Intercontinental Exchange Q2 2025 Earnings Report

Intercontinental Exchange EPS Results

• Actual EPS: $1.81
• Consensus EPS: $1.77
• Beat/Miss: Beat by +$0.04
• One Year Ago EPS: $1.52

Intercontinental Exchange Revenue Results

• Actual Revenue: $3.26 billion
• Expected Revenue: $2.50 billion
• Beat/Miss: Beat by +$761.95 million
• YoY Revenue Growth: +9.80%

Intercontinental Exchange Announcement Details

• Quarter: Q2 2025
• Date: 7/31/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, July 31, 2025
• Conference Call Time: 8:30AM ET

Intercontinental Exchange (NYSE:ICE), Inc., together with its subsidiaries, engages in the provision of market infrastructure, data services, and technology solutions for financial institutions, corporations, and government entities in the United States, the United Kingdom, the European Union, Singapore, India, Abu Dhabi, Israel, and Canada. It operates through three segments: Exchanges, Fixed Income and Data Services, and Mortgage Technology. The company operates regulated marketplaces for listing, trading, and clearing an array of derivatives contracts and financial securities, such as commodities, interest rates, foreign exchange, and equities, as well as corporate and exchange-traded funds; and trading venues, including regulated exchanges and clearing houses. It also offers energy, agricultural and metals, and financial futures and options; and cash equities and equity options, and over-the-counter and other markets, as well as listings and data and connectivity services. In addition, the company provides fixed income data and analytic, fixed income execution, CDS clearing, and other multi-asset class data and network services. Further, it offers proprietary and comprehensive mortgage origination platform, which serves residential mortgage loans; closing solutions that provides customers connectivity to the mortgage supply chain and facilitates the secure exchange of information; data and analytics services; and Data as a Service for lenders to access data and origination information. Intercontinental Exchange, Inc. was founded in 2000 and is headquartered in Atlanta, Georgia.

Intercontinental Exchange Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Record second quarter results with adjusted EPS of $1.81 up 19% year-over-year, net revenue of $2.5 billion up 9%, and adjusted operating income of $1.6 billion up 13%.
• Positive Sentiment: Exchange segment delivered record net revenues of $1.4 billion, up 12%, with transacting revenues +15% led by a 20% increase in interest rate products and 25% growth in energy.
• Positive Sentiment: Fixed Income & Data Services posted record revenues of $597 million, up 8%, driven by 28% muni bond growth, 25% higher CDS clearing revenues and strong data & analytics performance.
• Neutral Sentiment: Mortgage Technology revenues rose 5% to $531 million, while recurring revenue sees headwinds from M&A attrition and inactive loan roll-offs, partially offset by new client implementations.
• Negative Sentiment: Third quarter guidance includes adjusted operating expenses of $995 million–$1.5 billion and non-operating expenses of $170 million–$175 million, reflecting higher IPO market and data center investments.

Presentation

[Operator]

Good morning, all. Thank you for joining us on today's ICE Second Quarter twenty twenty five Earnings Conference Call. My name is Drew, and I'll be the operator today. During today's call, after the prepared remarks, we will have a Q and A session. It's now my pleasure to hand over to Katya Gonzales, Manager of Investor Relations to begin. Please go ahead when you're ready.

[Katia Gonzalez, Investor Relations at Intercontinental Exchange]

Good morning. ICE's second quarter twenty twenty five earnings release and presentation can be found in the Investors section of ice.com. These items will be archived, and our call will be available for replay. Today's call may contain forward looking statements. These statements, which we undertake no obligation to update, represent our current judgment and are subject to risks, assumptions and uncertainties.

[Katia Gonzalez, Investor Relations at Intercontinental Exchange]

For a description of the risks that could cause our results to differ materially from those described in forward looking statements, please refer to our 2024 Form 10 ks, twenty twenty five second quarter Form 10 Q and other filings with the SEC. In our earnings supplement, we refer to certain non GAAP measures. We believe our non GAAP measures are more reflective of our cash operations and core business performance. You'll find a reconciliation to the equivalent GAAP terms in our earnings materials. When used on this call, net revenue refers to revenue net of transaction based expenses and adjusted earnings refers to adjusted diluted earnings per share.

[Katia Gonzalez, Investor Relations at Intercontinental Exchange]

Throughout this presentation, unless otherwise indicated, references to revenue growth are on a constant currency basis. Please see the explanatory notes on the second page of the earnings supplement for additional details regarding the definition of certain items. With us on the call today are Jud Sprecher, Chair and CEO Warren Gardner, Chief Financial Officer Ben Jackson, President and Chris Edmunds, President of Fixed Income and Data Services. I'll now turn the call over to Warren.

[Warren Gardiner, Chief Financial Officer at Intercontinental Exchange]

Thanks, Katya. Good morning, everyone, and thanks for joining us today. I'll begin on slide four with a summary of our record second quarter results. Second quarter adjusted earnings per share were a record $1.81 up 19% year over year. These record results were led by a 9% increase in net revenue to a record $2,500,000,000 with growth contributions from all three of our operating segments.

[Warren Gardiner, Chief Financial Officer at Intercontinental Exchange]

Second quarter adjusted operating expenses totaled $983,000,000 and were towards the low end of our guidance range, driven in part by additional technology related savings and synergies. As a result of this strong performance, adjusted operating income increased by double digits to a record $1,600,000,000 up 13% and on top of 11% pro form a growth in the 2024. This strong business performance allowed us to return $532,000,000 of capital to our shareholders during the quarter, including $255,000,000 of share repurchases. Through the first half, we have returned over $1,000,000,000 to shareholders through both buybacks and dividends. And we did this while also investing in our business and reducing leverage, which ended the second quarter at our target of three times EBITDA, ahead of our initial target when we closed the acquisition of Black Knight less than two years ago.

