01—Abstract
Summary
Summary of the 10-Q filed October 31, 2019. Cited figures are marked; the original filing is the authoritative source.
Intercontinental Exchange, Inc. (ICE) reported solid financial performance for the nine months and third quarter ended September 30, 2019.
Total revenues, less transaction-based expenses, increased by 6% and 11% year-over-year for the respective periods, reaching $3.9 billiona and $1.3 billion. This growth was driven by strong performance in both the Trading and Clearing segment, particularly in cash equities and fixed income, and the Data and Listings segment, fueled by recurring subscription-based data services. The company continued its share repurchase program, demonstrating a commitment to returning capital to shareholders, and maintained a strong balance sheet with total assets growing to $95.3 billion.
Operating income and net income also saw healthy increases, reflecting the company's operational efficiency and strategic execution. ICE remains a diversified financial technology services provider with a robust infrastructure supporting global markets.
02—Key points
Key Highlights
- Total revenues, less transaction-based expenses, grew to $3.9 billion for the nine months ended September 30, 2019, up 6% year-over-year.
- Third-quarter revenues, less transaction-based expenses, increased 11% year-over-year to $1.3 billion.
- Operating income for the nine months rose 8% to $2.05 billion, and for the third quarter, it increased 17% to $706 million.
- Net income attributable to Intercontinental Exchange, Inc. increased by 8% to $1.485 billion for the nine months and 16% to $529 million for the third quarter.
- The company repurchased $1.1 billion of common stock during the nine months ended September 30, 2019, underscoring capital return initiatives.
- Total assets grew to $95.3 billion as of September 30, 2019, indicating continued business expansion.
- The launch of Bakkt's Bitcoin Futures contract in September 2019 marked a significant step into the digital assets space.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2019, Intercontinental Exchange, Inc. kept $0.32.
- Revenue$1.66B100.0%
- Cost of revenue−$327.0M19.7%
- Gross profit$1.34B80.3%
- Operating costs−$630.0M37.9%
- Operating income$706.0M42.5%
- Interest, other & tax−$177.0M10.6%
- Net income$529.0M31.8%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2019filed October 31, 2019Financial Statements
Q3 FY2019 against Q3 FY2018
| Line item | Q3 FY2019Q3 FY2018 | Change |
|---|---|---|
| Revenue | $1.66B$1.46B | +13.7% |
| Cost of Revenue | $327.00M— | — |
| Gross Profit | $1.34B— | — |
| SG&A Expenses | $33.00M$37.00M | −10.8% |
| Operating Expenses | $630.00M$598.00M | +5.4% |
| Operating Income | $706.00M$602.00M | +17.3% |
| Interest Expense | $72.00M$66.00M | +9.1% |
| Net Income | $529.00M$458.00M | +15.5% |
| EPS (Basic) | $0.95$0.80 | +18.7% |
| EPS (Diluted) | $0.94$0.79 | +19.0% |
| Shares Outstanding (Basic) | 559.00M572.00M | −2.3% |
| Shares Outstanding (Diluted) | 563.00M576.00M | −2.3% |
05—Questions
Frequently Asked Questions
What were the main drivers of revenue growth in the third quarter of 2019?
Revenue growth in the third quarter of 2019 was primarily driven by increases in transaction and clearing revenues, up 22% year-over-year, and a 4% increase in data services revenues. The Trading and Clearing segment saw significant boosts from cash equities and equity options, as well as fixed income and credit, while the Data and Listings segment benefited from steady performance in pricing and analytics, exchange data, and desktops and connectivity.
How has the company's acquisition strategy impacted its financial performance?
ICE completed the acquisition of Simplifile for $338 million in June 2019, integrating it into the Trading and Clearing segment. This acquisition, along with others from previous periods, contributes to revenue growth and business diversification, though it also leads to increased operating expenses and integration costs, which are sometimes adjusted for in non-GAAP measures.
What is the company's capital allocation strategy, particularly regarding share repurchases and dividends?
ICE continues to return capital to shareholders through share repurchases and dividends. For the nine months ended September 30, 2019, the company repurchased $1.1 billion of common stock. It also paid dividends totaling $467 million for the same period. The Board of Directors has approved a $2.0 billion stock repurchase program, with approximately $880 million remaining authorization as of September 30, 2019.
How is Intercontinental Exchange positioned in the digital assets market?
ICE entered the digital assets market with the launch of its Bakkt Bitcoin Futures contract in September 2019. This launch, supported by the Bakkt Trust Company, LLC acting as a qualified custodian, represents a strategic move to provide a regulated marketplace for physically-delivered digital asset futures.
06—Continue