Ladies and gentlemen, thank you for standing by, and welcome to the MarketAxess Holdings Inc. Fourth Quarter and Full Year 2025 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. To withdraw your question, press star one again. As a reminder, this conference call is being recorded on February 6, 2026. I would now like to turn the call over to Stephen Davidson, Head of Investor Relations at MarketAxess Holdings Inc. Please go ahead, sir.

Good morning, and welcome to the MarketAxess Holdings Inc. fourth quarter and full year 2025 Earnings Conference Call. For the call, Christopher Concannon, Chief Executive Officer, will provide you with an update on our strategy and our business, and Ilene Bieler, Chief Financial Officer, will review our financial results. Before I turn the call over to Christopher 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, 2024. 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 Christopher Concannon.

Good morning, and thank you for joining us to review our fourth quarter and full year 2025 financial results. We are pleased with the progress we achieved in delivering new protocols and functionality in 2025, and excited about our prospects and plans for 2026. First, we enhanced the MarketAxess Holdings Inc. advantage in 2025 by expanding our global network, enhancing our differentiated liquidity, and strengthening our deep proprietary data and analytics. These key components of the MarketAxess Holdings Inc. advantage are further complemented by our investment in multi-protocol solutions for the buy side and for the sell side. We have made significant progress in 2025 delivering and growing protocols across our three channels: portfolio trading protocols, block trading protocols, dealer matching protocols, automation protocols, and our closing auction protocol. Next, we have a clear and achievable technology and product roadmap that positions us to achieve our three-year targets that we announced in December. In 2025, we delivered critical protocols and workflow tools that will help achieve the first year's milestones. Now 2026 is about execution and building on the momentum we had as we exited 2025. Turning to our financial results on Slide three. In 2025, we generated record revenue of $846 million, including strong 10% growth in product areas outside US credit. Record total revenue was underpinned by record total ADV, driving record commission revenue combined with record services revenue, helping to drive record annual free cash flow generation of $347 million. Momentum continued to build with our new initiatives last year. We exited 2025 with a 29% increase in block trading ADD, including record block trading ADD in emerging markets, 28% estimated market share in US high yield portfolio trading, and over $3 billion in trading volume in our new dealer initiative protocol MIDEX. We continue to be…

Thank you, Christopher Concannon. Turning to our results. On slide 12, we provide a summary of our fourth quarter financials. We delivered 3.5% revenue growth to $209 million, which includes a $2 million benefit from foreign currency translation. We reported diluted earnings per share of $2.51 or $1.68 per share excluding notable items. The net $0.83 per share impact of notable items in the quarter consisted of approximately $1 million or $0.02 per share in repositioning charges, our expenses in the employee compensation and benefits line, and $31 million or $0.85 per share for reserve release related to the tax-related reserve we established in 2025. My comments on our results from this point forward will largely exclude the impact of notable items and will be on a non-GAAP basis where applicable. Looking at each of our revenue lines in turn, total commissions revenue increased 4% to $181 million compared to the prior year. Services revenue increased 2% to $28 million. Information services revenue of $13 million increased 2%. Post-trade services revenue of $11 million increased 1% versus the prior year. Technology services revenue of $4 million increased 2%, driven by higher license fees as well as connectivity fees from RFQ Hub. Total other income decreased approximately $1 million, driven by lower investment income on lower rates and increased interest expense related to borrowings for the ASR, partially offset by unrealized investment gains in the quarter. The effective tax rate was a negative 15.8% or a positive 23.4%, excluding the impact of the tax-related notable I referenced earlier. On slide 13, we provide more detail on our commission revenue and our fee capture. Total credit commission revenue of $165 million increased 2% compared to the prior year. 4% growth in U.S. high yield, 6% growth in emerging markets, and 9% growth…

On slide 16 is our full year 2026 guidance.

