Hello, and welcome to the ICE Fourth Quarter 2022 Earnings Conference Call and Webcast. My name is Alex and I'll be coordinating the call today. I'll now hand over to your host, Katia Gonzalez, Investor Relations and Senior Analyst. Katia, please go ahead.

Good morning. ICE's fourth quarter 2022 earnings release and presentation can be found in the Investors section of the 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 2022 Form 10-K and other filings with the SEC. In addition, as we announced last year, ICE has agreed to acquire Black Knight. The transaction is pending customary regulatory approval and we expect to close in the first half of this year. In connection with the proposed transaction, ICE has filed 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 includes a proxy statement of Black Knight that also constitutes a prospectus of ICE. Please see the Form S-4 filing for additional information regarding the 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 core business performance. You'll find a reconciliation to the equivalent GAAP terms 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 our 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 the NYSE. I'll now turn the call over to Warren.

Thanks, Katia. 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. Net revenues of $1.8 billion were driven by transaction revenues of $828 million and recurring revenues of $940 million, up 4% year-over-year. For the full year, revenues totaled $7.3 billion, also up 4% versus last year. Fourth quarter adjusted operating expenses totaled $740 million, and we're within our guidance range, including approximately $5 million of additional severance. This strong performance helped to drive fourth quarter adjusted earnings per share of $1.25 and full-year adjusted EPS of $5.30, an increase of 5% versus 2021. In 2022, free cash flow totaled a record $2.9 billion, which enabled us to return nearly $1.5 billion to shareholders while also continuing to make strategic investments across our business. In addition, we have received Board authorization to increase our quarterly dividend by 11% to $0.42 per share, beginning in the first quarter of 2023, extending our 10-year track record of double-digit dividend growth. 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 $982 million. Transaction revenues of over $600 million were driven in part by 11% growth in agricultural commodities and 13% growth in our equity derivatives business. Importantly, open interest trends remain strong across our futures and options in January, including 14% growth in global natural gas and 24% growth in LIBOR. Recurring revenues, which include our exchange data services and our NYSE listings business, increased by 5% year-over-year in the fourth quarter. Customer growth, particularly within our energy exchange data, was partially offset by slower growth in our listings business. While industry-wide capital markets activity was relatively muted, it's worth noting that despite a slower year for IPOs across the globe, we had a record year for listing transfers with 34, including more operating companies in the last three years combined. For the full year, exchange segment revenues increased by 8%, including a 33% increase in our interest rate business, a 20% increase in equity derivatives, and an 8% increase in our global natural gas revenues. Turning now to Slide six, I'll discuss our fixed income and data services segment. Fourth quarter revenues totaled a record $537 million, up 13% versus a year ago. Transaction revenues increased by 89%, including 182% growth in ICE bonds and 66% growth in our CDS Clearing business. Similar to last quarter, this strong growth was driven by market volatility, higher interest rates and our continued efforts to build institutional connectivity to our bond platforms. Recurring revenue growth of 3% was driven by demand for