ICE - Earnings call transcript Q4 2018 | Intercontinental Exchange, Inc.

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Operator

Good morning, and welcome to the Intercontinental Exchange Fourth Quarter 2018 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Warren Gardiner, Vice President of Investor Relations. ahead. go Please

Warren Gardiner

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

organic that believe our could measures and income, certain earnings from including filed data and non-GAAP operating risks our our XX-K, a EPS, results forward-looking free adjusted materially margin, performance. business the For In supplement, description we cash differ cause those operations are our EBITDA. cash to statements, income, of to of flow more tax core our which effective refer morning. this please XXXX We non-GAAP operating in revenue, we described refer measures to rate, expenses, effective Form

turn Officer; definition over Jackson, details the the explanatory Hill, Jeff President. the on You'll information XX-K. to reconciliation explanation Financial and call, deem in uses Form earnings measures page we the second on are of Chairman to regarding earnings used to certain with as the why call GAAP for based now materials on our Please this CEO; notes equivalent Sprecher, find adjusted these terms and earnings Scott. net see transaction additional to share. Ben Scott adjusted be as how revenue today I'll diluted expenses, per and meaningful; our well management of the items. Chief net a the this refers revenue When call to in supplement the of earnings and us of refers Also,

Scott Hill

million quarter consolidated X%. and Thanks, fourth record underpinned totaled Adjusted net slide you billion. highlights Trading of performance. with clearing a quarter. $X.X a ICE's our today. listings record by the and morning, and year-over-year currency XX% on million record from data a in and $XXX revenues everyone, quarter organic begin increased growth constant the net operating expenses X revenues record for to of Warren. million fourth $XXX thank us totaled revenues I'll were joining some key Good $XXX

quarter fourth our a increase Our to the compensation good end included a year. expenses $X in million strong performance-related reflecting

highlights, to quarter in weren't of In around fourth dollars delivered items $X $X.XX, organizational adjusted recurring. increase related of and These operating grew earnings guidance income XX% versus per non-recurring and XX% addition, quarter included our million our to contemplated Continuing restructuring a few be fourth quarter we XXXX. of items. year-over-year with aren't record expected the adjusted original a the share and million

generated billion, CapEx with way put cash $X.X of XX% Importantly, spend record year. flow that growth versus reduced work that to up earnings slide combined X. discuss the we on cash the prior strong free I'll

few our capital fixed approach our billion nearly return double last combined generation investment XXXX. continue of Bakkt. cash strong disciplined $X.X ago. along $X During the capital just billion That years We of strategic with investing leverage of in $XXX did and our than again support year million our business partners over income, all mortgages capital the during with returned nearly we dividends to authorization. launch return to once and the and while including model in maintaining this totaled target of a is the remaining in initiatives will million the repurchase XX% higher billion. to quarter, deployed $XXX our $X.X and XXXX what When paid, return we shareholders XXXX we fourth record The

XX% around Reflecting board deployed $XXX past, on $X we've in As that call, we in share million increase the our quarterly grows. third dividend our as approved our our billion share. $X.XXX And authorized company noted to which a per authorization growing in the as already from has January. to quarter a dividend board committed we're indicated commitment, we've our repurchase

ag, move overview of an and slide our $XXX to in which the trading of revenue revenue financials X grew XX% and increased fourth year for quarter futures business. quarter year-over-year and business year. performance as ag where and the I'll equity with Trading fourth clearing both products increased the prior let's index all ADV XX%. increased Fourth full XX% energy, Now, the energy clearing provide up rate our up quarter and million XX% versus revenue and to

to they're share and quarter average as cash This equity carried into well January across January complex open ADV interest-rate of Option year-over-year. end increased fourth unusually versus XX%. market volumes equity continues and higher year-over-year acquisition the and year than at importantly, a an CHX. options by as by equity's XX% of and our interest oil the volume X% products. While December. At up build Futures January up options momentum XX% our cash led continued with volumes in ago year-over-year, our year-over-year up in industry increased & across was are strong revenues the NYSE, driven in strength OI sequentially transaction And in down with gains daily business the cash volumes higher XX% business

trading credit, totaled revenue is clearing and and fixed our XX% a and XX% increased income since for rate of XXXX. businesses compound quarter. which Services million includes $XX fixed income CDS at growing CDS year-over-year Mortgage clearing, ICE the growth to revenue Moving

business. remain catalyst New participants, that credit the products and new additional need for protection for

discuss organic a an next million. $XXX record quarter X% slide grew services currency constant listings revenue Fourth Turning and I'll on X, data the segment. basis to to data

revenues connectivity organic total we Appendix. services grew on X% this and data analytics, better a a services XX% This change provides beginning capabilities connectivity comparison on provided included of from quarter, fourth it from which data X% distinguishes currency our of pricing in account revenues data desktops moved half fourth services including related were the our X% peers. and which For we and our the desktops grew for and for constant X% X/X organic Revenues and of better during in X% Please currency each revenue an We've the into historical from data consecutive up and note and of content the and revenues, feeds quarter third sell have exchange the Within business to on ASV, an constant data of basis full-year, restatement out services data basis our exchange organic data an with data. to our nearly exchange reflect results quarter. our that in the constant represent currency our distribution an feeds business. grew products services growth quarter, roughly basis.

