Intercontinental Exchange (NYSE: ICE):
- 3Q22 net revenues of $1.8 billion; +1% y/y; +3% y/y,
constant currency (CC)*
- 3Q22 GAAP diluted loss per share of $0.34, primarily due to
net losses from Bakkt
- 3Q22 adj. diluted earnings per share (EPS) of $1.31
- 3Q22 operating income, +4% y/y; +7% y/y, CC*. Adj. operating
income +4% y/y; +6% y/y, CC*
- 3Q22 operating margin of 50%, +164 basis points y/y; adj.
operating margin of 60%, +176 basis points y/y
Jeffrey C. Sprecher,
ICE Chair & Chief Executive Officer,
said, "We are pleased to report strong third quarter results that
extend our track record of growth. Amidst a backdrop of continued
geopolitical and macroeconomic uncertainty, our strong third
quarter performance reflects the "all weather" nature of our
business model. Our customers continue to rely on our
mission-critical data, technology, and liquid markets through an
array of macroeconomic environments. As we look to the balance of
the year and beyond, we remain focused on driving innovation,
helping to serve our customers' risk management needs and
delivering value to our stockholders."
Intercontinental Exchange (NYSE: ICE), a leading global provider
of data, technology and market infrastructure, today reported
financial results for the third quarter of 2022. For the quarter
ended September 30, 2022, consolidated net loss attributable to ICE
was $191 million on $1.8 billion of consolidated revenues, less
transaction-based expenses. Third quarter GAAP diluted loss per
share was $0.34, primarily due to net losses from Bakkt. Adjusted
net income attributable to ICE was $733 million in the third
quarter and adjusted diluted EPS was $1.31. Please refer to the
reconciliation of non-GAAP financial measures included in this
press release for more information on our adjusted operating
expenses, adjusted operating income, adjusted operating margin,
adjusted net income, adjusted diluted EPS and adjusted free cash
flow.
Warren Gardiner, ICE Chief Financial Officer, added: "Through
the first nine months of the year, we have grown revenues and
operating income. This strong performance, including compounding
growth in our recurring revenues across all three business segments
is a testament to the power of our diverse business model. As we
approach the end of 2022, we remain focused on extending our track
record of growth and creating value for our stockholders."
*Constant currency (CC) percentage changes are calculated
holding both the pound sterling and euro at the average exchange
rate from 3Q21, 1.3784 and 1.1788, respectively.
Third Quarter 2022 Business Highlights
Third quarter consolidated net revenues were $1.8 billion, up 1%
year-over-year including exchange net revenues of $1.0 billion,
fixed income and data services revenues of $534 million and
mortgage technology revenues of $276 million. Consolidated
operating expenses were $898 million for the third quarter of 2022.
On an adjusted basis, consolidated operating expenses were $727
million. Consolidated operating income for the third quarter was
$913 million and the operating margin was 50%. On an adjusted
basis, consolidated operating income for the third quarter was $1.1
billion and the adjusted operating margin was 60%.
$ (in millions)
Net Revenue
Op Margin
Adj Op Margin
3Q22
Exchanges
$1,001
70%
72%
Fixed Income and Data Services
$534
37%
45%
Mortgage Technology
$276
6%
46%
Consolidated
$1,811
50%
60%
3Q22
3Q21
% Chg
Recurring Revenue
$930
$888
5%
Transaction Revenue, net
$881
$914
(4)%
Exchanges Segment Results
Third quarter exchange net revenues were $1.0 billion. Exchange
operating expenses were $301 million and on an adjusted basis, were
$284 million in the third quarter. Segment operating income for the
third quarter was $700 million and the operating margin was 70%. On
an adjusted basis, operating income was $717 million and the
adjusted operating margin was 72%.
