continue platform early to stages the we We our in rapidly innovation. will

the need For investor automation dealer-initiated our flow, These firms. we liquidity tools to rapidly we inventory dealers' of dealers the been Approximately that improve exit comes investor and from tools seeking client are help rapidly efficiency liquidity now dealers growing same solve delivering trading have with XX% risk. to clients. trading provide their to

designed more of slide. U.S. electronification platform XX largest the count in of now explosion count credit portfolio as our clients. make of larger-sized ticket on is X-Pro, is trades trading trade for efficient Accompanying side the this shown to new right-hand XX% the handling our

and portfolio trends important is illustrates in high-yield accelerate in a X of the the key of a The Portfolio trading. PT of high-grade trading immediacy, growth market. April. evolution step market representing approximately is of the of in XX% trades, Slide trace electronification the which helped protocol has larger-size very

our allowed with do traders per more also a a efficiently notional immediacy has us demand trading trading streamlined of and for have the line item of efficiency, to and growth lower. average impressive clients the The sizable workflow. Portfolio shows more, PT portfolio trending with

across do market we believe environments. a demand volatility This it the trend trading. address for e-trading great portfolio But sizes. overall, that growth a recent demand future very believe and the market efficiency and for credit all created is for trades has for in types of we conditions that of in low of We all immediacy is all and must historically supportive products market indicator spread strong

Slide X frames the market U.S. high-grade opportunity.

growing been and high-quality also investments of higher-margin, dealer-initiated trading continuing While are portfolio the areas have our in market. faster, we trading

grade. algorithms client-initiated solutions that high U.S. more excluding representing the the opportunity have trading estimated block parts total credit million migrated revenue training is solutions. are opportunity, of launch challenging the targeting approximately on of PT market electronic e-trading and segment of market X-Pro the Our to of not $XXX XX% an in estimated The

down million, term combined in $X not per opportunity fee the increase the trade an revenue into over opportunity actually can is believe away our spot, from this moving We believe is drive greater market that with as higher. into broken the long that size trade, velocity And sweet higher million it. significantly we are than smaller

we on higher our In the we are solutions portfolio markets. keeping for the the growth building focus while and are most like parts execution areas attacking credit trading dealer-initiated summary, of largest, attractive

of X, client privileged we tools The Slide getting are credit markets. we for and trading largest markets. are algorithmic future. traders building a network are in X-Pro, data traders being a our that delivered we building tools credit liquidity automation the with is to analytics, for a and the our single highlight unique in source the global the powerful toolkit by MarketAxess access portal position the in

while increasingly an with solving making our to are life do more for for easier on focused We traders clients' less. need integrated ecosystem

Now our update turn call markets. to to let me the on you with over Rich an provide

Richard Schiffman

highlights X,XXX client a quarter, X,XXX continued our in grow, the credit XX% firms of our continues expansion firms client our U.S. We Thanks, year-over-year from in the platforms clients X,XXX on prior represented XX% international Slide Chris. increased firms. shown strong as credit XX% and volume record hedge which products in client active and Adoption Slide private to up network. the automation active volume, X and from XX. of total year. fund of record bank of suite first . Trading active included had trading on a

million of count volume XX% respectively, and automation XX% dealers, automation XXX algo volume Automation and We total experienced XX% and responses our with credit credit XX There record now represents record of trade CAGRs and year-over-year. were X-year client record another a a an of XX% increase trades. quarter active from record firms. of trade our volume XX%, of total a

CAGR the up versus products. count international a the international of of last businesses, of trading client quarter. we was volume generated Trade in volume was trade our our of in strength X-year On across Slide XX, with geographies a we highlight the last first and trade CAGR up and year XX% versus theme expansion XX%. Continuing business record with XX% year count XX%. Trade X-year

a volume, currency increase year-over-year of record emerging XX% trading A this trading local in volumes. key was driver markets XX% driven strength up by total

Our LATAM respectively. and ADV record and XX% markets APAC XX%, of clients levels quarter, up generated in the emerging

in We to has a in opportunity strong Emerging continues be for continued volumes April. into were markets increase that the and first growth quarter, attractive pleased to strength very see EM the company. a

Last Markets. We're $XXX XX,XXX, Emerging XX% week, Head we to to business. trade announced excited increase Axess that end Dan the an and million, record Global compared Burke ADV has up leadership Dan's of of of joined prior company in IQ, front the clients, of for experienced and generated have as growing count private banking year. XX% our important this

X.X%, strong product diversification market X.X% seeing municipal the in estimated also of year. record are bonds prior We with up from share in

of the Open down ADV Trading, on $X.X Open update fund was credit total was liquidity XX%, continued volume Hedge prior and year. Slide billion expand provided quarter, has market-leading funds XX an in prior Open XX% pool. X% XX% on provides the billion to activity share liquidity platform, in through with year. XXX trade hedge our Trading quarter, the all-to-all ADV a from our up $X.X from in the total of A record year. of Trading the prior increase from

maker the shown the chart of lower And and in market as has high-yield shown activity lower declined. the also as left impacted ETF price on it OT dispersion area, improvement our as has volatility in market reduces slide. price Lower right the the this opportunity lower on product in

Open pool. source Trading credit continues our to driven largest diverse single U.S. markets, by of secondary liquidity the in the be liquidity

me our over review let Now to Steve call financial to turn the performance.

