Intercontinental Exchange (NYSE: ICE), a leading global provider of data, technology and market infrastructure, today reported financial results for the third quarter of 2022. For the quarter ended September 30, 2022, consolidated net loss attributable to ICE was $191 million on $1.8 billion of consolidated revenues, less transaction-based expenses
ATLANTA & NEW YORK--(BUSINESS WIRE)--Nov 3, 2022--
3Q22 net revenues of $1.8 billion; +1% y/y; +3% y/y, constant currency (CC)*
3Q22 GAAP diluted loss per share of $0.34, primarily due to net losses from Bakkt
3Q22 adj. diluted earnings per share (EPS) of $1.31
3Q22 operating income, +4% y/y; +7% y/y, CC*. Adj. operating income +4% y/y; +6% y/y, CC*
3Q22 operating margin of 50%, +164 basis points y/y; adj. operating margin of 60%, +176 basis points y/y
ICE Chair & Chief Executive Officer, said,
"We are pleased to report strong third quarter results that extend our track record of growth. Amidst a backdrop of continued geopolitical and macroeconomic uncertainty, our strong third quarter performance reflects the "all weather" nature of our business model. Our customers continue to rely on our mission-critical data, technology, and liquid markets through an array of macroeconomic environments. As we look to the balance of the year and beyond, we remain focused on driving innovation, helping to serve our customers' risk management needs and delivering value to our stockholders."
Intercontinental Exchange (NYSE: ICE), a leading global provider of data, technology and market infrastructure, today reported financial results for the third quarter of 2022. For the quarter ended September 30, 2022, consolidated net loss attributable to ICE was $191 million on $1.8 billion of consolidated revenues, less transaction-based expenses. Third quarter GAAP diluted loss per share was $0.34, primarily due to net losses from Bakkt. Adjusted net income attributable to ICE was $733 million in the third quarter and adjusted diluted EPS was $1.31. 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: "Through the first nine months of the year, we have grown revenues and operating income. This strong performance, including compounding growth in our recurring revenues across all three business segments is a testament to the power of our diverse business model. As we approach the end of 2022, we remain focused on extending our track record of growth and creating value for our stockholders."
*Constant currency (CC) percentage changes are calculated holding both the pound sterling and euro at the average exchange rate from 3Q21, 1.3784 and 1.1788, respectively.
Third Quarter 2022 Business Highlights
Third quarter consolidated net revenues were $1.8 billion, up 1% year-over-year including exchange net revenues of $1.0 billion, fixed income and data services revenues of $534 million and mortgage technology revenues of $276 million. Consolidated operating expenses were $898 million for the third quarter of 2022. On an adjusted basis, consolidated operating expenses were $727 million. Consolidated operating income for the third quarter was $913 million and the operating margin was 50%. On an adjusted basis, consolidated operating income for the third quarter was $1.1 billion and the adjusted operating margin was 60%.
Fixed Income and Data Services
Exchanges Segment Results
Third quarter exchange net revenues were $1.0 billion. Exchange operating expenses were $301 million and on an adjusted basis, were $284 million in the third quarter. Segment operating income for the third quarter was $700 million and the operating margin was 70%. On an adjusted basis, operating income was $717 million and the adjusted operating margin was 72%.
Cash Equities and Equity Options
Data and Connectivity Services
(1) Net revenues in constant currency are calculated holding both the pound sterling and euro at the average exchange rate from 3Q21, 1.3784 and 1.1788, 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 $534 million. Fixed income and data services operating expenses were $337 million and adjusted operating expenses were $293 million in the third quarter. Segment operating income for the third quarter was $197 million and the operating margin was 37%. On an adjusted basis, operating income was $241 million and the adjusted operating margin was 45%.
Fixed Income Data and Analytics
Other Data and Network Services
(1) Net revenues in constant currency are calculated holding both the pound sterling and euro at the average exchange rate from 3Q21, 1.3784 and 1.1788, respectively.
Mortgage Technology Segment Results
Third quarter mortgage technology revenues were $276 million. Mortgage technology operating expenses were $260 million and adjusted operating expenses were $150 million in the third quarter. Segment operating income for the third quarter was $16 million and the operating margin was 6%. On an adjusted basis, operating income was $126 million and the adjusted operating margin was 46%.
Updated Financial Guidance
(1) 4Q22 non-GAAP operating expenses exclude amortization of acquisition-related intangibles, pending Black Knight acquisition costs, and Ellie Mae integration costs.
(2) Non-operating income / expense includes interest income, interest expense and net other income. Non-GAAP non-operating expense excludes equity earnings from unconsolidated investees, net interest expense on pre-acquisition-related debt and costs associated with re-financing existing debt.
Earnings Conference Call Information
ICE will hold a conference call today, November 3, 2022, at 8:30 a.m. ET to review its third quarter 2022 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 844-200-6205 from the United States or 929-526-1599 from outside of the United States. Telephone participants are required to provide the participant entry number 047703 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 2022 earnings has been scheduled for February 2nd, 2023 at 8:30 a.m. ET. Please refer to the Investor Relations website at www.ir.theice.com for additional information.