[Warren Gardiner, Chief Financial Officer at Intercontinental Exchange]

Now let's move to slide five, where I'll provide an overview of the performance of our Exchange segment. Second quarter net revenues sold a record $1,400,000,000 up 12% year over year and on top of 14% growth in the 2024. Record transacting revenues of over $1,000,000,000 were up 15%, driven by a 20% increase in our interest rate business, record NYFC cash equities and option revenues up 10%, and another quarter of record energy revenues, which grew 25% year over year. In addition, volumes in July continued to be strong, with energy ADV up 11%, interest rate ADV up 24%, our cash equity ADV up 54%, and our equity option ADV up 6%. And importantly, open interest continues to build, up 12% year over year, including 40% growth in global interest rates and 5% growth in our energy markets.

[Warren Gardiner, Chief Financial Officer at Intercontinental Exchange]

Shifting to recurring revenues, which include our exchange data services and our NYC listings business, revenues totaled $378,000,000 up 5% year over year. Underpinning growth in our recurring revenues was our broader exchange data and connectivity services, which grew 6%, and was once again led by our futures data services. In our listings business, the NYSE helped to raise approximately $9,000,000,000 in new IPO proceeds in the first half and an additional $4,500,000,000 so far in July. It's worth noting that only roughly half of new IPOs have met the NYSE's listing standards, and these high standards remain a critical component of our 99% retention rate. As a result of this strong growth, particularly across our futures data and connectivity solutions, we now expect full year growth in our exchange recurring revenues to be approximately four to 5% compared to prior expectations for low single digit growth.

[Warren Gardiner, Chief Financial Officer at Intercontinental Exchange]

Turning now to slide six, I'll discuss our Fixed Income and Data Services segment. Second quarter revenues totaled a record $597,000,000 including transaction revenues of $114,000,000 On a year over year basis, revenue at ICE bonds increased by 8%, driven by 28% growth in our muni business, which was in part driven by growing institutional adoption. Within our CDS business, revenues increased year over year with lower member interest offset by clearing revenue, which increased by 25% year over year. Current revenues totaled a record $483,000,000 and grew by 5% year over year. In our fixed income data and analytics business, record second quarter revenues of $3.00 $6,000,000 increased by 4%, driven by growth in pricing and reference data and our index business, which reached a record $743,000,000,000 in ETF AUM as of the end of the second quarter.

[Warren Gardiner, Chief Financial Officer at Intercontinental Exchange]

Data and network technology increased by 7% in the first half and in the second quarter, an acceleration from 5% growth in 2024. Growth was driven by our ICE global network, continued growth in our consolidated speeds business and strong performance across our desktop solutions as we continue to realize the benefits of investments to enhance our platform. Please flip to slide seven, where I'll discuss our mortgage technology results. Second quarter revenues totaled $531,000,000 up 5% year over year. Recurring revenues totaled $395,000,000 and increased on a year over year basis.

[Warren Gardiner, Chief Financial Officer at Intercontinental Exchange]

The year over year improvement was largely driven by data and analytics and our servicing business. As we look to the second half, we anticipate the recurring revenues will remain around these levels, driven by the typical roll off of inactive loans on MSP, which will impact the third quarter M and A related attrition, primarily driven by Mr. Cooper's acquisition of Flagstar and customers resetting their minimums on Encompass, which I'll note is paired with the benefit of higher transaction fees. We expect these items to largely be offset by revenue from new customer implementations and cross sell expansions. Transaction revenues totaled $136,000,000 up 15% year over year, driven by double digit revenue growth related to Encompass closed loans, MERS registrations and default management solutions within our servicing business.

[Warren Gardiner, Chief Financial Officer at Intercontinental Exchange]

Before I turn it over to Ben, I will highlight a few third quarter guidance items. Third quarter adjusted operating expenses are expected to be in the range of $995,000,000 to $1,500,000,000 Relative to the second quarter, the increase is expected to be driven by higher customer acquisition costs at the NYSE as the IPO market rebounds as well as higher technology spend related to our data center build out and strategy. Lastly, moving below the line, adjusted non operating expense is expected to be between $170,000,000 and $175,000,000 in the third quarter. In summary, we delivered record second quarter and first half results, including record revenues, adjusted operating income and adjusted EPS, building upon our record 2024. We also once again achieved our leverage target ahead of schedule.

[Warren Gardiner, Chief Financial Officer at Intercontinental Exchange]

As we look to the balance of the year, we're focusing on we're focused on strong finish to a record first half and on setting ourselves up for continued success in 2026. I'll be happy to take your questions during Q and A, but for now, I'll hand it over to Ben.

[Benjamin Jackson, President at Intercontinental Exchange]

Thank you, Warren, and thank you all for joining us this morning. Please turn to Slide eight. Across our futures and options markets, we've worked for nearly three decades to build out the scope and depth of our multi asset and multi geography offering to allow for both flexibility and precision trading from wherever in the world customers choose to trade on ICE. As a result, a record of over 1,000,000,000 contracts have traded on ICE through the first half, including a record $673,000,000 energy contracts and a record $462,000,000 interest rate contracts. This record performance drove 19% revenue growth in our futures and options revenues in the first half and is strong evidence of the ever growing need for global risk management as our customers continue to turn to ICE to manage risk across the thousands of contracts offered on our platform.

[Benjamin Jackson, President at Intercontinental Exchange]

Across energy, markets have grown more global, more interconnected and more complex, shaped by shifting trade flows, regional dynamics and growing complexity in how energy is transported, produced, priced and consumed. We have continuously invested alongside this evolution, recognizing the importance of deep liquidity on our platform. Today, as a result of organic and inorganic investments, trading on our network is not tied to any single product or limited to any one region. Instead, we have built a diverse energy network that provides deep liquidity and price transparency across the spectrum of fuel sources, from oil and refined products to coal, natural gas, power, environmental markets, renewables and ancillary products such as biofuels and their related credits. In essence, regardless of how the market evolves, whether driven by geopolitical change, shifting trade flows, or growing demand in the developing world, we have strategically positioned our platform to offer customers the tools they need to manage risk effectively.

[Benjamin Jackson, President at Intercontinental Exchange]

In The U. K, for example, coal has been phased out of electricity generation, while across Asia, it remains a significant part of the mix to support rapid industrialization. At the same time, electricity prices are influenced by natural gas. Whether active in oil, gas, carbon or a combination, by providing access to these contracts through a single platform, we provide the critical price transparency across the energy spectrum to help customers manage increasingly interconnected pricing dynamics. The value that our diverse, deep and liquid energy markets provides to customers contributed to another record volumes across our complex, driving our ninth consecutive quarter of record energy revenues.

