Enhanced Investments - Financial Portal

Published: 2023-11-02 07:30:12 ET

EX-99.1 2 tm2329450d1_ex99-1.htm EXHIBIT 99.1

Exhibit 99.1

Intercontinental Exchange Reports Strong Third Quarter 2023

• Record 3Q23 net revenues of $2.0 billion, +11% y/y		Jeffrey C. Sprecher, ICE Chair & Chief Executive Officer, said, "We are pleased to report our third quarter results, which extend our track record of revenue and earnings per share growth. Our customers continue to rely on our mission-critical data and technology to manage risk and capture workflow efficiencies through an array of macroeconomic environments, reflecting the all-weather nature of our business model. In addition, in early September, we completed our strategic acquisition of Black Knight, expanding our mortgage network while also enhancing the resiliency of our long-term growth profile. As we look to balance of the year and beyond, we remain focused on continuing to drive innovation, deliver workflow efficiencies, and deliver value to our stockholders."

• 3Q23 GAAP diluted earnings per share (EPS) of $0.96

• 3Q23 adj. diluted earnings per share of $1.46

• 3Q23 operating income of $845 million, (7)% y/y; adj. operating income of $1.2 billion, +10% y/y

• 3Q23 operating margin of 42%; adj. operating margin of 59%

• Completed the strategic acquisition of Black Knight on September 5, 2023

ATLANTA & NEW YORK, November 2, 2023 - Intercontinental Exchange (NYSE: ICE), a leading global provider of data, technology and market infrastructure, today reported financial results for the third quarter of 2023. For the quarter ended September 30, 2023, consolidated net income attributable to ICE was $541 million on $2.0 billion of consolidated revenues, less transaction-based expenses. Third quarter GAAP diluted earnings per share was $0.96. Adjusted net income attributable to ICE was $824 million in the third quarter and adjusted diluted EPS was $1.46. 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 adjusted free cash flow.

Warren Gardiner, ICE Chief Financial Officer, added: "In the third quarter, we once again generated revenue and earnings per share growth, driven by a continuation of robust trading results across our commodity complex and compounding growth in our recurring revenues. Our strong results are a testament to the power of our diverse business model and, as we approach the end of 2023, we are focused on extending our track record of growth and creating value for our stockholders."

Third Quarter 2023 Business Highlights

Third quarter consolidated net revenues were $2.0 billion including exchange net revenues of $1.1 billion, fixed income and data services revenues of $559 million and mortgage technology revenues of $330 million. Consolidated operating expenses were $1.2 billion for the third quarter of 2023. On an adjusted basis, consolidated operating expenses were $812 million. Consolidated operating income for the third quarter was $845 million and the operating margin was 42%. On an adjusted basis, consolidated operating income for the third quarter was $1.2 billion and the adjusted operating margin was 59%.

	Net Revenue		Op Margin			Adj Op Margin

$ (in millions)	3Q23
Exchanges	$	1,114		72	%		73	%
Fixed Income and Data Services	$	559		36	%		44	%
Mortgage Technology	$	330		(48	)%		39	%
Consolidated	$	2,003		42	%		59	%

	3Q23		3Q22			% Chg
Recurring Revenue	$	1,031	$	930			11	%
Transaction Revenue, net	$	972	$	881			10	%

Exchanges Segment Results

Third quarter exchange net revenues were $1.1 billion. Exchange operating expenses were $313 million and on an adjusted basis, were $297 million in the third quarter. Segment operating income for the third quarter was $801 million and the operating margin was 72%. On an adjusted basis, operating income was $817 million and the adjusted operating margin was 73%.

$ (in millions)		3Q23		3Q22	% Chg		Const Curr⁽¹⁾
Revenue, net:
Energy	$	384	$	266	45	%	42	%
Ags and Metals		61		57	7	%	6	%
Financials⁽²⁾		112		122	(8	)%	(13	)%
Cash Equities and Equity Options		93		88	5	%	5	%
OTC and Other⁽³⁾		104		121	(15	)%	(16	)%
Data and Connectivity Services		236		219	8	%	8	%
Listings		124		128	(4	)%	(4	)%
Segment Revenue	$	1,114	$	1,001	11	%	10	%

Recurring Revenue	$	360	$	347	4	%	4	%
Transaction Revenue, net	$	754	$	654	15	%	13	%

(1) Net revenues in constant currency are calculated holding both the pound sterling and euro at the average exchange rate from 3Q22, 1.1774 and 1.0071, respectively.

