Earnings Call: Q1 2021

Apr 22, 2021

Ladies and gentlemen, thank you for standing by. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session. As a reminder, this conference call is being recorded on April 22, 2021. I would now like to turn the call over to Dave Kresse, Investor Relations Manager at MarketAxess. Please go ahead, sir. Good morning, And welcome to the MarketAxess First Quarter 2021 Conference Call. For the call, Rick R. Sherman and Chief Executive Officer We'll review the highlights for the quarter Chris Kincannon, President and COO, will discuss automation and product expansion And then Tony Delee, Chief Financial Officer, will review the financial results. Before I turn the call over to Rick, 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 conditions 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 a description of risk factors in our Annual Report on Form 10 ks for the year ended December 31, 2020. 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 Rick. Thank you for joining us for our Q1 earnings call. 1st quarter revenue reached a new quarterly record of $195,000,000 up 16%. Operating income of $103,000,000 was up 14% and EPS of $2.11 was up 8%. Record revenue was driven primarily by market share gains in our core credit products. New quarterly volume records were set for Total credit trading volume as well as new volume records for high yield trading, emerging markets, Eurobonds and municipal bonds. Open Trading volumes grew 20% year over year and estimated transaction cost savings delivered to our clients were $197,000,000 International client volume was up 18% and reached a new record of $237,000,000,000 It is important to remember that in Q1 last year, We had 5 full weeks of elevated credit market activity due to the onset of the pandemic. In light of the significant difference in market conditions this year, We feel very good about the volume, revenue and earnings growth this quarter. Slide 4 provides an update on market conditions. The top left chart displays just how different the market environment was 1 year ago, our business thrives when credit spread volatility increases. During Q1 last year, Credit spread volatility was 10 times greater than this year. Credit spreads in high grade were nearly 200 basis points wider. New issue activity was strong during the quarter and similar to last year. Trace volumes in high grade were up 7% reflecting a continuing trend toward higher secondary market turnover. Average years to maturity for investment grade bonds traded on this system continues to climb and reach the high end of the historical range at 10 years this quarter. Slide 5 provides an update on Open Trading. Our market leading all to all marketplace Open Trading Set new records this quarter with an average of 34,000 orders per day, totaling over $19,000,000,000 in notional value per day in credit products. High grade, high yield and emerging markets all show healthy open trading volume increases in excess of 20%. Dealer initiated open trading orders were up 78% year over year. Our D2D business now represents 8% of our credit trading volume and 7% of credit trading revenue as we compete effectively in this client segment with more traditional D2D competitors through open trading. This quarter, 2 thirds of our system wide open orders traded with a traditional dealer counterparty, while 1 third found price improvement in Open Trading. Open Trading ADV reached a new record of $4,000,000,000 per day, up 22% year over year. For the 5th quarter in a row, estimated transaction cost savings $197,000,000 delivered to our clients, we're in excess of total company credit trading revenue. Now let me turn the call over to Chris to provide an update on product and client expansion. Thank you, Rick. Slide 6 highlights our international growth and product Expansion. Throughout the past year, we have remained focused on bolstering our global footprint and expanding our product offerings. I will touch on a few of these initiatives today. Our international growth continues with an 18% year over year increase And international client volumes driven by over 900 active clients across our global products. In the Q1, U. S. Credit volume from international clients was up 23%. Emerging Markets volume increased by 22% and Eurobond volumes increased by 13%. Our ongoing investment in Asia Pacific region delivered an increase in the number of clients and significant gains in volume. Client credit volume from the region grew to $29,000,000,000 up 57% from the Q1 of 2020 As the number of clients in the region also grew by 14% over the past year. We are encouraged by the progress we are making outside the U. S. And we believe we are well positioned to capture a larger share trading in the growing global credit markets. In the area of product We continue to see momentum in our municipal bond offering. In the Q1, we again hit record volumes with a total of $5,800,000,000 in municipal bond volumes, up 75% from a year ago. We also recently closed on the acquisition of Muni Brokers, a central electronic venue serving large banks and interdealer brokers in the municipal bond market. The acquisition expands our connectivity with dealers and provides rich content