[Benjamin Jackson, President at Intercontinental Exchange]

This strong performance is a testament to customers' continued confidence in ICE as the global energy hedging venue of choice, with energy revenues up 24% in the first half and growing 13% on average over the past five years. In our oil markets, Brent has become the world's most widely used benchmark, pricing roughly threefour of the world's internationally traded crude. Importantly, Brent stands as the cornerstone of a broader franchise that includes our Midland WTI, Platts Dubai and Middle East bourbon grades of crude. These critical pricing relationships extend to refined oil products, where ICE's low sulfur gas oil market similarly anchors price discovery for refined products globally. Together, these benchmarks form the foundation of a cohesive web of more than 800 related oil products developed by ICE, giving participants the ability to manage risk with precision across the oil value chain and around the world.

[Benjamin Jackson, President at Intercontinental Exchange]

These innovations have enabled us to continue to serve our global customers, with record oil volumes in the first half increasing 25% year over year, including records across Brent, WTI, Midland WTI, Platts Dubai, Mervin and Gasoil. In our natural gas markets, we've adopted a similar playbook, establishing liquid markets in TTF, JKM, Henry Hub and North American basis markets, offering a broad range of natural gas benchmarks with trading hubs across Europe, Asia and North America. As global LNG flows have increased and price relationships between regions have deepened, our TTF benchmark has emerged as the global reference point for gas pricing, much like Brent has for oil. This dynamic is illustrated by JKM execution patterns with roughly 60% of JKM volumes executed by the JKM TTF spread as participants draw assurance from TTF's deep liquidity to manage risk across an increasingly interconnected gas market. In the second quarter, volumes in our global gas complex increased 14% versus the prior year, contributing to a record first half to deliver 27% revenue growth year to date, including 19 growth in the second quarter.

[Benjamin Jackson, President at Intercontinental Exchange]

The importance of the evolution of energy markets extends to our leading environmental markets, which work with our oil, natural gas, coal and power markets to provide the price transparency across the energy spectrum. Year to date, record volumes in our environmental portfolio are up 9% year over year, including 37% growth in our North American markets. In summary, the guiding principle has been consistently to create a cohesive platform where customers can navigate complexity across markets. Our single platform model isn't just efficient, it's essential for navigating an increasingly dynamic energy landscape. Participants can operate across markets with a broader view using tools that were developed not just in reaction to trends but often in anticipation of them.

[Benjamin Jackson, President at Intercontinental Exchange]

Turning now to our Fixed Income and Data Services business on slide nine. Driven by multiyear investments in both technology and data, our comprehensive platform continues to generate compounding revenue growth, delivering another quarter of record revenues, which grew 5% year over year. Our high quality evaluated prices provide mission critical transparency for over 3,000,000 global securities daily. Across our reference data business, we've improved the precision of our underlying data, reduced the time to capture newly issued bonds and have continued to add to our coverage, thus providing a truly comprehensive offering. As a result, clients of our evaluated pricing business are increasingly drawn to the quality of our reference data.

[Benjamin Jackson, President at Intercontinental Exchange]

The quality of our pricing and reference data, combined with over fifty years of experience, serves the foundation for what is today one of the largest providers of fixed income indices globally. Whether it's benchmark indices, analytics or unique solutions like our custom indices, ICE serves the entire ETF ecosystem. Year to date revenue on our index business is up double digits, with passive ETF AUM benchmarked to ICE indices growing to a record of $743,000,000,000 through the end of the second quarter. In our data and network technology business, revenues were up 7% in the first half, driven by our ICE Global Network as well as continued demand for our desktop and feeds offerings. The ongoing investments in our ICE Global Network business and resulting growth reinforce its position as the gold standard for resiliency, latency and security.

[Benjamin Jackson, President at Intercontinental Exchange]

ICE Global Network securely connects participants to more than 750 data sources and more than 150 trading venues, including ICE and the NYIC exchanges. Within our desktops business, new clients are switching to ICE for the reliability of our service, the quality of our data and the sheer range of data sources. Similarly, growth in our consolidated feeds business reflects investments we've made to elevate and enhance our offering. Firms continue to seek more high quality data from a range of different sources in a cost effective manner. At the same time, they want access to new unique content, and thus, our competitive and comprehensive offering stands to benefit.

[Benjamin Jackson, President at Intercontinental Exchange]

We've also added features to give latency sensitive clients additional confidence in the speed of our data. This suite of data services, together with its institutional customer connectivity, is highly complementary to our ICE bonds execution venues. These venues, which offer our customers choice of protocols, including auction, click to trade and request for quote, round out a broader fixed income offering. Year to date, revenues in our ICE bonds business are up 12% versus the prior year and have grown 9% on average over the past five years. In summary, when we combine the long tail secular trends such as electronification of bond markets, workflow automation and the shift to passive investing, our comprehensive data offering is positioned to continue to deliver compounding growth well into the future.

[Benjamin Jackson, President at Intercontinental Exchange]

Shifting now to our mortgage business on Slide 10. Consistent with our strategy to bring efficiencies to workflows, we are uniquely positioned to drive greater automation across the mortgage space. Such investments are critical not only to meet rising customer expectations for a digital first experience, but also to drive long term operational efficiency and competitive positioning in an evolving mortgage landscape. For nearly a decade, ICE has been building an end to end digital mortgage platform that spans from customer acquisition all the way through to the secondary capital markets. This enables efficiency gains for our clients and bridges critical gaps between disparate systems.

