10-QPeriod: Q3 FY2019

Intercontinental Exchange, Inc. Quarterly Report for Q3 Ended Sep 30, 2019

Filed October 31, 2019For Securities:ICE

Summary

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 billion 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.

Financial Highlights

56 data points
Beta

Revenue

$1.66B

80.3% Gross Margin

Net Income

$529.00M

31.8% Net Margin

EPS (Diluted)

$0.94

Total Assets

$95.34B

Cash & Equivalents

$655.00M

Free Cash Flow

$470.00M

Financial Statements
Beta
Revenue$1.66B
Cost of Revenue$327.00M
Gross Profit$1.34B
SG&A Expenses$33.00M
Operating Expenses$630.00M
Operating Income$706.00M
Interest Expense$72.00M
Net Income$529.00M
EPS (Basic)$0.95
EPS (Diluted)$0.94
Shares Outstanding (Basic)559.00M
Shares Outstanding (Diluted)563.00M

Key Highlights

  • 1Total revenues, less transaction-based expenses, grew to $3.9 billion for the nine months ended September 30, 2019, up 6% year-over-year.
  • 2Third-quarter revenues, less transaction-based expenses, increased 11% year-over-year to $1.3 billion.
  • 3Operating income for the nine months rose 8% to $2.05 billion, and for the third quarter, it increased 17% to $706 million.
  • 4Net 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.
  • 5The company repurchased $1.1 billion of common stock during the nine months ended September 30, 2019, underscoring capital return initiatives.
  • 6Total assets grew to $95.3 billion as of September 30, 2019, indicating continued business expansion.
  • 7The launch of Bakkt's Bitcoin Futures contract in September 2019 marked a significant step into the digital assets space.

Frequently Asked Questions

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.

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.

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.

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.