8-K
Intercontinental Exchange, Inc. (ICE)
UNITED STATES SECURITIES AND EXCHANGECOMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13or 15(d) of THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date
of earliest event reported): February 3, 2022
Intercontinental Exchange, Inc.
(Exact Name of Registrant as Specified in Charter)
| Delaware | 001-36198 | 46-2286804 |
|---|---|---|
| (State or other jurisdiction<br><br> of incorporation) | (Commission File No.) | (I.R.S. Employer<br><br> Identification Number) |
5660 New Northside Drive, Third Floor, Atlanta, Georgia 30328
(Address of Principal Executive Offices) (Zip Code)
Registrant’s telephone number,
including area code: (770) 857-4700
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered |
|---|---|---|
| Common Stock, $0.01 par value per share | ICE | New York Stock Exchange |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
| Item 2.02 | Results of Operations and Financial Condition. |
|---|
On February 3, 2022, Intercontinental Exchange, Inc. issued a press release announcing its financial results for the fiscal quarter and year ended December 31, 2021. A copy of the press release announcing such financial results is attached as Exhibit 99.1 to this Current Report on Form 8-K.
The information contained herein, including the attached press release, is furnished pursuant to Item 2.02 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934 except as may be expressly set forth by specific reference in such filing.
Intercontinental Exchange makes references to non-GAAP financial information in the attached press release. A description of the non-GAAP financial information and a reconciliation of the non-GAAP financial information to the comparable GAAP financial measures are contained in the attached press release and Intercontinental Exchange’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
| Item 9.01 | Financial Statements and Exhibits |
|---|
(d) Exhibits
The following exhibits are filed as part of this Current Report on Form 8-K:
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release dated February 3, 2022. |
| 104 | The cover page from Intercontinental Exchange, Inc.’s Current Report on Form 8-K, formatted in Inline XBRL. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| INTERCONTINETAL EXCHANGE, INC. |
|---|
| /s/ A. Warren Gardiner |
| A. Warren Gardiner |
| Chief Financial Officer |
Date: February 3, 2022
Exhibit 99.1
Intercontinental Exchange Reports Fourth Quarter & Full Year 2021
16th consecutive year of record revenues
| · 2021<br> net revenues of 7.1 billion, +18% y/y<br> <br> · 2021<br> GAAP diluted EPS of 7.18, +90% y/y<br> <br> · 2021<br> adj. diluted EPS of 5.15, +17% y/y<br> <br> · Record<br> 2021 operating income of 3.4 billion, +14% y/y; Record adj. operating income of 4.2 billion, +18% y/y<br> <br> · 2021<br> operating margin of 48%; adj. operating margin of 58%<br> <br> · Record<br> annual operating cash flow of 3.1 billion, +8% y/y; Record free cash flow (FCF) of over 2.8 billion, +17% y/y<br> <br> · Announces<br> first quarter 2022 dividend of 0.38/share; an increase of 15% y/y |
All values are in US Dollars.
ATLANTA & NEW YORK, February 3, 2022 - Intercontinental Exchange (NYSE: ICE), a leading global provider of data, technology, and market infrastructure, today reported financial results for the fourth quarter and full year of 2021. For the quarter ended December 31, 2021, consolidated net income attributable to ICE was $1.5 billion on $1.8 billion of consolidated revenues less transaction-based expenses. Fourth quarter GAAP diluted earnings per share (EPS) were $2.70. Adjusted net income attributable to ICE was $760 million in the fourth quarter and adjusted diluted EPS were $1.34.
For the full year of 2021 consolidated net income attributable to ICE was $4.1 billion on $7.1 billion of consolidated revenues less transaction-based expenses. Full year 2021 GAAP diluted EPS were $7.18, up 90% year-over-year. On an adjusted basis, net income attributable to ICE for the year was $2.9 billion and adjusted diluted EPS were $5.15, up 17% year-over-year.
Please refer to the reconciliation of non-GAAP financial measures included in this press release for more information on our adjusted operating expenses, adjusted operating income, adjusted operating margin, adjusted net income, adjusted diluted EPS and free cash flow.
Warren Gardiner, ICE Chief Financial Officer, added: "In 2021 we generated record revenues, record operating income and record operating cash flows. We grew revenues across the asset classes in which we operate, generating double-digit growth in our recurring revenues. As we enter 2022, we expect the consistency of our growth and the compounding nature of both our revenues and cash flows to continue to create value as we invest in the many secular growth opportunities that exist across our business while also returning capital to our shareholders."
