Q2 2020 Intercontinental Exchange Inc Earnings Call
Good morning, and welcome to the Intercontinental Exchange first quarter 2020, <unk> earnings Conference call. All participants will be no listen only mode. So you need assistance. Please ignore pocket specialist pressing the star key followed by zero. After today's presentation there'll be an opportunity to ask questions. Please note that gets you there.
I would now like to turn the conference over to warn Gartner Vice President of Investor Relations. Please go ahead.
Good morning, I to second quarter 2020 earnings release, the presentation can be found retrospection <unk> dot com.
I didn't have the archiving or call will be available for replay.
Call contain forward looking statements.
If you ever take no obligation to update there was that our current drugs that are subject to risks assumptions and uncertainties for a description of the root cause results to differ materially from goes described in both of these big please refer to our 2000 I do want <unk> second quarter form 10-Q, and other bond.
And our earnings doubling the bird a certain non-GAAP measures, including adjusted.
Operating income operating margin expenses, but the tax rate and debt to adjusted EBITDA, We were non-GAAP measures and more but covert back operations and core business performance to find a reconciliation to equal they've got term earnings through an explanation of why would be situation to be meaningful well tell me they need to be whether or not.
[music].
When you go live call not revenue at birth to revenue per transaction based expenses adjusted earnings of <unk> adjusted diluted earnings per share.
Throughout the presentation, unless otherwise indicated references to revenue growth is on a constant currency basis <unk>.
You see here 40 notes on the second phase are there any spoken for additional details regarding the definition of certain terms.
It's on the call today are good Sprecher, Chairman and CEO, Scott Hill, Chief Financial Officer, and then got aggressive I'll now turn the call over to Scott.
Well good morning, everyone and thank you joining me today.
I'll begin on slide four within the key highlights from our strong second quarter results.
Net revenues totaled $1.4 billion up eight is debt given by 13% growth in trading and clearing revenues and weapons data services revenues of $574 million up or if that doesn't last year.
The dollar revenue performance combined with expected at the low end of our guidance range helped deliver second quarter adjusted earnings per share of $1.70 debt up 14% over the prior year.
We are drilling buyers are willing to $61 million to shareholders during the quarter, including board laid out the JV boats.
And then you did was the increase dividends or share.
Due to both.
We view the turned over $1.4 billion to shareholders, both buybacks and dividends and they agreed to 81% but last year.
Although <unk> second quarter, adjusted operating expenses of $575 million below about that.
But we do later in life delayed ideas would reduce mulkins Ben to be and why it.
In addition, a high productivity of our technology and reduced vacation due to cope with related capital stripping drove higher capitalized labor expense during the second quarter.
But it's gone IPO pipeline and the reopening of many communities. This summer we expect the fact is to begin to where both in the quarter, yielding an incremental $5 million to $7 million an expense. We also anticipate modestly up and strategic investments during the quarter all of which is expected to the vote and they reported adjusted operating expense in the range.
Bob every day.
$590 million.
Well I would like but well provide an overview of the before and that's about trading into that.
Trading and clearing revenues totaled $710 million in the second quarter up 13%.
Energy market revenues increased 9% driven by it wasn't the only in global natural gas 11.
Importantly, openedge is a block I is more good news.
I wouldn't do that year over year in July.
Well, that's the bulk of images is that they like that.
Despite a double digit percentage decline in Devon Diablo, just total oil openedge is it leaves a bit higher than a year ago.
And I add complex revenue decreased largely reflecting continued economic uncertainty associated with David.
We didn't financial operating in that <unk> rose, 8%, including enough deal volume uptick in Israel.
Hi, all these new products represent only about 20%, but up in April volumes, but they didnt really the revenue.
The strong performance largely mitigated the golf the aggregate activity reflected the global indicates at or near all time lows.
At the NYSE trading revenues increased 37% supported by 51 did <unk> Deputy HBV and a 44% increase in after the option agency.
And finally in a big data coming credit businesses revenue totaled $111 million in the second quarter results were led by our mortgage services business will continue to benefit from strong even it seems as though continued adoption of digital modem solutions.
Revenues from <unk> Morgan services totaled over $90 million, but most of this year.
With that on a pro forma basis.
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Turning now to play that I've, just got the data and lifting settlement.
Second quarter. They there. This is all those was up 4% totaling a walk with $574 million <unk>, what does that get consecutive quarter of year over year data services revenue growth.
We expect that tend to continue based upon acceleration in AOCI, which is that they were up where they have to say it year over year on a constant currency basis.
