Intercontinental Exchange (ICE) Q2 Earnings & Revenues Top

Intercontinental Exchange (NYSE:ICE) reported second-quarter 2019 adjusted earnings per share of 94 cents, beating the Zacks Consensus Estimate by 2.2%. Also, the bottom line improved 4.4% on a year-over-year basis.

The company witnessed strength in global energy business and compounding growth in subscription-based Data & Listings business.

Performance in Detail

Intercontinental Exchange’s revenues of $1.3 billion increased 4.2% year over year on higher transaction and clearing (5%), data services (5.1%) and other revenues (14.5%). Moreover, the top line outpaced the Zacks Consensus Estimate by 0.4%.

Net revenues of Trading and Clearing segment were $634 million, up 4% year over year, while Data and Listings revenues were $664 million, up 4.2% year over year

Total operating expenses rose 4.6% year over year to $618 million, primarily due to higher compensation and professional services, rent and occupancy, selling, general and administrative and depreciation and amortization. Adjusted operating expenses were $540 million in the second quarter, up 7.4% from the year-ago quarter’s figure.

Adjusted operating income improved 2% year over year to $758 million. Adjusted operating margin contracted 200 basis points (bps) from the year-ago quarter to 58%.

Trading and Clearing's adjusted operating income of $408 million was down 1.5% year over year. Adjusted operating margin contracted 400 bps. Data and Listings' adjusted operating income rose 6.4% year over year to $350 million and adjusted operating margin of 53% expanded 100 bps.

Total Futures & Options totaled 5.6 million contracts, down 9% year over year. Revenue per contract of $1.15 increased 9% year over year.

Intercontinental Exchange Inc. Price, Consensus and EPS Surprise

Financial Update

As of Jun 30, 2019, Intercontinental Exchange had cash and cash equivalents of $1.7 billion, up 11.3% 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 $17.1 billion as of Jun 30, 2019, up 0.5% from $16.9 billion as of Dec 31, 2018.

Operating cash flow was $1.4 billion in the first half of 2019, up 12% year over year. Free cash flow was $1.2 billion, up 13% year over year.

Share Repurchase and Dividend Update

In the first half of 2019, the company bought back shares worth $780 million and paid dividends amounting to $312 million.

Third-Quarter 2019 Guidance

Data revenues are estimated between $550 million and $555 million.

Operating expenses are projected in the range of $632-$642 million. Adjusted operating expenses are expected to be in the range of $552 million to $562 million.

The company expects interest expense of $73 million in the period.

Weighted average shares outstanding are anticipated between 560 million and 566 million shares.

2019 View

Data revenues are estimated between $2.19 billion and $2.24 billion.

Operating expenses are predicted in the band of $2.50-$2.52 billion. Adjusted operating expenses are expected to be in the range of $2.19 million to $2.21 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.

Performance of Other Securities and Exchanges

Nasdaq (NASDAQ:NDAQ) and CME Group’s (NASDAQ:CME) earnings beat the Zacks Consensus Estimate while that of MarketAxess Holdings (NASDAQ:MKTX) missed expectations.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot trades we're targeting>>