- 3Q21 net revenues of $1.8 billion, +28% y/y
Jeffrey C. Sprecher,ICE Chairman & Chief Executive
Officer, said,
"We are pleased to report our strong third quarter
results which extend our track record of growth. Our customers
continue to rely on our mission-critical data and technology to
provide transparency and efficiencies across asset classes and
through an array of macroeconomic environments. We remain focused
on collaboration and innovation to serve our customers, generate
growth and deliver value to our stockholders."
- 3Q21 GAAP diluted EPS of $1.12, +58% y/y
- 3Q21 adj. diluted EPS of $1.30, +34% y/y
- 3Q21 operating income of $878 million, +40% y/y; adjusted
operating income of $1.0 billion, +31% y/y
- 3Q21 operating margin of 49%; adj. operating margin of
58%
- Expect to resume share repurchases in the fourth
quarter
- Bakkt completes merger with VPC Impact Acquisition
Holdings
- Reached an agreement to sell 9.85% stake in Euroclear for
€709 million
Intercontinental Exchange (NYSE: ICE), a leading global provider
of data, technology and market infrastructure, today reported
financial results for the third quarter of 2021. For the quarter
ended September 30, 2021, consolidated net income attributable to
ICE was $633 million on $1.8 billion of consolidated revenues, less
transaction-based expenses. Third quarter GAAP diluted earnings per
share (EPS) were $1.12. Adjusted net income attributable to ICE was
$735 million in the third quarter and adjusted diluted EPS were
$1.30. 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
third quarter, we generated double-digit revenue, operating income
and earnings per share growth. This strong performance, including
double digit growth in our recurring revenues, was driven by
contributions from all three business segments and is a testament
to the power of our diverse business model. Additionally, our
strong cash flows and strategic capital allocation will enable us
to accelerate capital return to our shareholders while also
continuing to invest."
Third Quarter 2021 Business Highlights
$ (in millions)
Net Revenue
Op Margin
Adj Op Margin
3Q21
Exchanges
$959
66%
68%
Fixed Income and Data Services
$477
29%
39%
Mortgage Technology
$366
30%
58%
Consolidated
$1,802
49%
58%
Third quarter consolidated net revenues were $1.8 billion, up
28% year-over-year including exchange net revenues of $959 million,
fixed income and data services revenues of $477 million and
mortgage technology revenues of $366 million. Consolidated
operating expenses were $924 million for the third quarter of 2021.
On an adjusted basis, consolidated operating expenses were $755
million. Consolidated operating income for the third quarter was
$878 million and the operating margin was 49%. On an adjusted
basis, consolidated operating income for the third quarter was $1.0
billion and the adjusted operating margin was 58%.
Exchanges Segment Results
Third quarter exchange net revenues were $959 million. Exchange
operating expenses were $330 million and on an adjusted basis, were
$309 million in the third quarter. Segment operating income for the
third quarter was $629 million and the operating margin was 66%. On
an adjusted basis, operating income was $650 million and the
adjusted operating margin was 68%.
$ (in millions)
3Q21
3Q20
% Chg
Revenue, net:
Energy
$316
$229
38%
Ags and Metals
56
54
5%
Financials(1)
93
76
24%
Cash Equities and Equity Options
79
74
7%
OTC and Other(2)
84
73
14%
Data and Connectivity Services
208
201
3%
Listings
123
111
10%
Segment Revenue
$959
$818
17%
(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
Third quarter fixed income and data services revenues were $477
million. Fixed income and data services operating expenses were
$338 million and adjusted operating expenses were $293 million in
the third quarter. Segment operating income for the third quarter
was $139 million and the operating margin was 29%. On an adjusted
basis, operating income was $184 million and the adjusted operating
margin was 39%.
$ (in millions)
3Q21
3Q20
% Chg
Const Curr(1)
Revenue:
Fixed Income Execution
$12
$15
(18)%
(18)%
CDS Clearing
51
47
9%
9%
Fixed Income Data and Analytics
272
259
5%
5%
Other Data and Network Services
142
129
10%
9%
Segment Revenue
$477
$450
6%
6%
(1) Net revenues in constant currency are
calculated holding both the pound sterling and euro at the average
exchange rate from 3Q20, 1.2916 and 1.1691, respectively.
Mortgage Technology Segment Results
Third quarter mortgage technology revenues were $366 million.
