"We closed the year on a strong note and are pleased to report record revenues, pre-tax income and pre-tax margins for the full year of 2011," said Richard M. McVey, chairman and chief executive officer of MarketAxess. "Our estimated U.S. high grade market share continued to progress higher throughout 2011, culminating in a record 12.2% in the fourth quarter. We believe that the ongoing changes to global market structure, driven in part by regulatory reform, will continue to favor e-trading in the cash and derivative credit markets."

Fourth Quarter Results

Total revenues for the fourth quarter of 2011 increased 16.9% to $45.1 million, compared to $38.6 million for the fourth quarter of 2010. Pre-tax income was $18.9 million, compared to $14.4 million for the fourth quarter of 2010, an increase of 30.6%. Pre-tax margin was 41.8%, compared to 37.4% for the fourth quarter of 2010. Net income totaled $11.5 million, or $0.29 per share on a diluted basis, compared to $8.9 million, or $0.23 per share on a diluted basis, for the fourth quarter of 2010.

Commission revenue for the fourth quarter of 2011 totaled $38.8 million on total trading volume of $125.2 billion, compared to $32.3 million in commission revenue on total trading volume of $104.3 billion for the fourth quarter of 2010. U.S. high-grade trading volume as a percentage of FINRA's high-grade TRACE trading volume increased to an estimated 12.2%, compared to an estimated 9.6% for the fourth quarter of 2010.

All other revenue, which consists of technology products and services, information and user access fees, investment income and other revenue, increased slightly to $6.4 million, compared to $6.3 million for the fourth quarter of 2010.

Total expenses for the fourth quarter of 2011 increased 8.7% to $26.3 million, compared to $24.2 million for the fourth quarter of 2010. The increase in expenses during the fourth quarter of 2011 was primarily due to a 100% reserve against accounts receivable due from MF Global Inc. and a write-off of a minority investment. These two charges totaled $1.5 million, or $0.02 per share, in the aggregate.

The effective tax rate for the fourth quarter of 2011 was 38.8%, compared to 38.1% for the fourth quarter of 2010.

Employee headcount as of December 31, 2011 was 232, compared to 227 as of December 31, 2010.

Full Year 2011 Results

Total revenues for the year ended December 31, 2011 increased 23.8% to a record $181.1 million, compared to $146.2 million for 2010. Pre-tax income was a record $78.7 million, compared to $50.9 million for 2010, an increase of 54.7%. Pre-tax margin was 43.5%, compared to 34.8% for 2010. Net income totaled $47.7 million, or $1.20 per share on a diluted basis, compared to $31.4 million, or $0.80 per share on a diluted basis, for 2010.

Commission revenue for the year ended December 31, 2011 increased 27.2% to $155.4 million, compared to $122.2 million for 2010. Variable transaction fees increased 27.3% to $91.7 million on total trading volume of $525.0 billion, compared to variable transaction fees of $72.0 million on total trading volume of $402.3 billion for 2010.

All other revenue increased 6.7% to $25.7 million, compared to $24.0 million for 2010. The increase was primarily due to higher technology integration consulting services and bulk data sales.

Total expenses for the year ended December 31, 2011 increased 7.4% to $102.4 million, compared to $95.3 million for 2010. The increase was primarily due to higher employee compensation and benefits expense of $2.3 million, marketing and advertising expense of $1.8 million, and professional and consulting fees of $1.6 million. Capital spending for the year ended December 31, 2011 was $7.2 million.

The effective tax rate for 2011 was 39.4%, compared to 38.3% for 2010.

Dividend

The Company's board of directors declared a quarterly cash dividend of $0.11 per share of common stock outstanding or issuable upon conversion of outstanding shares of non-voting common stock, to be paid on March 1, 2012 to stockholders of record as of the close of business on February 16, 2012. This represents an increase in the quarterly cash dividend of $0.02 per share.

Share Repurchase Program Update

In October 2011, the Company's board of directors approved a $35 million share repurchase program. A total of 237,998 shares were repurchased in the fourth quarter of 2011 at a cost of $6.9 million.

Balance Sheet Data

As of December 31, 2011, total assets were $349.5 million and included $247.7 million in cash, cash equivalents and securities available-for-sale. Total stockholders' equity as of December 31, 2011 was $312.4 million.

Guidance for 2012

The Company expects total expenses for 2012 to be in the range of $107.0 million to $112.0 million and its full year 2012 capital spending to be in the range of $8.0 million to $11.0 million. The Company also anticipates that the overall effective tax rate for 2012 will be between 39% and 41%.