Intercontinental Exchange, Inc. Q2 FY2022 Earnings Call

Hello, everyone and welcome to the ICE Second Quarter 2022 Earnings Conference Call. My name is Victoria, and I will be coordinating the call today. I will now present to you, Mary Caroline O’Neal, Head of Investor Relations to begin. Please go ahead.

Good morning. ICE’s second quarter 2022 earnings release and presentation can be found in the Investors section of www.ice.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 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, second quarter Form 10-Q and other filings with the SEC. In addition, as we announced in May, ICE has agreed to acquire Black Knight; the transaction is pending customary regulatory approval and we expect to close in the first half of 2023. Please also note that this call does not constitute an offer to sell or buy or the solicitation of any offer to buy or sell any securities, nor shall there be any sale of securities in any jurisdiction in which such offer solicitation or sale would be unlawful prior to registration or qualification under the Securities Laws of any such jurisdiction. No offerings of securities shall be made except by means of prospectus, meeting the requirements of Section 10 of the Securities Act of 1933. In connection with the proposed transaction, ICE will file with the SEC a registration statement on Form S-4 to register the shares of ICE common stock to be issued in connection with the transaction. The registration statement will include a proxy statement of Black Knight that also constitutes a prospectus of ICE. When finalized, the definitive proxy statement prospectus will be sent to the stockholders of Black Knight seeking their approval of the transaction and other related matters. Before making any voting or investment decisions, investors and security holders of ICE and Black Knight are urged to carefully read the entire registration statement and proxy statement prospectus as well as any amendments or supplements to these documents because they will contain important information about the proposed transaction. 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 our 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 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, Chair and CEO; Warren Gardiner, Chief Financial Officer; Ben Jackson, President; and Lynn Martin, President of NYSE. I’ll now turn the call over to Warren.

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 second quarter results. Second quarter adjusted earnings per share totaled $1.32, a 14% increase year-over-year, marking the best second quarter in our company's history, and is on top of 12% growth in the second quarter of 2021. Net revenues totaled $1.8 billion, an increase of 8% versus last year, driven by a balanced contribution from both our diversified transaction revenues and our recurring revenues, which account for over half of our business and increased by 8% versus last year. Second quarter adjusted operating expenses totaled $740 million and were at the low end of our guidance range versus the midpoint of our guide. Second quarter expenses benefited from favorable FX, various expense efficiencies, and lower variable costs, particularly customer acquisition costs in our listings business. Moving to the full year, we're lowering our expense guidance to a range of $2.97 billion to $2.99 billion midpoint to midpoint; this represents a reduction of $35 million versus our prior guidance and similar to our second quarter results is driven by expense efficiencies, lower variable costs, and favorable FX. Second quarter adjusted operating income increased by 14% to $1.1 billion, their adjusted operating margin expanding to 59%. Moving to the balance sheet, shortly after we reported our first quarter results in May, we took the opportunity to raise $8 billion in new senior notes. We used $3 billion of these proceeds to refinance our 2022 and 2023 maturities and along with the proceeds from our sale of Euroclear, reduced our commercial paper balances to zero, with no maturities until the middle of 2025. We enter the second half of the balance sheet that is well positioned in an exceptionally volatile interest rate environment. The remaining $5 billion of proceeds raised in May is earmarked to fund a portion of our announced acquisition of Black Knight based on favorable rates that we've secured on these long-term notes. It is also worth noting that alongside the financing in May, we maintained our A minus and A3 pre-acquisition ratings from both S&P and Moody's. Now let's move to Slide five to provide an overview of the performance of our exchange segment. Second quarter exchange net revenues totaled $1 billion, an increase of 13% year-over-year; this strong performance was driven by an 80% increase in our interest rate futures and a 36% increase in our equity derivatives revenues. Importantly, total open interest, which we believe to be the best indicator of long-term growth, in July is up 11% versus the end of last year, including 6% growth in energy and 21% growth across our financial futures and options complex. Second quarter cash equities and equity options revenue increased by 17% year-over-year, and in July, we successfully migrated the NYCE Arca Options platform to our new pillar technology while continuing to seamlessly process record message volume, a testament to our team's hard work and our broader technology expertise. Exchange recurring revenues increased by 7% year-over-year. This growth was driven by strong demand in our energy exchange data and continued benefit from our record 2021 listings performance, and a one-time accrual in our listings business that we do not expect will reoccur in the second half. Turning now to Slide six. In our fixed income and data services segment, second quarter revenue totaled a record $512 million, a 13% increase versus a year ago. Transaction revenues increased by 78%, including 85% growth in ICE bonds and 76% growth in our CDS clearing business. This strong growth was driven in part by customers re-engaging and allocating more capital to CDS trading, as well as our continued efforts to build institutional connectivity through our bond platforms, where we're seeing market share gains and our municipal bond business. Recurring revenue growth, which accounted for over 80% of segment revenues, grew 5% in the quarter and was once again driven by strength in our consolidated fees business as well as continued growth in the ICE global network. Looking to the second half, we expect year-over-year growth in our recurring revenues to continue supported by an increase in interest rate activity in the third quarter, up over 5% year-over-year. In that second half, as reported recurring revenues, we expect to be flat to slightly up versus our first half results driven by your Euronext data center migration, which was included in our original guidance and $10 million of additional FX headwinds. Shifting to mortgage technology on Slide seven. Second quarter revenues totaled $297 million. Recurring revenues, which accounted for over half of the segment revenues totaled $160 million in the quarter and increased 18% year-over-year. These strong recurring revenues continue to drive outperformance versus an industry that experienced a 40% decline in origination volumes. While the current macroeconomic backdrop is challenging for a number of our customers, it has also presented opportunities to engage in more constructive conversations around efficiency and automation across the mortgage origination workflow. It's worth noting that second quarter unit origination volumes were similar to those in the second quarter of 2019. However, second quarter 2022 revenues in our mortgage technology business were over $100 million greater or up almost 60% when compared to pro forma revenues in 2Q '19. This is a clear testament to the continued automation and growth and customer adoption of our solutions across the origination workflow. I'll conclude on Slide eight. To the first half of the year, we've grown total ICE revenue by 7%, adjusted operating income by 11%, including 200 basis points of margin expansion and adjusted earnings per share by 12%, representing the best first half in our history. In addition, we've positioned our balance sheet for the acquisition of Black Knight while also growing our dividend and continuing to invest in future growth. As we look to the balance of the year, we're excited about the many growth opportunities in front of us, and we remain focused on creating value for our stockholders. With that, I'll hand it over to Ben.

