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Intercontinental Exchange (ICE) Q2 Earnings and Revenues Top

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Intercontinental Exchange, Inc. (ICE - Free Report) reported second-quarter 2018 adjusted earnings per share of 90 cents, beating the Zacks Consensus Estimate of 89 cents by 1.1%. Also, the bottom line improved 18% on a year-over-year basis.

Intercontinental Exchange Inc. Price, Consensus and EPS Surprise

The quarter witnessed strong performance across trading and clearing as well as data and listings segments, delivering record revenues.

On a GAAP basis, net income was 78 cents per share, up 10% year over year.

Performance in Detail

Intercontinental Exchange’s revenues of $1.2 billion increased 5.6% year over year on 5.8% higher revenues at transaction and clearing, nearly 1% higher net and listings segments as well as 12.2% increase in other revenues. Moreover, the top line marginally outpaced the Zacks Consensus Estimate by 0.3%.

Total operating expenses rose 3.5% year over year to $591 million, primarily driven by higher compensation and benefits, acquisition-related transaction and integration costs and technology and communication. Adjusted operating expenses were $503 million in the second quarter, up 2.6% from the year-ago quarter’s figure.

Adjusted operating income grew 7.7% year over year to $743 million. Adjusted operating margin was 60%, having improved 200 basis points.

Trading and Clearing's adjusted operating income augmented 12.2% year over year while operating margin expanded 100 basis points. Data and Listings' adjusted operating income increased 2.5% year over year to $414 million while operating margin expanded 100 basis points.

Financial Update

As of Jun 30, 2018, Intercontinental Exchange had cash and cash equivalents of $1.3 billion, up 3.5% from the level as of Dec 31, 2017. Long-term debt of $4.3 billion inched up 0.1% from 2017-end level.

Total equity was $16.8 billion as of Jun 30, 2018, which dipped 0.1% from $16.9 billion as of Dec 31, 2017.

Free cash flow was $1 billion in the first half of 2018, up 16.7% year over year.

Guidance

Intercontinental Exchange estimates third-quarter 2018 data revenues between $530 million and $532 million while fourth-quarter data revenues are expected between $538 million and $542 million.

Adjusted operating expenses are predicted between $520 million and $525 million for the third quarter of 2018 and between $2 billion and $2.04 billion for 2018.

Operating expenses are projected between $570 million and $580 million for the third quarter of 2018 and in the $2.04-$2.05 billion range for the full year.

Interest expense is anticipated at $67 million in the third quarter and $73 million in fourth-quarter 2018.

Intercontinental Exchange’s share count for the third quarter is likely to be in the band of 581-583 million weighted average shares outstanding and between 577 million and 582 million for 2018.

Our Take

Intercontinental Exchange boasts a stellar performance in earnings results. The company remains well-poised for growth on the back of its strength in energy franchise, rising recurring market data revenues as well as growth-driving strategic initiatives. The company focuses on building its growth trajectory, customer service and shareholder value.

Zacks Rank

Intercontinental Exchange 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

Among other players from the same industry having already reported second-quarter earnings, the bottom line of Nasdaq, Inc. (NDAQ - Free Report) , CME Group Inc. (CME - Free Report) and MarketAxess Holdings Inc. (MKTX - Free Report) surpassed the respective Zacks Consensus Estimate.

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