Intercontinental Exchange Earnings 2019-09-30

ICE 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow

Comparables ($MM TTM)
Ticker	M Cap	Assets	Liab	Rev	G Profit	Net Inc	EBITDA	EV	G Margin	EV/EBITDA	ROA
GS	75,781	944,903	854,011	0	0	9,734	31,010	33,223		1.1	1%
BLK	73,149	163,347	130,687	13,880	0	4,216	5,646	75,366	0%	13.3	3%
MS	70,822	891,959	809,114	0	0	8,426	25,470	187,314		7.4	1%
CME	70,134	70,350	43,865	4,593	0	1,809	2,932	69,191	0%	23.6	3%
SCHW	53,868	276,321	255,001	10,652	0	3,759	6,408	27,167	0%	4.2	1%
ICE	48,570	90,930	73,712	6,357	0	2,046	3,427	54,296	0%	15.8	2%
CS	47,825	772,069	726,075	2,380	0	0	0	102,086	0%		0%
AMTD	27,244	41,119	32,626	0	0	2,265	3,142	21,533		6.9	6%
TROW	25,357	8,912	1,321	5,422	0	2,045	2,712	23,555	0%	8.7	23%
NDAQ	15,804	14,132	8,581	4,200	2,501	540	1,137	18,463	60%	16.2	4%

Document

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q




(Mark One)
☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019



Or
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from to

Commission File Number 001-36198

INTERCONTINENTAL EXCHANGE, INC.

(Exact name of registrant as specified in its charter)



Delaware	46-2286804
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification Number)

5660 New Northside Drive, 30328

Atlanta, Georgia (Zip Code)



(Address of principal executive offices)

(770) 857-4700

Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:



Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, $0.01 par value per share	ICE	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of October 28, 2019, the number of shares of the registrant’s Common Stock outstanding was 556,849,511 shares.

INTERCONTINENTAL EXCHANGE, INC.

Form 10-Q

Quarterly Period Ended September 30, 2019

TABLE OF CONTENTS





PART I.	Financial Statements
Item 1.	Consolidated Financial Statements (Unaudited):
	Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018	2
	Consolidated Statements of Income for the nine and three months ended September 30, 2019 and 2018	4
	Consolidated Statements of Comprehensive Income for the nine and three months ended September 30, 2019 and 2018	5
	Consolidated Statements of Changes in Equity and Redeemable Non-Controlling Interest for the nine and three months ended September 30, 2019 and 2018	6
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018	8
	Notes to Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	59
Item 4.	Controls and Procedures	61

PART II.	Other Information
Item 1.	Legal Proceedings	62
Item 1A.	Risk Factors	62
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	62
Item 3.	Defaults Upon Senior Securities	63
Item 4.	Mine Safety Disclosures	63
Item 5.	Other Information	63
Item 6.	Exhibits	63
SIGNATURES		64

PART I. Financial Statements

Item 1. Consolidated Financial Statements (Unaudited)

Intercontinental Exchange, Inc. and Subsidiaries

Consolidated Balance Sheets

(In millions, except per share amounts)

(Unaudited)



	As of		As of
	September 30, 2019		December 31, 2018
Assets:
Current assets:
Cash and cash equivalents	$	655	$	724
Short-term restricted cash and cash equivalents	945		818
Customer accounts receivable, net of allowance for doubtful accounts of $8 and $7 at September 30, 2019 and December 31, 2018, respectively	1,056		953
Margin deposits, guaranty funds and delivery contracts receivable	65,988		63,955
Prepaid expenses and other current assets	227		242
Total current assets	68,871		66,692
Property and equipment, net	1,505		1,241
Other non-current assets:
Goodwill	13,310		13,085
Other intangible assets, net	10,330		10,462
Long-term restricted cash and cash equivalents	389		330
Other non-current assets	934		981
Total other non-current assets	24,963		24,858
Total assets	$	95,339	$	92,791

