Q3 2020 Intercontinental Exchange Inc Earnings Call

Good morning, My name is Andrea and I will be your conference operator today.

This time I would like to welcome everyone to the Intercontinental Exchange third quarter Conference call.

All lines have been placed on mute to prevent any background noise.

After the speakers remarks, there will be a question and answer session.

If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad.

If you would like to withdraw your question. Please press star followed by the number two thank you.

Mr. Gardner you may begin your conference.

Thank you good morning.

<unk> third quarter 2020 earnings release and presentation can be found in the investors section of the ice dot com.

It will be archived and our call will be available for replay.

Today's call May contain forward looking statements. These statements are true undertake no obligation to update represent our current judgment and are subject to risks assumptions and uncertainties.

A description of the rest it could cause our results to differ materially from those described in forward looking statements. Please refer to our 2019 form 10-K third quarter form 10-Q, and other filings with the FTC.

In our earnings up when we refer to certain non-GAAP measures, including adjusted income operating income operating margin expenses effective tax rate and debt to adjusted EBITDA. We believe are non-GAAP measures are reflective of our cash operations and core business performance.

Find a reconciliation to the equivalent GAAP term the earnings materials and an explanation of why we deem this information to be meaningful as well as how management uses these measures in our form 10-Q when used on this call net revenue refers to revenue net of transaction based expenses adjusted earnings refers to adjusted diluted earnings per share.

The prior year trading.

Trading and clearing revenues totaled $711 million.

Of note are toast mortgage revenues in the third quarter grew 62% on a pro forma basis versus third quarter, a year ago, while Isis total net revenues pro forma for Ellie Mae grew 7% year over year.

Third quarter, adjusted operating expenses totaled $611 million, including $29 million related to Ellie Mae.

Total expenses would've been roughly $7 million higher if not for some credits we don't expect to repeat in subsequent quarters.

As we move into the fourth quarter, we expect marketing expenses to accelerate related to a robust IPO pipeline and the launch of back mobile consumer finance at.

Combined with a full quarter of Elliott expenses, which we expect will contribute around $105 million to $110 million, we expect fourthquarter adjusted operating expenses in the range of $695 million to $705 million.

Now, let's move to slide five where I'll provide an overview of the performance of our trading and clearing segment.

And our commodity markets lower energy revenues were largely result of elevated volatility across our market in the third quarter of last year, which related to the September attack on Saudi Arabian oil fields.

Importantly, however, energy open interest, which we believe is the best indicator of the long term strength of our business is currently up 9% versus a year ago and.

And our act and metals complex revenues were also lower year over year, reflecting continued global trade uncertain.

Within financial equity Index revenue, which is nearly half of our financial futures revenues increased year over year.

This strength was mitigated by lower levels of interest rate activity due to global interest rates remaining at or near all time lows.

Moving into our fixed income and credit business revenues totaled $191 million in the third quarter results were led by ice mortgage technology, which continues to benefit from the adoption of digital mortgage solution strong refinancing trend and positive buyer and builder sentiment.

Revenues for mortgage technology totaled $140 million in the third quarter, including 73 million attributable to LMA.

On a pro forma basis as I mentioned previously mortgage technology revenues increased 62% versus the third quarter of last year.

As we continued to integrate with our new colleagues from Ellie Mae, we're evaluating the metrics and guidance that will be most helpful for investors to understand our mortgage technology segment, we look forward to discussing our attention to February and to sharing new pro forma segment information in early December.

For the fourth quarter I'll note that we currently expect LMA revenue to be in the range of $220 million to $235 million representing year over year growth of roughly 35% at the midpoint on a pro forma basis.

Nri's bonds business low interest rates continue to weigh heavily on retail and muni trading activity.

Importantly, though while still early days or institutional effort is showing progress during the third quarter. We continue to see institutional interest in our portfolio trading service with two of the largest etfs sponsors now utilizing our offerings.

In addition, we continued to add new participants to the ETS hub network and have completed the integration of our ice bonds trading protocol with ice fixed income celeb.

Of note Lynn Martin has now taken on the digital responsibility Ubi's bonds business, which will be led by divorced woman, who also leads are etfs initiatives.

We believe that next phase of integration across are unmatched fixed income franchise will lead to greater product innovation, and we will better position or bond execution platforms to serve the vast institutional network of our fixed income data services business.

Turning next to slide sick I'll discuss our data and lifting statement.

Third quarter data services revenues increased 6% year over year in total of a record $589 million in the quarter.

Growth in pricing and analytics was 5% and was once again driven by customer demand for our sweet of pricing and referenced data products as well as a strong contribution from our index business, which now has over $270 billion of ETF asset tracking our industries.

Desktops and connectivity revenue grew 3% in the quarter, reflecting continued growth in our ice global network offset by slower trends at the <unk>.

