MarketAxess Holdings (NASDAQ:MKTX) reported fourth-quarter results on Jan. 27. Revenue rose 9.2% year over year to $76.6 million, as the electronic bond-trading network continues to take share in both the high-grade and high-yield debt markets.

Mktx Hg Hy Market Share Marketaxess

Data source: MarketAxess Q4 2015 earnings presentation.

Total trading volume leapt 18.5% to a record $250.4 billion, helping to drive a 12% increase in commission revenue to $67.6 million, including a 16.3% jump in variable transaction fees to $51.3 million.

All other revenue -- consisting of information and post-trade services, technology products and services, and investment income -- fell 9% to $9 million, primarily due to lower consulting fees and unfavorable foreign exchange fluctuations.

MarketAxess again benefited from its operating leverage during the fourth quarter, as an 8.1% increase in total expenses to $39.7 million -- due mostly to higher employee compensation costs -- trailed revenue growth. That helped pre-tax margin improve to 48.3%, compared to 47.7% in the year-ago quarter, with pre-tax income rising 10.4% to $37 million.

Net income, aided by a lower effective tax rate, increased 13.4% t $24.5 million. And earnings per share, boosted by stock buybacks, rose 14% to $0.65.

"Fourth quarter and full year earnings results show continued strong growth, driven by an acceleration of market share gains across core products," said Chairman and CEO Richard McVey.

Capital returns
With more than $280 million in cash and investments and no long-term debt, MarketAxess' balance sheet strength and strong cash flow generation have allowed management to return cash to shareholders via stock repurchases and a rising dividend payout.

Mktx Dividends Fcf Marketaxess

Data source: MarketAxess Q4 2015 earnings presentation.

In that regard, the company repurchased32,700 shares during the fourth quarter at a cost of $3.1 million. And in its Q4 earnings press release, MarketAxess announced a 30% increase in its quarterly dividend to $0.26 per share.

Looking ahead
Management issued guidance for full-year 2016, including total expenses in the range of $168 million to $176 million and capital spending in the range of $18 million to $22 million. The company also expects its overall effective tax rate to be between 34% and 36%.

"We are actively investing to expand the global credit products available for trading on our market leading technology platform," added McVey.

Joe Tenebruso has no position in any stocks mentioned. The Motley Fool recommends MarketAxess Holdings. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.