1
Fourth Quarter and Full Year 2021 Business Highlights
| $ (in millions) | Net <br><br>Revenue | Op <br><br>Margin | Adj Op<br><br>Margin | Net <br><br>Revenue | Op <br><br>Margin | Adj Op<br><br>Margin | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Full Year 2021 | 4Q21 | |||||||||||||||
| Exchanges | $ | 3,856 | 65 | % | 69 | % | $ | 1,014 | 65 | % | 71 | % | ||||
| Fixed Income and Data Services | $ | 1,883 | 28 | % | 38 | % | $ | 480 | 28 | % | 38 | % | ||||
| Mortgage Technology | $ | 1,407 | 28 | % | 57 | % | $ | 346 | 25 | % | 55 | % | ||||
| Consolidated | $ | 7,146 | 48 | % | 58 | % | $ | 1,840 | 48 | % | 59 | % |
Fourth quarter consolidated net revenues were $1.8 billion, up 10% year-over-year, including exchange net revenues of $1.0 billion, fixed income and data services revenues of $480 million and ICE Mortgage Technology revenues of $346 million. Consolidated operating expenses were $960 million for the fourth quarter of 2021. On an adjusted basis, consolidated operating expenses were $749 million. Consolidated operating income for the fourth quarter was $880 million and the operating margin was 48%. On an adjusted basis, consolidated operating income for the fourth quarter was $1.1 billion and the adjusted operating margin was 59%.
Full year 2021 consolidated net revenues were $7.1 billion, up 18% year-over-year, including exchange net revenues of $3.9 billion, fixed income and data services revenues of $1.9 billion and ICE Mortgage Technology revenues of $1.4 billion. Consolidated operating expenses were $3.7 billion for 2021. On an adjusted basis, consolidated operating expenses were $3.0 billion. Consolidated operating income for the year was $3.4 billion and the operating margin was 48%. On an adjusted basis, consolidated operating income for the year was $4.2 billion and the adjusted operating margin was 58%.
Exchanges Segment Results
Fourth quarter exchange net revenues were $1.0 billion, up 17% year-over-year. Exchange operating expenses were $356 million and on an adjusted basis, were $292 million in the fourth quarter. Segment operating income for the fourth quarter was $658 million and the operating margin was 65%. On an adjusted basis, operating income was $722 million and the adjusted operating margin was 71%.
2
| $ (in millions) | 4Q21 | 4Q20 | % Chg | ||||
|---|---|---|---|---|---|---|---|
| Revenue, net: | |||||||
| Energy | $ | 336 | $ | 262 | 28 | % | |
| Ags and Metals | 51 | 48 | 7 | % | |||
| Financials^(1)^ | 113 | 82 | 37 | % | |||
| Cash Equities and Equity Options | 89 | 89 | 2 | % | |||
| OTC and Other^(2)^ | 87 | 77 | 13 | % | |||
| Data and Connectivity Services | 215 | 201 | 7 | % | |||
| Listings | 123 | 112 | 10 | % | |||
| Segment Revenue | $ | 1,014 | $ | 871 | 17 | % |
(1) Financials include interest rates and other financial futures and options.
(2) OTC & other primarily includes physical energy, interest income on certain clearing margin deposits, regulatory penalties and fines, fees for use of our facilities, regulatory fees charged to member organizations of our U.S. securities exchanges, designated market maker service fees, technology development fees, exchange member fees, and agriculture grading and certification fees.
Full year exchange net revenues were $3.9 billion, up 6% year-over-year. Exchange operating expenses were $1.3 billion and on an adjusted basis, were $1.2 billion for the full year. Segment operating income for 2021 was $2.5 billion and the operating margin was 65%. On an adjusted basis, operating income was $2.7 billion and the adjusted operating margin was 69%.
| $ (in millions) | FY21 | FY20 | % Chg | ||||
|---|---|---|---|---|---|---|---|
| Revenue, net: | |||||||
| Energy | $ | 1,236 | $ | 1,120 | 10 | % | |
| Ags and Metals | 228 | 245 | (7 | )% | |||
| Financials^(1)^ | 394 | 357 | 10 | % | |||
| Cash Equities and Equity Options | 355 | 377 | (6 | )% | |||
| OTC and Other^(2)^ | 326 | 296 | 10 | % | |||
| Data and Connectivity Services | 838 | 790 | 6 | % | |||
| Listings | 479 | 446 | 7 | % | |||
| Segment Revenue | $ | 3,856 | $ | 3,631 | 6 | % |
(1) Financials include interest rates and other financial futures and options.
(2) OTC & other primarily includes physical energy, interest income on certain clearing margin deposits, regulatory penalties and fines, fees for use of our facilities, regulatory fees charged to member organizations of our U.S. securities exchanges, designated market maker service fees, technology development fees, exchange member fees, and agriculture grading and certification fees.