additional capacity on ICE global network, as well as strong growth across our desktop, feeds and analytics offerings. We're beginning to see a return on the investments we've made in both enhanced content and functionality. This performance is a key driver of our other data and network services business, which increased by 8% in the fourth quarter, and 10%, excluding the impact of the Euronext migration. Somewhat offsetting was slower growth in our end-of-day pricing business; we're experiencing a slower sales cycle and pressure from asset base revenues in our index business, which declined double digits year-over-year, as investors shifted out of higher-fee risk assets, such as equities and corporate bonds, and municipal and treasury ETFs. For the full year, total segment revenues totaled a record $2.1 billion, up 13%. While adjusted operating margins expanded by 500 basis points, anticipated recurring revenue grew 4% for the year and it was up 5% after adjusting for Euronext. Let's go next to Slide seven, where I’ll discuss our Mortgage Technology Segment. Fourth quarter Mortgage Technology revenues totaled $249 million. Recurring revenues, which accounted for two-thirds of segment revenues, totaled $164 million and grew 10% year-over-year. These strong recurring revenues continue to drive out performance versus an industry that experienced a nearly 60% decline in origination volumes. Importantly, they've now less revenues increased by over 30% year-over-year. For the full year, Mortgage Technology revenues totaled $1.1 billion, including a 16% increase in our recurring revenues and a 24% increase in our data analytics revenues. And while industry volumes were actually below those seen three years ago in 2019, pro forma 2022 Mortgage Technology revenues are higher by nearly 50%, representing a CAGR of roughly 14%. I'll conclude my remarks on Slide eight with some additional guidance. Recurring revenues in 2023 are once again expected to be led by our Mortgage Technology segment, where we are expecting mid to high single-digit growth, a testament to the continued adoption of automation across the mortgage workflow. In our fixed income and data services segment, we expect recurring revenue growth, excluding headwinds of approximately $15 million related to FX and the Euronext data center migration, to once again be in the mid-single digits. And lastly, in our Exchange segment, we expect recurring revenue growth excluding a $20 million headwind from the cessation of LIBOR to be in the low single digits. As continued growth in our energy exchange data services is offset by fewer IPOs and the tapering of 2021 initial listing fees. Moving to expenses, we expect 2023 adjusted operating expenses to be in the range of $3.04 to $3.09 billion. Consistent with prior years, we will reward our employees for their contributions to our strong results, and therefore expect cash compensation expense to increase by approximately $20 to $40 million. Strategic investments in technology operations and revenue-related initiatives are expected to increase by $40 to $50 million, driven by higher licenses as well as investments across all three of our segments. In addition, we expect roughly $45 million to $55 million of incremental non-cash expense, including $25 million of D&A related to the rebuild of Ellie Mae CapEx. And lastly, we expect an FX benefit to our adjusted expenses of approximately $5 million to $15 million when compared to 2022. In summary, we delivered another record year of revenues, operating income, free cash flow and earnings per share. Across our business, we made strategic investments in future growth and as we enter 2023, we are well positioned to meet the evolving needs of our customers, once again, deliver profitable growth and create value for our shareholders. I'll be happy to take questions during Q&A. But for now, I'll hand it over to Ben.