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

(3) 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 $559 million. Fixed income and data services operating expenses were $358 million and adjusted operating expenses were $316 million in the third quarter. Segment operating income for the third quarter was $201 million and the operating margin was 36%. On an adjusted basis, operating income was $243 million and the adjusted operating margin was 44%.

$ (in millions)		3Q23		3Q22	% Chg		Const Curr⁽¹⁾
Revenue:
Fixed Income Execution	$	29	$	26	10	%	9	%
CDS Clearing		94		88	6	%	5	%
Fixed Income Data and Analytics		279		273	2	%	2	%
Other Data and Network Services		157		147	7	%	6	%
Segment Revenue	$	559	$	534	5	%	4	%

Recurring Revenue	$	436	$	420	4	%	3	%
Transaction Revenue	$	123	$	114	7	%	6	%

(1) Net revenues in constant currency are calculated holding both the pound sterling and euro at the average exchange rate from 3Q22, 1.1774 and 1.0071, respectively.

Mortgage Technology Segment Results

Third quarter mortgage technology revenues were $330 million. Mortgage technology operating expenses were $487 million and adjusted operating expenses were $199 million in the third quarter. Segment operating loss for the third quarter was $157 million and the operating margin was (48)%. On an adjusted basis, operating income was $131 million and the adjusted operating margin was 39%.

$ (in millions)		3Q23		3Q22	% Chg
Revenue:
Origination Technology	$	172	$	197	(13	)%
Closing Solutions		48		56	(14	)%
Servicing Software		69		—	n/a
Data and Analytics		41		23	76	%
Segment Revenue	$	330	$	276	20	%

Recurring Revenue	$	235	$	163	44	%
Transaction Revenue	$	95	$	113	(16	)%

Other Matters

Operating cash flow through the third quarter of 2023 was $2.6 billion and adjusted free cash flow was $2.5 billion.

Unrestricted cash was $837 million and outstanding debt was $23.3 billion as of September 30, 2023.

Through the third quarter of 2023, ICE paid $713 million in dividends.

Updated Financial Guidance

ICE's fourth quarter 2023 GAAP operating expenses are expected to be in a range of $1.21 billion to $1.22 billion. Adjusted operating expenses⁽¹⁾ are expected to be in a range of $955 million to $965 million.

ICE's fourth quarter 2023 GAAP non-operating expense⁽²⁾is expected to be in the range of $240 million to $245 million. Adjusted non-operating expense is expected to be in the range of $225 million to $230 million.

ICE's diluted share count for the fourth quarter is expected to be in the range of 572 million to 576 million weighted average shares outstanding.

ICE's full year capital expenditures is now expected to be in the range of $500 million to $525 million; includes four months of Black Knight.

(1) 4Q23 non-GAAP operating expenses exclude amortization of acquisition-related intangibles, and Black Knight integration costs.

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

Earnings Conference Call Information

ICE will hold a conference call today, November 2, 2023, at 8:30 a.m. ET to review its third quarter 2023 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 833-470-1428 from the United States or 929-526-1599 from outside of the United States. Telephone participants are required to provide the participant entry number 746760 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 2023 earnings has been scheduled for February 8th, 2024 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/investor-resources/supplemental-information/default.aspx

Consolidated Statements of Income

(In millions, except per share amounts)

(Unaudited)

	Nine Months Ended September 30,						Three Months Ended September 30,
	2023			2022			2023			2022
Revenues:
Exchanges	$	4,754		$	4,824		$	1,540		$	1,577
Fixed income and data services		1,668			1,555			559			534
Mortgage technology		815			880			330			276
Total revenues		7,237			7,259			2,429			2,387
Transaction-based expenses:
Section 31 fees		231			332			56			158
Cash liquidity payments, routing and clearing		1,219			1,403			370			418
Total revenues, less transaction-based expenses		5,787			5,524			2,003			1,811