Thank you, Warren. And thank you all for joining us this morning. Please turn to Slide nine. Rising inflation has created an interest rate environment that many of our customers have not navigated in over a decade. Meanwhile, the continued war in Ukraine has triggered a reshaping of the global energy supply chain, creating new risks and uncertainties for market participants. Importantly, we remain focused on connecting customers to our leading technology, mission-critical data, and transparent and accessible markets to navigate these uncertain conditions. In our interest rate markets, we've seen record year-to-date volumes in our contracts as customers increasingly seek to manage risks associated with rising rates and central bank activity across Europe and the U.K. This heightened risk has also contributed to strength in our equity derivatives complex, driving an 18% increase in volumes year-to-date. Across our global energy markets, customers are navigating supply uncertainty alongside longer-term Clean Energy Transition priorities. This will continue to introduce additional complexity and volatility to energy markets, which should drive greater demand for risk management. Our diverse global energy markets provide the critical price transparency and risk management tools customers need to navigate both the near-term and long-term complexities. Globalization of gas and the clean energy transition are trends that have contributed to the 43% average annual volume growth in our TTF gas business over the past five years, driving TTF to emerge as a global gas benchmark. Through the first half of this year, as a result of the Russia-Ukraine conflict, global gas markets have tightened significantly, increasing the demand for global liquefied natural gas in an uncertain geopolitical environment. This volatility and uncertainty have driven our global gas volumes to increase 31% year-to-date, including 49% growth in our North American gas business in the second quarter. Commercial customers continue to rely on our markets to manage their risk, as evidenced by the record share in open interest we've achieved in our Henry Hub contract, surpassing 50% for the first time ever. Because we operate a global gas market with benchmarks across North America, Europe, and Asia, we are well positioned to benefit from both the near-term volatility and the long-term secular growth trends occurring across these markets. Despite these global energy concerns, governments, corporates, and market participants remain committed to environmental policy to reduce carbon emissions. As such, valuing externalities such as placing a price on pollution, carbon-free electricity, and carbon sequestration and storage will continue to increase in importance. ICE has one of the largest networks of environmental products to value such externalities across the carbon cycle, including renewable fuel contracts, carbon allowances, nature-based solutions, and renewable energy certificates. The breadth of our complex, coupled with the growing importance of carbon price transparency, has contributed to the 19% average annual volume growth in our environmental complex over the past five years. As the clean energy transition continues to introduce new complexities, uncertainties, and volatility to energy markets, our global environmental alongside our gas and oil complexes will provide the price transparency across the energy spectrum needed to manage these evolving risks. Turning now to our mortgage business. I first want to touch on our pending acquisition of Black Knight as announced on May 4 of this year. As we said when we made our announcement back then, we continue to believe the transaction will close during the first half of 2023. Since the announcement, and in accordance with our initial expected timeline, we have submitted the necessary regulatory filings. We are working with the FTC as they perform their thoughtful and comprehensive reviews of the proposed transaction. Out of respect for the FTC's important work on this matter, we are working with them toward regulatory approval, and we do not intend to comment further on the transaction. But importantly, we remain very excited about the efficiencies that combined entities will bring to the end consumer and other stakeholders across the mortgage ecosystem. As interest rates rise, and mortgage origination volumes soften from recent record levels, our customers continue to turn to our mission-critical technology to operate more efficiently. In the second quarter, we once again grew recurring revenues and outperformed the broader industry. Our focus during these evolving market conditions is, first and foremost, our customer. Customer conversations have increasingly centered on efficiencies and automation and we continue to work with our customers to find the most efficient ways they can benefit from the breadth of offerings across our network. For example, we recently made the decision to offer interested customers our base eCO solution included in an Encompass subscription, making it easier and cheaper for customers to adopt and benefit from the efficiencies from an electronic closing. To focus on efficiencies has also led to increased interest in our data and analytics products. Leveraging machine learning technology, our analytics platform automates the steps in the loan manufacturing process, and can save lenders thousands of dollars per loan by reducing manufacturing time and complexity. Year-to-date, our data analytics business, which is made up largely of recurring revenues, has grown 21% year-over-year. We continue to see increased adoption of our analytics and new customers coming onto the platform, with a host of new clients added this year alone, representing the likes of Chase, a number of leading independent mortgage bankers, and a top-three home builder. We are pleased that the value of our offerings continues to resonate with lenders, and we remain optimistic about the long-term opportunity to accelerate the analog to digital conversion happening across the mortgage industry. I'll now turn the call over to Jeff.

