- 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
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version on businesswire.com: https://www.businesswire.com/news/home/20201029005447/en/
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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