for our growing muni client business. Our post trade business, an important contributor to our data strategy, Continues to grow with organic post trade revenue up 50% in the Q1, driven largely by new client additions and our We now have over 9 50 unique post rate clients. The integration of our recently acquired regulatory reporting hub Is well underway and is extending our leading regulatory reporting business across Europe, while further strengthening our data capabilities and our post trade services. Slide 7 demonstrates our continued momentum of automation in credit trading. Automated trading and dealers automated responses continue to grow across the platform. Automated trading volumes rose to $39,000,000,000 in the Q1, up from $31,000,000,000 in the Q1 of 2020. AutoX trade count also grew in the quarter to 205,000, up 37% from the prior year. 95 firms utilized our AutoX functionality in the quarter, up from 84 in Q1 of last year, while 22 firms used our auto We are also seeing healthy adoption of AutoX across investment grade, Eurobonds, high yield and emerging markets. The use of dealer algorithms is continuing to grow on the platform with approximately 4,800,000 algo responses in the 1st quarter, up 57% from the same period last year. The growth in the average number of responses per inquiry has resumed Following a decline in the first half of last year, the increasing responses ultimately improves the likelihood of execution across the platform. As the overall share of electronic trading grows in global credit, we are seeing continued demand for and growth in our automated trading solutions. We are continuing to develop innovative automated trading solutions in collaboration with our buy and sell side clients, and I look forward to sharing updates to our offering in the coming quarters. Slide 8 provides a summary of our trading volume across product categories. Our U. S. High grade volumes were up 10% year over year to $363,000,000,000 for the quarter, largely due to an increase in market volumes And market share gains. Estimated U. S. High grade market volumes were up 7%, while estimated share increased Market share increased by 0.5 percentage points year over year to 20.5%. Volumes in our other credit category were up 19% year over year to $391,000,000,000 for the quarter, and we achieved record quarterly trading volume in high yield, Emerging Markets, Eurobonds and Municipal Bonds. Market share gains account for the vast majority of the increase across each product category With U. S. High yield volume up 21%, emerging markets volume up 18%, Eurobond volume up 15% and municipal bonds up 75%. Our rates business maintained its dealer to dealer market share compared to Q4 of 2020, We are beginning to see volume contribution from both our new dealer to client trading protocol and our recently launched hedging initiatives. Over 150 clients are now approved for our click to trade rates offering. Regarding April activity, With 7 full days of trading left in April, it is far too early to draw any conclusions on the full month. However, trace market volumes are Thank you, Chris. On Slide 9, we provide a summary of our quarterly earnings performance. Revenue was a record $195,000,000 Up 16% year over year. The 14% increase in credit trading volume led to a 13% uplift in commissions. Post trade services revenue more than doubled to $10,300,000 and includes $4,000,000 of trade reporting revenue from clients added through the Regulatory Reporting Hub acquisition. Operating income was up 14% year over year and operating margin was 53% the Q1. EBITDA hit a record quarterly level in the quarter. Other expense was $1,600,000 in the 1st quarter and includes foreign currency transaction losses of $500,000 Absent unpredictable items like foreign currency transaction and investment gains and losses, we would expect other expense to run around $1,000,000 per quarter. The effective tax rate was 21% in the Q1 and reflects $4,000,000 of excess tax benefits related to share based compensation awards. Inclusive of the recently enacted increase in the New York State corporate tax rate, We are maintaining our full year effective tax rate guidance range of 22% to 24%. On Slide 10, we have laid out our commission revenue, trading volumes and fees per million. Total variable transaction fees were up 15% year over year. On a composite basis, the majority of the 17% increase in credit transaction fees was driven by estimated market share gains. The decline in rates transaction fees due to lower U. S. Treasuries trading volume, principally resulting from a decline in estimated dealer to dealer market volumes. U. S. High grade fee per million was down $7 versus 4th quarter level, but $4 higher year over year. There were several factors contributing to the sequential decline in fee capture, including a shift in trade size. The duration impact on U. S. High grade fee capture was muted on a sequential quarterly basis As longer years to maturity on bonds traded over the platform was offset by higher bond yields. Our other credit category fee per million of $202 was similar to both the Q4 2020 and Q1 2020 levels. Product mix, along with fee capture at the individual product level was very consistent across these periods. Slide 11 provides you with the expense detail. 