UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

Current Report

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 26, 2023

MarketAxess Holdings Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware	001-34091	52-2230784
(State or other jurisdiction<br> <br>of incorporation)	(Commission<br> <br>File Number)	(IRS Employer<br> <br>Identification No.)

55 Hudson Yards

New York, New York 10001

(Address of principal executive offices, including zip code)

(212) 813-6000

(Registrant’s telephone number, including area code)

Not applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading<br>Symbol(s)	Name of each exchange<br> <br>on which registered
Common Stock, par value $0.003 per share	MKTX	NASDAQ Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02	Results of Operations and Financial Condition

On April 26, 2023, MarketAxess Holdings Inc. (the “Company”) issued a press release announcing the Company’s financial results for its first quarter ended March 31, 2023. A copy of this press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

The information included in this Current Report on Form 8-K (including Exhibit 99.1 hereto) that is furnished pursuant to this Item 2.02 shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. In addition, the information included in this Current Report on Form 8-K (including Exhibit 99.1 hereto) that is furnished pursuant to this Item 2.02 shall not be incorporated by reference into any filing of the Registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference into such filing.

Item 8.01	Other Events

On April 26, 2023, the Company also announced that its Board of Directors has declared a regular quarterly dividend to be paid to the holders of the outstanding shares of capital stock. A cash dividend of $0.72 per share of common stock outstanding will be paid on May 24, 2023 to stockholders of record as of the close of business on May 10, 2023.

Item 9.01	Financial Statements and Exhibits

(d) Exhibits:

99.1	Press Release issued by MarketAxess Holdings Inc. on April 26, 2023.
104	Cover Page Interactive File (the cover page tags are embedded within the Inline XBRL document).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	MARKETAXESS HOLDINGS INC.
Date: April 26, 2023	By:	/s/ Christopher N. Gerosa
	Name:	Christopher N. Gerosa
	Title:	Chief Financial Officer

EX-99.1

Exhibit 99.1

LOGO

MarketAxess Reports Record Revenues of $203.2 Million in First Quarter 2023

Record Total Credit ADV of $13.7 Billion, Up 14%; Record Open Trading^®^ ADVof $4.5 Billion, Up 21% ****

NEW YORK | April 26, 2023 - MarketAxess Holdings Inc. (Nasdaq: MKTX), the operator of a leading electronic trading platform for fixed-income securities, today announced financial results for the first quarter ended March 31, 2023.

1Q23 financial and operational highlights* • Record total revenues of $203.2 million, up 9%;up 11% excluding the impact of foreign currency fluctuations. • Record total revenues include the impact of a 4% decline in total credit average variable transaction fee per million (“FPM”) driven by the lower duration of U.S. high-grade bonds traded. • Record total credit revenue on 14% growth in total credit average daily volume (“ADV”) to a record $13.7 billion. Record Open Trading ADV of $4.5 billion, up 21%, with total trade count up 27%. • Record commission revenue in U.S. high-yield (+16%), emerging markets (+6%) and Eurobonds (+30%); 15% increase in U.S. high-grade ADV to $6.3 billion. • Record information services revenue of $11.0 million, up 12%;up 18% excluding the impact of foreign currency fluctuations. • Strong estimated market share gains across composite corporate bond^1^ (+100 bps), high-yield (+310 bps), Eurobonds^2^ (+380 bps) and municipal bonds (+210 bps); strong estimated market share gains in emerging markets with record ADV of $3.1 billion, up 1%, **** compared to **** a 21% decline in **** emerging markets **** estimated market ADV.^3^ • 10% increase in total expenses, driven principally by investments to capture the long-term revenue opportunity in the global fixed-income markets. • 8% increase in operating income to $95.4 million; operating margin of 46.9%. • 15% increase in diluted EPS to $1.96 on a 14% increase in net income to $73.6 million; net income margin of 36.2%, up from 34.8%. The prior year period included a net $0.02 per diluted share negative impact from non-operating items. • 5% increase in EBITDA^4^ to$110.5 million; EBITDA margin^4^ of 54.4%. • 37% (+210 bps) total credit Open Trading share^5^, up from 35%. Estimated price improvement^6^ via Open Trading was approximately $252 million. • Record U.S. high-grade Open Trading share^5^ of 34% (+350 bps). • Record $31 billion in portfolio trading volume, up 125% from $14 billion. * All comparisons versus first quarter 2022 unless otherwise noted.