As from price giving momentum. slide, pricing than every component and X% And of continued and consumption analytics X.X% new in over for you in increases. importantly our us increased to existing more contributions our revenue XXXX is has can pricing on the and growth customers, model, targeted products, confidence from analytics ASV accelerated from This customers, and X%, up to reflects XXXX accelerating and revenue XXXX now new entering nearly growth XXXX. in see X.X%

formation, leading revenues the of my IPO raise despite XX business, for we slide on grew helping exchange NYSE Finally, year, capital volatility. our And in IPOs $XX market in again U.S. X. heightened listings listed X% in remarks were the billion the quarter I'll proceeds. terms our customers the fourth in and once conclude

per adjusted On can income earnings the X%, grew you of and grew cash XXXX operating X%, side our left-hand slide, strong recap of the free flow XX%, share XX%. adjusted a see Revenues grew performance. grew

you'll the few of of side for guidance On the points note right-hand slide, a XXXX.

data pound, euro $X which year is by reduce first million roughly is be of material $XXX quarter quarter And to no full currently services and billion. thereafter. data currency with only data in the also the data required dollar XXXX, both to XXXX versus in $XX of expect billion the be that $X.XX fluctuation million. between a sequential adjustment We improvement and to includes This our This note million growth. reflects revenues should stronger calculate expected XXXX acquisitions to $XXX revenue impact to $X.XX with million revenues each the

billion operating acquired million segment in $X.XX generate XXXX Moving to reduce trading clearing will $XX year be around taken our to next billion. and to acquisitions $XX million adjusted actions million in expenses. $XX We to of between anticipate roughly expense those $X.X and net of in full already costs businesses. expense, incremental the

revenue. In have top On than commitment deliver over we addition cost to IDC, $XXX the which achieved incremental savings the means synergies. related synergies of will of will acquired original $XX to total of be expense the million million businesses, cost savings, for we million recently $XXX of in the offset will final our more the by

as which our million. in to Bakkt $XX growth reward again once a will we expense upon based expenses their increase And will years, contribution to run by compensation million investment in of $XX generate Investments as employees revenue past with add philosophy, the will first million in of $XX as will expense around our $XX to part strong $XX finally, consistent Next, quarter. our well for the to million. million tied $XX pay-for-performance technology rate million

it and have you to But at take I'll to Jeff record happy year. year strategic questions Q&A. to the expand update momentum our progress through XXXX XXXX. during investment and year. level delivered Bakkt now entering will the we We I'll plans we the move on in new of another hand for We on be as entering your

Jeff Sprecher

to call. and you, on everyone morning good Thank the Scott,

history record begin adjusted revenues was We're what share. year me in ICE's per year marks that and Let consecutive report to X. XXth the our pleased record of on earnings slide best and

the strategically enhances regulatory footprint record houses workflows America, we've in Europe across and testament us the as our with around around they helps efficiency, swiftly customers' a to markets. to inception It's diverse that product U.K., provides since of we're risk positioned globally major and the is bring platform market six a a technology simple political build platform transparency growth emerge and growth North on for that to from track insulate to reliability world centers clearing development opportunities that In our capitalize gives approach world. us futures the customers choice, a to enables and markets, Our our that using taken our strategic Asia.

that desired Brent in often on key of again, proprietary technology, offer that traders participants. risk-management product weekend. benchmarks, markets, of fuel five business. clearing development needs open oil contract. two-thirds of in years. Gasoil of including cornerstone is On retention jet as provide designed Our our marketplace. over quickly wide nearly fastest-growing well the meet investors become our of benchmark exchanges regulations interest the Gasoil's markets take and crude remains diesel complimented gas energy record These global In day. top Brent's annum as In the we technology risks. per run as unmatched complex. oil platform comprehensive additional range jurisdictions around this the hold set manage participants distribution a our common a with Gasoil global it with one critical the marine generated is that move customer as to day benchmark on energy tailwinds if the our a a markets, markets liquid, our upon technology, oil which a refined traded on our the relevance energy to benchmark of flexibility and commercial to XXXX the a houses been suite XX% our for internationally of our average to are the benchmarks workflow and over acquisition world for providing upcoming for in market last operate And by moves barrel each every Brent complex in Once are to fuel. their and has and natural global is revenues contracts XXXX rely up the our and to the IMO could oil

gas a In now grow. to of fact, benchmark natural that U.S. products Hub, from relevance is is other customers two-thirds losing the benchmarks as derived our Henry roughly revenue global commercial than other

levels, daily is volumes with XX% our alternative complex these open markets, trillion SONIA uncertainty just up financial our its record over We equity in And equities interest includes natural natural and adoption also products European Asian in achieving see Brexit XX% interest for interest-rate from launch in business, has growth, up in was grown year-over-year interest a particular, volumes January. increasing in participation cleared up year-over-year gas over MSCI natural the and natural accelerated with emerging contract China XX% across to so activities in around have globalizes, benchmark our interest open our futures U.S. our spaces XXXX, notional economic open interest a volume daily in January. our gas As which average index In build, interest-rate rates shifting gas with trading In expectations of the contract American since customers' and is which ago. our European market year continue XX our too dynamic North at $X.X as of trade CAGR with tensions MSCI near-record markets increased the January. XX% global through XX% since of our open similar to futures average index. at JKM and TTF year-over-year, the continue business is and in benefiting up drive X% hedging increased and the indices. with gas end a