They've been Viking and analytic accelerated the 5% in the second quarter <unk>.
Given by resilient calculated day and pricing endeavor data bottle as well with continued strong contribution, but not fixed income index.
Desktop and productivity and they do disposal supported by the end, but then increasing capacity I told him that.
And finally exchange data it'd be good do good growth in each of these gains data in our consolidated his business with lot of they were about flat revenue would be and why I see.
Looking into the second half.
Data services revenues to accelerate sequentially due between 575 or $580 million ended the quarter and then do increase sequentially again by an additional $7 million to $10 million in the fourth quarter.
Moving to a listing business revenue totaled $111 million in the second quarter.
While revenues are largely recurring in nature result was somewhat impacted by lower ideal calendar goes into the first quarter and into May.
However, with the board the NYSE not part would be open issues are returning the market and the <unk> very healthy backlog heading into the remainder of the year.
They should help us build a solid performance during the first six months of 2020 and and while he is the leader in yield IPO capital gain including all of the largest ideas.
Quietly was also falling away the leader in capital away from special purpose acquisition vehicle spot you go increasingly being chosen but then also the path to the public market.
The second quarter was one of the strongest in our company's history.
We once again do the topline.
Our data revenues and eases open interest continued to increase.
We delivered double digit earnings per share growth.
Oh I see continued to improve cost of capital continues to decline.
And we reported a record $1.4 billion to shareholders, while continuing to strategically in that in a major.
We're focused on a strong finish to a record year this year and more importantly, setting ourselves up the more success in 2021.
I'll be happy to take your questions during July and now I'll hand, it yeah.
Thank you Scott and good morning, everyone on the call.
Before I begin I'd like to thank our customers, who continue to turn to our global market data services and leading technology to navigate these unprecedent at times.
And I'd like to recognize my colleagues at ice for their outstanding contribution to our first half results.
Now turning to slide seven.
Our record first half performance, which was highlighted by revenue rose, 15% adjusted operating income growth of 19% and adjusted earnings per share growth of 25% is a testament to our asset class diversity balance mix of recurring and transaction based revenues and opened.
The the growth potential of our platform.
And our first full quarter of operating in a work from home environment I'm very pleased to say that our teams responded.
Driven by our multiyear investment in both information technology, our data services business delivered a remarkably strong performance.
We generated key wins without pricing you reference data, where the quality of by end of day and real time fixed income places attracted new customers and increased consumption from existing customers.
We saw major financial institution adopt our new F G and regulatory products, while in our index business ETF assets benchmark to our indices reached a record $263 billion as of the end of June.
And lastly in our consolidated E business, a number of large institutions are transitioning away from competitors to ice data services, where they're real time data needs.
Our consolidated business and our index business, our future that's been $100 million of revenue today, they are well positioned to grow and capture market share. While also serving important role in our water enterprise sales strategy.
The second quarter was also marked by continued progress well call. It continues to gather a robust network a key industry participants.
The addition of credit Suisse and Wells Fargo. During the second quarter. We now have seven authorized participant active on the platform.
These authorized participants in aggregate account for over two thirds of the industry's create redeem activity.
And their commitment to our E. T. UPOP represents an important milestone towards adding other issuers and institutional customers in the coming quarters.
Turning to slide eight.
Open interest across global energy producers remain near all time highs as we continue to benefit from long tail secular growth trends unfolding across the global oil natural gas and environmental markets.
And our oil markets commercial customers continue to demand additional more precise hedging tools that really unique position to provide given that correlation to our bench contracts such as Brent crude oil.
This trend is best illustrated by the growth in our other crude and refined product line item, which has seen average daily volume low double digits on average over the last five years and are up 37% in the first half 20 twond.
The liberalization of the global natural gas markets in the rise of LNG use is driving accelerated adoption of our European.
And Asian JK benchmarks.
Volume with average daily volumes across these contracts they have grown an average annual rate of 55% over the last five years and increased by 80% year over year in the first half at 2020.
And demand for environmental products, such as our European carbon credits and U.S. renewable energy credits.
Also growing rapidly with open interest across the U.S. environmental portfolio now four times the size of what it was just five years ago and recently crossed the one Meanwhile, the opening because what it was time.
Collectively as you can see on slide eight this group of energy products are growing double digits on average over the last five years and now accounts for nearly a third of our total energy revenues.
Along with the strength of our global crude and refined oil benchmark our global energy platform is uniquely positioned it continued to evolve and grow new years because.
Turning to slide nine home or provide some additional color on mortgage services, which has recently become the fastest growing business within the ice platform.