Thank you, Warren, and thank you all for joining us this morning. Please turn to Slide 9. 2022 was a year marked by rising inflation, rising interest rates and continued geopolitical and macroeconomic uncertainty. Amidst this dynamic macroeconomic environment, we once again grew revenues, operating income and earnings per share, record results that are a testament to the resiliency and durability of our strategically diversified business model. In our financial futures markets, rising inflation and central bank activity across the globe presented an interest rate environment that has not been seen in generations, helping us drive 20% volume growth in our interest rate complex and 15% growth in our equity derivatives business. Across our global energy markets, the events unfolding across North America, Europe, Russia and Asia have triggered a reshaping of the global energy supply chain, creating new risks and uncertainties for market participants to navigate. In our global natural gas markets, an evolving energy supply chain in Europe has led to increased demand for global liquefied natural gas, or LNG, and has helped us drive a 17% increase in global gas volumes in 2022. This includes 24% growth in our North American gas business, which has benefited not only from increased commercial engagement with our Henry Hub contract but also our North American basis markets. These trends have continued into January with global natural gas open interest up 14% year-over-year, including 21% growth in North America. Although our European carbon markets experienced headwinds in 2022 due to the aforementioned factors, the secular trend towards cleaner energy continues and is a growth trend we are uniquely positioned to capture, as evidenced by the record year in our North American environmental markets with volumes up 5% year-over-year in 2022. As we look out over the longer term, corporates and market participants remain committed to environmental policy to reduce carbon emissions. This is an evolution that we've long envisioned and is one of the largest providers of environmental products, including renewable fuel contracts, carbon allowances, nature-based solutions, renewable energy certificates as well as a wealth of climate data and related analytics. We are excited about the many future growth opportunities that lie ahead. Moving to our Fixed Income and Data Services business. Our comprehensive platform continues to generate compounding revenue growth and delivered another year of record revenues in 2022. This strong growth was underpinned by both recurring and transaction revenue growth, again a testament to the strategic diversification of our business and our ability to deliver growth through an array of macroeconomic environments. Rising market uncertainty and interest rates are driving an increase in demand for credit protection, and we have seen this lead to increasing trading activity in our bonds business. These factors, coupled with our continued efforts to build institutional connectivity to our bonds platforms, continued to record full year revenues in our ICE Bonds business in 2022, up nearly 100% year-over-year. Turning now to our Mortgage business, increased workflow efficiency through continued electronification is a secular trend we believe will continue through a variety of mortgage origination environments. Our ability to capture this secular trend is evidenced by the strength and resiliency of our recurring revenues, which increased 16% in 2022. This continued strength is a result of executing against our strategy of leveraging our mission-critical technology and data expertise to accelerate this analog to digital conversion. As mortgage origination volumes have normalized, customer conversations have increasingly centered on efficiencies and automation. In the fourth quarter, we had our strongest quarter of last year in terms of sales to new customers of our loan origination system with wins across each major segment we service. In addition, there continues to be increased interest in our data and analytics products, which increased 31% in the quarter and 24% for the full year in 2022. Through our AIQ solution and analyzer tools, customers can save thousands of dollars per loan by leveraging our data and analytics tools to drive automation in the loan manufacturing process. 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. 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. I want to begin by touching on our pending acquisition of Black Knight. As communicated when making the announcement, we continue to believe that this transaction will close during the first half of this year. Our respect for the Federal Trade Commission's work on this matter, and as we cooperate with them to gain regulatory approval, we do not intend to comment further on the transaction. But importantly, we remain excited about the efficiencies that the combined entities will bring to the end consumer and to other stakeholders across the mortgage ecosystem. In that vein, and shifting to what was yet another successful year, 2022 marked our 17th consecutive year of record revenues, record operating income and record adjusted earnings per share. This track record of growth reflects on the quality of our strategy and, more importantly, on the execution of that strategy. We've intentionally diversified across asset classes and geographies, so that we're not tied to any one cyclical trend or macroeconomic environment. We've deliberately positioned the company to have a mix of transaction and compounding subscription revenues to provide upside exposure while hedging our downside risk. We've placed the company at the center of some of the largest markets undergoing an analog to digital conversion. The combination of these factors is what has made ICE an all-weather name and a business model that provides upside to volatility with less downside risk and, importantly, a business model that generates growth on top of growth. For example, in 2022, inflationary concerns and market speculation of central bank activity benefited our European and U.K. interest rate business, driving a 33% increase in revenues for the full year. These conditions also contributed to record full year revenues in our credit default swap clearing business, up 61% year-over-year, as rate volatility drove increased demand for risk management and credit protection. Across our mortgage business, even against this backdrop of rising interest rates, our business outperformed the broader market driven by strong recurring revenue growth, up 16% for the full year. Again, this is a reflection of the all-weather nature of our business model. As we look to 2023 and beyond, we're positioned to capitalize on the secular and cyclical trends occurring across asset classes, and we remain focused on executing on the many growth opportunities that are in front of us, extending our track record of growth. I'd like to conclude by thanking our customers for their business and for their trust in 2022, and I want to thank my colleagues for their contributions to the best year in our company's history. And with that, I'll turn the call back over to our operator, Alex, who will conduct a question-and-answer session until 9:30 Eastern Time.

