Intercontinental Exchange, Inc.’s (NYSE:ICE) third-quarter 2016 operating earnings per share of $3.21 missed the Zacks Consensus Estimate by a penny. However, earnings improved about 10.3% year over year.
Notably, this is the eight straight quarter of double-digit earnings growth for the company. The bottom-line improvement was backed by growth across the company’s data and listings business segments.
Total net revenue of $1.078 billion surged 32% year over year. This was owing a massive 134% increase in data services revenues to a record $489 million and a 4.9% rise in listings revenues. However, 6.5% lower transaction and clearing revenues and 4.3% decline in other revenues partially offset the upside. Total net revenue marginally missed the Zacks Consensus Estimate of $1.081 billion.
Total reported operating expenses increased 61% year over year to $604 million, primarily owing to higher compensation and benefits, rent and occupancy costs, depreciation and amortization, acquisition-related transaction and integration costs, selling, general and administrative expenses as well as technology and communication costs.
Operating income improved 7.7% to $474 million. Operating margin was 44% in the reported quarter, down 390 basis points year over year.
Financial Update
Cash flows from operations were $1.5 billion in the first nine months of 2016, up 69% year over year. Capital expenditure totaled $112 million for the same period.
Intercontinental Exchange exited the quarter with cash and cash equivalents of $458 million, down 27% from the 2015-end level. Long-term debt was $4.7 billion, up 0.06% from 2015-end level.
As of Sep 30, 2016 total assets decreased 2.2% to $76.3 billion from $77.9 billion as of Dec 31, 2015. Total equity was $15.5 billion as of Sep 30, 2016, up 4.7% from $14.8 billion as of Dec 31, 2015.
Guidance for 2016
Intercontinental Exchange expects adjusted operating expenses in the range of $500–$505 million for the fourth quarter of 2016 and $1.94–$1.97 billion for the full year.
Moreover, the company anticipates data services revenues to increase in the range of 6–7% in 2016 from the 2015-end level.
The company expects to realize expense synergies of about $115 million in 2016.
Intercontinental Exchange's diluted share count for the fourth quarter and full year is expected to be in the range of 118–121 million (590–605 million shares adjusting for 5-for-1 stock split).
Zacks Rank
Intercontinental Exchange presently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.
INTERCONTNTLEXC Price, Consensus and EPS Surprise
Performance of Other Stocks
Among the securities exchanges, earnings of CME Group Inc. (NASDAQ:CME) and MarketAxess Holdings Inc.'s (NASDAQ:MKTX) beat Zacks Consensus Estimate, while the bottom line of Nasdaq, Inc. (NASDAQ:NDAQ) met expectations in the third quarter.
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INTERCONTNTLEXC (ICE): Free Stock Analysis Report
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