Stephen Davidson

We of the These $XXX $X provide Rich. million financials. X% On include XX, acquisition. a Pragma prior first our you, we the revenue Slide from million, delivered results summary Thank quarter up of year. from

$XX benefit increase Information million. to look in across currency a revenue continue $XXX,XXX fluctuations. contracts and strong X%, income, share. driven X%, data The benefit a EPS effective currency services rate $X from up $X.XX suite, of environment $XX our The as especially million was million the interest product from was XX.X%, of revenue we was $X currency Foreign The tax million was of a CP+. Post-trade diluted from million experience up $X including interest by benefit per new including rate favorable fluctuations. $XXX,XXX quarter. up contributed a services of we forward was adoption

The Slide offset in in was revenue credit high commission lower more share commission yield our on quarter. by our increase due market volume increased or on credit XX, mostly revenue revenue million several $X commission estimated X% product across to the capture. market we estimated volatility. lower detail Total provide areas and in On stronger fee spread

The from principally global X of was was bank total by lower activity. credit product driven driven distribution reduction The the desk fixed the trading decline year mix, consolidation high-yield prior fees in specifically fee by in capture principally operations.

of we summary Slide On our provide XX, expenses. a operating

Pragma from million quarter $XXX expenses $X First a impact operating of $XXX,XXX currency fluctuations. negative foreign and included million from

in $XXX range previously full Based $XXX expenses progression first tracking on operating of the stated to the the low million. of of million expenses to guidance quarter, for are XXXX year the end

On update sheet, Slide XX, we provide on capital cash flow management. balance and an our

with March and XX, of of Our credit balance repurchased sheet totaling $XXX and we Board under for We on outstanding million to total continues investments in borrowings million facilities. as quarter the solid, the cash current the $XX authorization. $XX be XX,XXX remains a no total million shares a and of had

our XX-months, paid we shareholders. million $XXX to in dividends the trailing out quarterly During approximately

Our Board $X.XX company. regular based financial dividend on a share quarterly the the performance of of cash of declared Directors per

call to his me comments. let back turn Now Chris the for closing

Christopher Concannon

execute on very growth increase a new summary, quarter. Slide rates against market. increase an in all and of we The income XX, fixed In healthy in trading issuance, in to first strategy and continue point Steve. well to growing the higher Thanks, our velocity

our segments credit, equally disappointed recognized with U.S. are the in of and the the of in share We faster-growing importance market. market being we've strong

of a for to We our areas, strategy as these mechanism retooling leveraging our trading delivery have X-Pro offering. clear attack the

toolkit attractive do be we adoption client with to the clients, clients focus credit the most we and in are the of in continues of X-Pro leadership drive continue e-trading more markets flow and order help our largest, client While on maintaining to the future investor to position building the space. our with our And less.

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

Operator

Citi. [Operator And from our Allen first comes Instructions] from line question the of Chris

Christopher Allen

follow trading. to on portfolio wanted I up

key who in into traders talked participants making trading, the past market also who portfolio about block You for the inroads trading. control are the

other clients? the due us could in there kind what share trade, I you you any last update of if new that large of have new give So some the progress day on XX% to made turning wonder or one factors? also an clients April, adding And on was noted

Christopher Concannon

great a Sure, trading for Obviously, we've Chris. had recently. question. of deal the more focus Thanks on portfolio

year. specifically recently we know, portfolio obviously, you on been X-Pro the we've that features, portfolio seen embedded of As ramping platform, functionality ago. solution launched months trading of with We've that. last some X we an and new for well, as just trading, launched up X-Pro And just benefits our platform

our only More portfolio but importantly, them that portfolio how to traders of how analytics, to particularly we pre-trade proprietary critical analytics, pre-trade do data, with construct part is with with that not see that also those helps the strategy, a the trade and portfolio. optimize providing

clients market trading. that's driving an portfolio is PT PT to somewhere getting of positive U.S., largest remember, the area share and Again, portfolio trading XX So traders the been traders of space. trading in been quite with the in of share that really we've the between feedback largest the larger concentrated from drive the XX

the in -- So up X-Pro platform. particularly of we the the more trading. portfolio now April, of that rollout of makes see up recently, about makes on X-Pro volume, PT benefits volume In it saw we XX% April,

And to their that regard quite where then month repositioning high are End statisticly. for market portfolio. your is with a time the of volumes unique question and is end us month of people around

see you portfolios portfolios. higher of of saw do tend a number was series not X or a we was day. that It portfolios. to So that X There

add Rich, portfolio on trading? to anything

Richard Schiffman

nature I a of given on with have chunky down, the and day. Just and spikes you lot adoption up it, can any of mean, Chris,

estimate we're million small out, $XX And about $XX to we're after. it, It's of substantial Chris relatively per that million a PTs As day $XX after million group. of We pointed size. Call all going it's and targeted a above. number those. all

great we on had entire confidence that the see month the end, where month. throughout on a number to we carry that, like on gives of days lot that So That you capture a we us and can it XX%. can day -- a

of to the solution. across, to unique going same with it's So platforms. a are clients are coming open our traders using And to with and best the workflows being that matter different the the liquidity up attract features

Christopher Allen

stand to signing And just clients, for you Can the on base? metric us to I'm overall access then X-Pro. around with where specifically, where the in client my guys to process ask in wondering up are but follow-up, I And give just dealers rolling dealer top out wanted your about for XX you you the it X-Pro.

