Q3 2024 Intercontinental Exchange Inc Earnings Call

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Speaker Change: I'll now hand, you over to Kathy Gonzales manager of Investor Relations to begin. Please go ahead.

Speaker Change: Good morning, Ice's third quarter 2024 earnings release and presentation can be found in the investors section of <unk> Dot com.

Speaker Change: I don't think we archived and our call will be available for replay.

Speaker Change: This 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.

Speaker Change: This corruption of the risks that could cause our results to differ materially from those described in forward looking statements. Please refer to our 2023 Form 10-K, 2024 third quarter Form 10-Q, and other filings with the SEC.

Speaker Change: 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 see.

Speaker Change: A reconciliation to the equivalent GAAP term seem to earnings materials when.

When you from this call net revenue refers to revenue net of transaction based expenses and adjusted earnings refers to adjusted diluted earnings per share.

Speaker Change: Throughout this presentation unless otherwise indicated references to revenue growth are on a constant currency basis.

Speaker Change: When you see the exponential notes on the second page of the earnings supplement for additional details regarding the definition of certain items.

Speaker Change: With us on the call today are Jeff Sprecher Chair and CEO.

Warren Gardiner Chief Financial Officer.

Speaker Change: Towards the end of October open interest is up 23% year over year, including 32% growth in global interest rates and 26% growth in our energy markets.

Speaker Change: Shifting to recurring revenues, which include our exchange data services and our NYSE listings business revenue totaled $364 million, which included a few million dollars related to audit recoveries.

Speaker Change: Underpinning growth in our recurring revenues was our broader exchange data services, which was once again led by the continued expansion of our global energy and environmental network.

Speaker Change: In our listings business, while less than half of global Ipos have met the standards to lift so far in 2024. The NYSE has helped to raise $14 billion in new proceeds welcoming 43, new operating companies representing seven of the top 10, Ipos and eight of the top 10, performing ipos year to date.

Speaker Change: In addition, NYSE continued its leadership on transfer is welcoming 10 operating companies year to date.

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

Speaker Change: Third quarter revenues totaled a record $586 million <unk>.

Speaker Change: Including transaction revenues of $125 million.

Speaker Change: On a year over year basis growth in units corporates as well as Cds clearing activity was offset by lower treasury trading at ice bonds and slightly lower member interest in revenues.

Speaker Change: Record recurring revenues totaled $461 million and grew by 6% year over year.

Speaker Change: Discovered in the U S Gulf Coast via <unk>, Midland WTS futures markets and in the Middle East and Asia via Isis <unk> and Dubai Futures markets.

Speaker Change: Reflecting this dynamic volume in our global oil complex increased 17% year over year.

Speaker Change: This strong performance includes records across Brent <unk>, Midland <unk> and movement.

Speaker Change: And contributed to record oil revenues, which grew 16% in the quarter.

Speaker Change: These strong trends have continued into October with record total oil open interest up 28% and Brent options up 68, 86% year over year.

Speaker Change: These critical pricing relationships extend into refined oil products, where ices low sulfur gas oil markets. Similarly anchors price discovery for refined products globally with markets, such as Isis heating oil futures and ice Singapore gas oil, reflecting regional dynamics in the U S and Asia, respectively.

Speaker Change: We continue to see strong growth across the refined products with gas oil open interest up 63% year over year supporting double digit growth across the refined products complex, including growth in cleaner fuels, such as Ice's global marine fuel and biofuel markets.

Speaker Change: It depends to navigate this multilayered and non linear transition.

Speaker Change: Before I hand over to Jeff I wanted to briefly touch on our interest rate markets, which hit record volume during the quarter, increasing 50% year over year.

Speaker Change: Our mixed inflation picture low unemployment weak.

Speaker Change: Economic data and ongoing geopolitical uncertainty continued to drive demand for interest rate risk management.

Speaker Change: <unk> liquid multi currency short term interest rate complex includes the key benchmark your rival Sonya and sarin markets used to manage short term interest rate risk in euros pound Sterling and Swiss francs, respectively.

Speaker Change: As the benchmark for managing short term euro interest rate risks Ics <unk> volume increased 47% year over year in the third quarter with open interest up 15% in October.

Speaker Change: The latest addition to Ics multi currency complex the euro short term rates for Esther.

Speaker Change: Continues to break records across all liquidity metrics, including open interest hitching a record 681000 contracts during October.

Speaker Change: Some with the MSP servicing system with documents now moving straight from origination through to servicing.

Speaker Change: Taking it a step further we also incorporated DDA into MSP. So that servicers can quickly identify any critical information that may be missing from a loan file as the documents progress and we cemented this integration milestone with the signing of J P. Morgan Chase to also utilize this platform.

Speaker Change: For their servicing business.

