MarketAxess (MKTX) Beats Q2 Earnings, Revenue Estimates

MarketAxess Holdings Inc. (NASDAQ:MKTX) reported second-quarter 2016 record operating net income of 88 cents per share, which surpassed the Zacks Consensus Estimate by 3.5%. Also, the bottom line improved 37.5% from the year-ago quarter.

The bottom-line growth was primarily driven by a strong top-line performance. The company witnessed continued growth owing to clients derive from the technology investments and the increasing network of over 1,100 actively trading on the company’s platform.

Operational Update

MarketAxess posted record total revenue of $96.6 million, up 27.9% year over year. Revenues beat the Zacks Consensus Estimate of $93 million. The top-line improvement can be attributed to 29.9% higher commission revenues as well as a 172.1% surge in investment income, both on a year-over-year basis.

Total expense of MarketAxess increased 20.1% year over year to 46.1 million. The increase in expenses stemmed from higher employee compensation and benefits costs, technology and communications, professional and consulting fees, marketing and advertising and general and administrative expenses.

Total trading volume of MarketAxess grew 38.2% year over year to a record $338.3 billion.

Financial Update

MarketAxess exited the second quarter with total assets of $477.1 million, up 8.7% from year-end 2015.

Total cash and cash equivalents of $153.3 million as of Jun 30, 2016 plunged 23.2% from year-end 2015.

At the end of the reported quarter, MarketAxess had total stockholder’s equity of $436.2 million, up 11.6% year over year.

Dividend and Share Repurchase Update

The board of directors of MarketAxess declared a quarterly cash dividend of 26 cents per share. The dividend will be paid on Aug 25, 2016 to stockholders on record at the close of business on Aug 11, 2016.

In the second quarter, the company bought back shares worth $4.2 million. As of Jun 30, 2016, the company is left with $19.6 million available for buybacks.

Guidance Revised

MarketAxess increased its full-year 2016 expenses guidance to a range of $178–$183 million, up from $168.0 million to $176.0 million guided earlier. Capital spending is expected in the range of $18–$22 million. The overall effective tax rate is anticipated to be in between 34–36%.

Zacks Rank and Peer Performance

MarketAxess currently sports a Zacks Rank #1 (Strong Buy). Among the other players in the securities exchange that have reported their earnings so far, the bottom line at CME Group Inc. (NASDAQ:CME) and Nasdaq, Inc. (NASDAQ:NDAQ) beats their respective Zacks Consensus Estimate, While Bats Global Markets (NYSE:BATS) with a Zacks Rank #2 has announced to release its second quarter earnings result on Aug 4, 2016.