Liabilities and Equity:
Current liabilities:
Accounts payable and accrued liabilities	$	543	$	521
Section 31 fees payable	34		105
Accrued salaries and benefits	228		280
Deferred revenue	247		135
Short-term debt	1,329		951
Margin deposits, guaranty funds and delivery contracts payable	65,988		63,955
Other current liabilities	165		161
Total current liabilities	68,534		66,108
Non-current liabilities:
Non-current deferred tax liability, net	2,281		2,337
Long-term debt	6,496		6,490
Accrued employee benefits	197		204
Non-current operating lease liability	287		—
Other non-current liabilities	287		350
Total non-current liabilities	9,548		9,381
Total liabilities	78,082		75,489
Commitments and contingencies
Redeemable non-controlling interest in consolidated subsidiaries	72		71
Equity:
Intercontinental Exchange, Inc. stockholders’ equity:
Preferred stock, $0.01 par value; 100 shares authorized; no shares issued or outstanding at September 30, 2019 and December 31, 2018	—		—



Common stock, $0.01 par value; 1,500 shares authorized; 607 and 604 shares issued at September 30, 2019 and December 31, 2018, respectively, and 558 and 569 shares outstanding at September 30, 2019 and December 31, 2018, respectively	6			6
Treasury stock, at cost; 49 and 35 shares at September 30, 2019 and December 31, 2018, respectively	(3,538		)	(2,354		)
Additional paid-in capital	11,706			11,547
Retained earnings	9,335			8,317
Accumulated other comprehensive loss	(348		)	(315		)
Total Intercontinental Exchange, Inc. stockholders’ equity	17,161			17,201
Non-controlling interest in consolidated subsidiaries	24			30
Total equity	17,185			17,231
Total liabilities and equity	$	95,339		$	92,791

See accompanying notes.

Intercontinental Exchange, Inc. and Subsidiaries

Consolidated Statements of Income

(In millions, except per share amounts)

(Unaudited)



	Nine Months Ended September 30,						Three Months Ended September 30,
	2019			2018			2019			2018
Revenues:
Transaction and clearing, net	$	2,698		$	2,522		$	929		$	760
Data services	1,652			1,576			553			530
Listings	336			332			114			112
Other revenues	194			169			67			61
Total revenues	4,880			4,599			1,663			1,463
Transaction-based expenses:
Section 31 fees	274			272			105			61
Cash liquidity payments, routing and clearing	702			656			222			202
Total revenues, less transaction-based expenses	3,904			3,671			1,336			1,200
Operating expenses:
Compensation and benefits	768			732			261			251
Professional services	97			91			35			32
Acquisition-related transaction and integration costs	1			33			—			6
Technology and communication	346			320			126			107
Rent and occupancy	52			50			17			17
Selling, general and administrative	116			109			33			37
Depreciation and amortization	473			429			158			148
Total operating expenses	1,853			1,764			630			598
Operating income	2,051			1,907			706			602
Other income (expense):
Interest income	27			15			8			6
Interest expense	(214		)	(173		)	(72		)	(66		)
Other income, net	30			33			(2		)	12
Other income (expense), net	(157		)	(125		)	(66		)	(48		)
Income before income tax expense	1,894			1,782			640			554
Income tax expense	387			381			103			89
Net income	$	1,507		$	1,401		$	537		$	465
Net income attributable to non-controlling interest	(22		)	(24		)	(8		)	(7		)
Net income attributable to Intercontinental Exchange, Inc.	$	1,485		$	1,377		$	529		$	458
Earnings per share attributable to Intercontinental Exchange, Inc. common stockholders:
Basic	$	2.64		$	2.39		$	0.95		$	0.80
Diluted	$	2.62		$	2.37		$	0.94		$	0.79
Weighted average common shares outstanding:
Basic	563			577			559			572
Diluted	566			581			563			576

See accompanying notes.

Intercontinental Exchange, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(In millions)

(Unaudited)



	Nine Months Ended September 30,						Three Months Ended September 30,
	2019			2018			2019			2018
Net income	$	1,507		$	1,401		$	537		$	465
Other comprehensive income (loss):
Foreign currency translation adjustments, net of tax benefit of $1 for both the nine months ended September 30, 2019 and 2018 and $1 for the three months ended September 30, 2019	(32		)	(51		)	(39		)	(9		)
Change in equity method investment	(1		)	—			—			—
Other comprehensive income (loss)	(33		)	(51		)	(39		)	(9		)
Comprehensive income	$	1,474		$	1,350		$	498		$	456
Comprehensive income attributable to non-controlling interest	(22		)	(24		)	(8		)	(7		)
Comprehensive income attributable to Intercontinental Exchange, Inc.	$	1,452		$	1,326		$	490		$	449

See accompanying notes.

