Marketaxess Holdings Inc (MKTX) 2025 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the MarketAxess fourth quarter and full year 2025 earnings conference call. (Operator Instructions)

As a reminder, this conference call is being recorded on February 6, 2026. I would now like to turn the call over to Steve Davidson, Head of Investor Relations at MarketAxess. Please go ahead, sir.

Good morning, and welcome to the MarketAxess fourth quarter and full year 2025 earnings conference call. For the call, Chris Concannon, Chief Executive Officer, will provide you with an update on our strategy and our business; and Ilene Fiszel Bieler, Chief Financial Officer, will review our financial results.

Before I turn the call over to Chris, 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 Chris.

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 market access 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 market access advantage are further complemented by our investment in multi-protocol solutions for the buy side and for the sell side. We made significant progress in 2025, delivering and growing protocols across our 3 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 road map that positions us to achieve our 3-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 3. 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 ADV, including record block trading ADV 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, Mid-X.

We continue to be disciplined with our expense management with 5% growth in non-GAAP expenses in 2025. We have returned a total of $474 million to investors through $360 million of share repurchases and $114 million in dividends.

In addition to establishing our 3-year plan, we announced an enhanced capital return plan of $400 million, including a $300 million ASR. We just completed the ASR earlier this week with the final delivery of 360,000 shares. Through the completion of the ASR, we have now retired 1.7 million shares to date.

In summary, I'm encouraged by the significant product deliveries that we made in 2025 and the progress we achieved across our strategic channels, portfolio trading, dealer-initiated and block trading. The investments that we are making to help drive higher levels of revenue and market share growth in US credit are beginning to show some progress.

I just wanted to provide some context for our January trading volume statistics that we released yesterday. In January, we generated record total credit ADV driven by strong growth across all credit product areas with record ADV in our emerging markets business, up 50%. Strong market volumes, combined with the continued momentum in our new initiatives, helped drive strong growth in our total credit preliminary variable commission revenue.

Estimated market share in US high grade was lower than we would have liked, but it was negatively impacted by a 92% increase in new issue block activity. While this has a temporary impact on share, it is good for overall market volumes and turnover growth over time. US high-grade turnover increased 95% in January, levels we have not seen since approximately 2011.

Before moving to the next slide, I wanted to welcome 2 new members to our Board of Directors, Doug Cifu and Ken Schiciano, who will be joining our Board as of March 1. Doug brings deep fintech market structure and regulatory expertise from a major global market maker, and Ken has three decades of experience in fintech and private equity. Both will be integral to the Board and me as we continue to execute our long-term strategy.

Slides 4 and 5 really drive home how well we have enhanced the market access advantage in 2025. Most of the KPIs on slide 4 show healthy growth rates reflecting the underlying health of our franchise. This shows that the investments we have made to enhance our products and provide clients with new workflow tools and protocols are paying off. While we are pleased with these results, US credit market share continues to require attention and focus. The good news is we have a detailed plan to address it, which is embedded in our 3-year targets.

Slides 6 and 7 highlight how well we are executing on our new initiatives across our 3 strategic channels, including strong growth continuing in our automation suite. On slide 7, in the client-initiated channel, we continue to make progress with block trading globally. Our block solutions continue to grow in US credit, emerging markets and Eurobonds, proving that blocks will move from phone to platform.

We also recently launched a new [X] trading solution for dealers to send access directly to specific clients. The rollout is in progress, and the client feedback has been positive. We generated 24% growth in ADV to a record $5 billion of block activity across US credit, emerging markets and Eurobonds, with record block trading ADV across all 3 products. Our US credit ADV record was driven by record block trading ADV in US high grade of over $2 billion, which represented an 18% increase.

Our ADV record in US high yield of over $800 million in block trading represented an increase of 19%. This strong growth continued in January with a 56% increase in block trading ADV last month. Block trading in US credit, emerging markets and Eurobond now makes up about a third of our credit ADV and represents the next step in the growth of electronic trading.

In the Portfolio Trading Channel, we generated a 48% increase in total global portfolio trading ADV to a record $1.4 billion, with record US credit ADV and market share. US credit portfolio trading market share increased by 270 basis points in 2025. In January 2026, total portfolio trading ADV was up 126% and market share in US credit portfolio trading increased by 620 basis points.

In the Dealer-Initiated Channel, we generated a 33% increase in dealer-initiated ADV for the year, and we exited 2025 with a strong contribution from our new US credit Mid-X protocol with over $3 billion in trading volume in December alone. Again, this strong growth continued into January with a 13% increase in our dealer-initiated ADV. Total Mid-X trading volume was a record $7 billion, representing an increase of 83%.