$ (in millions)
3Q22
3Q21
% Chg
Const Curr(1)
Revenue, net:
Energy
$266
$316
(16)%
(13)%
Ags and Metals
57
56
1%
2%
Financials(2)
122
93
30%
46%
Cash Equities and Equity Options
88
79
13%
13%
OTC and Other(3)
121
84
45%
53%
Data and Connectivity Services
219
208
6%
6%
Listings
128
123
3%
3%
Segment Revenue
$1,001
$959
4%
8%
Recurring Revenue
$347
$331
5%
5%
Transaction Revenue, net
$654
$628
4%
9%
(1) Net revenues in constant currency are
calculated holding both the pound sterling and euro at the average
exchange rate from 3Q21, 1.3784 and 1.1788, respectively.
(2) Financials include interest rates and
other financial futures and options.
(3) OTC & other includes physical
energy, interest income on certain clearing margin deposits,
regulatory penalties and fines, fees for use of our facilities,
regulatory fees charged to member organizations of our U.S.
securities exchanges, designated market maker service fees,
technology development fees, exchange member fees, and agriculture
grading and certification fees.
Fixed Income and Data Services Segment Results
Third quarter fixed income and data services revenues were $534
million. Fixed income and data services operating expenses were
$337 million and adjusted operating expenses were $293 million in
the third quarter. Segment operating income for the third quarter
was $197 million and the operating margin was 37%. On an adjusted
basis, operating income was $241 million and the adjusted operating
margin was 45%.
$ (in millions)
3Q22
3Q21
% Chg
Const Curr(1)
Revenue:
Fixed Income Execution
$26
$12
121%
122%
CDS Clearing
88
51
72%
75%
Fixed Income Data and Analytics
273
272
—%
2%
Other Data and Network Services
147
142
4%
6%
Segment Revenue
$534
$477
12%
14%
Recurring Revenue
$420
$414
1%
3%
Transaction Revenue
$114
$63
81%
84%
(1) Net revenues in constant currency are
calculated holding both the pound sterling and euro at the average
exchange rate from 3Q21, 1.3784 and 1.1788, respectively.
Mortgage Technology Segment Results
Third quarter mortgage technology revenues were $276 million.
Mortgage technology operating expenses were $260 million and
adjusted operating expenses were $150 million in the third quarter.
Segment operating income for the third quarter was $16 million and
the operating margin was 6%. On an adjusted basis, operating income
was $126 million and the adjusted operating margin was 46%.
$ (in millions)
3Q22
3Q21
% Chg
Revenue:
Origination Technology
$187
$245
(24)%
Closing Solutions
53
88
(39)%
Data and Analytics
22
19
22%
Other
14
14
(8)%
Segment Revenue
$276
$366
(25)%
Recurring Revenue
$163
$143
14%
Transaction Revenue
$113
$223
(49)%
Other Matters
- Operating cash flow through the third quarter of 2022 was $2.5
billion and adjusted free cash flow was $2.1 billion.
- Unrestricted cash was $1.2 billion and outstanding debt was
$18.1 billion as of September 30, 2022.
- The effective tax rate for the third quarter of 2022 was 47%,
primarily due to net losses from Bakkt.
- Through the third quarter of 2022, ICE repurchased $632 million
of its common stock and paid $640 million in dividends. In
connection with ICE's pending acquisition of Black Knight, on May
4, 2022 ICE suspended its share repurchases.
Updated Financial Guidance
- ICE's fourth quarter 2022 GAAP operating expenses are expected
to be in a range of $890 million to $900 million. Adjusted
operating expenses(1) are expected to be in a range of $730 million
to $740 million.
- ICE's fourth quarter 2022 GAAP non-operating expense(2) is
expected to be in the range of $137 million to $142 million.
Adjusted non-operating expense is expected to be in the range of
$105 million to $110 million.
- ICE's diluted share count for the fourth quarter is expected to
be in the range of 558 million to 563 million weighted average
shares outstanding.
(1) 4Q22 non-GAAP operating expenses
exclude amortization of acquisition-related intangibles, pending
Black Knight acquisition costs, and Ellie Mae integration
costs.