Thank you, Ben. Good morning, everyone. And thank you for joining us. Please turn to Slide 10. The first half of the year has been marked by rising inflation, rising interest rates, and continued geopolitical and macroeconomic uncertainty. Our customers are navigating evolving risks and continue to rely on our data, technology and liquid markets to manage these risks. In the second quarter, we once again grew revenues, grew adjusted operating income, and grew adjusted earnings per share. These record-setting second quarter results reflect the strength of our network and the all-weather nature of our business model. Our strategy has always been to find unique and novel ways to apply data and technology to bring efficiencies and transparency to markets whether it was moving energy trading to the screen, clearing OTC swaps, modernizing the technology powering the U.S. equity markets, or building datasets for the opaque fixed income markets. As we've grown and diversified, we've broadened our opportunity set and our expertise has grown, providing new markets to grow into, and importantly, new ways to provide innovative solutions to customers. We've leveraged our leading pricing and reference data to build new tools for the front office. We've married our fixed income data to newly expanded climate capabilities. More recently, we've combined our expertise in futures contract construction with our index capabilities and our unique mortgage data to launch both the ICE mortgage rate lock index and its associated futures contract. These are just a few examples of the innovation that we can deliver with our expanded technology, datasets, and expertise. Our evolution has been intentional, diversifying across asset classes and geographies and increasing our mix of recurring revenues with the goal of building a business that today generates compounding earnings growth. It's how we've grown our adjusted earnings per share for the past 15 years in every year that we've been a public company. The net result of our compounding earnings growth is the compounding growth in our dividend, which we've grown double digits each year on average since we initiated it in 2013 and which we also grew 15% in this quarter. Looking now to the second half of the year and beyond, we're excited about the many growth opportunities that are in front of us. We remain focused on delivering innovative solutions for our customers while driving compounding growth for our stockholders. I'd like to thank our customers for their continued business and their trust and I'd like to thank my colleagues at ICE for their contribution to our record second quarter, following on the heels of our best first quarter, making this an unsurpassed first half result for our company. With that, I'll now turn the call back to our moderator, Victoria, and we will conduct a question-and-answer session until 9:30 a.m. Eastern Time.

