MKTXs Earnings Soar, But Buy Signal Backfires

MarketAxess Holdings (MKTX) reported Q4 2025 earnings on Feb 6, 2026, with a 41.8% year-over-year net income increase to $92.39 million. While revenue rose 3.5% to $209.41 million, it fell short of estimates. The company maintained its 2026 guidance for mid-single-digit services revenue growth and outlined strategic priorities, including AI-driven data initiatives and protocol expansion.

Revenue

Revenue growth in Q4 2025 was driven by robust performance across key segments. Commissions led the charge at $181.34 million, forming the backbone of total revenue. Information services contributed $13.45 million, while post-trade services added $11.03 million. Technology services, though smaller, delivered $3.58 million. Collectively, these segments propelled total revenue to $209.41 million, reflecting a 3.5% year-over-year increase despite market headwinds.

Earnings/Net Income

MarketAxess’s earnings per share (EPS) surged 44.8% to $2.52 in Q4 2025, significantly outpacing the $1.74 recorded in the prior-year period. Net income followed a similar trajectory, rising to $92.39 million from $65.14 million. The EPS growth underscores the company’s strong profitability, driven by operational efficiencies and strategic revenue diversification. This performance highlights MarketAxess’s ability to capitalize on market opportunities despite challenges in the U.S. credit trading environment.

Post-Earnings Price Action Review

The strategy of buying MKTX when revenues beat expectations and holding for 30 days resulted in a significant loss. The strategy returned -51.10%, underperforming the benchmark by 102.20%. With a maximum drawdown of 51.10% and a Sharpe ratio of -0.71, the strategy indicated a high level of risk and substantial volatility.

CEO Commentary

Christopher Concannon, CEO & Director, emphasized MarketAxess’ progress in expanding its global network, liquidity, and data/analytics capabilities. The company achieved record revenue of $846 million and $347 million in free cash flow. Concannon highlighted growth in portfolio trading, block trading, and dealer-initiated protocols, while addressing challenges in U.S. high-grade market share. Strategic priorities include executing 3-year financial targets, enhancing multiprotocol solutions, and leveraging AI for insights. The CEO expressed optimism about 2026, citing momentum in automation and emerging markets.

Guidance

For 2026, MarketAxess expects mid-single-digit growth in services revenue and total expenses of $530–545 million. The effective tax rate is projected at 24–26%, with CAPEX of $65–75 million. The company aims to return to higher revenue growth in U.S. credit, with incremental revenue contributions rising from 20% in 2026 to 35% by 2028. MarketAxess reiterated 3-year targets of 8–9% average revenue growth and 75–125 bps operating margin expansion.

Additional News

1. Stock Repurchase Authorization: MarketAxess increased its stock repurchase authorization to $505 million, signaling confidence in its long-term value.

2. Goldman Sachs Presentation: The company presented at the Goldman Sachs 2025 U.S. Financial Services Conference, highlighting its strategic initiatives and market position.

3. Trading Volume Growth: January 2026 saw a 28% year-over-year increase in total credit trading volume, driven by record emerging markets and block trading activity.

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