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Intercontinental (ICE) Q4 Earnings, Revenues Miss, Dividend Up
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Intercontinental Exchange (ICE - Free Report) reported fourth-quarter 2022 adjusted earnings per share of $1.25, which missed the Zacks Consensus Estimate of $1.26 but came in line with our estimate. Also, the bottom line decreased 6.7% on a year-over-year basis.
ICE witnessed a revenue decline, attributable to soft Exchanges and Mortgage Technology segments. However, lower expenses were a respite.
Intercontinental Exchange Inc. Price, Consensus and EPS Surprise
Intercontinental Exchange’s revenues, less transaction-based expenses, of $1.8 billion decreased 4% year over year as a result of a decline in revenues from the Exchanges and Mortgage Technology segments. The top line missed the Zacks Consensus Estimate by 0.4% but was almost in line with our estimate.
Net revenues from Exchanges were $982 million, down 3% year over year but higher than our estimate of $971 million. Fixed Income and Data Services revenues were $537 million, which increased 12% year over year and came in higher than our estimate of $531 million. Mortgage Technology revenues decreased 28% to $249 million and were lower than our estimate of $271 million.
Total operating expenses decreased 5.8% year over year to $904 million, primarily due to lower compensation and benefits and professional services. Adjusted operating expenses were $740 million in the quarter, down 1.2% from the year-ago figure but higher than our estimate of $730 million.
Adjusted operating income declined 5.8% year over year to $1 billion but was in line with our estimate. Adjusted operating margin contracted100 basis points (bps) from the year-ago quarter to 58%.
Exchanges' adjusted operating income of $694 million was down 3.9% year over year. Adjusted operating margin remained flat year over year at 71%. Fixed Income and Data Services' adjusted operating income rose 31% to $236 million. Adjusted operating margin expanded 600 bps to 44%. Mortgage Technology’s adjusted operating income of $98 million was down 48% year over year. Adjusted operating margin contracted 1600 bps to 39%.
Full-Year Highlights
Adjusted earnings per share of $5.30 increased 5% on a year-over-year basis. Intercontinental Exchange’s revenues, less transaction-based expenses, of $7.3 billion increased 2% year over year
Adjusted operating income increased 4.1% year over year to $4.3 billion. Adjusted operating margin expanded 100 bps from the year-ago quarter to 59%.
Financial Update
As of Dec 31, 2022, Intercontinental Exchange had cash and cash equivalents of $7.9 billion, up nearly five-fold from the Dec 31, 2021 level. Long-term debt of $18.1 billion increased 46.1% from the 2021-end level.
Total equity was $22.8 billion as of Dec 31, 2022, up 0.1% from 2021-end.
Operating cash flow was $3.6 billion in 2022, up 13.7% year over year. Adjusted free cash flow was $2.9 billion, up 3% year over year.
ICE repurchased $632 million worth of shares and paid out $853 million in dividends in 2022.
Q1 Guidance
Operating expenses for first-quarter 2023 are projected in the range of $895-$905 million. Adjusted operating expenses are expected in the range of $745-$755 million.
Non-operating expense is expected to be in the range of $115 million to $125 million. Adjusted non-operating expense is expected in the range of $95-$100 million.
Weighted average shares outstanding are anticipated between 558 million and 564 million.
2023 Guidance
Exchange revenues are expected to grow in low-single digits (excluding $20 million related to LIBOR cessation). Fixed Income & Data Services revenues are expected to grow in mid-single digits (excluding ~$15 million related to FX and Euronext migration). Mortgage Technology revenues are expected to grow in mid-to-high single digits.
Operating expenses for first-quarter 2023 are projected in the range of $3.675-$3.725 million. Adjusted operating expenses are expected in the range of $3.04-$3.09 million.
The effective tax rate is guided between 24% and 26%.
Capital expenditure is expected to be in the range of $450 -$500 million.
Dividend Update
The board of directors approved a dividend of 42 cents per share for the first quarter of 2023, reflecting an 11% increase. The dividend will be paid out on Mar 31 to shareholders of record as of Mar 17.
Cboe Global Markets, Inc. (CBOE - Free Report) reported fourth-quarter 2022 adjusted earnings of $1.80 per share, which outpaced the Zacks Consensus Estimate by 1.7%. The bottom line increased 5.8% year over year.