[Benjamin Jackson, President at Intercontinental Exchange]

Our unified mortgage technology suite aims to simplify mortgage origination and refinancing into a single click process, streamlining processes for lenders while reducing costs, errors and time. The opportunity for customers to acquire and retain more business starts with our industry leading customer engagement suite. This end to end suite of sales, marketing and borrower engagement solutions unique to ICE and seamlessly integrated with our loan underwriting platform provides mortgage lenders with an opportunity to scale their operations by efficiently identifying, attracting and acquiring new customers while improving the ability to retain existing customers. By enabling lenders to target borrowers with the right products at the right time, it reduces the time and cost of acquisition. Flowing directly into the next phase of the mortgage workflow, our leading loan underwriting platform provides significant operational efficiencies.

[Benjamin Jackson, President at Intercontinental Exchange]

Here, we collect borrower data in any form. We digitize and normalize it, and once harnessed, enable lenders to leverage our AI tools to quickly and efficiently verify credit income and collateral as well as audit that the loan package meets underwriting requirements. This creates consistency, uniformity and efficiency. We've also integrated our property tax, flood, closing fee and compliance related information for borrowers and lenders. These various automation capabilities integrated into our loan underwriting platform are designed to provide customers with a complete and automated underwriting process to help increase both frequency and velocity while reducing the cost of production.

[Benjamin Jackson, President at Intercontinental Exchange]

This is one of the many reasons we continue to add new clients to our platform. And as evidence to this, we have signed 43 new Encompass clients through the first half, 23 of which came from the second quarter alone. As we move to the servicing stage of the loan, lenders have the opportunity to unlock additional value by utilizing ICE for their servicing technology needs. Our servicing platform has proven to be an industry standard and has a long history of dependability that servicers trust. Once originated, lenders can seamlessly transfer loans to our servicing technology or easily move loans acquired from other lenders that are on our technology, a functionality that has been enabled by the integration of our loan servicing technology with our underwriting system.

[Benjamin Jackson, President at Intercontinental Exchange]

Importantly, customers can trust the quality of the loan package through our automated quality control and audit capabilities, which enable servicers to quickly identify and remedy any critical information that they may be missing from a loan file as the data and documents progress through the process. By integrating capabilities and data across mortgage origination and servicing, our platform creates opportunities for our lenders to provide more timely products to consumers. For example, lender servicers can now deliver a self-service home equity or refinance lending experience for their end consumer via an interconnected technology platform, effectively enabling them to quickly and efficiently compete for, recapture and retain clients, which should also improve the overall consumer experience while lowering their costs by matching the client to the right product at the right time. We also continue to find ways to leverage our industry leading mortgage data to increase transparency in the secondary capital markets. For example, in April, we launched a new RFQ protocol for mortgage backed securities, taking another step to improve the MBS market.

[Benjamin Jackson, President at Intercontinental Exchange]

This new functionality sits along ICE Bonds' existing MBS click to trade marketplace. Later this year, ICE Bonds plans to integrate pricing and analytics from ICE Mortgage Technology to help traders make more informed trading decisions. Also, in the second half of this year, we plan to launch the first version of our secondary whole loan trading platform. This is designed to automate and provide significant efficiencies to what is today a very analog process. The combination of IMT's data and community of customers provides us an opportunity to deliver unique innovations to our customers, such as our secondary whole loan trading and MBS execution on ICE bonds.

[Benjamin Jackson, President at Intercontinental Exchange]

Lastly, in June, we launched the ICE Average Prime Offer Rates Index, or ICE APOR, which represents the annual percentage rates derived from average interest rates, points, fees and other terms on mortgages that are offered to consumers. For lenders, consumers and secondary market participants, the APOR is published by the Consumer Financial Protection Bureau and must be used to determine whether the loan meets certain regulatory requirements, which can impact the terms of a mortgage and whether the loan qualifies for securitization. With the CFPB's mandate and services under review, we launched the ICE APOR Index to provide another option for this service should the MBS market need an alternative. In summary, on behalf of our clients, we've assembled an end to end platform that is operated by a neutral, trusted third party in ICE, bringing together the key industry stakeholders from origination to final settlement in a single network ecosystem. We have a touch point to nearly every U.

[Benjamin Jackson, President at Intercontinental Exchange]

S. Home mortgage connected to more than 3,000 lenders, 48,000 settlement agents and closing attorneys, 2,500 county governments, the GSEs, 80,000 notaries, 100 loan servicing companies, 1,000 mortgage backed securities investment firms, and thousands of third party data and service providers who can now communicate with one another via a common data standard on a robust network operated under ICE's cyber overlay. Our comprehensive platform automates workflows throughout each stage of the mortgage life cycle, resulting in lower cost to originate and service loans for our clients who can then pass those savings on to the end consumer, all while helping lenders and servicers better recapture and identify new business opportunities. With that, I'll hand it over to Jeff.

[Jeffrey Sprecher, Founder, Chairman & CEO at Intercontinental Exchange]

Thank you, Ben. Please turn to Slide 11. In the second quarter, amidst a dynamic macro environment, we once again grew revenues, grew adjusted operating income and grew adjusted earnings per share, delivering the best quarter and the best first half in our company's history. Over the past twenty five years, ICE has grown from a small Atlanta based power exchange into a global data and technology company. The heart of our strategy has been to drive transparency and create workflow efficiencies for our customers.

[Jeffrey Sprecher, Founder, Chairman & CEO at Intercontinental Exchange]

We do this by building and operating mission critical digital networks that leverage our technology, data, and expertise to connect our customers to opportunity around asset classes and around the globe. We connect these customers to our liquid energy markets to help manage risk. We connect entrepreneurs to capital at the New York Stock Exchange. We connect people to our fixed income data to give them pre trade and post trade transparency. And we connect participants to one another in the mortgage space to create more efficient transaction workflows.

[Jeffrey Sprecher, Founder, Chairman & CEO at Intercontinental Exchange]

As the world's leading energy marketplace, the breadth and diversity of our global commodity platform drives an important network effect, producing capital efficiencies for our customer base. In the second quarter, we saw record volumes and record revenues across our energy complex, contributing to an unsurpassed first half as market participants look to hedge exposures to geopolitical dynamics. Across our interest rate business, uncertainty on central bank policy, shifting trade policies, and ongoing geopolitical tensions drove demand for our interest rate risk management. As a result, in the first half, a record four sixty two million interest rate contracts traded on our platform, including records across our Euribor and Sonya markets. This strong performance contributed to a 19% increase in revenues year to date, including 20% growth in the second quarter.

