Q4 2021 Intercontinental Exchange Inc Earnings Call

Good morning, and welcome to the Intercontinental Exchange fourth quarter 2021 earnings conference call and webcast.

Speaker 1: Good morning and welcome to the Intercontinental Exchange fourth quarter 2021 earnings conference call in webcast.

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Speaker 1: I would now like to turn the conference over to Mary Caroline O'Neill, Head of Investor Relations. Please go ahead.

I would now like to turn the conference over to Mary Caroline O'neill head of Investor Relations. Please go ahead.

Good morning, Ice's fourth quarter 2021 earnings release and presentation can be found in the investors section of the ice dot com. These items will be archived and our call will be available for replay today's call may contain forward looking statements. These statements, which we undertake no obligation to update represent our current judgment and are subject to.

Speaker 2: Good morning. ICE's fourth quarter 2021 earnings release and presentation can be found in the investor section of the ice.com. These items will be archived and our call will be available for read.

Speaker 2: Today's call may contain forward-looking statements. These statements, which we undertake no obligation to update, represent our current judgment and are subject to risks, assumptions, and uncertainties. For a description of the risks that could cause our results to differ materially from those described in forward-looking statements, please refer to our 2021 Form 10-K and other filings with the SEC. In our earnings supplement, we...

Risks assumptions and uncertainties for a description of the risks that could cause our results to differ materially from those described in forward looking statements. Please refer to our 2021 Form 10-K and other filings with the SEC.

In our earnings supplement we refer to certain non-GAAP measures. We believe our non-GAAP measures are more reflective of our cash operations and core business performance, you'll find a reconciliation to the equivalent GAAP term in the earnings materials. When used on this call net revenue refers to revenue net of transaction based expenses and adjusted <unk>.

Speaker 2: We believe our non-GAAP measures are more reflective of our cash operations and core business performance.

Speaker 2: You'll find a reconciliation to the equivalent GAAP term in the earnings materials. When used on this call, net revenue refers to revenue net of transaction-based expenses and adjusted earnings refers to adjusted diluted earnings per share. Throughout this presentation, unless otherwise indicated, references to revenue growth are on a constant currency basis.

Earnings refers to adjusted diluted earnings per share throughout this presentation, unless otherwise indicated references to revenue growth are on a constant currency basis. Please see the explanatory notes on the second page of the earnings supplement for additional details regarding the definition of certain items with us on the call today are Jeff Sprecher, Chairman and CEO .

Speaker 2: Please see the explanatory notes on the second page of the earnings supplement for additional details regarding the definition of certain items.

Speaker 2: With us on the call today are Jeff Sprecher, Chair and CEO , Warren Gardner, Chief Financial Officer, Ben Jackson, President, and Lynn Martin, President of the NYSC and Chair of Fixed Income and Data Services. I'll now turn the call over to Warren.

Warren Gardiner Chief Financial Officer, Ben Jackson, President and Lynn Martin President of the NYSE and chair of fixed income and data services I'll now turn the call over to Warren.

Speaker 3: Thanks, MC. Good morning, everyone, and thank you for joining us today. I'll begin on slide four with some of the key highlights from our fourth quarter results.

Thanks, Nancy good morning, everyone and thank you for joining us today I'll.

I'll begin on slide four with some of the key highlights from our fourth quarter results.

Speaker 3: Adjusted earnings per share totaled $1.34, up 17% year over year, marking the best quarter in our company's history.

Adjusted earnings per share totaled $1 34.

Up 17% year over year, marking the best quarter in our company's history.

Speaker 3: Net revenues totaled a record $1.8 billion and increased 10% versus last year.

Net revenues totaled a record $1 8 billion and increased 10% versus last year.

Speaker 3: Total transaction revenues grew 11%, while total recurring revenues, which accounts for nearly half of our business, increased by 10%.

Total transaction revenues grew 11%, while total recurring revenues, which account for nearly half of our business increased by 10%.

Fourth quarter, adjusted operating expenses totaled $749 million slightly higher than expected driven by additional severance as well as higher performance based compensation due to the strong results to finish the year.

Speaker 3: Fourth quarter adjusted operating expenses totaled $749 million, slightly higher than expected, driven by additional severance as well as higher performance-based compensation due to the strong results to finish the year.

Adjusted operating income increased by 14% totaling a record $1 $1 billion.

Speaker 3: Adjusted operating income increased by 14%, totaling a record $1.1 billion.

This strong operating performance contributed to a record full year free cash flow of over $2 $8 billion.

Speaker 3: This strong operating performance contributed to a record full year keep free cash flow of over $2.8 billion, of which we returned a billion dollars to shareholders through dividends and buybacks, while also reducing our gross leverage to three times EBITDA, nearly a full year ahead of schedule.

Which we returned $8 billion to shareholders through dividends and buybacks, while also reducing our gross leverage to three times EBITDA nearly a full year ahead of schedule.

Speaker 3: Now let's move to slide five, where I'll provide an overview of the performance of our exchange SEC.

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

Fourth quarter net revenues totaled $1 billion, an increase of 17% year over year.

Speaker 3: Fourth quarter net revenues totaled $1 billion, an increase of 17% year over year. This strong performance was driven by a 71% increase in our interest rate business and a 29% increase in our energy revenues, both driven in part by rising inflation expectations.

This strong performance was driven by a 71% increase in our interest rate business and a 29% increase in our energy revenues, both driven in part by rising inflation expectations Rev.

Speaker 3: Revenues within our global oil complex increased 29% year over year. Well, natural gas and environmental products, which represent approximately 40% of our energy revenues, increased by 36% in the quarter and we're up 20% for the full year.

Revenues within our global oil complex increased 29% year over year, while natural gas and environmental products, which represent approximately 40% of our energy revenues increased by 36% in the quarter and were up 20% for the full year.

Speaker 3: Recurring revenues, which include our exchange data services and our NYSE listings business, increased by 8% year over year, including 10% growth.

Recurring revenues, which include our exchange data services, and our NYSE listings business increased by 8% year over year, including 10% growth in listings.

Speaker 3: Turning now to slide six, I'll discuss our fixed income and data services segment.

Turning now to slide six I'll discuss our fixed income and data services segment.

Fourth quarter revenues totaled a record $480 million.

Speaker 3: Fourth quarter revenues totaled a record $480 million, a 7% increase versus a year ago. Recurring revenue growth, which accounted for nearly 90% of segment revenues, also grew 7% in the quarter.

A 7% increase versus a year ago recurring revenue growth, which accounted for nearly 90% of segment revenues also grew 7% in the quarter.

Speaker 3: Within recurring revenues, our fixed income data and analytics business increased by 6% every year, including another quarter of double digit growth in our index franchise.

Within recurring revenues are fixed income data and analytics business increased by 6% year over year, including another quarter of double digit growth in our index franchise.

Speaker 3: while other data and network services grew 7% driven by continued demand for ICE global networks and consolidated fees off.

While other data and network services grew 7% driven by continued demand for ice global network and consolidated feeds offering.

Speaker 3: For the full year, data services revenue increased by 6%. And importantly, annual subscription value, or ASV, enters the first quarter up 5.5%, setting us up for yet another strong year of compounding revenue.

For the full year data services revenue increased by 6%.

And importantly annual subscription value or <unk> entered the first quarter up five 5% setting us up for yet another strong year of compounding revenue growth.

Speaker 3: Let's go next to slide seven where I will discuss our mortars technology segment.

Let's go next to slide seven where I will discuss our mortgage technologies segment.

Fourth quarter mortgage technology revenues totaled $346 million.

Speaker 3: Fourth quarter mortgage technology revenues totaled $346 million. Recurring revenues, which accounted for over 40% of segment revenues, totaled $149 million and grew 26% in year.

Recurring revenues, which accounted for over 40% of segment revenues totaled $149 million and grew 26% year over year.

Speaker 3: While total mortgage technology revenues declined slightly, down 1% in the fourth quarter, we outperformed an industry that experienced a roughly 30% decline in origination volume.

While total mortgage technology revenues declined slightly down 1% in the fourth quarter, we outperformed in industry that experienced a roughly 30% decline in origination volumes.

Speaker 3: For the full year, mortgage technology revenues grew 17% on a pro forma basis, reaching $1.4 billion, well ahead of our initial expectations and on track to achieve our target of more than doubling revenues over a 10-year period. I'll conclude my remarks on.

For the full year mortgage technology revenues grew 17% on a pro forma basis, reaching $1 4 billion well ahead of our initial expectations and on track to achieve our target of more than doubling revenues over a 10 year period.

I'll conclude my remarks on slide eight with some additional guidance.

Speaker 3: We expect full year total recurring revenues to be between $3.68 billion and $3.75 billion. This includes approximately $30 million of headwinds related to FX.

We expect full year total recurring revenues to be between $3 $6 8 billion and $3 $75 billion. This includes approximately $30 million of headwinds related to FX. The planned phase out of Sterling LIBOR and Euronext post Brexit decision to migrate certain connectivity services.

Speaker 3: the planned phase out of Stirling Libor, and Euronex's post-Brexit decision to migrate certain connectivity services away from our UK data center and onto the continent.

Away from our UK data center and onto the continent.

Speaker 3: is worth noting that the majority of Euronext connectivity revenues are expected to be offset by a related reduction in cost.

It is worth noting that the majority of Euronext connectivity revenues are expected to be offset by a related reduction in costs.

Adjusting for these items, we expect core growth in our recurring revenues, which again accounted for half of our business to be approximately 6% to 8% for the full year. This strong growth, which is on top of 10% growth last year is expected to once again be led by our mortgage technology business, which we expect will grow in the low to mid teens and importantly.

Speaker 3: Adjusting for these items, we expect core growth in our recurring revenues, which again account for half of our business, to be approximately 68% for the full year. This strong growth, which is on top of 10% growth last year, is expected to once again be led by Amorgus Technology.

Speaker 3: which we expect will grow in the low to mid teens, and importantly, is on top of an exceptional 30% growth in 2021.

As on top of an exceptional 30% growth in 2021.

In addition, and supported by an ASC that exits the fourth quarter up five 5%, we anticipate another year of 5% to 6% growth in our fixed income and data services recurring revenues.

Speaker 3: In addition, and supported by an ASV that exits the fourth quarter up 5.5%, we anticipate another year of 5-6% growth in our fixed income and data services recurring revenue.

Speaker 3: Moving to expenses, we expect 2022 adjusted operating expenses to be in the range of $2.99 to $3.04 billion.

Moving to expenses, we expect 2022, adjusted operating expenses to be in the range of $2 $99 billion to $3.04 billion.

Speaker 3: Consistent with prior years, we will reward our employees for their contributions to our strong results, and therefore expect compensation expense, net of synergies, and the resetting of 2021 performance awards to increase by $25 to $35 million.

