Intercontinental Exchange (ICE 0.56%), or ICE, finished 2017 on a solid note, reporting higher revenue and earnings in the fourth quarter. That helped push full-year revenue to a new record, marking the twelfth straight year of sales growth. Those solid numbers position the company to continue sending more cash back to shareholders.
Intercontinental Exchange results: The raw numbers
|
Metric |
Q4 2017 |
Q4 2016 |
Year-Over-Year Change |
|---|---|---|---|
|
Revenues, less transaction-based expenses |
$1.14 billion |
$1.14 billion |
0.5% |
|
Adjusted net income |
$433 million |
$428 million |
1.2% |
|
Adjusted EPS |
$0.73 |
$0.71 |
2.8% |
Data source: Intercontinental Exchange. EPS=Earnings per share.
Image source: Getty Images.
What happened with Intercontinental Exchange this quarter?
Data drove the quarter:
- Data and listings revenue rose 1% versus the year-ago quarter to $627 million. Data revenue was up 2% to $525 million thanks to 6% increases in pricing and analytics as well as exchange data. That helped offset a 2% drop in listings revenue, which fell to $102 million. That said, revenue would have been up 5% if it wasn't for the impact of foreign exchange fluctuations. Further, the company lost $4 million in data services revenue due to the mid-December sale of Trayport.
- Trading and clearing segment revenue dipped $1 million to $517 million. An 8% decline in revenue from financials more than offset a 2% increase in commodities and a 16% boost from "other."
- Earnings rose slightly more than revenue due to the company's cost savings initiatives. Meanwhile, per-share earnings came in even higher thanks to the impact of the company's share repurchase program after it bought back $949 million in stock last year.
- ICE expects to return even more cash to investors in 2018. The company authorized a $1.2 billion share repurchase program for this year and increased its dividend 20%.
What management had to say
CEO Jeffrey Sprecher commented on the company's full-year results, saying, "We are pleased to deliver our twelfth consecutive year of record revenue. We achieved this by executing on our strategy to deliver best-in-class trading, clearing, listings and information services while continuing to expand our range of content and distribution solutions to meet the evolving needs of the market."
For the full-year, revenue rose 3% to a record $4.6 billion thanks to the growth of its data services business. Meanwhile, adjusted earnings increased 6% to $2.95 per share, driven by higher revenue, cost savings initiatives, and share repurchases. "In addition to investing in growth, we returned more capital to shareholders in 2017 than any year in our history enabled by another year of record revenue, disciplined expense management, and strong cash flow," according to CFO Scott Hill. Overall, ICE generated $2.1 billion in cash and returned more than $1.4 billion to investors via repurchases and dividends while also reducing debt by $275 million.
Looking forward
ICE expects to continue its forward progress this year. The company sees data revenue rising 6% to 7% on an organic basis. In addition to that, the company anticipates capturing another $30 million in expense synergies this year while spending about 10% less on capital expenses and software. Those factors lead it to believe that it can generate more free cash flow this year, which is why it boosted the dividend and buyback authorization by 20% versus last year.
