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Strong 2Q Earnings for MarketAxess

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MarketAxess Holdings Inc. (MKTX - Free Report) reported second quarter 2013 net earnings of 49cents per share, beating the Zacks Consensus Estimate of 47 cents per share by 4.2%. Results also surpassed the year-ago earnings of 34 cents per share by 44%.

Operational Update

Total revenues as reported by MarketAxess for the second quarter of 2013 amounted to $65.6 million, higher than the Zacks Consensus Estimate of $60 million. Results also exceeded the year-ago revenues of $48.8 million by 34.3%. The increase was primarily attributable to higher commissions (up 27%), higher revenues from information and post-trade services (up 301.8%), and technology products and services (up 9.8%).

Total expenses escalated 23.3% year over year to $34 million in the second quarter of 2013. Results were driven by increase in technology and communication expenses, professional and consulting fees, occupancy costs, and general and administrative expenses.

Total volumes traded on the exchange amounted to $187.7 billion in the second quarter of 2013, an increase of almost 29.6% from $144.8 billion in the second quarter of 2012.

Financial Position

Cash and cash equivalents for MarketAxess as of Jun 30, 2013 stood at $135.5 million, up 5.1% from the 2012 end level.

Total Assets of the company at the end of the second quarter were $305.4 million, up 9.1% from $279.8 million at year end 2012.

Shareholders’ Equity as of Jun 30, 2013 was $270.6 million, up 11.5% from $242.7 million at year end 2012.

Dividend Update

The Board of Directors of the company declared a quarterly cash dividend of 13 cents per share which will be paid on Aug 22, 2013 to shareholders of record as of Aug 8, 2013.

2013 Guidance

MarketAxess expects total capital expenditure for full year 2013 to be between $21 million to $24 million. This guidance is higher than the previous guidance of $15 million to $18 million.

An upward revision in the guidance reflects the build-out of new office space in London following the Xtracker acquisition. The space will be occupied by the company in the last quarter of this year. Additionally, higher new product software development costs also have been accounted for in the guidance.

MarketAxess anticipates 2013 expense to be in the range of $137–$143 million. Tax rate is expected to be within 38% and 40%.

Peer Performance

Nasdaq OMX Group Inc. (NDAQ - Free Report) reported second quarter 2013 operating earnings per share of 62 cents. The result beat the Zacks Consensus Estimate by a penny but missed the prior-year quarter earnings of 64 cents per share.

Zacks Rank

MarketAxess currently carries a Zacks Rank #1 (Strong Buy). Among others in the industry, CBOE Holdings Inc. (CBOE - Free Report) with a Zacks Rank #2 (Buy) is scheduled to release its second quarter 2013 results on Aug 2 and CME Group Inc. (CME - Free Report) with the same Zacks Rank as MarketAxess is scheduled to release its second quarter results on Aug 1, 2013.

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