of And notional end the the over five of ago. contract only less the this outstanding purposes, of E-mini comparison was represents stood interest than million open S&P at in X% an for amount X.X years which total contracts. January, XX% XXX As

we've In spreads rolling capacity technology execution addition to trading to significantly the continuously provide markets. our venues. provides combined futures cash customer the handle the XX NYSE, customers experience that dark the a out At day IEX bid been a the equities improve technology, an which access is billion model, to hybrid average exchange. reliability that lower pool volatility, like trade and to to equities distinct our and has designated platform reduces than offers working a U.S. should we efficiencies, pillar all-in or differentiated seven market tighter our and bring that the with messages with markets transparency we're cost to dark our When venue maker and offer

$XXX analytics. market Our close unique was and listing of average unique on market-makers stock mission-critical amidst our approximately January tracking increase index and a had following seen the indices, a At XX% we XXXX. are our the provided than ago. pricing fixed illustrated which of our stocks a a were and and transition in XXX tools in by our have continues. the value such the continue the year passive as open ETF, grew a ICE we've better model nearly to tailwind XXX for reference continue the on to over in whopping analytics towards is brightest excuse and Demand -- the of as protect provider data from lower business. particular assets trends and XX% to there's proposition build performance in ETF quoted platform the of on our drive data tighter to These compensating on pricing manage these points in which basis data iShares search business that managers designated shines is preferred stocks output leading X% data indices lower and investing as results NYSE end analytics to billion listed as December services for best closest just of income And finally to business, XX% two efforts and accelerating. our shift me derived and The of traded Active spreads volatility competitor. volatility business our our

business our our the as from contribution have to strong and long-term for prepared core XXXX yet only as at lie opportunities that listings double-digit our not was strong growth, beyond to business. in for year which Kerry as business look that we turn I and trust for operator efforts Time. Services, we to in but was conduct want million Eastern complemented our another their now we're and expense excited our with their ICE. of customers Bakkt A call I'd also to for question-and-answer session recently our beginning very remarks, thank such their in in for ICE. year our fixed-income colleagues the XXXX that ICE EPS management $XXX until growth business and X:XX first we ahead, record our our for its about yet topline contributed raised the strategy. Turning XXXX Mortgage by my and for conclude compounding noted newer initiatives I'll execution, and synergy And round the another Coupled by thanking businesses back she'll over my slide of I reinforcing strong and produced data XX to conviction to funding. like transaction

Operator

Please from O'Neill. ahead. [Operator Repetto The Rich question first come go Sandler will Instructions] of

Rich Repetto

exchange at I guess, could external to of look the new tax Scott. that question's And in this in you forces and -- those that morning, investors on to you're Good U.S. hedge mentioned There's Brexit, where on think more, external compete Europe of you competing in benefits Jeff. Or morning, a I the as forces stand think as the some bumping on then would people data, these needing Brexit? Europe we question the that the can of my And do the going areas? Good move of the us broad of give do know you scrutiny highlight ideas overall I on U.S., potentially being some you -- where beyond into to on by in issue what guess, sort EU. well Hi. both a are you you points Jeff, forced commodities you the when recap of but that? be

Jeff Sprecher

my welcome to Well, world, Rich.

describe job. my You me basically to asked

with let's Brexit. So start

volatility we of their risk to mentioned, on benefit impose business. and in them we're that First from companies the you've risk management the manage unfortunately, because Brexit force all, actions as government

common said, on really to company we going felt geographically. That And a we the we've operation technologies, just income. move So I my around. including in EU. we consolidate there's all we you a and "business" revisiting U.K. have our long do have something said, a really of them also impact on clearing It's put prepared back And can trading in and mentioned we our of and we not weekend. and a operation shouldn't have in so both political on a there's positive issues. businesses trading a and clearing as that move that now tax forth as move. physical inside And the an revenues that's our remarks and lot overarching know over database of That

the On the theoretically decade. been the bound courts courts. to U.K. by or courts. for going longer remanded so, this specifically, XX now, the tax EU EU issues on a It's over has In is months the no

for of U.S. to me the concern press this would Brexit. we contracts the So relocated there I relates that industry. -- the And if has going and our seems maintained move locate just don't another than and table would With whole release. U.K. lived amount over -- I certainly order impact always could, things something of to a have going be other We'll as impact because minimize to certain know set to everybody has and that move it the that map be. and and negotiating that's in optionality It's have relationship we is practical it's the let cue between some want to ploy take but to EU going our respect to the or forever, if this where incredible an customers do from our business the the be any and on to about to exchange, reason that. ICE industry members with complicated

