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Intercontinental Exchange (ICE) Q2 Earnings Top Estimates

·5 min read

Intercontinental Exchange ICE reported second-quarter 2022 adjusted earnings per share of $1.32, which beat the Zacks Consensus Estimate of $1.28. Also, the bottom line increased 14% on a year-over-year basis.

ICE witnessed persistent revenue growth, driven by strong Exchanges and Fixed Income and Data Services. The results benefited from the strength of its technology and data services.

Intercontinental Exchange Inc. Price, Consensus and EPS Surprise

 

Intercontinental Exchange Inc. Price, Consensus and EPS Surprise
Intercontinental Exchange Inc. Price, Consensus and EPS Surprise

Intercontinental Exchange Inc. price-consensus-eps-surprise-chart | Intercontinental Exchange Inc. Quote

Performance in Detail 

Intercontinental Exchange’s revenues, less transaction-based expenses, of $1.8 billion increased 6% year over year on higher revenues from Exchanges and Fixed Income and Data Services.  The top line beat the Zacks Consensus Estimate by 0.6%.

Net revenues from Exchanges were $1 billion, up 11% year over year. Fixed Income and Data Services revenues were $512 million, which increased 12% year over year. Mortgage Technology revenues decreased 13% to $297 million.

Total operating expenses increased 4.1% year over year to $945 million, primarily due to higher acquisition-related transaction and integration costs, technology and communication and depreciation and amortization expense. Adjusted operating expenses were $740 million in the second quarter, down 0.5% from the year-ago figure.

Adjusted operating income improved 11.5% year over year to $1.1 billion. Adjusted operating margin expanded 300 basis points (bps) from the year-ago quarter to 59%.

Exchanges' adjusted operating income of $718 million was up 18.3% year over year. Adjusted operating margin expanded 400 bps to 71%. Fixed Income and Data Services' adjusted operating income rose 30.5% to $218 million. Adjusted operating margin expanded 700 bps to 43%. Mortgage Technology’s adjusted operating income of $138 million was down 27% year over year. Adjusted operating margin contracted 1000 bps to 6%.

Financial Update

As of Jun 30, 2022, Intercontinental Exchange had cash and cash equivalents of $6.9 billion, up more than four-fold from the Dec 31, 2021 level. Long-term debt of $18.1 billion increased 46.1% from the 2021-end level.

Total equity was $22.9 billion as of Jun 30, 2022, up 0.5% from 2021-end.

Operating cash flow was a record $1.7 billion in the first half of 2022, up 7.3% year over year. Free cash flow was $1.4 billion, down 0.3% year over year.

ICE repurchased $635 million worth of shares and paid out $427 million in dividends in the first half of 2022.

Q3 Guidance

Operating expenses for third-quarter 2022 are projected in the range of $903-$913 million. Adjusted operating expenses are expected in the range of $743-$753 million.

Non-operating expense is expected to be in the range of $180 million to $185 million. Adjusted non-operating expense is expected in the range of $115-$120 million.

Weighted average shares outstanding are anticipated between 558 million and 563 million shares.

2022 Guidance

Operating expenses are estimated in the range of $3.599 billion to $3.649 billion. Adjusted operating expenses are expected to be in the range of $2.97 billion to $2.99 billion

Dividend Update

The board of directors approved a dividend of 38 cents per share for the third quarter of 2022, up 15% from 33 cents per share paid in the third quarter of 2021. The dividend will be paid out on Sep 30, 2022 to shareholders of record on Sep 16, 2022.

Zacks Rank

Intercontinental Exchange currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Securities and Exchanges

Of the industry players that have reported second-quarter results so far, Nasdaq Inc. NDAQ, CME Group CME and MarketAxess Holdings MKTX beat the respective Zacks Consensus Estimate for earnings.

Nasdaq reported second-quarter 2022 adjusted earnings per share of $2.07, beating the Zacks Consensus Estimate of $1.91 by 8.4%. The bottom line improved 8.9% year over year. Nasdaq’s revenues of $893 million increased 5.6% year over year. The top line beat the Zacks Consensus Estimate by 1.1%. The operating margin of 54% remained unchanged year over year.

CME Group’s second-quarter 2022 adjusted earnings per share of $1.97 beat the Zacks Consensus Estimate of $1.92 and increased 20.1% year over year due to higher clearing and transaction fees and market data and information services. Revenues of $1.2 billion increased 4.9% year over year and beat the Zacks Consensus Estimate by 5%. ADV was 23.1 million contracts, including non-U.S. ADV of 6.3 million contracts, led by 40% growth in Latin America, 36% in Asia and 15% in EMEA. This marks the third-highest quarterly average daily volume.

MarketAxess’ second-quarter 2022 earnings per share of $1.78 outpaced the Zacks Consensus Estimate by 4.1% and improved 1% year over year. Total revenues of $182 million increased 3% year over year but fell short of the consensus mark by 1.2%. U.S. high-grade trading volume of MarketAxess increased 11% year over year. Emerging markets' trading volume rose 11.5% year over year.


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