Intercontinental Exchange (ICE) Q4 Earnings Beat & Up Y/Y

Intercontinental Exchange, Inc. (NYSE:ICE) reported fourth-quarter 2017 adjusted earnings per share of 73 cents, beating the Zacks Consensus Estimate by 1.39%. Also, the bottom line improved 2.8% on a year-over-year basis.

Intercontinental Exchange Inc. Price, Consensus and EPS Surprise

The quarter witnessed increase in data service revenues. Lower expenses aided operating margin expansion.

On a GAAP basis, net income was $2.08 cents per share, rising more than three-fold year over year.

Performance in Detail

Intercontinental Exchange’s revenues of $1.14 billion inched up 0.5% year over year on higher data service revenues as well as other revenues. The top line lagged the Zacks Consensus Estimate of $1.15 billion.

Total operating expenses decreased 4.8% ye
ar over year to $552 million, primarily driven by lower compensation and benefits, professional service, acquisition-related transaction as well as integration costs. Adjusted operating expenses were $479 million in the fourth quarter.

Operating income improved 6.1% to $592 million.

Full-Year Highlights

Intercontinental Exchange reported 2017 adjusted earnings per share of $2.95, surpassing the Zacks Consensus Estimate of $2.94. The bottom line improved 6.1% over 2016.

Intercontinental Exchange’s revenues of $4.6 billion grew 2.9% year over year. Results were in line with the Zacks Consensus Estimate. Top line logged a record figure for the twelfth straight year.

Financial Update

At the end of 2017, Intercontinental Exchange had cash and cash equivalents of $535 million, up 31.4% from Dec 31, 2016. Long-term debt of $4.3 billion increased 10.2% from the 2016-end level.

Total equity was $16.9 billion as of Dec 31, 2017 compared with $15.7 billion as of Dec 31, 2016.

Cash flows from operations were $2.1 billion for 2017. Operational capital expenditures in 2016 were $179 million.

Guidance

Adjusted operating expenses in 2018 are estimated between $495 million and $505 million in the first quarter of 2018 and between $2 billion and $2.05 billion for 2018.

Interest expense is projected at $52 million in the first quarter of 2018.

2018 Expense Synergies is estimated at about $30 million.

2018 Capital Expenditures are projected between $300 million and $330 million.

Intercontinental Exchange’s share count for the first quarter is likely to be in the range of $525-$592 million.

Our Take

Results of Intercontinental Exchange reflect a solid performance. The company remains well-poised for growth, given its strength in energy franchise, increasing recurring market data revenues and strategic initiatives. The company remains focused on enhancing its shareholders’ value.

Intercontinental Exchange carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Among other securities exchanges, the bottom line of CME Group Inc. (NASDAQ:CME) , Nasdaq, Inc. (NASDAQ:NDAQ) and MarketAxess, Inc. (NASDAQ:MKTX) beat the respective Zacks Consensus Estimate last quarter.

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