Chris Concannon, CEO of MarketAxess, commented: “We executed very well against our growth strategy in the first quarter and delivered 9% revenue growth to a record $203 million, driven by recordtotal credit revenue on a 14% increase in total credit average daily volume to a record $13.7 billion.** Our strong results were broad-based, with record commission revenue across U.S. high-yield, emerging markets and Eurobonds. Our differentiated liquiditypool, Open Trading, and the diversification of our model across products and geographies was a key driver of our results, with our international businesses contributing record levels of commission revenue and average daily volume. We also achievednew volume records across our new growth initiatives, including Portfolio Trading, Dealer RFQ and automated trading. Estimated price improvement^6^ for our clients was approximately$252 million, well in excess of our total revenue for the quarter. Themacro backdrop remains favorable, despite the market dislocation in March, and there was a significant uptick in trading velocity in the quarter compared to the prior year. Our estimated market share gains across most products are strong and totalcredit average fee per million has been stable. Our focus now is building on the strong momentum we have established in the first quarter.”

Table 1: 1Q23 select financial results

in millions, except per share data												Net Income						EBITDA
(unaudited)			Operating Income			Net Income			Diluted EPS			Margin (%)			EBITDA			Margin (%)
1Q23	203		$	95		$	74		$	1.96			36.2	%	$	111			54.4	%
1Q22	186		$	88		$	65		$	1.71			34.8	%	$	106			56.8	%
% Change	9	%	****	8	%	****	14	%	****	15	%	****	+140 bps	****	****	5	%	****	(240	) bps

All values are in US Dollars.

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Table 1A: 1Q23 trading volume (ADV)

	CREDIT																							RATES
$ in millions	US/UK Trading		Total			Total									Emerging						Municipal			Total			US Govt.			Agcy./Other
(unaudited)	Days^7^		ADV			Credit			High-Grade			High-Yield			Markets			Eurobonds			Bonds			Rates			Bonds			Govt. Bonds
1Q23		62/64	$	38,202		$	13,721		$	6,334		$	1,982		$	3,094		$	1,849		$	447		$	24,481		$	24,053		$	428
1Q22		62/63	$	37,504		$	12,005		$	5,518		$	1,626		$	3,060		$	1,493		$	288		$	25,499		$	25,076		$	423
% Change				2	%		14	%		15	%		22	%		1	%		24	%		55	%		(4	%)		(4	%)		1	%

Table 1B: 1Q23 estimated market share

	CREDIT																		RATES
							High-Grade/High-						Composite						US Govt.
(unaudited)	High-Grade			High-Yield			Yield Combined			Eurobonds			Corporate Bond^1^			Municipals			Bonds
1Q23		19.9	%		18.3	%		19.5	%		16.0	%		19.1	%		6.4	%		3.5	%
1Q22		20.7	%		15.2	%		19.1	%		12.2	%		18.1	%		4.3	%		3.6	%
Bps Change		(80	) bps		+310 bps			+40 bps			+380 bps			+100 bps			+210 bps			(10	) bps

