UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-34091

MARKETAXESS HOLDINGS INC.

(Exact name of registrant as specified in its charter)

Delaware	52-2230784
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
55 Hudson Yards, 15th Floor New York, New York	10001
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (212) 813-6000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.003 par value	MKTX	NASDAQ Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of July 22, 2022, the number of shares of the Registrant’s voting common stock outstanding was 37,640,008.

MARKETAXESS HOLDINGS INC.

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2022

TABLE OF CONTENTS

		Page
PART I — Financial Information
Item 1.	Financial Statements (Unaudited)	3
	Consolidated Statements of Financial Condition as of June 30, 2022 and December 31, 2021	3
	Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2022 and 2021	4
	Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2022 and 2021	5
	Consolidated Statements of Changes in Stockholders’ Equity for the Three and Six Months Ended June 30, 2022 and 2021	6
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021	8
	Notes to Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	42
PART II — Other Information
Item 1.	Legal Proceedings	43
Item 1A.	Risk Factors	43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 3.	Defaults Upon Senior Securities	44
Item 4.	Mine Safety Disclosures	44
Item 5.	Other Information	44
Item 6.	Exhibits	44

2

PART I — Financial Information

Item 1. Financial Statements

MARKETAXESS HOLDINGS INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Unaudited)

	As of
	June 30, 2022			December 31, 2021
	(In thousands, except share  and per share amounts)
ASSETS
Cash and cash equivalents	$	290,544		$	506,735
Cash segregated under federal regulations		50,276			50,159
Investments, at fair value		34,297			36,078
Accounts receivable, net of allowance of $193 and $140 as of June 30, 2022 and December 31, 2021, respectively		87,475			63,881
Receivables from broker-dealers, clearing organizations and customers		617,817			408,346
Goodwill		154,789			154,789
Intangible assets, net of accumulated amortization		105,607			116,377
Furniture, equipment, leasehold improvements and capitalized software, net of accumulated depreciation and amortization		93,255			96,061
Operating lease right-of-use assets		68,602			70,960
Prepaid expenses and other assets		65,048			27,066
Total assets	$	1,567,710		$	1,530,452
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accrued employee compensation	$	35,685		$	59,719
Payables to broker-dealers, clearing organizations and customers		375,211			229,325
Income and other tax liabilities		27,660			40,456
Accounts payable, accrued expenses and other liabilities		42,797			71,218
Operating lease liabilities		85,555			88,425
Total liabilities		566,908			489,143
Commitments and Contingencies (Note 13)
Stockholders' equity
Preferred stock, $0.001 par value, 4,855,000 shares authorized, no shares issued and outstanding as of June 30, 2022 and December 31, 2021		—			—
Series A Preferred Stock, $0.001 par value, 110,000 shares authorized, no shares issued and outstanding as of June 30, 2022 and December 31, 2021		—			—
Common stock voting, $0.003 par value, 110,000,000 shares authorized, 40,910,520 shares and 40,911,506 shares issued and 37,640,008 shares and 37,918,956 shares outstanding as of June 30, 2022 and December 31, 2021, respectively		123			123
Common stock non-voting, $0.003 par value, 10,000,000 shares authorized, no shares issued and outstanding as of June 30, 2022 and December 31, 2021		—			—
Additional paid-in capital		325,047			330,262
Treasury stock – Common stock voting, at cost, 3,270,512 shares and 2,992,550 shares as of June 30, 2022 and December 31, 2021, respectively		(320,252	)		(232,712	)
Retained earnings		1,035,723			956,966
Accumulated other comprehensive loss		(39,839	)		(13,330	)
Total stockholders' equity		1,000,802			1,041,309
Total liabilities and stockholders' equity	$	1,567,710		$	1,530,452
The accompanying notes are an integral part of these consolidated financial statements.

