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    MKTX
    Earnings call· Mar 2026(Q1 FY26)

    MARKETAXESS HOLDINGS Q1 FY26 earnings call MKTX

    May 7, 2026 Source

    Executive summary

    MarketAxess Q1 FY26 — Record Revenue and Strong International Growth

    MarketAxess delivered record Q1 FY26 results, driven by strong growth in international markets and new initiatives, particularly in block and portfolio trading. The company is leveraging AI to enhance data analytics and accelerate technology modernization, while also addressing challenges in the U.S. new issue market through a strategic partnership. Despite April's temporary slowdown due to macro factors and new issuance focus, management remains confident in its long-term strategy and product pipeline.

    Highlights

    5

    • Total revenue grew 12% to a record $233 million.

    • Product areas outside U.S. credit achieved very strong 20% growth, contributing 50% of total incremental revenue.

    • Diluted EPS, excluding notable items, increased 20% to $2.25 per share.

    • Operating margin expanded by almost 200 basis points to 44%.

    • Block trading ADV grew 35% to a record $7 billion across U.S. credit, EM, and Eurobonds.

    Concerns

    3

    • Estimated U.S. high-grade TRACE market share was impacted by up to 8% due to duplicate reports and historically high new issuance in April.

    • Total other income decreased approximately $5 million due to lower interest income and increased interest expense.

    • Total credit fee capture reduced year-over-year due to protocol and product mix shifts.

    Segment performance

    10
    SegmentRevenueYoYQoQMargin
    Total Company
    Record total revenue underpinned by record total trading ADV, driving record commission revenue.
    		$233 million12%——
    Product areas outside U.S. credit
    Generated approximately 50% of total incremental revenue in the quarter.
    		—20%——
    Services revenue
    Helping to drive trailing 12-month free cash flow generation of $316 million.
    		$30 million10%——
    Information Services
    Record Information Services revenue.
    		$14 million12%——
    Post-trade services
    Versus the prior year.
    		$12 million5%——
    Technology Services
    Driven by higher connectivity fees from RFQ Hub.
    		$4 million19%——
    Emerging Markets (EM)
    Record levels across both hard currency and local currency markets and across all regions. Generated $20 million in incremental revenue over the trailing 12 months, representing 68% of total credit incremental variable commission revenue.
    Active client firms: 1,547International active client traders: 3,410
    		—30%——
    EM Hard Currency
    With high fee per million.
    		—15%——
    EM Local Markets
    With lower fee per million (over 40% lower than hard currency business).
    		—56%——
    Eurobonds
    Record total commission revenue.
    		—14%——

    Operational metrics

    45
    Total Revenue
    $233 millionup 12% YoY
    Q1 FY26

    Record total revenue.

    Non-GAAP Expenses
    8%growth YoY
    Q1 FY26

    Disciplined with expenses.

    Diluted EPS (Adjusted)
    $2.25up 20% YoY
    Q1 FY26

    Excluding notable items.

    Diluted EPS (GAAP)
    $2.20
    Q1 FY26

    Reported diluted earnings per share.

    Share Count
    6%reduction YoY
    Q1 FY26

    Key driver of $0.12 benefit to EPS from enhanced capital return program and completed $300 million ASR.

    Total Commissions Revenue
    $203 millionup $22 million or 12% YoY
    Q1 FY26

    Record total commissions revenue.

    Incremental Commission Revenue
    $11 million50% of total incremental commission revenue
    Q1 FY26

    Driven by record trading volumes in each area.

    Other Commissions Revenue
    $5 millionup 104% YoY
    Q1 FY26

    Driven by inclusion of RFQ hub commission revenue and higher trading volumes.

    Total Other Income
    decreased $5 milliondecrease YoY
    Q1 FY26

    Driven by lower interest income on lower rates and increased interest expense related to borrowings for ASR.

    Effective Tax Rate
    25%down from 27% YoY
    Q1 FY26

    Primarily due to higher tax credits, lower state tax accruals and reduced stock-based compensation shortfall. Includes a one-time $3 million tax credit in other net line (nonrecurring).

    Total Credit Commission Revenue
    $184 millionup 9% YoY
    Q1 FY26

    Record results driven by 4% growth in U.S. high-yield and U.S. high-grade, 24% growth in emerging markets, and 14% growth in Eurobonds.

    Total Credit Fee Capture
    reducedYoY and QoQ
    Q1 FY26

    Reduction year-over-year due to protocol and product mix shifts, partially offset by higher duration of bonds traded in U.S. high-grade. Quarter-over-quarter reduction due principally to product mix.

    Operating Margin
    44%increased almost 200 bps YoY
    Q1 FY26

    Reflecting inherent operating leverage.

