Intercontinental Exchange (NYSE: ICE), the leading global network of exchanges and clearing houses and provider of global data and listing services, today reported financial results for the third quarter of 2016. For the quarter ended September 30, 2016, consolidated net income attributable to ICE was $344 million on $1.1 billion of consolidated revenues less transaction-based expenses. On a GAAP basis, diluted earnings per share (EPS) in the third quarter were $2.86. On an adjusted basis, net income was $385 million and diluted EPS were $3.21. Please refer to the reconciliation of non-GAAP financial measures included in this press release for more information on adjusted net income and adjusted diluted EPS.

“In 2016, we’ve grown revenue, margins and earnings while investing in our long term growth,” said ICE Chairman and CEO Jeffrey C. Sprecher. “Our double digit earnings growth year to date is driven by serving the rising demand for risk management, data and for capital efficient solutions in the US, Europe and Asia as markets evolve, driven by regulation, automation and innovation.”

Scott A. Hill, ICE CFO, said: “We generated $1.5 billion of operating cash flows through September, which enabled us to reduce our debt by $1 billion while growing our dividend compared to 2015, and we resumed our share repurchases in October of 2016. Our strategic approach to investing, ability to consistently generate operating efficiencies and disciplined allocation of capital has allowed us to generate growth in earnings and cash, diversify our business model, and deliver solid returns to our investors.”

Third Quarter 2016 GAAP Results

Third quarter 2016 consolidated revenues, less transaction-based expenses, were $1.1 billion, including $261 million in revenues from Interactive Data and Trayport.

Trading and clearing segment revenues were $483 million, with trading and clearing revenues, less transaction-based expenses, of $439 million in the third quarter 2016, down 5% compared to the prior third quarter. Other revenue was $44 million.

Data and listings segment revenues were $595 million, including data services revenues of $489 million and record listings revenues of $106 million, which grew 5% compared to the prior third quarter.

Consolidated operating expenses were $604 million for the third quarter of 2016, including $33 million related to the impairment of an intangible asset for Creditex customer relationships, $7 million in Interactive Data transaction and integration expenses, and $4 million related to employee severance costs resulting from the closure of the creditex U.K. brokerage operation. Consolidated operating income for the third quarter was $474 million and operating margin was 44%. The effective tax rate for the third quarter was 21%, and was impacted by a deferred tax benefit associated with the recently approved U.K. income tax rate reduction.

Consolidated cash flows from operations were $1.5 billion for the first nine months of 2016, up 69% compared to the prior nine months. Operational capital expenditures through September were $112 million and capitalized software development costs totaled $88 million.

Unrestricted cash was $458 million and outstanding debt was $6.3 billion as of September 30, 2016.

Financial Guidance

2016 Data Services Revenue +125-126% y/y +6-7% y/y on a pro forma basis(1)
2016 Operating Expenses $2.27-$2.30 billion(2) $1.94-$1.97 billion(2)
4Q16 Operating Expenses $580-$590 million(3) $500-$505 million(3)
2016 Expense Synergies ~$115 million
2016 Weighted Average Shares Outstanding 118 – 121 million shares (or 590-605 million shares reflected for the announced 5-for-1 stock split) for 4Q16 and 2016

(1) 2015 pro forma data services revenues include $973 million in additional data services revenues for Interactive Data and Trayport for 2015 as if we acquired them at the beginning of 2015.

(2) 2016 Non-GAAP operating expenses exclude $335 million in amortization of acquisition-related intangibles and Creditex customer relationship intangible impairment, $4 million in employee severance costs related to the closure of Creditex UK brokerage operations, and $31 million in acquisition-related transaction and integration costs for the full year 2016. The GAAP forecast does not reflect an estimate of acquisition-related transaction and integration costs for the fourth quarter of 2016.

(3) 4Q16 Non-GAAP operating expense excludes $72 million in amortization of acquisition-related intangibles for the fourth quarter of 2016. The GAAP forecast does not reflect an estimate of acquisition-related transaction and integration costs for the fourth quarter of 2016.

The full report can be found here

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