Canada markets closed
  • S&P/TSX

    20,490.36
    -111.74 (-0.54%)
     
  • S&P 500

    4,432.99
    -40.76 (-0.91%)
     
  • DOW

    34,584.88
    -166.44 (-0.48%)
     
  • CAD/USD

    0.7832
    -0.0054 (-0.69%)
     
  • CRUDE OIL

    71.96
    -0.65 (-0.90%)
     
  • BTC-CAD

    61,588.82
    +904.25 (+1.49%)
     
  • CMC Crypto 200

    1,193.48
    -32.05 (-2.62%)
     
  • GOLD FUTURES

    1,753.90
    -2.80 (-0.16%)
     
  • RUSSELL 2000

    2,236.87
    +3.96 (+0.18%)
     
  • 10-Yr Bond

    1.3700
    +0.0390 (+2.93%)
     
  • NASDAQ

    15,043.97
    -137.96 (-0.91%)
     
  • VOLATILITY

    20.81
    +2.12 (+11.34%)
     
  • FTSE

    6,963.64
    -63.84 (-0.91%)
     
  • NIKKEI 225

    30,500.05
    +176.71 (+0.58%)
     
  • CAD/EUR

    0.6677
    -0.0021 (-0.31%)
     

Intercontinental Exchange Reports Strong Second Quarter 2021

  • Oops!
    Something went wrong.
    Please try again later.
·18 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

ATLANTA & NEW YORK, July 29, 2021--(BUSINESS WIRE)--

Jeffrey C. Sprecher,

ICE Chairman & Chief Executive Officer, said,

"We are pleased to report our second quarter results that extend our track record of growth. Amidst a dynamic macroeconomic backdrop, customers continue to access our networks to manage risk, consume data and drive workflow efficiencies. As we look to the second half of the year and beyond, we will continue to leverage our data, technology & network expertise to deliver innovative solutions for our customers and drive growth for our stockholders."

Intercontinental Exchange (NYSE: ICE), a leading global provider of data, technology and market infrastructure, today reported financial results for the second quarter of 2021. For the quarter ended June 30, 2021, consolidated net income attributable to ICE was $1.3 billion on $1.7 billion of consolidated revenues, less transaction-based expenses. Second quarter GAAP diluted earnings per share (EPS) were $2.22. Adjusted net income attributable to ICE was $657 million in the second quarter and adjusted diluted EPS were $1.16. 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 free cash flow.

Warren Gardiner, ICE Chief Financial Officer, added: "In the second quarter, we once again grew revenues, operating income, earnings and cash flow. Our performance is a testament to the power of our diverse business model, which, through an array of macroeconomic environments, continues to deliver consistent and compounding growth for our stockholders."

Second Quarter 2021 Business Highlights

$ (in millions)

Net Revenue

Op Margin

Adj Op Margin

2Q21

Exchanges

$909

64%

67%

Fixed Income and Data Services

$458

26%

36%

Mortgage Technology

$340

28%

56%

Consolidated

$1,707

47%

56%

Second quarter consolidated net revenues were $1.7 billion, up 22% year-over-year including exchange net revenues of $909 million, fixed income and data services revenues of $458 million and mortgage technology revenues of $340 million. Consolidated operating expenses were $908 million for the second quarter of 2021. On an adjusted basis, consolidated operating expenses were $744 million. Consolidated operating income for the second quarter was $799 million and the operating margin was 47%. On an adjusted basis, consolidated operating income for the second quarter was $963 million and the adjusted operating margin was 56%.

Exchanges Segment Results

Second quarter exchange net revenues were $909 million. Exchange operating expenses were $326 million and on an adjusted basis, were $302 million in the second quarter. Segment operating income for the second quarter was $583 million and the operating margin was 64%. On an adjusted basis, operating income was $607 million and the adjusted operating margin was 67%.

$ (in millions)

2Q21

2Q20

% Chg

Revenue, net:

Energy

$274

$276

—%

Ags and Metals

62

59

3%

Financials(1)

83

76

8%

Cash Equities and Equity Options

85

101

(17)%

OTC and Other(2)

78

75

4%

Data and Connectivity Services

208

195

7%

Listings

119

111

8%

Segment Revenue

$909

$893

2%

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

(2) OTC & other includes physical energy, interest income 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

Second quarter fixed income and data services revenues were $458 million. Fixed income and data services operating expenses were $337 million and adjusted operating expenses were $291 million in the second quarter. Segment operating income for the second quarter was $121 million and the operating margin was 26%. On an adjusted basis, operating income was $167 million and the adjusted operating margin was 36%.

