MarketAxess : Q2 2021 Earnings slides

Q2 2021 Conference Call and Webcast

July 21, 2021

Forward Looking Statements

This presentation 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. The Company's actual results in future periods may differ materially from those currently expected or desired because of a number of risks and uncertainties, including: global economic, political and market factors; risks relating to the COVID‐19 pandemic, including the possible effects of the economic conditions worldwide resulting from the COVID‐19 pandemic; risks related to the U.K. exit from the European Union; the level of trading volume transacted on the MarketAxess platform; the rapidly evolving nature of the electronic financial services industry; 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; our ability to introduce new fee plans and our clients' response; our ability to attract clients or adapt our technology and marketing strategy to new markets; risks related to our growing international operations; our dependence on our broker‐dealer clients; the loss of any of our significant institutional investor clients; our exposure to risks resulting from non‐performance by counterparties to transactions executed between our clients in which we act as an intermediary in matched principal trades; risks related to self‐clearing; the effect of rapid market or technological changes on us and the users of our technology; our dependence on third‐party suppliers for key products and services; our ability to successfully maintain the integrity of our trading platform and our response to system failures, capacity constraints and business interruptions; the occurrence of design defects, errors, failures or delays with our platforms; our vulnerability to cyber security risks; our actual or perceived failure to comply with privacy and data protection laws; our ability to protect our intellectual property rights or technology and defend against intellectual property infringement or other claims; our ability to enter into strategic alliances and to acquire other businesses and successfully integrate them with our business; our dependence on our management team and our ability to attract and retain talent; limitations on our flexibility because we operate in a highly regulated industry; the increasing government regulation of us and our clients; our exposure to costs and penalties related to our extensive regulation; our risks of litigation and securities laws liability; our future capital needs and our ability to obtain capital when needed; limitations on our operating flexibility contained in our credit agreement; and other factors. 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.

2

2Q21 Summary1

FINANCIAL HIGHLIGHTS

BUSINESS HIGHLIGHTS

• Revenues of $176.3 million, down 5%; 2‐year CAGR of 19%

• Estimated U.S. high‐grade market share of 21.1%, down from 21.5% and

estimated U.S. high‐yield market share of 14.3%, up from 14.0%

• Operating income of $87.2 million, down 16%; 2‐year CAGR of 20%

• Open Trading® credit volume of $216 billion and estimated total system‐

• Operating margin of 49.4%

wide cost savings of $127 million2

• Emerging Markets volume $157.2 billion, up 11%; estimated market

• EBITDA of $99.3 million, down 12%; 2‐year CAGR of 20%

volumes down 17%

• Diluted EPS of $1.77, down 20%; 2‐year CAGR of 18%

• Record municipal bond volume of $6.1 billion, up 89%; closed on the

MuniBrokers acquisition on April 9th

• Record active total client firms of 1,842 and international client firms of 930

• Charles Li, the former Chief Executive of Hong Kong Exchanges and Clearing

Ltd (HKEX), joins the Board of Directors

TRAILING TWELVE MONTHS EPS

Q2 TTM Growth

TRAILING TWELVE MONTHS REVENUE

Q2 TTM Growth

YoY

10%

YoY

15%

$8.50

2YR CAGR

24%

750

2YR CAGR

23%

$8.00

700

$7.50

650

$7.00

600

$6.50

550

$6.00

$5.50

500

Pershare $5.00

$millions 450

$4.50

400

$4.00

350

$3.50

300

$3.00

$2.50

250

1Q19

2Q19

3Q19

4Q19

1Q20

2Q20

3Q20

4Q20

1Q21

2Q21

1Q19

2Q19

3Q19

4Q19

1Q20

2Q20

3Q20

4Q20

1Q21

2Q21

1. All period comparisons versus 2Q20 unless otherwise stated. 2‐year compound annual growth rate "CAGR" compared to 2Q19.
2. Estimated total system‐wide cost savings represents the combination of liquidity taker and liquidity provider estimated cost savings. Please see footnote 1 on slide 5 for the definition of liquidity taker cost savings and liquidity provider cost savings.