3
Fixed Income and Data Services Segment Results
Fourth quarter fixed income and data services revenues were $480 million, up 7% year-over-year. Fixed income and data services operating expenses were $344 million and adjusted operating expenses were $300 million in the fourth quarter. Segment operating income for the fourth quarter was $136 million and the operating margin was 28%. On an adjusted basis, operating income was $180 million and the adjusted operating margin was 38%.
| $ (in millions) | 4Q21 | 4Q20 | % Chg | ConstCurr^(1)^ | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Revenue: | ||||||||||
| Fixed Income Execution | $ | 13 | $ | 14 | (12 | )% | (12 | )% | ||
| CDS Clearing | 48 | 42 | 14 | % | 14 | % | ||||
| Fixed Income Data and Analytics | 278 | 262 | 6 | % | 6 | % | ||||
| Other Data and Network Services | 141 | 132 | 7 | % | 7 | % | ||||
| Segment Revenue | $ | 480 | $ | 450 | 7 | % | 7 | % |
(1) Net revenues in constant currency are calculated holding both the pound sterling and euro at the average exchange rate from 4Q20, 1.3207 and 1.1920, respectively.
Full year 2021 fixed income and data services revenues were $1.9 billion, up 4% year-over-year. Fixed income and data services operating expenses were $1.4 billion and on an adjusted basis, were $1.2 billion for the year. Segment operating income for the full year was $529 million and the operating margin was 28%. On an adjusted basis, operating income was $709 million and the adjusted operating margin was 38%.
| $ (in millions) | FY21 | FY20 | % Chg | Const Curr^(1)^ | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Revenue: | ||||||||||
| Fixed Income Execution | $ | 52 | $ | 70 | (25 | )% | (25 | )% | ||
| CDS Clearing | 192 | 208 | (8 | )% | (9 | )% | ||||
| Fixed Income Data and Analytics | 1,082 | 1,018 | 6 | % | 6 | % | ||||
| Other Data and Network Services | 557 | 514 | 8 | % | 7 | % | ||||
| Segment Revenue | $ | 1,883 | $ | 1,810 | 4 | % | 3 | % |
(1) Net revenues in constant currency are calculated holding both the pound sterling and euro at the average exchange rate from 2020, 1.2832 and 1.1412, respectively.
4
Mortgage Technology Segment Results
Fourth quarter mortgage technology revenues were $346 million. Mortgage technology operating expenses were $260 million and adjusted operating expenses were $157 million in the fourth quarter. Segment operating income for the fourth quarter was $86 million and the operating margin was 25%. On an adjusted basis, operating income was $189 million and the adjusted operating margin was 55%.
| $ (in millions) | 4Q21 | 4Q20 | %Chg | ||||
|---|---|---|---|---|---|---|---|
| Revenue: | |||||||
| Origination Technology | $ | 231 | $ | 249 | (7 | )% | |
| Network and Closing Solutions | 83 | 73 | 15 | % | |||
| Data and Analytics | 18 | 17 | 6 | % | |||
| Registrations and Other | 14 | 11 | 23 | % | |||
| Segment Revenue | $ | 346 | $ | 350 | (1 | )% |
Full year mortgage technology revenues were $1.4 billion. Mortgage technology operating expenses were $1.0 billion and adjusted operating expenses were $602 million in 2021. Segment operating income for the full year was $397 million and the operating margin was 28%. On an adjusted basis, operating income was $805 million and the adjusted operating margin was 57%.
| $ (in millions) | FY21 | FY20 | % Chg | ||||
|---|---|---|---|---|---|---|---|
| Revenue: | |||||||
| Origination Technology | $ | 971 | $ | 316 | 208 | % | |
| Network and Closing Solutions | 310 | 238 | 30 | % | |||
| Data and Analytics | 73 | 22 | 226 | % | |||
| Registrations and Other | 53 | 19 | 185 | % | |||
| Segment Revenue | $ | 1,407 | $ | 595 | 137 | % |
Other Matters
| • | ICE repurchased $250 million of its common stock in the fourth quarter and paid $747 million in dividends in 2021. |
|---|---|
| • | Unrestricted cash was $607 million and outstanding debt was $13.9 billion as of December 31, 2021. |
| --- | --- |
| • | Operating cash flow for 2021 was $3.1 billion, up 8% from $2.9 billion one<br>year ago. 2021 free cash flow was $2.8 billion, up 17% from one year ago. |
| --- | --- |
| • | Recognized a $1.4 billion gain upon our deconsolidation of Bakkt. |
| --- | --- |
| • | The effective tax rate for the fourth quarter was 28%. |
| --- | --- |
5
Financial Guidance
| GAAP | |
|---|---|
| 2022 Total Recurring Revenue | 3.68 - 3.75 billion |
| 2022 Operating Expenses | 3.619 - 3.669 billion |
| 1Q22 Operating Expenses | 900 - 910 million |
| 2022 Capital Expenditures | 490 - 520 million |
| 2022 Effective Tax Rate | 22.5% - 24.5%(2) |
| 1Q22 Weighted Average Shares Outstanding | 562 - 568 million shares, excluding the impact of any potential share repurchases |
All values are in US Dollars.