Mortgage technology operating expenses were $256 million and
adjusted operating expenses were $153 million in the third quarter.
Segment operating income for the third quarter was $110 million and
the operating margin was 30%. On an adjusted basis, operating
income was $213 million and the adjusted operating margin was
58%.
$ (in millions)
3Q21
3Q20
% Chg(1)
Revenue:
Origination Technology
$245
$67
n/a
Closing Solutions
88
67
31%
Data and Analytics
19
5
n/a
Other
14
4
n/a
Segment Revenue
$366
$143
n/a
(1) Percentage changes in the table above
deemed "n/a" are not meaningful due to the acquisition of Ellie Mae
in September 2020.
Other Matters
- The effective tax rate for the third quarter of 2021 was
23%.
- Operating cash flow through the third quarter of 2021 was $2.1
billion and free cash flow was $2.0 billion.
- Unrestricted cash was $618 million and outstanding debt was
$14.2 billion as of September 30, 2021.
- Through the third quarter of 2021, ICE paid $561 million in
dividends.
- ICE expects to resume share repurchases in the fourth
quarter.
- Bakkt completed its merger with VPC Impact Acquisition Holdings
on October 15, 2021.
- ICE reached an agreement to sell its 9.85% stake in Euroclear
for €709 million. The transaction could close as soon as the first
half of 2022, subject to regulatory approvals.
Financial Guidance
- ICE's fourth quarter 2021 total recurring revenues are expected
to be in a range of $892 million to $907 million.
- Exchanges fourth quarter 2021 total recurring revenues are
expected to be in a range of $330 million to $335 million.
- Fixed Income & Data Services fourth quarter 2021 total
recurring revenues are expected to be in a range of $415 million to
$420 million.
- Mortgage Technology fourth quarter 2021 total recurring
revenues are expected to be in a range of $147 million to $152
million.
- ICE's fourth quarter 2021 GAAP operating expenses are expected
to be in a range of $922 million to $932 million. Adjusted
operating expenses(1) are expected to be in a range of $737 million
to $747 million, including approximately $10 million related to
Bakkt.
- ICE's fourth quarter 2021 GAAP non-operating income(2) is
expected to be in the range of $1.185 billion to $1.190 billion,
including an expected gain on the Bakkt merger of approximately
$1.3 billion. Adjusted non-operating expense is expected to be in
the range of $100 million to $105 million.
- ICE's diluted share count for the fourth quarter is expected to
be in the range of 563 million to 569 million weighted average
shares outstanding, excluding the impact of any potential share
repurchases.
(1) 2021 and 4Q21 non-GAAP operating
expenses exclude amortization of acquisition-related intangibles
and transaction & integration costs.
(2) Non-operating income / expense
includes interest income, interest expense and net other income.
Non-GAAP non-operating expense excludes the equity earnings from
unconsolidated investees and the expected gain on Bakkt merger.
Earnings Conference Call Information
ICE will hold a conference call today, October 28, 2021, at 8:30
a.m. ET to review its third 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 or 412-317-6300 from outside of
the United States. Telephone participants are required to
provide the participant entry number 8624010 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 fourth quarter 2021 earnings has
been scheduled for February 3rd, 2022 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:
https://ir.theice.com/home/default.aspx.
Consolidated Statements of
Income
(In millions, except per share
amounts)
(Unaudited)
Nine Months Ended
September 30,
Three Months Ended
September 30,
Revenues:
2021
2020
2021
2020
Exchanges
$
4,376
$
4,406
$
1,434
$
1,337
Fixed income and data services
1,403
1,360
477
450
Mortgage technology
1,061
245
366
143
Total revenues
6,840
6,011
2,277
1,930
Transaction-based expenses:
Section 31 fees
204
465
38
145
Cash liquidity payments, routing and
clearing
1,330
1,181
437
374
Total revenues, less transaction-based
expenses
5,306
4,365
1,802
1,411
Operating expenses:
Compensation and benefits
1,093
849
374
298
Professional services
124
100
43
37
Acquisition-related transaction and
integration costs
42
90
14
76
Technology and communication
495
388
168
131
Rent and occupancy
61
59
20
19
Selling, general and administrative
163
132
52
43
Depreciation and amortization
759
494
253
180
Total operating expenses
2,737
2,112
924
784
Operating income
2,569
2,253
878
627
Other income (expense):
Interest income
—
9
—
1
Interest expense
(321
)
(245
)
(108
)
(89
)
Other income, net
1,341
75
54
44
Other income (expense), net
1,020
(161
)
(54
)
(44
)
Income before income tax expense
3,589
2,092
824
583
Income tax expense
1,049
512
187
189
Net income
$
2,540
$
1,580
$
637
$
394
Net income attributable to non-controlling
interest
(9
)
(17
)
(4
)
(4
)
Net income attributable to
Intercontinental Exchange, Inc.