Christopher Concannon

X-Pro new It complexity really to a everyone, with portfolio cockpit It is features allows of remind is and for to day. just trade platform. start clients Again, bonds offerings. trading. size Sure. It our like to new comes traders their any or also like things

traders is from last for RFQ we ticket within our we higher call And rolled power RFQ, were it these volumes MarketAxess. We So traditional out largest a what targeting our clients, clients. X-Pro users, unique trade offering our are that year. count. largest in

that At of the is increase handling embedded in about the is so point. there Chris, positive We've U.S. with around credit to our seen, ticket since X-Pro use. somewhere rollout, anecdotally, efficiency through we've seen regard only very XX% X-Pro. Currently, rollout, a at that XX% of total trader this volume going trends X-Pro in result as level, great

pre-trade have continue way X-Pro still additional analytics. to go functionality and PT And months accelerate I features, earlier, we we just of long and to obviously, only as the So rollout to on ago X-Pro. launched mentioned again, solution the add X a

phase We your of this or around X-Pro and call do have our coming X-Pro touch regarding an we that's block important dealer question high summer. phase It's of what content. trading, first for

dealer We're content quite dealer as by we our providing are to the around platform. feedback onboarding content encouraged speak. We

is all-to-all. block be to our Remember, in solution, allows solution without It very dealer-friendly. comp dealers our trading high-touch

to based them allows of clients competition. on smaller it universe a So price

unique what data, ] given which the adding also CUSIP to in call preferred are AI We the a dealer select Dealer X-Pro Select, we proprietary or [ bond. helps clients a given

X-Pro we're So block that of phases should what seeing rolled these seeing solutions solution. We'll calling late for high or all additional we're trading in are start our summer. touch proprietary starting be out rollout

Operator

Our of Alex from Kramm UBS. line next comes question from the

Alex Kramm

] your there's TAM on that you portfolio [ is a I dealer-initiated opportunities lot clearly at look trading. I know if chart, But bigger. of focus think

update you're very have admitted can us there. you a it. obviously space, an kind maybe So and crowded that late of It's give to you

where So you've you've you [indiscernible] any pricing any stand be how gotten? today, may seeing a there feedback differentiator just in particular? made, And are

Richard Schiffman

it's Alex, there is flagship lead years. And about Yes. Rich. we've over And It's our for number rate is pretty RFQ. a our been with something a its dealers which protocol, And feel that good really dozen in adoption of dealer we to we've for business. years offered we wide. now. And that

work to effects solution matching become actively critical or a building that and We're process space years auctions Eurobond it's protocols, market, for over grade and attractive network market, which getting well. have you onboarding we competitive protocol is the And in we're market for in doing built on both And the for and and markets. the investment a in working it in be now. we're as now we'll where Where doing need adoption several confident we're and high-yield price we up London matter single pretty really adoption on the past it. is That that do have the the mass an here up. have and

traders tools productively new doing are be We the to so access for X-Pro they protocols. dealers, more these that for buy-side that way going we're working sell-side out we're similar for delivering on can similar to traders, rolling the

through there a front-end manner. via combination internal for from to and in they systems use efficient connect own a their it's So more APIs tool, have the that trading firms also it of traders a want who and

protocols focused interfaces, investments also is together then on. protocols, something investments and in we're in tying those So

I available, tap to a offer going that to be order get using I'm RFQ. to or I'm So I ultimately I an have I that or to in buy, If someone can maybe the resting mid. have sell book lift or try, bid to don't then leave a at matching hit going in, the want want order to

now, So have right it's to are traders. that going pieces We we of be the independently. attractive to which combining these that's sell-side really kind believe operating

Christopher Concannon

suite automation was add, is last quite new that the a mentioning, And only one, which offerings just Rich rolled December the Alex, of We now as providing to XX% is protocols our that about of in It's out between we're I'd some that dealers, across provided popular of an It now one for important XX% to suite. to and solutions year automation the dealers RFQ our using quite spread RFQ tool. suite allows dealers. clients. effectively our of dealer price automated

So in seeing dealers RFQ our well benefits we're volumes the among continues received ramp result. as that's positive to and a and up deal

Alex Kramm

All give types, then a on stand we et just maybe quarter little quick question. housekeeping cetera? maybe Eurobonds, good. FPM, right. you first us April. for And different where Very the grades, high super high breakdown versus a of bit yield or Can a just the On product

