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Intercontinental Exchange Inc ICE

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Morningstar’s Analysis

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Intercontinental Exchange Reports a Decent Second Quarter as Trading Volume Falls

Michael Miller Equity Analyst

Analyst Note

| Michael Miller |

Wide-moat Intercontinental Exchange reported a decent second quarter with EPS of $1.16 matching the FactSet consensus estimate. Adjusting for the acquisition of Ellie Mae, net revenue increased 5% year over year and decreased nearly 5% sequentially. However, in our view the sequential decline in revenue undersells ICE’s underlying performance as stronger recurring revenue was offset by weaker transactional revenue at the company’s exchanges and mortgage technology segments. ICE benefited from elevated levels of equity volatility and mortgage refinance activity in the last quarter, and as conditions normalized it acted as a headwind. We do not expect this to be a sustained trend and ICE’s businesses remain healthy. We are maintaining our $120 fair value estimate for ICE.

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Company Profile

Business Description

Intercontinental Exchange is a vertically integrated operator of financial exchanges and provides ancillary data products. Though the company is probably best known for its ownership of the New York Stock Exchange, which it acquired in 2013, ICE operates a large derivatives exchange, too. The company's largest commodity futures product is the ICE Brent crude futures contract. In addition to the exchanges business, which is about 55% of net revenue, Intercontinental Exchange has used a series of acquisitions to create its mortgage technology business (18% of net revenue) and fixed-income and data-services segment (27% of net revenue).

5660 New Northside Drive, 3rd Floor
Atlanta, GA, 30328
T +1 770 857-4700
Sector Financial Services
Industry Financial Data & Stock Exchanges
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Cyclical
Employees 9,088