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Intercontinental Exchange Inc ICE

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Morningstar’s Analysis

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While Uncertainties Remain, Intercontinental Exchange Has Upside From Mortgage Technology and Bakkt

Michael Wong, CFA, CPA Sector Director

Analyst Note

| Michael Wong, CFA, CPA |

Intercontinental Exchange reported record revenue for 2020, and while we’re generally positive on the company’s business model and growth trajectory, the company’s growth rate remains fairly uncertain. The company reported net income to common shareholders of $526 million, or $0.93 per diluted share, on $1.67 billion of net revenue for the fourth quarter of 2020. Net revenue of $1.67 billion increased 29% compared with the previous year, after including a full quarter of revenue related to the Ellie Mae acquisition that closed in September 2020. On an adjusted basis that includes Ellie Mae revenue in the year-ago quarter, net revenue would have still increased a healthy 14%. Along with fourth-quarter earnings, the company announced that it is increasing its quarterly dividend 10% to $0.33 per share. We don’t anticipate making a material change to our $99 fair value estimate for wide-moat Intercontinental Exchange.

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Company Profile

Business Description

Intercontinental Exchange is a vertically integrated operator of financial exchanges and provides ancillary data products. Though the company is probably best known for its ownership of the New York Stock Exchange, which it acquired in 2013, ICE is the operator of a large derivatives exchange as well. The company's largest commodity futures product is the ICE Brent crude futures contract. In addition to the exchanges business that is about 55% of net revenue, Intercontinental Exchange also has mortgage technology (15% of net revenue) and fixed income & data services businesses (30% of net revenue).

5660 New Northside Drive, 3rd Floor
Atlanta, GA, 30328
T +1 770 857-4700
Sector Financial Services
Industry Financial Data & Stock Exchanges
Most Recent Earnings Dec 31, 2020
Fiscal Year End Dec 31, 2019
Stock Type Cyclical
Employees 8,890