1Q23 overview of results

Revenues and trading volume

Credit

•	Record total credit commission revenue of $175.7 million (including<br>$34.7 million in fixed-distribution fees) increased $15.8 million, or 10%, compared to $159.9 million (including $31.2 million in fixed-distribution fees) in<br>the prior year. The increase in total credit commission revenue was driven principally by higher trading volumes, strong estimated market share gains across most credit products and a $3.5 million, or 11%,increase in total credit fixed distribution fees, partially offset by lower average FPM. The increase in total credit fixed distribution fees was driven principally by new dealers on fixed fee plans and upgrades of dealers on existing fixed fee<br>plans. The decline in average FPM for total credit to $ 164.98 from $172.54 in the first quarter of 2022 was mainly due to the lower duration of bonds traded in U.S. high-grade, driven principally by higher bond yields, as well<br>as product mix-shift in other credit products.
	•	Record $13.7 billion in total credit ADV, up 14%, with total trade count<br>up 26%.
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	•	Record U.S. high-grade Open Trading share^5^<br>of 34% (+350 bps) on a 15% increase in U.S. high-grade ADV to $6.3 billion with estimated market share of 19.9%.
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	•	22% increase in ** U.S. high-yield ADV to a record $2.0 billion withestimated market share of 18.3% (+310 bps), up from 15.2%**.
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•	Record emerging markets ADV of $3.1 billion, up 1%; ** MarketAxess estimated<br>emerging markets TraX and FINRA TRACE-reportable emerging market ADV down a combined 21%.^3^Record local markets ADV of $1.1 billion, up 10%**.<br>
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•	24% increase in Eurobonds ADV ** to a record $1.8 billion with 16.0%<br>(+380 bps) estimated market share, up from 12.2%.^2^ Eurobonds ADV up approximately 31%** excluding the impact of foreign currency fluctuations.<br>
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•	55% increase in municipal bond ADV to $447 million, ** with recordestimated market share of 6.4% (+210 bps)**.
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•	Record Open Trading ADV of $4.5 billion, up 21%, with total trade count<br>up 27%.
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•	Total credit Open Trading share^5^ of 37% (+210bps), up from 35%. Estimated price improvement ^6^ via Open Trading was approximately $252 million, and average estimated price improvement permillion was $902.
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•	Record $31 billion in portfolio trading volume, up 125% from$14 billion in 1Q22. Estimated U.S. high-grade and U.S. high-yield portfolio trading market volume increased 13% and represented approximately 5% of the market in first quarter 2023, in line with first quarter 2022<br>levels.
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Rates

•	Total rates commission revenue of $6.3 million increased 1% compared to the prior year.<br>The 5% increase in average FPM for total rates products to $4.12, compared to $3.92 in the first quarter of 2022, was mostly offset by a 4% decrease in ** U.S. government bonds ADV to<br>$24.1 billion**.
•	250 active client firms on the platform, up 72% from 145 in the prior year.<br>
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Information services & post-trade services

•	Record information services revenue of $11.0 million increased<br>$1.2 million, or 12%, compared to the prior year. The increase in revenue was principally driven by new data contract revenue, partially offset by the impact of foreign currency fluctuations. Excluding the impact of foreign<br>currency fluctuations, information services revenue would have increased approximately 18%.
•	Post-trade services revenue of $10.0 million increased 1% compared to the prior<br>year. The increase in revenue was principally driven by net new contract revenue, mostly offset by the impact of foreign currency fluctuations. Excluding the impact of foreign currency fluctuations, post-trade services revenue would have increased<br>approximately 8%.
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•

Record information services revenue of $11.0 million increased $1.2 million, or 12%, compared to the prior year. The increase in revenue was principally driven by new data contract revenue, partially offset by the impact of foreign currency fluctuations. Excluding the impact of foreign currency fluctuations, information services revenue would have increased approximately 18%.

•

Post-trade services revenue of $10.0 million increased 1% compared to the prior year. The increase in revenue was principally driven by net new contract revenue, mostly offset by the impact of foreign currency fluctuations. Excluding the impact of foreign currency fluctuations, post-trade services revenue would have increased approximately 8%.

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Expenses

•

Total expenses of $107.8 million increased $9.9 million, or 10 %. The increase in expenses was driven principally by higher employee compensation and benefits as a result of a 12% increase in headcount, higher technology and communication expenses due to higher subscription costs and data center hosting expense, higher general and administrative expense and higher marketing expense on an increase in sales related activity. The increase in expenses across most activities was partially offset by a $2.5 million decline in professional and consulting fees, driven by lower acquisition-related consulting expenses and other consulting and recruiting fees. Excluding the impact of foreign currency fluctuations, total expenses would have increased approximately 12%.

