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Intercontinental (ICE) Beats on Q2 Earnings, Tweaks Expense View

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Intercontinental Exchange (ICE - Free Report) reported second-quarter 2024 adjusted earnings per share of $1.52, which beat the Zacks Consensus Estimate by 2%. The bottom line increased 6.3% on a year-over-year basis.

Intercontinental delivered solid results in all three segments. The performance reflected the strength of a balanced and diversified business as well as the results of the strategic investments it has made.

Performance in Detail

Intercontinental’s net revenues were a record $2.3 billion, up 23% year over year. The top line beat the Zacks Consensus Estimate by 0.3%.

Total operating expenses increased 34.1% year over year to $1.3 billion. This can be primarily attributed to higher compensation and benefits, professional services, technology and communication, rent and occupancy, selling, general and administrative, and depreciation and amortization expense. Our estimate was $1.2 billion. 

Adjusted operating expenses were $947 million in the quarter, up 25.3% year over year. Our estimate was $939.5 million.

Adjusted operating income rose 21% year over year to a record $1.4 billion. Our estimate was $1.3 billion. Adjusted operating margin contracted 100 basis points (bps) year over year to 59%.

Segment Details

Exchanges' net revenues were $1.2 billion, up 14% year over year. The Zacks Consensus Estimate was pegged at $1.6 billion. Our estimate was $1.2 billion.

Adjusted operating income of $935 million was up 16.9% year over year. Our estimate was $748 million. 

Adjusted operating margin expanded 200 bps year over year to 75%. Our estimate was 67%.

Fixed Income and Data Services' revenues were $565 million, which increased 4% year over year. Our estimate was $595 million. The Zacks Consensus Estimate was pegged at $584 million.  

Adjusted operating income rose 9% to $254 million. Our estimate was $209 million.

Adjusted operating margin expanded 200 bps year over year to 45%. Our estimate was 35.2%.

Mortgage Technology’s revenues increased 103% to $506 million. Our estimate was $518 million. The Zacks Consensus Estimate was pegged at $514 million. 

Adjusted operating income was $181 million, which surged 82.8% year over year. The Zacks Consensus Estimate was pegged at $222 million. 

Adjusted operating margin contracted 400 bps year over year to 36%. 

Financial Update

As of Jun 30, 2024, Intercontinental had cash and cash equivalents, including short-term restricted cash and cash equivalents of $2.1 billion, up 49.4% from Dec 31, 2023. Long-term debt of $18.6 billion decreased 10.1% from 2023-end.

Total equity was $26.7 billion as of Dec 31, 2023, up 3.7% from 2023-end.

Operating cash flow was $2.2 billion in the first half of 2024, up 22.2% year over year. Adjusted free cash flow was $1.8 billion, up 7.2% year over year.

Intercontinental paid out $519 million in dividends in the first half of 2024.

Third-Quarter 2024 Guidance

GAAP operating expenses are expected in the range of $1.22-$1.23 billion. Adjusted operating expenses are projected to be between $955 million and $965 million.

GAAP non-operating expense is anticipated between $200 million and $205 million. Adjusted non-operating expense is suggested in the range of $190-$195 million.

Share count is forecasted in the range of 573-579 million.

2024 Guidance

GAAP operating expenses are expected in the range of $4.90-$4.93 billion, up from $4.87-$4.90 billion guided earlier. Adjusted operating expenses are envisioned to be between $3.79 billion and $3.82 billion.

Dividend Update

The board of directors approved a dividend of 45 cents per share for the second quarter of 2024. The dividend will be paid out on Sep 30 to shareholders of record as of Sep 16.

Zacks Rank

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

Performance Industry Players

CME Group (CME - Free Report) reported second-quarter 2024 adjusted EPS of $2.56, beating the Zacks Consensus Estimate by 2%. The bottom line increased 11.3% year over year. CME Group’s revenues of $1.5 billion increased 12.5% year over year. The year-over-year upside was primarily due to higher clearing and transaction fees (up 11.8% year over year), market data and information services (up 7.3% year over year) and other (36.8% year over year). The top line beat the Zacks Consensus Estimate by almost 1%.

ADV was 25.9 million contracts, including non-U.S. ADV, which reached a record 7.8 million contracts. The total average rate per contract was 70.8 cents.

Nasdaq (NDAQ - Free Report) reported first-quarter 2024 adjusted earnings per share (EPS) of 69 cents, beating the Zacks Consensus Estimate by 7.8%. The outperformance came on the back of broad-based growth across three divisions and another quarter of double-digit Solutions growth. However, the bottom line declined 2.8% year over year on higher expenses.  Nasdaq’s revenues of $1.2 billion increased 25% year over year. The upside can primarily be attributed to a $168 million benefit related to the acquisition of Adenza, partially offset by a $2-million decline from the impact of changes in FX rates. The top line beat the Zacks Consensus Estimate by 2.7%.

Annualized Recurring Revenue (ARR) increased 29% year over year to $2.7 billion. Adjusted operating margin of 53% expanded 100 basis points year over year. The Nasdaq stock market welcomed 84 new company listings in second-quarter 2024, including 39 initial public offerings. The number of listed companies was 4,004 at the quarter end. 

Nasdaq expects 2024 non-GAAP operating expenses to be in the range of $2.145-$2.185 billion from $2.125 billion to $2.185 billion, guided earlier.

Upcoming Release

Cboe Global Markets (CBOE - Free Report) is set to report second-quarter 2024 results on Aug 2, before market open. The Zacks Consensus Estimate for second-quarter EPS is pegged at $2.09, suggesting an increase of 17.4% from the year-ago quarter’s reported figure.

CBOE’s earnings beat estimates in each of the last four reported quarters.

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