Consistent with prior years, we reward our employees for their contributions to our strong results and therefore expect compensation expense net of synergies and the resetting of 2021 performance awards to increase by 25% to $35 million.

Expenses tied to revenues are also expected to increase by 25% to $35 million driven by higher license fees as well as investments in business and product development across all three of our segments.

Speaker 3: Expenses tied to revenues are also expected to increase by $25 to $35 million, driven by higher license fees as well as investments in business and product development across all three of our segments.

Speaker 3: In addition, we expect an incremental $40 to $60 million in support of productivity and efficiency initiatives across our technology and operations groups, a portion of which we are electing to fund through the net operating savings we realize following the IPO of that.

In addition, we expect an incremental $40 million to $60 million in support of productivity and efficiency initiatives across our technology and operations groups a portion of which we are electing to fund through the net operating savings we realized following the IPO of bat.

Speaker 3: Lastly, and similar to last year, we expect roughly $30 million of incremental DNA expense related to purchase accounting and the rebuild of LA May cap act.

Lastly, and similar to last year, we expect roughly $30 million of incremental D&A expense related to purchase accounting and the rebuild of Ellie Mae Capex. Please see slide 12 in the appendix for a bridge reconciling our expense guidance 2021.

Speaker 3: Please see slide 12 in the appendix for a bridge reconciling our expense guidance 2021.

Speaker 3: Moving next to capital allocation and consistent with our track record of growing our dividend as we grow, we plan to increase our quarterly dividend by 15% year over year from 33 cents per share to 38 cents per share.

Moving next to capital allocation and consistent with our track record of growing our dividend as we grow we plan to increase our quarterly dividend by 15% year over year from 33 per share to <unk> 38 per share.

Speaker 3: In addition, and now that we are within our targeted leverage range, we expect to deploy approximately $475 million towards share of purchases in the first quarter, representing a nearly 20% increase versus the second quarter of 2020, the last full quarter of buybacks prior to our acquisition of LEMAC.

In addition, and now that we are within our targeted leverage range, we expect to deploy approximately $475 million towards share.

Purchases in the first quarter, representing a nearly 20% increase versus the second quarter of 2020, the last full quarter of buybacks prior to our acquisition of Ellie Mae and.

Speaker 3: In summary, we delivered a record finish to another record year.

In summary, we delivered a record finish to another record year delay.

Speaker 3: We delivered double-digit growth in revenue, operating income, and earnings for shares. We also invested in an array of future growth initiatives, increased our dividend in double-digits, and achieved our leverage target a year earlier than originally planned.

We delivered double digit growth in revenue.

Operating income and earnings per share.

We also invested in an array of future growth initiatives increased our dividend double digits and achieved our leverage target a year earlier than originally planned as.

Speaker 3: As we kick off 2022, we're focused on once again delivering growth and creating shareholder value against what is an ever-evolving macro back.

As we kick off 2022, we're focused on once again delivering growth and creating shareholder value against what is in an ever evolving macro backdrop I'll.

Speaker 3: I'll be happy to take your questions during Q&A, but for now I'll hand it over to Ben.

I'll be happy to take your questions during Q&A, but for now hand, it over to Ben.

Speaker 4: Thank you, Warren, and thank you all for joining us this morning. Please turn to slide nine. We're pleased

Thank you Lauren and thank you all for joining US. This morning, please turn to slide nine.

We are pleased to report another record year for ice.

Speaker 4: Our strong financial results reflect the tremendous efforts of my colleagues across the organization.

Our strong financial results reflect the tremendous efforts of my colleagues across the organization.

Speaker 4: the trust and expanding relationship we have with our customers, and the ability of our business model to drive growth across a variety of macroeconomic environments.

The trust and expanding relationships, we have with our customers and the ability of our business model to drive growth across a variety of macroeconomic environments.

Speaker 4: I'd like to focus on the secular trends that are driving growth across our mortgage and energy markets, and we'll turn it over to Lynn to discuss our position across fixed income, data and analytics, and some highlights from our great year at the NYSC.

I'd like to focus on the secular trends that are driving growth across our mortgage and energy markets and will turn it over to Lynn to discuss our position across fixed income data and analytics and some highlights from our great year at the NYSE.

Our data technology and network expertise position us well to accelerate the analog to digital conversion happening across the mortgage industry.

Speaker 4: Our data, technology, and network expertise position us well to accelerate the analog to digital conversion happening across the mortgage industry.

As mortgage origination costs continue to increase electronic vacation is a trend. We believe will continue in a variety of interest rate environments, and regardless of mortgage origination volumes.

Speaker 4: As mortgage origination costs continue to increase, electronification is a trend we believe will continue in a variety of interest rate environments and regardless of mortgage origination volume.

Speaker 4: Our ability to capture this secular trend is evidenced by the strength and resiliency of our recurring revenue.

Our ability to capture the secular trend is evidenced by the strength and resiliency of our recurring revenues.

Speaker 4: Part of that growth is driven by our strategy to intentionally shift more business to recurring revenue.

Part of that growth is driven by our strategy to intentionally shift more business to recurring revenue.

Speaker 4: We also continue to see strong sales and new customers coming onto the platform.

We also continue to see strong sales and new customers coming onto the platform.

Speaker 4: And with connectivity to nearly every participant in the mortgage industry, we have the opportunity to cross sell new products like e-clothes and AIQ to a captive customer base seeking efficiency.

And with connectivity to nearly every participant in the mortgage industry, we have the opportunity to cross sell new products like E close and AI Q2, a captive customer base seeking efficiencies.

Speaker 4: This flywheel effect and the secular trend of electronification give us confidence in our ability to grow this business and capture the $10 billion

This flywheel effect and the secular trend of electronic vacation give us confidence in our ability to grow this business and capture the $10 billion addressable market.

Speaker 4: Across our energy markets, we achieved record volumes in 2021, including in Brent, TTF, and Environmental.

Across our energy markets, we achieved record volumes in 2021, including in Brent TTS an environmentalist.

Speaker 4: The breadth and depth of our platform not only drove strong volumes and revenues, but more importantly, it positioned us to capture secular tailwinds across our energy complex, including the globalization of natural gas and the clean energy transition.

Breadth and depth of our platform not only dropped drove the strong volumes and revenues, but more importantly, it positions us to capture secular tailwind across our energy complex, including the globalization of natural gas in the clean energy transition.

Speaker 4: We have built a global natural gas business, including our European marker, TTF.

We have built a global natural gas business, including our European marker TTS.

The globalization of natural gas and the rise of LNG had driven TTS to emerge as the global gas benchmark.

Speaker 4: globalization of natural gas and the rise of LNG have driven TTF to emerge as the global gas benchmark.

Speaker 4: And in 2021, record volumes on our platform grew 45% and drove revenue growth of 36%.

And in 2021 record volumes on our platform grew 45% and drove revenue growth of 36%.

Our markets continue to be relied on by an increasing number of participants to manage risk and navigate volatile gas and power markets.

Speaker 4: Our markets continue to be relied on by an increasing number of participants to manage risk and navigate volatile gas and power markets.

We were also early to diversify into environmental <unk> acquiring the climate exchange in 2010 and building around those leading markets to develop a global environmental business.

Speaker 4: We were also early to diversify into environmentals, acquiring the climate exchange in 2010, and building around those leading markets to develop a global environmental...

And in 2021, we reached record volumes across the complex, including in our EU U K renewable greenhouse gas initiatives in California carbon allowances. These.

Speaker 4: And in 2021, we reached record volumes across the complex, including in our EU, UK, renewable greenhouse gas initiatives, and California carbon allowance.

Speaker 4: These record volumes contributed to a 56% increase in environmental revenues versus the prior year.

These record volumes contributed to a 56% increase in environmental revenues versus the prior year.

Speaker 4: As customers navigate the uncertainty and volatility related to the clean energy transition, we are well positioned as the venue of choice to manage risk and provide price transparency across the energy spectrum. With that, I'll now...

As customers navigate the uncertainty and volatility related to the clean energy transition, we are well positioned as the venue of choice to manage risk and provide price transparency across the energy spectrum.

With that I'll now turn the call over to Lynn.

Thank you Ben.

Speaker 5: Thank you, Ben. With data and technology at our core, our goal is to provide solutions which add transparency to both commonly understood risks as well as emerging risks such as ESG. We continue to increase the breadth and coverage of our products and accelerate the delivery of our ESG reference data to the NYSC issuer community, providing non-opinion based insights to market participants.

With data and technology at our core our goal is to provide solutions, which add transparency to those commonly understood risks as well as emerging risks such as ESG.

We continue to increase the breadth and coverage of our products and accelerate the delivery of our ESG reference data to the NYSE issuer community, providing non opinion based insights to market participants.

Speaker 5: And in the fourth quarter, we expanded our climate change and alternative data capabilities with the acquisition of risk and level 11 analytics.

And in the fourth quarter, we expanded our climate change and alternative data capabilities with the acquisition of risk and level 11 analytics.

Speaker 5: Combining geospatial data technology with our financial data will bring greater transparency to ESG risks across the financial markets, including our existing munibond and mortgage-backed security offering.

Combining geospatial data technology with our financial data will bring greater transparency to ESG risks across the financial markets, including our existing Muni bond and mortgage backed security offerings are.

Speaker 5: Our data, technology, and leading marketplaces position us well to benefit from the secular trend towards sustainability and net zero carbon commitments.

Data technology, and leading marketplaces position us well to benefit from the secular trend towards sustainability and net zero carbon commitments.

Turning now to fixed income.

Speaker 5: Increased automation, flexibility of delivery, and passive investing continue to drive demand for our proprietary data and rapidly growing index business.

Increased automation and flexibility of delivery in passive investing continue to drive demand for our proprietary data and rapidly growing index business.

Speaker 5: As a leading data provider to the fixed income market, we are uniquely positioned to drive automation.

A leading data provider to the fixed income market, we are uniquely positioned to drive automation.

Leveraging our proprietary evaluated prices analytics and our growing suite of reference data we've taken a business that historically served the back and middle office, and creative tools and analytics or the front office.

Speaker 5: leveraging our proprietary evaluated prices, analytics, and our growing suite of reference data, we've taken a business that historically served the back and middle office and created tools and analytics for the front office.

Speaker 5: These tools are critical to the pre-trade transparency needed in the opaque, less liquid fixed income markets, as is evidenced by our front office tools continuing to grow double-digit.

These tools are critical to the pre trade transparency needed in the opaque less liquid fixed income markets as is evidenced by our front office tools continuing to grow double digits.

