Intercontinental Exchange Reports 3Q Revenues of $1.2B
Staff Report From Metro Atlanta CEO
Thursday, November 1st, 2018
Intercontinental Exchange, a leading operator of global exchanges and clearing houses and provider of data and listing services, reported financial results for the third quarter of 2018. For the quarter ended September 30, 2018, consolidated net income attributable to ICE was $458 million on $1.2 billion of consolidated revenues less transaction-based expenses. Third quarter GAAP diluted earnings per share were $0.79. Adjusted net income was $491 million in the third quarter and adjusted diluted EPS were $0.85, up 16% year-over-year. 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, organic data revenue and free cash flow.
“Our third quarter performance reflected strength across our futures, cash equities, listings and data services businesses, marking the 22nd consecutive quarter of year-over-year revenue growth,” said ICE Chairman & Chief Executive Officer, Jeffrey C. Sprecher. “Against an uncertain regulatory and political backdrop, we are focused on driving innovation, delivering growth and helping to serve our customers’ risk management needs.”
Scott A. Hill, ICE Chief Financial Officer, added, “Through the end of the third quarter, we have grown revenues and earnings, generated record operating cash flows and returned nearly $1.5 billion dollars to stockholders - more than any full year in our history. As we approach the end of 2018, we remain focused on our growth initiatives and value creation.”
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Third Quarter 2018 Business Highlights |
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| $ (in millions) |
Net Revenue |
Op Margin |
Adj Op Margin |
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| Data & Listings | $ | 642 | 43 | % | 51 | % | |||||||
| Trading & Clearing | $ | 558 | 59 | % | 63 | % | |||||||
| Consolidated | $ | 1,200 | 50 | % | 57 | % | |||||||
Third quarter consolidated net revenues were $1.2 billion, up 5% year-over-year. Data and listings revenues in the third quarter were $642 million and trading and clearing net revenues were $558 million. Consolidated operating expenses were $598 million for the third quarter of 2018. On an adjusted basis, consolidated operating expenses were $521 million. Consolidated operating income for the third quarter was $602 million and the operating margin was 50%. On an adjusted basis, consolidated operating income for the third quarter was $679 million and the adjusted operating margin was 57%.
Data and Listings Segment Results
Third quarter data and listings revenues were $642 million, including data revenues of $530 million, up 2% year-over-year, negatively impacted by the divestiture of Trayport in the fourth quarter of 2017, and listings revenues of $112 million, up 7% year-over-year. On an organic, constant currency basis(1), segment revenues were up 6% with data revenues up 6% year-over-year and listings revenues up 7% year-over-year. Data and listings operating expenses were $368 million and on an adjusted basis, were $315 million in the third quarter. Segment operating income for the third quarter was $274 million and the operating margin was 43%. On an adjusted basis, operating income was $327 million and the adjusted operating margin was 51%.
| $ (in millions) | 3Q18 | 3Q17 | % Chg | Organic |
Organic Const Curr(1) |
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| Revenue: | |||||||||||||||||||||
| Pricing and Analytics | $ | 263 | $ | 242 | 9 | % | 7 | % | 7 | % | |||||||||||
| Exchange Data | 146 | 136 | 7 | % | 5 | % | 5 | % | |||||||||||||
| Desktops and Connectivity | 121 | 140 | (13 | )% | 3 | % | 3 | % | |||||||||||||
| Data Total | 530 | 518 | 2 | % | 6 | % | 6 | % | |||||||||||||
| Listings | 112 | 105 | 7 | % | 7 | % | 7 | % | |||||||||||||
| Segment Revenue | $ | 642 | $ | 623 | 3 | % | 6 | % | 6 | % | |||||||||||
| (1) | Net revenues in constant currency are calculated holding both the pound sterling and euro at the average exchange rate from 3Q17, 1.3091 and 1.1752, respectively. References to organic growth excludes businesses that have been acquired, divested or discontinued that significantly impact the comparable periods. For 3Q18 and 3Q17, $11 million and $27 million of data revenues were excluded from organic growth, respectively. | |
Trading and Clearing Segment Results
Third quarter trading and clearing net revenues were $558 million, up 7% from one year ago. Trading and clearing operating expenses were $230 million and adjusted operating expenses were $206 million in the third quarter. Segment operating income for the third quarter was $328 million and the operating margin was 59%. On an adjusted basis, operating income was $352 million and the adjusted operating margin was 63%.