$
2,531
$
1,563
$
633
$
390
Earnings per share attributable to
Intercontinental Exchange, Inc. common stockholders:
Basic
$
4.50
$
2.85
$
1.12
$
0.71
Diluted
$
4.48
$
2.83
$
1.12
$
0.71
Weighted average common shares
outstanding:
Basic
563
549
563
548
Diluted
565
552
566
551
Consolidated Balance
Sheets
(In millions)
As of
September 30, 2021
As of
(Unaudited)
December 31, 2020
Assets:
Current assets:
Cash and cash equivalents
$
618
$
583
Short-term restricted cash and cash
equivalents
1,045
1,000
Customer accounts receivable, net
1,327
1,230
Margin deposits, guaranty funds and
delivery contracts receivable
108,698
84,083
Prepaid expenses and other current
assets
1,032
323
Total current assets
112,720
87,219
Property and equipment, net
1,723
1,713
Other non-current assets:
Goodwill
21,309
21,291
Other intangible assets, net
13,928
14,408
Long-term restricted cash and cash
equivalents
398
408
Other non-current assets
584
1,161
Total other non-current assets
36,219
37,268
Total assets
$
150,662
$
126,200
Liabilities and Equity:
Current liabilities:
Accounts payable and accrued
liabilities
$
696
$
639
Section 31 fees payable
14
207
Accrued salaries and benefits
275
346
Deferred revenue
322
158
Short-term debt
1,831
2,411
Margin deposits, guaranty funds and
delivery contracts payable
108,698
84,083
Other current liabilities
196
155
Total current liabilities
112,032
87,999
Non-current liabilities:
Non-current deferred tax liability,
net
3,689
3,563
Long-term debt
12,394
14,126
Accrued employee benefits
200
206
Non-current operating lease liability
274
320
Other non-current liabilities
394
359
Total non-current liabilities
16,951
18,574
Total liabilities
128,983
106,573
Commitments and contingencies
Redeemable non-controlling interest in
consolidated subsidiaries
87
93
Equity:
Intercontinental Exchange, Inc.
stockholders’ equity:
Common stock
6
6
Treasury stock, at cost
(5,269
)
(5,200
)
Additional paid-in capital
14,019
13,845
Retained earnings
13,009
11,039
Accumulated other comprehensive loss
(206
)
(192
)
Total Intercontinental Exchange, Inc.
stockholders’ equity
21,559
19,498
Non-controlling interest in consolidated
subsidiaries
33
36
Total equity
21,592
19,534
Total liabilities and equity
$
150,662
$
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
Nine Months Ended
September 30,
Nine Months Ended
September 30,
Nine Months Ended
September 30,
Nine Months Ended
September 30,
2021
2020
2021
2020
2021
2020
2021
2020
Total revenues, less transaction-based
expenses
$2,842
$2,760
$1,403
$1,360
$1,061
$245
$5,306
$4,365
Operating expenses
977
919
1,010
987
750
206
2,737
2,112
Less: Amortization of acquisition-related
intangibles
56
53
136
144
277
38
469
235
Less: Transaction and integration costs
and acquisition-related success fees
12
10
—
—
28
76
40
86
Less: Accrual relating to a regulatory
settlement
—
—
—
8
—
—
—
8
Adjusted operating expenses
$909
$856
$874
$835
$445
$92
$2,228
$1,783
Operating income
$1,865
$1,841
$393
$373
$311
$39
$2,569
$2,253
Adjusted operating income
$1,933
$1,904
$529
$525
$616
$153
$3,078
$2,582
Operating margin
66%
67%
28%
27%
29%
16%
48%
52%
Adjusted operating margin
68%
69%
38%
39%
58%
62%
58%
59%
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
September 30,
Three Months Ended
September 30,
Three Months Ended
September 30,
Three Months Ended
September 30,
2021
2020
2021
2020
2021
2020
2021
2020
Total revenues, less transaction-based
expenses
$959
$818
$477
$450
$366
$143
$1,802
$1,411
Operating expenses
330
297
338
331
256
156
924
784
Less: Amortization of acquisition-related
intangibles
19
