Intercontinental Exchange Earnings: Strong Trading Revenue but Mortgage Weakness Remains a Headwind

Wide-moat-rated Intercontinental Exchange reported strong third-quarter earnings as high futures trading volume supported results. Net revenue increased 17% from last year to $2.3 billion, or 7% when adjusted for the acquisition of Black Knight. Meanwhile, GAAP diluted earnings per share rose 19% to $1.14. While this was a strong quarter on paper, we knew about the firm's strong trading revenue in advance of the release due to its monthly volume reports. On the other hand, the firm's more reliable recurring revenue saw much lower growth during the quarter, increasing 2% pro forma for the Black Knight purchase. As we incorporate these results, we do not plan to materially alter our $148 fair value estimate. We see the shares as fairly valued.