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Intercontinental Exchange (ICE) Q3 Earnings & Revenues Beat

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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

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.

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