Non-operating

•	Other income (expense): Other income was $2.8 million, up from$2.3 million in the prior year. The current quarter included higher interest income of $4.2 million, ** compared to $59 thousand in the prior year, due to rising interest rates. The<br>prior year period benefited from a $1.6 million revaluation gain on a contingent liability and a $1.3 million foreign currency translation gain which was a net benefit of $0.06 per diluted share** in<br>the prior year quarter.
•	Tax rate: The effective tax rate was 25.0%, compared to 28.4% in the prior year. The higher<br>effective tax rate in the prior year was driven principally by the impact of a $3.2 million charge, or $0.08 per diluted share, related to a settlement with New York State tax authorities. Excluding the charge, the first<br>quarter 2022 effective tax rate would have been 24.8%, in line with the current quarter.
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•

Other income (expense): Other income was $2.8 million, up from**$2.3** million in the prior year. The current quarter included higher interest income of $4.2 million, **** compared to $59 thousand in the prior year, due to rising interest rates. The prior year period benefited from a $1.6 million revaluation gain on a contingent liability and a $1.3 million foreign currency translation gain which was a net benefit of $0.06 per diluted share in the prior year quarter.

•

Tax rate: The effective tax rate was 25.0%, compared to 28.4% in the prior year. The higher effective tax rate in the prior year was driven principally by the impact of a $3.2 million charge, or $0.08 per diluted share, related to a settlement with New York State tax authorities. Excluding the charge, the first quarter 2022 effective tax rate would have been 24.8%, in line with the current quarter.

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Capital

•	The Company had $439.5 million in cash, cash equivalents and investments; there were no<br>outstanding borrowings under the Company’s credit facility.
•	The Board declared a quarterly cash dividend of $0.72 per share, payable on May 24,2023 to stockholders of record as of the close of business on May 10, 2023.
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Other

•	Employee headcount was 774 as of March 31, 2023, compared to 689 as of<br>March 31, 2022 and 744 as of December 31, 2022. The increase in headcount compared to the prior year was due to the continued investment in the Company’s growth initiatives, including geographic<br>expansion, trading automation and new trading protocols.
^1^	Composite corporate bond estimated market share is defined as combined estimated market share across U.S.<br>high-grade (derived from FINRA TRACE reported data), U.S. high-yield (derived from FINRA TRACE reported data), emerging markets (derived from FINRA TRACE-reportable emerging markets volume, principally U.S. dollar denominated corporates) and<br>Eurobonds (derived from MarketAxess TraX data, which is currently estimated to represent approximately 70% of the total European market) product areas.
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^2^	Eurobonds estimated market share is derived from MarketAxess TraX data for Eurobonds and covered bonds market<br>trading volume, which is currently estimated to represent approximately 70% of the total European market.
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^3^	Emerging markets estimated market ADV is derived by combining MarketAxess TraX emerging markets trading volume<br>(currently estimated to represent approximately 55% of the total emerging markets market) and FINRA TRACE-reportable emerging markets trading volume, principally U.S. dollar denominated corporates.
^4^	EBITDA and EBITDA margin are non-GAAP financial measures. Refer to “Non-GAAP financial measures and other items” for a discussion of changes made to the calculation of EBITDA beginning in the first quarter of 2023.
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^5^	Open Trading share at the product level is derived by taking total Open Trading volume in the product divided<br>by the total product trading volume. Total credit Open Trading share is derived by taking total Open Trading volume across all credit products where Open Trading is offered and dividing by total credit trading volume across all credit products where<br>Open Trading is offered.
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^6^	Estimated price improvement consists of estimated liquidity taker price improvement (defined as the difference<br>between the winning price and the best disclosed dealer cover price) and estimated liquidity provider price improvement (defined as the difference between the winning price and then current Composite+ bid or offer level, offer if the provider is<br>buying, bid if provider is selling) at the time of the inquiry.
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^7^	The number of U.S. trading days is based on the SIFMA holiday recommendation calendar and the number of U.K.<br>trading days is based primarily on the U.K. bank holiday schedule.
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Non-GAAP financialmeasures and other items