In exchange data and feed revenue increased 9% as continued growth in our futures exchange data in a consolidated feeds business with supplemented by the NYSE share a strong year over year growth and industry step revenues.

Looking to the fourth quarter, we expect data services revenues to again accelerate sequentially to between 590 and $595 million. This include the sequential decline in exchange data offset by continued acceleration and pricing and analytics.

Our expectation is reported by accelerating HSV growth, which exceeded 5% entering the fourth quarter up from four 5% a quarter ago, and 4% two quarters ago.

As a result full year data services revenues are now expected to totaled $232 billion above the midpoint of our original guidance and roughly 5% higher than in 2019.

While the quality of our data products and the breath of our offerings are imported drivers of this strong performance. It would not have been possible without the resilience and commitment of our sales team. Despite the challenges of the global pandemic our team maintain their productivity and focused on serving our customers. Their performance has been critical not only to our success and <unk>.

2020, but perhaps more importantly is established significant momentum entering 2021.

Just need to our lifting business third quarter revenues totaled $111 million, the NYSE Healthgrades $57 billion, a total capital in the third quarter, including $35 billion in IPO proceeds.

During the quarter, the NYSE, well compounded pier and snowflake and extended our success in the technology sector, where we've raised nearly 70% of all technology related IPO proceed since acquiring the New York stock exchange in 2013.

I'll note in closing that our focus remains on serving our customers and delivering value to our shareholders. The value of our business strategy is once again reflected in open interest growth across our commodities business. The continued in compounding growth of our data offering and the strength of our mortgage technology business this diverse and resilient busy.

Model is delivered record revenues operating income adjusted EPS and capital returns through the first nine months of 2020.

It also enabled us to invest in expanding our mortgage network with the acquisition of Ellie Mae, which was accretive in its first month and she continued to at top and bottom line accretion in the fourth quarter and 2021 and beyond.

I'll be happy to take your question during Q&A, but for now I'll hand at the gym.

Thank you Scott and good morning to everyone on the call.

As I begin I would like to welcome the Ellie may team to their first vice earnings call.

While it's been less than two months since we closed on the acquisition in early September I've been impressed by the collaboration between our teams during the short time.

And I'm confident that the integration valley make is off to a very strong spark.

I believe this is a testament to the talents of our respective employee populations and our share entrepreneurial cultures.

Similar to our exchanges in fixed income businesses Ellie may integrated into ice mortgage technology is in network.

Ah network that thrives by offering a value proposition that aligns grow with the efficiency gains that we bring to our customers.

As we've seen across our network and futures equity and fixed income. These efficiency gains are best achieved through harnessing unstructured data to create mission critical information seamlessly linking participants to that information and ensuring that the network technology underpinnings are of the highest quality.

And security.

It is the execution of this value proposition that often propels an analog and digital conversion of an industry and it's a blueprint that we've applied across all of our businesses for over two decades.

Turning now to slide seven open.

Open interest in our global energy business is currently up 9% year over year.

And with average daily volume in our flagship Brent crude oil contract up 4% through September energy revenues in total are up 15%.

This growth further contributed to our average annual revenue growth of over 7% since 2015 growth that as a direct result of staying close to our customers understanding their evolving risk management needs and expanding the breath of the content that we offer across our energy network.

And our global net for gas markets revenues were up 27% through the first nine months of 2020 led by the continued growth of LNG and in particular are European TTS App natural gas benchmark, which continues to emerge as the breath of natural gas.

In addition, our environmental markets continue to grow with revenues up 12% year to date and 7% in the third quarter.

The globalization of natural gas and the growing adoption of environmental markets are trends that we began investing in over a decade ago.

With our Brent crude oil contracts, serving as the cornerstone of our energy network. We've expanded the range of content that we offer to our customers and today as a result of organic and inorganic investments trading on our network is not tied to any one product or any one region. Instead, we have an energy network that delivers comprehensive <unk>.

Management solutions provides capital efficiencies and is positioned to grow alongside the continued evolution of global markets.

Turning you to slide as.

Like what we saw in the commodity markets 20 years ago. There was an analog to digital conversion occurring in the U S residential mortgage industry.

Amid record levels of mortgage applications. Many lenders are finding themselves capacity constrained and in some cases or even offering artificially high interest rates in order to curtail origination volume.

From these capacity constraints for social distancing guidelines. This year has revealed many of the pain and inefficiencies that exist across mortgage origination workflows.

An ice mortgage technology is uniquely positioned to address these pinpoints.

We estimate that automating the U S residential mortgage workflows at $10 billion a year addressable market.

Critical to our ability to execute on this opportunity is our network one that in combination with Ellie Mae now spans from customer acquisition, all the way through to the secondary market.

Like our network across fixed income equities and futures solving for any efficiency requires comprehensive workflow tools, Richard datasets robust analytics and leading technology.

As an early example, our ice data services on our ice mortgage technology teams are collaborating to bring the market our first mortgage data product bye.