[Jeffrey Sprecher, Founder, Chairman & CEO at Intercontinental Exchange]

At the New York Stock Exchange, our cash equity trading volumes increased 47% versus the prior year, while our equity options volume increased 5%. Similarly, in our credit default swap business, broad market volatility drove increased demand for credit protection, with CDS notional cleared increasing 42% in the second quarter versus the prior year. In summary, our record setting first half results reflect the all weather nature of our business model, where we've intentionally positioned the company to provide customer solutions in numerous geographies and economic conditions to facilitate all weather results. I'd like to end our prepared remarks today by thanking our customers for their continued business and for their trust. And I'd like to thank my colleagues at ICE for their contribution to our best ever second quarter, following on the heels of our record first quarter, delivering an unsurpassed first half for the company.

[Jeffrey Sprecher, Founder, Chairman & CEO at Intercontinental Exchange]

I'd now like to turn our call back to our moderator, Drew, and we'll conduct a question and answer session until 09:30 Eastern Time.

[Operator]

Thank you. We'll now start today's Q and A session. Our first question today comes from Craig B. Thaler from Bank of America. Line is now open. Please go ahead.

[Craig Siegenthaler, Managing Director at Bank of America]

Hey, good morning, everyone. Hope you're all doing well. We have a follow-up on some of your mortgage tech commentary on your efforts to improve your competitive positioning. So we're curious on how you're looking to upgrade your products, especially with new technologies like AI and blockchain that could improve your efficiency and also your client experience. And do you see new opportunities to employ both technologies in the future too?

[Benjamin Jackson, President at Intercontinental Exchange]

Thanks, Craig. This is Ben. So we and we've alluded to this in our in our in our comments that a lot of the, you know, innovation and technology that we're providing to the industry first starts with integrating for the first time all of these systems to create a front to back life of loan platform for our clients. That in and of itself is gonna help to to drive better analytics for customers that have a servicing book to understand the client base a lot better, to be able to predict when they're gonna be right for a refi or a home equity line of credit, create that signal, and and enable the customer themselves to have a self-service, platform in our in our consumer web portal to be able to engage with them or for the client to reach out proactively to them. And then once they engage, a lot of the details around that client are auto loaded into Encompass, can flow straight through to an electronic closing, and then back into into servicing seamlessly.

[Benjamin Jackson, President at Intercontinental Exchange]

So that's gonna create a ton of efficiency, and we're well on the way to executing that. As it relates to AI, we are leveraging AI in in a number of areas, today and and see a number of areas in the future where we can continue to enhance the experience for for our customers in utilizing our technology suite. So one area, and I alluded to this in in my prepared remarks, is in the data and document automation platform that's automating, certain parts of the checking process of the underwriting of a loan. And we already have the capabilities utilizing AI to do things like credit, income, collateral verification, and then have expanded as well into audit. So basically being able to provide a real time audit on the loan package as its underwriting to make sure that it's meeting the underwriting criteria of the loan.

[Benjamin Jackson, President at Intercontinental Exchange]

And then when the loan uses is is transferred to servicing, being able to audit that loan package at that point too to make sure that the data and documents include everything that the package needs, to meet servicing criteria. The second area that we're leveraging it heavily is in, our our call center and, for the customer experience, being able to mine data within our servicing system to understand why, why a client may be calling to be able to provide a better experience for the consumer, more efficient, call center experience for both the client and a more efficient experience for the for the customer themselves that's servicing that that that client. And then the third area is in is really in in compliance. So we run a a platform called AllRegs, which basically has all the underwriting, criteria for for loans around The U around The United States. It's got millions of pages of documents Using natural language models, put on top of that, you can put natural language questions into our ask Reggie platform that sits now on top of all regs, and it'll come back and mine that millions of pages of of of data that's out there, give you efficient, real time answers back to the back to the end, the end customer of ours.

[Benjamin Jackson, President at Intercontinental Exchange]

So that that's a handful of areas where we're utilizing it, today, and and we're innovating. And then outside of of AI, I I outside of AI, I also mentioned things like connecting our mortgage data to the capital markets with examples such as, our MBS RFQ capabilities, as well as secondary whole loan trading later this year and, MSR trading as well coming into the future.

[Operator]

Our next question today comes from Ben Budish from Barclays. Your line is now open. Please go ahead.

[Ben Budish, Director at Barclays]

Hi. Good morning and thank you for taking the question. Warren, you mentioned in your prepared remarks that your leverage level is now down to your target three times. I'm just curious if you could share any updated thoughts on capital allocation and wondering if you can comment on some of the recent media headlines around potential M and A transaction. I know that news didn't come from you guys, but is there anything you can share there?

[Ben Budish, Director at Barclays]

And otherwise, how should we think about capital priorities now that you're at your target leverage level? Thank you.

[Warren Gardiner, Chief Financial Officer at Intercontinental Exchange]

Sure. Hey, Ben. Thanks for the question. So right, we did reach the target leverage ratio in the quarter. We did go ahead of our scheduled target when we announced the deal.

[Warren Gardiner, Chief Financial Officer at Intercontinental Exchange]

So pleased with that. We did repurchase $2.50 or so, worth of stock during the quarter. You know, I'd expect as you move into the second half, we'll that up a little bit higher from where we where we were, but we still will probably chip away a little bit of that CP balance that we have, albeit probably not, not as much as we were previously, of course. So so that's kind of how we're thinking about, the capital return profile of the company at the moment as we move through into the second half. In terms of broader capital allocation, obviously, the priority first here is to invest in the business, and you've seen us do that.

[Warren Gardiner, Chief Financial Officer at Intercontinental Exchange]

I think it's from the from the perspective of some of the headlines you may have seen out there. I mean, we don't really comment on M and A. Rumors are out there. So I I think, you know, look, we're we're obviously always looking. We've done that sort of from the beginning of the company.

[Warren Gardiner, Chief Financial Officer at Intercontinental Exchange]

So I think from that perspective, I'll leave it at that. But right now, the focus for us is obviously just kind of having gotten to the leverage target starting to kind of tick up the buyback and continue to chip away at that CP bounce.