Our first question for today comes from Rich Repetto from Piper Sandler. Rich, your line is now open. Please go ahead.

Yes, good morning, Jeff and Ben and Warren. I wanted to ask about energy and more specifically natural gas. Ben, you made a lot of comments about how strong the U.S. natural gas markets are. You can see it in the volumes. But one issue it seems coming up is in the European natural gas and the TTF contract want to put in the right perspective, it's only 15%, I think, of the natural gas volumes but this whole deal with price caps that have been implemented and what you're going to do about it. And I guess it ties into the bigger question of politics and regulation impacting the markets, Jeff, as well. But anyway, the question on natural gas and sort of this broader intervention of government or regulation.

Ben, great question. It's important to note that gas was once a commodity heavily reliant on wellheads and pipeline infrastructure, making supply chains local rather than global. Disruptions to this infrastructure made it hard to rebalance supply chains. However, today, natural gas is a global commodity, especially with the rise of LNG, which can now be transported anywhere with the necessary regasification capacity. We recognized this trend years ago and have invested in a global natural gas business that establishes benchmarks and expands LNG contracts and freight agreements worldwide. Last year, the market faced severe challenges after Russia’s invasion of Ukraine disrupted energy supplies, particularly natural gas to Europe. Despite this, our market data subscriptions increased, and our community continued to grow. In 2023, the supply chains have adjusted, with substantial U.S. and Middle Eastern LNG now filling the gaps left by reduced Russian gas supplies. This clarity in the market has boosted trading confidence, with year-to-date open interest up 10% and volumes increasing by about 4% compared to last year's strong performance. Currently, various macroeconomic factors affect gas trading, and many of these events are tradable. New regasification capabilities in Europe allow for more efficient gas imports, storage facilities are well-stocked, and milder weather has not posed challenges so far. While European demand is decreasing and a potential recession looms, China’s economy is reopening after last year's downturn, which may also influence LNG supplies. Furthermore, the shift towards cleaner energy elevates the demand for natural gas, the cleanest fossil fuel. These macroeconomic conditions can be predicted and traded. We are optimistic about our position and have been expanding into new LNG contracts in Europe. Regarding price caps, I previously discussed how they might complicate trading and risk management. Although the price of TTF has dropped significantly, the price cap is still much higher than current trading levels, which could create problems for market participants. In response, we are introducing a new TTF contract in the U.K. that mirrors our existing contract in the Netherlands, giving customers more options. This new TTF contract will trade alongside another U.K. TTF contract known as TTF frontline, which is U.S. dollar-denominated and commonly used for trading LNG cargoes. Our existing community of U.K. traders will benefit from this hedge opportunity, and for us, it offers a mechanism for price discovery and risk management in our clearinghouse.

Our next question comes from Daniel Fannon of Jefferies. Daniel, your line is now open. Please go ahead.

Thanks, good morning. I wanted to follow up on the fixed income and data outlook as you think about '23, the mid-single-digit growth. Can you talk about the inputs that you're assuming for 2023, whether that's pricing and where the growth is? And I know you've cited some headwinds in '22. And maybe elaborate a little bit on that and maybe how you're thinking about changes within those headwinds going forward.

Dan, it's Warren. Good question. So there's not really much change in terms of our expectations and our targets as we head into next year. A couple of years ago, we outlined the growth algorithm for the data business, and that's been pretty consistent for the last couple of years. So there'll be a little bit of price we talked about in prior years, that being around a third of the growth. There will certainly be contributions from new customers, contributions from current customers purchasing more. And so I think it's a pretty similar algorithm if you're thinking about this year versus past years. I think when we're thinking about 2023 specifically, look, the macro, those factors are a little bit difficult to predict. I mean, AUM fees, particularly the last two quarters, those have been something that have weighed on us a little bit. I don't know exactly where those are going to go next year. It does feel like certainly in areas like fixed income, we could see some stabilization. And frankly, fixed income could very quickly become a very attractive asset class. So look, we're having some really good conversations with customers. We are a data superstore, if you will, We're indices, we're end-of-day pricing. We have analytics. We've got desktops. We've got fees. It's a really diverse business. And so it's an opportunity for us to have conversations with customers in this kind of environment than we are to maybe find ways to save but spend more with us. And that's something I think you've heard us talk about the last couple of years. So there's nothing really different about our target. But again, we're certainly cognizant that it's a somewhat challenging environment for a lot of our customers at the moment.

