Electronic bond trading platform MarketAxess (NASDAQ: MKTX) missed Wall Street’s revenue expectations in Q4 CY2025 as sales rose 3.5% year on year to $209.4 million. Its non-GAAP profit of $1.68 per share was 2.4% above analysts’ consensus estimates.

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StockStory’s Take

MarketAxess ended the fourth quarter with revenue growth below Wall Street expectations, reflecting a continued shift in trading protocol mix and ongoing investment in product innovation. CEO Christopher Concannon highlighted the company’s progress in delivering new trading protocols, particularly in block and portfolio trading, which contributed to expansion outside of U.S. credit products. Management noted that while U.S. high-grade market share remains a challenge, enhancements in global network connectivity and proprietary data analytics are beginning to yield results, especially in emerging markets and automation solutions.

Looking forward, MarketAxess is focusing its strategy on further protocol innovations and leveraging artificial intelligence across its trading and data platforms. Management expects continued growth in automation, portfolio trading, and international markets, driven by new product rollouts and a broadening customer base. CFO Ilene Bieler cautioned that expense growth will remain elevated as the company invests in technology and talent, but maintained that these investments are necessary to capture the expanding electronic trading opportunity. Concannon added, “We believe that our enhanced technology stack and proprietary data position us well to accelerate market share and revenue growth over the next several years.”

Key Insights from Management’s Remarks

Management attributed the quarter’s performance to stronger momentum in block and portfolio trading, growth in emerging markets, and disciplined investments in automation and data analytics.

• Block trading momentum: Block trading activity saw substantial growth, with management reporting a 24% increase in the fourth quarter and 56% year-over-year growth in January. Growth was driven by protocol enhancements, automation, and increased adoption across U.S. credit, emerging markets, and euro bonds.
• Portfolio trading expansion: Portfolio trading, where multiple bonds are traded in a single transaction, recorded a 48% increase in average daily volume. MarketAxess achieved higher market share in U.S. high-yield portfolio trading, reflecting client demand for more efficient execution in less liquid segments.
• Emerging markets strength: The company highlighted emerging markets as a key growth driver, benefiting from investments in on-the-ground sales teams and protocol innovation. January saw record average daily volume in emerging markets, up 50% year over year, as electronic adoption remains low but is rising.
• Fee capture pressure: Management acknowledged ongoing declines in average fee per million traded, largely due to protocol and product mix shifts favoring lower-fee channels like portfolio and block trading, though these are offset by higher overall revenue from larger trades.
• Automation and AI investment: The automation suite and adaptive algorithms, supported by the Pragma acquisition, have accelerated growth in automated trading volumes. Management views proprietary data and AI integration as foundational to future product and service innovation.

Drivers of Future Performance

MarketAxess expects continued revenue growth driven by protocol expansion, automation adoption, and increasing international market penetration, but faces headwinds from fee compression and elevated investment costs.

• Protocol innovation focus: Management plans to advance new trading protocols such as dealer matching, closing auctions, and expanded block trading solutions, aiming to capture a larger share of the remaining non-electronic fixed income market, particularly in U.S. credit and emerging markets.
• AI and data leverage: The company is prioritizing proprietary data for internal AI-driven analytics and product development rather than external sales, expecting this approach to support trading volumes, enhance client workflows, and differentiate MarketAxess from competitors.
• Expense and margin outlook: CFO Ilene Bieler guided for mid-single-digit services revenue growth and continued elevated expense growth due to technology investments and inflationary pressure, while emphasizing the importance of achieving three-year targets for average annual revenue growth and operating margin expansion.

Catalysts in Upcoming Quarters

In future quarters, the StockStory team will closely monitor (1) the pace of adoption and revenue contribution from new trading protocols—including dealer matching and closing auctions, (2) progress in expanding automation and AI-based solutions across both U.S. and international markets, and (3) any signs of stabilization or improvement in fee per million as product mix evolves. Execution on technology investment and the ability to capture share in underpenetrated markets will also be important signposts of success.

MarketAxess currently trades at $162.02, in line with $162.83 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).

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