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Intercontinental Exchange (ICE - Free Report) reported third-quarter 2020 adjusted earnings per share of $1.03, which beat the Zacks Consensus Estimate by 4%. Also, the bottom line improved 13.8% on a year-over-year basis.
The company witnessed continued revenue growth driven by strong Trading and Clearing as well as Data and Listings.
Performance in Detail
Intercontinental Exchange’s revenues of $1.4 billion increased 5.6% year over year on higher revenues from transaction and clearing, data services, and other revenues. Moreover, the top line outpaced the Zacks Consensus Estimate by about 3.1%.
Net revenues of Trading and Clearing segment were $711 million, up 6% year over year, while Data and Listings revenues were $700 million, up 5% year over year
Total operating expenses rose 24.4% year over year to $784 million, primarily due to higher compensation and benefits, professional services, technology and communication expenses, rent and occupancy, selling, general and administrative expenses and acquisition-related transaction and integration costs. Adjusted operating expenses were $661 million in the third quarter, up 20% from the year-ago quarter’s figure.
Adjusted operating income improved 1.9% year over year to $800 million. Adjusted operating margin contracted 20 basis points (bps) from the year-ago quarter to 57%.
Trading and Clearing's adjusted operating income of $429 million was up 2.1% year over year. Adjusted operating margin contracted 400 bps. Data and Listings' adjusted operating income rose 6.9% year over year to $371 million and adjusted operating margin expanded 100 bps to 53%.
Total Futures & Options totaled 4.9 million contracts, down 15% year over year. Revenue per contract of $1.12 increased 2% year over year.
Intercontinental Exchange Inc. Price, Consensus and EPS Surprise
As of Sep 30, 2020, Intercontinental Exchange had cash and cash equivalents of $1.6 billion, down 10.1% from the level as of Dec 31, 2019. Long-term debt of $14.9 billion was up 183.2% from 2019-end level.
Total equity was $19 billion as of Sep 30, 2010, up 10.2% from 2019 end.
Operating cash flow was $1.8 billion in the first nine months of 2020, down 3.6% year over year. Free cash flow was $1.6 billion, up 6.7% year over year.
In the third quarter of 2020, the company bought back $1.2 billion worth shares and paid $500 million in dividends.
Fourth-Quarter 2020 Guidance
Data revenues are estimated between $590 million and $595 million.
Operating expenses are projected in the range of $855-$865 million. Adjusted operating expenses are expected to be in the range of $695 million to $705 million.
Non-operating expense is expected to be in the range of $75 million to $80 million.
Weighted average shares outstanding are anticipated between 562 million and 568 million shares.
2020 View
Capital expenditures are expected between $410 million and $420 million.
Third-quarter earnings of Nasdaq (NDAQ - Free Report) and MarketAxess Holdings (MKTX - Free Report) beat the respective Zacks Consensus Estimate while CME Group (CME - Free Report) missed the same.
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Intercontinental Exchange (ICE) Q3 Earnings & Revenues Beat
Intercontinental Exchange (ICE - Free Report) reported third-quarter 2020 adjusted earnings per share of $1.03, which beat the Zacks Consensus Estimate by 4%. Also, the bottom line improved 13.8% on a year-over-year basis.
The company witnessed continued revenue growth driven by strong Trading and Clearing as well as Data and Listings.
Performance in Detail
Intercontinental Exchange’s revenues of $1.4 billion increased 5.6% year over year on higher revenues from transaction and clearing, data services, and other revenues. Moreover, the top line outpaced the Zacks Consensus Estimate by about 3.1%.
Net revenues of Trading and Clearing segment were $711 million, up 6% year over year, while Data and Listings revenues were $700 million, up 5% year over year
Total operating expenses rose 24.4% year over year to $784 million, primarily due to higher compensation and benefits, professional services, technology and communication expenses, rent and occupancy, selling, general and administrative expenses and acquisition-related transaction and integration costs. Adjusted operating expenses were $661 million in the third quarter, up 20% from the year-ago quarter’s figure.
Adjusted operating income improved 1.9% year over year to $800 million. Adjusted operating margin contracted 20 basis points (bps) from the year-ago quarter to 57%.
Trading and Clearing's adjusted operating income of $429 million was up 2.1% year over year. Adjusted operating margin contracted 400 bps. Data and Listings' adjusted operating income rose 6.9% year over year to $371 million and adjusted operating margin expanded 100 bps to 53%.
Total Futures & Options totaled 4.9 million contracts, down 15% year over year. Revenue per contract of $1.12 increased 2% year over year.
Intercontinental Exchange Inc. Price, Consensus and EPS Surprise
Intercontinental Exchange Inc. price-consensus-eps-surprise-chart | Intercontinental Exchange Inc. Quote
Financial Update
As of Sep 30, 2020, Intercontinental Exchange had cash and cash equivalents of $1.6 billion, down 10.1% from the level as of Dec 31, 2019. Long-term debt of $14.9 billion was up 183.2% from 2019-end level.
Total equity was $19 billion as of Sep 30, 2010, up 10.2% from 2019 end.
Operating cash flow was $1.8 billion in the first nine months of 2020, down 3.6% year over year. Free cash flow was $1.6 billion, up 6.7% year over year.
In the third quarter of 2020, the company bought back $1.2 billion worth shares and paid $500 million in dividends.
Fourth-Quarter 2020 Guidance
Data revenues are estimated between $590 million and $595 million.
Operating expenses are projected in the range of $855-$865 million. Adjusted operating expenses are expected to be in the range of $695 million to $705 million.
Non-operating expense is expected to be in the range of $75 million to $80 million.
Weighted average shares outstanding are anticipated between 562 million and 568 million shares.
2020 View
Capital expenditures are expected between $410 million and $420 million.
Zacks Rank
Intercontinental Exchange currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Securities and Exchanges
Third-quarter earnings of Nasdaq (NDAQ - Free Report) and MarketAxess Holdings (MKTX - Free Report) beat the respective Zacks Consensus Estimate while CME Group (CME - Free Report) missed the same.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot stocks we're targeting >>