3. International firms include all firms outside of the United States and Canada.

3

Market Conditions

LIQUID U.S. CORPORATE INDEX (LUCI)

	310			Benchmark Spread		3 Month Rolling Spread Volatility
(bps)SpreadBenchmark						14%	VolatilitySpreadRolling
260					12%
				10%
	210
				8%
	160					6%
				4%
	110
				2%
	60						0%

Source: Credit Suisse Global Credit Strategy

COMBINED ESTIMATED U.S. HIGH‐GRADE AND

U.S. HIGH‐YIELD MARKET SHARE

	23%
Share	21%
19%
Market	17%
15%
Estimated	13%
11%
	9%

7%

5%

Jun‐21

Mar‐21

Dec‐20

Sep‐20

Jun‐20

Mar‐20

Dec‐19

Sep‐19

Jun‐19

Mar‐19

Dec‐18

Sep‐18

Jun‐18

Mar‐18

Dec‐17

Sep‐17

Jun‐17

Mar‐17

Dec‐16

Sep‐16

Jun‐16

Mar‐16

Dec‐15

Sep‐15

Jun‐15

Mar‐15

Dec‐14

Sep‐14

Jun‐14

U.S. HIGH‐GRADE & HIGH‐YIELD TRACE VOLUME	Q2 YoY Change
AND ESTIMATED MARKET SHARE
		HG TRACE Volume		HY TRACE Volume	HG TRACE: ‐20%

Combined HG and HY Market Share	HY TRACE: ‐14%

	3,000									22%
$ billions	2,500									20%	Market Share
2,000									18%
1,500
								16%
	1,000									Estimated
	500									14%
	‐‐									12%
	1Q19	2Q19	3Q19	4Q19	1Q20	2Q20	3Q20	4Q20	1Q21	2Q21
Source: BondTicker

10 YEAR & 2 YEAR TREASURY YIELD & MKTX U.S HIGH GRADE WEIGHTED AVG. YEARS TO MATURITY

	3.0%			2Y TSY			10Y TSY				Weighted Avg. Years to Maturity
TreasuryYield																10.5	YearsAvg.to Maturity
1.0%																10.0
	2.5%
	2.0%															9.5
																9.0
	1.5%
															8.5
	0.5%																8.0	Weighted
																7.5
	‐‐															7.0
			1Q19	2Q19	3Q19	4Q19	1Q20	2Q20	3Q20	4Q20	1Q21	2Q21

Source: Federal Reserve

4

Open Trading® Expansion

HIGHLIGHTS

• Over 29,000 orders and $15 billion notional value available through Open Trading central marketplace on average per day in 2Q21
• 97% of total platform orders available in the Open Trading all‐to‐all liquidity pool
• $3.4 billion average daily volume, down 10% from 2Q20
• Open Trading credit revenue of $39.7 million
• Estimated system‐wide cost savings of $71.1 million for liquidity takers and $56.0 million for liquidity providers1
• Dealer initiated Open Trading volume of $70.9 billion, up 28% from 2Q20

DEALER INITIATED OPEN TRADING		28% Q2 YoY Growth
VOLUME											U.S. High‐Grade	24%
		U.S. High‐Grade				Emerging Markets		Emerging Markets	42%
						U.S. High‐Yield			13%
		U.S. High‐Yield					Eurobonds			Eurobond			147%
	90
	80																		$3
billions	70												$2		$2	$14		$19		$4
50														$14
	60															$3				$15
													$2
$	40					$2	$1		$10	$14	$10	$12				$12
		$1		$2		$8
	30			$7		$7		$9	$9
	$5		$7
				$6	$7	$7								$45
	20		$5					$27	$31	$28	$34			$39
							$22
	10	$18		$20	$20
		‐‐
		1Q19	2Q19		3Q19		4Q19	1Q20	2Q20	3Q20		4Q20	1Q21	2Q21

DIVERSITY DEALER INITIATIVE

• Launched a series of technology enhancements that will enable leading buy‐side institutions and minority‐, women‐ and veteran‐ owned broker dealers to increase trading interaction and revenue with the broad base of the MarketAxess client network
• Supports trading in investment grade bonds, high yield bonds and municipal securities available through the Open Trading marketplace
• Currently 12 dealers on‐boarded
• Almost 1,000 trades and volume of $2.2 billion traded during the

quarter, up 90% from 1Q21

1. Estimated liquidity taker cost savings is defined as the difference between the winning price and the best disclosed dealer cover price. Estimated liquidity provider cost savings is defined as the difference between the winning price and then current Composite+ bid or offer level (offer if the provider if buying, bid if provider is selling) at the time of the inquiry.

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