By combining data services expertise and cleansing and packaging unstructured data sets with the wealth of data that fits in our Mers mortgage database, our customers will soon be able to track and analyze mortgage production trends on a more granular level.

Turning now to slide nine police.

Servicing data, which ranges from or organizing raw and unstructured data such as with this Merced database example to our analytics indices and connectivity solutions Cross asset classes. These are a core competency advice, a competency that we across apply across all of our businesses.

The types of data information and analytics that we're creating helps our customers transact manage risk and become more efficient.

Coupling the high quality of our data our technology and the productivity of our sales force. This expertise has been core to building a track record of consistent and compounding growth.

Through an array of challenging economic conditions are data business has proven to be resilient and at a time when some of our peers have understandably guidance to revenue erosion. Our platform is seeing an acceleration having registered it's 43 consecutive quarter nearly 11th straight years of year over year revenue growth.

Turning to slide can.

Through the first nine months of 2020, we've delivered double digit revenue growth double digit operating income growth and double digit adjusted earnings per share growth.

As I mentioned last quarter, we have a vision for ice to deliver growth and all economic environment.

So far 2020 is but an excellent example of that it's this vision that distinguishes us not only from our peers, but also from numerous other companies that operate outside of the financial services industry.

Each individual asset class that we service, whether it's more mature or in the early stages of digital conversion like our mortgage and fixed income businesses.

Offer unique insight that can be applied to help improve our responses across each of our other asset classes.

Have we been as we have expanded over the last two decades, we become more knowledgeable and we're continuously applying that knowledge to our networks to enhance the value proposition to our customers.

This approach that has enabled us to grow in each of our 14 years as a public company.

So we're excited about the growth opportunities that lie ahead for the balance of this year and excited to extend our track record of earnings growth in 2021, as we continue to work closely with our customers and key industry participants to help them navigate these times, while creating value for all of our stakeholders.

So I'd like to thank our customers to their business and their trust in this quarter I'd also like to thank my colleagues that ice for their contributions to the strong third quarter results and again I'd like to welcome our new colleagues from LMA.

I will now turn our call back to our moderator Andrea to conduct a question and answer session until 930 eastern time.

At this time I would like to remind everyone in order to ask a question.

And the number one on your telephone keypad.

Due to the number of analysts on the call I'll ask that you limit yourself to one question.

If you'd like a follow up questions. Please re enter the queue will pause for just a moment to compile the Q&A roster.

And our first question comes from the line of ritual.

Paper Sandler your line is nello.

Good morning, Jocelyn good morning, Scott.

I guess given your acquisition to Ellie May you get much more diverse business as you've grown fixed income and I guess on a sum of the parts basis stock looks inexpensive too.

To us anyway.

So my questions are why haven't you chosen to break it out and I guess, Scott did sorta address you're still looking at how to.

Report this segment results, but I guess more importantly are you concerned over the valuation or versus some of the parts and how patient will you be over time, whether I know you just acquired LMA, but how you're thinking about the some of the parts given your diversity here now.

Thanks for the question rich so the first thing we're thinking it is Scott mentioned and you alluded to.

We're going to do a better job now of a.

Presentation, so that so that you and our investors have.

Visibility into how we're thinking about and running our business.

Basically.

As I think you know since you've covered as for many years.

We run network businesses, and we run businesses and book Tour.

Opportunities, where the next customer or the next product on that network become additive to everyone on the network and continues to compound.

Our revenue and earnings growth across that network as a result, and so.

<unk> feeling really good right now if you look at.

Or commodity business.

Futures business. We're open open interest is up 9% year over year when the markets are in contango that's normally a.

A signal or a precursor to volume in revenue growth in the future. So we're very very happy with the way that businesses performing if you look at our.

Fixed income and data business.

You see that Asce, which is a future indicator of business is accelerating.

And compounding.

And as we've indicated you if you look at our new mortgage network.

Which were still combining with our other assets.

Double digit both in subscription and in transaction revenue growth and.

And earnings growth for us in those businesses. So so all of the segments that we're.

Going to be showing you beginning in the first quarter are well positioned for 2021 and and the reason that that I'd like to end my prepared remarks on this graph that shows.

Long term earnings growth of the company is that that's how we are running it and as a result of that.

Mentality that this management team has.

Ah mentality that our job is to deliver EPS growth.

Well normally found that the stock will catch up to that growth.

And.

And we appreciate that many of the competitors and futures are interest rate and financial oriented competitors and they're struggling due to the interest rate environment. Many people in the data space don't have the global footprint that we have defined growth around the world and many people that are that are in the mortgage space don't.

Have the market share gains that we've been able to gain including in just in the two months since we've acquired alley.

That has continued to accelerate that that business. So we're all those networks are vertical position relative there are peer group and I think that will become apparent over time is this management team delivers bottom line results and just instinct that price eventually catches value as demonstrated every share we've ever bought back in our repurchase program. A year later has been <unk>.