Before I move to guidance for 2026, please note that for 2025, total revenue outside of US credit grew 10% and US credit revenue decreased 2%. Now in terms of guidance for 2026, total services revenue, which includes information, post-trade, and technology services, is expected to grow in the mid-single-digit percent in 2026. We expect total expenses ex-notables to be in the range of $530 million to $545 million. This would imply a growth rate of approximately 8% to the midpoint of the 2026 range. This includes the full year effect of 2025 hires, inflationary increases, as well as tech investments and higher variable costs. A note on our full year 2026 expense guidance relative to our average annual operating margin expansion target. As I have stated previously, our three-year average annual targets of 8% to 9% revenue growth and operating margin expansion of 75 to 125 basis points are exactly that: averages over three years. Turning to taxes, we expect that the effective tax rate will be in the range of 24% to 26%. Capital expenditures are expected in the range of $65 million to $75 million, of which roughly 80% relates to capitalized software development costs for investments we are making in new protocols and trading platform enhancements. Now let me turn the call back to Christopher Concannon for his closing comments.

Thanks, Ilene. In summary, on slide 17, we are continuing to execute our long-term strategy. We have significantly enhanced the MarketAxess Holdings Inc. advantage with our investments over the last several years. The growth profile of the company outside US credit is strong, and we are confident in our ability to return to higher levels of revenue growth in US credit with our three-year financial targets. We continue to make strong progress with our new initiatives across our three strategic channels. We are confident in our ability to execute in 2026, and we are continuing to focus on expense discipline and optimizing capital deployment to maximize long-term shareholder value. Now we would be happy to open the line for your questions.

We will now begin the question and answer session. In order to ask a question, simply press star followed by the number one on your telephone keypad. Our first question will come from the line of Patrick Moley with Piper Sandler. Please go ahead.

Yes. Good morning. Wanted to ask about block trading. Christopher Concannon, you noted in your prepared remarks the strength you've seen there, up 24% last year and then up 56% year over year in January. So could you break down the strength that you're seeing there, where it's coming from, and the different ways that you're attacking that market? Just trying to get a better sense for what's going on behind the scenes there. Thanks.

Sure. And thanks, Patrick, for that question. Obviously, we've been investing in our key initiatives, all our new initiatives, portfolio trading, dealer initiative, and then block. As part of the larger initiatives, we're seeing returns across all three, so it's quite exciting. The block volumes that we're seeing are quite substantial. So I'll just run through some of the stats and then get back to your question around where we're seeing blocks come through the platform. First of all, in 2025, you heard it in my prepared remarks, we've seen growth of block trading on the platform and IG of 18% and high yield of 19%. And then key areas where we first started to deploy our block protocols, EM is up 27% and euros up a staggering 66%. So the good news is the block opportunity is there. And the tools we're deploying are increasing our share of blocks on the market. Again, Q4, as you mentioned, a 24% increase, a total of $5 billion in block volume across the platform. And then here in January, still increasing our overall block volume. I'm happy to report a third of our credit volume is now in blocks during the month of January. And you know, in January, hybrid was up 33%, high yield up 42%, and EM up 92%, with the euros up 89%. So all sizable growth numbers across the block platform. We have a number of protocols that are seeing block volume pass through it. Obviously, the data is a key ingredient to our success in block. We are now able to price blocks based on their size and their direction, and that's a key feature that clients are asking us more and more about. Our targeted RFQ, which was launched in EM and Euros, is where we're…

Our next question will come from the line of Jeffrey Schmitt with William Blair. Please go ahead.

The average fee rate in credit has obviously been sliding for the last few years and really just from a shift in the protocol mix. Can you maybe talk about if there's competitive pricing pressures driving that as well? And what type of decline are you assuming in the fee rate in your medium-term revenue growth outlook? Thank you.