1st quarter expenses were up 18% year over year and include $3,600,000 of operating expenses, amortization of acquired intangibles and non recurring integration costs related to the regulatory reporting hub business. Excluding the regulatory reporting hub activity, expenses were up 14% year over year and up 11% on a constant currency basis. The rise in compensation and benefits was due to an increase in headcount of 74 personnel in support of our growth initiatives. The increase in professional and consulting expenses is due to a variety of factors, including M and A transaction and integration costs and consulting costs associated with our clearing and settlement transition projects. Higher depreciation and amortization reflects the continuing investment in product development along with the amortization of acquired intangibles. While open trading volume increased 20%, overall clearing costs were down 15%. In March, we completed the 2nd phase of our settlement project with the transition to a new settlement agent in the UK. Although we expect to realize some further cost improvements over the balance of this year, I'm happy to report that 3rd party clearing costs Measured on a per ticket basis declined by over 35% year over year. As Chris mentioned, we closed on the Muni Brokers acquisition on April 9. We expect muni brokers expenses will be around $4,000,000 in 2021, 50% of which will be amortization of acquired intangibles. We are updating our full year expense guidance range to $370,000,000 to $386,000,000 to incorporate the muni brokers expense activity. On Slide 12, we provide balance sheet information. Cash and investments were $415,000,000 at March 31 and trailing 12 months free cash flow reached $340,000,000 During the Q1, we paid out year end employee bonuses and related taxes of roughly $50,000,000 And a quarterly cash dividend of $25,000,000 We also repurchased 54,000 shares during the quarter, the majority of which were associated with the investing of employee stock awards. We didn't borrow against the revolving credit facility in the Q1 and ended the period with over $300,000,000 of excess net capital resident at MarketAxess Corp, our regulated self clearing entity. Based on the Q1 results, our Board has approved a $0.66 regular quarterly dividend. Now let me turn the call back to Rick. Thank you, Tony. Market share gains across all credit products in all geographic regions drove our record results in Q1. Trading automation is advancing in credit products with both dealer and investor clients and MarketAxess Open Trading is leading the way. We continue to invest actively in new product areas like municipal bonds, government bonds and Asia Emerging Markets to sustain long term growth. Also pleased with the progress we are making with new electronic trading protocols. Now I would be happy to open the line for your questions. Our first question will come from the line of Rich Repetto from Piper Sandler. You may begin. Good morning, Rick Antonio and Chris, I guess the question is on the fee per million. And Slide 4 helps, it shows the yield to maturity. But I guess the question is, Tony, can you review the drivers? We know that Duration, tray size and mix, but we're just trying to see the moving parts. And If it's easier to compare quarter to quarter, I believe rather than year over year, because the big change And yields occurred between 4Q and 1Q, I believe. Or you can explain whatever easier that we can understand it, I Yes. Happy to do that, Rich. So but Rich, you're right that there's lots of factors that influence the high grade fee capture. And we're really talking about investment Right, here. And years to maturity matters, yields matter. We have a tiered fee plan, so trade size matters. We have The mix of dealers that are participating, so for example, dealers that are on a distribution fee plan Versus dealers that are on an all variable plan, the fee capture looks different. Even when it comes to protocol, it may look different. Open Trading Fee capture is slightly different than disclosed request for quote. Some of the newer protocols, the fee capture is different. So there's a lot of moving parts here. But Rich, you're right. Looking at say Q4 versus Q1, that's probably the best way to And when you look at those two periods, eCAPTURE was down about $7 per 1,000,000 a couple of items in there. Trade size was one of them. Not a big influencer, but trade size did tend to shift to a little bit larger trade size as our Captures a little bit lower. Dealer mix, so when we look at dealers that are on all variable plans versus A little bit heavier weighting to dealers on fixed plan, recapture a little bit lower. But the item you mentioned, which is very interesting Rick picked it up in his comments. We're at close to the post credit crisis high on years to maturity of bonds traded over Typically that would result in higher fee capture, dollar value of basis points higher with longer years to maturity. But in this case, What offset the years to maturity was the fact that yields were up. So again, you're right. You look at Q4 to Q1, you did see a rise in bond yields. So Those 2 were largely