The growth in passive investing continues to be a tailwind for our business the flexibility of our tools quality of our pricing data and flexibility of our offerings directly contributed to the five asset managers with funds of over $66 billion.

Speaker 5: The growth and passive investing continues to be a tailwind for our business. The flexibility of our tools, quality of our pricing data, and flexibility of our offering directly contributed to the five asset managers with funds of over $66 billion of AUM that transitioned to ICE indices during 2021. And an additional group of funds with AUM of $6.7 billion have planned transitions during Q1 2022.

That transition to ice indices during 2021.

And an additional group of funds with AUM of $6 7 billion.

Half planned transitions during Q1 2022.

Speaker 5: This strength through a double-digit revenue growth in our index business for the fourth consecutive year and positions us well for continued growth.

This strength with double digit revenue growth in our index business for the fourth consecutive year and positions us well for continued growth.

I'll close with some highlights from the NYSE.

2021 was a record year for NYSE listings, we help connect innovators and entrepreneurs to nearly $120 billion in capital through 297, Ipos, including three of the four largest ipos and the three largest tech ipos and.

Speaker 5: 2021 was a record year for NYSE listings. We helped connect innovators and entrepreneurs to nearly $120 billion in capital through 297 IPOs, including three of the four largest IPOs and the three largest tech IPOs.

Speaker 5: And importantly, we continue to lead the marketing ETF listings with more than 65% of new funds selecting us as their home.

And importantly, we continue to lead the market in ETF listings with more than 65% of new funds selected us as their home.

Speaker 5: We also continue to prioritize our market leading technology, which enables customers to better manage risk and provide our issuer community with significantly less volatility at the open and the close.

We also continue to prioritize our market, leading technology, which enables customers to better manage risk and provides our issuer community with significantly less volatility at the open and close the.

Speaker 5: The performance of our technology was proven as recently as last week, when we processed nearly half a trillion messages in a single day with median response times of less than 30 microseconds across our equities complex, further cementing our position as the leading equity exchange group.

The performance of our technology with proven as recently as last week, when we processed nearly half a trillion messages in a single day with median response times of less than 30 microseconds across our equities complex further cementing our position as the leading equity exchange grid.

Speaker 5: Our leading data and technology, coupled with our investments in sustainable finance, the secular trends across fixed income markets, and the competitive differentiators of the NYSE will continue to drive our growth well into the future. I'll now turn the call over to Jeff.

Our leading data and technology, coupled with our investments in sustainable finance the secular trend across fixed income markets and the competitive differentiators of the NYSE will continue to drive our growth well into the future I'll now turn the call over to Jeff.

Speaker 6: Thank you, Lynn, and thank you all for joining us this morning. Please turn now to slide 10.

Thank you Lynn and thank you all for joining US. This morning, Please turn now to slide 10.

Speaker 6: 2021 marked our 16th consecutive year of record revenues and record adjusted earnings per share. This track record of growth reflects our strategy to diversify the business and position the company at the center of some of the largest markets undergoing an analog to digital conversion.

'twenty, one marked our 16th consecutive year of record revenues and record adjusted earnings per share. This.

This track record of growth reflects our strategy to diversify the business and position the company at the center of some of the largest markets undergoing an analog to digital conversion.

Speaker 6: A strategy that has made ICE an all-weather name. A business model that provides upside to volatility with less downside risk. And importantly, a positioning that drives growth on top of growth.

A strategy that has made ice and all weather name a business model that provides upside to volatility with less downside risk and importantly, a positioning that drives growth on top of growth.

Speaker 6: we have intentionally diversified across asset classes so that we are not tied to any one cyclical trend or one macroeconomic environment.

We have intentionally diversified across asset classes. So that we're not tied to any one cyclical trend or one macro economic environment.

Speaker 6: For example, in 2021, we saw record volumes across our energy complex, driven in part by inflationary concerns and market speculation of central bank activities.

For example in 2021, we saw record volumes across our energy complex driven in part by inflationary concerns and market speculation of Central Bank activity.

Speaker 6: Our European and UK interest rate business also benefited from interest rate volatility, driving a 15% increase in revenues in 2021 and more recently a 34% increase in our January revenue.

Our European and UK interest rate business also benefited from interest rate volatility driving a 15% increase in revenues in 2021 and more recently at 34% increase in our January revenues.

Speaker 6: Our CDS clearing business grew 14% in the fourth quarter as rate volatility increased, driving demand for risk management and credit protection.

Our Cds clearing business grew 14% in the fourth quarter as rate volatility increased driving demand for risk management and credit protection.

Speaker 6: And even against this backdrop of rising interest rates, our mortgage technology business outperformed the broader market, including proforma recurring revenue growth in 2021 of 31%. Again, a reflection of the all weather nature of our business model.

And even against this backdrop of rising interest rates, our mortgage technology business outperformed the broader market, including pro forma recurring revenue growth in 2021 up 31% again, a reflection of the all weather nature of our business model.

Speaker 6: As we begin 2022, we are better positioned than ever to capitalize on the secular and cyclical trends occurring across asset classes. And we remain focused on investing and executing on the many growth opportunities in front of us.

As we begin 2022, we are better positioned than ever to capitalize on the secular and cyclical trends occurring across asset classes and we remain focused on investing and executing on the many growth opportunities in front of us.

Speaker 6: Before we begin our prepared remarks, I'd like to thank our customers for their business and their trust in 2021. And I'd like to thank my colleagues at ICE for their continued efforts. Your hard work contributed to the best quarter in our company's history, combined with other excellent results, making it the best year in our company's history.

Before we end our prepared remarks I'd like to thank our customers for their business and their trust in 2021.

Like to thank my colleagues at ice for their continued efforts your hard work contributed to the best quarter in our company's history combined with other excellent results, making it the best year in our company's history.

Speaker 6: With that, I'll now turn the call back to Andrew, our operator, to conduct the question and answer session until 930 Eastern Time.

With that I'll now turn the call back to Andrew our operator to conduct the question and answer session until 930 eastern time.

Thank you we will now begin the question and answer session.

Speaker 1: Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the key.

To ask a question you May press Star then one on your telephone keypad.

If you are using a speakerphone please pick up your handset before pressing the keys.

Speaker 1: If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. Please limit yourself to the answer you would like to receive.

If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.

Please limit yourself to one question.

Speaker 1: And if you have a follow-up, you may rejoin the queue.

And if you have any follow up you may rejoin the queue.

At this time, we will pause momentarily to assemble our roster.

Speaker 1: At this time, we will pause momentarily to assemble our ross...

The first question comes from Rich Repetto with Piper Sandler.

Speaker 1: first question comes from Rich Rippetto with Piper Sandler.

Please go ahead.

Yes, good morning, guys. Good morning, Jeff So.

Speaker 7: Yeah, good morning guys. Good morning, Jeff. So my question is on

My question is on <unk>.

Speaker 7: the recurring revenue growth of mortgage, you know, if it was up 31% and now you're guiding to, I think, low double digits, you know, could you give us more color on that? Is that just the large numbers?

Recurring revenue growth for mortgage if it was up 31% and now you're guiding to I think low double digits.

Could you give us more color on that is that just the law of large numbers any progress on <unk>.

Speaker 7: any progress on metrics to sort of, that we can monitor that, you know, that recurring revenue and mortgage? And then lastly, Jeff, I know you talked about the offset, but how do you think about the offset going forward? Is it simply interest rate futures, you know, offsetting, you know, what looks like, you know, a slow down in origination volumes?

Our metrics to sort of that we can monitor that.

No.

That recurring revenue and mortgage and then lastly, Jeff I know you talked about the offset but how do you think about the offset going forward is it simply interest rate futures.

Setting what looks like a slowdown in origination volumes.

Going forward.

Speaker 4: Hi, Richard. It's been all I'll start here. So the the you hit on it a bit in the way you answered the question. So you do have growth compounding on top of growth there in the subscription side of the business.

Hi, rich its bad all.

I'll start here.

So.

You hit on it a bit in the way you answered. The question. So you do have growth compounding on top of growth there in the subscription side of the business.

Speaker 4: But also, we are looking at macro headwinds.

But also I mean, we are looking at macro headwinds I mean, more and brought up in his commentary that if you take a composite of where the industry analysts have volumes that you have volumes down 30%.

Speaker 4: Warren brought up in his commentary that if you take a composite of where the industry analysts have volumes, that you have volumes down 30%.

Speaker 4: And in that environment, we could see some macro headwinds, such as are there going to be a bunch of brand new originators coming onto the scene.

And in that environment, we could see some macro headwinds such as are there going to be a bunch of brand new originators coming onto the scene.

Speaker 4: potentially not. Could you see some industry consolidation? Potentially we'll see some of that. But despite those types of headwinds...

Potentially not could you see some industry consolidation potentially we will see some of that but despite those types of headwinds.

Speaker 4: You know, we see an opportunity to grow this subscription business in the teams because we have great visibility to a phenomenal new business pipeline of new customers that, that, you know, we're looking at right now. We have the ability to cross sell to that large stable of customers that we have solutions like our AIQ business that will provide them more efficiency as well as our industry leading point of sale solution.

We see an opportunity to grow this subscription business in the teens, because we have great visibility to a phenomenal new business pipeline of new customers.

We're looking at right now we have the ability to cross sell to that large stable of customers that we have solutions like our AI business that will provide them more efficiency as well as our industry, leading point of sale solutions and then the other dynamic that we have going on is that move towards.

Speaker 4: And then the other dynamic that we have going on is that move towards subscription as customers renew. We had a pilot program last year where we have roughly 20% of our customers renew in a given year.

Subscription as customers renew we had a pilot program last year, where we have roughly 20% of our customers renew in a given year.

Speaker 8: with a small percentage of those that renewed last year, we looked at shifting them more towards subscription, we're successful doing that, and we've codified a program of this year to hit a much larger percentage of the roughly 20% that are renewing this year. So all of those, we believe are tailwinds to offset the macroeconomic environments there and will lead to a teens grower and subscription revenue, which we feel great about. And Rich, this is Jeff.

With a small percentage of those are renewed last year, we looked at shifting them more towards subscription we're successful doing that and we've codified a program of this year to two.

Had a much larger percentage of the roughly 20% that are renewing this year. So all of those we believe are tailwind to offset.

The macroeconomic environments, there and will lead to a teens grower in subscription revenue, which we feel great about.

And rich this is Jeff.

Yes, we really thought hard over the last few years on how to position the company to be an all weather name that will just grow on top of growth.

Speaker 6: hard over the last few years on how to position the company to be an all-weather name that will just grow on top of growth.

Speaker 6: and in all macro environments and global geographies. And so,

Yeah.

And in all macro environments and global geographies and so.

Our thinking is that that inflationary pressures are what drive central banks to raise interest rates and we have.