(1) 2022 and 1Q22 non-GAAP operating expenses exclude amortization of acquisition-related intangibles and integration expenses.
(2) This represents 2022 full year guidance for both the GAAP and non-GAAP effective tax rates but note that the GAAP effective tax rate is more susceptible to diverging from this guidance based on items outside the normal course of business that are adjusted for to derive our non-GAAP results. Such items can be unknown, unpredictable or uncertain, requiring unreasonable efforts to determine with any precision and which could potentially be confusing or misleading.
Earnings Conference Call Information
ICE will hold a conference call today, February 3, at 8:30 a.m. ET to review its fourth quarter 2021 financial results. A live audio webcast of the earnings call will be available on the company's website at www.theice.com in the investor relations section. Participants may also listen via telephone by dialing 844-512-2926 from the United States or 412-317-6300 from outside of the United States and Canada. Telephone participants are requiredto provide the participant entry number 4506364 and are recommended to call 10 minutes prior to the start of the call. The call will be archived on the company's website for replay.
The conference call for the first quarter 2022 earnings has been scheduled for May 5th at 8:30 a.m. ET. Please refer to the Investor Relations website at www.ir.theice.com for additional information.
Historical futures, options and cash ADV, rate per contract, open interest data and CDS cleared information can be found at: https://ir.theice.com/investor-resources/supplemental-information/default.aspx
6
Consolidated Statements of Income
(In millions, except per share amounts)
| Twelve Months Ended<br> <br>December 31, | Three Months Ended<br> <br>December 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenues: | 2021 | 2020 | 2021 | 2020 | ||||||||
| Exchanges | $ | 5,878 | $ | 5,839 | $ | 1,502 | $ | 1,433 | ||||
| Fixed income and data services | 1,883 | 1,810 | 480 | 450 | ||||||||
| Mortgage technology | 1,407 | 595 | 346 | 350 | ||||||||
| Total revenues | 9,168 | 8,244 | 2,328 | 2,233 | ||||||||
| Transaction-based expenses: | ||||||||||||
| Section 31 fees | 248 | 622 | 44 | 157 | ||||||||
| Cash liquidity payments, routing and clearing | 1,774 | 1,586 | 444 | 405 | ||||||||
| Total revenues, less transaction-based expenses | 7,146 | 6,036 | 1,840 | 1,671 | ||||||||
| Operating expenses: | ||||||||||||
| Compensation and benefits | 1,462 | 1,188 | 369 | 339 | ||||||||
| Professional services | 159 | 144 | 35 | 44 | ||||||||
| Acquisition-related transaction and integration costs | 102 | 105 | 60 | 15 | ||||||||
| Technology and communication | 666 | 549 | 171 | 161 | ||||||||
| Rent and occupancy | 84 | 81 | 23 | 22 | ||||||||
| Selling, general and administrative | 215 | 185 | 52 | 53 | ||||||||
| Depreciation and amortization | 1,009 | 751 | 250 | 257 | ||||||||
| Total operating expenses | 3,697 | 3,003 | 960 | 891 | ||||||||
| Operating income | 3,449 | 3,033 | 880 | 780 | ||||||||
| Other income (expense): | ||||||||||||
| Interest income | 1 | 10 | 1 | 1 | ||||||||
| Interest expense | (423 | ) | (357 | ) | (102 | ) | (112 | ) | ||||
| Other income, net | 2,671 | 80 | 1,330 | 5 | ||||||||
| Other income (expense), net | 2,249 | (267 | ) | 1,229 | (106 | ) | ||||||
| Income before income tax expense | 5,698 | 2,766 | 2,109 | 674 | ||||||||
| Income tax expense | 1,629 | 658 | 580 | 146 | ||||||||
| Net income | $ | 4,069 | $ | 2,108 | $ | 1,529 | $ | 528 | ||||
| Net income attributable to non-controlling interest | (11 | ) | (19 | ) | (2 | ) | (2 | ) | ||||
| Net income attributable to Intercontinental Exchange, Inc. | $ | 4,058 | $ | 2,089 | $ | 1,527 | $ | 526 | ||||
| Earnings per share attributable to Intercontinental Exchange, Inc. common stockholders: | ||||||||||||
| Basic | $ | 7.22 | $ | 3.79 | $ | 2.72 | $ | 0.94 | ||||