[Operator]

Our next question today comes from Ken Worthington from JPMorgan. Your line is now open. Please proceed with your question.

[Ken Worthington, Financial Analyst at JP Morgan]

Hi, good morning. Thanks for taking the question. In IMT, origination and closing solution revenue both jumped nicely this quarter. I'm trying to get a better sense of what we're seeing here. Can you give us a sense to what extent the jump was driven by new relationships onboarding versus sort of higher industry activity versus just plain seasonality?

[Benjamin Jackson, President at Intercontinental Exchange]

Hi, Ken. It's Ben. Thanks for the question. It's a mix of all those elements that you just mentioned. We have been very explicit around the number of wins that we've been having each quarter since we closed on on the Black Knight acquisition and continue to have great success in terms of, winning new clients.

[Benjamin Jackson, President at Intercontinental Exchange]

And, you know, those clients, because they're they're these are complicated implementations, they take some time to work through. But now we're at a stage where some of these clients are starting to to come online. In fact, in the second quarter, we had, one of our large regional banks, come on come online on on Encompass. But that success continues. We continue to have a great, funnel, of of of new client activity.

[Benjamin Jackson, President at Intercontinental Exchange]

This past quarter, I mentioned we had 23 wins on Encompass. Four of those wins, by the way, were are clients that are on either MSP or that subsurface through somebody that's on MSP. And in addition, we had two wins on the MSP side, one of which was the beginning of the second quarter that I mentioned on the last call, which was United Wholesale Mortgage, an existing IMT client. And then we had another MSP win as well last quarter from an existing IMT client. So we'll continue to see really good success on the on the sales front front.

[Benjamin Jackson, President at Intercontinental Exchange]

We're seeing clients on the MSP side continuing to look for an independent, well capitalized, neutral technology provider that doesn't, know, potentially compete with them. And that's what's leading to either sales directly through us of moving clients moving to the MSP platform. But we're also seeing independent subservicers, most of which are on, MSP, are also having a lot of activity with clients as well as some of those clients that are are subservicing with others that could potentially be perceived to compete with them or reevaluating those relationships. So that's that's a that's a big piece of it. But, obviously, the the the backdrop of the environment starting to improve, you know, definitely helped with areas like our closing solutions where that is a very transaction oriented part of the business.

[Benjamin Jackson, President at Intercontinental Exchange]

Our our MERS business is doing very well. In fact, we've heard from one of the large depositories that traditionally has not used MERS is intending to start using MERS for the first time later this year. Simplifyll continues to do well as well. So it's really a a mix of of those elements.

[Operator]

Our next question comes from the line of Alex Blostein from Goldman Sachs. Your line is now open. Please go ahead.

[Alex Blostein, Managing Director at Goldman Sachs]

Hey, good morning. Thank you for the question. I wanted to ask you guys something that doesn't come up a whole lot on these Q and A sessions, but you spend more time talking about it recently, which is around data centers. You seem to continue to build out capacity there. And maybe help us understand a little better how that could translate into either new or improved revenue opportunities for ICE as a whole? Thanks.

[Christopher Edmonds, President of ICE Fixed Income & Data Services at Intercontinental Exchange]

Alex, it's Chris. So we have a footprint that we have continued to invest in. As you recognize, we've built out on the footprint that we have today about half of our capacity that sits out there today. We have great line of sight into what that looks like on a go forward basis and continued engagement with the clients as to what their needs are and a very scheduled process of how we will bring that online as power and things begin to, become available and and our our CapEx associated with that.

[Christopher Edmonds, President of ICE Fixed Income & Data Services at Intercontinental Exchange]

I'll let Warren comment on that if he needs to. But, you know, it's our proprietary network that we have forever talked about having you know, Jeff's made reference to Ice Cloud and and things that but we wanna control that that experience, and our clients have adapted to that very well and continue to come to us to fulfill those needs. So we have runway there through early 2030s that we will continue to develop in conjunction with the needs of our clients over that time base.

[Operator]

Our next question comes from Kyle Voigt from KBW. Your line is now open. Please proceed.

[Kyle Voigt, Managing Director at Keefe, Bruyette & Woods (KBW)]

Hi, good morning. Think they've asked me a slight follow-up, staying on the fixed income segment, ASD growth accelerate to 6% year on year. You noted a couple of tailwinds there, but it seems like most of the acceleration has been in data and network technology. Just wondering if you could unpack the drivers of that acceleration a bit and what you're doing to drive that. Then on the fixed income data and analytics side, we're seeing growth that's still closer to 4%.

[Kyle Voigt, Managing Director at Keefe, Bruyette & Woods (KBW)]

Are you seeing ASV accelerate in that business as well? Is there a pathway to get back to kind of a 5% to 6% organic revenue growth rate in that business, do you think?

[Alex Blostein, Managing Director at Goldman Sachs]

So I'll to break that down. Certainly, in our in the network piece, you look at our consolidated feeds business that we have there and the pricing that comes along with that, that gives us an opportunity as we continue to add unique sets of content that we will distribute across that feed business along the way, and and also on our desktops, in there. So those are two drivers you would see there. If you look at our index business and how we've continued to build out the custom indices and the offering that we see there, you look at the proliferation of our ETF ecosystem along with the fixed income ecosystem, I think what you're seeing is those two things coming together and people taking advantage of those two things in a single a single point. Those will both drive future business in both our evaluated pricing and and reference data opportunities as we continue to grow that over time.

[Alex Blostein, Managing Director at Goldman Sachs]

And certainly, the business that Ben referenced in his prepared remarks and so did Warren around the increasing of our passive AUM is evidence of that growth.

[Warren Gardiner, Chief Financial Officer at Intercontinental Exchange]

Yeah. Colin, the only thing I'd add to that too is just on the fixed income and data analytics business. We did actually exit the quarter in that particular business line at a 5% ASD. We had a record quarter for PRD within that. And so business trends are really strong there as we kind of head into the second half here.