| $ (in millions) | 3Q18 | 3Q17 | % Chg | ||||||||||
| Revenue, net: | |||||||||||||
| Energy | $ | 223 | $ | 223 | — | % | |||||||
| Ags & metals | 58 | 49 | 17 | % | |||||||||
| Financials(1) | 77 | 82 | (6 | )% | |||||||||
| Cash equities & equity options | 72 | 66 | 8 | % | |||||||||
| OTC & other transaction(2) | 67 | 49 | 40 | % | |||||||||
| Other revenue(3) | 61 | 54 | 13 | % | |||||||||
| Segment Revenue | $ | 558 | $ | 523 | 7 | % | |||||||
| (1) | Financials includes interest rates and other financial futures and options. | |
| (2) | OTC & Other transaction includes physical energy, fixed income execution and CDS execution and clearing. | |
| (3) | Other revenue includes 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, exchange member fees, and agriculture grading and certification fees. | |
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Energy futures and options revenue in the third quarter were flat year-over-year with a 7% increase in rate per contract (RPC), offset by a 6% decline in average daily volume (ADV).
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Ags and metals futures and options revenue in the third quarter increased 17% year-over-year driven by a 16% increase in ADV and 1% increase in RPC.
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Financials futures and options revenue in the third quarter decreased 6% year-over-year reflecting a 6% decline in RPC.
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U.S. cash equities and equity options revenue in the third quarter increased 8% year-over-year driven by a 31% increase in equity options ADV and a 7% increase in U.S. cash equities ADV.
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OTC and other transaction revenues in the third quarter were up 40% year-over-year driven by a 7% increase in CDS clearing revenue in the third quarter and the addition of BondPoint and TMC Bonds.
| ADV
(lots in thousands) |
RPC | |||||||||||||||
| 3Q18 | % Chg | 3Q18 | % Chg | |||||||||||||
| Energy | 2,456 | (6 | )% | $ | 1.44 | 7 | % | |||||||||
| Ags & metals | 393 | 16 | % | $ | 2.34 | 1 | % | |||||||||
| Financials | 2,336 | — | % | $ | 0.50 | (6 | )% | |||||||||
| Interest Rates | 1,957 | 4 | % | $ | 0.38 | (4 | )% | |||||||||
| Other Financials | 379 | (19 | )% | $ | 1.12 | 3 | % | |||||||||
| Total Futures & Options | 5,185 | (2 | )% | $ | 1.08 | 3 | % | |||||||||
| Cash Equities | 1,512 | 7 | % | $ | 0.048 | (6 | )% | |||||||||
| Equity Options | 3,070 | 31 | % | $ | 0.12 | (14 | )% | |||||||||
| The third quarter of 2018 included 63 trading days for commodities, other financials, cash equities and equity options and 65 trading days for interest rates. The third quarter of 2017 included 63 trading days for commodities, other financials, cash equities and equity options and 65 trading days for interest rates. |
Other Matters
- Through the third quarter, ICE repurchased nearly $1.1 billion of its common stock and paid $417 million in dividends.
- Unrestricted cash was $515 million and outstanding debt was $7.7 billion as of September 30, 2018.
- Operating cash flow through the third quarter was $1.7 billion, up 23% from $1.4 billion one year ago. Through the third quarter, free cash flow was $1.7 billion, up 33% from $1.3 billion one year ago.
- The effective tax rate for the third quarter was 16%.
Financial Guidance
No updated guidance.