Stephen Davidson

Steve here. it's Alex,

In you've across were a $X What pricing the per terms we've in seen it the higher pretty of PT, million. bit. products. in seen the We per stable down which April, about million overall definitely of dampened fee mostly April impact was

a bit that that better the of I if was lot a year-over-year. So think about But it little piece you think Eurobonds PT. was

XXX. the April in per to normal had came fee levels which this crossing Last trades, back it remember, depressed and back year, million, year those around we more

stable. is that outsized. pretty PT think in April increase was just I overall, It's So pricing

Operator

Our the Patrick line next Sandler. Piper of question comes Moley from from

Patrick Moley

you market and been maybe of that area is a of could focus April us from rest where in you trading? the kind portfolio this be not but hammer anything is like compare help did maybe I just last in performing of given in moving hoping for -- of XX%. year-to-date? to frame And us market around month just forward, going that guys guidepost day on there -- are the appreciate can you've the share measuring being to frame portfolio to give then share standpoint I big that, a how you how disclosure the trading, terms was

Christopher Concannon

solve obviously, expected particularly portfolio we focus solutions with portfolio for portfolio new on today, trading the we've trading and And market. on Yes, of been a focused to Patrick. some time, trading the obviously rollout

them credit Obviously, for important efficiency and demand think trade a seeing in it's environment that's high for -- the do our convert We we're largest portfolio large income benefit is that of trades. fixed where and tool of our income clients. a client into tool fixed franchise, levels of for immediacy for portfolio demand those seeing an products, trading this to we're

month I a month in billion I'd [ was portfolio the around portfolio billion size. April month, $X trading. during We somewhere of unusual saw the for and number $XX an what of very call large think trades ]

portfolio almost So size. we record those sizable are seen, quite trades that haven't

We a trading credit continue on the why that's portfolio delivering so part expect to market, focused a we're and of vibrant be to solution.

trades, important just mentioned, share in X-Pro PT. our an solution to a But solve number of a that market. deliver the we As market trying immediacy demand we're enhanced it's PT through such handful the for swing an clients' part of trades to can of

We make things part portfolio and construction help also are well. around portfolio. positive and in pre-trade a our you of We've be like item the other capacity. do analyze And should that portfolio the decisions what increased analytics your that line tools we We've really and think tradability those traders, shouldn't added get feedback. as we've added critical

demand items clients we're can largest seeing our trade X,XXX large line very from So the part clients. items is of line the over

in monthly market. we and we overall it our have the as our where clients' to will tool share our volume regularly tool see we So and continue TRACE PT Obviously, do reports report. kit critical in the volume a PT pit, we

hopefully, greater volume. just throughout you'll of see progress and reports our for in our the course out look monthly PT year So could you the

Patrick Moley

worth then Okay. this million shares quarter. you And of XX.X repurchased

significant think the first most middle repurchase the I of that or you did was XXXX. since the

of terms and that pace about maybe of from talk we should the decision you can buybacks expect -- just in you and here? Can size what

Stephen Davidson

Steve here. it's Patrick, Yes.

to really capital. So approach our with been no there's change

really focused basically we're think is years that the some our front-loaded X on still think dilution. offsetting activity And focused dividend. buyback ago. we just still on I And about I repurchases

like put a X almost couple years years ago. of of we So repurchases

So the I overall no philosophy capital. but change terms going of for we'll be forward terms repurchases in and opportunistic think in -- of

Operator

Our comes KBW. from Voigt next question of Kyle from line the

Kyle Voigt

high-yield on month, earlier share saw in you with ETF those are in some has Or on called we traders The hedge first yet had pure a just have month back? in Maybe out see from volatile market question side. the that been bit you that but disengaged? starting market I the really some a pulled uptick systematic of this was remained of the ETF flow that to kind that the maker to volumes funds of in or April year. given month primarily higher guess share, the had this elevated April systematic year high-yield traders reengage

Richard Schiffman

a versus pickup a a Kyle, more bit community. favorable. come March, March. to from becoming of it's from back, a that happy and we're It's are the back were still mean see seeing got from the XX.X% Rich. signs real both the money we conditions market of from combination. to It's a combination little ETF way XX.X% activity We've I but

So trending here, right way the definitely it's in so.

Kyle Voigt

one just then And more PT. follow-up maybe Okay. on

addition final that been have made make you you a product? the to of on the that? can could billing evaluating doing were in any your changing remind in versus recall differences functionality positioning decisions You fee there. guess, terms noted of adding you I functionality And in us in structure offering your maybe to of competitively think there some what difference the offering in product. the PT you're for structures added something of competitors? the in the terms was fee But of do I

Richard Schiffman

Yes. make there on at space lower competitive that the themselves than, lower say, Yes, competitors are business a to PTs. this it. the any PT into different break out there fees. than on in that definitely And sometimes talked about We rate trying comp are is a fee Kyle. market know the and levy ways for substantially it Open there capture a It's Trading without name going past fees even And are business. all-to-all in and we've to

We putting model model way It's are market us position. dealer. on and to a want didn't in the others an shifting that have a charging with in levying the the to adverse was consistent of it's the standing fee are and where we fee out a

say charging in manner fees competitive others fees who of the I'd on on these are and So consistent the with fees trades. levying