While still in refinancing volumes have provided a tailwind to first half results the secular shift towards the adoption of an electronic work flow is accelerating.
Today I mortgage services is focused on helping automated various parts of the U.S. loan closing process.
On a loan closing two key events occur.
Although the mortgage information is transmitted the mers and registered with the nerve database.
Second in order to consummate the transaction a settlement is unique required to reports certain information this irrelevant local economy reporter.
Together. These two events help ensure that the loan can be seems to be sold into the secondary market.
And so with the combination of Mers instant book, while we have a business that is part of nearly every U.S. mortgage closing process collecting marshaling and storing critical data.
After acquiring mercury quickly engaged with Fannie Mae Freddie Mac that digitized some of their required paper documentation starting with the mortgage promissory note known as they do you know.
You know to have seen rapid adoption over the last few quarters and the adoption rate has only accelerated in the wake of Cobot 19.
At only around 3% of the U.S. market, there's a tremendous market share upside for this product to continue to grow.
And our 2019 acquisition to simplify a lot of purchase it would take the reporting a key documents over an electronic highway that is plugged into over 2000 jurisdictions across the United States.
Importantly, this connectivity to the database of reference data that its catalog the various terms and conditions, we acquired by each of those 2000 jurisdictions as well as the fee schedules for tens of thousands of settlement agents across the country.
As you can imagine each county has its own recording nuances and each settlement agency has its own unique the schedule, which it navigated, namely as is often the case today can be costly time consuming and verifone to human error in other words, the U.S. mortgage back office work well is right for automation.
And greater efficiency.
We see the opportunity to build new products and services to add more content to what is already a robust expansive network.
We believe the addressable market for further automation is in the billions of dollars and it's one that our platform is well positioned to capture.
We're executing a business plan that we already applied to our futures markets and are currently at line in our fixed income businesses as markets embrace digital networks to replace path workflows practices.
And we're excited about the mortgage market opportunities that lie ahead, and what could prove to be another important factor in ice is 20 year evolution.
Turning to slide and.
The first half was another example of strong execution across our platform.
We delivered record revenues record operating income and record earnings per share.
We have a vision for ice as a public company to deliver growth in all economic environments and I think the decision distinguishes us from our peers.
We deliberately position the company they have a mix of transaction and compound in subscription revenues to give investors revenue upside exposure, while hedging our downside risk.
We target markets, where there's a tailwind of macroeconomic analog to digital conversions, taking place just read over microeconomic issues.
Next our ports, but the key financial markets. This react to central Bank acts of man and physical market, which reactor disruptive supply chain acts of God.
Diversify across the global footprint because at all times somewhere in the world there are risks that our customers and potential customers need to manage.
So we look forward to the second half and beyond what excited about the growth opportunities that lie ahead.
And we'll continue to work closely with our customers in our key industry participant to help them navigate these times, while creating value for all of our stakeholders.
With that I'd like to again, thank our customers for their business in their trucks in this quarter and I'd like to thank my colleagues at ice for the remarkable actors and their contributions to our first half results.
I'll now turn the call back to our moderator truck to conduct the question and answer session, which will run until 930 <unk> eastern time.
Thank you we will now begin the question and answer session to asking question. You know press Star then one on you touched on so if you're using speakerphone. Please pick up your handset before pressing the key.
Withdraw your question. Please press Star then too please limit yourself to one question and one follow up if you have further questions. You may read answer the question in queue. At this time, we'll pause momentarily to assemble our roster.
And our first question will come from Rich Repetto with Sandler. Please go ahead.
Good good morning, Jeff Good morning, Scott.
I guess my thanks go into all the details on the open interest the energy open interest and I guess my question was.
I'm just trying to differentiate you know why yours.
No you went through natural gas being very strong why you're open interest spreads.
Uh huh.
Separated from peers, and if you think I'm right when I'm, saying.
As of yet hasn't played out in volumes and.
Is that sort of abuse, but it will later you sort of explain that immediate I just went up a very picture.
Good morning.
What we've been doing a over the last decade, or so it really expanding the footprint of Oh, our energies futures markets and and obviously we started it wasn't when when we acquired the international Foreign exchange of London. It has for energy contracts and today we have.
Over 900 approaching 1000 and so.
The growth that you're seeing is in the global markets and it's in customers trading in the smaller major contracts that it gives them more precision for hedging something you know locally or or some.
Product oriented to energy that that is a specific to the geography and business and.
That's why I mentioned in my prepared remark Richard Kim.
Third of our revenues now and energy from the other energy products and they're the ones that are.
Our growing faster.
