Intercontinental Exchange Earnings 2020-06-30

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

ice-20200630

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 June 30, 2020


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

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 (§232.405 of this chapter) 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 July 27, 2020, the number of shares of the registrant’s Common Stock outstanding was 543,276,671 shares.

INTERCONTINENTAL EXCHANGE, INC.

Form 10-Q

Quarterly Period Ended June 30, 2020

TABLE OF CONTENTS




PART I.	Financial Statements
Item 1.	Consolidated Financial Statements (Unaudited):
	Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019	2
	Consolidated Statements of Income for the six months and three months ended June 30, 2020 and 2019	4
	Consolidated Statements of Comprehensive Income for the six months and three months ended June 30, 2020 and 2019	5
	Consolidated Statements of Changes in Equity and Redeemable Non-Controlling Interest for the six months and three months ended June 30, 2020 and 2019	6
	Consolidated Statements of Cash Flows for the six months ended June 30, 2020 and 2019	8
	Notes to Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	58
Item 4.	Controls and Procedures	61

PART II.	Other Information
Item 1.	Legal Proceedings	61
Item 1A.	Risk Factors	62
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	64
Item 3.	Defaults Upon Senior Securities	64
Item 4.	Mine Safety Disclosures	64
Item 5.	Other Information	64
Item 6.	Exhibits	65
SIGNATURES			66

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
	June 30, 2020		December 31, 2019
Assets:
Current assets:
Cash and cash equivalents	$	880	$	841
Short-term restricted cash and cash equivalents	993		943
Customer accounts receivable, net of allowance for doubtful accounts of $24 and $8, respectively	1,279		988
Margin deposits, guaranty funds and delivery contracts receivable	93,960		64,987
Prepaid expenses and other current assets	323		220
Total current assets	97,435		67,979
Property and equipment, net	1,510		1,536
Other non-current assets:
Goodwill	13,534		13,342
Other intangible assets, net	10,149		10,258
Long-term restricted cash and cash equivalents	408		404
Other non-current assets	1,024		974
Total other non-current assets	25,115		24,978
Total assets	$	124,060	$	94,493

Liabilities and Equity:
Current liabilities:
Accounts payable and accrued liabilities	$	520	$	505
Section 31 fees payable	316		138
Accrued salaries and benefits	199		291
Deferred revenue	383		129
Short-term debt	705		2,569
Margin deposits, guaranty funds and delivery contracts payable	93,960		64,987
Other current liabilities	110		197
Total current liabilities	96,193		68,816
Non-current liabilities:
Non-current deferred tax liability, net	2,317		2,314
Long-term debt	7,703		5,250
Accrued employee benefits	190		198
Non-current operating lease liability	274		281
Other non-current liabilities	294		270
Total non-current liabilities	10,778		8,313
Total liabilities	106,971		77,129
Commitments and contingencies
Redeemable non-controlling interest in consolidated subsidiaries	95		78
Equity:
Intercontinental Exchange, Inc. stockholders’ equity:


Preferred stock, $0.01 par value; 100 shares authorized; none issued or outstanding at June 30, 2020 and December 31, 2019	—		—
Common stock, $0.01 par value; 1,500 shares authorized; 609 and 607 issued at June 30, 2020 and December 31, 2019, respectively, and 544 and 554 shares outstanding at June 30, 2020 and December 31, 2019, respectively	6		6
Treasury stock, at cost; 65 and 53 shares, respectively	(5,050)		(3,879)
Additional paid-in capital	11,856		11,742
Retained earnings	10,462		9,629
Accumulated other comprehensive loss	(321)		(243)
Total Intercontinental Exchange, Inc. stockholders’ equity	16,953		17,255
Non-controlling interest in consolidated subsidiaries	41		31
Total equity	16,994		17,286
Total liabilities and equity	$	124,060	$	94,493

See accompanying notes.