$ (in millions)

2Q21

2Q20

% Chg

Const
Curr(1)

Revenue:

Fixed Income Execution

$13

$20

(33)%

(33)%

CDS Clearing

38

47

(19)%

(21)%

Fixed Income Data and Analytics

268

252

6%

5%

Other Data and Network Services

139

127

9%

7%

Segment Revenue

$458

$446

3%

1%

(1) Net revenues in constant currency are calculated holding both the pound sterling and euro at the average exchange rate from 2Q20, 1.2413 and 1.1011, respectively.

Mortgage Technology Segment Results

Second quarter mortgage technology revenues were $340 million. Mortgage technology operating expenses were $245 million and adjusted operating expenses were $151 million in the second quarter. Segment operating income for the second quarter was $95 million and the operating margin was 28%. On an adjusted basis, operating income was $189 million and the adjusted operating margin was 56%.

$ (in millions)

2Q21

2Q20

% Chg

Revenue:

Origination Technology

$241

$—

n/a

Closing Solutions

69

54

26%

Data and Analytics

18

n/a

Other

12

2

n/a

Segment Revenue

$340

$56

n/a

Other Matters

  • The effective tax rate for the second quarter of 2021 was 35%.

  • Operating cash flow through the second quarter of 2021 was $1.6 billion and free cash flow was $1.4 billion.

  • Unrestricted cash was $602 million and outstanding debt was $14.5 billion as of June 30, 2021.

  • Through the second quarter of 2021, ICE paid $374 million in dividends.

  • ICE recorded a pre-tax gain of $1.23 billion related to the full divestment of its stake in Coinbase in the second quarter of 2021.

Financial Guidance

  • ICE's third quarter 2021 total recurring revenues are expected to be in a range of $870 million to $885 million.

  • ICE's third quarter 2021 GAAP operating expenses are expected to be in a range of $930 million to $940 million and adjusted operating expenses(1) are expected to be in a range of $770 million to $780 million and include $55 million related to Bakkt.

  • ICE's full year 2021 GAAP operating expenses are expected to be in a range of $3.610 billion to $3.640 billion and adjusted operating expenses(1) are expected to be in a range of $2.950 billion to $2.980 billion to include third quarter Bakkt expense of $55 million.

  • ICE's third quarter 2021 GAAP non-operating expense(2) is expected to be in the range of $110 million to $115 million and adjusted non-operating expense is expected to be in the range of $100 million to $105 million.

  • ICE's full year 2021 capital expenditures are expected to be in a range of $430 million to $450 million.

  • ICE's diluted share count for the third quarter is expected to be in the range of 563 million to 569 million weighted average shares outstanding.

(1) 2021 and 3Q21 non-GAAP operating expenses exclude amortization of acquisition-related intangibles and transaction & integration costs.

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

Earnings Conference Call Information

ICE will hold a conference call today, July 29, 2021, at 8:30 a.m. ET to review its second quarter 2021 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 844-512-2926 from the United States, 866-284-3684 from Canada or 412-317-6300 from outside of the United States and Canada. Telephone participants are required to provide the participant entry number 0007154 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 third quarter 2021 earnings has been scheduled for October 28th, 2021 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: http://ir.theice.com/investors-and-media/supplemental-volume-info/default.aspx

Consolidated Statements of Income

(In millions, except per share amounts)

(Unaudited)

Six Months Ended
June 30,

Three Months Ended
June 30,

Revenues:

2021

2020

2021

2020

Exchanges

$

2,942

$

3,069

$

1,336

$

1,464

Fixed income and data services

926

910

458

446

Mortgage technology

695

102

340

56

Total revenues

4,563

4,081

2,134

1,966

Transaction-based expenses:

Section 31 fees

166

320

41

154

Cash liquidity payments, routing and clearing

893

807

386

417

Total revenues, less transaction-based expenses

3,504

2,954

1,707

1,395

Operating expenses:

Compensation and benefits

719

551

365

273

Professional services

81

63

37

34

Acquisition-related transaction and integration costs

28

14

10

2

Technology and communication

327

257

165

126

Rent and occupancy

41

40

20

19

Selling, general and administrative

111

89

60

40

Depreciation and amortization

506

314

251

157

Total operating expenses

1,813

1,328

908

651

Operating income

1,691

1,626

799

744

Other income (expense):

Interest income

8

2

Interest expense

(213

)

(156

)

(106

)

(84

)

Other income, net

1,287

31

1,239

11

Other income (expense), net

1,074

(117

)

1,133

(71

)

Income before income tax expense

2,765

1,509

1,932

673

Income tax expense

862

323

679

145

Net income

$

1,903

$

1,186

$

1,253

$

528

Net income attributable to non-controlling interest

(5

)

(13

)

(1

)

(5

)

Net income attributable to Intercontinental Exchange, Inc.