(2) Non-operating income / expense
includes interest income, interest expense and net other income.
Non-GAAP non-operating expense excludes equity earnings from
unconsolidated investees, net interest expense on
pre-acquisition-related debt and costs associated with re-financing
existing debt.
Earnings Conference Call Information
ICE will hold a conference call today, November 3, 2022, at 8:30
a.m. ET to review its third quarter 2022 financial results. A live
audio webcast of the earnings call will be available on the
company's website at www.theice.com in the investor relations
section. Participants may also listen via telephone by dialing
844-200-6205 from the United States or 929-526-1599 from outside of
the United States. Telephone participants are required to
provide the participant entry number 047703 and are recommended to
call 10 minutes prior to the start of the call. The call will
be archived on the company's website for replay.
The conference call for the fourth quarter 2022 earnings has
been scheduled for February 2nd, 2023 at 8:30 a.m. ET. Please refer
to the Investor Relations website at www.ir.theice.com for
additional information.
Historical futures, options and cash ADV, rate per contract,
open interest data and CDS cleared information can be found at:
https://ir.theice.com/investor-resources/supplemental-information/default.aspx
Consolidated Statements of
Income
(In millions, except per share
amounts)
(Unaudited)
Nine Months Ended
September 30,
Three Months Ended
September 30,
Revenues:
2022
2021
2022
2021
Exchanges
$
4,824
$
4,376
$
1,577
$
1,434
Fixed income and data services
1,555
1,403
534
477
Mortgage technology
880
1,061
276
366
Total revenues
7,259
6,840
2,387
2,277
Transaction-based expenses:
Section 31 fees
332
204
158
38
Cash liquidity payments, routing and
clearing
1,403
1,330
418
437
Total revenues, less transaction-based
expenses
5,524
5,306
1,811
1,802
Operating expenses:
Compensation and benefits
1,058
1,093
344
374
Professional services
101
124
32
43
Acquisition-related transaction and
integration costs
81
42
19
14
Technology and communication
513
495
169
168
Rent and occupancy
63
61
22
20
Selling, general and administrative
166
163
54
52
Depreciation and amortization
768
759
258
253
Total operating expenses
2,750
2,737
898
924
Operating income
2,774
2,569
913
878
Other income/(expense):
Interest income
42
—
33
—
Interest expense
(440
)
(321
)
(176
)
(108
)
Other income/(expense), net
(1,132
)
1,341
(1,097
)
54
Other income/(expense), net
(1,530
)
1,020
(1,240
)
(54
)
Income/(loss) before income tax
expense/(benefit)
1,244
3,589
(327
)
824
Income tax expense/(benefit)
186
1,049
(152
)
187
Net income/(loss)
$
1,058
$
2,540
$
(175
)
$
637
Net income attributable to non-controlling
interest
(37
)
(9
)
(16
)
(4
)
Net income/(loss) attributable to
Intercontinental Exchange, Inc.