Hi, Dan, this is Lynn. I'm just going to jump in with a bit more color on what Warren said. I think this segment, in particular, really illustrates the all-weather nature of the ICE name. And the ability for this segment to grow 13% in spite of some of the challenges Warren has highlighted really underpin that. If you look at the execution side of the business, volatility has certainly been a tailwind, but importantly, new products and new customer acquisition has also been a driver of our growth; new products in the CDS clearing side of the business, including our CDS options. In terms of ICE bonds, we've actually been able to grow our institutional market share. Institutional business in the muni asset class, in particular, is up 205% in Q4 alone, 175% for the full year. And we've been able to gain in muni about 650 basis points of share in 2022, really driven by the work we've done with the institutions to plug into their workflows. Now obviously, some of the macro forces have impacted the fixed income and data and analytics line, as Warren highlighted, slightly slower sales cycle in our pricing business. AUM trends driving out of our higher capture products into our lower fee capture products. But I would be remiss if I didn't talk about the outsized performance of our other data services line, where we haven't seen a slowdown in the sales cycle. And this was really fueled by demand for capacity, which was up 18% in the quarter, double-digit growth in our desktop and derivatives analytics businesses as well as strong growth in our fees business. So I think when you take a step back and look at the segment overall, we couldn't be more optimistic about the ability for that segment, in particular, to grow, compounding in a variety of macroeconomic positions because of the all-weather nature of the name.

Our next question comes from Ken Worthington of JPMorgan. Ken, your line is now open.

Good morning. Thanks for taking the question. Maybe to follow up on Rich's question, but with a focus on oil I wanted to dig a bit deeper into some of the changes that are being made there. You mentioned on the last call that you were taking Russian molecules out of the benchmark and highlighted the reconstitution maybe adding to activity levels in Brent. Given that Russian oil continues to flow pretty actively in Europe, is the reconstitution helping or hurting like you thought? And then secondly, I think Midland WTI has been added to Brent. To what extent do you see this inclusion making Brent an even more relevant benchmark? And as we think about Brent as a competing product to WTI, might this shift further drive share to ICE and Brent in oil?

Thanks for the question. You're correct that we’ve observed a similar situation with TTF in relation to oil and downstream products like gas oil being less accessible in Europe. We've seen a comparable trend in the natural gas markets, with U.S., Norwegian, and Middle Eastern oil stepping in to offset the supply lost due to reductions from Russia. Since we announced last year that Russian supplies were no longer part of the gas oil contract, we noticed that open interest in gas oil surged by 100% from October 1 to the end of last year, with an additional 14% growth since then. This indicates a recovery and increased market confidence in products like gas oil following those changes. Market confidence is improving, as reflected in Brent's rise since the start of the year, which makes us optimistic about that contract. Our Brent options have likewise performed well. These shifts in the supply chain globally are why we've invested in various oil sectors over the past few years. Two years ago, we launched ICE Futures Abu Dhabi and the Murban contract. Notably, Murban, which has historically priced Middle Eastern barrels for Asia, is now also pricing barrels for Europe, contributing to over 50% growth in Murban this year. The Midland WTI contract, introduced last year, has also started strong, with many physical traders involved. Midland WTI supplies going to Houston are effectively meeting European demands, making it an excellent option for hedging. With U.S. oil compensating for the lack of Russian supply, we're strategically positioned. By mid-year, the Midland contract will align well with Brent, further integrating those barrels into the Brent index. Overall, we are confident in our investments and believe they position us for growth amidst anticipated supply chain changes.

Our next question comes from Chris Allen of Citi. Chris, your line is now open.

Good morning, everyone. I would like to inquire about the outlook for recurring revenue in Mortgage Tech. You mentioned some positive developments in your comments regarding sales and discussions with customers, but there seems to be a decline in the pace of growth. Previously, you indicated that the mortgage industry was quite active during the upturn. With the current downturn, there appears to be an opportunity to enhance efficiency, which could lead to increased recurring revenue growth. Could you elaborate on the decline in the Mortgage Tech revenue growth outlook? What factors are contributing to the overall slowdown in the industry right now, and what opportunities exist for deeper customer penetration moving forward?

