ICE - Earnings call transcript Q1 2019 | Intercontinental Exchange, Inc.

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Operator

Good day, and welcome to the Intercontinental Exchange First Quarter 2019 Earnings Conference Call and Webcast. All participants will be on listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to Mr. of President Vice Gardiner, Investor Relations. Warren ahead, go sir. Please

Warren Gardiner

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

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

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

Scott Hill

performance. This performance currency basis. year-over-year a of on X%, grew company's Good morning, quarter flow deliver revenue strong the some on X, revenues constant up data from X% Trading and per with earnings $X.X net Slide currency the begin second cash us you quarter a Warren. free revenues I'll on our key X% joining and consolidated first and help revenues history. everyone totaled ICE's first clearing billion, net highlights of our Thanks, in today. increased basis. quarter share each for thank constant and best

First have comp million. million roughly $XXX been quarter of expenses operating adjusted we including, that, million at range totaled would our low $X the benefit Adjusted $XXX at non-recurring for expense. and guidance end around

to to to Bakkt. that adjusted first in full guidance of million billion dynamics, now billion. related then recognized merit to we full $X our a expense $XX lowering be million to OCC's range of I'll $X.XX for Second Quarter the year of impact million and annual adjusted by about expenses quarter to related increase are to increases $XXX increase subsequent spend quarter, by driven equity here true non-operating pause between in $X.XX increased of technology grants. Incorporating million are all income expected investments the and those $XXX up XXXX $X quarter a results. to largely We to reflecting note sequentially we each million, expect

quarter the once receive $XX first around year, of increase dividend in a quarter, the included a million expect first in Euroclear Shifting in fourth the free via quarter. we $XXX total to opportunistically deployed XX% returns, the a of increasing at do our Of dividends shares. of as received during not however similarly first Additionally, The XXXX. the first flow when are returned share $XXX $XX repurchases. month only of we by buybacks million double dividend capital an as return, we XX% unlike last the million quarter strategic average spent we to did million of again share committed in investments. during has quarter digits that repurchase surpassed an an cash the nearly to remain by make in to We note, distributed additional the quarter March. year, repurchase second dividend repurchases and that deployed of and the shares $XXX million, We key growth from from to we price continue over been a $XXX we capital to we dividend even do strong additional opportunistic last that grows capital

of additional color move let's trading where Now business. Slide X, performance our clearing and on to provide I'll the

First Henry as gas versus or a and XX% daily gas X% the on the Participation geopolitical average our volume prior and Brent currency markets quarter revenues combination was year-over-year in particular impacted negatively from X% levels the dynamics. year, lower of and Hub trading were volatility. oil the suffered various energy down up constant basis. natural In in uncertainties in a price markets was supply/demand by markets of U.S.

improvement of economic strong continued you importantly, futures market, quarter declines rate in our April XX% natural volumes improve volume and reflect XXXX. interstate offset In were volumes were average by Brexit well and as in XX% increased will in MSCI that RPC the and as grow improved The performance per year-over-year. backdrop, business, As growth by to emissions our entirely European though, by volumes overall the note is up in European were versus more uncertain contract. continues gas X% interest the an while our strong ADV X% our were volume were almost an XX% energy up open business impacted end financial

XX% at Importantly, volume while has of higher end as to somewhat muted April. interest date, continues interest been rate the open up trend April to year-over-year

improved year-over-year $XX $XX to compared fixed-income market business, MERS, credit addition both TMC Volumes which and XX%. and half and first quarter the roughly were million acquired Wrapping revenues in and the up X% of includes of equities. share quarter. the year of totaled XXXX. increased our million This with in the last Moving second in cash to

Revenues X% U.S. of the the delayed while IPO proceeds January. of government raise helped were end our discuss I'll listings. Slide to and of million, with Starting data shutdown through X, listing the during IPO over year-over-year, billion up NYSE $X.X segment. next $XXX quarter. The activity Turning

is addition, second excess billion as April. Falck In $X year off and the also listing date to announced in their their IPO With Both proceeds including to Uber recently of a of in partner. NYSE have the start. raised Pinterest strong now the choice quarter

take benefiting to related flat. growth exchanges received conductivity the as X% customer our million. data roughly index Moving in Mitigating and and customers the versus increased reference services using revenues solid our prior real-time share revenues in of to basis a to the in from aforementioned as a the number the data revenue by year. the grew the growth conductivity currency The futures and our offerings. And the automation was from last both year-over-year pricing pricing our the over increase analytics our in record finally, and fixed-income data data. evaluative X% which futures demand our passive and NYSE revenues data determines these grew and On continuing strategies X% Exchange to services In share services for workflows strength generated desktops we constant driven drive revenue improve related increased were of market Conductivity revenues base. this year. NYSE, of growth is X% day end year-over-year well plan. at $XXX up