Operating expenses:
Compensation and benefits		1,103			1,058			400			344
Professional services		88			101			31			32
Acquisition-related transaction and integration costs		201			81			155			19
Technology and communication		529			513			184			169
Rent and occupancy		65			63			20			22
Selling, general and administrative		196			166			59			54
Depreciation and amortization		836			768			309			258
Total operating expenses		3,018			2,750			1,158			898
Operating income		2,769			2,774			845			913
Other income/(expense):
Interest income		287			42			94			33
Interest expense		(557	)		(440	)		(206	)		(176	)
Other expense, net		(121	)		(1,132	)		(51	)		(1,097	)
Total other income/(expense), net		(391	)		(1,530	)		(163	)		(1,240	)
Income/(loss) before income tax expense		2,378			1,244			682			(327	)
Income tax expense/(benefit)		330			186			123			(152	)
Net income/(loss)	$	2,048		$	1,058		$	559		$	(175	)
Net income attributable to non-controlling interest		(53	)		(37	)		(18	)		(16	)
Net income/(loss) attributable to Intercontinental Exchange, Inc.	$	1,995		$	1,021		$	541		$	(191	)

Earnings/(loss) per share attributable to Intercontinental Exchange, Inc. common stockholders:
Basic	$	3.56		$	1.83		$	0.96		$	(0.34	)
Diluted	$	3.55		$	1.82		$	0.96		$	(0.34	)
Weighted average common shares outstanding:
Basic		561			559			563			558
Diluted		562			561			565			560

Consolidated Balance Sheets

(In millions)

	As of			As of
	September 30, 2023			December 31, 2022
	(Unaudited)
Assets:
Current assets:
Cash and cash equivalents	$	837		$	1,799
Short-term restricted cash and cash equivalents		471			6,149
Restricted short-term investments		730			—
Cash and cash equivalent margin deposits and guaranty funds		79,297			141,990
Invested deposits, delivery contracts receivable and unsettled variation margin		1,899			5,382
Customer accounts receivable, net		1,422			1,169
Prepaid expenses and other current assets		741			458
Total current assets		85,397			156,947
Property and equipment, net		1,918			1,767
Other non-current assets:
Goodwill		30,463			21,111
Other intangible assets, net		17,595			13,090
Long-term restricted cash and cash equivalents		190			405
Long-term restricted investments		199			—
Other non-current assets		1,260			1,018
Total other non-current assets		49,707			35,624
Total assets	$	137,022		$	194,338

Liabilities and Equity:
Current liabilities:
Accounts payable and accrued liabilities	$	964		$	866
Section 31 fees payable		18			223
Accrued salaries and benefits		377			352
Deferred revenue		334			170
Short-term debt		2,257			4
Margin deposits and guaranty funds		79,297			141,990
Invested deposits, delivery contracts payable and unsettled variation margin		1,899			5,382
Other current liabilities		136			184
Total current liabilities		85,282			149,171
Non-current liabilities:
Non-current deferred tax liability, net		4,210			3,493
Long-term debt		21,042			18,118
Accrued employee benefits		177			160
Non-current operating lease liability		306			254
Other non-current liabilities		493			381
Total non-current liabilities		26,228			22,406
Total liabilities		111,510			171,577

Equity:
Intercontinental Exchange, Inc. stockholders’ equity:
Common stock		6			6
Treasury stock, at cost		(6,278	)		(6,225	)
Additional paid-in capital		15,837			14,313
Retained earnings		16,225			14,943
Accumulated other comprehensive loss		(331	)		(331	)
Total Intercontinental Exchange, Inc. stockholders’ equity		25,459			22,706
Non-controlling interest in consolidated subsidiaries		53			55
Total equity		25,512			22,761
Total liabilities and equity	$	137,022		$	194,338