Intercontinental Exchange, Inc. and Subsidiaries

Consolidated Statements of Income

(In millions, except per share amounts)

(Unaudited)


	Six Months Ended June 30,						Three Months Ended June 30,
	2020		2019		2020		2019
Revenues:
Transaction and clearing, net	$	2,571	$	1,769	$	1,207	$	907
Data services	1,138		1,099		574		553
Listings	223		222		111		111
Other revenues	149		127		74		63
Total revenues	4,081		3,217		1,966		1,634
Transaction-based expenses:
Section 31 fees	320		169		154		100
Cash liquidity payments, routing and clearing	807		480		417		236
Total revenues, less transaction-based expenses	2,954		2,568		1,395		1,298
Operating expenses:
Compensation and benefits	551		507		273		259
Professional services	63		62		34		29
Acquisition-related transaction and integration costs	14		1		2		1
Technology and communication	257		220		126		113
Rent and occupancy	40		35		19		18
Selling, general and administrative	89		83		40		41
Depreciation and amortization	314		315		157		157
Total operating expenses	1,328		1,223		651		618
Operating income	1,626		1,345		744		680
Other income (expense):
Interest income	8		19		2		10
Interest expense	(156)		(142)		(84)		(71)
Other income, net	31		32		11		9
Other income (expense), net	(117)		(91)		(71)		(52)
Income before income tax expense	1,509		1,254		673		628
Income tax expense	323		284		145		150
Net income	$	1,186	$	970	$	528	$	478
Net income attributable to non-controlling interest	(13)		(14)		(5)		(6)
Net income attributable to Intercontinental Exchange, Inc.	$	1,173	$	956	$	523	$	472
Earnings per share attributable to Intercontinental Exchange, Inc. common stockholders:
Basic	$	2.14	$	1.69	$	0.96	$	0.84
Diluted	$	2.13	$	1.68	$	0.95	$	0.84
Weighted average common shares outstanding:
Basic	549		565		546		563
Diluted	552		568		549		566

See accompanying notes.

Intercontinental Exchange, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(In millions)

(Unaudited)


	Six Months Ended June 30,						Three Months Ended June 30,
	2020		2019		2020		2019
Net income	$	1,186	$	970	$	528	$	478
Other comprehensive income (loss):
Foreign currency translation adjustments, with no tax benefit for both the six months and three months ended June 30, 2020 and 2019	(78)		7		12		(19)
Change in equity method investment	—		(1)		—		—


Other comprehensive income (loss)	(78)		6		12		(19)
Comprehensive income	$	1,108	$	976	$	540	$	459
Comprehensive income attributable to non-controlling interest	(13)		(14)		(5)		(6)
Comprehensive income attributable to Intercontinental Exchange, Inc.	$	1,095	$	962	$	535	$	453

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 Income/(Loss)
	Shares	Value		Shares	Value
Balance, as of December 31, 2019	607	$	6	(53)	$	(3,879)	$	11,742	$	9,629	$	(243)	$	31	$	17,286	$	78
Impact of adoption of ASU 2016-13, net of tax	—	—		—	—		—		(10)		—		—		(10)		—
Other comprehensive loss	—	—		—	—		—		—		(78)		—		(78)		—
Exercise of common stock options	—	—		—	—		22		—		—		—		22		—
Repurchases of common stock	—	—		(12)	(1,099)		—		—		—		—		(1,099)		—
Payments relating to treasury shares	—	—		—	(72)		—		—		—		—		(72)		—
Stock-based compensation	—	—		—	—		73		—		—		—		73		8
Issuance under the employee stock purchase plan	—	—		—	—		16		—		—		—		16		—
Warrants issued to minority interest holders	—	—		—	—		3		—		—		—		3		2
Issuance of restricted stock	2	—		—	—		—		—		—		—		—		—