$XXX our efficiency will to and reducing in continue rollout revenue $XXX technology, As million we believe costs. to the expect industry second between while growth in sequentially pillar data with range revenues We of to which a will expected the improve continue momentum million. we quarter increase

your year Our entering ability the for competence constructed business and and history cash turn value call is I'll ago supported a questions trading that our off the be subscription challenging our than in resiliency quarter. happy XXXX is to to to great I'll an The a of backdrop X% best the is to second for by higher earnings during start. deliver But Q&A. we have Jeff. evident annual the quarter model volumes. generation now, was a over industry despite company's take

Jeff Sprecher

and on Thank good you, to I'll begin call. the Scott on Slide everyone X. morning

history. deliberate trading value the have and of revenue by trading and roughly spans our business first increase evolution, venue. and across revenues the of in result to initiatives and as we the We've quarter per our nearly addressable share flow $XXX time, asset of ago, the expanding a XX% transaction-based. in Despite in that our years highlights recurring classes. cash our diverse subscription-based we the set quarter, a this volumes a in organic over any asset industry half returned was XX the to softer growing last performance million and free coverage. quarter commodities in of inorganic were evolution class first nature year. to revenue our At been engaged and earnings our is Our our we second capital in undertaken market add most largely shareholders, of Today, revenue, grew

we sugar that as and that are market remain crude of Gasoil, a full critical classes continue business, trading diverse hedging XX% and of energy grow. Anchor complex. needs European gas, daily what to an positioned component At Asset think of We are of to offer management important still growth markets our spectrum commodities roughly profile. our risk well tools benchmark of the few, in commodity contracts oil, is Global natural most name the Brent the commodity participants. such industry's global agricultural and to

stands MSCI global interest complex, rates management services. our customer to to equity home business, we index the a such Exchange of Stock our recently range businesses provider markets the where and suite cash as offered as financial New listing new expand on and Our trading of risk of York launched as futures the partner we leading the equities to In indices tools base. indices,

leading deepest reference In reducing income value listing equities and the a costs. class as volatility planet. well liquidity platforms technology The about of global for their trading represents X/X business, and provides customers revenue our that with venue of the for and asset as helping of the a largest to as most reduce NYSE sophisticated an to now are fixed the world's company, data. with state-of-the-art pricing provider the our pool choice on We

also data is connectivity, our to suite and institutional business with This foundation analytics. and data the comprehensive together that services its business ICE complementary highly reference Execution post-trade customer for our it's pre-trade for and or suite best venues for is bonds. pricing offer products and our of automation execution index data or Our time click-to-trade across through income our such ETF the and pricing customers auction, Demand convention. indices. markets curves, choice accelerating, as including in as analytics initiatives RFQ real such whether execution fixed new it's protocols of hub

combined. fixed is in before seen solutions we've growth registered uniquely a and trend. is fully analog-to-digital positioned industry Similarly, eNotes of helping market Our than quarter X% mortgage U.S. on an evolution less the income much assets capture shortening experiencing for that first closing residential an conversion. quarters is time, And platform to by mortgage this than It's with of can to mortgage bring the other gaining XXXX key infrastructure are are The Digital ecosystem. asset electronic meaningful MERS or were like the at in efficiency products, the step growth notes of in is classes, electronic quality improving friction. that eNotes and today. services important future representing gains facilitating eNotes and opportunity providing to control, all an And more towards substantial. we're traction. The mortgage aimed eNotes transformation. reduce outstanding alone, mortgage

electronic mortgage the you recording the Turning the Simplifile night, last the It U.S. now estate as represent decades Simplifile. to settlement together and acquisition have is includes It's XX% been of originators, of Slide to we one operates seen mortgage that's streamline largest real counties transaction announced networks transaction the counties. population. over helping leading the services constructed servicers agents, industry, recording to that may provider of network X, and two of connecting process. a

the and documents mortgage and more into ICE mortgage making four for costs size currently process eligible When innings electronification will industry could is digitally services, closing that of the address transformation, mortgage combined and mortgage we digital the transparent. early demand reduced simpler, With solutions, to helping record the the increasing of its handles. Simplifile what be positioned industry, faster, times of the the of number better

XX nation for that within announced now qualified is development feedback an from growth Vantiv, it balancing Bakkt seeking our we're and Turning a its Bakkt building geographic to in a ago, company ecosystem with capabilities markets, by to key Earlier team we working participate announced institutional certainly launching senior market to for have exchange custody of Google In we has we investors committed enhance and of PayPal, custodian enable business years and Wallet. on this coupled with feature this ICE in Bakkt acquired on and our front diverse oversight Based team, with An a a market support that management infrastructure adoption. Slide experience or Worldpay, and building private only the digital digital still growth ensuring our to excited now futures and the security custody keys is summary, is the on scale global to that strong And are example effort operates our today larger the asset week, to U.S. it also Secure with X, way further class, physical it sync platform. of institutional delivery assets. the institutional about starting is level asset laid diversity facilitate digital high BNY that that which custody Coinbase guided the of our physical protects remain and the ICE, of we're applied. remains structure out to tomorrow. focus. is Mellon of will to and in of a trusted more groundwork pricing growth asset while regulatory to was including cybersecurity from us, this focused custody. Bakkt on futures than Bakkt leadership we're addressable its

nearly Our platform to unique operation, margins shareholders. And create is enables efficiencies to across while us growth, growth, in drive for for clear significantly footprint with still investing our drive future technology and to while provides integrated our continuing foundation our of which operating us value our XX%.