Intercontinental Exchange, Inc. and Subsidiaries

Consolidated Statements of Changes in Equity and Redeemable Non-Controlling Interest

(In millions)

(Unaudited)



	Intercontinental Exchange, Inc. Stockholders’ Equity																Non- Controlling Interest in Consolidated Subsidiaries			Total Equity			Redeemable Non-Controlling Interest
	Common Stock			Treasury Stock					Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Loss
	Shares	Value		Shares		Value			Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Loss
Balance, as of December 31, 2018	604	$	6	(35	)	$	(2,354	)	$	11,547	$	8,317		$	(315	)	$	30		$	17,231		$	71
Other comprehensive loss	—	—		—		—			—		—			(33		)	—			(33		)	—
Exercise of common stock options	1	—		—		—			22		—			—			—			22			—
Repurchases of common stock	—	—		(14	)	(1,120		)	—		—			—			—			(1,120		)	—
Payments relating to treasury shares	—	—		—		(64		)	—		—			—			—			(64		)	—
Stock-based compensation	—	—		—		—			109		—			—			—			109			3
Issuance under the employee stock purchase plan	—	—		—		—			28		—			—			—			28			—
Issuance of restricted stock	2	—		—		—			—		—			—			—			—			—
Distributions of profits	—	—		—		—			—		—			—			(29		)	(29		)	—
Dividends paid to stockholders	—	—		—		—			—		(467		)	—			—			(467		)	—
Net income attributable to non-controlling interest	—	—		—		—			—		(22		)	—			23			1			(2		)
Net income	—	—		—		—			—		1,507			—			—			1,507			—
Balance, as of September 30, 2019	607	$	6	(49	)	$	(3,538	)	$	11,706	$	9,335		$	(348	)	$	24		$	17,185		$	72



	Intercontinental Exchange, Inc. Stockholders’ Equity																Non- Controlling Interest in Consolidated Subsidiaries			Total Equity			Redeemable Non-Controlling Interest
	Common Stock			Treasury Stock					Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Loss
	Shares	Value		Shares		Value			Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Loss
Balance, as of June 30, 2019	606	$	6	(45	)	$	(3,194	)	$	11,651	$	8,961		$	(309	)	$	31		$	17,146		$	72
Other comprehensive loss	—	—		—		—			—		—			(39		)	—			(39		)	—
Exercise of common stock options	1	—		—		—			5		—			—			—			5			—
Repurchases of common stock	—	—		(4	)	(340		)	—		—			—			—			(340		)	—
Payments relating to treasury shares	—	—		—		(4		)	—		—			—			—			(4		)	—
Stock-based compensation	—	—		—		—			36		—			—			—			36			1
Issuance under the employee stock purchase plan	—	—		—		—			14		—			—			—			14			—
Distributions of profits	—	—		—		—			—		—			—			(15		)	(15		)	—
Dividends paid to stockholders	—	—		—		—			—		(155		)	—			—			(155		)	—
Net income attributable to non-controlling interest	—	—		—		—			—		(8		)	—			8			—			(1		)
Net income	—	—		—		—			—		537			—			—			537			—
Balance, as of September 30, 2019	607	$	6	(49	)	$	(3,538	)	$	11,706	$	9,335		$	(348	)	$	24		$	17,185		$	72

See accompanying notes.