Last, in the automation suite, we had another strong year as clients continue to leverage automation, enabling them to do more with less. Additionally, we were very pleased to see a significant increase in Adaptive Auto-X algo trading volume in the fourth quarter. Several key clients adopted more customized adaptive algo workflows to increase execution performance and generated over $8 billion in trading volume in the fourth quarter.

I'm also happy to report that our Pragma acquisition, which is powering our recent algo success, is fully accretive while also adding strategic value across our matching and automation technology modernization, including driving growth in our rates complex.

Slide 8 shows the strong growth of our new initiatives with our top 25 clients. Our top 25 clients have been driving our growth in portfolio trading with an 85% increase in PT volume coming from the top 25. While our top 25 clients have been leveraging our platform for portfolio trading, they've also been leveraging our automation suite for block trading.

Automated block trading volume from our top 25 is up over 125%. And not surprisingly, given the benefits of X-Pro in managing RFQ and portfolio trades with our rich proprietary free trade analytics and data, trading volume through X-Pro is also up 80%.

Slide 9 highlights the increase in market share in US high yield portfolio trading in the second half of 2025 as a result of several enhancements we made last year. The enhancements allow clients to better evaluate the pricing they receive for their high-yield portfolios. While this chart highlights the dramatic increase in estimated US high-yield PT market share, we have also seen our traditional RFQ high-yield market share increased by approximately 100 basis points in the second half of 2025.

Slide 10 highlights the increase in the long-term e-trading opportunity that we have seen in just the last several years. This is a point worth emphasizing that I believe many market followers have been missing, particularly with our recent growth in blocks. While total electronification percentage rates may have plateaued in US credit over the last year, the US high-grade market overall has increased by approximately 52% and US high yield has grown by approximately 28%.

We believe that we are well positioned to capture this expanding e-trading opportunity as a result of the new initiatives that we have in the market right now as well as the ones we plan to deliver in 2026. This is why we feel good about our position and our ability to return to higher levels of revenue growth in the coming quarters.

Now let me turn the call over to Ilene to review our financial performance.

Thank you, Chris. 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 in 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 the first quarter of 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 were 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 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 US high yield, 6% growth in emerging markets and 9% growth in Eurobonds, total commission revenue was partially offset by a 1% decline in US high grade and a 14% decline in municipals.

We were very pleased with the improvement in US high-yield revenue generation at the end of 2025. The reduction in total credit fee capture both year-over-year and quarter-over-quarter was principally due to protocol mix, partially offset by the higher duration of bonds traded in US high grade.

On slide 14, we provide a summary of our operating expenses. Excluding notable items, total expenses increased 8%, which included a headwind of $1 million due to the impact of foreign currency translation. The increase was driven principally by higher consulting, technology and communications and employee compensation costs as we continue to invest in our technology modernization and upgrade talent to drive future growth. We are continuing to invest, while at the same time, looking for cost efficiencies. Headcount was 869, down 2% from 891 in the prior year period and down 3% from the third quarter of 2025.

On slide 15, we provide an update on our capital management and cash flow. Our balance sheet continues to be strong, with cash, cash equivalents and corporate bond and US treasury investments totaling $679 million as of December 31, 2025. We generated a record $347 million in free cash flow in 2025 and we returned a total of $474 million to investors through share repurchase and dividends during the year. We repurchased 2 million shares for a total of $360 million in 2025, including 595,000 shares in open market repurchases for $120 million and approximately 1.4 million shares for $240 million with the commencement of our $300 million ASR in December of last year.

I'm pleased to report that we just completed the ASR earlier this week with the final delivery of an additional 360,000 shares, bringing the total shares repurchased through the ASR to $1.7 million. As of January 31, 2026, $205 million remains on the Board's share repurchase authorization.

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, deflationary 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 3-year average annual target of 8% to 9% revenue growth and operating margin expansion of 75 to 125 basis points are exactly that, averages over 3 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 Chris 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 market access 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 3-year financial targets.

We continue to make strong progress with our new initiatives across our 3 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'd be happy to open the line for your questions.

(Operator Instructions) Patrick Moley, Piper Sandler.

Good morning. I wanted to ask about block trading. Chris, 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 initiatives and then blocks 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 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 we -- 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 -- in January, high-grade was up 33%, high-yield up 42% and EM up 92% and with 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 seeing the strongest growth rates in our block growth rates. And then we are seeing traditional RFQ, all to all RFQ, we are seeing blocks come through the platform there. Just the liquidity levels are quite high. The market impact of sharing your block with all participants is quite reduced.

