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Intercontinental (ICE) Q1 Earnings & Revenues Top, Fall Y/Y
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Intercontinental Exchange (ICE - Free Report) reported first-quarter 2023 adjusted earnings per share of $1.41, which beat the Zacks Consensus Estimate by 0.7% and our estimate of $1.27. The bottom line however decreased 1.4% on a year-over-year basis.
ICE witnessed a revenue decline, attributable to the soft result Mortgage Technology segment. However, lower expenses were a respite.
Intercontinental Exchange Inc. Price, Consensus and EPS Surprise
Intercontinental Exchange’s revenues, less transaction-based expenses, of $1.9 billion decreased 22.9% year over year as a result of a decline in revenues at the Mortgage Technology segment. The top line beat the Zacks Consensus Estimate by 0.2% but was almost in line with our estimate.
Net revenues from Exchanges were $1.1 billion, up 1% year over year but lower than our estimate of $1.6 billion. Fixed Income and Data Services revenues were $563 million, which increased 11% year over year and came in higher than our estimate of $531 million. Mortgage Technology revenues decreased 23% to $236 million and were lower than our estimate of $298 million.
Total operating expenses decreased 2.2% year over year to $927 million, primarily due to lower compensation and benefits, technology and communication and professional services. Adjusted operating expenses were $740 million in the quarter, down 0.8% from the year-ago figure but lower than our estimate of $749 million.
Adjusted operating income increased 0.3% year over year to $1.2 billion but was higher than our estimate of $1.1 billion. Adjusted operating margin remained flat year over year at 61%.
Exchanges' adjusted operating income of $809 million was down 1.1% year over year. Adjusted operating margin remained flat year over year at 74%. Fixed Income and Data Services' adjusted operating income rose 28% to $262 million. Adjusted operating margin expanded 700 basis points (bps) to 44%. Mortgage Technology’s adjusted operating income of $98 million was down 43% year over year. Adjusted operating margin contracted 1300 bps to 36%.
Financial Update
As of Mar 31, 2023, Intercontinental Exchange had cash and cash equivalents of $8.2 billion, up 3.3% from the Dec 31, 2022 level. Long-term debt of $18.1 billion increased 0.02% from the 2022-end level.
Total equity was $22.8 billion as of Mar 31, 2023, up 2% from 2022-end.
Operating cash flow was $653 million, down 13.6% year over year. Adjusted free cash flow was $673 million, up 2% year over year.
ICE paid out $236 million in dividends in the first quarter.
Q2 Guidance
Operating expenses for second-quarter 2023 are projected in the range of $905-$915 million. Adjusted operating expenses are expected in the range of $763-$773 million.
Non-operating expense is expected to be in the range of $105 million to $110 million. Adjusted non-operating expense is expected in the range of $85-$90 million.
Weighted average shares outstanding are anticipated between 559 million and 564 million.
Dividend Update
The board of directors approved a dividend of 42 cents per share for the second quarter of 2023. The dividend will be paid out on Jun 30 to shareholders of record as of Jun 14.
Nasdaq, Inc. (NDAQ - Free Report) reported first-quarter 2023 adjusted earnings per share of 69 cents, beating the Zacks Consensus Estimate by 6.1% as well as our estimate of 62 cents. The bottom line improved 4.5% year over year. Revenues of $914 million increased 2% year over year and beat the Zacks Consensus Estimate by 0.2%.
Annualized Recurring Revenue (ARR) increased 7% year over year. Annualized SaaS revenues increased 11% and represented 36% of ARR. Operating margin of 52% remained unchanged year over year.
Nasdaq expects 2023 non-GAAP operating expenses in the range of $1.78 billion to $1.84 billion compared with the prior expectation of $1.77 billion to $1.85 billion. Nasdaq forecasts the non-GAAP tax rate in the range of 24-26% in 2023.
MarketAxess Holdings Inc. (MKTX - Free Report) reported first-quarter 2023 earnings per share of $1.96, which outpaced the Zacks Consensus Estimate by 3.7% and our estimate of $1.86. The bottom line advanced 13.3% year over year. Total revenues improved 9% year over year to $203.2 million in the quarter under review. The top line surpassed the consensus mark by 1.4% and our estimate of $200.2 million.
Commission revenues rose 9.6% year over year to $182 million in the first quarter. Information services revenues attained a record figure of $11 million, up 12.2% year over year. Meanwhile, post-trade services revenues of $10 million inched up 1% year over year in the quarter under review. MarketAxess’ U.S. high-grade trading volume climbed 14.8% year over year to $392.7 billion.
CME Group (CME - Free Report) reported first-quarter 2023 record adjusted earnings per share of $2.42, which beat the Zacks Consensus Estimate by 2.5% and our estimate of $2.02 per share. The bottom line increased 14.7% year over year. CME Group’s revenues of $1.4 billion increased 4.8% year over year. The top line beat the Zacks Consensus Estimate by 1.9% and our estimate of $1.2 billion.
Average daily volume (ADV) was 26.9 million contracts. Non-U.S. ADV reached 7.2 million contracts, which included the second-highest quarterly ADV across EMEA, Asia and Latin America. ADV increased in three of its six asset classes.