Intercontinental Exchange, Inc. and Subsidiaries

Consolidated Statements of Changes in Equity and Redeemable Non-Controlling Interest — (Continued)

(In millions)

(Unaudited)



	Intercontinental Exchange, Inc. Stockholders’ Equity																	Non- Controlling Interest in Consolidated Subsidiaries			Total Equity			Redeemable Non-Controlling Interest
	Common Stock			Treasury Stock					Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss
	Shares	Value		Shares		Value			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss
Balance, as of December 31, 2017	600	$	6	(17	)	$	(1,076	)	$	11,392		$	6,858		$	(223	)	$	28		$	16,985		$	—
Other comprehensive loss	—	—		—		—			—			—			(51		)	—			(51		)	—
Exercise of common stock options	—	—		—		—			19			—			—			—			19			—
Repurchases of common stock	—	—		(14	)	(1,059		)	—			—			—			—			(1,059		)	—
Payments relating to treasury shares	—	—		(1	)	(78		)	—			—			—			—			(78		)	—
Stock-based compensation	—	—		—		—			107			—			—			—			107			—
Issuance of restricted stock	3	—		—		—			—			—			—			—			—			—
Acquisition of non-controlling interest	—	—		—		—			(23		)	—			—			(2		)	(25		)	—
Distributions of profits	—	—		—		—			—			—			—			(28		)	(28		)	—
Dividends paid to stockholders	—	—		—		—			—			(417		)	—			—			(417		)	—
Net income attributable to non-controlling interest	—	—		—		—			—			(24		)	—			24			—			—
Net income	—	—		—		—			—			1,401			—			—			1,401			—
Balance, as of September 30, 2018	603	$	6	(32	)	$	(2,213	)	$	11,495		$	7,818		$	(274	)	$	22		$	16,854		$	—

Closing Price ($)	Shares Out (MM)	Market Cap ($MM)
$0.00	568	$48,570

10-Q	2019-10-31	Quarter: 2019-09-30
10-Q	2019-08-01	Quarter: 2019-06-30
10-Q	2019-05-02	Quarter: 2019-03-31
10-K	2019-02-07	Annual: 2018-12-31
10-Q	2018-10-31	Quarter: 2018-09-30
10-Q	2018-08-02	Quarter: 2018-06-30
10-Q	2018-05-03	Quarter: 2018-03-31
10-K	2018-02-07	Annual: 2017-12-31
10-Q	2017-11-02	Quarter: 2017-09-30
10-Q	2017-08-03	Quarter: 2017-06-30
10-Q	2017-05-03	Quarter: 2017-03-31
10-K	2017-02-07	Annual: 2016-12-31
10-Q	2016-11-01	Quarter: 2016-09-30
10-Q	2016-08-03	Quarter: 2016-06-30
10-Q	2016-05-04	Quarter: 2016-03-31
10-K	2016-02-04	Annual: 2015-12-31
10-Q	2015-10-28	Quarter: 2015-09-30
10-Q	2015-08-05	Quarter: 2015-06-30
10-Q	2015-05-05	Quarter: 2015-03-31
10-K	2015-02-05	Annual: 2014-12-31
10-Q	2014-11-04	Quarter: 2014-09-30
10-Q	2014-08-07	Quarter: 2014-06-30
10-Q	2014-05-08	Quarter: 2014-03-31
10-K	2014-02-14	Annual: 2013-12-31
10-Q	2013-11-05	Quarter: 2013-09-30
10-Q	2013-08-07	Quarter: 2013-06-30

8-K	2019-10-30	Earnings, Amend Bylaw, Exhibits
8-K	2019-08-01	Earnings, Exhibits
8-K	2019-05-17	Shareholder Vote
8-K	2019-05-02	Earnings, Exhibits
8-K	2019-05-01	Other Events, Exhibits
8-K	2019-02-07	Earnings, Exhibits
8-K	2018-10-31	Earnings, Exhibits
8-K	2018-08-13	Other Events, Exhibits
8-K	2018-08-09	Enter Agreement, Exhibits
8-K	2018-08-03	Other Events
8-K	2018-08-02	Earnings, Exhibits
8-K	2018-05-28	Other Events, Exhibits
8-K	2018-05-21	Officers, Other Events, Exhibits
8-K	2018-05-18	Shareholder Vote
8-K	2018-05-03
8-K	2018-02-05	Earnings, Officers, Exhibits

EX-31.1	ice2019930ex311.htm
EX-31.2	ice2019930ex312.htm
EX-32.1	ice2019930ex321.htm
EX-32.2	ice2019930ex322.htm