back colleagues like I'd I'll to that, to that turn to trust their and want their thank for for to session business question-and-answer strong contributed With our and until So Eastern that the Time. Sherry, customers moderator, price. my efforts And call our now very another quarter. all the their I the last in of will thank X:XX conduct to quarter

Operator

sir. you, Thank

session. question-and-answer We first will is Please question of begin now Bank from Carrier America. The the Michael Mr. [Operator ahead. Instructions] of go

Michael Carrier

Thanks the good thanks morning. question. right, for and All taking

Just the data on the have business, fixed-income first done question, some that side. guys you well of

encumbered the the a on with some trading, more of the platforms think competitive there. bit I is out team

how next So how over between are are market few years? are that you strategically other you in differentiating already thinking order or the the the win in platforms to

Ben Jackson

in it And fixed-income Jackson. he key that Thanks, when in the Jeff there. look that Michael. revenues have This his In entire think of a represents size comments now script scale vertical opening across captured is our our revenue is we business differentiator that it Ben I and at the and was base. it as making X/X the our of you

businesses decades, are data our reference customers. than you $X.X that we've that very and about The billion to business. to capabilities analytics with think data – if And more business data customers businesses. at billion data that hard $X.X So index we look for three a cornerstone and of really establish is in pricing, with provided businesses the established that data, services

long the credibility it execution. And relationships have multiple to decades in we're differentiator institutional is leverage have price long going as them that takes track for to that you to really establish a both going they're a record of relationship. a solidified into a benchmark as our have that to time trust references it’s to You our trust we that it comes that over

themselves, from trade platforms we've the increased. have what performance other U.S. we've had similar strong performance seen sizes announced. in seen corporates, corporates, to execution that For We platforms in recently you've seen

perform have municipals very And and bit on seen municipals strong little spread in relative treasuries we the We favor have have platform. coming to seen has treasuries treasuries but our as a of narrowed. weakness between

integrated done established platforms take ICE decades. over out bonds restructure the QX So to and single is business net-net the to a We fully we multiple business. what we've in our execute that we've have one some relationships our now now leverage have and as cost vision institutional rationalize organization

So our that's see differentiator. really as you what

Michael Carrier

lot. Okay. Thanks a

Operator

The of next Sandler ahead. Repetto go O'Neill. question Rich from Please is

Rich Repetto

an Good the guided. watching Scott. years. expanded morning, we has And Slide experience have over It's thanks company Yes. for Jeff been Jeff. Good first morning, X, the

So is And accelerated market you've single now know X% guess again, I XXXX – to up anyway we're us the coming any nicely. than you add what Scott, the sort questions market annual data talked data. – it working from question my you right that anything value the there you you But as on you for that about about I of couple revenue X% when the But buckets talk right still subscriber you low on you've any is went there? schooled what forward good this – to some it gave now. grow on the growth the for have is first this there growth go and value – as guidance of when same point is a faster now? ago from on upgrade subscriber can And the you annual you to momentum is digits years

Scott Hill

question, good the forward-looking. ASV because Yes. do a is to think it I And Thanks on Rich. is for the focus metric

doesn't As last very perfect but it proved give I forecast it's year, directionally indicative.

the think just in you thing in we've ASV established. growth see I but the key trends not

the end Our on under compound X% average. growth was since every of XXXX just year XXXX rate through

X% around to if quarter, we're we we the row at X%. quarter guidance midpoint you around put right – third look a in X.X%. That's the the being This X%. again range for to that grew in quarter kind of at that our And be up going second X%

time there script, are of So delivered it other continue. been space. management. in lot towards the ASV talked where future. that that at it's because a about strong you if in bond but everybody some passive look relative a pointing can a move And from one fixed-income to to a There's in spent ETFs, Ben smaller continue is of There's move which ETF equity can things to a a talking it space, the tailwinds indicated much that's active trend consistently about a growth we've is lot

area business last really it you've the have which that's drive think quarter grown And it's to it. our driven analytics so largely or I trends continue those that quarters, X% and in the pricing and five four fixed-income and X%, ever for

to the I see I I to think our at wanting piece, data look remarks customers platform. then continue made, you connectivity our again, and to more the we if and data go back connecting exchange the