They are they are correlated to the benchmarks, which is why it's important that we continue to marketing and pushed me benchmarks, but the brokers in these other areas and when energy markets are in contango, which.
The non traders means the normal market conditions, where there is store is available in the world.
We have always seen that open interest in these energy products is a.
Precursor to future volume trends and.
And actually when the markets rivers and do what they called Backwardated. These open interest becomes a poor a metric so one how to use a open interest cautiously, but we see opportunity for this business continued to grow as customers come back to these open positions.
Manage them up through the duration of the life.
So with the very bullish sentiment that we see inside the company far on forecast.
The only thing I'd add to that it is it don't get lot than the overall pools with some of the dynamic going on underneath the because a lot of adeptus talked about is growing right now so I rather oil products are up 15% year over year in July our natural gas products are up 5% year over year in July.
Missions products were up 41% year over year in July and you know looking at that our website overall.
And then up not only he had the mitigation commercials on the platform not only do we have the mitigation had the diversity across the product.
But the growth right now the mitigation to some extent against the revenue impact that we'll see and they do you know you can't spend volume you can then revenue and and that's where the cash capital returns and things like that or our ability. So it just I'd encourage is the thing did you have that doing it but there tomorrow take a look at how those businesses performed.
Good day and night.
Got it got it great insight.
On the <unk> [laughter], the volume translating to revenue but.
Anyway, My follow up question, Jeff could be on but I, but I see your excitement.
And you can you indicated you talked about movies or just sort of.
[noise] contract integrating let's say.
So I guess I guess the question on mortgage services is that our you know it appears you know right for you today Digitization in automation, but there is a slight difference I think some the market or maybe it isn't maybe you can sort of.
Draws the connection.
You know with the other markets did you automated.
Certainly a matching engine DVD exchanges you trade.
Oh.
A massive platform here.
Is maybe goes to the database management side of it but it seems like you've just got some great tools that leverage this oh potential through automation big market, but could you I guess dry.
Give us a little bit more insight of the connection.
There and maybe what the differences between that and say, we trading platform <unk> automated begin again.
Sure.
Good question coming to enrich because I know you and I have.
Have popped in the number of public forums.
About the fact that.
Yes he.
I really focus on this settlement process in the market that we serve.
In 2007.
In the theory, our own futures products and I think that was.
Pivotal moment in the history, the company and a life going on.
For me and the management team or that.
<unk>.
Really can do something for the back office portfolio was incredibly sticky so you've now seen with the tee up hop in the way we're approaching the fixed income markets. We entered through the back office with a reference data initially and now moving into the easier publishes settlement essentially.
Infrastructure and we were using the same playbook in mortgage which is which is let's get into the.
Settlement work flow and as I mentioned in my prepared remarks with Merck.
Right now we touched almost all.
Of the mortgages in the United States through what we've already built and once you have that settlement schemes easy to expand upstream and into the data business and as an adjunct <unk> markets.
With that create value for customers that are that are very very plus the network and so.
Think of what we're doing as you know building the clearing house, if you will for the mortgage industry.
And the next question will come from Ken Worthington JP Morgan. Please go ahead.
Hi, Good morning. Thank you for taking my questions ASV growth improved sequentially. This quarter due to 4.5% on it is still with the low end to the range you set forth when you guys.
And now it's the ITC deal.
I'll be on the path forward to that the midpoint of your range or maybe even at the higher into the range. The backdrop on the transition to fixed income indexation seems to be coming together quite well.
I had indicated you know more new account wins.
So it seems like things are getting better you indicated towards the improving as you move through the year.
So is the outlook here or what is the outlook here over the next couple of years for ASV growth should we expected to continue to improve from these levels.
Again, it's got them for the question, Yes look I do think we certainly expect that ASV growth will continue to accelerate as we move through the rest of this year and by the way I think in addition to the total will be accelerating in the first quarter and.
For the only insights and analytics, which is half the business move them early in the first quarter before in the second quarter and again ive, but that formed to continue as we move into the back half of the year I said back and they were all about pricing analytics, a go 5% to 6% I don't think that's true for the year, which indicate I also think the revenue.
And if that in analytics will accelerate in the back half of that and I think their membership trends that they really gotten they bought it I'll begin to get out their lending that team because they.
Leveraging those trends from home without traveling without being able to building a new customers face to face and yet we just had the best photos dining we've ever had when he told me he feel better about the pipeline entering the third quarter than she did entering the second quarter.
And it goes to a lot of what debt we're talking about it.
It's a flight back to quality on prices, we see customers consuming more about prices.
