Intercontinental Exchange reports record 1Q 2018 revenues, up 5% YoY


Intercontinental Exchange

Intercontinental Exchange (NYSE: ICE), the operator of global exchanges and clearing houses and provider of data and listing services, has reported financial results for the first quarter of 2018.

For the quarter ended March 31, 2018, consolidated net income attributable to ICE was $464 million on $1.2 billion of consolidated revenues less transaction-based expenses. First quarter GAAP diluted earnings per share (EPS) were $0.79. Adjusted net income was $525 million in the first quarter and adjusted diluted EPS were a record $0.90, up 22% year-over-year.

We are pleased to report on our first quarter performance, delivering strong results across our trading and clearing and our data and listings segments including record revenues,” said ICE Chairman and CEO Jeffrey C. Sprecher. “We completed our strategic acquisition of BondPoint while also generating solid organic growth, as customers’ demand of our comprehensive suite of multi-asset class workflow and risk management solutions continues to increase.

Scott A. Hill, ICE CFO, added:

Our first quarter performance produced revenue growth, margin expansion and strong cash flow allowing us to return nearly $540 million to stockholders through April, up 28% compared to the prior year. 2018 is off to a promising start and we are well positioned to build on our proven track record of growth, customer service and value creation for our stockholders.

First Quarter 2018 GAAP Results

First quarter 2018 consolidated revenues, less transaction-based expenses, were $1.2 billion. Trading and clearing segment revenues, less transaction-based expenses, were $596 million in the first quarter 2018, up 11% compared to the prior first quarter. Data and listings segment revenues were $629 million in the first quarter of 2018, including data services revenues of $520 million, and listings revenues of $109 million.

Consolidated operating expenses were $575 million for the first quarter of 2018. On an adjusted basis, consolidated operating expenses were $494 million. Consolidated operating income for the first quarter was $650 million and the operating margin was 53%. The effective tax rate for the first quarter was 23%.

Unrestricted cash was $523 million and outstanding debt was $6.9 billion as of March 31, 2018.

Financial Guidance

  • ICE’s second quarter 2018 GAAP operating expenses are expected to be in a range of $570 million to $580 million and adjusted operating expenses are expected to be in a range of $500 million to $510 million.
  • ICE’s full year 2018 GAAP operating expenses are expected to be in a range of $2.28 billion to $2.32 billion and adjusted operating expenses are expected to be in a range of $2.00 billion to $2.04 billion.
  • ICE’s interest expense is expected to be $55 million in the second quarter.
  • ICE’s diluted share count for the second quarter is expected to be in the range of 581 million to 583 million weighted average shares outstanding and 580 million to 585 million for the full year.

Consolidated Statements of Income

(In millions, except per share amounts)

(Unaudited)

Three Months Ended
March 31,
Revenues: 2018 2017
Transaction and clearing, net $ 898 $ 798
Data services 520 520
Listings 109 108
Other revenues 53 45
Total revenues 1,580 1,471
Transaction-based expenses:
Section 31 fees 121 91
Cash liquidity payments, routing and clearing 234 214
Total revenues, less transaction-based expenses 1,225 1,166
Operating expenses:
Compensation and benefits 240 247
Professional services 30 32
Acquisition-related transaction and integration costs 12 14
Technology and communication 105 98
Rent and occupancy 17 18
Selling, general and administrative 33 41
Depreciation and amortization 138 134
Total operating expenses 575 584
Operating income 650 582
Other income (expense):
Interest expense (52 ) (45 )
Other income, net 19 188
Other income (expense), net (33 ) 143
Income before income tax expense 617 725
Income tax expense 143 214
Net income $ 474 $ 511
Net income attributable to non-controlling interest (10 ) (8 )
Net income attributable to Intercontinental Exchange, Inc. $ 464 $ 503
Earnings per share attributable to Intercontinental Exchange, Inc. common stockholders:
Basic $ 0.80 $ 0.85
Diluted $ 0.79 $ 0.84
Weighted average common shares outstanding:
Basic 582 594
Diluted 586 599
Dividend per share $ 0.24 $ 0.20

Consolidated Balance Sheets

(In millions)

(Unaudited)

As of As of
March 31, 2018 December 31, 2017
Assets:
Current assets:
Cash and cash equivalents $ 523 $ 535
Short-term restricted cash and cash equivalents 804 769
Customer accounts receivable, net 1,167 903
Margin deposits, guaranty funds, and delivery contracts receivable 53,979 51,222
Prepaid expenses and other current assets 161 133
Total current assets 56,634 53,562
Property and equipment, net 1,235 1,246
Other non-current assets:
Goodwill 12,514 12,216
Other intangible assets, net 10,326 10,269
Long-term restricted cash and cash equivalents 331 264
Other non-current assets 1,022 707
Total other non-current assets 24,193 23,456
Total assets $ 82,062 $ 78,264
Liabilities and Equity:
Current liabilities:
Accounts payable and accrued liabilities $ 476 $ 462
Section 31 fees payable 120 128
Accrued salaries and benefits 104 227
Deferred revenue 468 125
Short-term debt 2,623 1,833
Margin deposits, guaranty funds, and delivery contracts payable 53,979 51,222
Other current liabilities 176 178
Total current liabilities 57,946 54,175
Non-current liabilities:
Non-current deferred tax liability, net 2,292 2,298
Long-term debt 4,269 4,267
Accrued employee benefits 240 243
Other non-current liabilities 309 296
Total non-current liabilities 7,110 7,104
Total liabilities 65,056 61,279
Equity:
Intercontinental Exchange, Inc. stockholders’ equity:
Common stock 6 6
Treasury stock, at cost (1,448 ) (1,076 )
Additional paid-in capital 11,428 11,392
Retained earnings 7,182 6,858
Accumulated other comprehensive loss (190 ) (223 )
Total Intercontinental Exchange, Inc. stockholders’ equity 16,978 16,957
Non-controlling interest in consolidated subsidiaries 28 28
Total equity 17,006 16,985
Total liabilities and equity $ 82,062 $ 78,264

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Intercontinental Exchange reports record 1Q 2018 revenues, up 5% YoY

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