MarketAxess Holdings, Inc.

Ladies and gentlemen, thank you for standing by. Welcome to the market access four quarter and full year 2024 earnings conference call. At this time, all participants are in the 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 the star followed by the number one on your telephone keypad. If you would like to withdraw your question, you may press the star one again. And as a reminder, this conference call is being recorded on February 6, 2025. I would now like to turn the conference 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 2024 earnings conference call. For the call, Chris Concanon, Chief Executive Officer, will provide you with a strategic update. Rich Schiffman, Global Head of Trading Solutions, will update you on our trading businesses. And then Eileen Fizell-Beeler, Chief Financial Officer, will review the financial results. Before I turn the call over to Chris, 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, 2023. I would also direct you to read the forward-looking statements disclaimer in our quarterly earnings release, which was issued earlier this morning

is now available on our website now let me turn the call over to chris good morning and thank you for joining us to review our fourth quarter and full year 2024 financial results before i provide my strategic update i would like to welcome roberto hornweg to our board of directors effective march 1st 2025. roberto's Wealth of experience in fixed income and international markets will be integral to our continued global expansion. Now, turning to slide three of my strategic update. We've reported solid financial results for the year with 9% growth in revenue, our strongest annual revenue growth rate since 2020, with record commission revenue and record services revenue. In 2024, we also made solid progress with our high-touch strategy focused on meeting both the portfolio trading and block trading needs of our clients. We generated record levels of portfolio trading ADD in 2024 with record levels of U.S. high-grade portfolio trading estimated market share. Building on our focus on blocks during the year, we launched our block trading solution late in Q4 in emerging markets and euro bonds. and we will be rolling out our full high-touch block solution and use credit at the end of Q1 this year. To be clear, 2024 was a build year, and now 2025 will be a year of delivery and execution. We will be highly focused on growing our market share across our leading client-initiated channel, the portfolio trading channel, and the dealer-initiated channel. and we plan to regularly report back on our progress in each of these channels. Slide 4 illustrates the record levels of credit and rates ADD we delivered in 2024. In credit, we generated a record $712 million in commission revenue and record commission revenue across most product areas on record total credit ADD. We have maintained our leadership position in client-initiated RFQ in U.S. credit while growing across our other product areas in emerging markets, euro bonds, munis, and rates. Our challenge was U.S. credit market share across key protocols. I will walk you through how our enhanced functionality, differentiated data, and innovative client solutions are expected to drive increased revenue and market share in 2025. Turning to our rates business, we have been very pleased with our growth in 2024. Trading ADD in our client-focused rates pool increased significantly from 2.9 billion per day in first Q24 to 11.4 billion ADD in Q4. A lot of this growth was driven by more clients leveraging our rates algos, which they use to work larger block orders, with low market impact over a specific time range. In 2025, we expect to see more usage of our client algos as we migrate clients to Pragma technology launching in Q1. Slide five illustrates the strong progress we have made with our high touch block strategy. First, in terms of portfolio trading, we gained over 200 basis points in share in U.S. high-grade portfolio trading in 2024. While we rolled out our new expo platform and delivered portfolio trading tools in emerging markets, euro bonds and munis. In the fourth quarter, with the launch of our global PT offering, portfolio trading in euro bonds doubled to approximately 11 billion in volume compared to 3Q24. In emerging markets, our portfolio trading ADD was up 175% for the full year 2024 versus 2023. And I'm pleased to report that we did over 400 million in portfolio trading volume in munis in 2024. Turning to our high-touch block solution. During 2024, we continued our investment in our block trading solution, and now we are seeing early signs of progress. Since our launch in emerging markets in late November, we've done over half a billion in block trades with over 75% of trades won by dealers recommended by our proprietary pre-trade selection tool. That win rate substantially reduces information leakage on our platform. The feedback from clients and dealers is very positive as we expand our pre-trade analytics and block solutions into euro bonds and U.S. credit in Q1 2025. Before I discuss the expected drivers of our growth in 2025, we released our January trading metrics yesterday, which reflect continued elevated market volumes and disappointing U.S. high-grade market share. We have always guided investors to look at longer-term trends and not read too much into the month-over-month fluctuations in our market share as we experienced in January. During the month of January, we saw continued spread tightening and low spread volatility. We also saw a sizable jump in block volumes in the market and a drop in non-block volumes. Both factors have an impact on our high-grade market share, but they make us even more focused on solving the block trading solution for our clients. We have a clear strategy to return to market share growth in U.S. credit across our three channels, and we believe that we will begin to see the benefits of our investments and acquisitions in 2025, which I will now walk you through on the next slide. Slide six highlights the enhanced functionality, differentiated data, and innovative client solutions that we expect to drive growth in 2025. As I mentioned earlier, our key initiatives are focused on these three channels. The client-initiated channel, where we have a clear leadership position in smaller-sized trades and are focused on increasing our block share. The portfolio trading channel, we are very excited that we just launched our global benchmark portfolio trading solution. We also saw a pickup in high-yield portfolio trading market share in January. And the dealer-initiated channel, where we have been in the process of enhancing our dealer solutions. Slide seven lays out the key deliverables for 2025 as we realize the benefits of our investments, tech modernization, and acquisitions. First, in the client-initiated channel, with our high-touch solution, we are focused on the global rollout of our block trading solution, which began in EM in December. Euro bonds have launched in this quarter, and we are on target to launch our high-touch block trading in the first half of this year. With our low-touch solutions, we're expanding our automation suite with products like Adaptive AutoX to support our global product set and integrate our client algo solutions with key markets like ICE bonds. In terms of Expro, our goal is to roll out traditional RFQ on Expro in Europe in the first half of 2025, while expanding our high-touch and portfolio trading tools in the US. Next, in the portfolio trading channel, we're expecting a full rollout of global benchmark pricing for portfolio trading, and we will continue to enhance our offerings. And last in the dealer initiated channel, dealer RFQ is expected to benefit from the migration to expo for dealers, and we are looking to relaunch mid-ex on pragma technology, both in the first half of 2025. Our expectation is that the client initiative and portfolio trading channels will be feature complete in the first half of 2025, and the enhancements for our dealer initiative channel will be launched and available to dealers in Q2. Slide eight frames the US high-grade market opportunity and the market channels that we are attacking to grow our share. First, the client initiative channel is an estimated 690 million revenue opportunity, representing approximately 63% of the total estimated E-trading opportunity in U.S. high-grade. This is where we have a clear leadership position and have very high share in small-size trades. Blocks made up 39% of the market at the end of 2024, and electronic penetration is very low. This is the most exciting opportunity in the market for us, and we are already seeing positive trends. Next is the portfolio trading channel. which is important from a market share perspective, but smaller from a revenue perspective. X-Pro and the pre-trade analytics that fuel X-Pro have been integral to our share gains in portfolio trading. Last is the dealer-initiated channel, which is also attractive, representing approximately $310 million, or 28% of the TAM. We are attacking this channel with our dealer RFQ, our automation for dealers, Mid-X, and live markets protocols supported by our data and our new expo for dealers. Now, let me turn the call over to Rich to provide you with an update on our trading businesses.