$
1,021
$
2,531
$
(191
)
$
633
Earnings/(loss) per share attributable to
Intercontinental Exchange, Inc. common stockholders:
Basic
$
1.83
$
4.50
$
(0.34
)
$
1.12
Diluted
$
1.82
$
4.48
$
(0.34
)
$
1.12
Weighted average common shares
outstanding:
Basic
559
563
558
563
Diluted
561
565
560
566
Consolidated Balance
Sheets
(In millions)
As of
September 30, 2022
As of
(Unaudited)
December 31, 2021
Assets:
Current assets:
Cash and cash equivalents
$
1,183
$
607
Short-term restricted cash and cash
equivalents
6,032
1,035
Cash and cash equivalent margin deposits
and guaranty funds
156,789
145,936
Invested deposits, delivery contracts
receivable and unsettled variation margin
7,902
4,493
Customer accounts receivable, net
1,248
1,208
Prepaid expenses and other current
assets
558
1,021
Total current assets
173,712
154,300
Property and equipment, net
1,720
1,699
Other non-current assets:
Goodwill
21,075
21,123
Other intangible assets, net
13,210
13,736
Long-term restricted cash and cash
equivalents
405
398
Other non-current assets
1,170
2,246
Total other non-current assets
35,860
37,503
Total assets
$
211,292
$
193,502
Liabilities and Equity:
Current liabilities:
Accounts payable and accrued
liabilities
$
788
$
703
Section 31 fees payable
58
57
Accrued salaries and benefits
274
354
Deferred revenue
315
194
Short-term debt
7
1,521
Margin deposits and guaranty funds
156,789
145,936
Invested deposits, delivery contracts
payable and unsettled variation margin
7,902
4,493
Other current liabilities
188
153
Total current liabilities
166,321
153,411
Non-current liabilities:
Non-current deferred tax liability,
net
3,565
4,100
Long-term debt
18,113
12,397
Accrued employee benefits
189
200
Non-current operating lease liability
267
252
Other non-current liabilities
417
394
Total non-current liabilities
22,551
17,343
Total liabilities
188,872
170,754
Equity:
Intercontinental Exchange, Inc.
stockholders’ equity:
Common stock
6
6
Treasury stock, at cost
(6,224
)
(5,520
)
Additional paid-in capital
14,269
14,069
Retained earnings
14,731
14,350
Accumulated other comprehensive loss
(403
)
(196
)
Total Intercontinental Exchange, Inc.
stockholders’ equity
22,379
22,709
Non-controlling interest in consolidated
subsidiaries
41
39
Total equity
22,420
22,748
Total liabilities and equity
$
211,292
$
193,502
Non-GAAP Financial Measures and Reconciliation
We use non-GAAP measures internally to evaluate our performance
and in making financial and operational decisions. When viewed in
conjunction with our GAAP results and the accompanying
reconciliation, we believe that our presentation of these measures
provides investors with greater transparency and a greater
understanding of factors affecting our financial condition and
results of operations than GAAP measures alone. In addition, we
believe the presentation of these measures is useful to investors
for period-to-period comparison of results because the items
described below as adjustments to GAAP are not reflective of our
core business performance. These financial measures are not in
accordance with, or an alternative to, GAAP financial measures and
may be different from non-GAAP measures used by other companies. We
use these adjusted results because we believe they more clearly
highlight trends in our business that may not otherwise be apparent
when relying solely on GAAP financial measures, since these
measures eliminate from our results specific financial items that
have less bearing on our core operating performance. We strongly
recommend that investors review the GAAP financial measures and
additional non-GAAP information included in our Quarterly Report on
Form 10-Q, including our consolidated financial statements and the
notes thereto.