different the for flow are follows that, equity the the that market of to directly industry firms saw organized changing move to their do automation rebate a amount be trade. a in of all world. spreads the widen high-frequency the stocks of as in book we've that you to exchanges the finished we participate try a of that That would market-making offer that high-frequency being decade go so years space retail they next in the to of pilot, theoretically well stool. doing really to investigate people to through largely looking of of And that essentially the traders order order and capture to flow called in "Flash income of it our the know affecting the their at a You called in what was they brokers. narrow which to It's something And the data's these And is fee make eliminating has and believe what saying to group couple capture equities sold business lot saw leg trading rate SEC the SEC fees a that see but the or the because Boys promulgate out high-frequency high-frequency brokers and exchanges, phenomenon". order of that think not trying to see what brokers comes it ago fees may that trying pay the is pilot had we of try of be is behavior back you to buckets the Rich, Boys retail and one tick front There model. what of they maybe and spread. to is the by retail get over or next the change the retail changes in certain pilot. and the how up trend And my retail the paid the a never If quickly up a have SEC's when an exchange I of exchanges. that mind, analyzed that the market-makers. impact We to can a of to market-makers result actually that had actions particularly number It set retail operates. to goes bid or named and Flash way doesn't we payment is are

behavior order Stock York for the that New believe all. at that the Now unfortunately, retail at us any flow. we We us that Exchange, of impacts don't see don't

exhaust orders they're these those after to market-makers routed are because not to people basically be the that that toxic executed sold offers not extent are are which are to and is us. the are on consider exchange that bids the to off-market fact In an

So fight think we they're it what over impact still to benefits the they're with to going said, doing, – That we have what on doing what's we'll has and New that York there. we believe we Stock support little over very because Exchange. not

competition of offer the First we going retail new And they're be longer consumers compete to don't all, would that compete going a they order directly to the they for for retail and compete could flow. it's for if be best if And is we We to be compete flow believe sell to idea we any for. order like the market-makers bid that. to to to public can for. there's exchange no able going to have think,

amongst to is have to new exchanges that trading anywhere We formed exchange cheaper the up. its of believe than cost we cost of pools, lowest And going cheaper the than have that all-in cover dark trading the newer cost. have

to believe and the could be incremental For offer low-cost and very ICE end accretive shareholders us be user this competitive will workflow very, would we offer. that for bid to the we trading

a capacity. be going network there business no sent there are Secondly, and going order increased go to even going to are business. the exchange that going if not And have That's Even can big viewed. offers is continue networks if compete to growth in there of we provide is manage capacity to a to part flow. we up end the there's the spend that. fragment That's of to down. capacity, to increase bids that users needed this are the of new to and That means, run data fact wallet

rule-making have comments making to the lastly, changes rule these adopt have which the just order we is will a where and and through. that of going rule getting to see techniques exchanges exchanges to capability. that wallet the Oftentimes a rules the essentially promulgate, large lot uses takes public a adopt of difficulty the up. going And SEC long to order we the time given one – So the of SEC through instead

that The So would consolidated consolidated lot this trail exchanges on that is to for individual filing the a a that vote exchange allow at got There's a a get rules in audit audit for happen. to not ordered consolidated example. trail. the People build over case by example trail vote. audit each that, market complaints the were were exchanges, of didn't who in

data and is in we trail can for case, the vote have and buy is the have can daunting the huge been the that atomic side the a be behalf And side information, Now difficult most technically billions pay exchanges. like sell It is reason least costs. be a budget. challenge. an managing trends has have readily want that for would it that attempted audit make In to projects that on spend. it the searchable clock consolidated the has of they know one of they that ever industry billions on is cap they spend It an been and point our to at stamped no consumer that to a of don't can captured time or sure there is unlimited

to of others vote underlying have obligation. been don't welcome to and that would would be come people those costs the votes and that fray in fighting exchanges because we that having have with have a pregnant also they help recent is they So matter. in the matter The obligations

that wallet long see interest short, could going believe data increase the be we have and finally compete there's that for story to We may industry. to we opportunity align So in an believe retail flow. order this spend an we

on a company. regard, And that don't negative consider so impact event in should our I see anyone any why it in

answer I role. accrue but that to one-winded will is listening think you for it ultimately my Thank positive. that

Operator

The of go Please JPMorgan. question Worthington will Ken next come ahead. from

Ken Worthington

good morning. Hi,

On your up ASV is the X%. data side,

us for gap really Your XXXX you is part. FX is X.X% the I help the between but part, a Clearly, bridge under a gave it two? a to show some revenue think was X%. guide small the up that Scott little of Can inflation

-- the BAML data the other the is these are figures what on is and is now the in not? where ASV And where gap And side? So between it revenue organic factors BAML in guide?

Scott Hill

all questions So, Ken regarding take gave concerns guidance currency range or constant of those out to year-over-year, terms. X% the first X% dollar what in any so we currency just roughly is guide constant to is a

you at our about think revenue. ASV you if that's If of remember XX% X%,

in X%. remarks, my grew prepared XXXX I our As business in data overall said

ASV revenue grew X%. Our

ASV the in inside big And so will drivers NMS, and been the overall elements don't that et expect cetera session business. fees become aren't haven't like we things growth

think, it you of if XX% you actually -- into our pushes consider middle as So you our I it you revenue, the right take ASV of range. and it absolute value the gives

feel very up headed I little to The in business like last is to well Pricing on as data it's over year set up the to mentioned of capacity growth business. from different. of X% growth going mix moved I a and X% I has the The look solid couple X.X% & another to to been the of other Analytics this Connectivity tremendous that's side X.X% So think over deliver year. we're years.