Kyle Voigt

is sorry, said the place? move that already or... the in build dealers And You to

Richard Schiffman

going few weeks. That's coming place is major next . the next come to with release, our which in in

Operator

from Our Dan the next of question Jefferies. comes line from Fannon

Daniel Fannon

of Sticking has with could to the the percentage evolve. but or some think as was previously, where normal put continued you is the talk could volume topic market of out to? of protocol PT. what just about you a I hoping state it you steady numbers this get I think

of hoping to get a be ultimately think consistent was your on can on basis? that what thoughts I So protocol updated kind you as

Christopher Concannon

only spreads low fairly in also and Sure. dealer-to-dealer solutions. certainly at that portfolio are not match historically I'll spread mid-market And a environment volatility certainly creates take that. but levels credit a the we trading, for look, of ripe credit

here see witnessed levels mid-market solutions. we during XXXX, higher volatility at So certainly at in of that and of XXXX of these times we've higher matching PT levels certainly, levels and

of we see trade of a month So volatility high levels the but during to see continue decreases volatility spread PT. April, it during some of decline. level increase, do impacting had Certainly, PT in slight can we spikes periods, in we, throughout day saw the we of PT those as volatility credit we April

predicting period historically typically for the go low remain levels not of these cycles. are that continued -- levels, volatility not credit time. So will we certainly They spread of through

trading, expect massive the today. clients, continue seeing just over growth important be portfolio we're remain said, that at level PT probably portfolio a for of of important our market And tool be that certain We and don't will part think do market will they an we trading ecosystem. it'll the levels at to We another and think stabilize time. do

Richard Schiffman

relatively to interesting increases It's of roughly the when that. to goes I trades to lot changes stay. now, expensive of that maintain in mean not going in the high and going in to around add what of to that's just Yes, more comp. and PT the we're Dan. seeing provides a it that Whether to when the environment would environment definitely rise stays percent down, trade, kind clients same, whether a be of see becomes that's volatility going terms doing benefits market It number right vol think market a still XX%. it's expensive the number workflow. I'll more relatively I the happens a here it's versus becomes to

something consider. to So

Daniel Fannon

Great. And the I a in this towards you're know year. the of then on it's follow-up early end guidance the as for tracking but low just year, already expenses.

market take the are So are just those? of about the ago? back low it we has volumes? What to changed or guess, what first, of the you I What that then the months are of the going think guidance to the Is the lower other share? higher? initial than rest a end since factors? couple midpoint the towards kind Is factors or And year and as

Stephen Davidson

here. Steve it's Dan,

some made pretty step we've data, with that a our [ you X-Pro, proprietary if think back, think period ]. we're substantial I exiting ADX of investments I

because more but come is that for that going really coming for looking maximizing out think out across the efficient at that base opportunities more out do the of we're we've the in And the we think as be in spending. what's runway. we're year. we're to I organization future And really ensure coming same time, disciplined that investments some So achieved period we of have the huge at quarter, our the on board, efficiencies expense we that significant look the I of fourth

we first that through the efficiencies. think I quarter, as we So to went some I achieve opportunities think saw incremental

as of run just given the remember of that to that the see the first that we terms of good that But think you'll and or there the million, think a in reflects rate I be we I the in move through terms quarter that is But up hiring that new pretty is through incremental a of a of incremental be, terms year. $XX the seasonality making place seasonality. throughout $XX comp bump should year, year. our normal remainder bit the probably hires probably million hires in

the feel progress we'll coming that we at bottom So to you the year. And I of continue range in now. think obviously, good update monitor the -- as and the we at pretty right end through

Christopher Concannon

I And would our are remind of just variable. that you XX% expenses

that up move can or volumes. piece the that's down with So

it's just So think we're early an we update we in being lower we think And in important how the about where to up earlier our component the guidance. guidance, the we'll end that's to too as tracking of end our and mentioned to call, year.

Operator

comes Our William next Schmitt line Jeff question the Blair. from from of

Jeffrey Schmitt

sort differently does you than execute like though, And On rollout? Do it edge X-Pro, what competitors portfolio thinking importantly, guess there? I trade doing how were any does its prior to how now? it of to you compare have

Richard Schiffman

Jeff, it's Rich.

