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, 2023

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 24, 2023, the number of shares of the Registrant’s voting common stock outstanding was 37,677,426.

2

MARKETAXESS HOLDINGS INC.

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2023

TABLE OF CONTENTS

		Page
PART I — Financial Information
Item 1.	Financial Statements (Unaudited)	3
	Consolidated Statements of Financial Condition as of June 30, 2023 and December 31, 2022	3
	Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2023 and 2022	4
	Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2023 and 2022	5
	Consolidated Statements of Changes in Stockholders’ Equity for the Three and Six Months Ended June 30, 2023 and 2022	6
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2023 and 2022	8
	Notes to Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	43
PART II — Other Information
Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	44
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 3.	Defaults Upon Senior Securities	45
Item 4.	Mine Safety Disclosures	45
Item 5.	Other Information	45
Item 6.	Exhibits	46

2

PART I — Financial Information

Item 1. Financial Statements

MARKETAXESS HOLDINGS INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Unaudited)

	As of
	June 30, 2023			December 31, 2022
	(In thousands, except share  and per share amounts)
ASSETS
Cash and cash equivalents	$	396,487		$	430,746
Cash segregated under federal regulations		52,015			50,947
Investments, at fair value		109,037			83,792
Accounts receivable, net of allowance of $421 and $590 as of June 30, 2023     and December 31, 2022, respectively		92,969			78,450
Receivables from broker-dealers, clearing organizations and customers		479,741			476,335
Goodwill		154,789			154,789
Intangible assets, net of accumulated amortization		89,812			98,065
Furniture, equipment, leasehold improvements and capitalized software, net of     accumulated depreciation and amortization		99,022			100,256
Operating lease right-of-use assets		63,674			66,106
Prepaid expenses and other assets		81,645			68,289
Total assets	$	1,619,191		$	1,607,775
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accrued employee compensation	$	35,877		$	56,302
Payables to broker-dealers, clearing organizations and customers		287,360			303,993
Income and other tax liabilities		18,518			28,448
Accounts payable, accrued expenses and other liabilities		32,422			55,263
Operating lease liabilities		79,922			82,676
Total liabilities		454,099			526,682
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, 2023 and December 31, 2022		—			—
Series A Preferred Stock, $0.001 par value, 110,000 shares authorized, no shares     issued and outstanding as of June 30, 2023 and December 31, 2022		—			—
Common stock voting, $0.003 par value, 110,000,000 shares authorized,     40,946,010 shares and 40,918,660 shares issued and 37,677,426 shares     and 37,648,148 shares outstanding as of June 30, 2023 and     December 31, 2022, 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, 2023 and December 31, 2022		—			—
Additional paid-in capital		339,867			345,468
Treasury stock – Common stock voting, at cost, 3,268,584 shares and 3,270,512     shares as of June 30, 2023 and December 31, 2022, respectively		(327,815	)		(328,326	)
Retained earnings		1,180,820			1,101,525
Accumulated other comprehensive loss		(27,903	)		(37,697	)
Total stockholders' equity		1,165,092			1,081,093
Total liabilities and stockholders' equity	$	1,619,191		$	1,607,775
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,
	2023			2022			2023			2022
	(In thousands, except per share amounts)
Revenues
Commissions	$	158,586		$	163,463		$	340,577		$	329,576
Information services		11,655			9,396			22,665			19,205
Post-trade services		9,415			9,144			19,395			19,056
Other		190			226			378			449
Total revenues		179,846			182,229			383,015			368,286
Expenses
Employee compensation and benefits		48,383			45,435			100,698			93,191
Depreciation and amortization		17,005			15,240			33,466			30,414
Technology and communications		15,235			12,490			30,234			24,682
Professional and consulting fees		8,023			8,920			15,150			18,541
Occupancy		3,199			3,700			6,810			7,087
Marketing and advertising		3,308			2,949			6,303			4,738
Clearing costs		4,182			4,263			8,727			8,838
General and administrative		4,784			4,444			10,544			7,903
Total expenses		104,119			97,441			211,932			195,394
Operating income		75,727			84,788			171,083			172,892
Other income (expense)
Interest income		5,312			254			9,561			313
Interest expense		(53	)		(337	)		(183	)		(510	)
Equity in earnings of unconsolidated affiliate		250			191			454			191
Other, net		(2,286	)		4,682			(3,770	)		7,111
Total other income (expense)		3,223			4,790			6,062			7,105
Income before income taxes		78,950			89,578			177,145			179,997
Provision for income taxes		19,091			22,656			43,658			48,306
Net income	$	59,859		$	66,922		$	133,487		$	131,691
Net income per common share
Basic	$	1.60		$	1.78		$	3.56		$	3.52
Diluted	$	1.59		$	1.78		$	3.55		$	3.49
Cash dividends declared per common share	$	0.72		$	0.70		$	1.44		$	1.40
Weighted average shares outstanding
Basic		37,485			37,529			37,482			37,456
Diluted		37,588			37,608			37,617			37,716
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,
	2023			2022			2023			2022
	(In thousands)
Net income	$	59,859		$	66,922		$	133,487		$	131,691
Cumulative translation adjustment		4,206			(21,458	)		9,961			(26,509	)
Net unrealized gain (loss) on securities available-for-sale,    net of tax of $(41), $0, $(56) and $0, respectively		(126	)		—			(167	)		—
Comprehensive income	$	63,939		$	45,464		$	143,281		$	105,182
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, 2023	$	123	$	345,468		$	(328,326	)	$	1,101,525		$	(37,697	)	$	1,081,093
Net income		—		—			—			73,628			—			73,628
Cumulative translation adjustment		—		—			—			—			5,755			5,755
Unrealized net gain (loss) on    securities available-for-sale,    net of tax		—		—			—			—			(41	)		(41	)
Stock-based compensation		—		7,488			—			—			—			7,488
Reissuance of treasury stock		—		(57	)		511			—			—			454
Exercise of stock options		—		707			—			—			—			707
Withholding tax payments on    restricted stock vesting    and stock option exercises		—		(20,492	)		—			—			—			(20,492	)
Cash dividend on common stock    ($0.72 per share)		—		—			—			(27,060	)		—			(27,060	)
Balance at March 31, 2023		123		333,114			(327,815	)		1,148,093			(31,983	)		1,121,532
Net income		—		—			—			59,859			—			59,859
Cumulative translation adjustment		—		—			—			—			4,206			4,206
Unrealized net gain (loss) on    securities available-for-sale,    net of tax		—		—			—			—			(126	)		(126	)
Stock-based compensation		—		6,890			—			—			—			6,890
Exercise of stock options		—		18			—			—			—			18
Withholding tax payments on    restricted stock vesting    and stock option exercises		—		(155	)		—			—			—			(155	)
Cash dividend on common stock    ($0.72 per share)		—		—			—			(27,132	)		—			(27,132	)
Balance at June 30, 2023	$	123	$	339,867		$	(327,815	)	$	1,180,820		$	(27,903	)	$	1,165,092
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, 2022	$	123	$	330,262	$	(232,712	)	$	956,966	$	(13,330	)	$	1,041,309
Net income		—		—		—