To supplement the Company’s unaudited financial statements presented in accordance with generally accepted accounting principles (“GAAP”), the Company uses certain non-GAAP measures of financial performance, including earnings before interest, taxes, depreciation and amortization (“EBITDA”), EBITDA margin and free cash flow. Starting with the first quarter of 2023, our calculation of EBITDA has been revised to adjust for interest income in addition to interest expense. In prior periods, we only adjusted for interest expense because interest income amounts were insignificant. Prior comparable periods have now been recast to conform to the current presentation. Likewise, starting with the first quarter of 2023, EBITDA margin is calculated by adjusting for interest income in addition to interest expense and prior comparable periods have been recast to conform to the current presentation. We define EBITDA margin as EBITDA divided by revenues. We define free cash flow as cash flow from operating activities excluding the net change in trading investments and net change in securities failed-to-deliver and securities failed-to-receive from broker-dealers, clearing organizations and customers, less expenditures for furniture, equipment and leasehold improvements and capitalized software development costs. The Company believes that these non-GAAP financial measures, when taken into consideration with the corresponding GAAP financial measures, provide additional information regarding the Company’s operating results because they assist both investors and management in analyzing and evaluating the performance of our business. See the attached schedule for a reconciliation of GAAP net income to EBITDA, GAAP net income margin to EBITDA margin and GAAP cash flow from operating activities to free cash flow.

The Company also presents revenue and expense growth rates excluding the impact of foreign currency fluctuations. The Company believes that it is useful to provide investors with this framework that is also used by management to assess how our business performed excluding the effect of foreign currency fluctuations. To present this information, current and comparative prior period results for product areas reporting in currencies other than U.S. dollars are converted into U.S. dollars using the average exchange rates from the comparative period rather than the actual exchange rates in effect during the current period.

Please refer to Tables 6 and 7 for a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP measures.

Webcast and conference callinformation

Chris Concannon, Chief Executive Officer, Rick McVey, Founder and Executive Chairman and Christopher Gerosa, Chief Financial Officer, will host a conference call to discuss the Company’s financial results and outlook on Wednesday, April 26, 2023 at 10:00 a.m. ET. To access the conference call, please dial 888-660-6576 (U.S.) and use the ID 3629577 or 929-203-1995 (international) and use the ID 3629577. The Company will also host a live audio Webcast of the conference call on the Investor Relations section of the Company’s website at http://investor.marketaxess.com. The Webcast will be archived on http://investor.marketaxess.com for 90 days following the announcement.

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About MarketAxess

MarketAxess (Nasdaq: MKTX) operates a leading electronic trading platform that delivers greater trading efficiency, a diversified pool of liquidity and significant cost savings to institutional investors and broker-dealers across the global fixed-income markets. Over 2,000 firms leverage MarketAxess’ patented technology to efficiently trade fixed-income securities. MarketAxess’ award-winning Open Trading^®^ marketplace is widely regarded as the preferred all-to-all trading solution in the global credit markets. Founded in 2000, MarketAxess connects a robust network of market participants through an advanced full trading lifecycle solution that includes automated trading solutions, intelligent data and index products and a range of post-trade services. Learn more at www.marketaxess.com and on Twitter @MarketAxess.

Cautionary Note Regarding Forward-Looking Statements

This press release may contain forward-looking statements, including statements about the outlook and prospects for Company and industry growth, as well as statements about the Company’s future financial and operating performance. These and other statements that relate to future results and events are based on MarketAxess’ current expectations. The Company’s actual results in future periods may differ materially from those currently expected or desired because of a number of risks and uncertainties, including: global economic, political and market factors; risks relating to the COVID-19 pandemic, including the possible effects of the economic conditions worldwide resulting from the COVID-19 pandemic; adverse effects as a result of climate change or other ESG risks that could affect our reputation; the level of trading volume transacted on the MarketAxess platform; the rapidly evolving nature of the electronic financial services industry; the level and intensity of competition in the fixed-income electronic trading industry and the pricing pressures that may result; reputational or credibility risks related to our data products and index business; the variability of our growth rate; our ability to introduce new fee plans and our clients’ response; our ability to attract clients or adapt our technology and marketing strategy to new markets; risks related to our growing international operations; our dependence on our broker-dealer clients; the loss of any of our significant institutional investor clients; our exposure to risks resulting from non-performance by counterparties to transactions executed between our clients in which we act as an intermediary in matched principal trades; risks related to self-clearing; risks related to sanctions levied against states or individuals that could expose us to operational or regulatory risks; the effect of rapid market or technological changes on us and the users of our technology; our dependence on third-party suppliers for key products and services; our ability to successfully maintain the integrity of our trading platform and our response to system failures, capacity constraints and business interruptions; the occurrence of design defects, errors, failures or delays with our platforms; our vulnerability to malicious cyber-attacks and attempted data security breaches; our actual or perceived failure to comply with privacy and data protection laws; our ability to protect our intellectual property rights or technology and defend against intellectual property infringement or other claims; our ability to enter into strategic alliances and to acquire other businesses and successfully integrate them with our business; our dependence on our management team and our ability to attract and retain talent; limitations on our flexibility because we operate in a highly regulated industry; the increasing government regulation of us and our clients; risks related to the divergence of U.K. and European Union legal and regulatory requirements following the U.K.’s exit from the European Union; our exposure to costs and penalties related to our extensive regulation; our risks of litigation and securities laws liability; our future capital needs and our ability to obtain capital when needed; limitations on our operating flexibility contained in our credit agreement; and other factors. The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. More information about these and other factors affecting MarketAxess’ business and prospects is contained in MarketAxess’ periodic filings with the Securities and Exchange Commission and can be accessed at www.marketaxess.com.