[Warren Gardiner, Chief Financial Officer at Intercontinental Exchange]

So I feel good about that. Part of the reason we were around 4% this quarter for that line was also the index business. While it grew, it didn't grow in the double digit range because we did have a bit of a market pullback there earlier So that business, of course, as you know, will ebb and flow with markets to some degree. But as we exit the quarter there, again, we were in pretty good footing from that perspective.

[Warren Gardiner, Chief Financial Officer at Intercontinental Exchange]

So I feel good about the trajectory of that business as we head into the balance of the year. And then similarly on the data network technology business, also seeing some continued strength there as we head into the second half. Pretty broad based as well across ICE Global Network, our desktops business and then our feeds business, as Chris mentioned as well.

[Operator]

Our next question comes from the line of Chris Allen from Citi. Your line is now open. Please go ahead.

[Christopher Allen, MD - Exchanges, Brokers, & Asset Managers at Citi]

Yes. Good morning, everyone. Thanks for taking my question. I want to kind of go back to Morris Technology. Got a lot of inbounds just in their current revenue trajectory here.

[Christopher Allen, MD - Exchanges, Brokers, & Asset Managers at Citi]

You noted some of the factors that were keeping things down. I think flat, so it was about a 1% impact. Just wondering what is there a geography issue too here? You mentioned customers receive minimums. Does that translate to higher transaction fees?

[Christopher Allen, MD - Exchanges, Brokers, & Asset Managers at Citi]

And we're kind of thinking about the overall guide where industry activity is trending, like how are you thinking about where the guide is kind of setting up for the rest of the year?

[Warren Gardiner, Chief Financial Officer at Intercontinental Exchange]

Yes. So look, I'm very comfortable with the guidance range that we gave at the beginning of the year, low to mid single digits at this point. I do think on the recurring revenue side, importantly, will grow this year. I did mention a couple of the headwinds that we do expect in the second half. Flagstar, of course, that's on an annualized basis about 1% of total revenues.

[Warren Gardiner, Chief Financial Officer at Intercontinental Exchange]

That will happen early in the fourth quarter. We do have the inactive loans that roll off. We have that every year. And that's more of a third quarter event. And then on the minimums, as I mentioned too, we continue to see people resetting some minimums, particularly customers from vintages back in 2020 and 2021, a little bit of 2022.

[Warren Gardiner, Chief Financial Officer at Intercontinental Exchange]

I will say we've moved through most of that or a lot of that, and we are seeing the discount, if you will, to the prior minimum narrow pretty significantly relative to where we were last year. And so we're seeing an improvement there. So ultimately, we've got probably less of a headwind than we had last year, which has been helpful. And then on the revenue side for recurring, we've got obviously customer implementations. We've been a bit better on that front this year.

[Warren Gardiner, Chief Financial Officer at Intercontinental Exchange]

I will say though, these take a long time. We've talked about revenue synergies, which I can give you an update on today, as we're around $80,000,000 now, but only about a fifth of that is actually in the run rate. So we are working through those, and those can take some time to implement, particularly larger ones, but we're seeing some improvement there at the end of the day. And so you've got a little bit better of a tailwind, a little bit less of a headwind versus last year and why I think we can continue to grow on the recurring revenue side as we move through this year. In terms of the overall guidance, I mean, look, tough to predict.

[Warren Gardiner, Chief Financial Officer at Intercontinental Exchange]

I mean, obviously, the first half of the year was good. In the second quarter, we saw some strong loan growth. It's hard to know what the second half will necessarily look like. But I think again, I think based on what we're seeing at the moment, we're comfortable that we'll be within the guidance range we gave for the overall business.

[Operator]

Our next question today comes from the line of Ashish Sabadra from RBC Capital Markets. Your line is now open. Please go ahead.

[Analyst]

Hey, good morning guys. This is Bill Keay on for Shisibadra. Appreciate you guys taking our question. Maybe just a follow-up on the mortgage tech. Great to kind of see that margin expansion there.

[Analyst]

Could maybe touch on what's kind of driving that disciplined expense management? And I'll take a with this later.

[Warren Gardiner, Chief Financial Officer at Intercontinental Exchange]

Sure. So it's two things. The first, we did do through part of the integration that that that we're obviously still ongoing here, we moved significantly most of that is really in the operations technology group, moving those over to Ice Inc, a little bit of corporate. And so there was a bit of a reallocation, if you will, of the expenses across the segments that occurred as part of the integration, all planned in terms of how we've done that. So we did that actually a couple of quarters ago, and that's why you're seeing from a year over year perspective some benefit.

[Warren Gardiner, Chief Financial Officer at Intercontinental Exchange]

And then the second part of that too is really on the synergy side, you've heard us talk about. And so we did raise the synergy target at the beginning of this year. You're starting to see those flow through, and I feel very comfortable that we will reach that target, you know, as we exit this year. So I think, you know, those two things are combination together with, you know, a typical strong expense control that we've always been good at is really why you're seeing that, you know, that margin expansion at the end of day for that segment. But I would encourage you really to look ultimately and zoom out always at the overall business and just note because again those expenses will move from segment to segment when you have those allocation changes.

[Warren Gardiner, Chief Financial Officer at Intercontinental Exchange]

We did grow margins two points this quarter, We had pretty solid incremental margin on top of that. So I would encourage you to also zoom out and look at the broader expense base, if you will, in terms of how we're performing on that front.

[Operator]

Our next question comes from Simon Lynch from Rothschild. Your line is now open. Please proceed.

[Simon Clinch, MD - Financials Research at Rothschild & Co Redburn]

Hi. Thanks for taking my question. I wanted to pivot to the gas markets and the strength that you're seeing as TTF is sort of establishing itself as a global benchmark for gas. How should we think about the scale of the future opportunity here? I mean, you perhaps talk about TTF in the concept of its share of total gas volumes across The U.

