Intercontinental Exchange (ICE) 8-K Results of Operations and Financial Condition

Exhibit 99.1

 

Intercontinental Exchange Reports Strong Third Quarter 2017 GAAP Diluted EPS of $0.62 on Revenues of $1.1 billion, +6% y/y; Adjusted Diluted EPS of $0.73, +14% y/y

▪ $1.1 billion of revenues in 3Q17, up 6% from the prior third quarter

▪ 2017 synergies now expected to be at least $70 million, up from $60 million previously

▪ Through October 31, 2017, $1.15 billion returned to shareholders via buybacks and dividends

▪ $1.2 billion share repurchase program authorized to begin January 1, 2018, 20% increase from prior authorization

ATLANTA & NEW YORK, November 2, 2017 -Intercontinental Exchange (NYSE: ICE), a leading operator of global network of exchanges and clearing houses and provider of global data and listing services, today reported financial results for the third quarter of 2017. For the quarter ended September 30, 2017, consolidated net income attributable to ICE was $369 million on $1.1 billion of consolidated revenues less transaction-based expenses. Third quarter GAAP diluted earnings per share (EPS) were $0.62, up 9% year-over-year. On an adjusted basis, net income was $430 million in the third quarter, and diluted EPS were $0.73, up 14% year-over-year. Please refer to the reconciliation of non-GAAP financial measures included in the press release for more information on our adjusted net income and adjusted diluted EPS.

“We are pleased to again deliver strong revenue and earnings growth while executing on our strategic objectives to serve our customers and shareholders," said ICE Chairman and CEO Jeffrey C. Sprecher. "We are investing to grow our trading, data and risk management solutions across geographies and asset classes and continue to see new ways to serve our customers across their workflow, from capital efficient clearing, to new trading and data products, to supporting regulatory compliance and connectivity needs. Our recent acquisitions demonstrate this focus and we look forward to leveraging our integrated offering to serve global markets as they evolve."

Scott A. Hill, ICE CFO, added: "Through the first nine months of the year we have grown revenues and are now on track to exceed our original 2017 synergy target even as we invest for continued growth in 2018. Our disciplined and balanced approach to shareholder value creation has enabled us to strategically invest in our business, while also returning over $1 billion to shareholders through buybacks and dividends so far in 2017."

Third Quarter 2017 GAAP Results

Third quarter 2017 consolidated revenues, less transaction-based expenses, were $1.1 billion. Trading and clearing segment revenues, less transaction-based expenses, were $523 million in the third quarter 2017, up 8% compared to the prior third quarter. Data and listings segment revenues were $620 million in the third quarter of 2017, up 4% compared to the prior third quarter, including data services revenues of $518 million, up 6% and listings revenues of $102 million, down 3% over the prior third quarter.

Consolidated operating expenses were $547 million for the third quarter of 2017. Consolidated operating income for the third quarter was $596 million and operating margin was 52%. The effective tax rate for the third quarter was 33%.

Unrestricted cash was $419 million and outstanding debt was $6.1 billion as of September 30, 2017.

Financial Guidance

• ICE's fourth quarter 2017 GAAP operating expenses are expected to be in a range of $540 million to $550 million and adjusted operating expenses⁽¹⁾ are expected to be in a range of $475 million to $485 million.

• ICE's interest expense is expected to be $50 million in the fourth quarter.

• ICE's adjusted effective tax rate is expected to be between 30-32% for the fourth quarter.

• ICE's diluted share count for the fourth quarter is expected to be in the range of 585 million to 595 million weighted average shares outstanding.

(1) The 2017 Non-GAAP adjusted operating expense excludes $65 million in amortization of acquisition-related intangibles for the fourth quarter of 2017. The GAAP operating expense forecast does not reflect an estimate of acquisition-related transaction and integration costs for the fourth quarter of 2017.

Earnings Conference Call Information

ICE will hold a conference call today, November 2, at 8:30 a.m. ET to review its second quarter 2017 financial results. A live audio webcast of the earnings call will be available on the company's website atwww.theice.com in the investor relations section. Participants may also listen via telephone by dialing 888-317-6003 from the United States, 866-284-3684 from Canada or 412-317-6061 from outside of the United States and Canada.Telephone participants are required to provide the participant entry number 1801297 and are recommended to call 10 minutes prior to the start of the call. The call will be archived on the company's website for replay.