Thank you for the question. It’s a great question. I want to emphasize that we are focused on building this business with fundamental elements that support growth of 8% to 10% over the long term. You are correct that we have made a significant effort in this regard. A key part of our strategy involves transitioning more transaction revenue to subscriptions, making our business model more predictable. We are pleased to report a 9% growth in subscription revenue during the fourth quarter, despite a challenging environment where volumes dropped 60% and were down about 20% sequentially. This growth occurred even as the mortgage industry faced a quicker and more severe downturn than anticipated. We have observed some of our clients undergoing mergers or consolidations, leading to cancellations, which has posed some challenges. However, we have also experienced several positive developments that give us confidence moving forward. Notably, over 60% of the renewals we secured last quarter had higher subscription rates than at the beginning of the quarter, thanks to our strategy of shifting more transaction revenue to subscriptions and successfully cross-selling additional products to our clients. Additionally, we had a very strong quarter in comprehensive sales, which was the best of 2022, and we saw this strength across various market segments, including banks, non-bank originators, brokers, and credit unions. Furthermore, some individuals affected by workforce reductions in the mortgage sector are starting their own businesses, and we are well-positioned to support their needs, even if starting with lower subscription fees. We also anticipate that many large home lending banks with outdated systems are looking to upgrade, as reflected in our sales funnel, and we are optimistic about their continued investments in 2023, which should drive future growth for us. This provides context for our fourth-quarter performance and our positive outlook ahead.

If you take a step back, what we're discussing with the industry is a fundamental change in how they assemble and manufacture mortgages to reduce costs, transitioning the industry to a more subscription-based model rather than putting each mortgage together with a variety of services. Currently, the cost of a first-time homebuyer’s mortgage is essentially the same as a $1 million mortgage. We believe that by providing the industry with a more predictable way to operate, they can better respond to their customers and allocate costs more appropriately across their business, which aligns with how business is conducted in most other digital markets that have shifted from analog to digital.

Our next question comes from Alex Kramm of UBS. Alex, your line is now open.

Good morning, everyone. Just wanted to ask about pricing holistically across the business. When you look at the data services space, some of your peers, maybe some of them in the desktop space that you're not in, but we're seeing price increases because of inflation. Your primary peer in the futures trading side also seems to have been taken a bigger price increase than usual this year. So when you put this all together and you look at your business, it seems like you're leaving some money on the table and you're a little bit afraid to kind of like turn that lever a little bit more. So just wondering if you're thinking, is it all evolving given the higher inflationary environment that's obviously driving your cost higher as well?

Alex, this is Warren. It's a good question. We've certainly seen some of the peers out there and what they've done on the pricing front. It's always been our philosophy that, when we're going to increase price, it will come with value added to the particular product that we're increasing that price on. And that hasn't changed, and that's not going to change this year. I think from our perspective, the better long-term strategy is to operate that way, and that's what we're going to be doing this year. And we mentioned a little bit earlier on the Fixed Income and Data Services side, there really wasn't much difference in terms of how we're approaching that this year. We do have a small amount of contracts, it's pretty immaterial at the end of the day, that are benchmarked to inflation. But I don't think you'd really notice that at the end of the day, depending on how much that will fluctuate. So on that front, I would say it's pretty consistent. On the futures side, we're always looking at that as an option. But again, it's something we haven't really pulled the lever on up until this point, and there certainly have been instances in the past where we've done it. But something we are thinking about and always thinking about, frankly. So I wouldn't necessarily say that's much of a change. But yes, that's something that's out there and certainly on what some of the others have been doing.

And this is Jeff. I want to highlight that we dedicate a significant amount of effort to managing our costs and the expenses associated with delivering our products. We continue to make sensible investments while carefully allocating personnel and resources. Among the major exchange groups, we have been the most cautious about transitioning business to the cloud due to the substantial cost increases and unpredictable fluctuations in expenses that we have observed. Therefore, we have remained conservative in how we deliver our products to meet our customers' expectations while prioritizing cost efficiency.

Our next question comes from Alex Blostein of Goldman Sachs. Alex, your line is now open.

Hi, everybody good morning. Thanks for the question. I just want to go back to some of the energy dynamics in the space. And I was hoping you guys could talk about the environmentals for a bit. It’s great to see the TTF complex kind of coming back to life here in January. What would it take to get, I guess, the environmental products going again? And kind of what are some of the dynamics in that market for '23?