Casinos, adding the the named adding I reference data because what we thought that the crisis with our prices were the de facto price discovery and in a world where you don't want backing there you come to I. David There. This is the by those guys. That's what we're seeing our existing got them or a buying more overseas.
New customers joined.
Jeff talked about the index business, we are now have $203 billion indexed against that.
Indices.
Net income ended the year from single digits and nearly 20% Sheila.
In that space in a very short period of time and it yet, but that's still not 100 million dollar business for us and it will be one.
Do you look at the feed business, what where that business didn't exist. When we bought I'd see five years later.
Posting $100 million in revenue and there we can compete not just on quality, but I'm blessed because when it went up but that's going in and we're going after new business and within competitive win competitive wins again stable competitors and competitive wins against competitors that where customers I'm quite sure who owns them and we've been pulling them.
As Paul So I think you're seeing all of them and a lot of that builds up in the order and allowed us to do a little better than the high end about die a it allowed me to imaging in my prepared remarks that we're going to accelerate sequentially in the third quarter and then again in the fourth quarter.
And again in a worldwide sales team did a whole and theyre doing a fantastic job and have allowed us to hold our guidance and the deceleration in growth so you're going to get revenue you're going to see if they had the and by the way I feel very good about outset stuff for 2021 as well.
Great. Thank you.
And then Nielsen distance between the challenging April wth delivery.
Indicative prices for T.I. that resulted has there been any noticeable fallout and at this point do you think I used to make she had benefit in penetrating for more participants switching to grant or has that transition already happened over the last decade.
Hi can spend Jackson I'll take this one.
So the short answer that question is yes, there is opportunity.
For Brent here, and we're seeing it in a in a number of different areas.
Jeff touched on one and in some of his prepared remarks and in the first answer to Rich's question, where I.
I think that market participants have seen now first hand, a lot of the issues that can be created by that landlocked infrastructure around W.P.I.
This is the truly global demand pool that blends has been can service.
And what that led to not only growth in our blended contract itself, but also in all of the refined products that come up with a barrel of oil all the different locations, where you can make it take delivery, which is very unique on our platform will be have those hundreds and hundreds of different locations and and refined.
Products that customers can trade that are very deep in very liquid and our high growth opportunities for us.
The other areas that we're seeing.
New opportunities for growth and blend. Our for example, you do you have space. So we are having an unprecedented number of conversations dollar bcf providers about adding blend for the first time.
Another area, where we're exploring is retail demand so retail in particular in Asia, we're assessing that that opportunity is it given some of the dislocation that happened in W. tie there are markets across Asia that we're looking to expand and offer a retail offerings for Brent.
In the third the discussions around the Gulf Coast.
So as I mentioned in Q1, and our last quarter loyal hits, the water coming out of the golf.
Price references most often Brent.
So commercial customers are now engaging us more than ever around opportunities in the Gulf coast around Houston related.
Benchmarks in Gulf Coast related benchmarks.
Because blend they see as the most logical benchmark to differentiate those contracts also up and create a differential market again, so were engaged more than ever with commercial customers around what is that that right you less benchmark.
Going forward and what changes may need to be made.
The short answer is yes, there's a lot of opportunity out of us and Brett.
Our next question will come from Alex Kramm with GBM. Please go ahead.
Hey, good morning, everyone I'm just wanted to follow up on the on the mortgage discussion.
Well here I saw an industry pulled the mortgage industry the other day.
Basically echo what you're saying since of the Digitization and spending is going there that said he's only 20% spend that's going to whats. The closing portion I think the majority is going to servicing and processing underwriting small apart.
So you know this would you agree with that it was an important oh, but then he says other areas are getting more spending.
He can you expand some of your base he doesn't have to be essentially inorganic because you know it's time to market.
Thanks, Alex its Ben I'll I'll jump in on on this one.
So and I think Jeff went through in his prepared remarks, you know that focus on the closing in post closing process and a lot you answered some of the question in the way you framed your your question in that the post closing at closing process is the one that's the most ripe for innovation right now it's Ben.
Most manual late and part of the entire process.
And with the two assets that we have been very unique with moves that we've talked about a lot and that was simple file as Jeff mentioned in his prepared remarks, having a very unique network.
And at the paved the road to all these different settlement agents in jurisdictions that no. One else has and then that you need reference data set that we have puts us in a position for new growth opportunity that have a significant hand, a billion dollar tam across them and to unpack, how we're executing how to think about that growth opportunity and follow those out.
It is and how I like one of us it is.
I'll give you a couple of examples so first is with simple file the key business being recorded.