Speaker 6: You know, our thinking is that inflationary pressures are what drive central banks to raise interest rates, and we have a lot of asset classes that we participate in and positioning of the company that will benefit from that volatility. And we tend to see commodity businesses like energy and agricultural commodities be very volatile in inflationary environments.

A lot of asset classes that we participate in and positioning of the company that that will benefit from.

That volatility and.

We tend to see commodity businesses like energy and agricultural commodities.

Very volatile in inflationary environments.

Speaker 6: And therefore there's a lot of hedging and we help people manage that risk.

And therefore, there is a lot of hedging and we help people manage that risk.

Speaker 6: Similarly, obviously in our interest rate businesses, which include interest rate futures and credit fault swaps and fixed income data and services, in a volatile interest rate environment, those businesses do well.

<unk> <unk>.

Obviously in our interest rate businesses, which include interest rate futures and credit default swaps and fixed income data and services.

In a volatile interest rate environment, those businesses do well and even in the mortgage space has been has been talking about.

Speaker 6: And even in the mortgage space, as Ben's been talking about, you know, home inflation tends to drive people to do cash out refinancings, which for us, refinancing a house versus buying a new house is the same transaction to our mortgage.

Hmm inflation tends to drive people to do cash out refinancings, which.

For us the refinancing our house versus buying a new house is the same transaction to our mortgage platform. So we really feel like we've positioned the company well in this environment. We also feel like we've positioned the company well if there isn't inflation if there isn't a lot of central bank activity.

Speaker 6: So we really feel like we've positioned the company well in this environment. We also feel like we've positioned the company well if there isn't inflation, if there isn't a lot of central bank activity. The low interest rate environment is where we always felt vulnerable and we've really done a number of things over the last few years that augment that base. So we hope you in thinking about our company will feel like you can safely purchase the...

The low interest rate environment is where we always felt vulnerable and and we've really done a number of things over the last few years that that augment that base. So so we hope you and thinking about our company will feel like you can you can safely purchase.

The stock for upside growth, but limit your downside risk and that's really how as managers, we've tried to position our company today.

Speaker 6: for upside growth but limits your downside risk. And that's really how, you know, as managers, we've tried to position our company today.

Thanks, Jeff.

Speaker 6: Thanks, Jeff. Very helpful. The call was helpful. Great.

Very helpful color is helpful. Thank you.

Speaker 1: The next question comes from Dan Fannin with Jefferies. Please go ahead.

The next question comes from Dan Fannon with Jefferies. Please go ahead.

Thanks. Good morning. My question is on the environmental is complex.

Speaker 8: Thanks. Good morning. My question is on the environmental complex and wanted to think about the size of that market. And maybe if you could address the customer base, their commercial versus financial, you kind of utilization. And as we think about it versus some of your mature markets to kind of get a sense of where we are in the adoption phase of some of these products.

Wanted to think about the size of that market and maybe if you could address the customer base there commercial versus <unk>.

Financial you kind of utilization and as we think about it versus some of your mature markets to kind of get a sense of where we are in the adoption phase and some of these products.

Hi, Dan This is Ben I'll take this one.

Speaker 4: We've been spending a lot of time thinking about this in terms of the size of that marketplace. And when we look at any of our derivatives markets, we look at the underlying physical market as really a proxy for it.

We've been spending a lot of time thinking about this in terms of the size of that marketplace and when we look at any of our derivatives markets. We look at the underlying physical market is really a proxy for it.

Speaker 4: And the estimates out there are that in any given year you have around 50 billion tons.

And the estimates out there that in any given year you have around 50 billion tons.

Speaker 4: of carbon that's emitted into the atmosphere around the world.

Carbon that submitted into the atmosphere around the world.

Speaker 4: And in the geographies where we're very strong and present right now, so take North America, the EU and the UK.

And in the geographies, where we're where we're very strong in present right now take North America the.

<unk> in the U K.

Speaker 4: Those geographies alone emit about 11 billion tons of carbon.

Those geographies alone amid about 11 billion tons of carbon.

And what we've seen in terms of the derivatives markets as they mature.

Speaker 4: And what we've seen in terms of the derivatives markets as they mature.

Speaker 4: is that it's common to see a derivatives market that would trade on top of the physical of around 10 times, if not more.

It's common to see.

Derivatives market that would trade on top of the physical of around 10 times if not more.

So if you just use 10 times as that market matures as the proxy for how you define a tam in the markets that we are today that's around.

Speaker 4: So if you just use 10 times as that market matures as the proxy for how you define a TAM in the markets that we are today, that's around

Speaker 4: 110 billion tons of a billion tons equivalent of physical that can trade.

$110 billion billion tonnes equivalent of physical that can trade.

And today in the marketplaces that that were strong we traded 18 billion tons. So we've hit about 16% of that Tam.

Speaker 4: And today in the marketplaces that were strong, we traded 18 billion tons. So we've hit about 16% of that TAM.

Speaker 4: And obviously with that, there's a long runway to go in the geographies.

And obviously with that there's a long runway to go in the geographies.

Speaker 4: where we're strong today. And what will help feed that growth is more inspectors of the economy coming in and trading these products as well as voluntarily more companies that are measuring their scope one, two, and three emissions coming in and also trading in those geographies.

Where we're where we're strong today and what will what will help feed that growth is more sectors of the economy coming in and trading these products as well as voluntarily more companies that are that are measuring their scope, one two and three emissions coming in and also trading in those geographies that ads.

Speaker 4: That adds more participants, it adds more sectors of the economy, and will lead to more transactions going on in the derivatives market.

Participants adds more sectors of the economy and will lead to more.

More more transactions going on in the derivatives markets.

Speaker 4: The other obvious area of growth is just more geographies around the world and global programs, if they do come in place, will increase the size of that physical market.

The other obvious area of growth is just more geographies around the world and global programs. If they do if they do come in place will increase the size of that physical market.

Speaker 4: But given that we represent around 95% of the world's trading that happen on our venues, we think we're very, very well positioned to capture that growth opportunity in that TAM that I just outlined.

Given that we represent around 95% of the world's trading that happened on the on our venues. We think we're very very well positioned to capture that growth opportunity in that Tam that I just outlined.

Thank you.

Speaker 1: The next question comes from Alex Cram with UBS. Please go ahead.

The next question comes from Alex Kramm with UBS. Please go ahead.

Speaker 9: Hey, good morning everyone. I want to ask about inflation broadly. It's been a big topic obviously this earning season the last few months for a lot of companies. It seems like on the cost side you're managing that pretty well. But I'm more interested on the revenue side. I mean 50% of your business or so is subscription based.

Yeah, Hey, good morning, everyone.

Wanted to ask about inflation broadly.

Topic, obviously this earning season in the last few months, but a lot of companies. It seems like on the cost side, you're managing that pretty well, but I'm more interested on the revenue side I mean, 50% of your business is sort of a subscription based so curious to what degree CPI is built into any of your subscriptions to what degree.

Speaker 9: So curious to what degree CPI is built into any of your subscriptions, to what degree that could help you or make pricing discussions easier. And then of course, how much of that is is baked into your recurring revenue forecast broadly. Thank you.

That could help you or make pricing discussions easy or and then of course, how much of that is baked into your recurring revenue forecast broadly. Thank you.

Hey, Alex it's Warren so so yes, there is an element of that to some extent, particularly on the CPI that is in terms of building some of the the data contracts I wouldn't say, it's necessarily a huge part of it but again, that's going to be built into part of our guide there when we talk about 5% to 6% for the year I think on the revenue side really the more it's what's Jeff and Ben have been talking about in <unk>.

Speaker 3: Yeah, it's Warren. So, yeah, there is an element of that to some extent, particularly on the CPI, that is, in terms of building some of the data contracts. I wouldn't say it's necessarily a huge part of it, but again, that's going to be built into part of our guide there when we talk about five to six percent for the year. I think on the revenue side, we're going to have to look at the

Speaker 3: Really, the more it's what Jeff and Ben have been talking about in terms of our exposure, if you will, to inflation and that's really going to come down to the commodities business.

<unk> of our exposure, if you will to inflation and that's really going to come down to the commodities business.

Speaker 3: the interest rate business, which is off to a great start in January , the CDS business.

The interest rate business, which is off to a great start in January .

The Cts business.

Speaker 3: the ag business within that commodity business. So I think that's really more in terms of our leverage to inflation expectations, if you will, on the revenue side.

You'd be AG businesses within that commodities business. So I think that's really more in terms of our leverage to two inflation expectations. If you will on the revenue side on the on the cost side, you're right. There are certainly we are seeing some pockets of it.

Speaker 3: On the cost side, you're right. There certainly, we were seeing some pockets of it. It's third party kind of services, as you would imagine, or pricing providers, things of that nature, things like utility costs.

Third party kind of services as you would imagine.

Our pricing providers and things of that nature of things like utility costs subtract out technology costs like cloud providers and things like that that are that we're seeing some uptick on but but then again, that's all baked into our guidance.

Speaker 3: some technology costs like cloud providers and things like that that are that we're seeing some uptick on but but that again that's all baked into our guidance that we provided you today and then I think on the Comps side the way to be thinking about that is look we've always been a

That we provided you today and then I think on the comp side the way to be thinking about that is look we've always been a pay for performance culture. We obviously had a really good year this year.

Speaker 3: paper performance culture. You know, we obviously had a really good year this year. We always want to monitor and retain kind of the best talent that's out there, but I think we have built up some goodwill, if you will, both with employees and potential employees from that perspective. So we're comfortable with that position on the comp side. And again, all that's baked into our expense guidance for the years, you saw.

We always want to monitor and retain the best talent that's out there but.

I think we do have we have built up some goodwill if you will.

Both with employees and potential employees from that perspective, so so we're comfortable with our position on the comp side and again all of that's baked into our expense guidance for the year as you saw.

Fantastic. Thank you guys.

The next question comes from Ken Worthington of Jpmorgan. Please go ahead.

Speaker 1: The next question comes from Ken Worthington of JP Morgan. Please go ahead.

Hi, good morning.

Speaker 10: Hi, good morning. Jeff, I wanted to pick your brain a little bit about crypto and blockchain, acknowledging that you and ICE were early and seeing the potential here with BOC and other investments. As we think about the mortgage process, is there a role you see for blockchain technology, helping ICE digitize parts of the mortgage process or getting you closer to your vision in the mortgage area?

Jeff I wanted to pick your brain, a little bit about crypto and blockchain acknowledging that you and I used for early and seeing the potential here with box and other investments as we think about the mortgage process is there a role you see for blockchain technology, helping ice digitize parts of the mortgage process or.

Getting you.

Or to your vision and the mortgage area.