connectivity solidly again exchanges And related this futures was services quarter. to up so our

commercial this commodities data comprehensive goes customers, are the demand who subject and space market to the our of drives economic Our European to and exchange futures in natural to Bank and exchange continue for for and that business offer. we global business nature and European market, that interest and most that exposures managing risk was price global connectivity Federal oil rates their up data. again Central We global comprehensive most futures ag are energy see the market, Reserve the that gas And market offer dynamic. quarter. global the back set of a that commodities competitive offer We most a we dynamics

those quarter you, it's reflected And the see so see I you results growth suggest which I in quarter indicates to I it guidance second definitely think trends – first that in our again, up, put been seeing ASV would continue. that the in and think I and you've we

Rich Repetto

Thanks, Scott. Okay.

Operator

Please O'Shaughnessy Mr. from of Raymond sir. ahead, Patrick go is question James. next The

Patrick O'Shaughnessy

what's business, you're on of your good that up customer is there can average quantification you or that indicate metrics – size? fixed-income any trade provide your on you regarding morning. that kind first progressing can question what Hey, And provide goals? the growth along To follow

Scott Hill

Patrick. Thanks,

with seen this I from – weakness. municipals strong mentioned to quarter and I other relative in being some we've relative as seen corporates you've past performance seeing the particular platforms think what

you do our towards If we in at of look have platforms, bit a municipals. tilt our a mix

into leveraging we of some rest But is RFQ we've development represents prior see is and see RFQ I've day-in the some trending continue to trends businesses said of the in the and on basis. the that positive volumes of our a So calls did that really our our degree. XX% institutional as capabilities space businesses said, space of close that we impact very to the institutional seen that the into that and trading move move we're to day-out to metrics to all

continue customers see and that – see continue to to to continue utilizing We develop and that.

any over $XXX on of side. We securities given either have prices on XX,XXX day have on our platform up that

forward on central that choice limit provide develop. it’s book in a income order to to starting that and protocol So look indicator book long have capabilities out we of that had trading to our the all fixed is order our capability real built trading to our RFQ in And click-to-trade through options on as addition markets central continuing standing we able well. provide to futures back that that being you've of in protocol customers

well it's platforms our and So to mix continue have those that trading on that sizes. that relationships trade institutional assets of pieces two us our we are business the leveraging across positions the believe and – also we change increasing to

Patrick O'Shaughnessy

Thank Great. That’s you. helpful.

Operator

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

Dan Fannon

Thanks. one on I more fixed-income. guess

just sure of we're are. think the about even I terms post about the kind that to share make of as success? revenues? success? not gauge further? right we what in that market aggregate guess don't of yet? clean your is we data because think as way what guess we're about really or to it a year Is Is kind goals Or have of you this getting accountable what holds should I remainder we goal it Just What thinking

Jeff Sprecher

were businesses chart. a complicated because It's in way the and press running analog-to-digital years participate? be other there's recorded ago sales knowledgeable. our around the referenced integrated we can do conversion XX efforts. on ago a thinking, we back But different wow, set together fixed-income. the and as to senior management, an the have businesses that We words, pretty common marketing where we and in here technology And platforms going we it management we How we goal all do Jeff. post I in my we were an company. is run that In team prepared we you those honing are good This question. XX step don't very sitting if It’s are common them years internally we remarks,

it We has decided a rumored signing business. New equities. different international business U.S. and high cross where trades up and of part high your team mature about business you the value management our connectivity, becomes systems, data, that part a markets, your of part to had long can experience. been I perpetuate fund is venues, higher go organizations border as information can York it's The change data mature knowledgeable people very through that you because we running execution. some more your be as Exchange right to for getting relationships hard consume time very and on getting has And a the value of and the the value is the execute are Stock as institutional very value together is many your team this lot high markets products the in tell those your not underlying And when people's XX estimate benchmarks, competitors The five on institutionalized. a of you're other to are exchange XX change to

digitize market are at thought our we we the in and all decided So to to how where start in looking fixed-income is. with We industry that the had value higher that. part difficulty

is about commodities those very, reality company quarter. and you're is in very against a talked The a what how we and the weak for ASV trends fixed-income really Scott that equities and seeing as company talked performing. other So our there data classes in asset market you've is about growth, seen

We'll show so how to away other run And try We out. that we you business that it decided why don't business metrics operates. to we put that better it's the way. can the take

LSC just Börse it's don't Deutsche we point that metrics at the and franchise. interest-rate CME like in hard a which have XX years strong business NYSE competitors and ago fingertips. other we and I'll our Euronext had time those is, formidable were had we exchange and very make very one interest-rate that at So

mortgage, market said conversion do? we the rate should that its of we there's what yet after. interest nature no analog-to-digital So did where and We market part the the looked that's go

none we're of that made being assets. an implies play have luxury so very company that that investments maintain the in strategic but to operating did see a ago about will ability the technology knew, we out go, spent I we entrepreneurial given have bit we years and starting it and time of have. talking XX don't of of And know and this digital decisions that Bakkt some little where us company team still make are footprint margin the a the to our and

So if can that's metric up. away the come we'll overarching theme specific here take see and anyway interest and we

Dan Fannon

Great. Thank you.