#

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Contacts
INVESTOR RELATIONS	MEDIA RELATIONS
Stephen Davidson<br> <br>MarketAxess Holdings<br>Inc.<br> <br>+1 212 813 6313<br> <br>sdavidson2@marketaxess.com	Marisha Mistry<br> <br>MarketAxess Holdings<br>Inc.<br> <br>+1 917 267 1232<br> <br>mmistry@marketaxess.com
	William McBride<br> <br>RF	Binder<br><br><br>+1 917 239 6726

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Table 2: Consolidated Statements of Operations									****
	Three Months Ended<br>March 31,
In thousands, except per share data (unaudited)	2023			2022			% Change
Revenues
Commissions	$	181,991		$	166,113			9.6	%
Information services		11,010			9,809			12.2
Post-trade services		9,980			9,912			0.7
Other		188			223			(15.7	)
Total revenues		203,169			186,057			9.2
Expenses
Employee compensation and benefits		52,315			47,756			9.5
Depreciation and amortization		16,461			15,174			8.5
Technology and communications		14,999			12,192			23.0
Professional and consulting fees		7,127			9,621			(25.9	)
Occupancy		3,611			3,387			6.6
Marketing and advertising		2,995			1,789			67.4
Clearing costs		4,545			4,575			(0.7	)
General and administrative		5,760			3,459			66.5
Total expenses		107,813			97,953			10.1
Operating income		95,356			88,104			8.2
Other income (expense)
Interest income		4,249			59			NM
Interest expense		(130	)		(173	)		(24.9	)
Equity in earnings of unconsolidated affiliate		204			—			NM
Other, net		(1,484	)		2,429			NM
Total other income (expense)		2,839			2,315			22.6
Income before income taxes		98,195			90,419			8.6
Provision for income taxes		24,567			25,650			(4.2	)
Net income	$	73,628		$	64,769			13.7
Per Share Data:
Net income per common share
Basic	$	1.96		$	1.73
Diluted	$	1.96		$	1.71
Cash dividends declared per common share	$	0.72		$	0.70
Weighted-average common shares:
Basic		37,478			37,384
Diluted		37,645			37,824

NM - not meaningful

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Table 3: Commission Revenue Detail

In thousands, except fee per million data	Three Months Ended March 31,
(unaudited)	2023		2022		% Change
Variable transaction fees
Credit	$	140,970	$	128,682		9.5	%
Rates		6,258		6,191		1.1
Total variable transaction fees		147,228		134,873		9.2
Fixed distribution fees
Credit		34,684		31,178		11.2
Rates		79		62		27.4
Total fixed distribution fees		34,763		31,240		11.3
Total commission revenue	$	181,991	$	166,113		9.6
Average variable transaction fee per million
Credit		164.98		172.54		(4.4	)
Rates		4.12		3.92		5.1