Speaker 10: And then it would seem like the information is indelible there to some of your comments at Alex's conference late last year. And then second, the crypto trading ecosystem is developing in a much more vertically integrated way. Do you see the crypto ecosystem moving more towards specialization over time like the cash equity world or is a chance that the cash equity ecosystem might evolve to look more like the crypto ecosystem? And does either of these have implications for the New York Stock?

And then it would seem like it would seem like the information is available there to some of your comments at Alex's conference late last year, and then second the crypto trading ecosystem is developing in a much more vertically integrated way.

Do you see the crypto ecosystem moving more towards specialization over time like the cash equity world or is it a chance that the cash equity ecosystem might evolve to look more like the crypto ecosystem and does either of these have implications for the New York stock exchange.

Speaker 8: Those are two really thoughtful questions. Thank you for those Ken. First of all, when we think about the blockchain,

Those are two really thoughtful questions. Thank you for those Ken.

First of all.

When we think about the block chain.

Speaker 8: we think about its main value, well, it has two values in our mind. The main value is it creates an indelible record. And so to a certain extent,

We think about its main value while it has two values in our mind. The main value is it creates an indelible record and so to have certainty to a certain extent.

Property rights are something that society views as an indelible record and it's why we have title insurance for example in mortgages so that.

Speaker 8: property rights are something that society views as an indelible record and it's why we

Speaker 8: have title insurance, for example, in mortgages so that we have an insurance wrapper around, you know, title to a property. And so you can imagine that an indelible record that's accessed by many, many people that would insure property rights for both mortgages or homes or any other asset is something that could grow. And it's an area that we definitely are focused on.

We have an insurance wrapper around.

Title to a property and so you can imagine that an indelible record that's access by many many people that would ensure.

Pretty rights for boats.

Mortgages are homes or any other.

Asset is something that could grow and it's an area that we that we definitely are focused on.

Speaker 8: The second attribute of blockchain and the broader cryptocurrency environment is that it has captured mindshare and has really been used as a marketing tool to move people from

The second attribute.

Coop chain and the broader crypto currency C environment is that it has captured mind share.

<unk> has really been used as a marketing tool to.

To move people from.

Speaker 8: more analog brokerage houses to more digital brokerage houses and give customers direct access. So those brokerages that didn't engage their customers digitally are seeing themselves somewhat being disintermediated by new brokers that are digital. The interesting thing about your question, the third part of your question, which is really what do regulators want to do about it.

More analog brokerage houses to more digital brokerage houses and give customers direct access so those brokerages that that didn't engage their customers digitally are seeing themselves somewhat being disintermediation by new brokers that that our digital the interesting thing about your question.

The third part of your question, which is is.

Is really what our regulators wanted to do about this.

Speaker 8: And largely speaking, our whole.

And largely speaking.

Our whole.

Infrastructure for regulation in the Western World has been that there is a broker that has a customer relationship and they have the <unk> and AML responsibility for their customers. They have to know their customers and they have to do anti money laundering.

Speaker 8: infrastructure for regulation in the Western world has been that there is a broker that has a customer relationship and they have the KYC and AML responsibility for their customers. They have to know their customers and they have to do anti-money laundering, checks and balance.

And balances and once.

Speaker 8: And once having done that, they can then access the broader market.

Having done that they can then access the broader market and.

Speaker 8: And there's been a blurring in the crypto space between the obligations of a broker dealer and the obligations of an exchange and the obligations of clearing house.

There has been a blurring in the crypto space between the obligations of our broker dealer and the obligations of the exchange and the obligations of the clearinghouse generally speaking in the organized clearing markets. There are intermediaries that are providing credits amelioration to the customer.

Speaker 8: Generally speaking, in the organized clearing markets, there are intermediaries that are providing credit amelioration to the customer. And it is the collective balance sheet of all of those brokers and clearing firms that backstop the market. And in the case of some of the crypto companies, that is not the case.

It is the collective balance sheet of all of those.

Brokers and clearing firms that backstop the market.

In the case of some of the crypto companies that is not the case and so you know.

Speaker 8: And so, you know, if those comp- if regulators decide to subject, you know, the straight through processing companies to the same terms and conditions that they have subjected

If those if regulators decide to subject the straight through processing companies to the same terms and conditions that they have subjected.

Speaker 8: historical companies, those companies have some work to do around KYC, AML, and credit amelioration and passing the IOSCO standards of a clearinghouse that has to be stress tested, which essentially is banking.

Historical companies those companies have some work to do around.

<unk> C AML and credit amelioration.

And passing the IOSCO standards of a clearinghouse that has to be stress testing, which essentially is banking.

If the regulators say you know what maybe those issues arent as important because we had thought they were and maybe having the consumer directly participate end to end is a better way than you are going to see the legacy companies in our industry move more to opening up their clearing houses.

Speaker 8: say, you know what, maybe those issues aren't as important as we had thought they were. And maybe, you know, having the consumer directly participate end to end is a better way, then you are going to see the legacy companies in our industry move more to opening up their clearing houses..

Speaker 8: to end users and opening up their platforms.

<unk>.

Two two.

To end users and opening up their platforms.

Speaker 8: matching engines and other platforms directly to end users and bypassing the brokerage.

Matching engines and other platforms directly to end users and bypassing the brokerage community.

Speaker 8: I think it's too soon to predict what will happen there. But you can, you know, to the extent that I've helped, you know, you're thinking at all you'll see now as you read articles about what the various regulators are doing and saying that that is the essential question that they're wrestling with. Do they bring the legacy business towards the crypto space or do they bring the crypto space into the legacy business?

I think it's too soon to predict what will happen there, but you can you know to the extent that I've helped.

Youre thinking at all Youll see now as you read articles about what the various regulators are doing and saying that that is the central question that they're wrestling with do they bring the legacy business towards the crypto space or to bring the crypto space into the legacy business I'd make one last comment which is.

Speaker 8: you know, largely speaking in the United States, we're subject to the Securities Act of 1934. The act has

Largely speaking in the United States, we're subject to the Securities Act of 1034.

That act has withstood a lot of change in technology and in market structures and what have you but.

Speaker 8: withstood a lot of change in technology and in market structures and what have you. But based in the 34 Act.

Based in the 34 act is the <unk>.

Speaker 8: is the customer protection and fraud protection. And I suspect that notwithstanding, there's a lot of people wanting the 34 Act to be updated. There's a lot of tools in the 34 Act for regulators to even deal with new technologies as they have done now over decades. But thank you for those questions.

Customer protection.

And fraud protection and.

And I suspect that notwithstanding theres a lot of people wanting the 34 act to be.

So updated.

There's a lot of tools in the 34 act for regulators to even deal with new technologies as they have done now over over decades, but thank you for those questions and very thoughtful.

Thank you Jeff.

Speaker 1: The next question comes from Michael Sifris with Morgan Stanley . Please go ahead.

The next question comes from Michael <unk> with Morgan Stanley . Please go ahead.

Speaker 11: Hey, Camree, thanks for taking the question. I just wanted to ask about the cloud. I was hoping you might be able to remind us which parts of your business today are on the cloud. And as you look forward, how do you think about the opportunity for migrating more of your business to the cloud? What benefits could you see? And which parts of the organization can make sense to do sooner versus which ones do you think would take a bit more?

Hey, good morning, Thanks for taking the question I just wanted to ask about the cloud I was hoping you might be able to remind us which parts of your business today or on the cloud and as you look forward. How do you think about the opportunity for migrating more of your business to the cloud what benefit could you see and which parts of the organization can make sense to do sooner.

Versus which ones do you think would take a bit more time.

It's a great question, we first of all we use the cloud and are active in the cloud in a lot of our businesses in the main.

Speaker 8: It's a great question. We, first of all, we use the cloud and are active in the cloud in a lot of our businesses and the main

Attribute that the cloud brings us is it just another network were.

Speaker 8: attribute that the cloud brings us is it's just another network where customers can get access to our products. We also run our own data centers and we have our own network and we're hooked to a lot of third party network.

Customers can get access to our products.

We also run our own data centers, and we have our own network and we are hooked to a lot of third party networks. So our goal.

Speaker 8: So our goal, and by the way, a lot of third party screen providers and platform providers. So the cloud is important to us to the extent that we have clients that would prefer to receive services from us in the cloud.

And by the way a lot of third party.

Screen providers and platform providers so.

The cloud is important to us to the extent that we have clients that would prefer to receive services from us in the cloud.

Speaker 8: where it is not as important to us is because of our scale and size, we're better able to control our costs when we're managing our own technology and networking.

Where it is not as important to us is because of our scale and size.

We are better able to control our costs, when we're managing our own technology and network infrastructure.

Speaker 8: We have done a lot of analysis around this and as I think Warren mentioned in his...

We have done a lot of analysis around this and and and.

I think Warren mentioned in his.

Speaker 8: remarks to one of the inflationary questions. Probably the highest inflation pressure that we're seeing right now is in the services that are in the cloud. We don't have...

<unk> remarks to one of the inflationary questions, probably the highest inflation pressure that we're seeing right now is in the services that are in the cloud.

We don't have good.

Speaker 8: moats around our ability to control those costs.

Moats around our ability to control those costs.

Speaker 8: notwithstanding. And so if clients, however, want to bear those costs, we're happy to provide them access through the cloud. But I think you'll see it as an important but augmentative service that we have, not necessarily the key service.

Notwithstanding and so if clients however want to bear those costs, we're happy to provide them access through the cloud, but I think you'll see it you'll see it as as an important.

But augmented.

Service that we have not necessarily the key service.

Speaker 8: And last thing I would mention to you is I think we're different than some of our peers in that we have always felt that the way to control costs is to control our technology. It's not something that, you know, at its core that we license to others. It's not something at its core that we get from others. And it's not something at its core that we run in other people's infrastructures.

Last thing I would mention to you is I think we're different than some of our peers in that we have always felt that the way to control cost is to control our technology, it's not something that at its core that we license to others. It's not something at its core that we get from others and it's not something at its core that we run and other people.

<unk> infrastructures.

Great. Thank you.

The next question comes from Andrew <unk> with Goldman Sachs. Please go ahead.

Speaker 1: The next question comes from Andrew Willstein with Goldman Sachs. Please go ahead.

Hey, guys its Alex.

Speaker 12: So I wanted to go back to the mortgage question for a second. You gave some color about 22 specifically, but clearly it's a pretty meaningful slowdown in growth and recurrent revenues into low to mid teens from well north of 20% over the last 12 months. Do you think this is just a 2022 dynamic and the reasons you sort of described earlier just really kind of relate to the next 12 months?

So.

I wanted to go back to the mortgage question for a second.

You gave some color about 'twenty, two specifically, but clearly it's a pretty meaningful slowdown in growth in recurring revenues into low to mid teens from well north of 20% over the last 12 months.

