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Intercontinental (ICE) Beats Q3 Earnings & Revenue Estimates

Zacks Equity Research

Intercontinental Exchange ICE reported third-quarter 2019 adjusted earnings per share of $1.06, beating the Zacks Consensus Estimate by 11.6%. Also, the bottom line improved 24.7% on a year-over-year basis.

The company witnessed improved operating income and growth in business segments.

Intercontinental Exchange Inc. Price, Consensus and EPS Surprise

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 of $1.3 billion increased 11% year over year on higher transaction and clearing, data services and other revenues. Moreover, the top line beat the Zacks Consensus Estimate by 1.16%.

Net revenues of Trading and Clearing segment were $669 million, up 20% year over year, while Data and Listings revenues were $667 million, up 4% year over year.

Total operating expenses rose 5.4% year over year to $630 million, primarily due to higher compensation and benefits, professional services, technology and communication, depreciation and amortization. Adjusted operating expenses were $551 million in the third quarter, up 5.8% from the year-ago quarter’s figure.

Adjusted operating income improved 15.6% year over year to $785 million. Adjusted operating margin contracted 200 basis points (bps) from the year-ago quarter to 59%.

Trading and Clearing's adjusted operating income of $438 million was up 24.4% year over year. Adjusted operating margin expanded 200 bps. Data and Listings' adjusted operating income rose 6.1% year over year to $347 million and adjusted operating margin of 52% expanded 100 bps.

Total Futures & Options totaled 5.8 million contracts, up 12% year over year. Revenue per contract of $1.10 increased 2% year over year.

Financial Update

As of Sep 30, 2019, Intercontinental Exchange had cash and cash equivalents of $655 million, down 9.5% from the level as of Dec 31, 2018.

Long-term debt of $6.5 billion was up 0.1% from 2018-end level.

Total equity was $17.2 billion as of Sep 30, 2019, down 0.3% from the level as of Dec 31, 2018.

Operating cash flow was $1.9 billion in the third quarter of 2019, up 11.8% year over year. Free cash flow was $1.7 billion, up 3.4% year over year.

Share Repurchase and Dividend Update

In the third quarter of 2019, the company bought back shares worth $1.1 billion and paid out dividends amounting to $467 million.

Q4 Guidance

Data revenues are estimated between $555 million and $560 million.

Operating expenses are projected in the range of $637-$647 million. Adjusted operating expenses are expected to be in the range of $562 million to $572 million.

The company expects interest expense of $71 million in the period.

Weighted average shares outstanding are anticipated between 557 million and 563 million.

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.

Other Releases

Of the finance industry players that have reported third-quarter results so far, American Financial Group, Inc. AFG, Arthur J. Gallagher AJG and CNA Financial Corporation CNA beat the respective Zacks Consensus Estimate for earnings.

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