We mentioned on calls the right now we're in jurisdictions and plugged into jurisdiction to represent 85%.
The U.S. population.
He knows in those jurisdictions.
If you go back to 29 team, we want to capturing I'd record business about 25% of the eligible documents that we would take a whole lot of even get to feel.
The first accelerate the first six months to this year and that has accelerated 35% to go from 25% to 35% capture.
What was manual paper based documentation to now automated.
Second example that we talked about is he knows he just mentioned this in his in his prepared knowledge.
That we're doing about 3% of the moves volume is now so in somebody's registering a mortgage up about 3% of those loans also into the registration of an email.
Back to last year that was 1%. So we're seeing a nice pick up an acceleration. There in addition to that we're adding customers.
And have added customers like Ginnie Mae Chase rocket U.S. bank onto this platform, which is as good visibility into a tailwind that will continue to grow that percentage.
A third area of growth that we haven't talked about is a business that simplifies really built organically by itself as a startup business and that's the automation of the closing in post close process.
This has very complimentary to what I just discussed the most has on the notes and this is the automation of all the other elements of the closing and post close process.
That business has gone from the start up to now to use most volumes as a proxy than the first six months of this year.
Is captured about 3% of that market and we see similar to the he know trend, we're seeing adoption pick up customers that significant customers on boarding under that we have a very big Tam ahead of us there.
The last thing I'd highlight.
While we have a bunch of other opportunities for growth in this in this market. The other thing that to look at is there's a very strong replied trend in the market where each one of the services that we provide in other refinances down we're collecting a transaction fee associated to each of those transactions.
If you look at low mortgage rates are.
Our mortgage rates are now there's an estimation from industry estimates that about 18, and a half million outstanding mortgages are in the money at current rates and in the money, there's 75 basis points lower that where rates are currently shop.
So we see ahead of us a significant refinancing, but it's going to last for quite some fine with the central bag Bank action that has happened what did it continue.
In years.
Our next question will come from Brian Brookdale.
It's a bank. Please go ahead.
Great. Thanks, Good morning, Thank for taking my question.
It does a good that's good segue Ben you My question on fixed income and credit broadly obviously the mortgage I'm excited that has a fantastic tailwind. He can you talk about the third the revenues efforts within fixed income trading and obviously.
Ted tell me if it does that your it sounds like you've got faster near term growth trend on the on the mortgage.
Side and Ah, we have a little bit of a longer term built on a fixed income trading said that maybe if you can flesh how you see the revenue in that area growing in the second half and then next year or did you do you have hub. Obviously it has got great momentum, but I believe correct me, if I'm wrong, because I believe you're not charging much without right now.
Now.
And there's more of a up across so game plan on that to me. These questions I've heard of out of that.
Sure. Thanks, Brian So I I think the way you characterize is correct in terms of revenue. So with mortgage we obviously have had an have in front of us your medium and long term a significant family go after we're very well positioned to recapture it and we're capturing it actively now.
And.
In fixed income.
I've said on the last few quarterly calls.
Well I'll play here has been on execution.
He is to really establish a network for the first on an institutional network.
Leveraging the strength that we have in ice data services business that has that institutional network.
Plugging into very inefficient work flows in the fixed income marketplace.
And then combining our execution venues or capabilities on the ice data services side and plugging into the work flow and efficiencies to solve real problems.
And the first example of that as we've talked about on calls the T.F. hub and gave a lot of great updates last quarter. So a couple of things to look at in terms of network expansion also volume expansion on that that we've achieved this past quarter is that we've added up three market makers onto the platform so significant market makers.
Industry old mission, and Chicago trading or not in the platform.
And in his remarks, we had two more 18 significant ones in credit Suisse and Wells Fargo that have joined the other five that are on the platforms.
We've added a new issuer as a development partner on the Advisory Committee in JP Morgan asset management.
Continue to enhance our workflow automation capabilities in a custom basket facilitation or the ability to customize what are the securities that I can provide the somebody to swap for any tee up and that primary trading vehicle.
Last but not least voice call so quarter over quarter or volume continues to grow in our primary trading venue and we've done now over 330 billion in transactions since inception.
What's ahead of us and getting to your question around execution by the key things ahead of US as I had mentioned on our last quarter, we just launched ice select.
An ice select is our aggregation venue.
<unk> protocols, although venues as well as a rich ice data services datasets and analytics like best execution in real time pricing integrate all that into an aggregation.
Venue that in coming weeks, it's going to be integrated into a de tee up so for the first time or venues that can be compete in the secondary market.