Thanks, Alex. It's Ben. We're really pleased with our position in the environmental marketplace. We established ourselves early on, having acquired the Climate Exchange nearly 13 years ago, which served as our foundation. Since then, we've continuously built and invested in a comprehensive range of global solutions that assist our clients in pricing carbon, offsetting carbon risks, and trading renewable energy credits. A key advantage of our environmental business is its strong connection to the energy sector. Producers and consumers of energy are often concerned about carbon pricing, creating a mutually beneficial relationship. If we examine last year, we encountered some challenges in the European Union allowance markets, largely due to the focus on energy markets. However, we have seen a steady growth in market data subscriptions, particularly in environmental ones. We continue to expand our community through our market data and ICE instant messaging platform, which is generating increased visibility and interest in our markets. Additionally, the European Union reaffirmed its trading scheme late last year and indicated that thresholds for free allowances, which determine the amount of carbon permitted before needing to purchase an allowance, will decrease. This suggests that carbon pricing will intensify and more sectors will be included, providing a positive long-term growth outlook. We successfully launched our U.K. allowance platform, which grew by 16% last year. North America also had a record year with nearly 3.7 million lots traded and an unprecedented number of market participants. Our regi contracts, including California carbon allowances and renewable fuels, performed exceptionally well. We continue to invest by introducing new contracts, including tech wind solar contracts and several tranches of nature-based offsets. One initiative we launched at the end of last year focused on the offset market, often referred to as voluntary markets, which are still in very early stages. A major challenge in these markets is the difficulty of understanding what offsets are available for trading, as well as the quality and details of the associated reference data. In response, we introduced a reference data service that allows our community of over 100,000 traders to quickly look up any offset or environmental credit, acquiring essential information such as issuance dates, retirement status, and availability for trading. This foundational supply data is crucial for accurately pricing contracts. We feel confident in our position in this area and are excited about the potential of this emerging market that we believe we can significantly impact.

Our next question comes from Simon Clinch of Atlantic Equities. Simon, your line is now open.

Thank you for taking my question. I wanted to revisit the mortgage business, specifically regarding transaction revenues. As you aim to shift your revenue streams towards recurring revenue over time, should we anticipate a rebound in transaction revenues? Additionally, should we expect the growth rate of transaction revenues compared to mortgage industry volumes to decrease to zero as your business transitions to recurring revenue streams? I'm trying to understand the interaction between recurring and transaction revenues at this moment.

Sure. There are several aspects to that question that I will address. Regarding transaction revenue, we have indicated our willingness to forgo some of our current transaction revenue. For instance, when a loan is completed, there is a transaction fee involved. If we can reduce that fee for our clients while increasing our recurring revenue, we are prepared to do so, even if it affects our current transaction revenues in the short term. At the same time, we are cross-selling a broad range of services to our 3,000 Encompass customers worldwide. Some of these services are recurring, while others are transactional. As these offerings mature, which are currently in early phases but showing promising results, our ability to cross-sell, including our data and analytics products, will improve since we've shifted a significant portion towards subscription models. Additionally, we are continuing to invest in services that will contribute incremental transaction revenues. Overall, we believe that establishing a more predictable business model will allow us to achieve sustained growth of 8% to 10% annually over the long term.

Our next question comes from Craig Siegenthaler from Bank of America. Craig, your line is now open.

Good morning, everyone. I wanted to come back to Ben's commentary that 4Q is the strongest Mortgage Tech sales quarter since last year. What products drove the increase in 4Q versus the prior quarters? And also, given several announcements of exits and downsizes in the residential mortgage world, and I'm thinking Wells Fargo is probably the biggest, which products are you seeing under the most pressure on the sales front in 4Q?

Thanks for the question, Craig. I'll first discuss 2022, then move on to the fourth quarter. Overall, our AIQ automation service, which reduces the cost of manufacturing loans for our clients, performed strongly throughout the year and each quarter. We also had a successful quarter in bringing new clients onto that platform, which should lower their manufacturing costs in line with the comments Jeff made earlier. Ideally, these cost savings will benefit the end consumer. In the fourth quarter, an interesting trend emerged: it was the core Encompass product that fueled our sales strength. Although some customers are consolidating and experiencing mergers, acquisitions, and downsizing, we see two parallel developments. Many banks, credit unions, and non-bank originators are seizing this opportunity to improve their infrastructure. They are investing in their systems, especially those we are replacing, to prepare for an eventual market rebound. Looking ahead, we recognize that large banks are examining their existing infrastructures and planning investments to be well-positioned when the market recovers. Additionally, as downsizing affects employees, many are starting new businesses. We are well-positioned to capture that market as well. Overall, we see businesses taking advantage of the current situation to invest and prepare for the market's return.

