• YTD revenues of $4.4 billion, +12% y/y; Third quarter revenues of $1.4 billion, +6% y/y
  • YTD GAAP EPS of $2.83, +8% y/y; Third quarter GAAP EPS of $0.71, -24% y/y
  • YTD Adj. diluted EPS of $3.37, +15% y/y; Third quarter adjusted EPS of $1.03, -3% y/y
  • Third quarter Data Services revenues +6% y/y
  • Completed the strategic acquisition of Ellie Mae on September 4, 2020

 

 

Jeffrey C. Sprecher,ICE Chairman & Chief Executive Officer, said,“Through the first nine months of this unprecedented year, we have grown revenues and operating income by double-digits and reported record earnings per share. In addition, in early September, we completed our strategic acquisition of Ellie Mae, expanding our mortgage network, while also enhancing the diversity and resilience of our long-term growth profile. As we begin to look to 2021, we are thankful for our customers business, and we are focused on continuing to drive innovation, deliver workflow efficiencies and extend our track record of growth"

Intercontinental Exchange (NYSE: ICE), a leading operator of global exchanges and clearing houses and provider of mortgage technology, data and listing services, today reported financial results for the third quarter of 2020. For the quarter ended September 30, 2020, consolidated net income attributable to ICE was $390 million on $1.4 billion of consolidated revenues, less transaction-based expenses. Third quarter GAAP diluted earnings per share (EPS) were $0.71. Adjusted net income attributable to ICE was $569 million in the third quarter and adjusted diluted EPS were $1.03. 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 free cash flow.

Scott A. Hill, ICE Chief Financial Officer, added: "Led by our data services business, which grew 6% year-over-year and generated record revenues, our third quarter performance demonstrated the power of our balanced and diverse business. Continued compounding growth in our subscription-based businesses, which account for approximately half our revenues, as well as growing open interest across our leading global energy futures platform are what enable us to continue to invest in future growth. As we look to the balance of 2020 and towards another successful year in 2021, we remain focused on creating value for all of our stakeholders."

Third Quarter 2020 Business Highlights

$ in millions

Net Revenue

Op Margin

Adj Op Margin

 

 

 

 

Data & Listings

$700

46%

53%

Trading & Clearing

$711

43%

61%

Consolidated

$1,411

44%

57%

Third quarter consolidated net revenues were $1.4 billion, up 6% year-over-year, including $75 million related to our September 4th, 2020 acquisition of Ellie Mae. Data and listings revenues in the third quarter were $700 million and trading and clearing net revenues were $711 million. Consolidated operating expenses were $784 million for the third quarter of 2020 and included $56 million of expenses related to Ellie Mae. On an adjusted basis, consolidated operating expenses were $611 million and included $29 million of expenses related to Ellie Mae. Consolidated operating income for the third quarter was $627 million and the operating margin was 44%. On an adjusted basis, consolidated operating income for the third quarter was $800 million and the adjusted operating margin was 57%.

Data and Listings Segment Results

Third quarter data and listings revenues were $700 million, including data revenues of $589 million and listings revenues of $111 million. On a constant currency basis(1), segment revenues were up 5% with data revenues up 6% year-over-year. Data and listings operating expenses were $378 million and on an adjusted basis, were $329 million in the third quarter. Segment operating income for the third quarter was $322 million and the operating margin was 46%. On an adjusted basis, operating income was $371 million and the adjusted operating margin was 53%.

$ in millions

3Q20

3Q19

% Chg

Const Curr(1)

Revenue:

 

 

 

 

Pricing and Analytics

$287

$273

5%

5%

Exchange Data and Feeds

189

172

9%

9%

Desktops and Connectivity

113

108

4%

3%

Data Total

589

553

6%

6%

Listings

111

114

(2)%

(2)%

Segment Revenue

$700

$667

5%

5%

(1) Net revenues in constant currency are calculated holding both the pound sterling and euro at the average exchange rate from 3Q19 of 1.2330 and 1.1118, respectively.