3

MARKETAXESS HOLDINGS INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
	(In thousands, except per share amounts)
Revenues
Commissions	$	163,463		$	156,431		$	329,576		$	332,269
Information services		9,396			9,844			19,205			19,006
Post-trade services		9,144			9,848			19,056			20,109
Other		226			211			449			414
Total revenues		182,229			176,334			368,286			371,798
Expenses
Employee compensation and benefits		45,435			40,732			93,191			88,820
Depreciation and amortization		15,240			13,097			30,414			24,876
Technology and communications		12,490			10,544			24,682			20,580
Professional and consulting fees		8,920			10,704			18,541			20,344
Occupancy		3,700			3,300			7,087			6,617
Marketing and advertising		2,949			3,128			4,738			4,332
Clearing costs		4,263			4,372			8,838			9,066
General and administrative		4,444			3,280			7,903			6,512
Total expenses		97,441			89,157			195,394			181,147
Operating income		84,788			87,177			172,892			190,651
Other income (expense)
Investment income		254			107			313			214
Interest expense		(337	)		(171	)		(510	)		(362	)
Equity in earnings of unconsolidated affiliate		191			—			191			—
Other, net		4,682			(1,060	)		7,111			(2,649	)
Total other income (expense)		4,790			(1,124	)		7,105			(2,797	)
Income before income taxes		89,578			86,053			179,997			187,854
Provision for income taxes		22,656			18,765			48,306			40,109
Net income	$	66,922		$	67,288		$	131,691		$	147,745
Net income per common share
Basic	$	1.78		$	1.79		$	3.52		$	3.94
Diluted	$	1.78		$	1.77		$	3.49		$	3.87
Cash dividends declared per common share	$	0.70		$	0.66		$	1.40		$	1.32
Weighted average shares outstanding
Basic		37,529			37,508			37,456			37,489
Diluted		37,608			38,104			37,716			38,129
The accompanying notes are an integral part of these consolidated financial statements.

4

MARKETAXESS HOLDINGS INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended June 30,					Six Months Ended June 30,
	2022			2021		2022			2021
	(In thousands)
Net income	$	66,922		$	67,288	$	131,691		$	147,745
Net cumulative translation adjustment and foreign currency exchange hedge, net of tax of $0, $(133), $0, and $(546), respectively		(21,458	)		1,138		(26,509	)		(794	)
Comprehensive income	$	45,464		$	68,426	$	105,182		$	146,951
The accompanying notes are an integral part of these consolidated financial statements.

5

MARKETAXESS HOLDINGS INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

	Common Stock Voting		Additional Paid-In Capital			Treasury Stock – Common Stock Voting			Retained Earnings			Accumulated Other Comprehensive Loss			Total Stockholders' Equity
	(In thousands, except per share amounts)
Balance at January 1, 2022	$	123	$	330,262		$	(232,712	)	$	956,966		$	(13,330	)	$	1,041,309
Net income		—		—			—			64,769			—			64,769
Cumulative translation adjustment		—		—			—			—			(5,051	)		(5,051	)
Stock-based compensation		—		8,099			—			—			—			8,099
Exercise of stock options		—		50			—			—			—			50
Withholding tax payments on restricted stock vesting and stock option exercises		—		(20,292	)		—			—			—			(20,292	)
Repurchases of common stock		—		—			(38,800	)		—			—			(38,800	)
Cash dividend on common stock ($0.70 per share)		—		—			—			(26,543	)		—			(26,543	)
Balance at March 31, 2022		123		318,119			(271,512	)		995,192			(18,381	)		1,023,541
Net income		—		—			—			66,922			—			66,922
Cumulative translation adjustment		—		—			—			—			(21,458	)		(21,458	)
Stock-based compensation		—		6,503			—			—			—			6,503
Exercise of stock options		—		86			—			—			—			86
Withholding tax payments on restricted stock vesting and stock option exercises		—		339			—			—			—			339
Repurchases of common stock		—		—			(48,740	)		—			—			(48,740	)
Cash dividend on common stock ($0.70 per share)		—		—			—			(26,391	)		—			(26,391	)
Balance at June 30, 2022	$	123	$	325,047		$	(320,252	)	$	1,035,723		$	(39,839	)	$	1,000,802
The accompanying notes are an integral part of these consolidated financial statements.

6

MARKETAXESS HOLDINGS INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (CONTINUED)

(Unaudited)

	Common Stock Voting		Additional Paid-In Capital		Treasury Stock – Common Stock Voting			Retained Earnings		Accumulated Other Comprehensive Loss			Total Stockholders' Equity
	(In thousands, except per share amounts)
Balance at January 1, 2021	$	123	$	329,742	$	(169,523	)	$	799,369	$	(4,650	)	$	955,061
Net income		—		—		—			80,457		—			80,457
Cumulative translation adjustment and foreign currency exchange hedge, net of tax		—		—		—			—		(1,932	)		(1,932	)
Stock-based compensation		—		7,424		—			—		—			7,424
Exercise of stock options		—		244		—			—		—			244
Withholding tax payments on restricted stock vesting and stock option exercises