Do you think this is just a 2022 dynamic and the regions you sort of described earlier, just really kind of related to the next 12 months or for a variety of reasons. This is more of a reasonable run rate, we should expect over the medium term. Thanks.

Speaker 12: or for a variety of reasons this is more of a reasonable runway we should expect over the medium term.

Hey, Alex This is this is Ben.

Speaker 4: Hey, Alex, this is Ben. So when you look at that macro environment, and again, Warren used that composite estimate of around a backdrop of the business being down or sorry, not the business, but the.

So when you look at that macro environment and again warned us that.

Composite estimate of around a backdrop of the business being down or I'm, sorry that the business, but the.

Speaker 4: the overall transaction volume is being down 30%. When I look at our strategy for this business in each of the segments that we have in this business.

The overall transaction volumes being down 30% when I look at our strategy for this business in each of the segments that we have in this business. We are executing very very well and what's the evidence to that look at each of the segments underneath there so despite that volume decline.

Speaker 4: we are executing very, very well. And what's the evidence to that?

Speaker 4: look at each of the segments underneath there. So despite that volume decline, our data and analytics business grew year over year. And we've talked on the number

Our data and analytics business grew.

Year over year, and we've talked on a number of these calls.

Speaker 4: on how we see that playing out over time and that will continue to be a growth driver as more of our customers adopt automation.

How we see that playing out over time and that will continue to be a growth driver as more of our customers adopt automation. We also have our clothing line item that's grown year over year as we've invested a lot in <unk> did.

Speaker 4: We also have our closing line item that's grown year over year as we've invested a lot in a did a lot of brand new innovations that the industry has not seen before over this past year. And as customers ramp on those, we're starting to see some substantial ramp up on that. And that's leading to growth in that line item year over year. And on the origination line item, we way outperformed what industry...

We did a lot of brand new innovations that the industry has not seen before over this past year and as customers ramp on those we're starting to see some substantial ramp up on that and that's leading to growth in that line item year over year and on the origination line item, we way outperformed what industry.

Volumes were.

And underneath the covers there it's an explicit move towards more and more subscription. So we feel great about how the business is executing despite this.

Speaker 4: And underneath the covers there, it's an explicit move towards more and more subscription.

Speaker 4: So we feel great about how the business is executing despite this near-term drop in volumes. It's hard to predict how long the drop in volumes will play out. But we feel good on our ability to grow this business and to outperform.

Near term.

<unk> and.

And volumes, it's hard to predict how long does the drop in volumes will play out, but we feel good on our ability to grow this business and to outperform.

Speaker 4: the industry backdrop based on our strategy in each one of those. And remember, we just started that pilot program.

The industry backdrop based on our strategy in each one of those and remember on the on the we just started that pilot program.

Speaker 4: that was last year in terms of as every customer renews, for a small percentage of them, we are shifting the revenue more and more towards subscription.

That was last year in terms of is every customer renews for a small percentage of them were shifting the revenue more and more towards subscription.

Speaker 4: and roughly 20% renew in a given year. And this year, we've really codified a program to hit a much larger percentage. We have a long runway, I mean, to do in the math, we have a long runway to execute that over many, many years that we believe will continue to lead the growth in that subscription line item.

And roughly 20% renew in a given year and this year, we've really codified our program to hit a much larger percentage, we have a long runway I mean, just doing the math, we have a long runway to execute that over many many years that we believe will continue to.

Lead to growth in that subscription line item.

Alright, thank you.

Speaker 1: The next question comes from Brian Bedell with Deutsche Bank. Please go ahead.

The next question comes from Brian Bedell with Deutsche Bank.

Please go ahead.

Speaker 13: Great, thanks. Good morning folks. Ben, if I could just come back to the environmental complex question and your answer to a prior question on that. Two-parter.

Great. Thanks, good morning folks.

Maybe Ben if I could just come back to the environmental complex question and your answer to that.

Part of your question on that.

Partner.

Speaker 13: First, on the 110 billion tons of physical TAM that you mentioned, I just wanted to clarify if that is a current TAM and...

First on the 110 110 billion tons of physical Tam that you mentioned.

Just wanted to clarify.

That is that's sort of our current Tam and.

Speaker 13: and then your expectations for that to grow over time as we move more into carbon transition. And then secondarily, looks like the environmental complex is now north of 10% of your energy revenue. Nat Gaff is also inching up as well 25% or so. What is your view?

And then your expectations for that to grow over time as we move more into carbon transition and then secondarily. It looks like the environmental is complex is now north of 10% of your energy revenue.

That gas is also inching up as well, 25% or so what is your view.

Speaker 13: on Nat gas as a transition energy and whether, you know, if we want to think about a long-term carbon transition, should we be thinking about that Nat gas to grow as a portion of your total energy revenue to dislike the environmental system?

On Nat gas as a transition energy and weather.

If we want to think about our long term carbon transition should we be thinking about that nat gas to grow as a portion of your total energy revenue to just like the environmental just grown.

Speaker 4: Yes. Okay. Thanks, Brian . So on that 110 billion tons of physical equivalent traded

Yes, okay. Thanks, Brian so.

So on that 110 billion tonnes of physical equivalent trade it.

Speaker 4: Yeah, the estimate I use there, so that's again just based on the geographies where we are now. So that's North America, EU and UK, and putting a 10X multiple on that. And as you picked up there and the way you asked the question, that's as markets are maturing, we see it can get to 10%, but even in order of magnitude more than that. If you take very well-established benchmarks, it can be two, three Xs that easily.

Yes, they estimate I use there so thats again, just based on the geographies, where we are now so that's north America.

EU and U K and putting a <unk> multiple on that.

As you picked up there and the way you asked the question that says markets are maturing, we see it can get to 10%, but even an order of magnitude more than that if you take very well established benchmarks. It can be two to three X that easily.

Speaker 4: So we see this as a market that as it matures can get bigger than that. So I see that as more of kind of a near to medium-term tam that can be achieved in that environmental markets. But then also as more geographies get added around the world and as more of the overall $50 billion, $50 billion tons.

So we see this as a market that as it matures can get bigger than that.

So I see that as more of a kind of a near.

Near to medium term Tam that can be achieved.

In that environmental markets, but then also as more geographies get added around the world.

And as more of the overall $50 billion 50 billion tons of carbon emissions that are happening around the world as more of that.

Speaker 4: of carbon emissions that are happening around the world as more of that adds more programs, and as more governments around the world add programs, we have an opportunity to go after that as well. So there's an acceleration that can happen on that over time.

More of that adds more programs that as more governments around the world AD programs, we have an opportunity to go after that as well. So there is.

An acceleration that can happen on that overtime.

Speaker 4: On the Nat gas, you pointed out, you know, environmental is at 10% natural gas also continuing to grow. Our natural gas business is is really the only global gas business around the world are

The Natgas you pointed out environmental at 10% natural gas also continuing to grow our natural gas business is really the only global gas business around the world are.

Speaker 4: our TTF business continues to grow on top of growth. So you're seeing that.

Our TTS business continues to grow on top of growth so you're seeing that.

Speaker 4: continue to compound and customers coming to us around the world to manage their risk in using natural gas as the cleanest of the fossil fuels to help with this energy transition.

Continue to compound and customers coming to us around the world to manage their risk and using natural gas is the cleanest of the fossil fuels to help with this energy transition and with a backdrop of industry estimates, saying that energy demand is likely to double between now and 2050, we see that that's going to be in.

Speaker 4: And with a backdrop of industry estimates saying that energy demands is likely to double between now and 2050, we see that that's going to be an important element in this transition towards a cleaner environment and that this transition is going to be bumpy. And we're pleased to see that our customers are coming to us as much as ever to manage their risk in that environment.

Important element in this transition towards the.

Towards a cleaner environment and that this transition is going to be bumpy and we're pleased to see that our customers are coming to us much coming to us as much as ever to manage that risk in that environment.

Okay, great. Thank you.

The next question comes from Owen Lau with Oppenheimer. Please go ahead.

Speaker 1: The next question comes from Owen Lau with Oppenheimer. Please go ahead.

Good morning, and thank you for taking my question.

Speaker 14: Good morning and thank you for taking my question. Could you please talk about your balance sheet investment? What's your plan to like maybe discuss the console, the OCC and back, or you will be more opportunistic to leverage your balance sheet to make additional investments? Thank you.

Could you. Please talk about your balance sheet investment what's your plan to like maybe discuss the consolidate OCC and back or you will be you will be more opportunistic to laugh racial balance sheet to make additional investments. Thank you.

And it's more than so.

Speaker 3: With respect to back, as you probably recall, we did deconsolidate that in the fourth quarter, it went public, I would call it, in October . So that is, certainly we have a stake that's on our balance sheet. That's an investment we've been making over a number of years that we've been very happy with and have a lot of confidence in the outlook for that business. So I don't think there's anything to update there in terms of any kind of plans on that front. With respect to OCC, that is something that's on our balance sheet.

With respect to <unk> as you probably recall it was we did consolidate that and are in the four quarter went public our goal in October . So that is certainly we have a state that's on our balance sheet.

That's an investment we've been making over a number of years that we've been.

Been very happy with it and add a lot of confidence in the outlook for that business. So I don't think there's anything to update there in terms of any kind of plans on that front with.

With respect to OCC that is something that's on our balance sheet.

Speaker 3: I don't recall the exact mark of it, but it's a small investment that we have there. So we'll see if there's any opportunity there, but I wouldn't necessarily say that that's something we're thinking about at the moment. Certainly, it's part of what we do in the options and equities side to begin with, so I wouldn't be thinking about that. So we do, over time, as you know, with EuroClear and some of the other investments, we do look for opportunities that are adjacent to what we do in our business, and so we will look for those opportunities and invest in those as we see it. So I think you could.

We had.

Don't recall, the exact mark of it but but its a small investment that we have there. So we will see if theres any opportunity there, but I wouldn't necessarily say that that's something we're thinking about at the moment certainly it's part of what we do on the options and equity side to begin with so so I wouldn't be thinking about that so we do over time as you know with Euroclear and some of the other investor.

We do look for opportunities that are within that are sort of adjacent to what we do and.

In our business and so we will look for those opportunities and invest in those as we see it. So I think you could expect us to continue to do that when those opportunities arise, but those 10 will those will be sort of minority investments small minority of vessels for the most part as you've seen with some of the ones we've done in the past.

Speaker 3: expect us to continue to do that when those opportunities arise, but those will be sort of minority investments, small minority investments for the most part, as you've seen with some of the ones who've done in the past.

Alright, thank you.

Speaker 1: The next question comes from Kyle Voigt with KBW. Please go ahead.