20% more than two years later has been worth 40% to 50% more and.

And so it does catch up I do think that the new segments will help and as I mentioned in my prepared remarks, we intend in early December to give you all some history with regards to how those segments will look back from 18, and 19 and year to date.

So that you'll have that information in early December and as Jeff said will present, the company that way in the fourth quarter.

Your next question comes from the line of Alex Cramps.

You're lying is open.

Yeah, Hey, good morning, everyone. Just I guess quick one on the on the mortgage sites first of all I think early came in better than your initial expectations. I know, it's it's a small number it was only a month, but also for Q looks pretty robust. So just curious about.

The near term outlook, what you're seeing but related to that I think the mortgage bankers Association recently revised forecast productivity for next year. So just curious if you're starting to get more comfortable or bullish on on the outlook for next year that you've laid out I know, it's early days, but just curious of what your latest thoughts.

Hey, Alex it's been out I will take that so a couple a couple of things I'll share with you. It's only about a couple of months since since we've closed on the business, but a couple of.

Interesting things to share with the group number one.

Sure just on the integration front, we've made a ton of progress on pulling together our mortgage assets. So the simple final business the merge business and Ellie Mae we've been able to pull businesses together to operate as one very very quickly.

And what enabled us to do that as we knew the LMA business very well prior to.

Doing this transaction because we had a long term partnership with them with simple file. So we had a good view of what we were going to do we got to a room quickly in September we were able to make the decisions that needs to be made to get the business organized correctly have made all those decisions announced them to all the boys in that we're executing against the single vision in a single strategy.

Two other evidence points I'll give you is so well.

Well publicized that volumes are strong.

Rates are low millennials are buying you're seeing people purchasing new homes to get more space to get to get a pool transitioning out of cities and the suburbs, we're seeing all of that kind of mix.

One of the interesting things that not many people appreciate around early may as we also have a bit of a forward view on what's happening in that space because we're in the origination space and we see all the way up front of my original application process when somebody's applying for a refinance for the purchase of a new home we see.

That 60, plus days earlier than the rest of the market. So.

So we see those trends that I could say from what we see on the platforms to that that that that volumetric aspect of the business.

It needs to be strong and it just firms are view that we had going into this transaction what the opportunity is with this business.

The third thing I'd point too and the most important thing and just just touched on it and an answer that he just add.

That I think is the most important thing to look at is our subscription sales results.

So if you we modeled a view as to where sales of new encompass seats would be sales of their artificial intelligence engine called AI Q.

That's going after the analytics Ham that we have.

Identified in this space, we had a view of where subscription sales wood and the year and I can say that in the last couple of weeks. The business is already hit the subscription sales numbers, where we thought they would end of the year.

The reason that that's important is that as we're hitting those sales results.

It helps to firm our view on what we assumed market share growth would be so they're continuing to gain market share they're continuing to gain more customers more users. There's more recurring revenue coming out of the platform. It's a stronger network and all of this pulls through additional volume.

So net net is we've everything that we've seen in the two months of owning the business is really firmed her original views.

Your next question comes from the line of Mike, where you think of America. Your line is open.

Good morning, and thanks for taking the question.

At least one more intelligent.

Getting that close to do more work in the area.

Can you just provide maybe an update on when you think about the growth opportunities.

And more importantly played a different components of the revenue growth meeting you have obviously volume deponent, but also the adoption and given the ladder you kind of get more credit in terms of evaluation.

Over time, it's a little bit more importantly than in any other factors are opportunities that you're seeing it as you do more work in that area in the market.

Hi, Mike, It's it's bad I'll I'll take this one as well so there is.

My question, there's a whole bunch of different opportunities for growth in this business.

Which is what gave us conviction of this business can grow really through any any volume environment that we'd see and.

And we touched when we announced the deal on on our ability to capture that $1 billion Tam in the closing and post closed space. So that's that's where the where time together and creating a D closing room for the underwriter digitally connect to the settlement agents on the network that we have across mortgage so I won't go in.

A lot more detail on that one but I figured because we went into a lot last time I figured I'd go into a couple of others that we're capturing that I think are under appreciated.

So first we identified that there is a $4 billion tan in front of us and just origination and processing.

And we're obviously very well positioned there the businesses is touching almost almost 50% of us mortgages that are coming through the process refined and purchases.

And as I just mentioned the sales results that we've just seen as firmed our view on the ability to continue to gain market share that space.

The second thing that that is a matter of origination processing Tan is really about our network.

And I don't know that people really appreciate the fact that the business our business here has the largest mortgage mortgage network in the us.

So we interconnect hundreds and hundreds of service providers to lenders and this network is very well established all that connectivity exhibit and there are significant benefits.

At the lenders themselves can receive from utilizing and buying services from those third party providers.

Overall network yet is underutilized.

So the types of benefits that lenders get from watering services off of our network is that it's a very efficient process.