offsetting. One last thing, because I'm getting I'm on the clock right now. One last thing, just sensitivity going forward, Every year to maturity around $10 to $15 per million, all things being equal, a 1% change in yields Cross the yield curve again about a $10 to $15 per million all else being equal. Our next question will come from the line of Patrick Schwanstein from Raymond James, you may begin. Hey, good morning, guys. Good morning, Raymond James. So I think portfolio trading is up to around 5 To develop a client solution in this area. Sure. I'll be happy to start on that, Patrick. Thank you for the question. But Yes. You did see growth again in the Q1 in portfolio trading. And I think that situationally clients and dealers are finding good opportunities to use the workflow solutions around portfolio trading for efficiency and execution. And there are a variety of different cases where dealers can promote inventory in baskets to clients, Which in an environment like this has been very popular from both sides. You have certain transactions that involves Offsetting buys and sells where the combined risk of the basket is less than it would be in individual bonds and can sometimes create efficient execution for both sides. You've also seen trades where investors are making room for new issues through portfolio trading. So A variety of different case studies and March was an unusually active month for portfolio trading. It's tapered off from what we can see on the trace tape in April so far, but very large month in March. We continue to work on our workflow solution there. We are very confident that we are closing the gaps that we have and we'll be competitive in the space. At the same time, we're making very large investments in our liquidity solutions through open trading and a new product area. So It's a convenient workflow solution. It's they're a subset of very large dealers that are active, a subset of very large Clients, limited client community, but growing importance in the market and it's something that we expect to be competitive in throughout 2021 beyond. And Rick, I'll just add that we are rolling out enhancements to our portfolio trading solution this quarter and the coming quarters, Including things like critically important things like net hedging that will be available to portfolio trades. The other things worth mentioning is We are seeing activity in our dealer RFQ platform on open trading, Which is likely resulting from the liquidation of portfolios that dealers are trading into. So we are getting Collateral benefit on the platform, particularly in open trading and things like investment grade and high yield as a result of These very large block trades that are going up on trace and then we're seeing those dealer liquidations happening on the platform. That's very helpful. Thank you. Our next question will come from the line of Dan Fannon from Jefferies. You may begin. Thanks. Good morning. Wanted to follow-up a bit more on some of the market share trends year to date and the detail on Slide 4 highlights Some of the macro factors, but as you think about volatility maybe being a bit more depressed and the work from home environment Ending as things normalize, how are you thinking about kind of the trajectory of market share from here? Yes. I'll start with thanks for the question, Dan. But listen, when we look at broadly at market share trends, we're really encouraged by what we see in the first quarter even though as you point out market volatility across most credit products was significantly lower than it had been much For much of last year, it's coming through most clearly in year over year gains in high yield and emerging markets. High grade, a little bit more developed market electronically is going to have ebbs and flows based on volatility. And especially with the ETF ARB community, where you would have seen them very active a year ago at high volatility levels and they are always less in low volatility environments. But beyond that, when we look under the hood at the trends that we see With investment managers, hedge funds, dealers using open trading, international clients, it's all very encouraging for long term market share gains. And we have no control over the quarter to quarter market conditions. But if you look Historically, in our consistent growth and success over almost 17 years of being a public company, we've been able to show Sustainable long term growth through any environment. So our expectation is that we have lots of reason for optimism because of the Liquidity solutions that we are delivering in the significant transaction cost savings to see share gains through any environment and that is certainly what we Saw in the Q1 of this year. Great. Thank you. Our next question will come from the line of Ari Ghosh from Credit Suisse. You may begin. Hey, good morning, everyone. So just wanted to come back to some of your new initiatives and rollouts, especially as institutional participation continues to improve this year. Specifically, appreciate any color around the traction that you're seeing around live markets and then also the opportunity for market access in China, just given that there's been some recent regulatory changes and