Adjusted operating expenses, adjusted operating income, adjusted
operating margin, adjusted net income attributable to ICE common
stockholders, adjusted diluted earnings per share and adjusted free
cash flow for the periods presented below are calculated by adding
or subtracting the adjustments described below, which are not
reflective of our cash operations and core business performance,
and their related income tax effect and other tax adjustments (in
millions, except for per share amounts):
Adjusted Operating Income,
Operating Margin and Operating Expense Reconciliation
(In millions)
(Unaudited)
Exchanges Segment
Fixed Income
and Data
Services
Segment
Mortgage
Technology
Segment
Consolidated
Nine Months
Ended
September 30,
Nine Months
Ended
September 30,
Nine Months
Ended
September 30,
Nine Months
Ended
September 30,
2022
2021
2022
2021
2022
2021
2022
2021
Total revenues, less transaction-based
expenses
$3,089
$2,842
$1,555
$1,403
$880
$1,061
$5,524
$5,306
Operating expenses
904
977
1,029
1,010
817
750
2,750
2,737
Less: Amortization of acquisition-related
intangibles
50
56
137
136
271
277
458
469
Less: Transaction and integration
costs
—
12
—
—
79
28
79
40
Adjusted operating expenses
$854
$909
$892
$874
$467
$445
$2,213
$2,228
Operating income
$2,185
$1,865
$526
$393
$63
$311
$2,774
$2,569
Adjusted operating income
$2,235
$1,933
$663
$529
$413
$616
$3,311
$3,078
Operating margin
71%
66%
34%
28%
7%
29%
50%
48%
Adjusted operating margin
72%
68%
43%
38%
47%
58%
60%
58%
Adjusted Operating Income,
Operating Margin and Operating Expense Reconciliation
(In millions)
(Unaudited)
Exchanges Segment
Fixed Income and Data Services
Segment
Mortgage Technology
Segment
Consolidated
Three Months Ended
September 30,
Three Months Ended
September 30,
Three Months Ended
September 30,
Three Months Ended
September 30,
2022
2021
2022
2021
2022
2021
2022
2021
Total revenues, less transaction-based
expenses
$1,001
$959
$534
$477
$276
$366
$1,811
$1,802
Operating expenses
301
330
337
338
260
256
898
924
Less: Amortization of acquisition-related
intangibles
17
19
44
45
91
92
152
156
Less: Transaction and integration
costs
—
2
—
—
19
11
19
13
Adjusted operating expenses
$284
$309
$293
$293
$150
$153
$727
$755
Operating income
$700
$629
$197
$139
$16
$110
$913
$878
Adjusted operating income
$717
$650
$241
$184
$126
$213
$1,084
$1,047
Operating margin
70%
66%
37%
29%
6%
30%
50%
49%
Adjusted operating margin
72%
68%
45%
39%
46%
58%
60%
58%
Adjusted Net Income
Attributable to ICE and EPS
(In millions)
(Unaudited)
Nine Months Ended September
30, 2022
Nine Months Ended September
30, 2021
Net income attributable to ICE
$
1,021
$
2,531
Add: Amortization of acquisition-related
intangibles
458
469
Add: Transaction and integration costs
79
40
Add: Accelerated unamortized costs related
to the early payoff of the June 2023 floating rate senior notes
—
4
Add: Impairment on Bakkt equity method
investment
40
—
Add: Accrual relating to legal
settlement
9
16
Add: Net interest expense on
pre-acquisition-related debt
49
—
Add: Extinguishment of 2022 and 2023
Senior Notes
30
—
Less: Gain on sale and fair value
adjustment of Euroclear equity investment and dividends
received
(41
)
(94
)
Less: Gain on sale of Coinbase equity
investment
—
(1,227
)
Less: Gain related to the settlement of an
acquisition-related indemnification claim
—
(7
)
Add/(Less): Net losses/(income) from
unconsolidated investees
1,112
(42
)
Add/(Less): Income tax effect for the
above items
(478
)
216
Add/(Less): Deferred tax adjustments on
acquisition-related intangibles
(3
)
196
Adjusted net income attributable to
ICE
$
2,276
$
2,102
Basic earnings per share
$
1.83
$
4.50
Diluted earnings per share
$
1.82
$
4.48
Adjusted basic earnings per share
$
4.07
$
3.74
Adjusted diluted earnings per share
$
4.06
$
3.72
Basic weighted average common shares
outstanding
559
563
Diluted weighted average common shares
outstanding
561
565
Adjusted Net Income
Attributable to ICE and EPS
(In millions)
(Unaudited)
Three Months Ended September
30, 2022
Three Months Ended September
30, 2021
Net income/(loss) attributable to ICE
$
(191
)
$
633
Add: Amortization of acquisition-related
intangibles
152
156
Add: Transaction and integration costs
19
13
Add: Accrual relating to legal
settlement
—
16
Add: Net interest expense on
pre-acquisition-related debt
31
—
Add: Accelerated unamortized costs related
to the early payoff of the June 2023 floating rate senior notes
