Intercontinental Exchange Reports Strong First Quarter 2024

Intercontinental Exchange (NYSE: ICE):

  • Record 1Q24 net revenues of $2.3 billion, +21% y/y

 

  • 1Q24 GAAP diluted earnings per share (EPS) of $1.33, +14% y/y

 

  • 1Q24 adj. diluted EPS of $1.48, +5% y/y

 

  • Record 1Q24 operating income of $1.1 billion, +10% y/y; Record adj. operating income of $1.4 billion, +18% y/y

 

  • 1Q24 operating margin of 46%; adj. operating margin of 59%

 

 

Jeffrey C. Sprecher,

ICE Chair & Chief Executive Officer, said,

"We are pleased to report strong first quarter results that extend our track record of revenue and earnings per share growth. Our customers continue to rely on our mission-critical data and technology to manage risk and capture workflow efficiencies, reflecting the all-weather nature of our business model. As we look to the balance of the year and beyond, we remain focused on innovating for our customers, investing in future growth and creating value for our stockholders."

Intercontinental Exchange (NYSE: ICE), a leading global provider of technology and data, today reported financial results for the first quarter of 2024. For the quarter ended March 31, 2024, consolidated net income attributable to ICE was $767 million on $2.3 billion of consolidated revenues, less transaction-based expenses. First quarter GAAP diluted EPS were $1.33. Adjusted net income attributable to ICE was $852 million in the first quarter and adjusted diluted EPS were $1.48. 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: "In the first quarter, we generated record revenues and record operating income. This performance not only reflects the strength of our balanced and diversified business but also the strategic investments that we have made to drive long-term profitable growth and to create value for our stockholders."

First Quarter 2024 Business Highlights

First quarter consolidated net revenues were $2.3 billion including exchange net revenues of $1.2 billion, fixed income and data services revenues of $568 million and mortgage technology revenues of $499 million. Consolidated operating expenses were $1.2 billion for the first quarter of 2024. On an adjusted basis, consolidated operating expenses were $930 million. Consolidated operating income for the first quarter was $1.1 billion, and the operating margin was 46%. On an adjusted basis, consolidated operating income for the first quarter was $1.4 billion, and the adjusted operating margin was 59%.

 

$ (in millions)

Net

Revenues

Op

Margin

Adj Op

Margin

 

 

1Q24

Exchanges

$

1,223

 

73

%

75

%

Fixed Income and Data Services

$

568

 

38

%

46

%

Mortgage Technology

$

499

 

(10

)%

37

%

Consolidated

$

2,290

 

46

%

59

%

 

 

 

 

 

 

1Q24

 

1Q23

 

% Chg

Recurring Revenues

$

1,196

$

953

 

25

%

Transaction Revenues, net

$

1,094

$

943

 

16

%

 

Exchanges Segment Results

First quarter exchange net revenues were $1.2 billion. Exchange operating expenses were $326 million and on an adjusted basis, were $307 million in the first quarter. Segment operating income for the first quarter was $897 million, and the operating margin was 73%. On an adjusted basis, operating income was $916 million, and the adjusted operating margin was 75%.

$ (in millions)

 

1Q24

 

1Q23

% Chg

Const

Curr(1)

Revenues, net:

 

 

 

 

Energy

$

457

$

345

33

%

32

%

Ags and Metals

 

72

 

70

3

%

2

%

Financials(2)

 

135

 

128

6

%

3

%

Cash Equities and Equity Options

 

99

 

95

4

%

4

%

OTC and Other(3)

 

103

 

101

2

%

2

%

Data and Connectivity Services

 

235

 

232

1

%

1

%

Listings

 

122

 

126

(4

)%

(4

)%

Segment Revenues

$

1,223

$

1,097

12

%

11

%

 

 

 

 

 

Recurring Revenues

$

357

$

358

%

%

Transaction Revenues, net

$

866

$

739

17

%

16

%

 

(1) Net revenues in constant currency are calculated holding both the pound sterling and euro at the average exchange rate from 1Q23, 1.2150 and 1.0730, respectively.

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

(3) OTC & other includes physical energy, net interest income and other fees 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

First quarter fixed income and data services revenues were $568 million. Fixed income and data services operating expenses were $354 million, and adjusted operating expenses were $309 million in the first quarter. Segment operating income for the first quarter was $214 million, and the operating margin was 38%. On an adjusted basis, operating income was $259 million, and the adjusted operating margin was 46%.