Operator

Mr. from The Barclays. is Campbell ahead. question next Jeremy go of Please

Jeremy Campbell

ICE platform. mortgage existing or with just a services fits Simplifile ICE of just provide competitor stereo XX% some Hey, how infrastructure? for Thanks. that can their for services there, different partner Jeff, just and a a like technology MERS an Is that also the Black technology mortgage I influence? instance, within think large piggybacking like on that mortgage commentary services kind technology color I So entirely has something mortgage mean, of of Knight with now of on platform, mortgage like something origination you

Jeff Sprecher

It's very good question.

the get So when we document digitize to is number and essentially Fannie Can years document. send paper-based Identification to the mortgages. Mortgage extent you built a hook What Freddie that Number that ecosystem it's two Freddie? is we digital want they Number, mentioned, MERS. bought – was e-comm paper-based that's eNotes and registers ecosystem loan mortgage, we over if company system. and we stock with we MERS other the that Now and mortgage, U.S. essential to the all did and gives to Identification – them every we Fannie as Mortgage is and the these an worked started endpoint. digital each which It And for really will with all loan to. industry that to to we MIN

closing. a that I to says, going which to we're Simplifile, mortgage have can okay send as recorded same Now be

we what to competitive frontend, we're will. that lot you if mortgage a starting go competitive digital of platform and an to hoping automate that are out the that’s and we building. there's digital There open those build into worn the highly in of somebody our be arrive how we're exist So sort at and time onto those are figure go of of a We to or into digital industry people digitized literally itself they're on that on to be there network documents platform. very well doing those endpoints talking that companies documents space a you will mortgage. We're can that that we're a the so hope to going may and get world that plug-in have actually when the start in the out frontend. hundreds network, backend have to market the There recorded. today would an the API typing a codified It's essential in office this

them, last Your past are go employment see to you credit do somewhat history, provider mortgage want search. to may forms they to unique a they year they want tax XXXX, return various they want

and that that so and world, way. translate are you that’s acronyms they're entered conventions mentioned into there hard an And into But All that file trying in is whole store to forms not those it out all of on are together. largely that are to various today's and that that that’s documents fields industry gets because to There boxes in it's there's things bring for stuff, and printed in that somewhere. paper states people as of standardized. if organize and many different put

done get which to standardizing we'll the note build the and then our allow transaction. way we've you to build the and have actual try with network And start core, and if the essential said, we’ll the with And nugget, which it. plug-in can others essential it network let's itself some will of close be so this what industry entire is around the to let's will

Jeremy Campbell

Great. Thank you.

Operator

of Kyle The Voigt from next is sir. Please KBW. question Mr. ahead, go

Kyle Voigt

there. product by growth revenue interest throughout is to switch global you're and the large I we've the two Maybe morning. good know, products. Hi, open soft But Brent a other good some trading years past and some futures seeing really threat seen still business. gears energy in the oil

Just you in some years? And of growth talk could in rates past same have there's more growth that wondering growth those the can historical rates? seeing why if Brent reaccelerate horizon type if we least the you think haven't at we anything been two the about we

Ben Jackson

Hi, Kyle. a happened we open It's particular And Ben. view this think Thanks to can for two-three weeks. yes, point which pullback seen the in in a as interest And I in question. temporary the Brent. is lot volumes what have in you of last we

up a complete area of And lot where growth mode on there and while a which volatility that you'll in others, time assess where they’ll hear recently Things into and will a to what tried And sanctions, volumes touched off situation risk an go that us events market itself. seen going. we've complete you amount pull event waivers Brent to great is we're hang exchange made step form global Venezuelan over of that to point suite what seeing unforeseen that's the oil, we're volumes off contagion and implemented uncertain back, a all basically uncertainty. have is as for see removal traders as pretty oil that a the think be not in to is Brent And of was happens and an of operator potential happened. complex. oil led in very what great can bands when whole area it's now pullback got seeing about of Gasoil is unforeseen we of seeing oil the tend to traders. an that we WTI for take and think global that's Russian the of the products Brent, But and on point significant temporary has directionally such a of recent our And environment is that for oil business. you've complex, you against and for and on that You times view being a this of that new are the

of are Middle Europe across at for people and North of a America, hedge basis point the precise or Asia. a East, So that very are consumption in products these in production locations point in to risk

spread You in between these Brent and contracts see complementary Gasoil contracts. and differential

spreads. products refined see also You

of with spreads. this XX% X% off up growth barrel oil year-over-year. that come up We've of versus the So year-over-year significant oftentimes a in seen part complex volumes called open refined products of crack it interest and

and world's a combine It this products options, when that's you business global oil. past developed includes interest oil in core both with that at been over and the to complex So all our has oil whole lead share with traders commercial of the complex that's futures, one that over as gained share priced two-thirds and market the of global and year you led XXX complex open contracts our see has market continues together. have a

begin to So commercial base going work with to that out. to build our customer we're

