MarketAxess Reports Record Revenues of $181 Million for 2011

MarketAxess, an electronic trading platform for fixed income securities, reported that revenues for the fourth quarter ending December 31, 2011 increased 16.9 percent to $45.1 million, compared to $38.6 million for Q4 2010.

Pre-tax income for the fourth quarter of 2011 was $18.9 million, an increase of 30.6 percent, compared to $14.4 million for the fourth quarter of 2010. Net income totaled $11.5 million, or $0.29 per share on a diluted basis, compared to $8.9 million, or $0.23 per share on a diluted basis for Q4 of 2010, the company stated today.

Total revenues for the year ending Dec. 31, 2011 increased 23.8 percent to a record $181.1 million, versus $146.2 million for 2010. Net income totaled $47.4 million, or $1.20 per share on a diluted basis, compared to $31.4 million or $0.08 per share on a diluted basis, for 2010.

“We closed the year on strong note and are pleased to report record revenues, pre-tax income and pre-tax margins for the full year of 2011,” stated Richard McVey, chairman and CEO of MarketAxess, in today’s release.

MarketAxess also increased its estimated market share in the U.S. high-grade corporate market throughout 2011, culminating in a record 12.2 percent in the fourth quarter, noted McVey in the release.

The firm, which has been active in discussions over the U.S. derivatives reform process in Washington, D.C., stands to benefit from the anticipated movement of derivatives contracts to electronic trading platforms. “We believe that the ongoing changes to global market structure, driven in part by regulatory reform, will continue to favor e-trading in the cash and derivative credit markets,” McVey commented.

Commission revenue for the fourth quarter totaled $38.8 million on total trading volume of $125.2 billion, compared to $32.3 million in commission revenue on total trading volume of $104.3 billion for the fourth quarter of 2010. U.S. high-grade trading volume as a percentage of FINRA’s high-grade TRACE trading volume increased to an estimated 12.2 percent, compared to an estimated 9.6 percent for Q4 2010.

For the full year, commission revenue increased 27.2 percent to $155.4 million, as compared to $122.2 million for 2010. Other revenue stemming from technology products and services, information and user access fees, investment income and other revenue, grew slightly to $6.4 million, compared to $6.3 million for the 2010 fourth quarter.

Total expenses for the fourth quarter of 2011 were up 8.7 percent to $26.3 million, versus $24.2 million for Q4 2010. The increase in expenses was primarily due to a 100 percent reserve against accounts receivable due from bankrupt futures brokerage firm MF Global Inc. and a write-off of a minority investment. These two charges totaled $1.5 million, in the aggregate.

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