The conference call for the fourth quarter 2017 earnings has been scheduled for February 7, 2018 at 8:30 a.m. ET. Please refer to the Investor Relations website atwww.ir.theice.com for additional information.

Historical futures, options and cash ADV, rate per contract, open interest data and CDS cleared information can be found at: http://ir.theice.com/investors-and-media/supplemental-volume-info/default.aspx

Consolidated Statements of Income

(In millions, except per share amounts)

(Unaudited)

	Nine Months Ended  September 30,						Three Months Ended  September 30,
	2017			2016			2017			2016
Revenues:
Transaction and clearing, net	$	2,373		$	2,566		$	758		$	777
Data services		1,559			1,463			518			489
Listings		315			314			102			106
Other revenues		148			131			54			44
Total revenues		4,395			4,474			1,432			1,416
Transaction-based expenses:
Section 31 fees		275			290			92			94
Cash liquidity payments, routing and clearing		635			823			197			244
Total revenues, less transaction-based expenses		3,485			3,361			1,143			1,078
Operating expenses:
Compensation and benefits		710			708			231			236
Professional services		94			101			30			32
Acquisition-related transaction and integration costs		27			61			4			14
Technology and communication		294			277			99			93
Rent and occupancy		52			52			17			17
Selling, general and administrative		117			83			38			31
Depreciation and amortization		404			470			128			181
Total operating expenses		1,698			1,752			547			604
Operating income		1,787			1,609			596			474
Other income (expense):
Interest expense		(137	)		(134	)		(47	)		(44	)
Other income, net		198			24			11			13
Other income (expense), net		61			(110	)		(36	)		(31	)
Income before income tax expense		1,848			1,499			560			443
Income tax expense		537			409			185			93
Net income	$	1,311		$	1,090		$	375		$	350
Net income attributable to non-controlling interest		(22	)		(20	)		(6	)		(6	)
Net income attributable to Intercontinental Exchange, Inc.	$	1,289		$	1,070		$	369		$	344
Earnings per share attributable to Intercontinental Exchange, Inc. common shareholders:
Basic	$	2.18		$	1.80		$	0.63		$	0.58
Diluted	$	2.17		$	1.79		$	0.62		$	0.57
Weighted average common shares outstanding:
Basic		591			595			588			596
Diluted		595			599			592			600
Dividend per share	$	0.60		$	0.51		$	0.20		$	0.17

Consolidated Balance Sheets

(In millions)

(Unaudited)

	As of			As of
	September 30, 2017			December 31, 2016
Assets:
Current assets:
Cash and cash equivalents	$	419		$	407
Short-term investments		16			23
Short-term restricted cash and investments		762			679
Customer accounts receivable, net		897			777
Margin deposits and guaranty funds		52,401			55,150
Prepaid expenses and other current assets		744			97
Total current assets		55,239			57,133
Property and equipment, net		1,192			1,129
Other non-current assets:
Goodwill		12,016			12,291
Other intangible assets, net		10,056			10,420
Long-term restricted cash and investments		264			264
Long-term investments		—			432
Other non-current assets		351			334
Total other non-current assets		22,687			23,741
Total assets	$	79,118		$	82,003
Liabilities and Equity:
Current liabilities:
Accounts payable and accrued liabilities	$	427		$	388
Section 31 fees payable		32			131
Accrued salaries and benefits		184			230
Deferred revenue		228			114
Short-term debt		1,197			2,493
Margin deposits and guaranty funds		52,401			55,150
Other current liabilities		131			111
Total current liabilities		54,600			58,617
Non-current liabilities:
Non-current deferred tax liability, net		2,989			2,958
Long-term debt		4,865			3,871
Accrued employee benefits		264			430
Other non-current liabilities		381			337
Total non-current liabilities		8,499			7,596
Total liabilities		63,099			66,213
Redeemable non-controlling interest		—			36
Equity:
Intercontinental Exchange, Inc. shareholders’ equity:
Common stock		6			6
Treasury stock, at cost		(833	)		(40	)
Additional paid-in capital		11,423			11,306
Retained earnings		5,718			4,789
Accumulated other comprehensive loss		(322	)		(344	)
Total Intercontinental Exchange, Inc. shareholders’ equity		15,992			15,717
Non-controlling interest in consolidated subsidiaries		27			37
Total equity		16,019			15,754
Total liabilities and equity	$	79,118		$	82,003

