Electronic bond trading platform MarketAxess (NASDAQ: MKTX) reported Q3 CY2025 results exceeding the market’s revenue expectations, with sales up 1% year on year to $208.8 million. Its non-GAAP profit of $1.84 per share was 8.1% above analysts’ consensus estimates.

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StockStory’s Take

MarketAxess delivered slightly higher revenue and profitability in Q3, with management attributing performance to growth in non-U.S. credit markets and ongoing traction with new trading protocols. CEO Christopher Concannon pointed to double-digit advances in international client activity and emerging markets, while noting the U.S. credit segment remains pressured by tight spreads and lower volatility. Concannon acknowledged, “Our current model does exceptionally well in higher volatility when spreads are widened out and liquidity is in higher demand. Unfortunately, we have only seen limited periods of volatility over the last several years.”

Looking forward, MarketAxess expects growth to be driven by adoption of new protocols such as portfolio trading, block trading, and the recently announced closing auction for fixed income. Management sees particular opportunity in automation and international expansion, especially as clients seek more efficient ways to execute trades across varied market conditions. Concannon explained, “We are investing in the fixed income market of tomorrow while also addressing the competitive landscape of today,” emphasizing that a protocol-agnostic platform and enhanced workflow tools will be central to the company’s strategy.

Key Insights from Management’s Remarks

Management highlighted that automation, protocol innovation, and international market expansion were key to the quarter’s results, even as U.S. credit revenue growth lagged due to market structure changes.

• Automation momentum: MarketAxess saw rapid growth in automated trading, with automation trade counts and volumes growing at a compound annual rate of nearly 30%. Management cited a major investment manager that increased its use of automated block trades to over 80% of total tickets, underscoring the stickiness and efficiency gains possible with automation tools.

• International and emerging markets strength: Non-U.S. credit trading volumes grew at double-digit rates, and clients outside North America now account for more than a third of global credit trading. The platform added over 6,000 international traders, supporting diversification beyond the core U.S. market.

• Block and portfolio trading expansion: Block trading average daily volume (ADV) rose 10% in Q3 and 21% in October, with particularly strong progress in emerging markets and Eurobonds. Portfolio trading ADV increased 20% in the quarter, including record U.S. high-yield activity, and the company’s U.S. credit portfolio trading market share climbed by 300 basis points in October.

• Dealer-initiated and Mid-X protocol launch: Dealer-initiated ADV grew 18% in Q3 and 22% in October, supported by the September launch of Mid-X, a dealer-to-dealer matching protocol. Early results indicate that Mid-X is running at a daily rate of $2.7 billion in matched volume, with plans to scale sessions in coming months.

• New closing auction protocol: MarketAxess announced the introduction of a closing auction mechanism for the fixed income market, aimed at providing end-of-day liquidity and a standardized closing process. Management considers this a major strategic initiative, supported by partnerships with leading asset managers and S&P for index pricing data.

Drivers of Future Performance

Management expects protocol innovation, automation, and international market expansion to drive results, but notes that tighter spreads and increased competition may weigh on revenue growth and margins.

• Shift toward protocol agnosticism: The company is focusing on delivering a platform that supports multiple trading protocols, allowing clients to choose the optimal method depending on market conditions. Management believes this flexibility will help weather both low- and high-volatility periods, but also acknowledged that revenue growth could lag if volatility remains subdued.

• International and emerging market focus: Continued investment in expanding products and client relationships in Latin America, Asia-Pacific, and Europe is expected to support double-digit growth outside the U.S. credit market. Management views these regions as key sources of diversification and future revenue, given the growing adoption of electronic trading.

• Margin and fee pressure from new protocols: Newer offerings such as portfolio trading and dealer-to-dealer solutions (like Mid-X) generate lower fees per trade compared to legacy protocols. While these initiatives are expected to increase total volume and market share, management highlighted that the shift in business mix could pressure overall margins and fee capture.

Catalysts in Upcoming Quarters

In upcoming quarters, the StockStory team will focus on (1) adoption rates for new protocols such as Mid-X and the closing auction, (2) further international client growth and trading volume outside North America, and (3) continued expansion of automation and block trading solutions. We will also monitor how shifts in market volatility and competition affect fee capture and overall margin trends.

MarketAxess currently trades at $167.27, in line with $165.84 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free for active Edge members).

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