MarketAxess Holdings, Inc.

Ladies and gentlemen, thank you for standing by. Welcome to the Market Access fourth quarter and full year 2023 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 followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. As a reminder, this conference call is being recorded on January 31st, 2024. I would now like to turn the call over to Steve Davidson, Head of Investor Relations at Market Access. Please go ahead, sir.

Good morning, and welcome to the Market Access fourth quarter and full year 2023 earnings conference call. For the call, Chris Concannon, Chief Executive Officer, will provide you with a strategic update on the company. Rich Shipman, Global Head of Trading Solutions, will update you on how we executed this quarter, and then I will review the financial results for the quarter. Before I turn the call over to Chris Concannon, 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 31, 2022. I would also direct you to read the forward-looking statement 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 Chris Kincannon.

Good morning, and thank you for joining us to review our fourth quarter and full year results. Our underlying revenue growth trends improved during the fourth quarter as we continued to execute our growth strategy. We delivered 11% revenue growth, including the benefit of our Pragma acquisition. Earnings per share was $1.84, an increase of 16%. U.S. high-grade transaction revenue increased 14 percent, emerging markets increased 8 percent, and euro bonds increased by 7 percent. With these improved results in the quarter, we delivered our 15th straight year of record annual revenue. Turning to my strategic update on slide three, first, we are delivering innovation with the launch of our new trading platform, EXPRO, designed to address our U.S. credit market share challenges by retooling the delivery of our trading offering. We are pleased to see our portfolio trading clients increasingly leveraging our unique pre-trade analytics like tradability, which are only available through ExPro. 30% of our portfolio trades were executed on ExPro in the fourth quarter, up from 18% in the third quarter. Next, we are enhancing our suite of automation tools with the addition of Pragma. We delivered new records across our automation suite of products in the quarter. Our automation products crossed a record $300 billion in volume for the full year in the fourth quarter. Adaptive AutoX, our new client algo solution, moved out of the pilot phase during the quarter with a total of 13 clients, including six of the largest. Early results show promising transaction cost savings in U.S. high grades. And last, in terms of execution, our client franchise has never been stronger with a record 2,100 active firms. We delivered strong growth in our international businesses, portfolio trading, and municipals. We also generated record revenue in both our market data and post-trade businesses as our investments to broaden our geographic and product footprint continue to pay off. Slide four summarizes how powerful data and content on our platform is helping traders achieve better trading outcomes. We want to capture the full spectrum of order flow in the market by helping traders manage their portfolio composition, protocol selection, and counterparty optimization. Our data is at the core of these new initiatives we are delivering through EXPRO. From growing portfolio trading market share to increasing our share of larger size trades, our proprietary data is what differentiates us from other market solutions. In 2023, we had a record 390 million price responses from liquidity providers across our platform, which is growing at a three-year TAGR of 11%. This unique data set and the magnitude of this price information is what powers our proprietary data and insights that we generate for clients on Xpro. Slide five highlights our action plan for stronger market share growth in corporate bonds in 2024. Using U.S. high rate as a case study, we've done a very good job of electronifying small size tickets, which has been the key value proposition of market access since our founding. While the history of electronification would indicate that the largest, most complicated block trades would be the last to adopt electronic solutions, Our market has jumped right to the largest and most complicated trades, the portfolio trade. What is left in the middle is trade sizes 5 million or greater, which is the target market for the rollout of X-Pro. We've heard from our clients that they need better data and workflow solutions to manage this part of the market. In this environment, hiring more traders is not the answer. To help our clients manage protocol and counterparty selection for larger size trades, We've launched Tradability and AI Dealer Select. Tradability helps determine depth of market, while AI Dealer Select helps clients determine the right dealers to engage. With Adaptive Auto X, we are also helping clients manage larger size trades by leveraging our different trading protocols, including open trading. Helping clients manage small and large size trades with pre-trade data and analytics, growing our share of portfolio trading, and enhancing our dealer-centric trading protocols, like dealer RFQ, are key objectives for 2024. Slide 6 provides an update on market conditions. In the fourth quarter, ETF market maker ADD on our platform was up 68% from the third quarter, as market conditions improved, but was still down 19% from the prior year. Since the Fed's pivot in early December, we have seen a pickup in duration, which has had a positive impact on our U.S. high-grade fee capture. Before I turn the call over to Rich Schiffman, I wanted to provide an update on January activity with one final important trading day remaining in the month. January trends show solid low double-digit growth in U.S. high-grade ADD year-over-year, with estimated market ADD up approximately 15%, indicating lower estimated market share. January is historically a lower market share month, given seasonally strong new issuance in January. Over $190 billion has been issued to date in January, making it the highest January on record. As a result, trading in newly issued bonds represented approximately 15% of the market, up from an average of 8%. U.S. high-yield ADD is down approximately 30% from elevated levels in the prior year. The decline is driven by lower ETF market maker activity, an increased focus on distressed names that do not lend themselves to electronic platforms, and an increased focus on a strong new issue calendar by our long-only accounts. Estimated market ADD is down approximately 9%, indicating significantly lower estimated market share. Portfolio trading is on track to be a record month with ADD of approximately 800 million, up approximately 160% from the prior year. Now let me turn the call over to Rich to provide you with an update on our market. Thanks, Chris.