Yes. Great question. Again, there's a lot of parts that impact our fee per million. Just to kind of go through some of them. So the product mix, as you mentioned, can impact our fee per million. Obviously, protocol selection will definitely impact our fee per million. Maturity, average maturity impacts our fee per million. And then things like spread and volatility have an indirect impact on our fee per million. So a lot of moving parts around fee per million. We've seen some of the largest adjustments in fee per million through the protocol and product mix. A perfect example is the move to portfolio trading that comes in at a much lower fee per million. But, again, we're all about growing our incremental revenue, and much of the new initiatives that may come in at a lower fee per million are obviously growing revenue, incremental revenue. The areas that we have seen fee per million impact, one area in particular, we just talked about the growth in block volume. In January, our growth in block volume does impact our fee per million. But it has a net benefit to our revenue. I'll just walk you through an example so you can understand the implications of doing more volumes by block. If we trade a $50,000 order, which is quite a small size order on MarketAxess Holdings Inc., we'll incrementally make $17 on that trade, but that comes in at a $350 fee per million. A $5 million block trade will make $700 on that same transaction, but that comes in at a fee per million of a 140,000,000. So you can see that as we grow these new protocols and grow into incremental volume, it will have an impact on our fee per million calculation. And that's an important factor because we are growing all of these new initiatives, portfolio trading, block volume, and, obviously, automation and our dealer initiative is growing as well. All of those can have an impact on our fee per million. I'll turn it over to Ilene Bieler to round out the question.

Yeah. Let me just give a little bit of context also to support what Christopher Concannon is saying. So if you think about the month-over-month January decline to 132 from 137, for instance, in fee per million, as you noted, it's volume mix shift largely into lower fee capture product, as Christopher Concannon just discussed. But to put some more texture around it, we had a very strong month in Eurobonds with ADV up 74%. And we know Eurobonds come in at a lower capture, but we expect this, right? That's a good thing. We want to continue to see that business growing. And then also, obviously, with high-grade flux, that ADV was up 82% on a month-over-month basis. And it really goes to what Christopher Concannon was talking about before on the question on block. Now, there was a little bit of offset. There wasn't a huge change in the weighted average years to maturity month over month. It went from about, you know, 9.47 to 9.49. So there was a little bit of offset in terms of high-grade duration there. But by and large, you can see these trends, and this is not new. This is what we've been talking about in terms of both product and protocol shift. Let me get back to you also on your medium-term target question because I understand where that's coming from. And it's important to take a step back when you think about the medium-term targets. And you've heard me say this before. I said it in my prepared remarks, right? We know that the 8% to 9% average growth is just that: average. And there could be variability on phasing in over the course of the three years. Having said that, you may recall that we're being pretty clear that this is really about revenue growth and the way that we are expecting to achieve that. We think that in the first year, US credit will be about 20% of the total incremental revenue growth for the company. And then by the end of our three-year plan, we think that's going to be about 35% of incremental growth expected to come from US credit. Now, we also have our services business, and you heard that guide today in terms of, you know, in the aggregate, single digits for 2026. And we haven't included assumptions for increases in velocity, for instance, in these three-year targets in our three-year plan. While I'm not going to give you specifics on fees per million, I can confirm that we have not baked in any fee per million accretion. Our objective, really importantly, we keep talking about this, but just to bring it back, is that we really are looking at our ways, the levers we can use to drive revenue growth. And Christopher Concannon talked a lot about those initiatives, and I'm sure we're happy to go into it further. But just wanted to get back to you on that point.

Okay. Great. Thank you.

Our next question will come from the line of Alex Kramm with UBS. Please go ahead.

Yes. Hey, everyone. Can you give us a quick update on emerging markets? Seems like that's one of the biggest standout success stories for you here over the last few years. I know it's still a very underpenetrated market, so maybe define really what the roadmap is, what you're excited about maybe in 2026. Then, you know, look, obviously, others are watching you. So just wondering if you see any sort of shift in competitive dynamics, if you're running into other people a little bit more. Or if this is still kind of a large market for you to capture?