Consolidated Statements of Income
(In millions, except per share amounts)
Fixed income and data services
Transaction-based expenses:
Cash liquidity payments, routing and clearing
Total revenues, less transaction-based expenses
Compensation and benefits
Acquisition-related transaction and integration costs
Technology and communication
Selling, general and administrative
Depreciation and amortization
Other income/(expense), net
Other income/(expense), net
Income/(loss) before income tax expense/(benefit)
Income tax expense/(benefit)
Net income attributable to non-controlling interest
Net income/(loss) attributable to Intercontinental Exchange, Inc.
Earnings/(loss) per share attributable to Intercontinental Exchange, Inc. common stockholders:
Weighted average common shares outstanding:
Consolidated Balance Sheets
Cash and cash equivalents
Short-term restricted cash and cash equivalents
Cash and cash equivalent margin deposits and guaranty funds
Invested deposits, delivery contracts receivable and unsettled variation margin
Customer accounts receivable, net
Prepaid expenses and other current assets
Property and equipment, net
Other non-current assets:
Other intangible assets, net
Long-term restricted cash and cash equivalents
Total other non-current assets
Accounts payable and accrued liabilities
Accrued salaries and benefits
Margin deposits and guaranty funds
Invested deposits, delivery contracts payable and unsettled variation margin
Other current liabilities
Total current liabilities
Non-current deferred tax liability, net
Accrued employee benefits
Non-current operating lease liability
Other non-current liabilities
Total non-current liabilities
Intercontinental Exchange, Inc. stockholders’ equity:
Additional paid-in capital
Accumulated other comprehensive loss
Total Intercontinental Exchange, Inc. stockholders’ equity
Non-controlling interest in consolidated subsidiaries
Total liabilities and equity
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
Total revenues, less transaction-based expenses
Less: Amortization of acquisition-related intangibles
Less: Transaction and integration costs
Adjusted operating expenses
Adjusted operating income
Adjusted operating margin
Adjusted Operating Income, Operating Margin and Operating Expense Reconciliation
Fixed Income and Data Services Segment
Mortgage Technology Segment
Total revenues, less transaction-based expenses
Less: Amortization of acquisition-related intangibles
Less: Transaction and integration costs
Adjusted operating expenses
Adjusted operating income
Adjusted operating margin
Adjusted Net Income Attributable to ICE and EPS
Nine Months Ended September 30, 2022
Nine Months Ended September 30, 2021
Net income attributable to ICE
Add: Amortization of acquisition-related intangibles
Add: Transaction and integration costs
Add: Accelerated unamortized costs related to the early payoff of the June 2023 floating rate senior notes
Add: Impairment on Bakkt equity method investment
Add: Accrual relating to legal settlement
Add: Net interest expense on pre-acquisition-related debt
Add: Extinguishment of 2022 and 2023 Senior Notes
Less: Gain on sale and fair value adjustment of Euroclear equity investment and dividends received
Less: Gain on sale of Coinbase equity investment
Less: Gain related to the settlement of an acquisition-related indemnification claim
Add/(Less): Net losses/(income) from unconsolidated investees
Add/(Less): Income tax effect for the above items
Add/(Less): Deferred tax adjustments on acquisition-related intangibles
Adjusted net income attributable to ICE
Diluted earnings per share
Adjusted basic earnings per share
Adjusted diluted earnings per share
Basic weighted average common shares outstanding
Diluted weighted average common shares outstanding
Adjusted Net Income Attributable to ICE and EPS
Three Months Ended September 30, 2022
Three Months Ended September 30, 2021
Net income/(loss) attributable to ICE
Add: Amortization of acquisition-related intangibles
Add: Transaction and integration costs
Add: Accrual relating to legal settlement
Add: Net interest expense on pre-acquisition-related debt
Add: Accelerated unamortized costs related to the early payoff of the June 2023 floating rate senior notes
Add: Impairment on Bakkt equity method investment
Less: Gain on sale and fair value adjustment of Euroclear equity investment and dividends received
Add/(Less): Net losses/(income) from unconsolidated investees
Less: Income tax effect for the above items
Less: Deferred tax adjustments on acquisition-related intangibles
Adjusted net income attributable to ICE
Basic earnings/(loss) per share
Diluted earnings/(loss) per share
Adjusted basic earnings per share
Adjusted diluted earnings per share
Basic weighted average common shares outstanding
Diluted weighted average common shares outstanding
Adjusted Free Cash Flow Calculation
Nine Months Ended September 30, 2022
Nine Months Ended September 30, 2021
Cash flow from operations
Less: Capital expenditures and capitalized software development costs
Add/(Less): Section 31 fees, net
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, 2021, as filed with the SEC on February 3, 2022. 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
CONTACT: ICE Investor Relations Contact:
KEYWORD: UNITED STATES NORTH AMERICA NEW YORK GEORGIA
INDUSTRY KEYWORD: FINANCE DATA MANAGEMENT PROFESSIONAL SERVICES TECHNOLOGY SOFTWARE
SOURCE: Intercontinental Exchange
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PUB: 11/03/2022 07:30 AM/DISC: 11/03/2022 07:32 AM
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