relaxation of requirements for investors. So just trying to think about how you scale that opportunity and timelines around when you think that may start rolling into your numbers in a meaningful manner? Thanks so much. Well, great question. So On Live Markets, I'll start. We're seeing more activity on Live Markets and it's quite encouraging because it is Brand new protocol to the credit space. And what we have seen is we've got 19 dealers live on the platform. We expect to have new announcements We expect to have new announcements around designated market makers on the platform as well. We would likely have up to 3 Designated market makers, those are fully committed 2 sided market makers on the platform, and we expect to have Announcements around that in the coming quarter. Very encouraging signs on the size of trades on Live Markets. Right now, our average trade size on live markets is $2,000,000 which is much larger than your traditional RFQ average on the platform. So we're encouraged that There is sizable live liquidity with two way markets in over 250 QSiPs across the platform. So Again, it's a new protocol. The changes in workflow and trading behavior by clients is a sizable lift. But The liquidity that's building on the platform is encouraging. And the opportunity for clients to join a bid or an offer and not cross spread Is growing as that liquidity on live markets grow. I'll let Rick cover our recent activities in Asia And the growth of our volumes there. Sure. We highlighted in the prepared remarks that we're really encouraged by the developments we see with Our APAC business and part of it is organic where we see more dealers and investor clients Embracing electronic trading and trading consistently across the platform. Part of it we hear back from dealers is a view that our competitive Position has gotten even stronger in EM globally and particularly in the Asia region. So really good news there in terms of the trends in EM broadly in very large markets. With respect to China, I think that It's very clear that they will continue to take additional steps to open up their fixed income markets. And given the presence we have with global investors in our EM franchise, we know that we can play a significant role In bringing investor order flow into China and we're also encouraged by southbound traffic where it's likely that Investors within China will be trading more actively outside of China. So we would expect to be more involved in that market. We are Taking the steps to be eligible to do so. And we're hopeful that our presence in EM is going to Make a significant contribution to the Chinese goal of opening up their fixed income markets. Great. Thanks so much. Our next question comes from the line of Alex Blostein from Goldman Sachs. You may begin. Hey, good morning guys. Thanks for the question. Just sticking with some of the new initiatives, Chris, you highlighted muni markets. I was hoping to dig into that a little bit more. Can you provide us, I guess, maybe some specifics around what MarketAx is doing In order to enable greater pace of electrification in the media market today, what are some of the biggest hurdles? Obviously, it Feels like there's a lot of inertia and that's based on trying to think how you guys trying to break through that. And how much of the muni market do you think it ultimately become electronically traded? Sure. I'll tackle that one. Well, I continue to be excited about the muni market And our opportunity there, you're talking about a very large market, a difficult market to trade because of The breadth of product in that market, data analytics will prove to be very helpful In the muni market as we break down the more manual parts of the market and add electronic trading. I'm encouraged by our growth in munis. Obviously, the 75% year over year increase in that market is encouraging. Also, I'm encouraged by the size of our all to all market in muni. So all to all is proving to be A very important component to our growth rate, it's now 43% of our volume in munis. The other areas that we're seeing areas like dealer RFQ in munis grow over 170% year over year. So we are seeing dealers using our platform similar to the way they would use an interdealer market interdealer broker market. We obviously have closed the acquisition of muni brokers. That's approximately 4 Of the muni market heavily weighted towards exempt munis. So we're working on the integration of that market and We plan to have that integrated more largely in 2021. I do think, As you think about that market, there's sizable costs to large investors to Maintain their large small trade size across the muni market. And we're seeing investments from the large Investment managers to reduce their costs in that market similar to the ways they've embraced electronic trading across their Investment grade and high yield trading desk. So we just see that trend continuing. We see getting higher penetration rates in those large client flows in the muni market. I can't predict how far it goes, but Given the small ticket sizes, the complexity of the market, I would expect high dependency on electronic solutions for the years to come. And Alex, just one last thing, just on the size of the