For flow to fulfill orders in procurement of bonds versus boys and other venues and with the 330 billion that we've executed to date priority market a meaningful portion of the of the market. That's out there close to get started though.
Also ahead of US is really introducing for the first time, a chat and messaging platform. This very well established in the energy commodities markets introducing that for the first time into the fixed income markets and late this year will have internationally.
On top of that.
We will be a in the latter part of the second half of this year. He will also start to share publish on a regular basis.
Volumes as our institutional network in Serbia status.
And by the only bad debt onto that it gets overlooked the little bit is we've got a CBS business did 100 million dollar revenue in the first half of the year, which is 20% higher than it was a year ago on track to be at 200 million dollar business. So that yeah. That's another fact them or that my answer to rich that but I hope people don't Miss because in a world where people.
Looking to hedge their credit exposures. They can do it you know with the bonds themselves, but they're also turning more and more than 80, yet and we built the Jeff 0.0 about building clearing fees in the Bakken solution that delivers a mismanagement you did that not to get clearing business and its book woman stupid six months outstanding.
Our next question will come from Alex Blostein with Goldman Sachs. Please go ahead.
Oh, Hi, this is Jay filling in Florida, I, you see some longer than that.
And that's going on can you talk about the rationale or you're not really good extraordinary blogger and is there an opportunity to actually be shady parties on the backbone for higher cash is now.
Yes so.
We did we have some bonds that were coming due later this year.
And we also had been some of the M&A activity that we've done a a rather accelerate or higher balance and CP looking at the debt markets and look at it at the indicate that were available. We thought it was a good time to move into the market and depends on the T.D. out and to go ahead and take out the Bob If you look.
We actually they bonds that were due in December 20.
We're actually going that popped up more from a coupon standpoint than the blended money, we got that averages out at 20 years materially So I I blended cost on what we raised though is a weighted average maturity 20 years in a cost of about 2.5% to 2.6%, although lower than what we are paying a bond.
That we're doing it at the end of the years that we we felt it was an opportune moment to new reducing the CV.
It's a little bit of flexibility with in terms of of the revolver capacity that we have.
Then you know in an uncertain period that ran having an additional flexibility it did in a relatively inexpensive that to go out and get it.
Informed the of the repurchases you know what you saw the quoted if we were steady.
With that originally 2.4 billion authorization from the board roughly covers the colder at about 400. The quota that's what we did this quarter I'm being a little bit more in the first quarter, a when the their share prices a little bit beaten down.
And given where we sit today that that was a good move but I would again it as it typically my hands over the last few years. It is steady as she goes on capital return, we continue to grow our profitability. We continue to grow our capital returns. We continue to grow I dividend and we'll continue to look that look to do that and we will continue to look to the debt more.
It's opportunistically.
Due to continue the as I mentioned again in my prepared remarks, another thing I want people to make sure that you know noted our return on invested capital it now back into that.
I waited out across the debt now that bottom or so you know the overall balance sheet management has reduced costs, even at the businesses generated increasing returns.
And our next question will come from my carrier with Bank of America. Please go ahead.
Hi, good morning, they see the question.
You guys didn't begin distraction and you talked a lot about units into your area that age equally mortgages.
But I think you mentioned.
Large and you know head.
It's just how are you thinking about that that longer term revenue opportunity.
You know what maybe places I.
Sign.
Given the potential Asian traction as you see easily in a little faster than you expected you. How do you see that you need playing out.
Thanks.
Thanks, Mike.
Similar to the.
To the answer I gave in the question a couple a couple of though that Alex had.
I think the way to the way to think about it that the real near near term revenue growth opportunities that are right in front of us that were already capturing.
He is really in that mortgage services business and how well positioned we are for the automation of that closed in post close process that.
Especially with coated all the assets that we have won some nice to have assets to absolute must have assets and we are on onboarding customers at an unprecedented rate.
To our platforms for the registration de notes for getting out of a simple filed to plug into those you know more jurisdictions coming onboard more agents coming on board.
And and looking to rapidly rapidly onboard onto these onto the products and increasing adoption and as I've mentioned, there's a white follow those three to four significant growth opportunities and we're capitalizing on in terms of new business opportunities.
That we're capturing in that mortgage services business.
For fixed income.
We're establishing that network, it's you know.
So while to get establishing that institutional space for execution and all of the data points that I've been talking about I'm on each of these calls how fast we are getting as platform on the volume that's coming through the platform.
How much of our network is already established and has and that would get established with feeds on itself. So we think we're very well positioned there.
