MarketAxess Holdings Inc. Files Q2 2024 10-Q

TL;DR

MKTX Q2 10-Q filed. Financials look stable, focus on tech & post-trade services.

AI Summary

MarketAxess Holdings Inc. filed its 10-Q for the period ending June 30, 2024. The filing details financial performance and business operations, including segments like Post-Trade Services and Technology & Communications. Key financial data points such as fair value measurements and equity components are reported as of December 31, 2023, and June 30, 2024.

Why It Matters

This filing provides investors with an update on MarketAxess's financial health and operational performance for the second quarter of 2024, crucial for understanding the company's trajectory in the financial technology sector.

Risk Assessment

Risk Level: low — The filing is a routine quarterly report and does not indicate any immediate or significant risks.

Key Numbers

• 2024-06-30 — Reporting Period End Date (Indicates the end of the fiscal quarter for which financial information is reported.)
• 2024-08-06 — Filing Date (The date the 10-Q report was officially submitted to the SEC.)
• 2023-12-31 — Prior Year End Date (Used for comparative financial data and fair value measurements.)

Key Players & Entities

• MarketAxess Holdings Inc. (company) — Filer of the 10-Q
• 20240630 (date) — End of the reporting period
• 20240806 (date) — Filing date
• 55 Hudson Yards, 15th Floor (address) — Company's business and mailing address
• 212-831-6000 (phone_number) — Company's business phone number

FAQ

Key Financial Figures

• $0.003 — nge on which registered Common Stock, $0.003 par value MKTX NASDAQ Global Select

Filing Documents

• mktx-20240630.htm (10-Q) — 3364KB
• mktx-ex31_1.htm (EX-31.1) — 12KB
• mktx-ex31_2.htm (EX-31.2) — 11KB
• mktx-ex32_1.htm (EX-32.1) — 8KB
• mktx-ex32_2.htm (EX-32.2) — 8KB
• 0000950170-24-091990.txt ( ) — 13752KB
• mktx-20240630.xsd (EX-101.SCH) — 1507KB
• mktx-20240630_htm.xml (XML) — 3176KB

— Financial Information

PART I — Financial Information Item 1.

Financial Statements (Unaudited)

Financial Statements (Unaudited) 3 Consolidated Statements of Financial Condition as of June 30, 2024 and December 31, 2023 3 Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2024 and 202 3 4 Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2024 and 2023 5 Consolidated Statements of Changes in Stockholders' Equity for the Three and Six Months Ended June 30, 2024 and 2023 6 Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023 8

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 9 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 28 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 45 Item 4.

Controls and Procedures

Controls and Procedures 47

— Other Information

PART II — Other Information Item 1.

Legal Proceedings

Legal Proceedings 48 Item 1A.

Risk Factors

Risk Factors 48 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 48 Item 3. Defaults Upon Senior Securities 49 Item 4. Mine Safety Disclosures 49 Item 5. Other Information 49 Item 6. Exhibits 50 2 P ART I — Financial Information It em 1. Financial Statements MARKETAXESS HOLDINGS INC. C ONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited) As of June 30, 2024 December 31, 2023 (In thousands, except share and per share amounts) ASSETS Cash and cash equivalents $ 434,063 $ 451,280 Cash segregated under federal regulations 46,141 45,122 Investments, at fair value 135,908 134,861 Accounts receivable, net of allowance of $ 609 and $ 577 as of June 30, 2024 and December 31, 2023, respectively 92,350 89,839 Receivables from broker-dealers, clearing organizations and customers 577,992 687,936 Goodwill 236,706 236,706 Intangible assets, net of accumulated amortization 108,420 119,108 Furniture, equipment, leasehold improvements and capitalized software, net of accumulated depreciation and amortization 108,802 102,671 Operating lease right-of-use assets 60,500 63,045 Prepaid expenses and other assets 85,831 84,499 Total assets $ 1,886,713 $ 2,015,067 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities Accrued employee compensation 41,002 60,124 Payables to broker-dealers, clearing organizations and customers 392,846 537,398 Securities sold, not yet purchased, at fair value 9,167 — Income and other tax liabilities 2,058 7,892 Accounts payable, accrued expenses and other liabilities 36,338 37,013 Operating lease liabilities 76,081 79,677 Total liabilities $ 557,492 $ 722,104 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, 2024 and December 31, 2023, respe

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (Unaudited) Fair Value Financial Instruments Fair value is defined as "the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date." A three-tiered hierarchy for determining fair value has been established that prioritizes inputs to valuation techniques used in fair value calculations. The three levels of inputs are defined as Level 1 (unadjusted quoted prices for identical assets or liabilities in active markets), Level 2 (inputs that are observable in the marketplace other than those inputs classified in Level 1) and Level 3 (inputs that are unobservable in the marketplace). The Company's financial assets and liabilities measured at fair value on a recurring basis consist of its money market funds, trading securities, available-for-sale securities, foreign currency forward contracts and securities sold, not yet purchased. All other financial instruments are short-term in nature and the carrying amounts reported on the Consolidated Statements of Financial Condition approximate fair value. Receivables from and Payables to Broker-dealers, Clearing Organizations and Customers Receivables from broker-dealers, clearing organizations and customers include amounts receivable for securities not delivered by the Company to the purchaser by the settlement date ("securities failed-to-deliver") and cash deposits held at clearing organizations and clearing brokers to facilitate the settlement and clearance of matched principal transactions. Payables to broker-dealers, clearing organizations and customers include amounts payable for securities not received by the Company from a seller by the settlement date ("securities failed-to-receive"). Securities failed-to-deliver and securities failed-to-receive for transactions executed on a matched principal basis where the Company serves as a counterparty to both the buyer a

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (Unaudited) Cloud Computing Costs The Company capitalizes certain costs associated with cloud computing arrangements, including, among other items, vendor software development costs billed to us that are part of the application development stage. These costs are recorded as a prepaid asset on the Consolidated Statements of Financial Condition and are amortized over the period of the hosting service contract, which ranges from one to five years . The Company reviews the amounts capitalized for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be recoverable. Foreign Currency Translation and Forward Contracts Assets and liabilities denominated in foreign currencies are translated using exchange rates at the end of the period; revenues and expenses are translated at average monthly rates. Gains and losses on foreign currency translation are a component of accumulated other comprehensive loss in the Consolidated Statements of Financial Condition. Transaction gains and losses are recorded in other, net in the Consolidated Statements of Operations. The Company enters into foreign currency forward contracts to economically hedge its foreign currency transaction gains and losses. Realized and unrealized gains and losses on these forward contracts are included in other, net in the Consolidated Statements of Operations. The Company records the fair value of the forward contract asset in prepaid expenses and other assets or the fair value of the forward contract liability in accounts payable, accrued expenses and other liabilities in the Consolidated Statements of Financial Condition. Revenue Recognition The Company's classification of revenues in the Consolidated Statements of Operations represents revenues from contracts with customers disaggregated by type of revenue. The Company has four revenue streams as described below. Commission Revenu

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