The trading difference that's real note, front system so the perspective, end execution managing you on how our interact and maker gain productivity okay? of with the this. the from the an As and have capabilities, end is traders consistent, back and it's we

let's to application. modern designed X-Pro, that challenging, which of something more manipulate able was a it's think It's handle large lists readily, be in our do better legacy is more interface. and say, to to So them

of the process them that have it's we we trades and end, So the the to of through send how and leveraging how downstream back parties. post-trade capabilities we all in terms

the we're interaction where front-end that the our user this level, really it's to difference. making new tool. of be that is But new at that doing interface in going is a is And front at development all

earlier, use front actively who in easily already several comp used do RFQ items than hundred that much also in it's to large need be we're isolated is example, interface. do for end the that's where initiative, going PTs, and but major to the not the So today can just focus by moment, traders lists, comp, we it's high-touch so we to at although traders manage our it's old the in saying can more for line

well So the and will going to more traders be and to investment going lead we to us business. that's significant for received area believe be of that's the by

Christopher Concannon

And for all add in the tool X-Pro built that Jeff, cloud-based I'd RFQ both trading X-Pro, technology. portfolio and are just

functionality rolled tech environment. a us here. development more all in out also new new and to allows It we've it's features and So changes introduce make rapid that

weeks into within trader production So we've out within seen feedback months. really -- changes rolled than back out and rather from quarters from

a the new tool, speeds we're can or any it and functionality features, embed our it just it's that providing. but to we in we functionality that delivery pre-trade from also up not market, data it's So that very a powerful data proprietary all the can -- offer trader,

highly So an that us makes for environment. already in competitive competitive it

Jeffrey Schmitt

drop market question I Great. trending? how the is a on RFQ of you a part discuss share all? And that high-grade then into share. is institutional mean, your Could at

Richard Schiffman

Yes.

On we the a see a of share, I did decline. bit mean,

and trading that, areas. are to for that on in the analyzing hence, regain significant upon pickup dealer of We portfolio it's due occurred the business. are to to we're those also X We X effort definitely the investment mostly extra factors. attributed areas us that And those the both Those making in share.

on terms dealer business, that grounds in efficiently liquidity in-comp our to maker and very in-comp the think difference pool ability and solid being for with terms do Open of of We client the very our activity of in Trading the clients. all RFQ

business, largely the it and right now to dealer business. So in dealer-initiated challenges due PT is

Christopher Concannon

our I would by market volumes increase just QX XX%. add did that in high-grade

into we area, well. market. And and block those up. highly XX% at and remaining trading continues We up see people Our automation we're levels. and that that area automation penetrated more QX one And grow That's high-grade to increased throughout moving automation importantly, our to sticky. volume ramping as automation automation within is more the was quite see ADV continue where

sizable automation the seen and with penetration growth, across high-grade our market, importantly, seen So we've we've we've . solution. seen more records

Operator

from Deutsche of next question Our comes Bedell line Bank. Brian from the

Brian Bedell

just sticking X-Pro. with Maybe

quoted XX% XX% you nearly now accounting or of about think I of running for portfolio your XX% trades. and your through X-Pro volume is it's

to get you where terms in think you portfolio extent or X-Pro want what Just can you is that trading if of getting having spread you if market of volatility, that can from do your of more comment within back to the part big maybe a and that to credit time volume on overall just away or portfolio see over working of on market if get share? to of that you ultimately process overall expand X-Pro volume? then And your we shift higher your how does because algorithm trading

Christopher Concannon

legacy Great question. for replace to obviously, X-Pro our And is user clients. our interface designed

client summer. X-Pro, intend all throughout this Europe in we the globally. see put to clients base X-Pro out and X-Pro front in all traders So and rolling you'll international of

we're RFQ, rollout continue traditional importantly, to of more So not excited X-Pro the for just for but trading. portfolio

The do the -- mentioned, of that the and we what that That's Rich longer see those capacity As features users. a in we designed help on does benefit. X-Pro item for users. trading we also the I line we biggest started is tool workflow X-Pro. rollout think where benefit. mentioned efficiency benefits larger call power the of portfolio some And

the -- see this biggest is the the do for X-Pro really We quarters trading solution. opportunity around summer and block ahead

X-Pro engage or are with in and allows RFQ. to information the dealers hear to regard we multidealers our of all-to-all from that an either feedback leakage one-on-one One traders and clients clients easily biggest directly, our

of to very which targeting size really, it, in $X That's being million the is call bucket, the should market U.S. to, rolled the TRACE a part we're million -- large $XX out and here

done overall rollout. to client really all trader, designed across so and our products every the is X-Pro And every touch with when we're

X-Pro about most from we move as development across client delivery at and roll does out new allow exciting base. importantly, to I part as mentioned, the technology and a the this And quicker us standpoint. pace More that's a

Brian Bedell

second that's that block That's Actually, follow-up that, sizes. leads and into large the question the great. on

million. you over size That's market time trade crack. done the obviously is been think time, and area with of to been like that at more it's I is where been quoted [ its has last [indiscernible] ] suffered So XX% the over $X

So call I of view the next, of market? leg as the guess, the or next part on the your that so market years over, sort what X the say, electronification of electronifying is it, of

Richard Schiffman

across think said Yes, we mean high Brian, to I've all And before, rate a sizes. going it's we're to see I it's penetration increase. Rich. going

clients And is and designed known might a with ways That's dealer. part trade of Some this what X-Pro to just just bilateral bilaterally be a maybe say, identify that the a of to that more fine. some or processing in be trade that's efficient to dealers on of let's might do to it's recommending portion to executed with be phone, ways do . But way to that trade system likely Open been whether with able a them going are processing have sure a efficiently. the their party trade when trader trade. to Trading of very way that it that, want variety we've into make they engaging to who to orders got trade they likely we're with it's who can that whether in engage the we are engage, a puts that's on our that a

it from is the trading order. making a these off in best little bit available, which want point, is different can of order that, variety their place little capabilities. all And more depending in available they work tap all for MarketAxess that's a to all With think way to system a where harder than has X-Pro, different our one they manage order. upon siloed one right how bit their works, that recommended it across what's the legacy available, launch X-Pro, trader and access operate as point what's of ways tools central protocols, different the which the into So they directions, from a key all from in the and it's capabilities of the the is their once can part is that of kind of of trader central where our