Thank you. We will now start our Q&A session. Our first question comes from Rich Repetto at Piper Sandler. Please go ahead. Your line is open.

Good morning, Jeff and Ben and Warren. It's unfortunate we can't get any comments on the Black Knight acquisition because that's certainly on everybody's mind. But anyway, I'll ask about fixed income. Ben, you saw probably a nice uptick in fixed income execution, I think it's up 85% up 10 million, just quarter-over-quarter. And I would suspect that's just the retail, your retail complex picking up? And then one other question related to fixed income, the recurring revenues went down quarter-to-quarter just by a million, I suspect that's currency, but just wanted to get some clarification there as well.

Hi, Rich. I'm going to hand it over to Lynn to go through this.

Hi, Rich. Thanks for the question. You're right that we saw strong growth in our fixed income trading business this quarter. As mentioned in our prepared remarks, that was driven off of our strengthened municipal trading business. While volatility and the return of retail has certainly been a contributor, we're seeing our institutional efforts pay off. As you are aware, over the last two years, we've really focused on leveraging our market-leading assets in the municipal ecosystem, including our data assets and our index business, which now serves as the benchmark for more than 60% of the AUM in this area to build out the infrastructure to connect the institutional market to our municipal execution platforms. In this quarter alone, we're seeing the benefits of that work manifest itself. That institutional share within our municipal execution platforms has doubled since 2020, enabling us to take share in the broader municipal market. And finally, it's worth noting that our institutional business in munis has grown 250% year-over-year, a further sign that we're gaining share in this asset class.

And then, Rich, it's Warren on your question on the recurring revenues. You're right. That's largely FX, and there's also a little bit of AUM related revenue in our ETF business. So as we saw during the quarter, people shifting into treasuries and out of equities, and some of the credit-focused ETFs, there's lower economics on those treasury ETFs that track our benchmarks, and so that was a little bit of a mix shift impact for us as well within the AUM portion of the index. The rest of the index business did really well during the quarter, up double digits. Again, some of the subscription revenue, pure subscription revenue, if you will, in there. So really just kind of the macro dynamics taking hold there that is why you saw that slight sequential decline.

Got it. Thanks for the update.

Thank you for your question. Our next question comes from Alex Kramm at UBS. Please go ahead.

Yes. Hey, good morning. Lots of info you gave already on the mortgage side. But we'd like to dig a little bit deeper, particularly on the recurring side. So a few questions here. One, I don't know if you gave an update to the recurring revenue guide for that segment; I would be interested if that's still unchanged. But then more importantly, I think you mentioned that even like some of the challenges in the end markets you are seeing some bankruptcies, etc. So maybe you could give us an update on what you're seeing in terms of customer losses, and maybe remind us how the revenue model is if there are any receipts, etc. And then, sorry, lastly, maybe give us a little bit of the algorithm of growth that you've seen so far in recurring revenues year-to-date between customer losses but then also some of the upsells that you guys were talking about earlier, and then also this continued shift to moving the contract terms to more recurring, so I know that's a mouthful, but hopefully I get it all out.

Yes, that's a lot, Alex. This is Ben. I'll start and Warren will also, I'm sure, add in here. In terms of, I'll start with this, just the overall challenges in the environment. If you take a step back and look at what we're building, we're building a business here in mortgage with a number of different market environments with an eye towards an 8% to 10% growth over the long haul. Why are we confident in our ability to do that? One is we have absolutely mission-critical software for these clients that we're providing. We have long-term contracts with our clients, four to five years of a high amount of retention in them. We are heavily focused, as you've seen in our results, on shifting the revenue to more and more towards recurring. We did it again this quarter, on the backdrop of a 40% down market in terms of volumes, with 18% year-over-year recurring revenue growth in the business. The other proof point, you've seen in terms of being able to weather various market environments is our data analytics line item. That has been up 36% last quarter alone. One of the key inputs and drivers to that is our AIQ and Analyzer solutions; we're seeing tremendous uptake in that. We're seeing clients now more than ever just looking to adopt automation to automate as much of the workflow as possible to lower their costs. The other proof point I put out there is a comment Warren made in his prepared remarks; if you look at Q2 of 2019, we generated more than $100 million of revenue on a pro forma basis in a very similar volume environment. Our ability to capture some benefit from the efficiencies that we're providing to the industry has been tremendous. In terms of the algorithm of growth on recurring revenue, it's really a mix that we've described before. There is some pricing in there, there are sales to new clients. I mentioned that we had a good start to the year for sales on Encompass. We've had good sales for our AIQ business this year. And then also the other input is that shift as customers are renewing from transaction revenue to subscription; we're continuing to do that and having a lot of success. We're still in the early days; we're really in the first year of a codified program to do that. Given that contracts with clients go four to five years into the future, we have a long runway to go.