Distributions of profits	—	—		—	—		—		—		—		(15)		(15)		—
Dividends paid to stockholders	—	—		—	—		—		(330)		—		—		(330)		—
Redeemable non-controlling interest	—	—		—	—		—		—		—		—		—		10
Issuance of non-controlling interest	—	—		—	—		—		—		—		9		9		—
Net income (loss) attributable to non-controlling interest	—	—		—	—		—		(13)		—		16		3		(3)
Net income	—	—		—	—		—		1,186		—		—		1,186		—
Balance, as of June 30, 2020	609	$	6	(65)	$	(5,050)	$	11,856	$	10,462	$	(321)	$	41	$	16,994	$	95

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
Income/(Loss)

Value

Balance, as of March 31, 2020

609

(61)

(4,647)

Price	92.40	EPS	4
Shares	566	P/E	25
MCap	52,298	P/FCF	28
Net Debt	5,836	EBIT	2,719
TEV	58,134	TEV/EBIT	21
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-06-30	Filed 2020-07-30
10-Q	2020-03-31	Filed 2020-04-30
10-K	2019-12-31	Filed 2020-02-06
10-Q	2019-09-30	Filed 2019-10-31
10-Q	2019-06-30	Filed 2019-08-01
10-Q	2019-03-31	Filed 2019-05-02
10-K	2018-12-31	Filed 2019-02-07
10-Q	2018-09-30	Filed 2018-10-31
10-Q	2018-06-30	Filed 2018-08-02
10-Q	2018-03-31	Filed 2018-05-03
10-K	2017-12-31	Filed 2018-02-07
10-Q	2017-09-30	Filed 2017-11-02
10-Q	2017-06-30	Filed 2017-08-03
10-Q	2017-03-31	Filed 2017-05-03
10-K	2016-12-31	Filed 2017-02-07
10-Q	2016-09-30	Filed 2016-11-01
10-Q	2016-06-30	Filed 2016-08-03
10-Q	2016-03-31	Filed 2016-05-04
10-K	2015-12-31	Filed 2016-02-04
10-Q	2015-09-30	Filed 2015-10-28
10-Q	2015-06-30	Filed 2015-08-05
10-Q	2015-03-31	Filed 2015-05-05
10-K	2014-12-31	Filed 2015-02-05
10-Q	2014-09-30	Filed 2014-11-04
10-Q	2014-06-30	Filed 2014-08-07
10-Q	2014-03-31	Filed 2014-05-08
10-K	2013-12-31	Filed 2014-02-14
10-Q	2013-09-30	Filed 2013-11-05
10-Q	2013-06-30	Filed 2013-08-07

8-K	2020-09-08	Other Events, Exhibits
8-K	2020-09-04	M&A, Sale of Shares, Regulation FD, Exhibits
8-K	2020-08-21	Enter Agreement, Off-BS Arrangement, Exhibits
8-K	2020-08-20	Other Events, Exhibits
8-K	2020-08-14	Enter Agreement, Exhibits
8-K	2020-08-13	Officers, Regulation FD, Exhibits
8-K	2020-08-06	Regulation FD, Exhibits
8-K	2020-08-06	Enter Agreement, Sale of Shares, Exhibits
8-K	2020-07-30	Earnings, Exhibits
8-K	2020-05-26
8-K	2020-05-15
8-K	2020-04-30
8-K	2020-02-06
8-K	2020-01-21
8-K	2019-10-30
8-K	2019-08-01
8-K	2019-05-17
8-K	2019-05-02
8-K	2019-05-01
8-K	2019-02-07
8-K	2018-10-31
8-K	2018-08-13
8-K	2018-08-09
8-K	2018-08-03
8-K	2018-08-02
8-K	2018-05-28
8-K	2018-05-21
8-K	2018-05-18
8-K	2018-05-03
8-K	2018-02-05

EX-31.1	ice2020630ex311.htm
EX-31.2	ice2020630ex312.htm
EX-32.1	ice2020630ex321.htm
EX-32.2	ice2020630ex322.htm

ICE 10Q Quarterly Report

Intercontinental Exchange Earnings 2020-06-30