Christopher Concannon

hear through they seen. workflow trend would regularly a with . What just you using imagine not market less. is add traders more our result of the and end that analytics not pre-trade identifying one, just order. the help we're consume; to the been we've dealers of that their That's the chat do that market area that with we perspective, the a replicate both hiring that collecting And for and the obviously clients their and that minimizing interact on and Brian, and content on that traders, a the want do to right two, this information from trying inefficient I ] to desks. area in we're can evolution. will fairly market phones their this and the from has data They're dealers [ to best order those chat, is experience CUSIP of and the important pumping size X-Pro specific phone leakage just can

see thing excited chat we for and we're electronic And it's market portfolio sizable So pretty opportunity trading definitely portfolio is what convert -- phone onto portion to one a the is from own the and that today clients hiring the high demand about at among for is capital of trading more they their not into high capital. all-time to flowing they immediacy, certainty traders influx platforms, workflow as and our see need an are of the efficiency solve of platform.

Operator

from question comes from line Michael Stanley. next of Morgan Our the Cyprys

Michael Cyprys

elaborate the how this being on Maybe question firm? the you strategically there have the And I Pragma. Pragma. was with on you additive I path see update you update could you business, maybe the PT. could see contribution topics progress changing on hoping how the from a us can away ahead. us to growth Maybe on strategically, you of

Christopher Concannon

has transaction the been Sure. MarketAxess the quickly space. of in framework. on the Pragma to excited launch about the algo the of broader Obviously, a and first fourth credit we're integrating Pragma ingredient closed We're some the we're technology key credit Obviously, that technology we the in into Pragma quarter, synergies seeing.

and algo the excited the and demand from -- algo. we're to feedback see getting on the So that we're that that clients

Pragma, throughout seeing technology opportunities our Pragma, to now, automation importantly, some suite. consuming More of footprint. is Pragma technology use Right we're our

one a auto the selection want of within and products. basic so the algos of both we have be you can RFQ, get to current all part or of the all the offering, is responder suite suite goal what So integration automation of of same auto do, suite of and algos API basic same to

of about automation. integration in excited Pragma So the pretty

The see technology connect the the Obviously, various the next that for we an EMS able and orders integration but multiple out be see and is we're maintain piece it we within to do solution, state in destinations. of market. as using Pragma EMS MarketAxess, control order that playing protocols further to opportunity deployed

the And us. further higher integration we benefits It's an technology. see seeing of actually technology acquisition So synergy of we're important of Pragma. that for

dealers, in think the for particularly in We market. of business. protocols that interesting also in new that but plan around that mid-matching We that using there's rolling not we're solutions, Pragma well out we automation dealer dealer-to-dealer products our on as solutions only suite see

early MarketAxess. but the still around for overall Pragma footprint acquisition, days see So our of the more in excitement it's technology we a footprint important becoming definitely it

Michael Cyprys

just a And markets. the Great. follow-up EM, if question, could, particularly markets I particularly Great on renewed in strength, in emerging local see April. to

the particularly Just more initiatives bit other And regions that innovation in curious what see you're on broadly focused have any a seeing there. Maybe you ahead more EM you and can for that you're more scope you elaborate where EM? on? do

Christopher Concannon

Sure.

volumes we've excited record lower up QX. change saw change, obviously obviously, in And seeing commission pretty record almost ADV front, record it growth QX. XX% that and Obviously, we to but seen the EM XXXX. weren't in about volumes, and were we that EM revenue in did expecting in the On

is trading really ADV first and up seen that protocol, growth we've that in area growth, a XX% of year-over-year block interesting One of it's almost quarter. and result is our as the

about growth, growth hopefully that excited certainly further of we're our So block trading products. block trading across a all predictor

bigger estimated is XX% volume market growth Obviously, market market, was of year-over-year. be local our The local to other of the obviously EM in the to XX% within sizable area local overall up markets. in the QX is opportunity close markets. they The are the

year-over-year. volumes QX, April, up of XX%. And and APAC about we've obviously, up in was then further almost seen excitement, even APAC APAC in XX% grow up was our areas

we're our volume. APAC of APAC, as seeing Out EM key of a driver

up APAC volume, local market XX%. was in Our particular, from almost

that international growth APAC particularly the that our our we in EM reaping across then is April. that expansion So QX, and and rates international benefits seeing continued market into growth were