Alex, this is Warren. You asked about the guidance. So yes, you're correct. There's no change to the guidance that we gave to start the year. We did assume, as we said back then, that there will be some headwinds from people potentially going out of business or maybe not as many new market participants. I'll say I'm highly confident that to the extent that starts to play out, that's going to be a cyclical trend, not a secular one, because I think if you think about the process for this market, it continues to be very costly for the consumer; it's very inefficient. We have the tools that are really solving those problems.

I want to clarify that we’ve seen a small number of lenders facing challenges and potentially going out of business, but it's a very small number that we've seen so far.

Very good. Thank you.

Perfect. Thank you for your question. Our next question comes from Kyle Voigt at KBW. Please go ahead.

Hi, good morning. So last quarter, you spoke about energy traders moving away from using futures and toward options at least for oil specifically. Just given the decline in oil futures open interest throughout 2Q, it seemed like that trend may have continued. Just wondering if you could talk about what you're seeing from commodity trading firms right now trying to manage risk in an extremely volatile environment. Because I guess given the volatility, we've seen the market, it's a bit surprising to see energy volumes only up 3% in the second quarter and now seemingly kind of trending lower year-on-year into the third quarter. Thank you.

Hey, Kyle, it's Ben. We are experiencing a unique combination of global issues that are unprecedented. Despite this, we are glad to report that our overall futures business has increased year-over-year in terms of open interest since the end of last year, and our energy business has also seen an increase in open interest during that time, considering the current events. We are facing an inflationary environment and a recession, particularly in Europe, where governments must find a balance between sanctions against Russia and the effects of those sanctions on their citizens regarding immediate energy prices and the transition to cleaner energy. In light of these challenges, we believe our marketplace is well-positioned to assist clients in navigating these events, and they are actively using our services to do so. I'll give a few examples. First, we have one of the most deep and liquid markets across the energy spectrum. As clients look to move and switch between fuels, looking to a cleaner environment, we are the exchange and clearing businesses that they're going to do that. Second, in managing global supply shocks, we have deep liquid global markets in each of those respective asset classes that I mentioned with oil, gas, LNG, power, and environmentals. We believe we are well positioned to help clients manage their risks using different risk management tools. For example, with Russia stifling gas supplies going into Europe, U.S. gas products are being used to hedge those cargos. We are seeing record shares in open interest from our Henry Hub perspective, as well as the North American gas market. The third thing I'd point out is that we're engaged as much as ever with clients and governments around the world around the sanctions and how the issues will play out in products like gas and oil, with Russian fuel oil historically being an input. Now with governments making clear that as of February 2023, Russian fuel oil will no longer be consumed in Europe, we've changed the specification on our gas oil contract and are beginning to see open interest build again in gas oil, calendar 2023 and beyond. You pointed out our deep liquid options market; options will hedge geopolitical tail risk, and our volume in open or volume in Brent options year-over-year is up 25%. When you look at the overall energy complex, we feel really good about how we're positioned.

Thank you so much.

Thank you for your question. Our next question comes from Craig Siegenthaler at Bank of America. Please go ahead. Your line is open.

Hey, good morning, everyone. So my question is on mortgage tech origination revenues were down; not that surprising. But could you help us with some perspective on incremental downside from current levels? Also, in terms of timing, when should we think these revenues will stabilize, and any perspective on that relative to what rates are doing would be helpful too?

Hey, Craig, it's Ben. I'll start. Basically reiterate some of the things that I said before. When you widen out what our strategy is within the mortgage and mortgage technology business, our strategy here has been to move more and more of the revenue towards recurring to take some of that cyclicality out of the business, and we continue to do that. We've been successfully doing that. In terms of predicting the rate environment and how that's going to play out, just look at how the rate environments played out over the last week; it's been extraordinarily hard to predict how this volume environment will settle down. But despite that, we're going to continue to make investments in the innovation that we're providing to our clients. As we mentioned, many of the investments that we've made fueled that $100 million growth we saw over the last three years in a similar environment to what we had in 2019. Those investments are in and around everything that we've been doing in the closing side; our simple file business continues to gain market share and do very well. All the innovation we're introducing on the data and analytics side with our AIQ platform, as well as the automation of the underwriting platform, are tailwinds that irrespective of the rate and volume environment serve as growth drivers for us.