market. And think about where we are today. We're at about 2% market share. And We've talked about this before in terms of revenue opportunity. For us, every 1% of share equates to about $10,000,000 in annual revenue. Yes. We don't know where this will end up in terms of electronic adoption, but yes, you can do a little math around it. If Half the market goes electronic. This is an enormous opportunity. That's why we're so focused on it. That's why we continue to invest. That's all part of the Strategy around bringing onboard muni brokers, so big opportunity ahead of us. Yes, for sure. It feels like a good run rate. Thanks. Our next question comes from the line of Michael Cyprys from Morgan Stanley. You may begin. Thank you for taking the question. Just hoping you could talk a little bit about block trades, maybe some of the initiatives you have there To further penetrate that, where you stand today in terms of block trade penetration and how you're seeing client behavior change around that? Sure. Happy to take a start on that, Mike. Thank you. But listen, it's an important part of the market. We're Investing in new solutions to address blocks and we're seeing good progress in some areas as well. And I would point to high yield in particular For many years, almost all of our volume was in odd lot trade sizes. And if you see the big jump year over year in high yield share, The majority of that is driven by more success in what is considered to be block size trades in high yield over 1,000,000 So we've moved our market share up primarily by investors and dealers in high yield getting more comfortable with large trade sizes. In high grade, we've been pretty flat around the 10% area lately. Clearly, Live Markets is It's intended to attack part of the block trading market in very liquid bonds, where Both new issues and benchmark deals trade actively in block size and very tight bid offer. And we're encouraged as you heard Chris say about some of the developments in live markets that we think over the coming quarters are going to make that a viable new addition to on our trading platform and especially in blocks. And I'll just add, Rick, that we have a very unique view of the credit market And we have been developing a number of data solutions that help traders identify the true depth of the market, Things like our tradeability data solution. So we do think we can be super helpful to the average trade desk When they're determining true size of a block and how to engage the market. And we do think that will attract larger size orders on our Platform when we can define for them, what the execution could be, execution costs for that block and the true depth So the market at the moment in time they want to trade. Thank you. Our next question will come from the line of Brian Bedell from Deutsche Bank, you may begin. Thanks. Good morning. If I can squeeze a 2 parter in here. I apologize I joined a few minutes late, but Just on back to the high grade market share question, given the growth initiatives and the pretty good client traction that you have across the different Our protocols including AutoX and the transaction savings, given that versus the Challenges of the lower volatility as a sort of a more of a macro headwind. When do you maybe it's hard to answer, but when do you think you could cross Those initiatives and client traction could outweigh that headwind of volatility as we sort of move through 2021 in terms of Having a year over year gain in high grade market share. And then the second part is just, I don't think you talked about But just an update on the green bond trading, as that seems to be gaining momentum globally. Well, I'll start on the volatility question and then I'm sure Chris would like to update you on the green bond initiative And client adoption as well. But listen, volatility comes and goes in every market, right? So yes, it's temporarily A headwind in credit. It's not to say that it will be that way next week or next month or next quarter. So We do have a Goldilocks scenario right now where people are quite optimistic on Economic growth for the quarters ahead and that leads to better credit quality among a lot of corporate bond issuers. But our business keeps getting more diversified, right? So our European business is more important than ever. We talked about Asia. Global EM It's loaded with opportunities. All of them have different cycles and volatility characteristics along the way that it's not something that we worry that much We would not have encouraged anybody last spring to use those volatility levels as the new normal and we would not encourage you today to leave To use current levels is the new normal either. And what we do is focus on the long term is And that's where we've had great success is investing in important trading protocols and new markets around the world and new clients on boarding. And there's A lot of that going on right now. And there's a lot of reason to believe that over the coming quarters, there are multiple factors that could increase volatility. So it's a short term headwind, but we are we're not it's not something we obsess over because we've been through all kinds of market environments over the last 17 years. I'll just