    Headcount
    859down 1% from 870 in prior year and 869 in Q4 FY25
    Q1 FY26
    Cash, Cash Equivalents and Investments
    $537 millioncompared to $679 million at end of 2025
    as of March 31, 2026

    Strong balance sheet and cash generation.

    Annual Incentive Compensation Paid
    $52 million
    Q1 FY26
    Borrowings Paid Down
    $63 million
    Q1 FY26

    Related to ASR. Additional $20 million paid down after quarter, bringing drawn balance to $137 million at end of April.

    Dividends Paid
    $27 million
    Q1 FY26
    Share Repurchases
    $300 millioncompleted in early February
    Q1 FY26

    Returned to investors through share repurchases.

    Share Repurchase Authorization
    $205 million
    as of April 30, 2026

    Remains on the Board's authorization.

    Notional Inquiry Information
    $5 trillion
    FY25

    Generated by global network, proprietary to MarketAxess.

    Notional Response Information
    $34 trillion
    FY25

    Generated by global network, proprietary to MarketAxess.

    Open Trading Penetration
    47%highest level since 2023
    Q1 FY26

    Reflecting increased demand for differentiated liquidity.

    TRACE Volume Inflation
    up to 8%
    April FY26

    Estimated due to duplicate reports, impacting estimated market share.

    Estimated Market Share Impact
    160 basis pointshigher if adjusted for duplicates
    April FY26

    Believed to be higher if adjusted for duplicate reporting consistent with FINRA's proposal.

    Liquidity Provision
    almost 80%increased YoY
    Q1 FY26

    Increase in unique liquidity delivering improved execution experience.

    Total EM Fee Per Million
    down 4%down YoY
    Q1 FY26

    In part due to mixed impact of local markets fee per million (over 40% lower than hard currency business).

    Total Global Portfolio Trading ADV
    $1.9 billionup 51% YoY
    Q1 FY26

    Record level.

    Portfolio Trading Market Share
    100 basis pointsincreased YoY
    Q1 FY26
    Mid-X ADV
    $6.7 billionsecond highest monthly activity
    April FY26

    Record levels of ADV in Q1.

    Automation Volume
    $144 billion
    Q1 FY26

    Helped by sizable increase in adoption of Adaptive Algo solution.

    Block Trading ADV
    $7 billionup 35% YoY
    Q1 FY26

    Record block activity across U.S. credit, emerging markets and Eurobonds.

    Dealer Algos Win Rate
    30%
    March FY26

    Dealer algos won 30% of block trades on the platform.

    New Issue Block Market Growth
    34%YoY
    April FY26

    Grew to as high as 13% of the total block market in April.

    New Issue Market Forecast
    $2 trillion
    FY26

    Current market forecasts.

    Auction Orders Staged
    $11 billion
    Q1 FY26

    Over $11 billion in auction orders staged in our platform.

    Notional Orders Submitted
    $7 billion
    Q1 FY26

    Over $7 billion in notional orders submitted into the auction.

    Active Buy-Side Clients
    12
    Q1 FY26

    Participating in the auction.

    Active Dealers
    4
    Q1 FY26

    Participating in the auction.

    Block Trading ADV
    up 46%YoY
    Q1 FY26

    Smash records, up 11% QoQ.

    Block Trading ADV
    up 45%YoY
    Q1 FY26

    Record.

    Portfolio Trading ADV
    up 90%YoY
    Q1 FY26
    Dealer Business ADV
    up 73%YoY
    Q1 FY26

    Record.

    Mid-X Volume
    $16 billion
    YTD Q1 FY26

    Traded over $16 billion in volume, with high participation from unique dealers.

    Portfolio Trading ADV
    up 78%YoY
    Q1 FY26

    Continued strong activity.

    Product announcements

    2
    ProductTypeDetails
    New Issue Trading Solution (via DirectBooks partnership)launch
    Closing Auctionupdate

    Deals & partnerships

    1
    DirectBooksStrategic partnership to address the new issue market.

    Partnership to launch a new issue trading solution, starting with a pilot in May 2026. Focus on streamlining access to new issue calendar, pricing, and allocations, with a future click-to-trade solution for post-break trading.

    Risks & headwinds

    5
    Geopolitical events and market volatilityQ1 FY26, specifically March and early April.

    higher levels of volatility and wider credit spreads in the quarter.

    Mitigation: The initial jump in volatility and widening of credit spreads was short-lived and credit spreads moved back to historically low levels in April.

    Impact of duplicate TRACE reports on market share calculationApril FY26

    inflated U.S. high-grade TRACE volumes by up to 8% in April.

