MarketAxess Holdings (MKTX)
MKTX is a better deal than before!
MarketAxess Holdings Inc.
MKTX 0.00%↑ was originally covered on October 17th, 2024. Since the original post, MarketAxess’ stock price has declined more than 20%. Let’s dive into this company’s recent earnings report and see if we can determine what caused the drastic drop in stock price.
On Wednesday, May 7th, 2025 the company announced Q1 2025 earnings, where revenue missed by about $1.5M, but was down less than 1% YoY to $208.6M. Conversely, GAAP EPS was $0.40 well short of analyst estimates which was $1.81 per share. It’s worth mentioning an extraordinary item effected their EPS by $1.47 per share, making their Non-GAAP EPS $1.87.
The company is focused on 3 channels for continued success. Client-Initiated, Portfolio Trading and Dealer-Initiated.
Starting with Client-Initiated average daily volume (on their platform, not their actual stock), we can see the ADV has been trending higher in recent years. There was a nearly 24% increase in ADV in Q1 2025 compared to Q1 2024, couple that with a 3-year CAGR of 15%, and this area of the company is doing phenomenal. Believe it or not, this ADV growth is the slowest of the 3 channels…let’s keep going!
Their fastest growing area is Portfolio Trading. In fact, just two years ago the ADV for this segment was $500M, since then the ADV has grown by about 2.5x and is more than $1.25B.
Last but not least is the Dealer-Initiated section of MKTX 0.00%↑ which saw ADV growth of 45% from Q1 2024 to Q1 2025. Additionally, this segment has a 3-year CAGR of 20%, just above the growth of Client-Initiated trading.
Below is a breakdown of the ADV by Bond type on the MKTX 0.00%↑ platform. As you can see, staggering growth across all markets, thanks to the overall market volatility.
So…Why Has MKTX 0.00%↑ Stock Struggled?
To be honest it hasn’t just been one thing. While ADV is trending higher in all areas, this additional volume also requires more capacity in their systems and thus more spending. Furthermore, MKTX 0.00%↑ has been adding new software and data tools to entice its customers to adopt their system but that costs money as well.
Additionally, in Q1 the total credit commissions declined by 3%, specifically the U.S. credit commission revenue which slipped by 7%, although it was partially offset by increases in emerging market and Eurobonds. Additionally, there was a decline in transaction fees per million for total credit and this can be attributed to changes in product mix, with growth in lower fee products, like portfolio trading and dealer-to-dealer trading. Moreover, there was a drastic decline in U.S. high-yield trading activity of almost 20% YoY, in Q4 2024 (reported in Feb. 2025).
As one can see, there isn’t one single cause but a variety of things leading to the decline. The drop in MKTX 0.00%↑ stems from investments made by the company (that will hopefully pay off in the future), along with reduced U.S. credit commission revenue, and lower fees as a result of shifts in product mix. These issues, combined with a tough bond market landscape, have driven the stock’s weaker performance.
Before you continue, here are some tools to help with your investing journey
Follow on other social media platforms
Link to Youtube
Link to X @LongacresFin