If you are using the encompass system and you order third party services that ordering process is automated because we know in the workflow when you're going to order a credit report when you're going to order a flood report all of that is automated and more importantly, all of the content that comes from that third party.

Digitally sent to you. So that you can consume it you can you can easily.

At around you can analyze it and you can you can actually do things with it.

The other way of ordering the services outside of the network is you'd have to manually go out and select vendors you have to manually procure the information you're going to get back.

<unk> documents Pds with data that you can't really do anything with Jeff didn't have extra steps of of manually re keying information.

So today vendors are really starting to see the benefits of ordering services off of our network and for the benefit that we're providing lenders as well as the benefit that will provide volleys third party data providers, we receive a revenue share for that and we're seeing this part.

This opportunity in front of us that we're starting to capture in that part is accelerating substantially.

The other piece that I will touch on it the data and analytics site.

We've had a few few questions since we announced this deal on this.

And the one I want to focus on is really analytics and what we're executing again today here against another what we've identified as a $4 billion Tan.

So we've identified that on average origination fee costs around $8000.

Of that time studies that we've done estimate that at least $5200. A that 8000 is just manual processing and.

And technology costs are well less than 500.

And the year 2020, you'd think that that would almost be the reverse that manual processing would be a lot less and technology somewhat more.

Our time studies have shown that at least half so call at 2600 of that manual processing could and should be automated with simple tools to be able to analyze and take away a lot of the stair and compare work that happens.

Well this isn't just a dream we're actually executing on this this is a time that we're accomplishing in capturing when we talk about that AI queue business. The business all capsule on that LMA acquired.

In the last couple of years.

This business goes through for our customers today and captures documents. It recognizes the data on those documents extracted and most importantly, we apply analyzers to that data annulled.

Analyzers that today for our lenders can go through and automate the process of when you're looking at a credit report to make sure that the social security numbers match the date of birth matches.

The date of the credit report is within the window that the lender was expecting that credit report to be to approve belong the score that the individual had on that credit report matches. The qualification criteria for the product that that does that consumer is applying for.

All of this is happening today and we're capturing with.

Capturing this opportunity and it's a significant growth opportunity and that data and analytics quite analytic space and we see it already coming through in terms of AI queue sales that.

Happened this year on the platform interested in the last two months.

Of owning the business, we're seeing these analyzers getting picked up from our existing.

Customer base. So those are two new areas that I would say no to focus on going forward as other areas of growth for this space.

Your next question comes from the line of Kenworthy.

J P. Morgan your line is open.

Hi, Good morning, and thank you for taking my question.

Like we're seeing further pressure to migrate away from LIBOR in the U S may be first can you remind us if there's any impact on this transition away from LIBOR.

In terms of data revenue benchmark service revenue.

I don't I don't think there's much but really can you talk about the transition to Sonya in terms of trading in Europe, and if there's any opportunities in this transition.

To either grow trading or grow data or should we really expect this just to be a swap from your wry for thanks.

Yeah, that's a good question.

We're right we're in the middle of a transition. So so there is a bit of Borg if you will as to the timing of this transition obviously regulators are pushing.

But there are a lot of underlying.

Business issues that have to get dealt with in the transition. So it's hard to know.

Date other than the trend is there.

The.

Sale of LIBOR.

As an index for us as of the minimum revenue.

And.

And there is a question as to how long LIBOR made survive after the industry does move dystonia in order to pick up legacy.

Business of that that just couldn't be transitioned over so so LIBOR may exist or some time and it's hard to know what that time is.

Because it is.

Is so pervasive around the world and there are many there are other eyeballs by the way that LIBOR being dollar.

LIBOR, but but there are a lot of other <unk> many of which were the calculation agent all which have the same issues.

The transitions is actually trading Sonya has accelerated our market share is very strong, we're probably north of 70% market share of the all the trading and Sonya.

And and so the market is getting comfortable with with simultaneously trading Sonya based futures and LIBOR based futures.

And so we feel very very comfortable and confident with where we were.

Positioned are trading activities.

To be able to provide a bridge and if the to survive side by side for some time will be enough beneficiary of that.

As well.

But ultimately it's a straight swap from once the other there's not anything any any any way to really grow. This this grow from this from this transition well the one the one area that is really under discussion is.

Is the small and mid sized regional banks and.

And a whole range of products that.

That.

Are not necessarily covered by is the swaps or hedged with swaps.

And so what you're seeing is is that having.

Work with the industry to come up with a common rules set on how the transition can go in and you see that sort of institutional market coming up with game plans, but but in the the small and widely dispersed market.

They're not they're not.

In the swamps business and they've got there are many people have 30 year agreements that have the word LIBOR in it and so we have been developing an alternative to LIBOR called the bank yield index.

Which we publish we've been publishing it weekly and people have been doing academics have been doing white papers on it to see how it tracks a credit base.

