10-QPeriod: Q3 FY2014

Intercontinental Exchange, Inc. Quarterly Report for Q3 Ended Sep 30, 2014

Filed November 4, 2014For Securities:ICE

Summary

Intercontinental Exchange, Inc. (ICE) reported robust financial performance for the nine months and third quarter ended September 30, 2014, demonstrating significant growth driven by the integration of the NYSE acquisition. Total revenues, less transaction-based expenses, saw substantial increases of 116% and 121% year-over-year for the nine and three-month periods, respectively. This growth was largely attributable to the inclusion of NYSE's operations, contributing significantly to transaction and clearing fees, as well as market data and listing fees. The company also made strategic divestitures, successfully completing the initial public offering (IPO) of Euronext and selling off NYSE Technologies businesses, which were presented as discontinued operations. These strategic moves allowed ICE to streamline its operations and focus on its core exchange and clearing house businesses. Despite increased operating expenses stemming from the NYSE integration and strategic initiatives, ICE maintained strong operating income and profitability, reflecting effective management of its expanded business.

Financial Highlights

55 data points
Beta

Revenue

$1.01B

Net Income

$306.00M

30.3% Net Margin

EPS (Diluted)

$550000.00

Total Assets

$67.29B

Cash & Equivalents

$687.00M

Free Cash Flow

$39.00M

Financial Statements
Beta
Revenue$1.01B
SG&A Expenses$37.00M
Operating Expenses$415.00M
Operating Income$440.00M
Interest Expense$22.00M
Net Income$306.00M
EPS (Basic)$550000.00
EPS (Diluted)$550000.00
Shares Outstanding (Basic)570.00M
Shares Outstanding (Diluted)570.00M

Key Highlights

  • 1Total revenues, less transaction-based expenses, increased significantly by 116% to $2.3 billion for the nine months ended September 30, 2014, and by 121% to $745 million for the three months ended September 30, 2014, largely due to the inclusion of NYSE operations.
  • 2The company successfully completed the IPO of Euronext, divesting 94% of its stake and generating significant cash proceeds, while also divesting non-core NYSE Technologies assets.
  • 3Operating income grew by 67% to $1.05 billion for the nine months and by 63% to $330 million for the three months, demonstrating continued profitability despite increased operating expenses.
  • 4Net income attributable to ICE increased by 61% to $693 million for the nine months and by 46% to $206 million for the three months, reflecting strong financial performance.
  • 5ICE announced plans for further strategic acquisitions, including SuperDerivatives and Holland Clearing House, indicating a focus on expanding its risk management analytics, data services, and clearing capabilities.
  • 6The company repurchased approximately $448 million of its common stock during the nine months ended September 30, 2014, signaling a commitment to returning capital to shareholders.
  • 7Debt levels decreased from $5.06 billion at the end of 2013 to $4.14 billion at September 30, 2014, largely due to the use of proceeds from the Euronext IPO to repay debt.

Frequently Asked Questions

Revenue growth was primarily driven by the inclusion of NYSE's operations following the acquisition in November 2013. This significantly boosted transaction and clearing fees, market data fees, and listing fees. Strategic divestitures like the Euronext IPO and sales of NYSE Technologies were presented as discontinued operations, allowing the company to focus on its core strengths.

While operating expenses increased substantially due to the NYSE integration, including compensation, technology, and professional services, ICE managed to maintain strong operating income. The company also incurred acquisition-related transaction and integration costs, but strategic divestitures and a focus on core operations helped to offset these increased costs and maintain profitability.

ICE is actively pursuing strategic growth through acquisitions, such as the pending acquisitions of SuperDerivatives and Holland Clearing House, aimed at enhancing its data, analytics, and clearing services. The company also demonstrated a commitment to returning capital to shareholders through significant share repurchases and dividend payments, while also actively managing its debt levels.

The financial results of Euronext (following its IPO) and the NYSE Technologies businesses (NYFIX, Metabit, and Wombat) are reported as discontinued operations in the consolidated financial statements. This presentation separates their financial impact from the ongoing core business operations.