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Intercontinental (ICE) Q1 Earnings & Revenues Top, Fall Y/Y
Intercontinental Exchange (ICE - Free Report) reported first-quarter 2023 adjusted earnings per share of $1.41, which beat the Zacks Consensus Estimate by 0.7% and our estimate of $1.27. The bottom line however decreased 1.4% on a year-over-year basis.
ICE witnessed a revenue decline, attributable to the soft result Mortgage Technology segment. 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 $1.9 billion decreased 22.9% year over year as a result of a decline in revenues at the Mortgage Technology segment. The top line beat the Zacks Consensus Estimate by 0.2% but was almost in line with our estimate.
Net revenues from Exchanges were $1.1 billion, up 1% year over year but lower than our estimate of $1.6 billion. Fixed Income and Data Services revenues were $563 million, which increased 11% year over year and came in higher than our estimate of $531 million. Mortgage Technology revenues decreased 23% to $236 million and were lower than our estimate of $298 million.
Total operating expenses decreased 2.2% year over year to $927 million, primarily due to lower compensation and benefits, technology and communication and professional services. Adjusted operating expenses were $740 million in the quarter, down 0.8% from the year-ago figure but lower than our estimate of $749 million.
Adjusted operating income increased 0.3% year over year to $1.2 billion but was higher than our estimate of $1.1 billion. Adjusted operating margin remained flat year over year at 61%.
Exchanges' adjusted operating income of $809 million was down 1.1% year over year. Adjusted operating margin remained flat year over year at 74%. Fixed Income and Data Services' adjusted operating income rose 28% to $262 million. Adjusted operating margin expanded 700 basis points (bps) to 44%. Mortgage Technology’s adjusted operating income of $98 million was down 43% year over year. Adjusted operating margin contracted 1300 bps to 36%.
Financial Update
As of Mar 31, 2023, Intercontinental Exchange had cash and cash equivalents of $8.2 billion, up 3.3% from the Dec 31, 2022 level. Long-term debt of $18.1 billion increased 0.02% from the 2022-end level.
Total equity was $22.8 billion as of Mar 31, 2023, up 2% from 2022-end.
Operating cash flow was $653 million, down 13.6% year over year. Adjusted free cash flow was $673 million, up 2% year over year.
ICE paid out $236 million in dividends in the first quarter.
Q2 Guidance
Operating expenses for second-quarter 2023 are projected in the range of $905-$915 million. Adjusted operating expenses are expected in the range of $763-$773 million.
Non-operating expense is expected to be in the range of $105 million to $110 million. Adjusted non-operating expense is expected in the range of $85-$90 million.
Weighted average shares outstanding are anticipated between 559 million and 564 million.
Dividend Update
The board of directors approved a dividend of 42 cents per share for the second quarter of 2023. The dividend will be paid out on Jun 30 to shareholders of record as of Jun 14.
Zacks Rank
Intercontinental Exchange currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Securities and Exchanges
Nasdaq, Inc. (NDAQ - Free Report) reported first-quarter 2023 adjusted earnings per share of 69 cents, beating the Zacks Consensus Estimate by 6.1% as well as our estimate of 62 cents. The bottom line improved 4.5% year over year. Revenues of $914 million increased 2% year over year and beat the Zacks Consensus Estimate by 0.2%.
Annualized Recurring Revenue (ARR) increased 7% year over year. Annualized SaaS revenues increased 11% and represented 36% of ARR. Operating margin of 52% remained unchanged year over year.
Nasdaq expects 2023 non-GAAP operating expenses in the range of $1.78 billion to $1.84 billion compared with the prior expectation of $1.77 billion to $1.85 billion. Nasdaq forecasts the non-GAAP tax rate in the range of 24-26% in 2023.
MarketAxess Holdings Inc. (MKTX - Free Report) reported first-quarter 2023 earnings per share of $1.96, which outpaced the Zacks Consensus Estimate by 3.7% and our estimate of $1.86. The bottom line advanced 13.3% year over year. Total revenues improved 9% year over year to $203.2 million in the quarter under review. The top line surpassed the consensus mark by 1.4% and our estimate of $200.2 million.
Commission revenues rose 9.6% year over year to $182 million in the first quarter. Information services revenues attained a record figure of $11 million, up 12.2% year over year. Meanwhile, post-trade services revenues of $10 million inched up 1% year over year in the quarter under review. MarketAxess’ U.S. high-grade trading volume climbed 14.8% year over year to $392.7 billion.
CME Group (CME - Free Report) reported first-quarter 2023 record adjusted earnings per share of $2.42, which beat the Zacks Consensus Estimate by 2.5% and our estimate of $2.02 per share. The bottom line increased 14.7% year over year. CME Group’s revenues of $1.4 billion increased 4.8% year over year. The top line beat the Zacks Consensus Estimate by 1.9% and our estimate of $1.2 billion.
Average daily volume (ADV) was 26.9 million contracts. Non-U.S. ADV reached 7.2 million contracts, which included the second-highest quarterly ADV across EMEA, Asia and Latin America. ADV increased in three of its six asset classes.