Environment and we've now.

Accelerated the publishing of that daily.

To create more data points by the way for for analysis and.

And it's very possible that there could be a transition away from LIBOR for the credit space part of the industry that is not sonya or.

And.

So we have a very very good benchmark that we're working on that will be up the regulators and abroad industry adoption.

If that happens, but there certainly is a lot of work going on underneath to work to try to try to at least have a viable alternative should that in these reviewed rise and Ken you've seen historically as you transition from one contract definition to a similar but different one the impact tends to be as you near that.

Transition point, you see a decline in the trading of the old and everyone's not quite moved into the new and the good news for us as interest rates only make up about 4% of our revenue. So it's a relatively small impact regardless.

Your next question comes from the line of Jeremy Campbell of Barclays. Your line is open.

Hey, thanks.

Maybe just a follow up to Mike question, a little earlier around the mortgage Tam and the growth.

Then you gave some really good color around the opportunity to capture Tam from your end and sweet a solution another L as in the fold.

Just wondering as you guys look at your solutions right now are there any additional white spaces, you'd ideally like to fill in in mortgage land either to build organically or bolt on inorganically that might make the holistic solution a little more compelling to the originator with whom you don't currently have a partnership or to augment the data and analytics product for lung seem to sell they're just.

Seems to be some additional properties out there that can be available, but not sure if any of that fits within your vision.

Thanks, Jeremy.

What I can say there is that we feel good about the position that we're at with the assets that we have I mean, we literally our network touches.

Every single part an aspect.

Alone all the way from you as a consumer are thinking about it you're going out and doing your research and touching the point of sales systems to engagement between that individual customer and the lender that they've chosen to to do that long with the digitization of all the documents and helping to automate.

That origination process now interconnecting the originator to the settlement agent and electronic buying clothes. So we have all the right pieces as I mentioned, we focus very very early on on just making sure that we got the integration of these businesses.

Nailed and executing on that we did very very quickly to get the team all operating as one and the only thing I point out is that a lot of the work we're talking about pulling the networks together of creating a digital be closing world.

It didn't just start now that started in the partnership that we forge with with Ellie may back when we bought simple file and simple viable so had relationships with them that predated that so a lot of us works already underway.

All that said as I had mentioned it and an answer earlier, it's I think it's under appreciated a little bit about how how.

How strong that network is that we have having the largest network in the U S mortgage origination space. So with that position. We also see what are all the third party vendors doing what are the quality of the services that they provide and we're in a position that if there is bolt on opportunities that we think we can accelerate growth.

Or entities by having them.

More directly.

Part of our business as a bolt an opportunity for us and we would evaluate those.

Your next question comes from the line of Dan Shannon of Geoffrey's. Please go ahead.

Hey, good morning.

My question is on the data business Covid above your guidance you talked about some of the trends in your prepared remarks, Scott, but I was hoping you could.

Kind of expand upon where the strength is coming from and.

You have historically talked about it on longer dated time periods in terms of the outlook. So maybe if you could give us a look into the next year now that business is trending.

Sure. Thanks for the question Dan.

To look at the beat in the quarter what was it a couple of things clearly as I mentioned in my prepared remarks, the ZIP revenues related to the significant retail activity in the cash equities markets.

Contributed to that but the one that I did.

Been really happy with this year has been the pricing and analytics business that in a world where our sales team has been limited just like everyone else in terms of travel ability to meet face to face, they're still crushing that they've held productivity level versus the prior year.

You know on track to achieve I think it's like 98 or 9% of their signings objective and that business with you'll remember I didn't grow 5% to 6% come in the end of the year, which is in February before I, even knew of Covid. One is going to grow 5%. This year and the growth has accelerated each quarter and it's going to grow again and.

Fourth quarter, and likely will be around 6% growth in the fourth quarter. So that business is doing phenomenally, well and it's a lot of factors.

People continue to consume more of our prices.

As consolidation of vendors happens, we can be a one stop shop for people in their data need whether it's our data or feed or network are all of that we can tell our indexes as I mentioned in my prepared remarks, we're now up to $270 billion worth of assets that track are larger.

Fixed income indices, so if that price and and analytics business that I'm. So happy with and then you ask about 2021 and while I will give you a dollar guide I will point you to NASD that was 4% two quarters ago that above five now and will trend higher than the fourth quarter.

And so to me that again is you know today that 90% of our future revenue.

As we roll into the New segment review that Asce will effectively be 100% of the forward revenue and so if you've got an AFC number today that sit in between five and 6% that says you are set up very well to deliver that type of revenue growth next year. So we feel very good about the execution of that business very good about how the sales team has performed.

Also mentioned come in the end of the year. The fact that we were hiring into the growth opportunities, we saw and we've done that hiring but in a world where people aren't in the office getting knows that part of the team up to speed has been more of a talented the good news, though is that means we've had a good year. This year without really a lot of productivity from the new boat and as we move into next year.