Thanks, Alex. And, obviously, emerging markets is an exciting area for us. We're obviously, just to size the market, it's similar in size to US credit when you talk about the global emerging market. And you have two types of markets, both sovereign as well as corporate local, as well as hard currency. So it's quite a diverse market. The nice thing about that market, it is a diverse dealer market as well. It's not what I would call top-heavy. So having a diversity of dealer communities both in the local markets and the global dealer community is a key ingredient to the liquidity that we see over the platform. And as you mentioned, our EM, our emerging market growth has been quite attractive over the last couple of years. It continues into January where we saw our EM growth continue into January. Our market ADD and EM just for January was over $5 billion, which was a record and up 50% year over year. Up 56% month over month. So you just can see that trend line is quite positive. In terms of the competitive landscape, we're not seeing, you know, we're competing dramatically with chat and phone in the EM market. It's not a well-penetrated electronic market. I think, you know, we try to estimate the electronic penetration in EM as somewhere under 10% and growing. So we see that as a huge market opportunity for us. You do need people on the ground in the local markets. So it is an investment in sales, investment in regional offices, and those investments we have made for quite some time with folks in Latin America, teams in APAC, and across other areas of the globe. So exciting, a great deal of, and we mentioned earlier the block volume growth. We're seeing block volume in EM as well, helping us drive that growth. As we mentioned earlier, that was up 92% in January and up 70% month over month as well, setting a new record in block. So a lot of exciting things to come, and we're obviously very focused on protocol solutions in EM. That's one area where not only do we have an all-to-all RFQ, but we have an RFM as well, which is helping to drive some of our block volume growth both in the local market as well as in the hard currency market.

Very good. Thanks.

Our next question will come from the line of Alex Blostein with Goldman Sachs. Please go ahead.

I wanted to go back to your comment around revenues outside of U.S. Credit. Growing, I think you said 10%, in 2025. When you zoom out, and I know there's a lot of things that go in there. Obviously, there's some trading business like non-US, but also there's recurring revenues within there as well. I think at the slide, at the slide deck at our conference, in December, you talked about that being, I think, like, a mid-teen percent grower over time. So maybe talk a little bit about what has driven sort of the slower growth last year and how do you think about the growth in that non-US trading part of the business on a multiyear basis as part of your overall revenue growth, Algo?

Thanks for the question, Alex. Yeah, of course, I know the slide you're talking about and keeping in mind that was a CAGR over five years, right? And so if you think about, let's just take your service point to start and look at the full year 2025, right? Our services revenue there was about 6% this year, and we are guiding to, for 2026, mid-single-digit growth there as well. And so I think that all fits. And then you would expect to see higher revenue growth in our trading businesses outside of US credit. So this algorithm still fits, and it still is exactly as we said. If you think about the 8% to 9% average annual overtime with the phase-in and variability. And I would just say that there are different levers. Right? If you think about this plan, there's obviously the volume levers, and while we don't control volume, needless to say, in the marketplace, we know that the electronification has definitely velocity, and Christopher Concannon has certainly talked about it in the past. And if you even look at turnover in January, Alex, that was 95%. And we also, again, while we don't control volume, we went back and we did an analysis over time and we looked at volumes. And the only time in the last since 2014, for instance, since volumes have contracted in this market really was in that one post-COVID year, and we all know what 2020 was like. So we're continuing. The important thing for us, though, in terms of driving more velocity and driving turnover is making sure we have the protocols in place, the initiatives in place that's really going to enhance for our clients what they need. We want to be there to have the solutions there. And that goes to the market share component of the algorithm. Right? When we really are looking at market share, we're looking at it as what can we do to make sure that we are protocol agnostic. And Christopher Concannon has talked a lot about that. And so if you think about all of these things together, that is really what's driving the three-year plan. A lot of it is really based on just sort of how do you maximize for when you're seeing volumes in the marketplace, what we're doing on the initiatives, then, obviously, the last part of that is the pay per million, which we talked about. I don't know if Christopher Concannon if you wanted to add to that?