Pricing and content be that be closer the futures to add additional to were capture will we then that in connectivity And be likely to oil you're in continuing those strong bit X% packages. in from of exchange little X% going is capacity. again products exchange our our But to grow. value itself to I is as consume with coming a Analytics middle demand, able energy some growth. data through this a the that data likely year two and think to slow customers additional But seeing capacity that to

and what And so I a ASV to suggests. guidance aligns feel sets be overall the up very good think with like XXXX year perfectly the I actually

Operator

Jefferies. Dan from will next go come of ahead. Please The Fannon question

Dan Fannon

Thanks. on data. Good One more the morning question

the looking a kind fits we're buckets the mid to the down components and much look back looking at Just data the incremental high-single-digit would XXXX various mid chart like broke of high? of the and at you you pie breakdown from today those as the customers pretty how mid-single-digit number consumption your -- Can investor -- that that outline new that. to talk pricing where growth you between that about versus squarely

Scott Hill

the for thanks Yeah, question.

model fits business good there to which at as I Analytics the in is said very year. going expectation X% perfectly. There's of Pricing balance I are the that think just around about So go the thing business, where parts you interesting look and a it for is XXXX the

the indices indices the your data weren't data is this products, Bank America answer last there question way -- products, of New Merrill acquisitions Lynch organic Ken is, by because Everything reference the to year. year. fully your are

and new are medium-sized our drove we the that growth, Existing growth products that that customers new indicators the Those look see our had that But buying, are moved you'll back. in us products all below XX% has to buying indicator organic. more in but indicators. customers; Europe in new things Europe really now are be it's lot the those introduced products dipped our will those because of need solved XX% driving the customers we've they it II existing just actually XX%, European customers execution of buying great at the to So products of who like best not back MiFID a an of MiFID and II XX%, and now when breadth to XXXX U.S. small new back liquidity liquidity more then slide got was back customers trade growth existing need. where buying the mix that

M&A. out; And note point of if from don't contribution have a And growth. we then thing one I'll a driving are that's from so included seeing price. that again it model you pull that in year. roughly we growth And this it

the you was over if close back the we to last you businesses years If exclude will growth X%. inorganic of divested our and look couple

going and So new to at again year at growth present not element very M&A fairly strong even inside as solid relates customers, deliver a the with look products cetera to XX% that across where Pricing all then in new and we're pricing, XXXX I across across a et very contribution a balance Analytics.

growth capacity per continue where larger the number in we the price gig it in slow as bit. exchange I really the it growth, though little buying more those was, down actual even consuming the of versus on customers you ports, price If will existing on reduction think side, at there they more actual again look fact customers connectivity because the an buy that And to customers comes see with a side, which is data and buying our products. is future existing

model don't the again indicative we than point think still the across So contribution I revenue but other have it mixes XXXX, elements, that is very in M&A. from

Operator

The next Alex from come Please Blostein question will ahead. of Goldman Sachs. go

Alex Blostein

morning. guys, good Hey

I question the of just thinking around a business. Just -- guess the

on you the and XXXX guys So credit you lined platforms maybe that get trading back purchased. for have update of an up the initiatives on

that stand going are kind the $XXX-ish And the call that I maybe run about call are get guys some Where last rate. on that to million on working annual before think higher? does you it trading talked of that you what things being call today?

Jeff Sprecher

Ben that have for Let you. Jackson me answer

Ben Jackson

Thanks Alex.

had strong TMC our look So you a QX at BondPoint. platforms when very and

corporates prior TMC in you munis a volume notional volatility As over than also the year. a to U.S. means is XX% XX% over average the we that was was fourth up X% trade size note BondPoint prior notional was up were of that lot And platform. of and quarter the prior terms, what where the over XX% were quarter greater and year. know, back the came that and quarter beneficiary and over in over and there highlighting is prior increasing which volume the on the we traded And I on

And north XXX trading that things the increase to trades OddBot of about continued BondPoint, of trading, XX% last on and we basis I've a XX% saw on TMC. prior of of a so one year, is on per So increase an OddBot increase. talked has trade bonds annual calls

highlight I'd period we've to a is thing these time. short remember got owned you've platforms other of The for

a about integration had is we've about months. TMC underway. six And BondPoint, well for our year; effort So

weeks, technology the the team, teams we're scales. single-mission, one combined for and a And with in Just group now into leveraging few bonds. business BondPoint, technology executing direction, and our last we've across ICE efficiencies called across TMC, Creditex

you've I'd have a When to comprehensive prices, take operating challenges around isolation, really is the only because combine world, the only to on businesses. complete getting with calls about that we line end-of-day market starting what trading step you real-time that but prior where for businesses XX million solution in terms got wasn't we're I income. and realize prices. some in the million record fixed thing for back fixed-income to a space. a bonds it's see reference So end-of-day other there our leader, integrated mentioned we're the where of the in real our income leader of With The real-time data we're of buying and about pricing, providing execution those just is, and businesses our customers are data, reference providing three say golden providing instruments not conditions instruments, business for those

income We and in expertise Lynch America Bank with growing fixed ICE have of onboard fast mentioned as the index commentary. the came that's Merrill index that business

have you protocols XXXXX and difficult on TMC, the to to have price day at BondPoint, central last and that of fixed-income We cetera. provide trust their you also manage streaming portfolio $X to bought in the updates order space least, execution but platforms, run XXX you up customers most bonds that can that's core in analytical given the identify liquidity and have you et add have that's the securities that opportunity, leadership best provide book trillion analytics on you on offer time. that And the to that we to bid point in we a us have in When any assets the from not price choice million securities risks where have that trade next they updates the on businesses markets identify protocols million understand to onto establish. attribution, that customers optimal XXX best can our through with to return protocols XX

securities two-way We have with XXXXX markets.