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 adjusted 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,
	2023			2022			2023			2022			2023			2022			2023			2022
Total revenues, less transaction-based expenses	$	3,304		$	3,089		$	1,668		$	1,555		$	815		$	880		$	5,787		$	5,524
Operating expenses		944			904			1,057			1,029			1,017			817			3,018			2,750
Less: Amortization of acquisition-related intangibles		49			50			127			137			316			271			492			458
Less: Transaction and integration costs		—			—			—			—			201			79			201			79
Less: Other		17			—			—			—			—			—			17			—
Adjusted operating expenses	$	878		$	854		$	930		$	892		$	500		$	467		$	2,308		$	2,213
Operating income/(loss)	$	2,360		$	2,185		$	611		$	526		$	(202	)	$	63		$	2,769		$	2,774
Adjusted operating income	$	2,426		$	2,235		$	738		$	663		$	315		$	413		$	3,479		$	3,311
Operating margin		71	%		71	%		37	%		34	%		(25	)%		7	%		48	%		50	%
Adjusted operating margin		73	%		72	%		44	%		43	%		39	%		47	%		60	%		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 September 30,						Three Months Ended September 30,						Three Months Ended September 30,						Three Months Ended September 30,
	2023			2022			2023			2022			2023			2022			2023			2022
Total revenues, less transaction-based expenses	$	1,114		$	1,001		$	559		$	534		$	330		$	276		$	2,003		$	1,811
Operating expenses		313			301			358			337			487			260			1,158			898
Less: Amortization of acquisition-related intangibles		16			17			42			44			133			91			191			152
Less: Transaction and integration costs		—			—			—			—			155			19			155			19
Adjusted operating expenses	$	297		$	284		$	316		$	293		$	199		$	150		$	812		$	727
Operating income/(loss)	$	801		$	700		$	201		$	197		$	(157	)	$	16		$	845		$	913
Adjusted operating income	$	817		$	717		$	243		$	241		$	131		$	126		$	1,191		$	1,084
Operating margin		72	%		70	%		36	%		37	%		(48	)%		6	%		42	%		50	%
Adjusted operating margin		73	%		72	%		44	%		45	%		39	%		46	%		59	%		60	%

Adjusted Net Income Attributable to ICE and Diluted EPS

(In millions)

(Unaudited)

	Nine Months Ended September 30, 2023			Nine Months Ended September 30, 2022
Net income attributable to ICE	$	1,995		$	1,021
Add: Amortization of acquisition-related intangibles		492			458
Add: Transaction and integration costs		201			79
Add/(Less): Net interest (income)/expense on pre-acquisition-related debt and debt extinguishment		(12	)		79
Less: Gain on sale of Euroclear equity investment and dividends received		—			(41	)
Add: Net losses from and impairment of unconsolidated investees		91			1,152
Add: Other		40			9
Less: Income tax effect for the above items		(178	)		(478	)
Less: Deferred tax adjustments on acquisition-related intangibles		(131	)		(3	)
Less: Other tax adjustments		(81	)		—
Adjusted net income attributable to ICE	$	2,417		$	2,276

Diluted earnings per share	$	3.55		$	1.82

Adjusted diluted earnings per share	$	4.30		$	4.06

Diluted weighted average common shares outstanding		562			561

Adjusted Net Income Attributable to ICE and Diluted EPS

(In millions)

(Unaudited)

	Three Months Ended September 30, 2023			Three Months Ended September 30, 2022
Net income/(Loss) attributable to ICE	$	541		$	(191	)
Add: Amortization of acquisition-related intangibles		191			152
Add: Transaction and integration costs		155			19
Add: Net interest expense on pre-acquisition-related debt and debt extinguishment		—			31
Add: Net losses from and impairment of unconsolidated investees		26			1,095
Add: Other		23			—
Less: Income tax effect for the above items		(66	)		(355	)
Less: Deferred tax adjustments on acquisition-related intangibles		(46	)		(18	)
Adjusted net income attributable to ICE	$	824		$	733

Diluted earnings/(loss) per share	$	0.96		$	(0.34	)

Adjusted diluted earnings per share	$	1.46		$	1.31

Diluted weighted average common shares outstanding		565			560

Adjusted Free Cash Flow Calculation

(In millions)

(Unaudited)

	Nine Months Ended September 30, 2023			Nine Months Ended September 30, 2022
Net cash provided by operating activities	$	2,573		$	2,462
Less: Capital expenditures		(104	)		(125	)
Less: Capitalized software development costs		(222	)		(200	)
Free cash flow		2,247			2,137
Add/(Less): Section 31 fees, net		205			(1	)
Adjusted free cash flow	$	2,452		$	2,136

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 at http://www.intercontinentalexchange.com/terms-of-use. 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, 2022, as filed with the SEC on February 2, 2023. 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

ICE Investor Relations Contact:

Katia Gonzalez

+1 678 981 3882

katia.gonzalez@ice.com

investors@ice.com

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+1 212 656 2490

josh.king@ice.com

media@ice.com