They will join us at the high productivity level that I think can give us an added boost so that business right now is hitting on all cylinders and we feel very good about not just the fourth quarter, but about 2021.

Thank you.

Your next question comes from the line of our egos of credit Suisse Your line or something.

Hey, good morning, everyone that I guess, it's just another one on the mortgage tech business Magenta appreciate all color.

Far.

The deal fairly you makes a lot of censorship, Nicole profile and structural tailwind already seemed really nice.

Contributions soulmate off from from day one.

Some of the larger competitors space levels and talking about the strength digital capabilities and the network effect of that thinking as well. So I was just hoping you could talk a little bit about specific areas, where you're the most appreciated versus some of the larger plants.

More on the on structured data side.

Internet from the book flow Oreo network effects or something else. So just look machine.

Areas you both to contribute.

Thanks.

Sure. Thank you for that.

I'd say the major areas, where we are different is I mean, if you just look at industry assessments of.

Of market shares and and those market shares reflect the strength of the of the network that you have the businesses that we have.

Have by far the largest network that stretches all the way from the inception of the origination all the way through to closing.

And I can't stress that enough that you need to think about that entire ecosystem from the inception of your thinking about alone all the way through to documents can follow that a county courthouse to to consummate a transaction between a buyer and the seller.

So it's the strength of that network is first and foremost the major differentiator. So we have.

Underneath that in network, so not only on the origination side that we have is by far a very big market lead.

In terms of the loan loans that we touched on the us trending getting up to a close to 50%, but also in the closing in post closed space with asset slight simple file and mirrors.

Simple file we've used the phrase that they went out and paved the dirt road. So they went out and literally did the hard work of digitizing digitally connecting thousands and thousands of counties around the us two thousands and thousands of attorneys that are in the middle of her slash settlement agents that are in the middle of closing.

Real estate transactions, the reason that Ellie Mae with such a strong network came in and did a partnership with simple file a few years ago as they acknowledged and realized that the piece of the network that LD made did not have in the only entity that really had a digital highway on a digital network to electronically clothes.

Transactions.

Was simple bottle. So that's that's a lot of the real differentiator the other piece I'd say underneath the network.

Under appreciated the datasets that we have that are very unique within that business. So one of the things that simple file has by digitizing that network of all these settlement agents and all of these counties. It is the only real repository in the U S that knows exactly what the settlement fees or what the settlement requires with the settlement.

Requirements are for every real estate just about every real estate transaction that happens in the U S.

With that type of information you can use that information put forward into the origination process and reduce a substantial amount of errors in the processing of loans by by sharing that information very early on digitally sharing it and then also including it with the analyzers that I was speaking about earlier to be able to compare one.

The requirements that this county has on closing in particular transaction versus what's getting pulled together and consummated in the origination package.

Of that long. So those are two of the main areas I would highlight is just substantial headstarts is differentiators that we have that are very difficult for others to replicate.

This is Jeff and one of the things that we really liked about business. When we started to think about putting together our network our existing network and the only main network was that we've opened that network and so many of these.

Companies that you may view as competitors.

Used parts of our network in order to offer their services because our network. So comprehensively because it open and you can pick off you could joined the network at the very beginning or all along the chain.

That to a certain degree benefit from the entire growth in the industry.

As partners.

Swap partition, if you will with.

With many others in the industry. So that model is very compelling than that.

Our goal as early as I am.

Said on the final slide that we land on his to really just grow our earnings per share.

Not necessarily too.

To completely crush every competitor.

Your next question comes from Brian The Gal of Deutsche Bank. Your line is open.

Great. Thanks for your money folks. Thanks for taking my question just one quick clean up on the on the tax rate outlook for <unk> I don't know if I missed that one but the bigger question is done another one in the mortgage business horse.

Just.

I guess first of all it's got if you can just reiterate the 8% to 10% growth we may business.

That you've stated in the past four 2021, even with the with the refi headwinds and then I guess.

More importantly, and thinking about the organic growth of that business from from.

From obviously the large towns.

In in the processing side, but also the organic growth from existing customers using the network.

And how should we sort of think about those two different elements.

Contributing I do think using that organic growth data.

Or as you talk about this segment in your carpet out into next year that would definitely be something that would be helpful. For the evaluation. So we could we could isolate that and then and then the ability to scale that on that cost base that you from outline for <unk>. If you think of 21.

What not to give expense guidance, specifically, right now and that but but but how should we think about scaling.

The growth of the mortgage business on that existing cost base.

Columbia Straightened out so I think that was 30 question.

The tax rate will will be in the 20% to 24% guidance that's been consistent for the year other than the third quarter as we had to reverse the UK back to 19%.

To that we would expect the fourth quarter will go back to kind of where we started the year.

Yes, Lee as we roll early and that the U S thinks business that'll put a little over pressure on the the tax rate.