Trading and Clearing Segment Results

Third quarter trading and clearing net revenues were $711 million, up 6% from one year ago and included $75 million of revenue related to Ellie Mae. Trading and clearing operating expenses were $406 million and adjusted operating expenses were $282 million in the third quarter. Segment operating income for the third quarter was $305 million and the operating margin was 43%. On an adjusted basis, operating income was $429 million and the adjusted operating margin was 61%.

$ in millions

3Q20

3Q19

% Chg

Revenue, net:

 

 

 

Energy

$229

$265

(14)%

Ags & metals

54

60

(11)%

Financials(1)

76

91

(16)%

Cash equities & equity options

74

74

—%

Fixed income & credit(2)

191

101

89%

OTC & other transaction(3)

12

11

13%

Other revenue(4)

75

67

12%

Segment Revenue

$711

$669

6%

(1) Financials include interest rates and other financial futures and options.

(2) Fixed income and credit includes fixed income execution, CDS execution and clearing and ICE Mortgage Technology. For the 3Q20, Fixed income & credit also includes $73 million of revenue related to the acquisition of Ellie Mae, which closed on September 4th, 2020.

(3) OTC & other transactions include physical energy.

(4) Other revenue includes 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. For the 3Q'20, other revenue includes $2 million from Ellie Mae.

  • Energy futures and options revenue in the third quarter decreased (14%) year-over-year driven by a (8%) decrease in average daily volume (ADV) and a (6%) decrease in rate per contract (RPC).
  • Ags and metals futures and options revenue in the third quarter decreased (11%) year-over-year driven by an (9%) decrease in ADV and a (2%) decrease in RPC.
  • Financials futures and options revenue in the third quarter decreased (16%) year-over-year reflecting a (24%) decrease in ADV and partially offset by a 9% increase in RPC.
  • U.S. cash equities and equity options revenue in the third quarter was flat year-over-year reflecting, in part, a 29% increase in cash equities ADV offset by a (21%) decrease in RPC.

 

ADV (lots in thousands)

RPC

 

3Q20

% Chg

3Q20

% Chg

Energy

2,545

(8)%

$1.40

(6)%

Ags & metals

376

(9)%

$2.23

(2)%

Financials

2,024

(24)%

$0.56

9%

Interest Rates

1,620

(27)%

$0.38

—%

Other Financials

404

(9)%

$1.32

9%

Total Futures & Options

4,945

(15)%

$1.12

2%

 

 

 

 

 

Cash Equities (in millions)

2,151

29%

$0.038

(21)%

Equity Options

5,328

74%

$0.06

(46)%

The third quarter of 2020 included 64 trading days for energy, ags & metals, other financials, cash equities and equity options and 66 trading days for interest rates. The third quarter of 2019 included 64 trading days for energy, ags & metals, other financials, cash equities and equity options and 66 trading days for interest rates.

Other Matters

  • The effective tax rate for the third quarter of 2020 was 32%.
  • Operating cash flow through the third quarter of 2020 was $1.8 billion and free cash flow was $1.6 billion.
  • Unrestricted cash was $610 million and outstanding debt was $17.3 billion as of September 30, 2020.
  • Through the third quarter of 2020, ICE repurchased $1.2 billion of its common stock and paid $500 million in dividends.

Financial Guidance

  • ICE's fourth quarter 2020 Data Services revenues are expected to be in a range of $590 million to $595 million.
  • ICE's fourth quarter 2020 GAAP operating expenses are expected to be in a range of $855 million to $865 million and adjusted operating expenses(1) are expected to be in a range of $695 million to $705 million.
  • ICE's fourth quarter 2020 non-operating expense(2) is expected to be in the range of $75 million to $80 million.
  • ICE's full year 2020 capital expenditures are expected to be in a range of $410 million to $420 million.
  • ICE's diluted share count for the fourth quarter is expected to be in the range of 562 million to 568 million weighted average shares outstanding.

(1) 4Q20 non-GAAP operating expenses exclude amortization of acquisition-related intangibles and transaction & integration costs.