 

$ (in millions)

1Q24

1Q23

% Chg

Const Curr(1)

Revenues:

 

 

 

 

Fixed Income Execution

$

26

$

32

(15

)%

(15

)%

CDS Clearing

 

93

 

101

(8

)%

(8

)%

Fixed Income Data and Analytics

 

288

 

276

4

%

4

%

Other Data and Network Services

 

161

 

154

4

%

4

%

Segment Revenues

$

568

$

563

1

%

1

%

 

 

 

 

 

Recurring Revenues

$

449

$

430

4

%

4

%

Transaction Revenues

$

119

$

133

(10

)%

(10

)%

(1) Net revenues in constant currency are calculated holding both the pound sterling and euro at the average exchange rate from 1Q23, 1.2150 and 1.0730, respectively.

Mortgage Technology Segment Results

First quarter mortgage technology revenues were $499 million. Mortgage technology operating expenses were $547 million, and adjusted operating expenses were $314 million in the first quarter. Segment operating loss for the first quarter was $48 million, and the operating margin was (10)%. On an adjusted basis, operating income was $185 million, and the adjusted operating margin was 37%.

 

$ (in millions)

1Q24

1Q23

% Chg

Revenues:

 

 

 

Origination Technology

$

174

$

174

%

Closing Solutions

 

44

 

41

9

%

Servicing Software

 

214

 

n/a

 

Data and Analytics

 

67

 

21

210

%

Segment Revenues

$

499

$

236

111

%

 

 

 

 

Recurring Revenues

$

390

$

165

136

%

Transaction Revenues

$

109

$

71

53

%

 

Other Matters

  • Operating cash flow in the first quarter of 2024 was $1.0 billion and adjusted free cash flow was $877 million.
  • Unrestricted cash was $863 million and outstanding debt was $22.0 billion as of March 31, 2024.
  • Through the first quarter of 2024, ICE paid $258 million in dividends.

Updated Financial Guidance

  • ICE's full year 2024 Mortgage Technology pro forma segment revenue growth is expected to be flat-to-down in the low single digit range.
  • ICE's full year 2024 GAAP operating expenses are expected to be in a range of $4.87 billion to $4.90 billion. Adjusted operating expenses(1) are expected to be in a range of $3.79 billion to $3.82 billion.
  • ICE's second quarter 2024 GAAP operating expenses are expected to be in a range of $1.21 billion to $1.22 billion. Adjusted operating expenses(1) are expected to be in a range of $945 million to $955 million.
  • ICE's second quarter 2024 GAAP non-operating expense(2) is expected to be in the range of $225 million to $230 million. Adjusted non-operating expense is expected to be in the range of $205 million to $210 million.
  • ICE's diluted share count for the second quarter is expected to be in the range of 572 million to 578 million weighted average shares outstanding.

(1) Full year and 2Q 2024 non-GAAP operating expenses exclude amortization of acquisition-related intangibles, duplicate rent expenses and Black Knight integration costs.

(2) Non-operating expense includes interest income, interest expense and net other income/expense. Non-GAAP non-operating expense excludes equity earnings/losses from unconsolidated investees.

Earnings Conference Call Information

ICE will hold a conference call today, May 2, 2024, at 8:30 a.m. ET to review its first quarter 2024 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 833-470-1428 from the United States or 929-526-1599 from outside of the United States. Telephone participants are required to provide the participant entry number 854785 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 second quarter 2024 earnings has been scheduled for August 1st, 2024 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)

 

 

 

Three Months Ended

March 31,

Revenues:

2024

2023

Exchanges

$

1,734

 

$

1,673

 

Fixed income and data services

 

568

 

 

563

 

Mortgage technology

 

499

 

 

236

 

Total revenues

 

2,801

 

 

2,472

 

Transaction-based expenses:

 

 

Section 31 fees

 

67

 

 

119

 

Cash liquidity payments, routing and clearing

 

444

 

 

457

 

Total revenues, less transaction-based expenses

 

2,290

 

 

1,896

 

 

 

 

Operating expenses:

 

 

Compensation and benefits

 

462

 

 

352

 

Professional services

 

36

 

 

28

 

Acquisition-related transaction and integration costs

 

36

 

 

21

 

Technology and communication

 

205

 

 

172

 

Rent and occupancy

 

29

 

 

20

 

Selling, general and administrative

 

78

 

 

74

 

Depreciation and amortization

 

381

 

 

260

 

Total operating expenses

 

1,227

 

 

927

 

Operating income

 

1,063

 

 

969

 

Other income/(expense):

 

 

Interest income

 

30

 

 

91

 

Interest expense

 

(241

)

 

(176

)

Other income/(expense), net

 

112

 

 

(35

)

Total other income/(expense), net

 

(99

)

 

(120

)

Income before income tax expense

 

964

 

 

849

 

Income tax expense

 

181

 

 

175

 

Net income

$

783

 

$

674

 

Net income attributable to non-controlling interest

 

(16

)

 

(19

)

Net income attributable to Intercontinental Exchange, Inc.