Yes. No, Alex, it's the right question. Look, our international business has been growing double digits for some time. That's really powered by EM and euros, where we see exciting growth. And, again, in EM, still early penetration for electronic trading. So the market opportunity is quite sizable. Around the services, particularly the data business, we have historically, I've on these calls have many times said, we will not sell some of our data. That is proving strategically correct at this point as we see what's happening around the AI space. Keeping our data, which is proprietary, in-house to then leverage through our own use of AI is going to be a critical ingredient going forward. So I think it comes to services and particularly market data revenue, we've strategically decided to keep that at a single-digit number because we want to actually hold our data for our own AI uses, which will actually help our transaction business. So it was a strategic decision we made quite a number of years ago, but now it's proving to be quite valuable. As we start to look at the use of AI within our data set. Just to give you a sense of how much that data asset is growing, in 2025, we saw $5.3 trillion in inquiry volume. That's up about 13% from the prior year. That inquiry volume triggered close to 91 million in prices. So it's an increase in prices coming back. That is all unique data that is across the globe. Across all the assets that we trade, and we're seeing over $35 trillion in notional prices on our platform each year. So it's quite a powerful data set. Our choice is not to sell it all in raw form. Our choice is to leverage that data for AI purposes to create higher volumes, more sticky services around our trading businesses. So that's part of what factors into our thought process around data and data growth.

Our next question will come from the line of Benjamin Budish with Barclays. Please go ahead.

This is Chris O'Brien on for Benjamin Budish. I just had a question about capital return. So it's been quite a strong start to the year for volumes across the industry and on platform at MarketAxess Holdings Inc. So just curious if we saw continued momentum through the rest of the year, how are you guys thinking about share repurchases as we go through 2026? Thanks.

Sure. Thanks for the question. I think, as you just noted, you know, we, in particular, obviously have significant capital return with our ASR and just closing it out. And I would remind everybody that we did take out about $220 million on our revolver in order with the cash outlay in order to put a little bit of leverage on it to do that ASR. So our first order of business is going to be to pay that down over time. And so we do know that we have $25 million left in authorizations, and so we're just going to see how that goes. There's no end date on that authorization. So that's really how we're thinking about capital right now. And you probably also saw today that we did increase our dividend to $0.78 per share. So that's another thing that we're thinking about in terms of increasing capital return, at least on the dividend side in the short term.

Great. Thank you.

Our next question will come from the line of Daniel Fannon with Jefferies. Please go ahead.

So wanted to follow-up, Christopher Concannon, on your comments around Slide 10 and just the addressable market. I think you mentioned that 2025, some of the e, or the electronification slowed. Just wanted to get a sense of what gives you confidence about that reaccelerating here in '26 more broadly as we just think about, obviously, the protocols you've been doing, but if there are other things idiosyncratic in the market, competition-wise that maybe slowed that down.

Sure. Great question. Something we obviously focus on is converting this market from phone to platform. And the market opportunity is larger than what has been converted today. So when you think about that, the opportunity is enormous, and we're still early in the journey of electronification of the global fixed income market. With regard to our slides, really, if you look at US credit, that's really where the growth of electronification across the entire market has plateaued. Kind of flatlined. Somewhere, it's hard to estimate, but somewhere in the 45 to 50% range. What's holding it back from further conversion when you analyze what is not on platform, it's really phone and chat block market. So that block market makes up the next 50% roughly, and that's the market opportunity that we are chasing. And very focused on. If you look at portfolio trading, the growth of portfolio trading because it's all electronic, should have increased the overall electronic footprint in the market. Ironically, it did not. It converted what was already largely electronic RFQ into just larger baskets traded as a single price basket. So it was really the growth of portfolio trading that did a really a conversion of e RFQ to e portfolio trading. Now and look. The market was quite focused on portfolio trading, both platforms, dealers, and clients were making huge investments to convert their RFQs to portfolio trading. I will tell you the focus of clients, dealers, and platforms today has shifted to that 50% of US credit. It's all targeting block market. That's the exciting piece, and our earlier discussion on our block growth is really reflective of the investment we're making in that block market. When you jump from US credit into other product areas, EM in particular, we're still early days electronic penetration. So we're seeing our portfolio trading in EM grow dramatically. We're seeing electronic RFQ, all-to-all. We're seeing block growth in EM as well. And then finally, our automation suite of products is growing quite handsomely in EM as well. Again, a very low automation penetration in that EM bucket. So overall, I just love the fact that our market opportunity is greater than what has been converted today. Around the globe, and that just is an exciting opportunity for us as we deploy more and more products targeting that specific block market, which is left to convert.