execution, challenges in connectivity, these manage established we all out protocols are building our to manage manage have in well streaming that best real have those latency, You business. and

growth of that the be also the I've investing cue to and hub at well last building this of those we that one pipe. the And and auction XX% project of little opportunity which comes addition to that this we're I've fixed-income hub ETF ETF an a a the be of CAGR initiatives and capabilities about. XX bit highest the when area life has hottest talked flavor have you is the highlighted already years. coming That in on In later will over passive XX% the the out project year a volume gives which to us as gives space had down platforms that our represents group instrumental

Operator

from Carrier will Please of question go ahead. of next Michael The Bank come America.

Michael Carrier

are terms anywhere the some tech on guidance morning. are of it's of XXXX on on you million further $XX revenue expenses maybe your expected a wanted of some or like with million, the the Thanks, on just good million like and growth some whether the for million, in just new to just $XX What $XX $XX Scott get what that the those on on like initiatives? just Bakkt of sense then buckets out? like those growth investment - or associated gave expenses returns the

Scott Hill

Yes.

on think the would first that you well to years. found already kind based And are updated as rate of out in consistent I news. in I that And did they're as XX.XX, consistent average look expectation, run done we you point adjustments. as additionally then at move pretty said costs year. XXXX our through the quarter prior would note million And on you out, if they're now right would as we So we with be good a year to you new taken be you to we've work hopefully went or expecting we'd the there rate expense, told last guidance keep what of -- the be $XX And just we $XX think on question. we with I average And million. investing $XX million and use acquired terms of think it's I businesses XX. which us I've run that guys around XX on you pretty We two the I

in XXXX mid-single-digit total. likely range revenue support with definitely of But think Specifically did that revenue going is in as I That's kind to those technology I continue and continued the to they subject will all the those that think to investments, growth revenue just in be to will investments and volatility. regards XXXX growth. overall support

talk that little topline. Jeff see to it. the and That's market revenue over investment XXXX we in I about an bit about think I'll and future opportunities Bakkt and and really a hand is it less about the to more future

Jeff Sprecher

Yes. its name, Bakkt is a own separate a we've as that a up unique actually management it team capitalization. structure and with for separate us company separate set and

I the in or you So at right is us. of We'll clearing. step make investor as allow believe a the financing. stay three trading look has spin goes that now it we majority it whether that We ICE if obviously majority expect forward is, company, what other to ICE decision have and rounds do us we we'll of back

cases have will infrastructure some tap that of these that That capabilities, a some We Bakkt management world has warehouse just are jurisdictions can new and in and operations, we come try very global and with assets infrastructure Starbucks in blockchain our many, other that infrastructure things overlay. have digital that attracted Microsoft. working people. that Obviously, a involve with announced some for interesting to distinctions and settlement a the we've provide to use connectivity the that into massive treasury -- and work with lot Bakkt, -- cyber invested Starbucks banking custody many is have around companies large -- capabilities, regulatory very,

we very could global initiative if into will a that out We plays connectivity that create have end large franchises very, that our company and users to very out. brought retail valuable very, of hope plan business be ecosystem

does management agreements as that of Bakkt with ICE its -- then own it And very organized is that Bakkt way own offices, its team manner we've bit bet services, over ICE that overlay. the a a has it's cetera. businesses. entered and So been than in over a I've et into described typically moonshot provide different and to it's

revenue They're it and unfolds. wants more that about So And et to this infrastructure we'll are what its let an later think an building well how see it Bakkt along go the goes. business about it use talk how launch cases model, I in see I'll out as you'll year. cetera,

Ben Jackson

separate separately office We thing Yes. this aside And I'd partners fund to cash add the to put other our business. is it's in only then funded. separate addition have and teams,

already And in impact quarter. won't doesn't doesn't the XX%. already so funded. over It leverage increased the dividend returns. our year, also our shares bought We that's generate in impact back it current capital We've revenue of while $XXX it the million

cash funded though And anticipated would what a it so even it aside. you already of have partners expense that sense, is in it's by incremental is funded have and on top we our put

Operator

Kyle of go ahead. will from Voigt next Please The KBW. question come

Kyle Voigt

morning. Good Hi.