—
4
Add: Impairment on Bakkt equity method
investment
40
—
Less: Gain on sale and fair value
adjustment of Euroclear equity investment and dividends
received
—
(64
)
Add/(Less): Net losses/(income) from
unconsolidated investees
1,055
(8
)
Less: Income tax effect for the above
items
(355
)
(38
)
Less: Deferred tax adjustments on
acquisition-related intangibles
(18
)
(1
)
Adjusted net income attributable to
ICE
$
733
$
711
Basic earnings/(loss) per share
$
(0.34
)
$
1.12
Diluted earnings/(loss) per share
$
(0.34
)
$
1.12
Adjusted basic earnings per share
$
1.31
$
1.26
Adjusted diluted earnings per share
$
1.31
$
1.26
Basic weighted average common shares
outstanding
558
563
Diluted weighted average common shares
outstanding
560
566
Adjusted Free Cash Flow
Calculation
(In millions)
(Unaudited)
Nine Months Ended September
30, 2022
Nine Months Ended September
30, 2021
Cash flow from operations
$2,462
$2,130
Less: Capital expenditures and capitalized
software development costs
(325)
(328)
Add/(Less): Section 31 fees, net
(1)
193
Adjusted free cash flow
$2,136
$1,995
About Intercontinental Exchange
Intercontinental Exchange, Inc. (NYSE: ICE) is a Fortune 500
company that designs, builds and operates digital networks to
connect people to opportunity. We provide financial technology and
data services across major asset classes that offer our customers
access to mission-critical workflow tools that increase
transparency and operational efficiencies. We operate exchanges,
including the New York Stock Exchange, and clearing houses that
help people invest, raise capital and manage risk across multiple
asset classes. Our comprehensive fixed income data services and
execution capabilities provide information, analytics and platforms
that help our customers capitalize on opportunities and operate
more efficiently. At ICE Mortgage Technology, we are transforming
and digitizing the U.S. residential mortgage process, from consumer
engagement through loan registration. Together, we transform,
streamline and automate industries to connect our customers to
opportunity.
Trademarks of ICE and/or its affiliates include Intercontinental
Exchange, ICE, ICE block design, NYSE and New York Stock Exchange.
Information regarding additional trademarks and intellectual
property rights of Intercontinental Exchange, Inc. and/or its
affiliates is located at
http://www.intercontinentalexchange.com/terms-of-use. Key
Information Documents for certain products covered by the EU
Packaged Retail and Insurance-based Investment Products Regulation
can be accessed on the relevant exchange website under the heading
“Key Information Documents (KIDS).”
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995 - Statements in this press release regarding
ICE's business that are not historical facts are "forward-looking
statements" that involve risks and uncertainties. For a discussion
of additional risks and uncertainties, which could cause actual
results to differ from those contained in the forward-looking
statements, see ICE's Securities and Exchange Commission (SEC)
filings, including, but not limited to, the risk factors in
Intercontinental Exchange, Inc.’s Annual Report on Form 10-K for
the year ended December 31, 2021, as filed with the SEC on February
3, 2022. We caution you not to place undue reliance on these
forward-looking statements. Any forward-looking statement speaks
only as of the date on which such statement is made, and we
undertake no obligation to update any forward-looking statement or
statements to reflect events or circumstances after the date on
which such statement is made or to reflect the occurrence of an
unanticipated event. New factors emerge from time to time, and it
is not possible for management to predict all factors that may
affect our business and prospects. Further, management cannot
assess the impact of each factor on the business or the extent to
which any factor, or combination of factors, may cause actual
results to differ materially from those contained in any
forward-looking statements.
SOURCE: Intercontinental Exchange
ICE-CORP
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221103005548/en/
ICE Investor Relations Contact: Katia Gonzalez +1 678 981 3882
katia.gonzalez@ice.com investors@ice.com ICE Media Contact: Josh
King +1 212 656 2490 josh.king@ice.com media@ice.com
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