And then the other areas -- other exciting areas that we're seeing block content is in our automation solution. We're seeing very large institutional investors increased their size of block activity through automation. So there's no human involved. It's just a large block going through our Auto-X platform. And then we're seeing blocks in our algo suite, which is really designed for block solutions, and we're seeing a pickup in blocks there.

We've also seen block size in our newly launched Mid-X solution which was just launched in the fourth quarter of last year. And then we're seeing block sizes come through our newly launched auctions, closing auction platform there. That is designed for block side as well. So we have a number of protocols, some specifically designed to compete with IV, chat and phone and others where we're just seeing an increase in an appetite for putting blocks over the platform.

The other piece of the market that we're seeing higher levels of block was around new issue. So the block market in the new issue market in January increased quite substantially. So in order to move the overall trade volumes that we're seeing, while PT is an important protocol to put exposure on and off, we're seeing higher levels of block activity across the market and trying to address that activity.

Jeff Schmitt, William Blair.

Good morning. 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.

Great question. Again, there's a lot of parts that impact our fee per million, just to 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 move to portfolio trading that comes in at a much lower fee per million. But again, it's -- 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 kind of 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-sized order on MarketAxess, we'll incrementally make $17 on that trade, but that comes in at a $350 fee per million. A $5 million block trade, we'll make $700 on that same transaction, but that comes in at a fee per million of $140 million. So you can see that as we grow these new protocols and grow incremental volume, it will have impacts 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 fee per million. I'll turn it over to Ilene to round out the questions.

Let me just give a little bit of context also to support what Chris is saying. So if you think about the month-over-month January declined to $1.32 from $1.37, for instance, in fee per million. As you noted, it's volume mix shift largely into lower fee capture products, as Chris 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 blocks, that ADV was up 82% on a month-over-month basis. And it really goes to what Chris 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 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 that 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 as I understand where that's coming from. I think 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 some variability on phasing in over the course of the 3 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 3-year plan, we think that's going to be about 35% of incremental growth expected to come from US credit.

Now we've also have our services business, and you heard that guide today in terms of in the aggregate mid-single digits for 2026. And we haven't included assumptions for increases in velocity for instance, in these 3-year targets -- in our 3-year plan. And while I'm not going to give you specific of fees per million, I can confirm that we have not baked in any fee per million accretion.

Our objective, really importantly, and 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 Chris talked a lot about those initiatives, and I'm sure we're happy to go into it further, but I just wanted to get back to you on that point.

Alex Kramm, UBS.

Can you give us a quick update on emerging markets? It seems like that's one of the biggest standout success stories for you here over the last few years. I know it's still very underpenetrated market. So maybe define really what the road map is, what are you excited about maybe in 2026? Then 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 inside the US credit when you talk about the global emerging market and you have 2 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. We saw our EM growth continue into January. Our market ADV in 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 -- we're competing dramatically with chat and phone in the EM market, it is not a well-penetrated electronic market. I think we try to estimate the electronic penetration in EM is 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, and investment in regional offices. And that -- 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 blocks. So a lot of exciting things to come, and we're obviously very focused on a protocol solutions in EM. That's one area where not only do we have an all-to-all RFQ but we have a 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.

Alex Blostein, Goldman Sachs.

Good morning. Thank you for taking the question. I wanted to go back to your comment around revenues outside of US credit growing. I think you said 10% in 2025. (inaudible), and I know there's a lot of things that go in there. Obviously, there is some trading businesses like non-US, but also there's (inaudible) revenues within there as well. I think 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 (inaudible)?

Thanks for the question, Alex. So yes, 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 services 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 over time 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 increased velocity, and Chris 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 also went back and we did an analysis over time, and we looked at volumes. And 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 Chris has talked a lot about that. And so if you think about all of these things together, that is really what's driving the 3-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. And then obviously, the last part of that is the fee per million, which we talked about.

I don't know, Chris, if you wanted to add...

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 -- on these calls, as 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 when 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.

Ben Budish, Barclays.

Good morning. This is Chris O'Brien on for Ben. I actually 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. So just curious if we saw a continued momentum through the rest of the year, how are you guys are thinking about share repurchases as we go through 2026? Thanks.

Sure. Thanks for the question. I think as you just noted, we, for us, in particular, obviously, has significant capital return with our ASR and just closing it out. And I would remind everybody that we did take out about $220 on our revolver in order with the cash outlay in order to put a little bit of leverage on it to do that. So our first order of business is going to be to pay that down over time.

And so we do know that we have $205 million left in authorization, 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.

Dan Fannon, Jefferies.