Just one on M&A.

that past the for deals ICE on Over targeted been has are years, few bolt-on more nature. of more the in M&A

So the and questions really M&A my guess the exchange I on large-scale space.

some an on Brexit the the gotten I large you. think it environment, regulatory occurring cited environment an as give you at we've you've the sector? with an right? but this that clarity scale previously more Thank the the uncertainty along impediment update Brexit, around to and that M&A still whether seems on the impediment uncertainty to in see us least for broadly side as Can clearing, you regulatory future about broadly environment in uncertainty more political

Jeff Sprecher

should it their standpoint. In the our more a groups sort structure mind. the leading think footprints have in regulatory stepped acquisitions correct question up is that I where market aspect I consolidation seen we've brokers. think go of to sort your -- People a consolidated my the have obviously exchange becomes concentrated flow MiFID The standpoint, trading from limited space has is clearing from to large obvious other in your are number. of things and our seen formation exchange analysis and of tends and has providing people. a high-frequency we've groups seen in flow of peers. to traders impact particularly Order in consolidation also We've more your a analytics like a and industry, ICE large

concentration serve. across financial a that entire So seeing services market we've the we been

as up. could companies of well in number large formed of data there You date sort a

That's get and will continued returns companies M&A we should been our with deals done disciplined M&A opportunistic. for when in been somebody. our where set target into be cost very That synergy these of a you been maybe capital said space regard So more with to as large I M&A obvious have ourselves We've shareholders. has that the promised. Large and sure deliver where us been M&A that these high of to synergies we obvious -- our there to do we've work and to we that on it's cases as disciplined. together that's hold be lot think model that know will another. touch that above make opportunistic one And we our

I easy And larger. But of believe that companies some so clearing. do that get M&A all is not are said, the as impediments

Ben Jackson

executed the Yes. my capital is it kind invested IDC, above you financial at back to event on the XX%. our total, And validate of on cost on slide points Jeff's X%. to return it past it's now of in deals, missed basis discipline first we've our capital. In on our just that -- And back XXX you look outside if at been would've point

on we've higher which to will we're profit we deals XX% invested base we've doing our as the has requires continuously so which said, made capital, continue done see capital that in you Jeff us again, that say that generate And which, returns, results done. when grow grown overall to moving on is return committed it to

Operator

come Please Ben Citi. Herbert go The next from of ahead. question will

Ben Herbert

for Thanks Hi, question. good morning. taking the

and particularly, and the go to wanted data Pricing to back Just Analytics.

you the Just mean a fixed-income for guidance acquisitive of do you I growth mean the gave side? continue that further income, feel more in to be know is think we see within more positioned XXXX, an to there M&A opportunity built? to do ecosystem you've you but how the I Or as could integrate fixed accelerate bit Thanks. I there? you

Ben Jackson

it's Hi, Ben. Ben,

I hottest being keep thing I pulled Issues our some approach indeed we're do we've it somebody that different down How took the is then heading one at positioned mentioned sign the that when others of that where think strategy find hub first on that deliver execution later one you we of issues the do able again, need when those we out right before start figure -- what do someone understand get it I to at number that that need uniquely fixed that with How than real in a of people that for price think for to the I vast growth I that I really when The commentary do? mentioned and really of to the year fixed of think a that someone I've I when areas different a to is inventory doesn't have I on I'd trade a all market. identify comprehensive a is project we're people has is solve to of that to of about highlight the looked is all And many trade? income to -- for like often, I'd that instrument? that that And the because income. fair to good side path year you in I want in wants the have hub, do looked I trading protocols place in that? solution fixed income in order to is this all we pieces data the ETF to trade execute. that of How do what I offer of time that. price? launch ETF the How the ocean it, do reference find the how top

these be authorized you're going of market to and for an to, an And portal, as a that with connect a time, or the share be multiple able time interface you're dealing redeem interfaces to the single you portal. able or in single having to with -- to XX if a first to the -- issuers to want For maker create participant opposed ETF, issuers. that connect first different you'll you're with

for gather issuer's Second, able constituents you'll ETFs. each to be the index

So, of ETFs to think be able done number in the be single it that that's the of they multiply issuers going to have, a portal. hundreds of by all all

create basket a constituents those those able issuers. change day Every one each days view each constituents and funds one or of Third, share. for redeem to those you'll to to be be able that of

able itself you problem can data compounds you about the that So are and gather the market things from today. as done be to think on us Fourth, you'll it see that or way that are to day. leading levels space able price understand the trading of in what the the constituents the baskets provider redeemed be we're the created could to in be that and data,

problem of not what connect through a to submit be to or you'll acceptable to that that, to positioned choose well-established least, negotiate, able as participants growth. via capabilities to the next go of have In they you'll market see that's be we able but very have capabilities into help space in this. Next, this protocols, third-party to portal. assets venues to is RFQ, that solve us this investing growing we do because able instant-messaging sign to combination place to of with me us uniquely the fixed-income to level to and through streaming execute have passive be it have a are auctions market our which To underpin And pretty that's well to powerful our create fast where a pulling the redeem. you last, order a instant-messaging our as

Operator

The Please next question Deutsche Bank. will go come from ahead. Brian Bedell of

Brian Bedell

Great. much. Thanks very

data if a the could revenue Scott, to in the X%? actually as of pricing X%, Is the guidance, the or from between then, it customers? to X% -- just difference X% the ask do of timing you see what I Just drivers biggest And on questions. basis constant one mostly couple new on currency

-- that, revenue if more of Just on markets XXXX. your in just think that year? think later can this begin type the development that later a and for then thanks of Prior a And affect launching members up is you exchange NYMEX event? this on start year, this something gets the later might that's said running do one to you and is XXXX Or ETF year perspective, that is that the of answer. actually hub when on from Ben, you RFQ I think or Jeff, contributing timing

Scott Hill

Yes.

