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Intercontinental Exchange (ICE - Free Report) reported first-quarter 2020 adjusted earnings per share of $1.28 per share, which exceeded the Zacks Consensus Estimate of $1.23. The bottom line improved 39% on a year-over-year basis.
Shares gained 2.5% in the pre-market trading session to reflect the outperformance.
The quarter witnessed record revenues, record operating income and double-digit earnings per share growth.
Intercontinental Exchange Inc. Price, Consensus and EPS Surprise
Intercontinental Exchange’s revenues of $1.6 billion improved 62% year over year, driven by increased revenues at Trading and Clearing as well as Data and Listings. The top line marginally beat the Zacks Consensus Estimate.
Net revenues of Trading and Clearing segment were $66 million, up 52 % year over year while Data and Listings revenues were $883 million, up 69% year over year.
Total operating expenses rose 11.9% year over year to $677 million, primarily due to higher compensation and benefits, professional services, technology and communication, selling, general and administrative and depreciation and amortization. Adjusted operating expenses were $597 million in the first quarter, up 13.1% from the year-ago figure.
Adjusted operating income improved 29.6% year over year to $962 million. Adjusted operating margin expanded 400 basis points (bps) from the year-ago quarter to 62%.
Trading and Clearing's adjusted operating income of $608 million was up 49% year over year. Adjusted operating margin expanded 200 bps to 69%.
Data and Listings' adjusted operating income rose about 6% year over year to $354 million and adjusted operating margin of 52% expanded 100 bps.
Total Futures & Options ADV came in at 8 million contracts, down 17% year over year. Revenue per contract of $1.11 increased 4% year over year.
Financial Update
As of Mar 30, 2020 Intercontinental Exchange had cash and cash equivalents of $1582 million, down from $1784 million as of Dec 31, 2019. Long-term debt of $5.3 billion was up 0.03% from the level at 2019 end. Total equity was $17 billion as of Mar 30, 2020, down 1.9% from the level as of Dec 31, 2019.
Operating cash flow was $520 million in the quarter, down 20.5% year over year. Free cash flow was $434 million, down 30.4% year over year.
Share Repurchase and Dividend Update
In the first quarter of 2020, Intercontinental Exchange bought back shares worth $699 million and paid out $166 million in dividends.
The board of directors approved second quarter dividend of 30 cents per share, up 9% from 27.5 cents per share dividend paid out in the second quarter of 2019. The cash dividend will be paid out on Jun 30, 2020 to shareholders of record as of Jun 16.
Guidance
Q2
For the second quarter of 2020, the company expects its data revenues to be $565-$570 million while adjusted operating expenses are expected to be in the range of $575 million to $585 million.
2020
GAAP operating expenses are expected to be in the range of $2.607 billion to $2.657 billion while adjusted operating expenses are expected to be in the range of $2.32 billion to $2.37 billion.
Capital expenditures are expected to be in the range of $300 million to $330 million.
Nasdaq (NDAQ - Free Report) , CME Group (CME - Free Report) and MarketAxess Holdings (MKTX - Free Report) have outperformed the respective Zacks Consensus Estimate for first-quarter 2020 earnings.
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Intercontinental Exchange (ICE) Q1 Earnings Beat Estimates
Intercontinental Exchange (ICE - Free Report) reported first-quarter 2020 adjusted earnings per share of $1.28 per share, which exceeded the Zacks Consensus Estimate of $1.23. The bottom line improved 39% on a year-over-year basis.
Shares gained 2.5% in the pre-market trading session to reflect the outperformance.
The quarter witnessed record revenues, record operating income and double-digit earnings per share growth.
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 of $1.6 billion improved 62% year over year, driven by increased revenues at Trading and Clearing as well as Data and Listings. The top line marginally beat the Zacks Consensus Estimate.
Net revenues of Trading and Clearing segment were $66 million, up 52 % year over year while Data and Listings revenues were $883 million, up 69% year over year.
Total operating expenses rose 11.9% year over year to $677 million, primarily due to higher compensation and benefits, professional services, technology and communication, selling, general and administrative and depreciation and amortization. Adjusted operating expenses were $597 million in the first quarter, up 13.1% from the year-ago figure.
Adjusted operating income improved 29.6% year over year to $962 million. Adjusted operating margin expanded 400 basis points (bps) from the year-ago quarter to 62%.
Trading and Clearing's adjusted operating income of $608 million was up 49% year over year. Adjusted operating margin expanded 200 bps to 69%.
Data and Listings' adjusted operating income rose about 6% year over year to $354 million and adjusted operating margin of 52% expanded 100 bps.
Total Futures & Options ADV came in at 8 million contracts, down 17% year over year. Revenue per contract of $1.11 increased 4% year over year.
Financial Update
As of Mar 30, 2020 Intercontinental Exchange had cash and cash equivalents of $1582 million, down from $1784 million as of Dec 31, 2019. Long-term debt of $5.3 billion was up 0.03% from the level at 2019 end. Total equity was $17 billion as of Mar 30, 2020, down 1.9% from the level as of Dec 31, 2019.
Operating cash flow was $520 million in the quarter, down 20.5% year over year. Free cash flow was $434 million, down 30.4% year over year.
Share Repurchase and Dividend Update
In the first quarter of 2020, Intercontinental Exchange bought back shares worth $699 million and paid out $166 million in dividends.
The board of directors approved second quarter dividend of 30 cents per share, up 9% from 27.5 cents per share dividend paid out in the second quarter of 2019. The cash dividend will be paid out on Jun 30, 2020 to shareholders of record as of Jun 16.
Guidance
Q2
For the second quarter of 2020, the company expects its data revenues to be $565-$570 million while adjusted operating expenses are expected to be in the range of $575 million to $585 million.
2020
GAAP operating expenses are expected to be in the range of $2.607 billion to $2.657 billion while adjusted operating expenses are expected to be in the range of $2.32 billion to $2.37 billion.
Capital expenditures are expected to be in the range of $300 million to $330 million.
Zacks Rank
Intercontinental Exchange’s currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Peer Performance
Nasdaq (NDAQ - Free Report) , CME Group (CME - Free Report) and MarketAxess Holdings (MKTX - Free Report) have outperformed the respective Zacks Consensus Estimate for first-quarter 2020 earnings.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
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