$

1,898

$

1,173

$

1,252

$

523

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

Basic

$

3.38

$

2.14

$

2.23

$

0.96

Diluted

$

3.36

$

2.13

$

2.22

$

0.95

Weighted average common shares outstanding:

Basic

562

549

563

546

Diluted

565

552

565

549

Consolidated Balance Sheets

(In millions)

(Unaudited)

As of

As of

June 30, 2021

December 31, 2020

Assets:

Current assets:

Cash and cash equivalents

$

602

$

583

Short-term restricted cash and cash equivalents

1,046

1,000

Customer accounts receivable, net

1,300

1,230

Margin deposits, guaranty funds and delivery contracts receivable

92,080

84,083

Prepaid expenses and other current assets

1,038

323

Total current assets

96,066

87,219

Property and equipment, net

1,745

1,713

Other non-current assets:

Goodwill

21,315

21,291

Other intangible assets, net

14,098

14,408

Long-term restricted cash and cash equivalents

398

408

Other non-current assets

568

1,161

Total other non-current assets

36,379

37,268

Total assets

$

134,190

$

126,200

Liabilities and Equity:

Current liabilities:

Accounts payable and accrued liabilities

$

636

$

639

Section 31 fees payable

163

207

Accrued salaries and benefits

210

346

Deferred revenue

428

158

Short-term debt

318

2,411

Margin deposits, guaranty funds and delivery contracts payable

92,080

84,083

Other current liabilities

415

155

Total current liabilities

94,250

87,999

Non-current liabilities:

Non-current deferred tax liability, net

3,711

3,563

Long-term debt

14,135

14,126

Accrued employee benefits

203

206

Non-current operating lease liability

287

320

Other non-current liabilities

399

359

Total non-current liabilities

18,735

18,574

Total liabilities

112,985

106,573

Commitments and contingencies

Redeemable non-controlling interest in consolidated subsidiaries

89

93

Equity:

Intercontinental Exchange, Inc. stockholders’ equity:

Common stock

6

6

Treasury stock, at cost

(5,267

)

(5,200

)

Additional paid-in capital

13,952

13,845

Retained earnings

12,563

11,039

Accumulated other comprehensive loss

(174

)

(192

)

Total Intercontinental Exchange, Inc. stockholders’ equity

21,080

19,498

Non-controlling interest in consolidated subsidiaries

36

36

Total equity

21,116

19,534

Total liabilities and equity

$

134,190

$

126,200

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 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

Six Months
Ended

June 30,

Six Months
Ended

June 30,

Six Months
Ended

June 30,

Six Months
Ended

June 30,

2021

2020

2021

2020

2021

2020

2021

2020

Total revenues, less transaction-based expenses

$1,883

$1,942

$926

$910

$695

$102

$3,504

$2,954

Operating expenses

647

622

672

656

494

50

1,813

1,328

Less: Amortization of acquisition-related intangibles

37

35

91

96

185

10

313

141

Less: Transaction and integration costs and acquisition-related success fees

10

10

17

27

10

Less: Accruals relating to a regulatory settlement

5

5

Adjusted operating expenses

$600

$577

$581

$555

$292

$40

$1,473

$1,172

Operating income

$1,236

$1,320

$254

$254

$201

$52

$1,691

$1,626

Adjusted operating income

$1,283

$1,365

$345

$355

$403

$62

$2,031

$1,782

Operating margin

66

%

68

%

27

%

28

%

29

%

50

%

48

%

55

%

Adjusted operating margin

68

%

70

%

37

%

39

%

58

%

59

%

58

%

60

%

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

June 30,

Three Months
Ended

June 30,

Three Months
Ended

June 30,

Three Months
Ended

June 30,

2021

2020

2021

2020

2021

2020

2021

2020

Total revenues, less transaction-based expenses

$909

$893

$458

$446

$340

$56

$1,707

$1,395

Operating expenses

326

300

337

326

245

25

908

651

Less: Amortization of acquisition-related intangibles

19

18

46

48

90

5

155

71

Less: Transaction and integration costs and acquisition-related success fees

5

4

9

Less: Accruals relating to a regulatory settlement

5

5

Adjusted operating expenses

$302

$282

$291

$273

$151

$20

$744

$575

Operating income

$583

$593

$121

$120

$95

$31

$799

$744

Adjusted operating income

$607

$611

$167

$173

$189

$36

$963

$820

Operating margin

64

%

66

%

26

%

27

%

28

%

53

%

47

%

53

%

Adjusted operating margin

67

%

68

%

36

%

39

%

56

%

62

%

56

%

59

%

Adjusted Net Income Attributable to ICE and EPS

(In millions)