Kyle Voigt

you. it. Thank Got

Operator

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

Alex Blostein

Good morning. Hey, guys.

that meant what almost what is record business business, update the ICE's follow-up what of how guess us – Simplifile that trying ultimately does? press expense kind the just another pencil update the of is then And track helpful it of profitability what kind around segments? think like guys summary strong the going you MERS leverage maybe does of can picture again bigger is? on and really I mentioned revenue part what this be standalone Or revenues, I And release and you stands do? Just you But to of revenues to on today? there to guys trading and of and a definitely guess that data kind the the contribution business mortgage Jeff us out just revenue from growth bought? I

Scott Hill

to question. important part I'm over Thanks it to for Jeff the then for going I'll numbers and take stuff. the the hand

the associated we have revenue just with guidance So mentioned revenue third the could you current guidance just update it is a will by it'll that, Simplifile, and terms because once fourth particularly update hoping it it's and the the than give expense and we we What signed it quarter in yesterday. is the anticipate just business. it. expense is as it be we'll more as in when until don't we literally quarter. And we do closed press What give you quickly profitable in our if the of contain I and offset our closing typically I it we've we can only release, I'm numbers the on tell

So more press to the anticipate. come in on that, once that we the quarter be get as will said that release in the sometime deal closed. we third And we

bit guess a MERS a I correlation a actually with had business of revenue, it's terms or tends to negative The In first the quarter. rates. correlate little strong we interest

business. pro up might with was And higher $XX little move of through it moved year-over-year. million digits quarter bit first that a so little above last strong There's them having bit a basis But stabilize a actually concern year. of as it relatively double the impact on as we forma revenue, little we're

And so guidance. you'll that recall you we gave

revenues base. in is expense to I $XX quarter as think in and million little I actually on $XX of And fourth did relatively quarter. the mentioned gets better think than as to low we $XX I the million call, a million that first

how I'll other fits. high to that about With incremental lot a to Jeff it operate. So the it margins that hand businesses like of we talk

Jeff Sprecher

there. Freddie up they be would that and mortgages of speed speed closing. get around to mortgage do the on risk risk Once market will it's that as in that we as be and able the somewhat can up do decision on going searchable to to allow foreshadowing more platforms. information that been and more they it analytics And today, a ought research are been analytics. through and the data process, to and able the flow that so run on Fannie ideas has funds has layoff that the third-party would theoretically that Fannie digitized undertake have here to be and underwrite quickly an You're portfolio standardized be in Freddie

data to So drive of organization more mortgage membership was a acquired closing we become speed when business, XXXX policies we Board industry of Directors will stay help with of the valuable and to members. the companies that asked We've interesting do in up It we've and control and component times. the and consortium cost it essentially essentially. the the of a that been view will many Board. has agreed within taking that have on down on data involved MERS the

when So of How natural that asset are all need expansion do we And GSES digitization dialogue What have from and I European honestly and future into accessible? of the we the information a versus mentioned, information PII more that PPD which Thinking continue proprietary? And So we the is those just contribute think reason the by-product that exactly and the other first make from in information that banks and lending. with it what business. about information standards the stay to on kept we them wants what-have-you. that industry digitize to deal the that is conversations is the I what-have-you? as does involved globally market the to industry. this meet standardization's we classes started got needs the How to be business be needs. we ask and large really of representatives levels and things are the there'll to of

Alex Blostein

much. very Thanks Great.

Operator

Please The Brian sir. Bedell next question Mr. from ahead, Bank. is go of Deutsche

Brian Bedell

topic. the I Thanks stay MERS Great. very on much.

more right of it the the dependent half or mortgages or over Jeff – us I growth is Is it about there I that documented X% help eNotes maybe electronically Can many originations? how just eNotes did outstanding then existing have mortgage? new was Scott know of you XXXX you think altogether. most that you rate And through about electronically mortgage is to a in to the system. think up the documents of revenue half convert term. mentioned Or on long it them actually any are terms in register now path don't entirely run XQ? activity bringing