Thanks. Good morning. I wanted to follow up, Chris, on your comments around slide 10 and just the addressable market. I think you mentioned that 2025, some of the -- or the electronification slowed. And so 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 was other things idiosyncratic in the market or competition-wise, it 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 flat lined. 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 early largely electronic RFQ into just larger baskets traded as a single price basket. So it was really the growth of portfolio trading that did 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 investments 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.

Eli Abboud, Bank of America.

Good morning. Thanks for taking the question. I wanted to follow up on the last one about the overall slowdown in electronification and US 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?

And then if I could just squeeze in like a follow-up here. I was hoping we could get an update to on the opening and closing auction initiative and what the early returns have been there? Thanks.

Sure. 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 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 in protocol.

Turning to our matching solutions, things like Mid-X and auctions. These are all new investments, quite an exciting incremental revenue investments. So we're seeing sizable growth across our matching solution Mid-X.

I know, Eli, you did a nice report on that in January. I appreciate all the kind remarks around our data set and the feedback from our clients. We promise we will use it as a marketing tool to talk to the dealer community. But Mid-X has been growing since we launched it in the fall of last year. It's quite exciting to be part of that match business in the dealer-to-dealer market. Again, we only have one match a day. We plan to increase that to multiple matches per day. So a lot of exciting growth there.

Your question on closing auctions again, a newly launched auction solution. Right now, we're just focused on a closing auction, not an opening auction, and that was launched on an entirely new tech stack brought to us by our Pragma acquisition. So a very exciting new tech stack with a new front end used by both clients and dealers.

The closing auction was launched really in the -- sometime in the fourth quarter, it was in a pilot phase, and we just we just rolled out the auction to a broader set of clients. So we're -- as of two weeks ago, we opened it up to a broader set. But we are seeing a pretty exciting participation. We've got 3 dealers now supporting liquidity in the auction. We have about 11 buy-side clients that are active in the auction and we have some -- just some very key what I'd call, anchor dealers that are now posting block-size liquidity into the auction.

Some of the stats that we're seeing, again, this was pilot, about $2 billion in notional orders staged in the auction, over $900 million of orders submitted into the auction. And so we're seeing a great deal of participation. It's interesting we had a really great call with our clients. We did a call on this webinar, just on the closing auction.

We had over 600 participants joined, was kind of one of our record webinars that we've ever seen. But the feedback has been exciting. We've had clients looking for additional bonds to be listed in the auction and looking to understand. It is a new protocol that clients have to get used to because it is a time protocol in the late afternoon of the day, which is new to the buy side. So again, we don't expect that to ramp up dramatically in the coming quarters. We think that will grow over time and be a key ingredient for larger box size trades near the end of the day.

Michael Cyprys, Morgan Stanley.

Thanks for squeezing me in here. 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 into your AI models? And does that create any sort of flywheel that others cannot catch?

Sure. Exciting area for us, an area that we have been investing for some time. Obviously, our -- 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 buildouts are all through bonds. And then you'll finally need the utility -- the utilities and the infrastructure to support those data centers, will likely also come through bond funding. So it's just -- it's 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 what 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 data set is probably the most powerful leverage that we have, and I'm happy to report, as I mentioned earlier, our data set or our data footprint that we can leverage for -- through AI continues to grow. So things like EM -- EM most local markets are not transparent markets. And so we are leveraging AI to produce transparency in those local markets.

The other areas that we're seeing pretty interesting exploration using AI, portfolio construction is a powerful area where we can see clients giving us what I'd call market exposures and not specific bonds. And then we would use AI to produce an outcome or a suggested basket that they could buy either through a PT or something that's available in the market.

So the other area that we're exploring is trading signals. We have quite a sizable portion of the world's bond market activity across EM, US credit, euro bonds and now treasuries. So we are seeing that activity before we wake up here in the morning in New York. And so the signals that are born using AI across the patterns of behavior on a marketplace are quite powerful. And we have a number of clients asking us about indicators or heat maps across sectors across the globe. So there's a number of areas that we see ourselves deploying AI using our proprietary data.

Another area is depth of liquidity in the market. Most people can't see the depth of the bond market. It's individually priced inquiries or over chat. We have the full depth of the market because of all the prices that we collect on the platform. So these are all areas.

Another area is spread prediction. We are able to predict movement in spread using AI. Again, that's a very powerful piece of information if you're a bond trader, whether you're a dealer or a client. So there's lots of uses that we're exploring right now. The last use is just basic chat functionality using AI questions, basic language models for our clients to understand the market or make requests of our data using chat.

So there's a number of places that we're exploring. The opportunities are huge. And like I mentioned earlier, we made a strategic decision not to sell all of our data and to use it for things like trading solutions that I just described. So an exciting new area for us, an exciting new area that we're going to clearly leverage here in 2026.

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

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

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