Great. Thank you.

Our next question comes from the line of Elias Abboud with Bank of America. Please go ahead.

I wanted to follow-up on the last one about the overall kind of slowdown in electronification and U.S. Credit this past year. I wonder if that has changed how you think about capital allocation. Does it still make sense to allocate the incremental dollar to US credit versus other areas like emerging markets or munis that are growing faster? Then if I could just squeeze in, like, a follow-up here. I was hoping we could get an update too on the opening and closing auction initiative and what the early returns have been there. Thanks.

Sure. Yeah. First, what's great about the opportunity and we really, we were just talking about blocks where we had substantial growth. Our investment in the block opportunity is actually very similar across product set. So whether we're investing in EM blocks or we're investing in US credit blocks, the way we have built our technology, our new technology on X Pro, it scales across both product sets. So the incremental investment has very high returns because we have shifted to investing our protocols into global protocols as opposed to individual product protocols. So that's the exciting part. So any investment in a block solution is an investment in a block solution across a protocol. So the high return on that investment is quite attractive. And we'll continue to roll out our X Pro solution, which is really delivering multiple protocols from portfolio trading, to blocks to our automation delivery as well as traditional list RFQ. All delivered on the same technology stack and the same platform as we roll that out across the globe. So investments high return because we're attacking the same unpenetrated market of EM or US credit with very similar techniques and protocol. Turning to our matching solutions, things like MIDX, and auctions, these are all new investments, quite an exciting incremental revenue investment. So we're seeing sizable growth across our matching solution MIDEX, I know, Elias Abboud, you did a nice report on that in January. I appreciate all the kind remarks around our dataset and the feedback from our clients. We promise we will use it as a marketing tool to talk to the dealer community. But Midex has been growing since we launched it in the fall of last year. It's quite exciting to be a part of that match, match business, in…

Perfect. Thanks, Christopher Concannon.

Our final question will come from the line of Michael Cyprys with Morgan Stanley. Please go ahead.

Just a question around artificial intelligence. I was hoping you could speak to some of your ambitions and visions around embedding AI more broadly across the business. Curious what portion of client flows do you think is ultimately automatable? And how do you think about execution outcome feedback in your AI models? And does that create any sort of flywheel that others cannot catch?

Sure. Exciting area for us, an area that we've been investing in for some time. Obviously, a number of our data products are AI-based. So we are along that journey in creating commercial products through AI. I'll take a step back and just mention the AI boom itself is very helpful to the bond market. If you look at the size of the bond market more recently, it is growing as a result of the funding that AI needs. Both in terms of the equipment and chips that people are buying through funding using the bond market, but also the data center build-outs are all through bonds. And then you'll finally need the utilities and the infrastructure to support those data centers will likely also come through bond funding. So it's just going to grow the bond market quite dramatically, and we feel we'll feel the benefits of that over the years to come. With regard to our use of AI, we're pretty excited about where AI can obviously help us. There's the, I refer to as the corporate AI use where it will make us more productive. Whether it's someone in finance using AI or one of our developers deploying code through AI. We're already seeing the benefits of that development, so we're excited about what's to come, and I think we're still in the early stages of leveraging AI to increase our productivity both in terms of product design as well as product and code writing. When it comes to commercialization of AI within our trading platform, the dataset is probably the most powerful leverage that we have. And I'm happy to report, as I mentioned earlier, our dataset or our data footprint that we can leverage through AI continues to grow. So things like EM, most local…

Great. Thank you.

And that will conclude our question and answer session. I'll hand the call back over to Christopher Concannon for any closing remarks.

Thank you all for joining us. We look forward to talking to you on our next quarterly call. Again, and have a great weekend.

This concludes our call today. Thank you all for joining. You may now disconnect.