MarketAxess (MKTX) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue was $208.6–$209 million, nearly flat year-over-year, with record commission revenue in emerging markets, municipals, and Eurobonds, and strong growth in international and new product areas.

• Trading volumes increased 31–31.5% to $2.62 trillion, with record ADV in credit, portfolio trading, and Open Trading.

• Net income dropped 79% to $15.1 million due to a $54.9–$55 million tax reserve, with adjusted net income at $70.0 million and adjusted EPS at $1.87.

• Expenses rose 2% year-over-year, mainly from higher technology, communications, and general administrative costs.

• Record block trading ADV in U.S. high-grade (+20%), emerging markets (+22%), and Eurobonds (+68%).

Financial highlights

• Total revenues were $208.6–$209 million, down 0.8–1% year-over-year.

• Commission revenue declined 2–3% year-over-year, mainly due to lower fee per million and U.S. credit market share, partially offset by higher market volumes and a 34% increase in rates commission revenue.

• Services revenue grew 7%, driven by a 9% increase in information services and 14% growth in technology services.

• Operating expenses rose 2% to $120–$120.2 million, reflecting cost discipline and higher technology costs.

• Free cash flow for Q1 was $47.1 million, with TTM free cash flow at $344 million.

Outlook and guidance

• Full-year 2025 expense guidance refined to the low end of the $505–$525 million range, including RFQ Hub impact.

• GAAP effective tax rate for 2025 expected at 41–42% due to a new tax reserve; excluding this, the rate is 26–27%.

• Management expects new block and portfolio trading capabilities to drive higher U.S. credit market share in coming quarters.

• No change to previously stated guidance for services revenue and capital expenditures.

• RFQ Hub consolidation expected in May, with 2025 revenue growth projected at 15–20%.