add, just when it comes to long term growth rates, we are encouraged by the growth of Fixed income ETFs, we clearly have a correlation to some of the growth around fixed income ETFs and the trading of fixed income ETFs. And that long term growth is underway and quite powerful as you look at the numbers that AUM pouring into fixed income ETFs globally. One reflection of that is in investment grade In the Q1, our open trading, which is an important component of the fixed income ETF ARB grew 24% in Q1 over 2020. So important fundamental growth rates are happening even in the face of Macro wins. With regard to green bonds, we're doing a lot of exciting things in the whole ESG area. I'll note that our ESG report is now live up on our website. So please take a look. There has been a lot of work into that report And it reflects all the different things we're doing as a company, but also some of the things that we're doing for our client investors, who trade green bonds. 1st quarter green bond volume was $13,000,000,000 So we continue to see increases on our platform in green bonds. More importantly, we launched last year the Greenbond, the Trading for Trees initiative. So not only are we Benefiting from the growth of green bonds trading on our platform, but we're taking a stand in the environment and planting trees. We planted 65,000 trees In the Q1, that's on top of what we planted in 2020, which was 130,000 trees. So we continue to see our progress there And we have a small fire alarm test going on in our background, so please ignore that. But trees are being planted, green bonds are being traded And we're super excited about what we can do in that environment. Okay. Great. Thanks for all the color. The last thing I'll say is that The other trend that's important for all of you to keep an eye on is the increase in trading velocity that's taking place in credit. And a variety of factors for that, right? AltAll Trading is bringing a lot of new market participants into credit trading, Many for the first time. So you have a new base of market makers, a new base of systematic credit investors. They are clearly adding to the mix around trading velocity. And then you see AltAll Trading reducing transaction costs, which also traditionally Increased velocity. So lots of reasons to be optimistic that we could see higher levels of market turnover In Global Credit as all client segments seem to be embracing greater levels of electronic trading and trading automation. Yes, makes sense. Thank you so much. Our next question comes from the line of Sean Horrigan from Rosenblatt. You may begin. Hey, guys. Thanks for taking my question. I was wondering if you could talk about hiring plans for the year. How many new hires are you targeting for 2021? And How many of those are will be technology hires? Yes, sure, Sean. Happy to take the question. And A big component of our expenses, it is compensation and benefits. It's more than 50% of our costs. And this year, as we entered the year, we were looking to add somewhere around 60 or 70 personnel. And the majority of that, the vast majority of that would be in the technology space. We've got when you look at where we ended the Q1 with around 610 people, we've got just to put in perspective right now, we've got about Line of sight on 50 roles with names attached to those roles. And about half of those are part of our college grad program, But we've got line of sight on around 50 roles today. So we feel pretty good about hitting that target of adding You're 70 personnel over the balance of the full year. Okay, great. Thank you. And our next question will come from the line of Ari Ghosh from Credit Suisse. You may begin. Taking my follow-up guys. Tony, just a quick cleanup item. And again, apologies if I missed this one. But just looking at the 1Q non op expense, that 1,700,000 Wondering if that's a good starting point for 2Q. I know there's a commitment fee here in the numbers, but I was wondering if The other moving parts that might drop off next quarter. Thanks so much. Yes. Sure, Ari. And I know it's been a challenge to predict that line item. There's a variety of non operating Items in there. So you've got foreign currency transaction gains are hard to predict that one. You've got unrealized and realized Gains and losses on the investment portfolio, again, hard to predict. There's items like our credit facility fees in there as well. But it was around $1,600,000 in the Q1 that did have some foreign currency transaction losses in there. Absent these unpredictable items, this is what I had in the prepared remarks. Absent the unpredictable items, Foreign currency transaction gains or losses, unrealized and realized gains and losses on the investment portfolio. We think it's going to be about $1,000,000 per quarter. That's where it would have been in the Q1. That's where it would have been in the Q4. Again, absent these unpredictable items, that's where we think it will be over the balance of the year. Turn the call over to Rick McVeigh for any closing comments. Thank you for joining us This morning and we look forward to catching up with you again next quarter. This concludes today's conference call. Thank you for participating. You may now disconnect.