MarketAxess Holdings, Inc.

Ladies and gentlemen, thank you for standing by. Welcome to the Market Access fourth quarter and full year 2022 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. To withdraw your question, please press star one again. As a reminder, this conference call is being recorded on January 25th, 2023. I'd now like to turn the call over to Steve Davidson, Head of Investor Relations at Market Access. Please go ahead, sir.

Thank you, Chris. Good morning and welcome to the Market Access fourth quarter and full year 2022 earnings conference call. For the call, Rick McVeigh, Chairman and Chief Executive Officer, will provide a strategic update for the company. Chris Concanon, President and COO, will review key business trends, and then Chris DeRosa, Chief Financial Officer, will walk you through the financial results for the quarter. Before I turn the call over to Rick, let me remind you that today's call may include forward-looking statements. These statements represent the company's belief regarding future events that by their nature are uncertain. The company's actual results and financial condition may differ materially from what is indicated in those forward-looking statements. For a discussion of some of the risks and factors that could affect the company's future results, please see the description of risk factors in our annual report on Form 10-K for the year ended December 31st, 2021. I would also direct you to read the forward-looking statements disclaimer in our quarterly earnings release, which was issued earlier this morning and is now available on our website. Now, let me turn the call over to Rick.

Good morning, and thank you for joining us to review our fourth quarter and full year results. We continue to execute our growth strategy and delivered the third consecutive quarter of record market share gains across nearly all our product areas, strong increases in trading volumes, and significant price improvement for clients through our unique all-to-all trading protocol, OpenTrading. Our underlying revenue growth trends improved materially in the quarter despite near-term bond duration and FX revenue headwinds. We delivered 8% revenue growth, 10% adjusted for currency, EBITDA growth of 10%, and EPS growth of 15%. With this strong finish to the year, we delivered our 14th straight year of record annual revenue. Slide four highlights the key areas of our growth strategy. Our leadership position in global credit continues to expand beyond just U.S. high grade, with record estimated market share in high yield in municipals, record share in Euro bonds, and accelerating share gains of almost 300 basis points in emerging markets, reflecting our increasing global diversification. The deep pool of liquidity on our platform continues to expand, with a record of nearly 2,100 active client firms and a record number of active traders. We have seen especially strong growth in our international business with over 1,000 active client firms and nearly 6,000 active traders. As traditional sources of liquidity have become scarce, the importance of our all-to-all liquidity increases and a record 38% of our credit volume was executed through open trading. This has been a key driver of our estimated market share gains and a source of valuable price improvement for our clients. For the full year 2022, an astonishing 1,300 client firms provided liquidity on the market access platform. In summary, the foundation of our business has never been better with accelerating growth in trading volume, new market share records, increasing momentum in new product areas, and a substantial addressable market opportunity. With this strong financial performance as backdrop, earlier this month we announced that Chris Kincannon, a proven leader deeply experienced in electronic markets, will assume the CEO role in April, and I will take on the new role of Executive Chairman. I would like to congratulate Chris on the promotion to CEO. It is well-deserved, and given his strengths in automation, e-training protocols, data product delivery, and ETS, Chris is the right person to lead the company. And now is the right time to make this transition because we have never been in a better position. I am excited about my new role as executive chairman, where I will continue to work with Chris and our board of directors on long-term strategy, key client relationships, regulatory affairs, and investor communications. We will continue to invest actively in our business by developing new trading and data capabilities, adding new product areas, and expanding internationally. We believe we have an outstanding opportunity set for the next decade and beyond, and many reasons to believe the fixed income market environment will be favorable for e-trading and data revenue growth. Slide five provides an update on market conditions and U.S. credit. In 2022, the Fed raised the Fed funds rate a total of 425 basis points, making it the fastest rate hike cycle since 1980 to 81. This shock to the fixed income markets, especially with the initial moves in the first half of the year, drove an unprecedented 14% decline in investment-grade indices for the year, the largest negative return I have seen in my career. Along with these price declines, duration declined approximately 20% from year-end 21 levels to the lows in October, directly impacting high-grade fee capture for institutional client e-trading activity. With some measures of inflation and economic growth trending down, interest rates have moved lower in the recent months, increasing bond index duration about 6% from the lows in October. Higher bond yields around the world compared to one year ago create a better fixed income investing environment. We are already seeing the benefits of that with trace investment grade bond volumes up 23% in Q4 versus one year ago. Investment grade trace ticket count in Q4 grew a remarkable 93% as investors reenter the market and use trading automation to find liquidity. Trace average trade size is down 38% year over year, another trend that is favorable for market access. Smaller tickets require greater trading automation and at the margin, add to high-grade fee capture. I expect market volumes in high-yield, emerging markets, and euro bonds to improve this year as well. We remain optimistic on growth in trading velocity due to the improved fixed-income investing environment, increase in trading automation, and growth in market participation due to all-to-all trading opportunities. Slide 6 shows the strong multi-year gains in estimated market share from the pre-pandemic period in 2019. This is the third consecutive quarter of top quartile market share gains for the company. In Q4 22, all but one of our primary products were in the top quartile of historical data for year-over-year quarterly growth versus the past 10 years. Strong market share gains across our global product set combined with improving market volume and bond duration trends, positioned the company well for revenue growth in 2023. Now let me turn the call over to Chris for more details on business trends.