$

767

 

$

655

 

 

 

 

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

 

 

Basic

$

1.34

 

$

1.17

 

Diluted

$

1.33

 

$

1.17

 

Weighted average common shares outstanding:

 

 

Basic

 

573

 

 

559

 

Diluted

 

575

 

 

561

 

 

Consolidated Balance Sheets

(In millions)

 

 

 

 

As of

 

 

March 31, 2024

As of

 

(Unaudited)

December 31, 2023

Assets:

 

 

Current assets:

 

 

Cash and cash equivalents

$

863

 

$

899

 

Short-term restricted cash and cash equivalents

 

1,227

 

 

531

 

Restricted short-term investments

 

 

 

680

 

Cash and cash equivalent margin deposits and guaranty funds

 

74,123

 

 

78,980

 

Invested deposits, delivery contracts receivable and unsettled variation margin

 

2,056

 

 

1,814

 

Customer accounts receivable, net

 

1,645

 

 

1,366

 

Prepaid expenses and other current assets

 

628

 

 

703

 

Total current assets

 

80,542

 

 

84,973

 

Property and equipment, net

 

1,960

 

 

1,923

 

Other non-current assets:

 

 

Goodwill

 

30,549

 

 

30,553

 

Other intangible assets, net

 

17,056

 

 

17,317

 

Long-term restricted cash and cash equivalents

 

278

 

 

340

 

Long-term restricted investments

 

62

 

 

 

Other non-current assets

 

950

 

 

978

 

Total other non-current assets

 

48,895

 

 

49,188

 

Total assets

$

131,397

 

$

136,084

 

 

 

 

Liabilities and Equity:

 

 

Current liabilities:

 

 

Accounts payable and accrued liabilities

$

967

 

$

1,003

 

Section 31 fees payable

 

66

 

 

79

 

Accrued salaries and benefits

 

180

 

 

459

 

Deferred revenue

 

590

 

 

200

 

Short-term debt

 

1,916

 

 

1,954

 

Margin deposits and guaranty funds

 

74,123

 

 

78,980

 

Invested deposits, delivery contracts payable and unsettled variation margin

 

2,056

 

 

1,814

 

Other current liabilities

 

150

 

 

137

 

Total current liabilities

 

80,048

 

 

84,626

 

Non-current liabilities:

 

 

Non-current deferred tax liability, net

 

4,030

 

 

4,080

 

Long-term debt

 

20,068

 

 

20,659

 

Accrued employee benefits

 

183

 

 

193

 

Non-current operating lease liability

 

325

 

 

299

 

Other non-current liabilities

 

454

 

 

441

 

Total non-current liabilities

 

25,060

 

 

25,672

 

Total liabilities

 

105,108

 

 

110,298

 

 

 

 

Equity:

 

 

Intercontinental Exchange, Inc. stockholders’ equity:

 

 

Common stock

 

7

 

 

6

 

Treasury stock, at cost

 

(6,375

)

 

(6,304

)

Additional paid-in capital

 

16,047

 

 

15,953

 

Retained earnings

 

16,865

 

 

16,356

 

Accumulated other comprehensive loss

 

(305

)

 

(294

)

Total Intercontinental Exchange, Inc. stockholders’ equity

 

26,239

 

 

25,717

 

Non-controlling interest in consolidated subsidiaries

 

50

 

 

69

 

Total equity

 

26,289

 

 

25,786

 

Total liabilities and equity

$

131,397

 

$

136,084

 

 

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

 

Three Months

Ended

March 31,

 

Three Months

Ended

March 31,

 

Three Months

Ended

March 31,

 

Three Months

Ended

March 31,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Total revenues, less transaction-based expenses

$

1,223

 

 

$

1,097

 

 

$

568

 

 

$

563

 

 

$

499

 

 

$

236

 

 

$

2,290

 

 

$

1,896

 