    Mitigation: Adjusting for these duplicates, consistent with FINRA's recent proposal to suppress duplicate reporting, we believe our estimated U.S. high-grade market share would have been approximately 160 basis points higher in April.

    High new issuance impacting secondary trading volumesApril FY26

    historically high new issuance further reduced our estimated U.S. high-grade market share in April.

    Mitigation: We are now addressing the challenges of the new issue calendar with our new issue trading solution.

    Lower interest income and higher interest expenseQ1 FY26

    Total other income decreased approximately $5 million, driven by lower interest income on lower rates and increased interest expense related to borrowings for the ASR.

    Reduction in total credit fee captureQ1 FY26

    The reduction in total credit fee capture year-over-year was due to protocol and product mix shifts.

    Mitigation: Partially offset by the higher duration of bonds traded in U.S. high grade.

    What to watch in Q2 FY26

    5

    New Issue Trading Solution Pilot Rollout

    Q2 FY26
    CurrentPilot form in May
    TargetSuccessful expansion of pilot, positive client/dealer feedback.

    Why it matters

    This solution aims to address a long-standing challenge in the new issue market, which significantly impacted April's market share, and could be a key growth driver.

    we are excited that we are finally addressing the new issue market head on. And we have a new product coming to market that we're quite excited about.

    Q&A highlights

    5

    Asked about competition in international markets and how MarketAxess maintains its moat, as well as momentum in EM and Eurobond businesses.

    Chris Concannon highlighted record ADV and volume in EM (up 30%) and Eurobonds, driven by key initiatives like block trading (up 46% in EM, 45% in Eurobonds), portfolio trading (up 90% in Eurobonds), and dealer-initiated trading. He noted limited competition in EM (Bloomberg) and Eurobonds (Bloomberg, Tradeweb) in the dealer-to-client space.

    “largely, in the dealer-to-client business, our key franchise, we only see Bloomberg in that space really making a difference at all.”

    asked by Dan Fannon · answered by Christopher Concannon

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Execution and AI Leverage

    MarketAxess is focused on executing its long-term strategy, which includes enhancing its global network, differentiated liquidity, and proprietary data and analytics. The company is increasingly using AI to leverage its $5 trillion in notional inquiry information and $34 trillion in notional response information from 2025 to deliver unique data solutions like CP+, Depth of Book, Sense AI, and AI Dealer Select. Management is exploring AI-driven real-time market intelligence, portfolio optimization, and protocol suggestion to further enhance client outcomes and product offerings.

    02

    Technology Modernization and Leadership

    The company is investing in technology modernization, including the rollout of its enhanced X-Pro front end and the strategic hire of Will Quan as Chief Technology Officer. AI is being leveraged to accelerate this modernization, including refactoring legacy code and increasing time-to-market for new capabilities. All developers have access to the latest AI models, which is impacting the speed of development and UI design, reflecting a significant shift in the company's technological approach.

    03

    April Market Dynamics and New Issue Focus

    April experienced a slowdown in trading volumes across all products due to a rapid drop in volatility, holidays, and a robust new issue market. The company estimates duplicate reports inflated U.S. high-grade TRACE volumes by up to 8% in April, and historically high new issuance shifted client focus away from secondary trading. This diversion of attention impacted MarketAxess's estimated market share, particularly in U.S. high-grade, as clients prioritized the new issue calendar.

    04

    New Issue Trading Solution

    MarketAxess is addressing the new issue market challenges🌐 through a partnership with DirectBooks, launching a pilot for a new issue solution in May. This solution aims to streamline access to DirectBooks services, allowing clients to submit indications of interest and providing seamless booking and straight-through processing for allocations. A click-to-trade solution for new issue trading post-break is expected to be rolled out in the second half of 2026, directly targeting an area where the company has historically faced challenges.

    05

    Closing Auction Development

    The closing auction, launched in late Q4 2025, aims to aggregate liquidity at the end of the trading day, addressing the typical U-shaped liquidity curve in fixed income. While trading volume is still light, the platform has seen over $11 billion in staged auction orders and $7 billion in notional orders submitted. Currently, 12 active buy-side clients and four active dealers are participating, indicating early adoption for this novel protocol designed to organize liquidity at a single moment in time.

    06

    International Market Penetration

    The international business, particularly Emerging Markets and Eurobonds, showed strong growth, with EM volumes up 30% in Q1. This growth is attributed to early stages of electronification in these markets and the successful application of new protocols like block trading (up 46% in EM) and portfolio trading (up 90% in Eurobonds). The company sees significant runway for further penetration in these less electronified markets, leveraging its diverse protocol offerings to engage a broader client base.

    AI-generated summary of the company’s earnings call. Not investment advice.