Total adjusted revenues of CBOE Global amounted to $457.1 million for the fourth quarter, which improved 17% year over year on the back of growth in derivatives markets and data and access solutions. The top line missed the consensus mark by 0.6%.
Options revenues climbed 35% year over year to $273.2 million. Europe and Asia Pacific revenues decreased 15 % year over year to $44.2 million. Futures net revenues decreased 10% year over year to $26.8 million for the quarter under review.
Nasdaq, Inc. (NDAQ - Free Report) reported fourth-quarter 2022 adjusted earnings per share of 64 cents, which missed the Zacks Consensus Estimate of 65 cents by nearly 1.5%. The bottom line remained unchanged year over year. Nasdaq’s revenues of $906 million increased 2.3% year over year. The top line matched the Zacks Consensus Estimate.
Annualized Recurring Revenue (ARR) of Nasdaq increased 8% year over year. Annualized SaaS revenues increased 13% and represented 36% of ARR. Operating margin of 49% contracted 200 basis points year over year.
In 2022, the Nasdaq Stock Market featured six of the largest ten U.S. IPOs by capital raised, attracted 74% of all proceeds raised through U.S. IPOs and welcomed 14 listing switches. In the Nordic and Baltic regions, Nasdaq maintained its leadership position with 38 IPOs.
MarketAxess Holdings Inc. (MKTX - Free Report) reported fourth-quarter 2022 earnings per share of $1.58, beating the Zacks Consensus Estimate of $1.53 and our estimate of $1.45. The bottom line increased 15.3% year over year. Total revenues of $177.9 million rose 7.8% year over year in the quarter under review and beat the consensus mark of $176 million and our estimate of $175.7 million.
Active clients of MarketAxess totaled 2,068 in the fourth quarter, which increased 10% year over year. Active international clients attained a record figure of 1,006 in the quarter under review. The figure advanced 5% year over year. Operating income of $77.7 million advanced 7% year over year in the fourth quarter.
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Intercontinental (ICE) Q4 Earnings, Revenues Miss, Dividend Up
Intercontinental Exchange (ICE - Free Report) reported fourth-quarter 2022 adjusted earnings per share of $1.25, which missed the Zacks Consensus Estimate of $1.26 but came in line with our estimate. Also, the bottom line decreased 6.7% on a year-over-year basis.
ICE witnessed a revenue decline, attributable to soft Exchanges and Mortgage Technology segments. However, lower expenses were a respite.
Intercontinental Exchange Inc. Price, Consensus and EPS Surprise
Intercontinental Exchange Inc. price-consensus-eps-surprise-chart | Intercontinental Exchange Inc. Quote
Performance in Detail
Intercontinental Exchange’s revenues, less transaction-based expenses, of $1.8 billion decreased 4% year over year as a result of a decline in revenues from the Exchanges and Mortgage Technology segments. The top line missed the Zacks Consensus Estimate by 0.4% but was almost in line with our estimate.
Net revenues from Exchanges were $982 million, down 3% year over year but higher than our estimate of $971 million. Fixed Income and Data Services revenues were $537 million, which increased 12% year over year and came in higher than our estimate of $531 million. Mortgage Technology revenues decreased 28% to $249 million and were lower than our estimate of $271 million.
Total operating expenses decreased 5.8% year over year to $904 million, primarily due to lower compensation and benefits and professional services. Adjusted operating expenses were $740 million in the quarter, down 1.2% from the year-ago figure but higher than our estimate of $730 million.
Adjusted operating income declined 5.8% year over year to $1 billion but was in line with our estimate. Adjusted operating margin contracted100 basis points (bps) from the year-ago quarter to 58%.
Exchanges' adjusted operating income of $694 million was down 3.9% year over year. Adjusted operating margin remained flat year over year at 71%. Fixed Income and Data Services' adjusted operating income rose 31% to $236 million. Adjusted operating margin expanded 600 bps to 44%. Mortgage Technology’s adjusted operating income of $98 million was down 48% year over year. Adjusted operating margin contracted 1600 bps to 39%.
Full-Year Highlights
Adjusted earnings per share of $5.30 increased 5% on a year-over-year basis.
