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 September 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 October 23, 2023, the number of shares of the Registrant’s voting common stock outstanding was 37,905,448.

2

MARKETAXESS HOLDINGS INC.

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

TABLE OF CONTENTS

		Page
PART I — Financial Information
Item 1.	Financial Statements (Unaudited)	3
	Consolidated Statements of Financial Condition as of September 30, 2023 and December 31, 2022	3
	Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2023 and 2022	4
	Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2023 and 2022	5
	Consolidated Statements of Changes in Stockholders’ Equity for the Three and Nine Months Ended September 30, 2023 and 2022	6
	Consolidated Statements of Cash Flows for the Nine Months Ended September 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	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	42
Item 4.	Controls and Procedures	44
PART II — Other Information
Item 1.	Legal Proceedings	45
Item 1A.	Risk Factors	45
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45
Item 3.	Defaults Upon Senior Securities	46
Item 4.	Mine Safety Disclosures	46
Item 5.	Other Information	46
Item 6.	Exhibits	47

2

PART I — Financial Information

Item 1. Financial Statements

MARKETAXESS HOLDINGS INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Unaudited)

	As of
	September 30, 2023			December 31, 2022
	(In thousands, except share  and per share amounts)
ASSETS
Cash and cash equivalents	$	420,497		$	430,746
Cash segregated under federal regulations		52,601			50,947
Investments, at fair value		132,844			83,792
Accounts receivable, net of allowance of $580 and $590 as of September 30,     2023 and December 31, 2022, respectively		90,548			78,450
Receivables from broker-dealers, clearing organizations and customers		548,081			476,335
Goodwill		154,789			154,789
Intangible assets, net of accumulated amortization		84,687			98,065
Furniture, equipment, leasehold improvements and capitalized software, net of     accumulated depreciation and amortization		101,654			100,256
Operating lease right-of-use assets		63,101			66,106
Prepaid expenses and other assets		88,710			68,289
Total assets	$	1,737,512		$	1,607,775
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accrued employee compensation	$	43,881		$	56,302
Payables to broker-dealers, clearing organizations and customers		364,086			303,993
Income and other tax liabilities		19,379			28,448
Accounts payable, accrued expenses and other liabilities		40,019			55,263
Operating lease liabilities		79,169			82,676
Total liabilities		546,534			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 September 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 September 30, 2023 and December 31, 2022		—			—
Common stock voting, $0.003 par value, 110,000,000 shares authorized,     40,946,522 shares and 40,918,660 shares issued and 37,680,665 shares     and 37,648,148 shares outstanding as of September 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 September 30, 2023 and     December 31, 2022		—			—
Additional paid-in capital		346,947			345,468
Treasury stock – Common stock voting, at cost, 3,265,857 shares and 3,270,512     shares as of September 30, 2023 and December 31, 2022, respectively		(327,091	)		(328,326	)
Retained earnings		1,208,607			1,101,525
Accumulated other comprehensive loss		(37,608	)		(37,697	)
Total stockholders' equity		1,190,978			1,081,093
Total liabilities and stockholders' equity	$	1,737,512		$	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 September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
	(In thousands, except per share amounts)
Revenues
Commissions	$	150,496		$	153,164		$	491,073		$	482,740
Information services		11,801			9,711			34,466			28,916
Post-trade services		9,833			9,000			29,228			28,056
Other		154			237			532			686
Total revenues		172,284			172,112			555,299			540,398
Expenses
Employee compensation and benefits		48,872			44,805			149,570			137,996
Depreciation and amortization		17,561			15,302			51,027			45,716
Technology and communications		15,339			14,169			45,573			38,851
Professional and consulting fees		9,181			7,560			24,331			26,101
Occupancy		3,503			3,381			10,313			10,468
Marketing and advertising		2,100			1,797			8,403			6,535
Clearing costs		3,665			4,211			12,392			13,049
General and administrative		5,154			4,576			15,698			12,479
Total expenses		105,375			95,801			317,307			291,195
Operating income		66,909			76,311			237,992			249,203
Other income (expense)
Interest income		6,590			1,433			16,151			1,746
Interest expense		(164	)		(138	)		(347	)		(648	)
Equity in earnings of unconsolidated affiliate		125			869			579			1,060
Other, net		(1,717	)		388			(5,487	)		7,499
Total other income (expense)		4,834			2,552			10,896			9,657
Income before income taxes		71,743			78,863			248,888			258,860
Provision for income taxes		16,802			19,556			60,460			67,862
Net income	$	54,941		$	59,307		$	188,428		$	190,998
Net income per common share
Basic	$	1.47		$	1.58		$	5.03		$	5.10
Diluted	$	1.46		$	1.58		$	5.01		$	5.07
Cash dividends declared per common share	$	0.72		$	0.70		$	2.16		$	2.10
Weighted average shares outstanding
Basic		37,491			37,479			37,485			37,464
Diluted		37,574			37,567			37,603			37,666
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 September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
	(In thousands)
Net income	$	54,941		$	59,307		$	188,428		$	190,998
Cumulative translation adjustment		(9,687	)		(20,248	)		274			(46,757	)
Net unrealized (loss) on securities available-for-sale,    net of tax of $(5), $0, $(61) and $0, respectively		(18	)		—			(185	)		—
Comprehensive income	$	45,236		$	39,059		$	188,517		$	144,241
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
Net income		—		—			—			54,941			—			54,941
Cumulative translation adjustment		—		—			—			—			(9,687	)		(9,687	)
Unrealized net gain (loss) on    securities available-for-sale,    net of tax		—		—			—			—			(18	)		(18	)
Stock-based compensation		—		7,481			—			—			—			7,481
Reissuance of treasury stock		—		(185	)		724			—			—			539
Withholding tax payments on    restricted stock vesting    and stock option exercises		—		(216	)		—			—			—			(216	)
Cash dividend on common stock    ($0.72 per share)		—		—			—			(27,154	)		—			(27,154	)
Balance at September 30, 2023	$	123	$	346,947		$	(327,091	)	$	1,208,607		$	(37,608	)	$	1,190,978
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		—		—		—			64,769		—			64,769
Cumulative translation adjustment		—		—		—			—		(5,051	)		(5,051	)
Stock-based compensation		—		8,099		—			—		—			8,099
Exercise of stock options		—		50		—			—		—