Non-GAAP Financial Measures and Reconciliation

We use non-GAAP measures internally to evaluate our performance and in making financial and operational decisions. When viewed in conjunction with our GAAP results and the accompanying reconciliation, we believe that our presentation of these measures provides investors with greater transparency and a greater understanding of factors affecting our financial condition and results of operations than GAAP measures alone. In addition, we believe the presentation of these measures is useful to investors for period-to-period comparison of results because the items described below as adjustments to GAAP are not reflective of our core business performance. These financial measures are not in accordance with, or an alternative to, GAAP financial measures and may be different from non-GAAP measures used by other companies. We use these adjusted results because we believe they more clearly highlight trends in our business that may not otherwise be apparent when relying solely on GAAP financial measures, since these measures eliminate from our results specific financial items that have less bearing on our core operating performance. We strongly recommend that investors review the GAAP financial measures and additional non-GAAP information included in our Quarterly Report on Form 10-Q, including our consolidated financial statements and the notes thereto.

Adjusted net income attributable to ICE common shareholders and adjusted diluted earnings per share for the periods presented below are calculated by adding or subtracting the adjustments described below, which are not reflective of our cash operations and core business performance, and their related income tax effect and other tax adjustments (in millions, except for per share amounts):

	Three Months Ended September 30, 2017			Three Months Ended September 30, 2016
Net income attributable to ICE	$	369		$	344
Add: Interactive Data and NYSE transaction and integration costs		3			7
Add: Employee severance costs related to Creditex U.K. brokerage operations		—			4
Add: Creditex customer relationship intangible asset impairment		—			33
Add: Amortization of acquisition-related intangibles		64			76
Add: Accruals relating to ongoing investigations and inquiries		4			—
Less: Income tax effect for the above items		(22	)		(45	)
Add: Deferred tax adjustments on acquisition-related intangibles		12			—
Less: Other tax adjustments		—			(34	)
Adjusted net income attributable to ICE	$	430		$	385
Diluted earnings per share attributable to ICE	$	0.62		$	0.57
Adjusted diluted earnings per share attributable to ICE	$	0.73		$	0.64

About Intercontinental Exchange

Intercontinental Exchange (NYSE:ICE) is a Fortune 500 company that operates a leading network ofglobal futures, equity and equity options exchanges, as well asglobal clearing anddata services across financial and commodity markets. TheNew York Stock Exchange is the world leader in capital raising, listings and equities trading.

Trademarks of ICE and/or its affiliates include Intercontinental Exchange, ICE, ICE block design, NYSE and New York Stock Exchange. Information regarding additional trademarks and intellectual property rights of Intercontinental Exchange, Inc. and/or its affiliates is located atwww.intercontinentalexchange.com/terms-of-use.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 - Statements in this press release regarding ICE's business that are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of additional risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see ICE's Securities and Exchange Commission (SEC) filings, including, but not limited to, the risk factors in Intercontinental Exchange, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2016, as filed with the SEC on February 7, 2017. We caution you not to place undue reliance on these forward looking statements. Any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of an unanticipated event. New factors emerge from time to time, and it is not possible for management to predict all factors that may affect our business and prospects. Further, management cannot assess the impact of each factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

SOURCE: Intercontinental Exchange

ICE-CORP

ICE Investor Relations Contact:

Warren Gardiner

+1 770 835 0114

warren.gardiner@theice.com

investors@theice.com

ICE Media Contact:

Kelly Loeffler

+1 770 857 4726

kelly.loeffler@theice.com

media@theice.com