And the subject what ever happened in the election, but even that if you are modeling I don't see a reason right now to move away from the 22 to 24.

I'm going to need the extent first.

Think one of the things we like about the this mortgage business is similar to our other businesses.

It is scalable in the sense of the incremental dollars.

Generate good incremental margin that notwithstanding we are in a place where we are making a number of investment that has been alluded to in his answers with regards to be building on and he closing room at as one really good example, and so if you're looking at the fourth quarter I think you need to take a couple of things into account. It if you want to use that is run.

Right number one for purchase again, we have to rebuild the capex and cat labor and so with that run rate should probably another 20 on top of that.

And then I would throw the 20 to 25 of investments, we're going to be making that not only grow the business next year, but more importantly.

Two months ago on the deal call. We said, we thought it was a business that could grow 8% to 10% per decade.

And so we'll make some investment again that notwithstanding you'd do that math and you'll see that it will still be very accretive to the bottom line I think in the four core alone it's going to be 7% accretive. So that's kind of on the expense side.

I don't know the today is the day, we'd say a whole lot more in terms of our guide on the revenue.

Still feel good about the 810% we do for all the reasons been alluded to.

As we move forward.

We mentioned going in that we expected refis to go back someone in an earlier question said that the industry assessments, we're improving with they're really just improving closer to where we were already work.

The those estimate tend to be a little bit pessimistic. So.

Again, we're only two maybe two months away from from closing the deal and having the call with you. All been is given a lot of color on why we love This business and why we believe it absolutely was the right investment.

And so as I sit here today two months later.

Absolutely, 100% sales confident that it can grow the way we talked about.

Again, if you would like to ask a question press star and the number one on your telephone keypad.

Your next question comes from Alex Blow steam of Goldman Sachs. Your line is open.

Great. Thanks, Good morning, everybody, maybe shifting gears a little bit I was hoping we could touch on you guys credit trading business.

I believe towards the end of the year you guys talked about maybe some sort of a full integration between ETF hub and some of the training venues of you've acquired so maybe talk a little bit about what's the kind of overall revenue contribution from those businesses today, how do you think about that evolving over the next 12 months or so upset because they think you guys meet some investments there over the last 12 months.

Thanks House has been.

And.

As Scott had mentioned in the question earlier around the resettlement of the re segmentation of the business that will common in the first half of December that's when we're going to start giving more color on the revenue aspect of this.

So the answers one part of your question on the other side of it just just to give you. Some flavor of continued strides that we're making on the institutional space <unk>.

Strategy really has has three like Stuart. So first is the automation of extremely complicated manual workflows and a space, it's growing like crazy, which we've talked about a lot which is that primary trading area of ETS creation redemption. That's our ETF help project. The second leg of the strategy I talked about on our.

Last earnings call.

With the launch of ice select and what I selected as an aggregation.

Engine that we've created that pulls together all of our protocol. So the click the trade protocols are auction protocols and RFG protocols all into one.

And more importantly, it also added all of our institutional analytics and pricing content that all of <unk> side. All this all the sales side customers utilized today for understanding what the fair valuation of the instruments are that they are that they are training and Scott had mentioned that as part of this realignment we're really.

Pulling together, our execution vendors and fixed income very closely aligned to our fixed income.

Data business underlined.

The last piece. We also I also mentioned on the last one is called the we've now connected I select to ETS hub and we've also connected I select to third party on our systems such as a lab.

The progress that we've made since that last earnings call has been significant so we've added another AP citigroup onto our Etfs hub network. We've added for more market make a significant market makers and all the total of southern market makers in there.

That we just announced in the last couple of days. We now have six issuers that are part of our advisory committee on ETF half so that the.

The number of issuers are expanding that are helping to give us their requirements that we would need to cover to be able to add onto the onto the ETF hub. In addition to Blackrock.

And we've had marketmakers not only testing, but now they're executing.

Going into the secondary market to procure bonds via Isolette.

And the last couple of weeks, we've had some market makers going into using our secondary platforms and I select to go out and procure bonds to procure the basket that then they negotiate in our primary trading menu being ETF hub to swap that basket.

Of bonds for sure sure of ETS.

And the last bit a bit of progress that we've made is that we have had multiple portfolio auctions executed on our platform by two of the largest issuers to the largest asset managers in the space in just the past couple of weeks.

So a lot of Alas, you've heard me talk on on a number of these earnings calls and a lot of it has been putting all the infrastructure in place laying a lot of all the rails and groundwork that needs to be done to pull this together, it's together and we're starting to see signs that some green shoots are starting to develop there.

There are no further questions at this time Mister Speaker I turn the call back over to you.

Thank you Andrea for moderating and thank all of you for joining us this morning.

We look forward to speaking to you again soon and in the meantime, I guess I hope that you and your level and stay safe and stay healthy and with that I hope they'll have a great day. Thank you.

This concludes today's conference call you may now disconnect.