The next question comes from Kyle Voigt with <unk>. Please go ahead.

Hi, Good morning, I just wanted to ask a question still on the energy topic.

Speaker 11: Hi, good morning. I just wanted to ask a question still on the energy topic, specifically on Brent and Brent open interest.

Specifically on Brent Brent open interest we're seeing.

Speaker 11: We're seeing nice growth in the options, OI and that complex, but Brent Futures of Ventura specifically was down 17% year on year as of earlier this week. So I guess with the price volatility, we've seen the oil marketer the past year, just would have expected to see a bit stronger trend there. Just wondering if you could kind of opine on whether you think this is cyclical, still related to kind of COVID normalization or whether there's something more secular going on there that's causing the decline would be helpful. Thank you.

Nice growth in the options Oi in that complex, but Brent futures open interest specifically was down 17% year on year as of earlier. This week. So I guess with the price volatility we have seen the oil market over the past year I, just would've expected to see a bit stronger trends. There. Just wondering if you could kind of opine on whether you think there's some cyclical is still related to COVID-19 normalized.

Asian, or whether there is there something more secular going on there that's that's causing the decline.

Would be helpful. Thank you.

Speaker 4: Thanks, Kyle. Yes, we do see this as temporary. If you look at Brent overall, open interest today is about 5% over last year. You got to remember last year was also another very volatile year where we saw tremendous growth in that business.

Thanks Kyle.

Yes, so we do see this as a temporary if you look at Brent overall open interest.

Today is about 5% over last year, you got to remember last year was also another very volatile year, where we saw tremendous growth in that business.

Speaker 4: So you are looking at a compare that's difficult, but on top of that, we're still growing that business and growing that business.

So you are looking at a compare thats difficult, but on top of that we're still growing that business and growing that business.

Speaker 4: nicely. In addition, in oil overall, we have had a lot of success working with

Nicely. In addition, and oil overall, we have had a lot of success working with with many of the physical industry participants and some brand new innovations and new ways for them to help manage their risk in the oil markets. The example would be.

Speaker 4: with many of the physical industry participants in some brand new innovations and ways for them to help.

Speaker 4: manage their risk in the oil markets. The example would be Ice Futures Abu Dhabi that we launched last year to help people hedge and come up with a market price for hedging suburban crude oil that's going to Asia.

Ice futures Abu Dhabi that we launched last year to help people hedge and come up with the market price for hedging Bourbon crude oil thats going to Asia.

Speaker 4: And then just within two weeks ago, we launched our new HOU contract, which is Midland WTI American Gulf Coast contract, where we were selected by the industry to come up with a better way to price Midland TI as it gets to the Gulf.

And then just within two weeks ago, we launched our new <unk> contract, which is Midland WTS American golf Coast contract. When we were selected by the industry to come up with a better way to price Midland Ti as it gets to the Gulf and is going overseas and both of those contracts have seen tremendous amount of pick up.

Speaker 4: and is going overseas. And both of those contracts have seen tremendous amount of pickup in physical market participants supporting it in early days.

And physical market participants supporting it in early days and we see those as highly complementary to the overall Brent complex. So it's an area we're going to continue to invest.

Speaker 4: And we see those as highly complementary to the overall Brent complex. So it's an area we're going to continue to invest. We do see the COVID environment and jurisdictions and geographies opening and closing, opening and closing. Unfortunately, it does create some gyrations in here. But overall, we feel great about the oil complex.

To see the Covid environment, and jurisdictions and geographies opening and closing opening and closing Unfortunately does create some gyrations in here, but overall, we feel great about the oil complex.

Understood. Thank you.

The next question comes from Craig Siegenthaler with Bank of America. Please go ahead.

Speaker 1: The next question comes from Craig Seigenthaler with Bank of America. Please go ahead.

Hey, guys. Good morning. This is Ely on for Craig I had a question for you on December as leadership changes.

Speaker 14: Hey guys, good morning. This is Eli, I'm for Craig. I had a question for you on December's leadership changes. Should we see those as a precursor to more meaningful strategy changes at NYSE? Or do you anticipate any changes will be more incremental? Specifically on listings? Has the new team given any thought to lowering listing standards to help make the New York Stock Exchange a little more competitive in 2022? Or maybe pivoting the brand to better appeal to all the new tech companies coming to public markets? Thanks.

Should we see those as a precursor to more meaningful strategy changes at <unk> or do you anticipate any changes will be more incremental.

Specifically on listings is the new team given any thought to lowering listing standards to help make the New York stock exchange, a little more competitive in 'twenty two.

Maybe pivoting the brand to better appeal to all the new tech coming in tech companies coming to public markets.

Sure Good question.

Speaker 8: This is Jeff. I'm surrounded by a generation that's younger than me that's incredibly talented, that's delivered the best year in our history. And those changes were an opportunity to...

This is Jeff.

Surrounded by a generation, it's younger than me thats incredibly talented.

<unk> delivered the best year in our history.

And those changes are an opportunity to.

Speaker 8: start to put leaders in that generation and because the company is

Start to put leaders.

In that generation and because the company is so broad now and so geographically diverse we're trying to give people.

Speaker 8: so broad now and so geographically diverse. We're trying to give people

Speaker 8: in that leadership team opportunities to try their skills in different businesses and and give them exposure to the markets.

And that leadership team opportunities to try their skills in different businesses and.

Give them exposure to the markets.

Speaker 8: So I was thrilled to be able to ask Lynn Martin if she would.

So I was thrilled to be able to to ask Lynn Martin if she would lead the New York stock exchange and I'll, let her tell you what she is thinking.

Speaker 8: lead the New York Stock Exchange and I'll let her tell you what she's thinking.

Speaker 5: Yeah, thanks, Stefan. Thanks for the question. I mean, you know, it was early days of me being in the seat at NYSE, but I continue to see great opportunity to further cement NYSE is the home of global markets. You know, we've got, as I think about this year, we've got a healthy pipeline of IPOs, although the timing of some of the companies coming to market is shifting a bit, given the...

Yeah. Thanks, Thanks, Kevin Thanks for the question I mean, it's early days as me being in the seat at NYSE, but I continue to see great opportunity to further cement NYSE is the home of global markets and we've got as I think about this year, we've got a healthy pipeline of Ipos, although the timing of some of the company.

He is coming to market is shifting a bit given the macroeconomic environment, but importantly, we really see the environment changing and the drivers of capital raising last year may have favored our competitors, but we see that shifting given the strength of our model the issuers that I've been talking to more recently CEO .

Speaker 5: macroeconomic environment, but importantly we really see the environment changing and the drivers of capital raising last year may have favored.

Speaker 5: our competitors, but we see that shifting given the strengths of our model.

Those that are looking to come to market, they're valuing different things and theyre valuing stability and trading lower cost of capital and strong governance and that really favors the NYSE market model and now our message around our market model the differentiation and the investment we've made in technology and also the <unk>.

<unk> technology assets that we're bringing to bear through the various other ice businesses are really resonating as differentiators for the New York stock exchange.

Speaker 6: Got it. Thanks. The next question comes from Simon Clinch with Atlantic Equities. Please go ahead. Hi, guys. Thanks for taking my question. I just wanted to just do a housekeeping really on the CAPEX guidance. I just wanted to give us a bit more color as to how to think about CAPEX going forwards and particularly what's really driving that growth in – if you can tease out sort of the separate drivers for fiscal 22.

Speaker 15: Got it. Thanks.

Got it thanks.

The next question comes from Simon.

Speaker 1: The next question comes from Simon Clinch with Atlantic Equities. Please go ahead.

With Atlantic Equities. Please go ahead.

Speaker 6: Hi guys, thanks for taking my question. I just wanted to do a housekeeping really on the capex guidance. I just wanted to give us a bit more colour as to how to think about capex going forwards and particularly what's really driving that growth in the separate drivers for fiscal 2020.

Hi, guys. Thanks for taking my question I just wanted to I just about housekeeping really on the Capex guidance, just wonder if you'd give us a bit more color as to.

How to think about capex going forwards.

And particularly what's really driving that growth.

You can tease out sort of the secular drivers for fiscal 'twenty two.

Speaker 3: Sure. Hey, Simon, it's Warren. So, right, so we're about 450 million, as you know, this year. That was kind of towards the high end of the range. Some of that is in...

Sure Simon it's worn so right. So we were about $450 million as you know this year that was kind of towards the high end of the range some of that some of that is.

Speaker 3: related to BACT. Of course, we had a full year of LE May. As you're looking at the guidance for next year, as you saw, it's about 520 to 490. We are planning some data center migrations and some upgrades.

Related to back we of course, we had a full year of Ellie Mae.

As Youre looking at the guidance for next year as you saw it its about $520 to $4 90, we are planning some data center migrations and some upgrades.

Speaker 3: That's adding about 80 million or so to that five ninety to five or five twenty to four four ninety

And that's adding about $80 million or so to that $5 90 to five sorry, $5 20 to 490.

Speaker 3: Those are going to result eventually in some cost savings. So.

Those are going to result, eventually in some some cost savings there is revenue related expansion product prior to our project within that so so all kinds of good things on the on the back end of that investment.

Speaker 3: So all kind of good things on the back end of that investment.

Speaker 3: You know, within that guidance range of this year, probably around 100 million of LE May too. So, you know, when you start to back, peel off those pieces, you're back down to sort of the 300, 350 range, which is where…

Within that guidance range of this year, it's probably around $100 million of Ellie Mae too so.

When you start to back to Peel off those pieces, a little you're back down to sort of a $303 50 range, which is where we'll call. It legacy ice was and has been for a number of years prior to that acquisition and some of these.

Speaker 3: We'll call it Legacy ice was and has been for a number of years prior to that acquisition and some of these

Speaker 3: productivity and efficiency investments that we're going to be making around some of the data center moves.

Productivity and efficiency investments that we're going to be making around some of the data center moves.

Great. Okay. Thank you.

And we have a follow up from Alex Kramm with UBS. Please go ahead.

Speaker 1: And we have a follow up from Alex Cram with UBS. Please go ahead.

Speaker 9: Yes, hey again, just a couple of quick quick quick up follow ups here. One on the mortgage side, maybe I missed it. But can you give us an update in terms of where you stand with subscribers on eclose and and also where we are in the subscription or subscription

Yes, Hey, again, just a couple of quick quick quick follow ups here one on the mortgage side, maybe I missed it but can you give us an update in terms of where you stand with subscribers on E. Close and then also where we are in the subscription.

<unk>.

Speaker 9: Kind of like transition in terms of how many of your clients have no transition. I know it's about 20% a year, but just maybe an update there. And then also on the trading side, very quick, I obviously with the contract transitions here in EuRibor, obviously the rate per contract has been moving higher. We see that in your January number numbers. I know it's a three months lag number and I can probably do the math, but just wondering what's a good RPC to use for the quarter or where we are running in January alone. Any color would be great. Thanks guys.

