Intercontinental (ICE) Q4 Earnings, Revenues Miss, Dividend Up
Intercontinental Exchange ICE reported fourth-quarter 2022 adjusted earnings per share of $1.25, which missed the Zacks Consensus Estimate of $1.26 but came in line with our estimate. Also, the bottom line decreased 6.7% on a year-over-year basis.
ICE witnessed a revenue decline, attributable to soft Exchanges and Mortgage Technology segments. However, lower expenses were a respite.
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, less transaction-based expenses, of $1.8 billion decreased 4% year over year as a result of a decline in revenues from the Exchanges and Mortgage Technology segments. The top line missed the Zacks Consensus Estimate by 0.4% but was almost in line with our estimate.
Net revenues from Exchanges were $982 million, down 3% year over year but higher than our estimate of $971 million. Fixed Income and Data Services revenues were $537 million, which increased 12% year over year and came in higher than our estimate of $531 million. Mortgage Technology revenues decreased 28% to $249 million and were lower than our estimate of $271 million.
Total operating expenses decreased 5.8% year over year to $904 million, primarily due to lower compensation and benefits and professional services. Adjusted operating expenses were $740 million in the quarter, down 1.2% from the year-ago figure but higher than our estimate of $730 million.
Adjusted operating income declined 5.8% year over year to $1 billion but was in line with our estimate. Adjusted operating margin contracted100 basis points (bps) from the year-ago quarter to 58%.
Exchanges' adjusted operating income of $694 million was down 3.9% year over year. Adjusted operating margin remained flat year over year at 71%. Fixed Income and Data Services' adjusted operating income rose 31% to $236 million. Adjusted operating margin expanded 600 bps to 44%. Mortgage Technology’s adjusted operating income of $98 million was down 48% year over year. Adjusted operating margin contracted 1600 bps to 39%.
Full-Year Highlights
Adjusted earnings per share of $5.30 increased 5% on a year-over-year basis.
Intercontinental Exchange’s revenues, less transaction-based expenses, of $7.3 billion increased 2% year over year
Adjusted operating income increased 4.1% year over year to $4.3 billion. Adjusted operating margin expanded 100 bps from the year-ago quarter to 59%.
Financial Update
As of Dec 31, 2022, Intercontinental Exchange had cash and cash equivalents of $7.9 billion, up nearly five-fold from the Dec 31, 2021 level. Long-term debt of $18.1 billion increased 46.1% from the 2021-end level.
Total equity was $22.8 billion as of Dec 31, 2022, up 0.1% from 2021-end.
Operating cash flow was $3.6 billion in 2022, up 13.7% year over year. Adjusted free cash flow was $2.9 billion, up 3% year over year.
ICE repurchased $632 million worth of shares and paid out $853 million in dividends in 2022.
Q1 Guidance
Operating expenses for first-quarter 2023 are projected in the range of $895-$905 million. Adjusted operating expenses are expected in the range of $745-$755 million.
Non-operating expense is expected to be in the range of $115 million to $125 million. Adjusted non-operating expense is expected in the range of $95-$100 million.
Weighted average shares outstanding are anticipated between 558 million and 564 million.
2023 Guidance
Exchange revenues are expected to grow in low-single digits (excluding $20 million related to LIBOR cessation). Fixed Income & Data Services revenues are expected to grow in mid-single digits (excluding ~$15 million related to FX and Euronext migration). Mortgage Technology revenues are expected to grow in mid-to-high single digits.
Operating expenses for first-quarter 2023 are projected in the range of $3.675-$3.725 million. Adjusted operating expenses are expected in the range of $3.04-$3.09 million.
The effective tax rate is guided between 24% and 26%.
Capital expenditure is expected to be in the range of $450 -$500 million.
Dividend Update
The board of directors approved a dividend of 42 cents per share for the first quarter of 2023, reflecting an 11% increase. The dividend will be paid out on Mar 31 to shareholders of record as of Mar 17.
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.
Performance of Other Securities and Exchanges
Cboe Global Markets, Inc. CBOE reported fourth-quarter 2022 adjusted earnings of $1.80 per share, which outpaced the Zacks Consensus Estimate by 1.7%. The bottom line increased 5.8% year over year.
Total adjusted revenues of CBOE Global amounted to $457.1 million for the fourth quarter, which improved 17% year over year on the back of growth in derivatives markets and data and access solutions. The top line missed the consensus mark by 0.6%.
Options revenues climbed 35% year over year to $273.2 million. Europe and Asia Pacific revenues decreased 15 % year over year to $44.2 million. Futures net revenues decreased 10% year over year to $26.8 million for the quarter under review.
Nasdaq, Inc. NDAQ reported fourth-quarter 2022 adjusted earnings per share of 64 cents, which missed the Zacks Consensus Estimate of 65 cents by nearly 1.5%. The bottom line remained unchanged year over year. Nasdaq’s revenues of $906 million increased 2.3% year over year. The top line matched the Zacks Consensus Estimate.
Annualized Recurring Revenue (ARR) of Nasdaq increased 8% year over year. Annualized SaaS revenues increased 13% and represented 36% of ARR. Operating margin of 49% contracted 200 basis points year over year.
In 2022, the Nasdaq Stock Market featured six of the largest ten U.S. IPOs by capital raised, attracted 74% of all proceeds raised through U.S. IPOs and welcomed 14 listing switches. In the Nordic and Baltic regions, Nasdaq maintained its leadership position with 38 IPOs.
MarketAxess Holdings Inc. MKTX reported fourth-quarter 2022 earnings per share of $1.58, beating the Zacks Consensus Estimate of $1.53 and our estimate of $1.45. The bottom line increased 15.3% year over year. Total revenues of $177.9 million rose 7.8% year over year in the quarter under review and beat the consensus mark of $176 million and our estimate of $175.7 million.
Active clients of MarketAxess totaled 2,068 in the fourth quarter, which increased 10% year over year. Active international clients attained a record figure of 1,006 in the quarter under review. The figure advanced 5% year over year. Operating income of $77.7 million advanced 7% year over year in the fourth quarter.
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Intercontinental Exchange Inc. (ICE) : Free Stock Analysis Report
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