Operating expenses

 

326

 

 

 

320

 

 

 

354

 

 

 

343

 

 

 

547

 

 

 

264

 

 

 

1,227

 

 

 

927

 

Less: Amortization of acquisition-related intangibles

 

19

 

 

 

16

 

 

 

38

 

 

 

42

 

 

 

197

 

 

 

92

 

 

 

254

 

 

 

150

 

Less: Transaction and integration costs

 

 

 

 

 

 

 

 

 

 

 

 

 

36

 

 

 

21

 

 

 

36

 

 

 

21

 

Less: Regulatory matter

 

 

 

 

10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10

 

Less: Other

 

 

 

 

6

 

 

 

7

 

 

 

 

 

 

 

 

 

 

 

 

7

 

 

 

6

 

Adjusted operating expenses

$

307

 

 

$

288

 

 

$

309

 

 

$

301

 

 

$

314

 

 

$

151

 

 

$

930

 

 

$

740

 

Operating income/(loss)

$

897

 

 

$

777

 

 

$

214

 

 

$

220

 

 

$

(48

)

 

$

(28

)

 

$

1,063

 

 

$

969

 

Adjusted operating income

$

916

 

 

$

809

 

 

$

259

 

 

$

262

 

 

$

185

 

 

$

85

 

 

$

1,360

 

 

$

1,156

 

Operating margin

 

73

%

 

 

71

%

 

 

38

%

 

 

39

%

 

 

(10

)%

 

 

(12

)%

 

 

46

%

 

 

51

%

Adjusted operating margin

 

75

%

 

 

74

%

 

 

46

%

 

 

47

%

 

 

37

%

 

 

36

%

 

 

59

%

 

 

61

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income Attributable to ICE and Diluted EPS

(In millions)

(Unaudited)

 

 

 

 

 

Three Months

Ended March 31,

2024

 

Three Months

Ended March 31,

2023

Net income attributable to ICE

$

767

 

 

$

655

 

Add: Amortization of acquisition-related intangibles

 

254

 

 

 

150

 

Add: Transaction and integration costs

 

36

 

 

 

21

 

(Less)/Add: Litigation and regulatory matters

 

(160

)

 

 

10

 

Add: Net losses from unconsolidated investees

 

42

 

 

 

35

 

Add: Fair value adjustment of equity investments

 

3

 

 

 

 

Less: Net interest income on pre-acquisition-related debt

 

 

 

 

(6

)

Add: Other

 

7

 

 

 

6

 

Less: Income tax effect for the above items

 

(46

)

 

 

(57

)

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

 

(51

)

 

 

1

 

Less: Other tax adjustments

 

 

 

 

(24

)

Adjusted net income attributable to ICE

$

852

 

 

$

791

 

 

 

 

 

Diluted earnings per share

$

1.33

 

 

$

1.17

 

 

 

 

 

Adjusted diluted earnings per share

$

1.48

 

 

$

1.41

 

 

 

 

 

Diluted weighted average common shares outstanding

 

575

 

 

 

561

 

 

Adjusted Free Cash Flow Calculation

(In millions)

(Unaudited)

 

 

 

 

Three Months Ended

March 31, 2024

Three Months Ended

March 31, 2023

Net cash provided by operating activities

$

1,009

 

$

653

 

Less: Capital expenditures

 

(58

)

 

(21

)

Less: Capitalized software development costs

 

(87

)

 

(64

)

Free cash flow

 

864

 

 

568

 

Add: Section 31 fees, net

 

13

 

 

105

 

Adjusted free cash flow

$

877

 

$

673

 

 

About Intercontinental Exchange

Intercontinental Exchange, Inc. (NYSE: ICE) is a Fortune 500 company that designs, builds and operates digital networks that connect people to opportunity. We provide financial technology and data services across major asset classes helping our customers access mission-critical workflow tools that increase transparency and efficiency. ICE’s futures, equity, and options exchanges – including the New York Stock Exchange – and clearing houses help people invest, raise capital and manage risk. We offer some of the world’s largest markets to trade and clear energy and environmental products. Our fixed income, data services and execution capabilities provide information, analytics and platforms that help our customers streamline processes and capitalize on opportunities. At ICE Mortgage Technology, we are transforming U.S. housing finance, from initial consumer engagement through loan production, closing, registration and the long-term servicing relationship. Together, ICE transforms, streamlines and automates 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, 2023, as filed with the SEC on February 8, 2024. 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

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