(Unaudited)

Six Months
Ended June 30,
2021

Six Months
Ended June 30,
2020

Net income attributable to ICE

$

1,898

$

1,173

Add: Amortization of acquisition-related intangibles

313

141

Add: Transaction and integration costs and acquisition-related success fees

27

10

Add: Extinguishment of December 2020 Senior Notes

14

Add: Accruals relating to a regulatory settlement

5

Add: Impairment of CAT promissory notes

2

Less: Gain on sale of Coinbase equity investment

(1,227

)

Less: Gain related to the settlement of an acquisition-related indemnification claim

(7

)

Less: Net income from unconsolidated investees

(34

)

(35

)

Add/(Less): Income tax effect for the above items

248

(33

)

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

197

(10

)

Adjusted net income attributable to ICE

$

1,415

$

1,267

Basic earnings per share

$

3.38

$

2.14

Diluted earnings per share

$

3.36

$

2.13

Adjusted basic earnings per share

$

2.52

$

2.31

Adjusted diluted earnings per share

$

2.50

$

2.30

Basic weighted average common shares outstanding

562

549

Diluted weighted average common shares outstanding

565

552

Adjusted Net Income Attributable to ICE and EPS

(In millions)

(Unaudited)

Three Months
Ended June 30,
2021

Three Months
Ended June
30, 2020

Net income attributable to ICE

$

1,252

$

523

Add: Amortization of acquisition-related intangibles

155

71

Add: Transaction and integration costs and acquisition-related success fees

9

Add: Extinguishment of December 2020 Senior Notes

14

Add: Accruals relating to a regulatory settlement

5

Add: Impairment of CAT promissory notes

2

Less: Gain on sale of Coinbase equity investment

(1,227

)

Less: Gain related to the settlement of an acquisition-related indemnification claim

(7

)

Less: Net income from unconsolidated investees

(9

)

(18

)

Add/(Less): Income tax effect for the above items

288

(16

)

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

196

(9

)

Adjusted net income attributable to ICE

$

657

$

572

Basic earnings per share

$

2.23

$

0.96

Diluted earnings per share

$

2.22

$

0.95

Adjusted basic earnings per share

$

1.17

$

1.05

Adjusted diluted earnings per share

$

1.16

$

1.04

Basic weighted average common shares outstanding

563

546

Diluted weighted average common shares outstanding

565

549

Free Cash Flow Calculation

(In millions)

(Unaudited)

Six months ended
June 30, 2021

Six months ended
June 30, 2020

Cash flow from operations

$1,607

$1,378

Less: Capital expenditures and capitalized software development costs

(240

)

(144

)

Add/(Less): Section 31 fees, net

44

(178

)

Free cash flow

$1,411

$1,056

About Intercontinental Exchange

Intercontinental Exchange, Inc. (NYSE: ICE) is a Fortune 500 company that designs, builds and operates digital networks to connect people to opportunity. We provide financial technology and data services across major asset classes that offer our customers access to mission-critical workflow tools that increase transparency and operational efficiencies. We operate exchanges, including the New York Stock Exchange, and clearing houses that help people invest, raise capital and manage risk across multiple asset classes. Our comprehensive fixed income data services and execution capabilities provide information, analytics and platforms that help our customers capitalize on opportunities and operate more efficiently. At ICE Mortgage Technology, we are transforming and digitizing the U.S. residential mortgage process, from consumer engagement through loan registration. Together, we transform, streamline and automate 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 here. 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, 2020, as filed with the SEC on February 4, 2021. 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

View source version on businesswire.com: https://www.businesswire.com/news/home/20210729005320/en/

Contacts

ICE Investor Relations Contact:
Mary Caroline O'Neal
+1 770 738 2151
marycaroline.oneal@ice.com
investors@ice.com

ICE Media Contact:
Josh King
+1 212 656 2490
josh.king@ice.com
media@ice.com

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting