"Our second quarter results represent the ninth straight quarter of record revenues and earnings for MarketAxess. These results were propelled primarily by strong U.S. high grade market share gains, healthy fee capture and our ongoing focus on expense management," said Richard M. McVey, chairman and chief executive officer of MarketAxess. "Market volumes remain solid and are supported by the growth in corporate debt outstanding. We are also encouraged by the strong growth in our Other product category."

Second Quarter Results

Total revenues for the second quarter of 2011 increased 29.6% to a record $45.8 million, compared to $35.3 million for the second quarter of 2010. Pre-tax income was a record $19.9 million, compared to $11.9 million for the second quarter of 2010, an increase of 67.9%. Pre-tax margin was 43.5%, compared to 33.6% for the second quarter of 2010. Net income totaled $11.9 million, or $0.30 per share on a diluted basis, compared to $7.2 million, or $0.18 per share on a diluted basis, for the second quarter of 2010.

Commission revenue for the second quarter of 2011 totaled $39.1 million on total trading volume of $133.0 billion, compared to $29.5 million in commission revenue on total trading volume of $98.3 billion for the second quarter of 2010. U.S. high-grade trading volume as a percentage of FINRA's high-grade TRACE trading volume increased to an estimated 11.1%, compared to an estimated 8.1% for the second quarter of 2010.

Technology products and services revenue, which includes revenue for technology licenses, support and professional services, increased 22.6% to $4.0 million for the second quarter of 2011, compared to $3.3 million for the second quarter of 2010. Other revenue, which consists of information and user access fees, investment income and other revenue, increased 4.4% to $2.7 million, compared to $2.6 million for the second quarter of 2010.

Total expenses for the second quuarter of 2011 increased 10.3% to $25.9 million, compared to $23.5 million for the second quarter of 2010. The increase in expenses during the second quarter of 2011 was primarily due to higher employee compensation and benefits expense of $0.9 million and professional and consulting fees of $0.7 million. Employee compensation and benefits is net of a $1.1 million favorable adjustment to reflect the cancellation of certain unvested stock options, restricted stock and performance shares upon the resignation of the Company's President. Excluding this adjustment, diluted earnings per share would have been $0.29 for the second quarter of 2011.

The effective tax rate for the second quarter of 2011 was 40.0%, compared to 39.5% for the second quarter of 2010.

Employee headcount as of June 30, 2011 was 236, compared to 221 as of June 30, 2010.

Dividend

The Company's board of directors declared a quarterly cash dividend of $0.09 per share of common stock outstanding or issuable upon conversion of outstanding shares of non-voting common stock, to be paid on August 25, 2011 to stockholders of record as of the close of business on August 11, 2011.

Balance Sheet Data

As of June 30, 2011, total assets were $321.3 million and included $211.5 million in cash, cash equivalents and securities. Total stockholders' equity as of March 31, 2011 was $292.9 million.

 Q2 net income soars 

The Company is reconfirming its full year 2011 expense and tax rate guidance and expects total expenses to be towards the upper end of the guidance range of $101 million to $107 million and the overall effective tax rate to be between 38% and 41%.

The Company now expects its full year 2011 capital spending to be in the range of $5.5 million to $7.0 million.