18
45
48
92
28
156
94
Less: Transaction and integration
costs
2
—
—
—
11
76
13
76
Less: Accrual relating to a regulatory
settlement
—
—
—
3
—
—
—
3
Adjusted operating expenses
$309
$279
$293
$280
$153
$52
$755
$611
Operating income
$629
$521
$139
$119
$110
$(13)
$878
$627
Adjusted operating income
$650
$539
$184
$170
$213
$91
$1,047
$800
Operating margin
66%
64%
29%
26%
30%
(9)%
49%
44%
Adjusted operating margin
68%
66%
39%
38%
58%
64%
58%
57%
Adjusted Net Income
Attributable to ICE and EPS
(In millions)
(Unaudited)
Nine Months Ended September
30, 2021
Nine Months Ended September
30, 2020
Net income attributable to ICE
$
2,531
$
1,563
Add: Amortization of acquisition-related
intangibles
469
235
Add: Transaction and integration costs and
acquisition-related success fees
40
86
Add: Accelerated unamortized costs related
to the early payoff of the June 2023 floating rate senior notes
4
—
Add: Extinguishment of December 2020
Senior Notes
—
14
Add: Pre-acquisition interest expense on
debt issued for Ellie Mae acquisition
—
5
Add: Accrual relating to legal
settlement
16
—
Add: Accrual relating to regulatory
settlement
—
8
Add: Impairment of CAT promissory
notes
—
2
Less: Gain on sale of Coinbase equity
investment
(1,227
)
—
Less: Gain on value of equity
investment
(34
)
—
Less: Gain related to the settlement of an
acquisition-related indemnification claim
(7
)
—
Less: Net income from unconsolidated
investees
(42
)
(84
)
Add/(Less): Income tax effect for the
above items
204
(62
)
Add: Deferred tax adjustments on
acquisition-related intangibles
196
33
Adjusted net income attributable to
ICE
$
2,150
$
1,800
Basic earnings per share
$
4.50
$
2.85
Diluted earnings per share
$
4.48
$
2.83
Adjusted basic earnings per share
$
3.82
$
3.28
Adjusted diluted earnings per share
$
3.80
$
3.26
Basic weighted average common shares
outstanding
563
549
Diluted weighted average common shares
outstanding
565
552
Adjusted Net Income
Attributable to ICE and EPS
(In millions)
(Unaudited)
Three Months Ended September
30, 2021
Three Months Ended September
30, 2020
Net income attributable to ICE
$
633
$
390
Add: Amortization of acquisition-related
intangibles
156
94
Add: Transaction and integration costs
13
76
Add: Accrual related to legal
settlement
16
—
Add: Accrual related to regulatory
settlement
—
3
Add: Accelerated unamortized costs related
to the early payoff of the June 2023 floating rate senior notes
4
—
Add: Pre-acquisition interest expense on
debt issued for Ellie Mae acquisition
—
5
Less: Gain on value of equity
investment
(34
)
—
Less: Net income from unconsolidated
investees
(8
)
(49
)
Less: Income tax effect for the above
items
(44
)
(29
)
Add/(Less): Deferred tax adjustments on
acquisition-related intangibles
(1
)
43
Adjusted net income attributable to
ICE
$
735
$
533
Basic earnings per share
$
1.12
$
0.71
Diluted earnings per share
$
1.12
$
0.71
Adjusted basic earnings per share
$
1.31
$
0.97
Adjusted diluted earnings per share
$
1.30
$
0.97
Basic weighted average common shares
outstanding
563
548
Diluted weighted average common shares
outstanding
566
551
Free Cash Flow
Calculation
(In millions)
(Unaudited)
Nine months ended September
30, 2021
Nine months ended September
30, 2020
Cash flow from operations
$2,130
$1,815
Less: Capital expenditures and capitalized
software development costs
(328
)
(268
)
Add: Section 31 fees, net
193
85
Free cash flow
$1,995
$1,632
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/20211028005374/en/
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
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