Operator

of from Goldman line comes from Blostein question next Sachs. Our Alex the

Alexander Blostein

me. for one Just

for running of competitors And hit a the a likely well? the million put $XXX come is of and million bit. those? little the gap credit the that on more pricing $XXX You per But right path how million, as market as I of IG bridging just share your the last kind you pricing spoke pressure a about you're kind of with expect at that just towards in other the fee compare little RFQ. [ dealer-initiated PT quarters of PT talk initiative from some a now? Can [ market on you the think in the over that that today of and ] part both of you extensively that do sort to ] more to and the does couple there going whole to bit

Richard Schiffman

dealers, business, I it's lower our business, the did for capture capture other make we to relatively things in to XX% And delivering Open can most that. be . And connections more of the us an where and Sure, should when Rich. the an all-to-all tends allows it's Alex. from about relatively fee about I valuable It's yes, PT value, is to not the one note -- mention dealer And we're fee is which higher with time, higher of dealers. deliver fee we of being there. firms, type Trading, liquidity that's some of charge that that just comes buy-side a

capture the dealer-initiated fee think the in quite the for prospects So side business of I promising. is

Trading remarks, dealers each should and those being Open capture in during opportunity that make and in between We client-to-dealer other, to remains And of fee note, clients that pointed the we from a things. perspective. directly connections business, plenty attractive traditional prepared leveraging growth for out into also the comp and other as see able with

It fee gives and as a richer challenging a marketplace. capture. in thousands workflow solution we're we is most of when is lowest area, definitely opportunity can And capture benefits it's and very for us the much that connecting the as operating that it, the on the the So deliver about the participants PT. marketplace a less fee

Operator

of Our Budish from the from Barclays. comes next question Ben line

Benjamin Budish

wanted dealer about business you the comprises initiated just check double how think to much segment. today. your on talked of I -- of I don't that that

of then types? electronify and IG? So versus about you do potential and market the the how How think if think about you there can of dealer forward, broader in you And much versus trade that can other client maybe to it's looking been talk in some piece where the about the that past?

Richard Schiffman

we it's of again. roughly our coming Rich Ben, strongly can that feel Yes. it's dealers definitely the say, is initiating opportunities on speaking, no, there. you about our about XX% RFQ side. And RFQ from activity And

has a that I our saying, That's, protocols. So promising RFQ of as was to again, area capture. just fee And it's room right now, using grow.

we we in firms our the As is user markets solutions market, it's pretty is book know attractive attractive matching has introduce think which area also another we to significant. been base, that very going and that be our to live to order

Operator

question America. next from line Bank Our Eli the of from of Abboud comes

Elias Abboud

How Can mentioned more feedback? think penetration I bit it. an share quarter, last the we clients a using can have XX update on were And of little you you Adaptive that what Auto-X? relief has progressed? about

Christopher Concannon

credit launched algorithm There's first the we're the have Auto-X, as client Adaptive waiting more, obviously, clients pretty clients XX of then approved, innovation in Right the Sure, onboarded. now, Eli. mentioned Yes, there's about pipeline. the live I excited on space. still be Auto-X. about in earlier, Adaptive XX to we And

positive, dynamic an excited summer, about a really new solution. The this the liquidity-taking algo are feedback launch We been a also from feedback of has quite clients.

product positive. pipeline. to obviously of some feedback demos has waiting clients, our the all in quite have in clients the very and the been queue We've We large been the showing

spread block healthy still a in terms as sizes. execution with trade from blocks into early larger sliced both impact being with also We're days limiting it's quality, result seeing better larger of outcome we're as seeing sizes. just the of Again, quality a terms in as product of rollout, market executing well avoiding execution but smaller this eliminating -- of some

early with And dealing days but the feedback. size the product, of quite with given onboarding right So client again, high we're pretty the obviously, now. exciting demand is the that

Elias Abboud

and you that protocols to block technologies attributable Got driving a is of are on trading Adaptive early Auto-X? far? other had it so How this progress quarter that it. mentioned this progress Or earlier. particularly the much is strong And

Christopher Concannon

request protocol block we trading in, particularly we're been that in EM, been we time trading our that really some seeing market here. block launched offering, Really, the a success offer quite has an ago, a the driving of that experience for and that's some

I trading mentioned, up EM, block XX%. as in And was

size block The markets EM seeing obviously, other local as larger areas, We're well. markets. in is local in

through So investment also where platform and running it's -- trading. current in block mentioned in block increase an our grade, is seeing then I size we're

targeting mentioned for the our We touch. roll high out that also market, to coming to that's come Again, that's X-Pro quarters. and the intent block in still a is size

block those size size blocks solution, electronic as So a the breaking solving leakage lot of trading opportunity algorithms down for blocks as reducing information from well both around by trades. for just

Operator

That concludes conference over I the back will Chris now for Q&A the session. Concannon closing to turn remarks.

Christopher Concannon

look out everyone, us Well, things on our building today. Thanks, that call. quarter Great. exceptionally our for about updating you forward we're thank excited to summer, joining for we joining. this We're next progress and at the you rolling and

Operator

Ladies joining. and you for all call. concludes gentlemen, Thank that today's

disconnect. now may You

MarketAxess (MKTX) 7 May 242024 Q1 Earnings call transcript