Speaker Change: We continue to enhance the MSP loan servicing technology since our acquisition of Black Knight by investing in a new user interface called MSP Dx. This.

Speaker Change: This interface modernizes access and control of the legacy loan servicing platform and streamlined key tasks across loan Onboarding investor reporting and customer service. It allows users to seamlessly retrieve data and a bulk servicing actions through a conversational user interface.

Speaker Change: And its expanded capability facilitates loan triage, providing users with an efficient view of relevant information when working on lone exceptions. We've.

Speaker Change: We've also further automating the credits.

Speaker Change: <unk> processes to help mortgage servicers meet their 30 day reporting obligations under the fair credit reporting Act.

Speaker Change: Thomas.

Thomas: And a lot of that is going to be in places.

In the developing world, where contracts like J J M in TTS and brands in Dubai, and moving our critical in managing price risks around those areas. So we feel pretty good about about the opportunity ahead of us.

Speaker Change: But as you say, it's pretty difficult to quantify that.

Speaker Change: Okay.

Speaker Change: Our next question comes from Craig Siegenthaler with Bank of America.

Speaker Change: Please go ahead.

Craig Siegenthaler: Hey, good morning, everyone.

Craig Siegenthaler: Had a question on the new partnership between ice bonds and market access. So how this partnership enhance your liquidity pool and client value proposition and will we see it translate into stronger market share trends, if I could just squeeze one more in.

Craig Siegenthaler: Could this lead down the road to a closer relationship with market access ranging from a full acquisition or a strategic minority equity investment.

Speaker Change: Greg its Chris Thanks for the question probably more towards the second one you asked.

Speaker Change: But look the partnership with market access it really gives us an opportunity where we have a very unique client base that is different than the market access to traditional client base, but there are different pools of liquidity because what they represent and so this gives the opposite this combination gives us the ability for all of our clients.

Speaker Change: Globalization of gas is that guests players globally, and particularly in the U S. Now that the U S. As a major exports of LNG need to be cognizant of and have risks to manage in respect of prices not just in the U S. But globally. So we've got a lot of global producers in.

Speaker Change: The U S that are now looking at both TTS numbers as well as Henry hub numbers.

Some of our basis numbers to figure out whether it's best pipe that guess internally too whether it's for data center usage or other power usage in the U S or to export that's in the form of LNG to whether it's Europe or Asia. So we're seeing a lot of our U S. Participants now actively trading in whole positioning holding positions in markets like TTS.

And Jacob I think the other trend just pivoting quickly to oil which has been very interesting you'll recall that a few years ago, we set up a new market in the U S Gulf Coast.

Speaker Change: To better reflect the export price of.

Speaker Change: Permian <unk> coming out of the U S Gulf Coast and again as the U S continues to export more and more Permian grade <unk> and as that grade is now linked into into brands.

We're seeing a lot more physical participants in the U S Permian producers.

Using our numbers to price their exports out of the U S. Gulf Coast you might see.

Speaker Change: This last week, the sale produce continental resources announced that it was switching.

Speaker Change: Meehan pricing to Ics HEU contract, which is replacing a differential to <unk> Cushing. So that's all pointing in a good direction that the increased participation.

Putting that into your second question around sustainable aviation fuel or SaaS.

Speaker Change: As participants start to engage with our reference data and with ice chat transactions on that front.

Our next question comes from Ken Worthington with Jpmorgan.

Your line is open hi.

Ken Worthington: Hi, good morning, Thanks for taking the question.

Speaker Change: Stuart more more for you trial by fire.

Ken Worthington: If we think about the globalization of gas driving your T. T. S. J Cam contracts, we're seeing the growth of T. T F far exceeds the LNG capacity that's.

Come on line in recent years, there's some sort of multiplier or maybe its speculators. Following hedgers. So how do you think about this relationship between molecules in motion the need to hedge and what ends up ultimately is I guess I'll call it normalized volume.

Speaker Change: LNG capacity is going to double over the next three years, what is reasonable to expect for this LNG relationship with T. T F and J K M, which you called out as sort of a non linear relationship.

Yes. Thanks for the question, Ken I think the other dynamics to keep in mind, when you're thinking about.

The volume on our futures contract versus the underlying market is the length of the curve. So we've got liquid pricing and TGF now going out 10 years.

Speaker Change: And so Thats 10 Years' worth of supply is the thing you need to be thinking about as you think about the hedging volumes on the exchange.

But look it's the thing that we see the dynamic we're seeing is as you said in your question. The the demand for LNG is growing significantly and we see that as being a significant part of both the Asian growth story, but also.

The Asian move to cleaner energies. So theres no question in our minds that LNG supply is going to need to increase significantly. The other dynamic here is because there is more liquid pricing in the marketplace looking at the likes of TTS, and JK and more and more buyers and sellers are referencing TGF.