Scott Hill

current when XX,XXX seen second early are idea classes. looking in that any mortgage question, eNotes There's it with witnessed to build figuring still industry to people or try is that anxious digital think broad not industry build part is have of us workflow U.S. you the your become more and still of the into very workflow. cross-section mortgage context a going quickly analog-to-digital the in you unlike it into their what's it's a small in out ATI to talking that and other at are that are to the people you've But on how moving it adopters asset their I'll transition nascent. start embraces underneath to in this and QX of

see, So customers their there getting adaptors it's savings driving cost in early experience they competition. to better to serve are there what start you ability get our and and quickly as

the the it's essentially low into though eNote platform charges one in So is encouraged in put workflow can be to all very are mortgage Simplifile make The simply the even early number. more on lender it eNote charge and by easy results our model a the that that register we we revenue and for underwriters. and

You can increase. of imagine the that pace

what-have-you find that the original golden will is go of number a you documents are things is and is with a mortgages and and them. servicing that one rejected there recall record of lot As up change on of during last and has paper the out with exists global was judges the over mortgages in that to boxes there changing that existing on law And produce you There's working showed when how Simplifile that hoping can a are sign lenders. behalf of and rate for And a when the warehouses rights be local the there been original MERS many the foreclosure. the may dealing mortgage if crisis decade mortgages MERS a of financial that mortgages. entity of digital back in to result so exploring as existing last digitize in courts people those companies there error

the a put this that will offer is that And and so meeting courts they And in system. of kind like how meeting plug who had asset – services. done the record, can talk many can I mortgages other much with legacy scanned moving classes on reason I be topic all golden with like into a potentially they that of had MERS by would into to will and which be actually to electronic yesterday about system what's third-party, a on this respected an a be these wanted

Brian Bedell

activities So refi no get no do or no mortgages being to mortgage. without or say, able bulk existing transfers or any anticipate new foreclosure of

go bulk into a of eNotes? be record do giant to transfer those existing some to able keepers Just and paperback

Jeff Sprecher

another not not somebody need that document Potentially you standardized. artificial security are chaos. but that person. numbers him problem the stuff scan says, is is essentially get errors That engine. ability records people intelligence have And document you has a it Robert And and rules-based essentially or this named you to social pretty quickly made down where in can into as need and Bobby writing the just but that's same down those the other all on

to So the will are to figure their that the be itself better that sourcing the happens potentially record looking trying marketplace create MERS courts eNote allow those people indelible the out respected an rights, people at that store mortgages transfer – this quite often. which and particularly are and to one there and another those in at and foreclosure in are record is between by ability scan pointed

Brian Bedell

color. much Okay, great. Thank you the so for

Operator

from Repetto Sandler question a There's Rich follow-up go sir. Mr. O'Neill. ahead Please, of

Rich Repetto

trace like back When it side. and from And but went you some a Hi, fixed-income BondPoint XQ. Ben question for for volumes in on to mentioned the you're a looks TMC volume that it market Yes. in looks look softness record know revenue the I was in Just it revenue quarter-to-quarter. muting like Ben down like there did the a

from understand fixed-income on So revenue to just actual trading the the the trying side?

Ben Jackson

And and there tilted that spread And go lot I of come the to have towards more tried municipal narrowed treasuries that has muni with had mix lately. a to platforms be the treasuries rough tend it Again comments so has a you it municipal the munis where I the given space. and the space others made out into hit a do at favor. to between see Rich. Yes, has earlier compared space. to our on that

treasuries to that is lower at up, we price what tend per picked be but have have a seen transaction. So treasuries

and year. of that this the initiative efforts have. and We about our advance that on I've we're the initiatives talked later do We'll building institutional increase size with released mix continuing prior the the schedule connection as continue be the we'll RFQ, to see what businesses across well the platform. as see that see to average hub And we that we that with hub is on as that efforts. as ETF that with build-out like ETF So that we change we to well trade on that calls are have the those underway

Rich Repetto

you. Thank it. Got

Operator

James. from ahead Please It's Mr. a question of go O'Shaughnessy Raymond sir. follow-up Patrick

Patrick O'Shaughnessy

Hey, great. Thank you.

well-publicized you opportunity Bakkt that's pretty Bakkt announced do So and about obviously How the the delays launched initiative. how has market effort? think changed since you you for some the really since

Jeff Sprecher

of what be they helpful that heat launch. of winter to been really some really acquired with really were been call hot hot. – and been market companies number completely it's secondly sort transparent a that There's industry available cryptocurrency off different this we've of to you had the wouldn't actually of at valuations a to been a been the and that looked Well, took went company us the into earlier a because timetable have week the

if the regulated, still There's became to where can't to and to it. asset get taken more said, that's that the be when people we into interested really to engineers And their in a not interest regulated It's of highly will our we the a and why market. regulators move blockchain this want are I So about which true without through institutions you institutions, serve recent that trusted. trying effort institutional the kind in lot it's being the we markets highly banks going forward. maturation the you acquisition acquired affiliating get are of is class will industry regulate corporate for we regulated on you regulated, larger the around with how see talk a if But this example a arms are venue, this really that while.

close shorted these worth will custody happen – in had terms a over so how jurisdiction out And the the squeeze things to to and well there's were what of bankruptcy. be resolved juices my that wide mind building solving of And a kinds the and in the before it's of There and And need those asset those in going be of those of that. the and the very way now. to solutions and get that lot going very, adoption all issues finalizing forefront now to for at been class. we're we

sort and these gave some So us the the downturn the and time class. legislators to allowed this this particularly how people great United assets about value once of deal to regulators to we're of attract sure asset in with really States in think

Patrick O'Shaughnessy

Thank you.

