MarketAxess Holdings 2025 Q1 Earnings Misses Targets as Net Income Drops 79%

MarketAxess Holdings (MKTX) reported its fiscal 2025 Q1 earnings on May 07th, 2025. MarketAxess Holdings reported a notable decline in its earnings for the first quarter of 2025, with net income dropping 79% compared to the previous year. The company’s results fell short of expectations, with earnings per share (EPS) at $0.40, well below the anticipated figures. Despite the challenges, the company maintained its revenue guidance for 2025, with expectations for stable services revenue and capital expenditures, indicating confidence in its future performance.

Revenue
Total revenue for MarketAxess Holdings fell by 0.8% to $208.58 million in Q1 2025, compared to $210.32 million in Q1 2024. The commission segment generated $181.34 million, while information services brought in $12.90 million. Post-trade services contributed $11.09 million, and technology services added $3.24 million to the total revenue.

Earnings/Net Income
MarketAxess Holdings experienced a sharp decline in earnings per share (EPS), which dropped by 79.2% to $0.40 in Q1 2025 from $1.92 in Q1 2024. The company's net income also fell significantly, reaching $15.06 million, a 79.3% decrease from the $72.61 million reported in Q1 2024. The substantial drop in EPS indicates a challenging quarter for the company.

Price Action
The stock price of MarketAxess Holdings increased by 4.65% during the latest trading day, rose 2.96% over the most recent full trading week, and gained 7.14% month-to-date.

Post Earnings Price Action Review
Over the past five years, the strategy of buying MKTX shares following a quarter-over-quarter revenue drop and holding them for 30 days has underperformed the benchmark. This approach resulted in a return of -2.24% compared to the benchmark return of 84.08%. The strategy's compound annual growth rate was -0.45%, with a maximum drawdown of -9.14%, highlighting considerable risk and losses. Despite carrying moderate risk, evidenced by a Sharpe ratio of -0.08 and a volatility of 5.88%, the strategy failed to leverage market gains, making it less effective than a simple buy-and-hold strategy.

CEO Commentary
Chris Concannon, Chief Executive Officer, emphasized the positive impact of technology investments, noting record commission revenue in international and emerging markets. He pointed out substantial growth in U.S. government bonds, driven by institutional clients using advanced algorithms. Concannon highlighted the company's cost discipline, with a minimal 2% rise in expenses, and expressed optimism about improvements in portfolio trading and block solutions despite challenges in U.S. credit market share.

Guidance
Ilene Fiszel Bieler, Chief Financial Officer, confirmed the 2025 revenue guidance, forecasting consistent services revenue and capital expenditures. She adjusted the expense guidance range to $505 million to $525 million, expecting costs to trend toward the lower end. The effective tax rate is projected between 41% and 42% on a GAAP basis, with a non-GAAP rate of 26% to 27%. The company anticipates RFQ-hub revenue growth between 15% and 20% in 2025, with incremental expenses from RFQ-hub consolidation estimated at $7 million to $9 million.

Additional News
MarketAxess Holdings has announced a quarterly cash dividend of $0.76 per share, payable on June 4, 2025, to stockholders of record as of May 21, 2025. Additionally, the company reported the buyback of 250,792 shares year-to-date through April 2025 at a total cost of $51.7 million, with 187,905 shares repurchased during the first quarter alone. Furthermore, MarketAxess Holdings has $173.4 million remaining under the Board of Directors' share repurchase authorization as of April 30, 2025.