(2) Non-operating expense includes interest income, interest expense and net other income.

Earnings Conference Call Information

ICE will hold a conference call today, October 29, 2020, at 8:30 a.m. ET to review its third quarter 2020 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 888-317-6003 from the United States, 866-284-3684 from Canada or 412-317-6061 from outside of the United States and Canada. Telephone participants are required to provide the participant entry number 7499654 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 2020 earnings has been scheduled for February 4th, 2021 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: http://ir.theice.com/investors-and-media/supplemental-volume-info/default.aspx

Consolidated Statements of Income

(In millions, except per share amounts)

(Unaudited)

 

Nine Months Ended September 30,

Three Months Ended September 30,

Revenues:

2020

2019

2020

2019

Transaction and clearing, net

$

3,726

 

$

2,698

 

$

1,155

 

$

929

 

Data services

1,727

 

1,652

 

589

 

553

 

Listings

334

 

336

 

111

 

114

 

Other revenues

224

 

194

 

75

 

67

 

Total revenues

6,011

 

4,880

 

1,930

 

1,663

 

Transaction-based expenses:

 

 

 

 

Section 31 fees

465

 

274

 

145

 

105

 

Cash liquidity payments, routing and clearing

1,181

 

702

 

374

 

222

 

Total revenues, less transaction-based expenses

4,365

 

3,904

 

1,411

 

1,336

 

Operating expenses:

 

 

 

 

Compensation and benefits

849

 

768

 

298

 

261

 

Professional services

100

 

97

 

37

 

35

 

Acquisition-related transaction and integration costs

90

 

1

 

76

 

 

Technology and communication

388

 

346

 

131

 

126

 

Rent and occupancy

59

 

52

 

19

 

17

 

Selling, general and administrative

132

 

116

 

43

 

33

 

Depreciation and amortization

494

 

473

 

180

 

158

 

Total operating expenses

2,112

 

1,853

 

784

 

630

 

Operating income

2,253

 

2,051

 

627

 

706

 

Other income (expense):

 

 

 

 

Interest income

9

 

27

 

1

 

8

 

Interest expense

(245)

 

(214)

 

(89)

 

(72)

 

Other income, net

75

 

30

 

44

 

(2)

 

Other income (expense), net

(161)

 

(157)

 

(44)

 

(66)

 

Income before income tax expense

2,092

 

1,894

 

583

 

640

 

Income tax expense

512

 

387

 

189

 

103

 

Net income

$

1,580

 

$

1,507

 

$

394

 

$

537

 

Net income attributable to non-controlling interest

(17)

 

(22)

 

(4)

 

(8)

 

Net income attributable to Intercontinental Exchange, Inc.

$

1,563

 

$

1,485

 

$

390

 

$

529

 

 

 

 

 

 

Earnings per share attributable to Intercontinental Exchange, Inc. common stockholders:

 

 

 

 

Basic

$

2.85

 

$

2.64

 

$

0.71

 

$

0.95

 

Diluted

$

2.83

 

$

2.62

 

$

0.71

 

$

0.94

 

Weighted average common shares outstanding:

 

 

 

 

Basic

549

 

563

 

548

 

559

 

Diluted

552

 

566

 

551

 

563

 

Consolidated Balance Sheets

(In millions)

(Unaudited)

 

As of

As of

 

September 30, 2020

December 31, 2019

Assets:

 

 

Current assets:

 

 

Cash and cash equivalents

$

610

 

$

841

 

Short-term restricted cash and cash equivalents

993

 

943

 

Customer accounts receivable, net

1,310

 

988

 

Margin deposits, guaranty funds and delivery contracts receivable

85,900

 

64,987

 

Prepaid expenses and other current assets

324

 

220

 

Total current assets

89,137

 

67,979

 

Property and equipment, net

1,693

 

1,536

 

Other non-current assets:

 

 

Goodwill

21,243

 

13,342

 

Other intangible assets, net

14,507

 

10,258

 

Long-term restricted cash and cash equivalents

408

 

404

 

Other non-current assets

1,092

 

