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Intercontinental Exchange (ICE) Q4 Earnings Meet, Rise Y/Y

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Intercontinental Exchange (ICE - Free Report) reported fourth-quarter 2019 adjusted earnings per share of 95 cents, in line with the Zacks Consensus Estimate. Meanwhile, the bottom line inched up 1.1% on a year-over-year basis.
However, the company witnessed lower revenues and higher expenses in the quarter under review.

Performance in Detail

Intercontinental Exchange’s revenues of $1.3 billion dipped 0.8% year over year, mainly due to lower transaction and clearing. The top line also missed the Zacks Consensus Estimate by 0.2%.

Net revenues of Trading and Clearing segment were $626 million, down 5% year over year while Data and Listings revenues were $672 million, up 3% year over year.

Total operating expenses rose 7% year over year to $676 million, primarily due to higher compensation and benefits, technology and communication, and depreciation and amortization. Adjusted operating expenses were $570 million in the third quarter, up 3.1% from the year-ago figure.

Adjusted operating income slipped 3.6% year over year to $728 million.

Adjusted operating margin contracted 200 basis points (bps) from the year-ago quarter to 56%.

Trading and Clearing's adjusted operating income of $380 million was down 10.6% year over year. Adjusted operating margin contracted 400 bps to 61%.

Data and Listings' adjusted operating income rose 5.5% year over year to $348 million and adjusted operating margin of 52% expanded 100 bps.

Total Futures & Options came in at 5.2 million contracts, down 17% year over year. Revenue per contract of $1.14 increased 14% year over year.

Financial Update

As of Dec 31, 2019, Intercontinental Exchange had cash and cash equivalents of $841 million, up 16.2% from the level as of Dec 31, 2018.

Long-term debt of $5.2 billion was down 19% from the level at 2018 end.

Total equity was $17.2 billion as of Dec 31, 2019, up 0.3% from the level as of Dec 31, 2018.

Operating cash flow was $2.7 billion in 2019, up 5% year over year. Free cash flow was $2.3 billion, up 1.5% year over year.

Share Repurchase and Dividend Update

In 2019, the company bought back shares worth $1.5 billion and paid out dividends amounting to $621 million.

The company also took up a new share repurchase plan of $2.4 billion, effective Jan 1, 2020.

Q1 Guidance

Following fourth-quarter results, the company issued its first-quarter and 2020 outlook.

For the first quarter of 2020, the company expects its data revenues to be $560-$565 million while operating expenses are projected in the range of $570-$580 million.

2020 Guidance

Data revenues are estimated between $2.29 billion and $2.33 billion.

Operating expenses are predicted in the $2.275-$2.325 billion band.

Full-Year Update

For 2019, net revenues were $5.2 billion, up 4% year over year. Adjusted operating expenses for the year were $2.2 billion, up 5.7% year over year.

The company’s adjusted EPS for the period was $3.88, up 8% year over year.

Adjusted operating income for the full year was $3 billion, up 3.6% year over year.

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.

Upcoming Releases From Finance Sector

Some stocks worth considering from the finance sector with a perfect mix of elements to surpass estimates in the upcoming quarterly releases are as follows:

American International Group, Inc. AIG is slated to announce fourth-quarter earnings on Feb 13. The stock has an Earnings ESP of +3.70% and is Zacks #3 Ranked.

Brighthouse Financial, Inc. BHF has an Earnings ESP of +1.39% and a Zacks Rank #2 (Buy). The company is scheduled to release fourth-quarter earnings on Feb 10.

CME Group Inc. CME is set to report fourth-quarter earnings on Feb 12. The stock is #3 Ranked and has an Earnings ESP of +0.19%.

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