[Simon Clinch, MD - Financials Research at Rothschild & Co Redburn]

S. And Europe and where that might go to, for example, comparing that perhaps to Brent within oil? Thanks.

[Benjamin Jackson, President at Intercontinental Exchange]

Sure. Thanks for the question. So as we've as we've talked about on on prior calls and, I was in my prepared remarks as well today, our overall energy market's doing fantastic. There is a number of of different reasons for that and tailwinds for it, and I'll I'll just delve specifically into into natural gas trends as an example. So one one development that we see is gonna continue to create a long tailwind for the growth of natural gas globally is just the resolution to the tariffs and trade discussions that have been going on.

[Benjamin Jackson, President at Intercontinental Exchange]

As in many of these in many of these settlements, you're starting to see energy being in US energy and forward commitments to purchase U US energy as a key element to it. Examples of that are the settlement that just happened in the last last twelve hours with South Korea, including a commitment around future purchases of gas. Japan, last weekend, had the same thing. Both of those are highly complementary to our, JKM contract, and JKM also trades oftentimes the package to TTF. So as that LNG hits the water, that JKM contract is the Japan Korea marker, and it's very, very well positioned to be the pricing point for that gas.

[Benjamin Jackson, President at Intercontinental Exchange]

In the EU settlement this past week, gas and oil commitments for future purchases are a part of that coming out of The US. We see that as as tailwinds as well as oil that's that leaves The Gulf heading towards Europe is priced via Brent and our HOU contract, and gas that's destined for Europe is a tailwind to TTF. So we see a number of tailwinds. That's one example. Obviously, the geopolitical situations have reset, supply chains and and US gas is flowing around the world, as a result of that, in particular, into into Europe, and those supply chains will be hard to reset.

[Benjamin Jackson, President at Intercontinental Exchange]

You also have, energy demand through the roof, not only in The US, but but around the world with, power demand and data center demand and and AI. As it relates to the back part of your question around how much for growth is there, just to use some relative metrics. So TTF is doing very well, up more than 30% this year off a very strong growth last year. If you look at TTF relative to Brent in terms of active market participants, it's roughly half. So you have the you know, the world's global benchmark for oil is roughly double, the number of active market participants than TTF has as the global benchmark for the movement of natural gas around around the world.

[Benjamin Jackson, President at Intercontinental Exchange]

So a big big tailwind there as it relates to rents. But then also if you look at open interest in ADV and compare TTF to Henry Hub, it's roughly 15%. So, again, points to a a a long tailwind of tailwind of growth. And another thing I'll I'll point out is we've we've said time and time again that that there's an opportunity, in the transition to cleaner fuels, so moving from coal as a few source to natural gas. And the size of that opportunity in Asia Pacific alone, is the size of the North American, energy, demand across all sources.

[Benjamin Jackson, President at Intercontinental Exchange]

So that's a a huge opportunity there. The settlement on these tariff issues that I had mentioned, is one input into it. We're seeing India continuing to grow in terms of of of LNG demand. Canada has, an LNG facility coming live on the West Coast that's also being designed to transport LNG to Asia, which is another good fit for our JKM and TTF contract.

[Operator]

Our final today our final question today comes from Dan Fallon from Jefferies. Your line is now open. Please go ahead.

[Dan Fannon, MD - Research Analyst at Jefferies & Company Inc]

Thanks. Jeff, I was hoping you could expand upon Warren's comments and just talk about your appetite for large scale M and A given where your business sits today, your stock valuation and all the other factors that go into it.

[Jeffrey Sprecher, Founder, Chairman & CEO at Intercontinental Exchange]

Sure. I don't first of I don't think, as we sit today, anything has changed over the DNA of the company, which is, we do feel like, companies need to evolve. We wanna be an all weather name. So we we we care deeply about the mix of the businesses that we have and making sure that that we can rationalize that in in various geographies and and various economic conditions that we can continue to deliver growth. So that's at the core of of how we're planning the company going forward.

[Jeffrey Sprecher, Founder, Chairman & CEO at Intercontinental Exchange]

And we meet regularly, on strategy and look at, our ability to buy into businesses to accelerate that strategy or to invest organically to move into these various strategies. And and we're disciplined about how we do it in terms of of what's the best way to deploy capital. And always in that mix is is a conversation about share buybacks and dividends and return of capital to shareholders as as the highest value use of funds. So nothing has changed there. I think, you know, what is unique is that Warren has pointed out that we've hit our leverage ratio targets.

[Jeffrey Sprecher, Founder, Chairman & CEO at Intercontinental Exchange]

We we we're very diligent about the last large acquisition that we did, which was the acquisition of Black Knight and and paying down the debt that we borrowed ahead of schedule to put ourselves in a position where where we have maximum flexibility under these market conditions to to execute a long term strategy. Long winded way of saying nothing changed, but the same discipline exists within the company, to make sure that that, you know, we can be trusted as a management team to to deliver the highest value that we're capable of delivering to shareholders.

[Operator]

Thank you. With that, we have no further questions in the queue. So that concludes the Q and A portion of today's call. I'll now hand back over to Jeff Spreka for some closing remarks.

[Jeffrey Sprecher, Founder, Chairman & CEO at Intercontinental Exchange]

Well, thank you, Drew, and I want to thank all of you for joining us this morning. And we continue to look forward to updating you soon, as we build out these innovative solutions that I mentioned, and, continue to drive an all weather business model that we're designing for growth. With that, I hope you all have a good day, and I look forward to seeing you soon.

[Operator]

That concludes today's call. You may now disconnect your line.

Participants

Executives

• Katia Gonzalez, Investor Relations
• Warren Gardiner, Chief Financial Officer
• Benjamin Jackson, President
• Jeffrey Sprecher, Founder, Chairman & CEO
• Christopher Edmonds, President of ICE Fixed Income & Data Services

Analysts

• Craig Siegenthaler, Managing Director at Bank of America
• Ben Budish, Director at Barclays
• Ken Worthington, Financial Analyst at JP Morgan
• Alex Blostein, Managing Director at Goldman Sachs
• Kyle Voigt, Managing Director at Keefe, Bruyette & Woods (KBW)
• Christopher Allen, MD - Exchanges, Brokers, & Asset Managers at Citi
• Analyst
• Simon Clinch, MD - Financials Research at Rothschild & Co Redburn
• Dan Fannon, MD - Research Analyst at Jefferies & Company Inc