So I'll start.

that were I data got said went think we questions something fairly still think X% But to guidance a look gave and visibility it, tight three X% I have certainty case. there good into to last is embedded the and believe in XX.X% which February. like I there. into The I I you in guys interpreted year

so is quarters certain in that some happened what some downside some business didn't the There this acknowledging And we year where in anticipate didn't a desktop we year. wider on we expect audits XXXX. range were little that in the we move just places through as the erosion had the

the that million in on million churn through I ran some $XX stock as that the million of the actually grew billion year for so mentioned, grew there any difference And revenues we year. out a is reality X%. those or difference of business $X And where $X all $XX X%. things worked were But revenue to $X because a given million or and quarter the the ASV

quarter. million that volatility was $XXX around trying I on million guess people out the so And $X the are it take thought in prudent to to of who try and some

if feel that's confident going going Pricing I to that, to our that then middle be the driven As by right ASV range. said & Analytics. point inside of you number growth on call, it's the I the very And look to at in you

few later. years laid business X%. the two-and-a-half momentum very IDC compelling used to and got. going that X% a our you Ben's -- a that in a of the that that to just we've ASV that supports I'm investment. it's lot than So effectively bit times out case And products a that's there's for faster grow telling fixed-income And overall the But grow is to

business. very So about the I feel good

yes, versus plus hey, minus little widening you the year. more, of just last could or range only X.X% plus in or the thing think X% interpret I is, bit should minus a the it be

Ben Jackson

on that Brian, had. the ETF RFQ, up And, pick you hub I'll questions

we now. on So RFQ, have that capability

So to in question in a exchange, classes, have be is expertise your clearinghouse of we remember, long-time have from number You our auction you going later asset to year? markets. the said, in space different many this market operator that RFQ of in a coming being

that capabilities established and TMC we both of BondPoint to very get and So RFQ expertise on those able we're a leverage lot rapidly.

I've the very capability have we have out, do that as And we're and well to now. So get now and is there our network capabilities able about which to functionality brought fixed-income distribution points it's those also that leveraging businesses our mentioned, together through with Creditex in of Data touch that our the ICE and our community business. all business, leveraging Services we

the this time steering hub, year. For our That's our that ETF with will frame committee. later targeted launch

definition that. have completed around the requirements We

well design have We the underway.

enabled and to We and have the major market-makers looking issuers most down this that helping And the as assisting us we're with and has that lock us design. as at onboard, that well with year. are really this, that that are major of now later helping APs

contribution XXXX. We're this. targeting see on you'll So

Jeff Sprecher

on fast, else's if or I really a probably not verbatim that us. the two. that's in members year-ish that just their was And working somebody maybe lastly, there's their position, exchange. management it market aware one on one copy rule I'm anything, to said, guess, probably wanted process, book. the I'd get obligation But with to not And if but anybody there's discuss I I

going seek their would Of a doesn't that way somebody And pundits are not copy for marketplace. years the And talking towards business -- book, along that issue terms going of their suspect the scrutiny members many very anything exchange, customers that to few done that lot ability you last completely is audit in there's unique around rather the are bias best the be it's I in the the I course, to behavior. else's of of in try to But that if about and exists. give yet. rule come it which that's than price disclosure

try the in And of just necessarily be regulatory moving So not I order flow that And you that is regulatory and be amount to things are there'll fair said, States. I intended right stand routed. the now All in how conversation Bakkt watching its I'm suspect footprint. review of fast nothing a fast tell to moves world. can up United

Operator

last Point. question The will ahead. Allen Please of today Compass Chris from for go come

Chris Allen

guys. Good morning,

I questions question. quick my had numbers of most answered. think a have gone I just

revenues, in of XQ, the million and over of kind sequentially year in Just the again that wondering in what's there? XQ. up been boosted which on I'm outlook other course $X driving of by are the just kind fines the

Scott Hill

is with other revenues revenue the the earned where deposit. house clearing actually Chris our associated on So we the we've interest got

have so to drove at and the balances That's up tend part up. and houses clearing they has cash our to what as moved year-end And like grow grown fed people at year-end. at the rates it

on depending to levels collateral dynamic. the to it And XXXX, what correlate see more specifically through will rates If all collateral, the at so that's that house. actual environment constant, our you a some clearing move than similar were as of we rate that. is cash held could Nothing,

Operator

This question-and-answer closing I conference now session. Jeff our concludes over to remarks. turn any Sprecher like the to would back for

Jeff Sprecher

next Kerry. Thank all joining forward to to look you, and guided Thank talk for you we quarter. on call we'll you really the us the for and up-year again XXXX, a in

Operator

Thank concluded. The attending now for conference today's has presentation. you

great You lines. now may a Have day. disconnect your

Intercontinental Exchange (ICE) 7 Feb 192018 Q4 Earnings call transcript