Our next question comes from Brian Bedell of Deutsche Bank. Brian, your line is now open.

Great. Thanks, good morning folks. Thanks for taking my question. I wanted to turn back to fixed income trading. It's been on such a strong growth trajectory. And when you described good traction in the muni business and data, maybe if you can talk a little bit more about the mix of revenues within that business. I know the market share gains have been really good. Is it mostly munis? And just thinking about the sustainability of this, munis has been growing more than doubling on a year-over-year basis, reaching a $100 million annual revenue business in the second quarter. If it can continue to grow like sequentially, it will be a $200 million annual business within a couple of quarters. So just trying to get a sense of the drivers behind that and if you think this momentum can continue?

Yes. Thanks for the question. As I mentioned, volatility certainly did help out this business, but a lot of the share gains we've achieved in the institutional side of the business has really been what's driving the growth. 26% in Q4 of our muni activity came from institutional accounts. So that's up from 13% in 2020 when we started to acquire all of these different platforms. So we've really been able to increase institutional footprint. We do see opportunities also in treasuries and CDs. Those two asset classes within the execution segment have outperformed a lot of that volatility-driven segments. But the toughest thing to do is to get the plumbing into the institutional accounts. And I think the deliberate decisions we took a couple of years ago to be workflow-agnostic, to work with a variety of providers to plumb our platforms into a variety of workflow solutions have really borne fruit in 2022. So when volatility came into the market, it wasn't just about your traditional retail trader that was executing the munis and corporates. It's now about the institutional trader that sees us as a diversified platform across multiple asset classes in fixed income.

Our next question comes from Michael Cyprys of Morgan Stanley. Michael, your line is now open.

Thanks. I wanted to follow up on Mortgage Technology. With recurring revenues increasing by about 16% in 2022, could you clarify how much of that growth came from new customers versus increased business from existing customers where you are enhancing the services provided to them? Additionally, how much of the growth resulted from the transition from transactional revenue to recurring revenue? Looking ahead to 2023, with your expectations of mid- to high single-digit growth in recurring revenue for Mortgage Tech, how do you anticipate that mix will change? Thank you.

Thank you, Michael. It's Ben. It’s a combination of factors. You highlighted some key points in your question. Our perspective is that with a substantial base of 3,000 lenders using our platform, there is a significant opportunity for cross-selling. A major contributor to our recurring revenue growth is our success in delivering our AIQ platform to this customer base. There is still much potential to deepen our engagement with these lenders and provide them with the necessary efficiency, especially in the current landscape. We are optimistic about our cross-selling capabilities and our execution since acquiring the former Ellie Mae business, and we have a positive outlook moving forward. Additionally, we are seeing strong performance in acquiring new customers who are leveraging our AIQ services and providing analyses to third parties. We are also continually adding new clients to Encompass. Our success spans all segments, whether it's a start-up, an established non-bank originator, a bank, or a credit union. We believe our investments in our platform position us well to meet the needs of these clients. As many major home lenders in the U.S. seek to replace outdated in-house systems, we believe we are also well-positioned to capture that market. These factors are crucial, along with our low attrition rate. We serve as a core platform for these businesses, so unless they are shutting down or involved in mergers and acquisitions, we are not losing customers.

Thank you. We have no further questions for today. So I will hand back to Jeff Sprecher for any further remarks.

Well, thank you, Alex. Thank you all for joining us here this morning. We are continuing to innovate for our customers and build an all-weather business model and delivery growth. And so with that, I hope you'll have a great day and appreciate your being with us.

Thank you for joining today's call. You may now disconnect your lines.