Kind of like a transition in terms of how many of your clients have now transitioned I know its about 20% a year, but just maybe an update there and then also on the trading side very quick obviously with the contract transitions here and your rigor obviously the rate per contract has been moving higher or we see that in your January number numbers I know is a three months lag number than I can.

You do the math, but just wondering what's the goods RPC to use for the quarter or where we are running in January alone any color would be great. Thanks, guys.

Hey, Alex I'll start on the on the mortgage side and then give some some color on the.

Speaker 4: Hey Alex, I'll start on the mortgage side and then get some color on the short-term interest rate transition as well.

Short term interest rate transition as well.

Speaker 4: In terms of eClos, we're continuing to see that ramp. So we went to, we were at 76 customers.

In terms of E close we're continuing to see that ramp. So we went we went to we were at 76 customers.

Speaker 4: last quarter and the last update here, we're now at 93. So we're continuing to see that pick up and ramp up, and we see as those customers ramp up, that's going to be...

Last quarter in the last update here. We're now at 93, so we're continuing to see that pick up and ramp up and we see it as those customers ramp up that's going to be yet.

Speaker 4: yet another area that grows that closing line item on a year over year basis as that closing line item is going to be heavily transaction oriented because a lot of the costs associated to closing fees actually go on to the end closing statement of the customer. So that is.

Yet another area that grows that closing.

Line item on a on a year over year basis.

That closing line item is going to be heavily.

Transaction oriented because a lot of the costs associated to closing fees actually go onto the and closing statement of the customers. So that is important to highlight that in us as we deliver more and more of these innovations and solutions. We are able to capture more revenue per loan, which is which is something.

Speaker 4: important to highlight that and as we deliver more and more of these innovations and solutions, we are able to capture more revenue per loan, which is something.

Speaker 4: that's important on that closing line item. On the subscription line item, so last year is when we started that pilot program.

That's important on that closing line item.

On the subscription line item.

So last year is when we started that pilot program.

Speaker 4: And we did a small percentage of what renewed. So if you take a ballpark of around 10% of the 20% that renewed, that's probably the right zip code of the number that we touched last year.

And we did a small percentage of what renewed so if you take a ballpark of around 10% up to 20% that renewed that's probably the right ZIP code of the number that we touched last year.

Speaker 4: And based on what we learned through that pilot program, we've now codified a program that's going to hit a much larger percentage of the 20% that are going to renew.

And based on what we learned through that pilot program. We've now codified a program that's going to hit a much larger percentage of the 20% that are going to redo.

Speaker 16: this year. So that that gets you into the ballpark of what we have accomplished being a very small percentage and that we do have a long runway of being able to do this over multiple years.

This year, so that that gets you in the ballpark of what we have accomplished being a very small percentage and that we do have a long runway of being able to do this over multiple years.

Ahead of Us just.

Speaker 16: Yeah, from the overall short term interest rate transition and what we're seeing.

From the from the overall short term interest rate transition and what we're seeing.

Speaker 16: in that marketplace, that transition went seamless for us.

In that marketplace that transition went seamless for us in terms of the short Sterling to Sonya transition. We've seen we did have some trading volumes from our trading volume that was trading short sterling versus Sonya that obviously, even short Sterling went away came off but when you look at the overall <unk>.

Speaker 16: in terms of the short sterling to Sonya transition. We did have some trading volume, some arbitrating volume that was trading short sterling versus Sonya that obviously when short sterling went away came off but when you look at the overall ster's complex and this rising rate environment that we're in in both the UK.

<unk> complex and this rate rising rate environment that we're in both the U K as well as the EU.

Speaker 16: as well as the EU. The market overall is off to a great start in terms of both volumes as well as open interest.

The market overall is off to a great start in terms of both volumes as well as well as open interest and I'll hand, it off to Warren talked about RPC, Yes, just quickly on the rates RPC, So, yes, youre seeing a little bit of lift there.

Speaker 3: Yeah, it's just quickly on the rates RPC. So yeah, you're seeing a little bit of lift there. You know, as we kind of transition into Sonia, as you know, that's a much bigger contract than what we had in the on the short sturling side. So there's a

As we kind of transition into Sonya as you know that's a much bigger contract than what we had on the on the schwartzberg Sterling side. So theres a equivalent benefit if you will from the RPC to kind of account for that so the revenue you were looking at just at a revenue basis.

Speaker 3: equivalent benefit, if you will, from the RPC to account for that. So the revenue, if you were to look at it just at a revenue basis, that should be relatively neutral if you're thinking about it on a notional.

It should be relatively neutral if youre thinking about it on a notional notional level.

Speaker 3: You know, the other impacting factor there. And so I think at this current level, you're probably at a good place for that interest rate RPC moving forward. Obviously the impact can be from mix, you know, medium-term versus short-term rates of a rates overall. And then of course, there's a component of effects that can flow through there as well. But again, all LP equal, I think it's kind of a good...

The other impacting factor there and so I think at this current level youre, probably at a good place for that interest rate RPC moving forward, obviously the impact can be for mix.

Medium term versus short term rates of our rates overall and then of course. There is there is a component of FX that can flow through there as well.

But again all else equal I think it's kind of a good.

Speaker 3: you know, what we reported this month is a good run rate to be kind of thinking about for that component of our future business.

What we reported this month is a good run rate to be kind of thinking about for that component of our future business.

Sounds good I'll follow up on that thanks.

And I understand there is time for one more follow up that is from Kyle Voigt. Okay. VW. Please go ahead.

Speaker 1: and I understand there's time for one more follow up that is from Kyle Voight from KVW. Please go ahead.

Hey, Thanks, Thanks for squeezing in my follow up I guess.

Speaker 11: Hey, thanks. Thanks for squeezing in my follow up. Um, it's just some expenses. Uh, the midpoint of the expense guides, I think it's 5% year on year growth, um, comparing to the adjusted OpEx excluding back.

<unk> expenses the.

The midpoint of the expense guidance I think it was 5% year on year growth.

Comparing to the adjusted Opex excluding back.

Speaker 11: Just wondering if you could talk about how committed you are to delivering operating leverage in 2022 specifically. Again, if we're looking at the business on an adjusted basis, excluding backed, and then given the business mix change over the past five years or so, just wondering if you can update us on your view of long-term expense growth, like what's the right expense growth for a long-term price.

Just wondering if you could talk about how committed you are to delivering operating leverage in 2022, specifically.

Again, if we're looking at the business on an adjusted basis, excluding backed.

And then given the business mix changed over the past five years or so I was wondering if you can update us on your view of long term expense growth.

The right expense growth rate long term price. Thanks sure sure. Thanks. Good question, so you're right at the midpoint, it's about 5% growth.

Speaker 3: Sure, sure. Thanks Kyle. Good question. So you're right, at the midpoint it's about 5% growth.

Speaker 3: You know, again, as I said in my remarks, you know, there's a portion of that.

Again as I said in my remarks, there's a portion of that that we are electing to invest related to.

Speaker 3: that we're electing to invest related to the IPO back, so some of the operating savings that we had from back.

The IPO back with some of the operating savings that we had from banks is that if you include revenue, it's about $75 million of savings that we got from back we're going to invest a portion of that this year and some of the tech and ops projects. So so thats probably about a point of that if you will of that five at the midpoint that is coming from that and those are things that.

Speaker 3: you know, if you include revenue, it's about 75 million of savings that we got from back, we're going to invest a portion of that this year in some of the tech and ops projects. So that's probably about a point of that, if you will, that five at the midpoint that is coming from that. And those are things that

Speaker 3: you know, certainly we would have done and we would do over time, but just given the opportunity we had with those savings, we chose to elect to do them now. And so, you know, look, ICE has always been a...

Certainly we would have done and we would do over time, but just given the opportunity we had with those savings we chose to elect to do them now.

So you know look ice has always been.

Talk to us about cost controls in and being good on expense controls and things of that nature and so so we did take that opportunity to do that.

Speaker 3: conscious about cost controls and being good on expense controls and things of that nature. So we did take that opportunity to do that in order to kind of save that later. But I think as you're thinking about it longer term, it's what it's been in the past. And we've talked about compensation expense being kind of

In order to kind of save that later, but but I think as youre thinking about it longer term.

What it's been in the past and then we've talked about compensation expense being kind of lower single digit growth in terms of merit.

Speaker 3: lower single digit growth in terms of merit annually. That's about half of our expense base. I think that, you know, when you think about non-compic expense is probably in a similar range. So I think I think a lower single digit kind of expense growth range on an organic basis is a fair place to be. And again, that's again.

Annually, that's about half of our expense base I think that when you think about non comp expense is probably in a similar range. So I think that I think a lower single digit kind of expense growth range on an organic basis is a fair place to be and again that's against revenue. We don't give top line revenue growth overall for the business, but I think it's safe to assume that within.

Speaker 3: You know, we don't give top line revenue growth overall for the business, but I think it's safe to assume that's within the context of revenues growing faster than expenses.

The context of revenue is growing faster than expenses.

Speaker 3: I think for instance this year we added

I think for you know for instance, this year, we added $500 million of incremental revenue.

Speaker 3: 500 million of incremental revenue was yielded 380 or so of operating income. That's about a 75% incremental margin. So I think, yes, we're very much committed to that. Transaction business can certainly fluctuate here and there, but over the medium-long term, yeah, we would certainly expect that operating leverage to flow through.

Which yielded 380 or so of operating income and it's about 75% incremental margin. So so I think yes, we're very much committed to that transaction business can certainly fluctuate here and there, but but over the medium long term, yes, we would we would certainly expect that operating leverage to flow through.

Great. Thanks, Brian .

Speaker 1: This concludes our question and answer session. I would like to turn the conference back over to Jeff Sprecher for any closing remarks.

This concludes our question and answer session I would like to turn the conference back over to Jeff Sprecher for any closing remarks.

Speaker 8: Well, thank you, Andrew, for running the call and thank you all for joining us this morning. We look forward to soon updating you as we continue to innovate for our customers and give you the results of our all-weather business model as we continue to drive growth. And with that, I hope you have a great day.

Well, thank you Andrew for running the call and thank you all for joining US. This morning, we look forward to soon and updating you as we continue to innovate for our customers and.

Give you the results of our all weather business model as we continue to drive growth and with that I Hope you have a great day.

Speaker 1: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Okay.

Speaker 17: ["Pomp and Circumstance"] ["Pomp and Circumstance"]

Okay.

[music].

Yes.

Yes.

Yes.

[music].

Okay.

[music].