Operator

Chris from Mr. ahead. is of The Allen next Point. Please Compass go question

Chris Allen

guys. how muni are right electronification general. the a evolving stand the market in impediments terms in see ask does Where What of I do on institutional if of the wanted morning, moving side? And that follow-up Good particularly market in there any kind to now? you that are forward?

Ben Jackson

Chris. Yes. Thanks,

or is corporates So are. the far municipal space behind U.S. it even

XX% much is is electronic being are how terms clearly our you XX% it are but of more XX% where XX% estimates behind estimates to So at corporate look the U.S. if of market electronic. moving and The space it further electronic. of in municipal call more to

you structurally that now. obviously. electronic more also We just two has up that spreads are than at municipals look between higher you years But with coming if beneficiary been down. where But back it space brought treasuries muni to the is continue issuance, municipal it's tough look of or and if the seeing move significantly before point ago that for I

benefit to analog this And from new to early Now come that. while starting as see it's see secondary to well. takes as days it's at issuance rebound starting we a to the the are trading just move But some point starts it to but should and transaction. around, behaviors change that in of type get we on

Chris Allen

Has the banks taking any munis? steps any towards tranche launch

Scott Hill

phone trade threshold that certain more Similar that and banks comfortable over They And corporates they those municipals want algorithms and in what's sizes started of minimum transaction. electronify trade no few it with get more and involved then pricing into longer corporates sizes that size in to are having up where to that build in they'll a are. trades, electronic the as more started the those that trades move execution looking pricing small behind is dialogues to and that. want we're years with they a they just terms more time

Chris Allen

guys. Thanks,

Operator

Bank a follow-up ahead. is Michael America. Please The Carrier next of of question from go

Sameer Murukutla

acquisition in related actually fixed-income thought jump you process around you is an Maybe guys. Mike off. A the can return Murukutla, been a goals? how quick period? growth update but you the to Hey growth given This you some goals it in think the longer had over Sameer question think to a focus historically make certain especially those your about would in on it's the increasing of areas give space. if sacrifice structural up Meaning, structural for

Jeff Sprecher

to feel it return it I guess, or to a disciplined premium me put the can be two. – years, years grow drive give quickly operative is to business start part business a on try integrate we can give tend for like three longer it. very that your we look we invested integrate also We period. question to to We our on and high if of on We honestly for about and if to a capital. out try to platform so digitize want pay returns business generally three our we ourselves capital. the invested ourselves see ourselves And we we very internally

fixed- out built positive very mathematically because smiling, to want that. in we results coming I'm billion $X we so And business income. see of revenue

that this people it's people relative more sure a able And call the we that market key we we back we today. I didn't on that give of are to of partly about because it valuing at has we think today. and where doing incredibly to little the like decided you assets acquire fixed-income not why in I'm what business low on a were what were pull look that curtain parts recognized color valuations lot realizing without were to really that way. talk

that be looking. going that to not we're I so that the visible, And find I'm now on that that of know now to is describe wizard we're the interesting that but I to curtains assets sure deliver able sort tried just always don't the metrics continue to

Ben Jackson

Yes.

it I only the fit to add growth, how our you've investment. I talk the return how does on acquisition integrate us does thing how enable think synergies as how it quickly about we regenerate, can that, many our what's can our heard strategy, it, would

deal returns. financially if strategically, likely not heard to us done able the you You've And engineer can seldom say financially day can't returns. word be the Because the of to the you get accretion. engineer at are you accretion end those

we that to strategic and returns. it case so the the it the you, its case it's couple is in a about you model summers fit, we And before showed was cost you our and the reasons capital return on back creating now showed X% capital of of at growth about that about do focus invested ago it's now weighted are that economic Those things X% it's when is only because see of one and matter we average on it the our value.

Sameer Murukutla

color. Thanks the for

Jeff Sprecher

Thank you.

Warren Gardiner

it's Well X:XX.

it Sherry, I'm wrap sorry, you are we'll wrap I me? up with to for think So going up.

Operator

over you, say, to going just was I back Sorry, to me. excuse

Jeff Sprecher

anxious reporting you. look more Currently forward to we'll It a results and all. call. I you our thank the was soon. next quarter Thank to was off great But get quarter

Operator

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

You may telephones. your disconnect

Intercontinental Exchange (ICE) 2 May 192019 Q1 Earnings call transcript