Table 4: Trading Volume Detail*

	Three Months Ended March 31,
In millions (unaudited)	2023				2022				% Change
	Volume		ADV		Volume		ADV		Volume			ADV
Credit
High-grade	$	392,715	$	6,334	$	342,093	$	5,518		14.8	%		14.8	%
High-yield		122,873		1,982		100,826		1,626		21.9			21.9
Emerging markets		191,841		3,094		189,740		3,060		1.1			1.1
Eurobonds		118,366		1,849		94,077		1,493		25.8			23.8
Other credit		28,683		462		19,075		308		50.4			50.0
Total credit trading		854,478		13,721		745,811		12,005		14.6			14.3
Rates
U.S. government bonds		1,491,292		24,053		1,554,716		25,076		(4.1	)		(4.1	)
Agency and other government bonds		27,061		428		26,518		423		2.0			1.2
Total rates trading		1,518,353		24,481		1,581,234		25,499		(4.0	)		(4.0	)
Total trading	$	2,372,831	$	38,202	$	2,327,045	$	37,504		2.0			1.9
Number of U.S. Trading Days^1^				62				62
Number of U.K. Trading Days^2^				64				63
^1^	The number of U.S. trading days is based on the SIFMA holiday recommendation calendar.
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^2^	The number of U.K. trading days is based on the U.K. Bank holiday schedule.
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*	Consistent with FINRA TRACE reporting standards, both sides of trades are included in the Company’s<br>reported volumes when the Company executes trades on a matched principal basis between two counterparties. Consistent with industry standards, U.S. government bond trades are single-counted.
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Table 5: Consolidated Condensed Balance Sheet Data

	As of
In thousands (unaudited)	March 31, 2023			December 31, 2022
Assets
Cash and cash equivalents	$	332,780		$	430,746
Cash segregated under federal regulations		51,459			50,947
Investments, at fair value		106,674			83,792
Accounts receivable, net		100,184			78,450
Receivables from broker-dealers, clearing organizations and customers		558,254			476,335
Goodwill		154,789			154,789
Intangible assets, net of accumulated amortization		94,411			98,065
Furniture, equipment, leasehold improvements and capitalized software, net		99,133			100,256
Operating lease<br>right-of-use assets		64,904			66,106
Prepaid expenses and other assets		65,874			68,289
Total assets	$	1,628,462	****	$	1,607,775	****
Liabilities and stockholders’ equity
Liabilities
Accrued employee compensation	$	24,735		$	56,302
Payables to broker-dealers, clearing organizations and customers		316,274			303,993
Income and other tax liabilities		37,930			28,448
Accounts payable, accrued expenses and other liabilities		46,674			55,263
Operating lease liabilities		81,317			82,676
Total liabilities		506,930			526,682
Stockholders’ equity
Common stock		123			123
Additional paid-in capital		333,114			345,468
Treasury stock		(327,815	)		(328,326	)
Retained earnings		1,148,093			1,101,525
Accumulated other comprehensive loss		(31,983	)		(37,697	)
Total stockholders’ equity		1,121,532			1,081,093
Total liabilities and stockholders’ equity	$	1,628,462	****	$	1,607,775	****

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Table 6: Reconciliation of Net Income to EBITDA and Net Income Margin to EBITDA Margin

	Three Months Ended March 31,
In thousands (unaudited)	2023			2022
Net income	$	73,628	****	$	64,769	****
Add back:
Interest income		(4,249	)		(59	)
Interest expense		130			173
Provision for income taxes		24,567			25,650
Depreciation and amortization		16,461			15,174
EBITDA	$	110,537	****	$	105,707	****
Net income margin^1^	****	36.2	%	****	34.8	%
Add back:
Interest income		(2.1	)		—
Interest expense		0.1			0.1
Provision for income taxes		12.1			13.7
Depreciation and amortization		8.1			8.2
EBITDA margin^2^	****	54.4	%	****	56.8	%

Table 7: Reconciliation of Cash Flows from Operating Activities to Free Cash Flow

	Three Months Ended March 31,
In thousands (unaudited)	2023			2022
Cash flows from operating activities	$	7,527	****	$	(23,730	)
Exclude: Net change in trading investments		419			—
Exclude: Net change in<br>fail-to-deliver/receive from broker-dealers, clearing organizations and customers		46,767			68,542
Less: Purchases of furniture, equipment and leasehold improvements		(217	)		(1,396	)
Less: Capitalization of software development costs		(10,690	)		(9,425	)
Free cash flow	$	43,806	****	$	33,991	****
^1^	Net income margin is derived by dividing net income by total revenues for the applicable period.<br>
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^2^	EBITDA margin is derived by dividing EBITDA by total revenues for the applicable period.
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