974

 

Total other non-current assets

37,250

 

24,978

 

Total assets

$

128,080

 

$

94,493

 

 

 

 

Liabilities and Equity:

 

 

Current liabilities:

 

 

Accounts payable and accrued liabilities

$

594

 

$

505

 

Section 31 fees payable

53

 

138

 

Accrued salaries and benefits

274

 

291

 

Deferred revenue

267

 

129

 

Short-term debt

2,463

 

2,569

 

Margin deposits, guaranty funds and delivery contracts payable

85,900

 

64,987

 

Other current liabilities

135

 

197

 

Total current liabilities

89,686

 

68,816

 

Non-current liabilities:

 

 

Non-current deferred tax liability, net

3,567

 

2,314

 

Long-term debt

14,869

 

5,250

 

Accrued employee benefits

187

 

198

 

Non-current operating lease liability

315

 

281

 

Other non-current liabilities

310

 

270

 

Total non-current liabilities

19,248

 

8,313

 

Total liabilities

108,934

 

77,129

 

Commitments and contingencies

 

 

Redeemable non-controlling interest in consolidated subsidiaries

94

 

78

 

Equity:

 

 

Intercontinental Exchange, Inc. stockholders’ equity:

 

 

Common stock

6

 

6

 

Treasury stock, at cost

(5,198)

 

(3,879)

 

Additional paid-in capital

13,804

 

11,742

 

Retained earnings

10,682

 

9,629

 

Accumulated other comprehensive loss

(273)

 

(243)

 

Total Intercontinental Exchange, Inc. stockholders’ equity

19,021

 

17,255

 

Non-controlling interest in consolidated subsidiaries

31

 

31

 

Total equity

19,052

 

17,286

 

Total liabilities and equity

$

128,080

 

$

94,493

 

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 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)

   

 

Trading and Clearing Segment

 

 

Data and Listings Segment

 

 

Consolidated

 

 

Nine Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

2020

 

2019

 

 

2020

 

2019

 

 

2020

 

2019

 

Total revenues, less transaction-based expenses

$2,304

 

$1,916

 

 

$2,061

 

$1,988

 

 

$4,365

 

$3,904

 

Operating expenses

998

 

732

 

 

1,114

 

1,121

 

 

2,112

 

1,853

 

Less: Amortization of acquisition-related intangibles

99

 

70

 

 

136

 

164

 

 

235

 

234

 

Less: Transaction and integration costs and acquisition-related success fee

86

 

 

 

 

 

 

86

 

 

Less: Accruals related to investigations and inquiries

 

 

 

8

 

 

 

8

 

 

Adjusted operating expenses

813

 

662

 

 

970

 

957

 

 

1,783

 

1,619

 

Operating income

1,306

 

1,184

 

 

947

 

867

 

 

2,253

 

2,051

 

Adjusted operating income

1,491

 

1,254

 

 

1,091

 

1,031

 

 

2,582

 

2,285

 

Operating margin

57

%

62

%

 

46

%

44

%

 

52

%

53

%

Adjusted operating margin

65

%

65

%

 

53

%

52

%

 

59

%

59

%

Adjusted Operating Income, Operating Margin and Operating Expense Reconciliation

(In millions)

(Unaudited)

 

Trading and Clearing Segment

 

Data and Listings Segment

 

Consolidated

 

Three Months Ended September 30,

 

Three Months Ended September 30,

 

 

Three Months Ended September 30,

 

2020

 

2019

 

 

2020

 

2019

 

 

2020

 

2019

 

Total revenues, less transaction-based expenses

$711

 

$669

 

 

$700

 

$667

 

 

$1,411

 

$1,336

 

Total operating expenses

406

 

255

 

 

378

 

375

 

 

784

 

630

 

Less: Amortization of acquisition-related intangibles

48

 

24

 

 

46

 

55

 

 

94

 

79

 

Less: Transaction and integration costs

76

 

 

 

 

 

 

76

 

 

Less: Accruals related to investigations and inquiries

 

 

 

3

 

 

 

