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MarketAxess Reports Fourth Quarter 2012 Revenues Of $50.4 Million, Pre-Tax Income Of $21.5 Million And Diluted EPS Of $0.54, Or $0.36 Excluding An $0.18 Favorable Income Tax Adjustment

MarketAxess maintains its headquarters in New York and has offices in London, Chicago, Salt Lake City, Hong Kong, Singapore and São Paulo. For more information, please visit  www.marketaxess.com.

Cautionary Note Regarding Forward-Looking Statements

This press release may contain forward-looking statements, including statements about the outlook and prospects for Company and industry growth, as well as statements about the Company’s future financial and operating performance. These and other statements that relate to future results and events are based on MarketAxess’ current expectations. Actual results in future periods may differ materially from those currently expected or desired because of a number of risks and uncertainties, including: the level and intensity of competition in the fixed-income electronic trading industry and the pricing pressures that may result; the variability of our growth rate; the rapidly evolving nature of the electronic financial services industry; the level of trading volume transacted on the MarketAxess platform; the absolute level and direction of interest rates and the corresponding volatility in the corporate fixed-income market; our ability to develop new products and offerings and the market’s acceptance of those products; our exposure to risks resulting from non-performance by counterparties to transactions executed between our clients in which we act as an intermediary in matching back-to-back trades; our dependence on our broker-dealer clients; our ability to enter into strategic alliances and to acquire other businesses and successfully integrate them with our business; our future capital needs and our ability to obtain capital when needed; and other factors. The Company’s actual results and financial condition may differ, perhaps materially, from the anticipated results and financial condition in any such forward-looking statements. The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. More information about these and other factors affecting MarketAxess’ business and prospects is contained in MarketAxess’ periodic filings with the Securities and Exchange Commission and can be accessed at www.marketaxess.com.
                       

MarketAxess Holdings Inc.

Consolidated Statements of Operations
                   
Three Months Ended Twelve Months Ended
December 31, December 31,
       
2012 2011 2012 2011
(In thousands, except per share data)
 
(unaudited)
 

Revenues
Commissions $ 44,228 $   38,759 $ 174,199 $   155,444
Technology products and services 3,244 3,439 12,351 14,310
Information and user access fees 1,878 1,960 7,435 7,199
Investment income 236 317 1,058 1,229
Other   801       659   3,161       2,917

Total revenues
  50,387       45,134   198,204       181,099
 

Expenses
Employee compensation and benefits 14,579 13,707 60,361 58,786
Depreciation and amortization 2,337 1,793 8,233 6,781
Technology and communications 3,534 2,916 12,766 10,912
Professional and consulting fees 4,018 2,354 13,081 10,138
Occupancy 764 726 3,012 2,921
Marketing and advertising 1,224 1,380 5,470 4,882
General and administrative   2,402       3,393   8,595       7,946

Total expenses
  28,858       26,269   111,518       102,366
 

Income before taxes
21,529 18,865 86,686 78,733
Provision for income taxes   1,064       7,323   26,617       31,029

Net income
$ 20,465   $   11,542 $ 60,069   $   47,704
 

Per Share Data:

Earnings per share:
Basic $ 0.56 $ 0.31 $ 1.65 $ 1.29
Diluted (1) $ 0.54 $ 0.29 $ 1.59 $ 1.20
 

Cash dividends declared per common share
$ 1.41 $ 0.09 $ 1.74 $ 0.36
 

Weighted-average common shares:
Basic 36,501 37,629 36,516 37,006
Diluted 37,589 39,814 37,816 39,608
 

(1) Non-GAAP Financial Measure
Diluted earnings per share, as reported $ 0.54 $ 0.29 $ 1.59 $ 1.20
Adjustment to unrecognized tax benefits   (0.18 )     -   (0.18 )     -
Non-GAAP diluted earnings per share $ 0.36   $   0.29 $ 1.41   $   1.20
 
               

MarketAxess Holdings Inc.

Consolidated Condensed Balance Sheet Data
   
December 31, 2012 December 31, 2011
(In thousands)
 
(unaudited)

Assets
Cash and cash equivalents $       128,908 $       169,620
Securities available-for-sale 51,208 78,110
Accounts receivable, net 31,044 36,170
All other assets         68,681         65,558

Total assets
$       279,841 $       349,458

 

Liabilities and Stockholders' Equity
 
Total liabilities $ 37,124 $ 37,019
Total stockholders' equity         242,717         312,439

Total liabilities and stockholders' equity
$       279,841 $       349,458
 
                       

MarketAxess Holdings Inc.

Reconciliation of Non-GAAP Financial Measures
                   
Three Months Ended Twelve Months Ended
December 31, December 31,
       
2012 2011 2012 2011
(In thousands, except per share data)
 
(unaudited)
                         
EBITDA
 
Net income $   20,465 $   11,542 $   60,069 $   47,704
 
Add back:

Interest expense
(84) 13 45 58
 

Provision for income taxes
1,064 7,323 26,617 31,029
 

Depreciation and amortization
    2,337     1,793     8,233     6,781
 
Earnings before interest, taxes, depreciation

and amortization (EBITDA)
$   23,782 $   20,671 $   94,964 $   85,572
 
                         
Adjusted Diluted Earnings Per Share
 
Diluted earnings per share, as reported $ 0.54 $ 0.29 $ 1.59 $ 1.20
 
Adjustment to unrecognized tax benefits     (0.18)     -     (0.18)     -
 
Non-GAAP diluted earnings per share $   0.36 $   0.29 $   1.41 $   1.20
 
                           

MarketAxess Holdings Inc.

Volume Statistics

 
                   
Three Months Ended Twelve Months Ended
December 31, December 31,
       
2012 2011 2012 2011
                         
Total Trading Volume
($ in millions)
 
(unaudited)
U.S. high-grade - multi dealer 1

fixed-rate
$ 89,211 $ 73,181 $ 355,087 $ 311,758

floating-rate
3,499 2,278 12,603 11,802
Eurobond 7,995 8,042 34,538 36,933
Other 1,2   48,373   41,699   187,368   164,514
Total $ 149,078 $ 125,200 $ 589,596 $ 525,007
                         
Average Daily Volume
($ in millions)
 
(unaudited)
 
U.S. high-grade 1 $ 1,545 $ 1,237 $ 1,483 $ 1,294
Eurobond 125 128 137 147
Other 1,2   806   684   756   658
Total $ 2,476 $ 2,049 $ 2,376 $ 2,099
 
Number of U.S. Trading Days 3 60 61 248 250
Number of U.K. Trading Days 4 64 63 252 251
                         
Average Variable Transaction Fee Per Millon
 
(unaudited)
U.S. high-grade - multi dealer

fixed-rate
$ 200 $ 195 $ 202 $ 190

floating-rate
  45   27   34   22
Total U.S. high-grade 193 190 197 183
Eurobond 80 92 73 99
Other   232   166   214   175
Total $ 200 $ 175 $ 195 $ 175
 

1 Consistent with FINRA TRACE reporting standards, both sides of trades are included in the Company's reported volumes when the Company executes trades on a riskless principal basis between two counterparties.
2 Effective January 2012, the Company no longer reports credit default swaps trading volumes.
Credit default swap volumes previously reported in "Other" trading volume have not been removed.
3 The number of U.S. trading days is based on the SIFMA holiday recommendation calendar.
4 The number of U.K. trading days is based on the U.K. Bank holiday schedule.
 

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