Let me just mention that a lot of our mortgage strategy is driven by the fact that we're trying to position the company to be an all-weather name in all interest rate and macroeconomic environments. I can conclude my prepared remarks on the same page that shows a graph of compounding earnings growth for shareholders. Moving into mortgages gives us exposure; we own LIBOR, trade U.K. and EU interest rate futures, and have a global credit default swap business. We believe any house that gets built will be sold, and a mortgage will be put on it. The supply chain issues are getting better; the underdevelopment of building is increasing.

Great. Thanks for taking my question.

Thank you for your question. Our final question comes from Brian Bedell at Deutsche Bank. Please go ahead.

Great. Thanks. Good morning, folks. Thanks for taking my question. Just a two-parter on the environmental initiatives. So maybe Ben, if you could just comment on within the energy complex, obviously, we're seeing very good strength in gas. We did see a couple of quarters now sequential declines in the environmental, so the question there is, are your customers substituting that gas for some of the environmental versus something else driving on the environmental side short-term? And then, the second part of the question is, if you could comment on this, maybe Lynn, but on the acquisition of Urgentem and the overall climate data strategy, whether you're seeking to grow substantially in that business linking that into the data heavier into the environmental trading side?

Got it. Thanks, Brian. Yes, I'll start, and then I’ll hand it to Lynn for the second part of that. There is a confluence of issues going on in particular in Europe, and we have seen some impact regarding the balance between Russia, sanctions, and the impact on traders with our European Union Allowances shrinking in the short term. In North America, however, we’ve had a very strong business continuing to do well; we see significant activity in our Regional Greenhouse Gas Initiatives and California Carbon Allowances. We just launched some new Biofuel Contracts that are doing well, and the future looks promising as we will continue to invest.

Given the strength in our fixed income data, we're uniquely positioned to add transparency around ESG, really focused on climate risk. We are turning physical climate data into actionable insights across various sectors including our muni bond service and recently into the mortgage-backed securities market. This acquisition strategy and the ability to offer parcel-level information globally will grow our climate risk offering.

That's great color. Thank you.

Thank you for your question. Our final question comes from Michael Cyprys at Morgan Stanley. Please go ahead.

Great, thanks so much. I wanted to ask about the commodities franchise, just curious how you guys are thinking about the longer-term growth drivers there, what factors ultimately drive volumes higher in your commodities franchise?

Thanks, Michael. This is Ben. The way we think about it is we need to have the breadth of offerings across the inputs into producing energy, especially as energy consumption is expected to double significantly by 2050. Even with recent headwinds in some of the products in Europe, we continue to see user growth. Looking at user growth, open interest, and the global breadth of the offerings we provide, all are inputs into our growth outlook.

Great. Thank you.

Thank you for your question. Our final question is a follow-up from Rich Repetto of Piper Sandler. Please go ahead.

Yes. Thanks for taking the question. Just one last question on mortgage, and this I think is more for Jeff. In the prepared remarks, it was mentioned about efficiency and automation and how the downturn is maybe emphasizing that more in the mortgage segment. The question, Jeff, is how is it comparing given that mortgage has a longer workflow process, but what you are seeing so far in regards to the automation of the market longer term versus the other asset classes you've dealt with?

That's a great question, Rich. It's very hard to get people to change their behavior when they're making a lot of money and when things are going well. This downturn presents an opportunity for us to show value by transitioning to our digital capabilities for our clients. The mortgage market has tremendous inefficiencies throughout the entire process, from manufacturing a mortgage to how mortgages are financed and traded in secondary markets. Centralizing data transparency is vital, and we see this as a ground for us to operate on moving forward. We aim to build a more efficient mortgage ecosystem.

Got it. Thank you. That's helpful.

Thank you for your question. This concludes our Q&A session. And now I'd like to pass over to Chair CEO, Jeff Sprecher for any final remarks.

Thank you, Victoria. Thank you all for joining us this morning. Let me again thank my colleagues for delivering yet another record quarter, and we very much appreciate and want to say thank you to our customers for putting your faith in us during the quarter. We'll look forward to updating you again soon as we continue to execute on these exciting growth opportunities that we mentioned on the call. And with that, I hope you'll have a great day.

Thank you, everyone, for joining today's call. You may now disconnect.