3

 

 

Adjusted total operating expenses

$282

 

$231

 

 

$329

 

$320

 

 

$611

 

$551

 

Operating income

$305

 

$414

 

 

$322

 

$292

 

 

$627

 

$706

 

Adjusted operating income

$429

 

$438

 

 

$371

 

$347

 

 

$800

 

$785

 

Operating margin

43

%

62

%

 

46

%

44

%

 

44

%

53

%

Adjusted operating margin

61

%

65

%

 

53

%

52

%

 

57

%

59

%

Adjusted Net Income Attributable to ICE and EPS

(In millions)

(Unaudited)

 

Nine Months Ended September 30, 2020

Nine Months Ended September 30, 2019

Net income attributable to ICE common stockholders

$

1,563

 

$

1,485

 

Add: Amortization of acquisition-related intangibles

235

 

234

 

Add: Extinguishment of 2020 Senior Notes

14

 

 

Add: Pre-acquisition interest expense on debt issued for Ellie Mae acquisition

5

 

 

Add: Transaction and integration costs and acquisition-related success fee

86

 

 

Add: Accruals related to investigations and inquiries

8

 

 

Add: Impairment of CAT promissory notes

2

 

16

 

Less: Income tax effect for the above items

(85)

 

(65)

 

Add / (Less): Deferred tax adjustments on acquisition-related intangibles

33

 

(13)

 

Add: Other tax adjustments

 

3

 

Adjusted net income attributable to ICE

$

1,861

 

$

1,660

 

 

 

 

Diluted earnings per share attributable to ICE

$

2.83

 

$

2.62

 

 

 

 

Adjusted diluted earnings per share attributable to ICE

$

3.37

 

$

2.93

 

Adjusted Net Income Attributable to ICE and EPS

(In millions)

(Unaudited)

 

Three Months Ended September 30, 2020

Three Months Ended September 30, 2019

Net income attributable to ICE

$

390

 

$

529

 

Add: Amortization of acquisition-related intangibles

94

 

79

 

Add: Transaction and integration costs

76

 

 

Add: Accruals related to investigations and inquiries

3

 

 

Add: Pre-acquisition interest expense on debt issued for Ellie Mae acquisition

5

 

 

Add: Impairment of CAT promissory notes

 

16

 

Less: Income tax effect for the above items

(42)

 

(25)

 

Add: Deferred tax adjustments on acquisition-related intangibles

43

 

 

Adjusted net income attributable to ICE

$

569

 

$

599

 

 

 

 

Diluted earnings per share attributable to ICE

$

0.71

 

$

0.94

 

 

 

 

Adjusted diluted earnings per share attributable to ICE

$

1.03

 

$

1.06

 

 

 

 

Free Cash Flow Calculation

(In millions)

(Unaudited)

 

Nine months ended September 30, 2020

Nine months ended September 30, 2019

Cash flow from operations

$1,815

$1,882

Less: Capital expenditures and capitalized software development costs

(268)

 

(203)

 

Add: Section 31 fees, net

85

 

70

 

Free cash flow

$1,632

$1,749

About Intercontinental Exchange

Intercontinental Exchange (NYSE: ICE) is a Fortune 500 company and provider of marketplace infrastructure, data services and technology solutions to a broad range of customers including financial institutions, corporations and government entities. We operate regulated marketplaces, including the New York Stock Exchange, for the listing, trading and clearing of a broad array of derivative contracts and financial securities across major asset classes. Our comprehensive data services offering supports the trading, investment, risk management and connectivity needs of customers around the world and across asset classes. As a leading technology provider, ICE Mortgage Technology provides the technology and infrastructure to transform and digitize U.S. residential mortgages, from application and loan origination through to final settlement.

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, 2019, as filed with the SEC on February 6, 2020. 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.

ICE-CORP

ICE Investor Relations Contact: Warren Gardiner +1 770 835 0114 warren.gardiner@theice.com investors@theice.com ICE Media Contact: Josh King +1 212 656 2490 josh.king@theice.com media@theice.com

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