Well, a medium to long term growth opportunity in execution remember in fixed income when it we don't look out as Justin execution business.
To solve the real problems and fixed income it's going to require.
<unk> billion dollar business a year that we have in fixed income that it's really the cornerstone is a pricing analytics business and marrying those rich analytics and pricing services with execution in partnering buy side and sell side clients to plug into real fishing workflows because were Walton.
Mission and that we will be only one that has really that comprehensive all of the assets there that helps all though.
Our next question will come from Kyrobak with KBW. Please go ahead.
Hi, good morning, or maybe a question on M&A.
In your prepared remarks, the diversity of your business.
Just wondering where are you still see holes.
Sure.
For your two opportunities to add to better.
I went back into a major consumer through back or elsewhere.
And then maybe also update on what you're seeing the current M&A environment into that.
Our last opportunity I say versus a year ago. Thank you.
Sure.
Well I think it's a complicated environment I had a very interesting conversation with a one of the senior investment bankers.
In our space about the.
The difficulty in to CEO.
Meeting and getting to know each other in determining if the businesses.
I would be good together in a world where were working from home and can't travel and can't have face to face conversation.
And so and so the M&A market as a result for that is much more about it that we're seeing is much more about.
Company, particularly private equity on companies that are going to run a process for their sale or merger and ER and those kinds of situations. We know we.
Our tend to be the more disciplined investors.
Scott mentioned, we Tropo return on invested capital, we track our cost of capital and so while it's easy to make.
M&A.
With that we need to make M&A accretive.
Due to the low interest rate environment that we're in you know it's harder to make a rational deals that have real long term.
Value creation for.
Investors as opposed to giving our investors their money back and letting them make their own choices in the market. So it's complicated.
That said there are a lot of private equity owned businesses. So we.
Participated in play a number of different.
It took a look at a number of different processes in the last quarter and and obviously, a not done anything or we would have announced it but.
I'm also seen that.
That.
You know covert 19 environment has really created winners and losers.
Many spaces, including financial services.
Got a lot of inquiries from.
We have type companies that are worried about their future funding capabilities, we generally or companies that.
Our loss, making company and and built themselves to try to get scale in a in a world where there was a lot of capital free floating around and now.
And investors seem to be more disciplined and these companies are looking for larger.
Sponsors if you will bolster businesses too.
Again, because we're disciplined investors.
And our good things you know like accretion dilution return on invested capital.
Those deals are hard for us on of just to financial basis. So we only looking at things where we thing.
Those acquisitions would accelerate.
Initiative that we already are working on and it's essentially a buy versus build strategy or speed to market strategy look these are floating around but again, we looked at along but are.
Not seen anything that really would move the needle for us so.
Long story short we're in a very good position you know, we got access to capital.
Got a lot of initiatives going on.
Our productivity is high because a lot of what we talked about on this call is about building technology and systems.
Help our customers and and interestingly, a tech focused or can be well in this environment I'm because our people are actually being pretty productive working from home. So we're in great position.
They would have come along but.
But it's a complicated environment for M&A, just due to the social distance and what's going on.
And our next question will come from Oh Wow Oppenheimer. Please go ahead.
Good morning, and thank you what taking my question.
Could you. Please gives us more color on block, whereas the partnership with MSG.
For example, the integration of ice up pricing and that's weapons data into Emmis jackpot platform and also the progress on launching more futures contracts not based on kind of Jive X. Thanks.
Thank you for your questions Ben Nolan.
Our partnership with MSC eyes is very strong and it's been a longstanding relationship that we continue to look for opportunities to grow or we're going to continue we're going to continue to.
Gauge with them actively on a number of different indices in a number doesn't futures the weekend that we can launch around the world. It's obviously been a very strong.
Our business for us for a long time with the futures.
In that business, you seemed a little bit in recent times with with the volatility in the risk that there is in the market we've seen a bit of a pullback on things like emerging markets, where there were a high risk environment people tend to pull back from.
Okay.
From the market's been there when you have that kind of when you have that kind of volatility in it but we've seen a 15% increase in Q2 in this business and lot of that is on the back of the eco business, which is another significant contract that we got.
So were looking with them actively partnering with them on on all kinds of you new growth opportunities and those are really state of the relation is very strong.
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This concludes our question and answer session I would like to turn the conference back over to Jeff Sprecher for any closing remarks. Please go ahead.
Well, thank you Chuck for moderating call and I want to thank everybody for joining us.
For the speaking with you again soon and until that happens a I hope that you and your Loveland stay safe and healthy and a that you guys try to have a good day. Thank you.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.