Intercontinental Exchange’s revenues, less transaction-based expenses, of $7.3 billion increased 2% year over year
Adjusted operating income increased 4.1% year over year to $4.3 billion. Adjusted operating margin expanded 100 bps from the year-ago quarter to 59%.
Financial Update
As of Dec 31, 2022, Intercontinental Exchange had cash and cash equivalents of $7.9 billion, up nearly five-fold from the Dec 31, 2021 level. Long-term debt of $18.1 billion increased 46.1% from the 2021-end level.
Total equity was $22.8 billion as of Dec 31, 2022, up 0.1% from 2021-end.
Operating cash flow was $3.6 billion in 2022, up 13.7% year over year. Adjusted free cash flow was $2.9 billion, up 3% year over year.
ICE repurchased $632 million worth of shares and paid out $853 million in dividends in 2022.
Q1 Guidance
Operating expenses for first-quarter 2023 are projected in the range of $895-$905 million. Adjusted operating expenses are expected in the range of $745-$755 million.
Non-operating expense is expected to be in the range of $115 million to $125 million. Adjusted non-operating expense is expected in the range of $95-$100 million.
Weighted average shares outstanding are anticipated between 558 million and 564 million.
2023 Guidance
Exchange revenues are expected to grow in low-single digits (excluding $20 million related to LIBOR cessation). Fixed Income & Data Services revenues are expected to grow in mid-single digits (excluding ~$15 million related to FX and Euronext migration). Mortgage Technology revenues are expected to grow in mid-to-high single digits.
Operating expenses for first-quarter 2023 are projected in the range of $3.675-$3.725 million. Adjusted operating expenses are expected in the range of $3.04-$3.09 million.
The effective tax rate is guided between 24% and 26%.
Capital expenditure is expected to be in the range of $450 -$500 million.
Dividend Update
The board of directors approved a dividend of 42 cents per share for the first quarter of 2023, reflecting an 11% increase. The dividend will be paid out on Mar 31 to shareholders of record as of Mar 17.
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
Cboe Global Markets, Inc. (CBOE - Free Report) reported fourth-quarter 2022 adjusted earnings of $1.80 per share, which outpaced the Zacks Consensus Estimate by 1.7%. The bottom line increased 5.8% year over year.
Total adjusted revenues of CBOE Global amounted to $457.1 million for the fourth quarter, which improved 17% year over year on the back of growth in derivatives markets and data and access solutions. The top line missed the consensus mark by 0.6%.
Options revenues climbed 35% year over year to $273.2 million. Europe and Asia Pacific revenues decreased 15 % year over year to $44.2 million. Futures net revenues decreased 10% year over year to $26.8 million for the quarter under review.
Nasdaq, Inc. (NDAQ - Free Report) reported fourth-quarter 2022 adjusted earnings per share of 64 cents, which missed the Zacks Consensus Estimate of 65 cents by nearly 1.5%. The bottom line remained unchanged year over year. Nasdaq’s revenues of $906 million increased 2.3% year over year. The top line matched the Zacks Consensus Estimate.
Annualized Recurring Revenue (ARR) of Nasdaq increased 8% year over year. Annualized SaaS revenues increased 13% and represented 36% of ARR. Operating margin of 49% contracted 200 basis points year over year.
In 2022, the Nasdaq Stock Market featured six of the largest ten U.S. IPOs by capital raised, attracted 74% of all proceeds raised through U.S. IPOs and welcomed 14 listing switches. In the Nordic and Baltic regions, Nasdaq maintained its leadership position with 38 IPOs.
MarketAxess Holdings Inc. (MKTX - Free Report) reported fourth-quarter 2022 earnings per share of $1.58, beating the Zacks Consensus Estimate of $1.53 and our estimate of $1.45. The bottom line increased 15.3% year over year. Total revenues of $177.9 million rose 7.8% year over year in the quarter under review and beat the consensus mark of $176 million and our estimate of $175.7 million.
Active clients of MarketAxess totaled 2,068 in the fourth quarter, which increased 10% year over year. Active international clients attained a record figure of 1,006 in the quarter under review. The figure advanced 5% year over year. Operating income of $77.7 million advanced 7% year over year in the fourth quarter.