| Diluted | $ | 7.18 | $ | 3.77 | $ | 2.70 | $ | 0.93 | ||||
| Weighted average common shares outstanding: | ||||||||||||
| Basic | 562 | 552 | 562 | 561 | ||||||||
| Diluted | 565 | 555 | 565 | 564 |
7
Consolidated Balance Sheets
(In millions)
| As of | As of | |||||
|---|---|---|---|---|---|---|
| December 31, 2021 | December 31, 2020 | |||||
| Assets: | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 607 | $ | 583 | ||
| Short-term restricted cash and cash equivalents | 1,035 | 1,000 | ||||
| Cash and cash equivalent margin deposits and guaranty funds | 145,936 | 81,628 | ||||
| Invested deposits, delivery contracts receivable and unsettled variation margin | 4,493 | 2,455 | ||||
| Customer accounts receivable, net | 1,208 | 1,230 | ||||
| Prepaid expenses and other current assets | 1,021 | 323 | ||||
| Total current assets | 154,300 | 87,219 | ||||
| Property and equipment, net | 1,699 | 1,713 | ||||
| Other non-current assets: | ||||||
| Goodwill | 21,123 | 21,291 | ||||
| Other intangible assets, net | 13,736 | 14,408 | ||||
| Long-term restricted cash and cash equivalents | 398 | 408 | ||||
| Other non-current assets | 2,246 | 1,161 | ||||
| Total other non-current assets | 37,503 | 37,268 | ||||
| Total assets | $ | 193,502 | $ | 126,200 | ||
| Liabilities and Equity: | ||||||
| Current liabilities: | ||||||
| Accounts payable and accrued liabilities | $ | 703 | $ | 639 | ||
| Section 31 fees payable | 57 | 207 | ||||
| Accrued salaries and benefits | 354 | 346 | ||||
| Deferred revenue | 194 | 158 | ||||
| Short-term debt | 1,521 | 2,411 | ||||
| Margin deposits and guaranty funds | 145,936 | 81,628 | ||||
| Invested deposits, delivery contracts payable and unsettled variation margin | 4,493 | 2,455 | ||||
| Other current liabilities | 153 | 155 | ||||
| Total current liabilities | 153,411 | 87,999 | ||||
| Non-current liabilities: | ||||||
| Non-current deferred tax liability, net | 4,100 | 3,563 | ||||
| Long-term debt | 12,397 | 14,126 | ||||
| Accrued employee benefits | 200 | 206 | ||||
| Non-current operating lease liability | 252 | 320 | ||||
| Other non-current liabilities | 394 | 359 | ||||
| Total non-current liabilities | 17,343 | 18,574 | ||||
| Total liabilities | 170,754 | 106,573 | ||||
| Commitments and contingencies | ||||||
| Redeemable non-controlling interests in consolidated subsidiaries | — | 93 | ||||
| Equity: | ||||||
| Intercontinental Exchange, Inc. stockholders’ equity: | ||||||
| Common stock | 6 | 6 | ||||
| Treasury stock, at cost | (5,520 | ) | (5,200 | ) | ||
| Additional paid-in capital | 14,069 | 13,845 | ||||
| Retained earnings | 14,350 | 11,039 | ||||
| Accumulated other comprehensive loss | (196 | ) | (192 | ) | ||
| Total Intercontinental Exchange, Inc. stockholders’ equity | 22,709 | 19,498 | ||||
| Non-controlling interest in consolidated subsidiaries | 39 | 36 | ||||
| Total equity | 22,748 | 19,534 | ||||
| Total liabilities and equity | $ | 193,502 | $ | 126,200 |
Non-GAAPFinancial Measures and Reconciliation
We use non-GAAP measures internally to evaluate our performance and in making financial and operational decisions. When viewed in conjunction with our GAAP results and the accompanying reconciliation, we believe that our presentation of these measures provides investors with greater transparency and a greater understanding of factors affecting our financial condition and results of operations than GAAP measures alone. In addition, we believe the presentation of these measures is useful to investors for period-to-period comparison of results because the items described below as adjustments to GAAP are not reflective of our core business performance. These financial measures are not in accordance with, or an alternative to, GAAP financial measures and may be different from non-GAAP measures used by other companies. We use these adjusted results because we believe they more clearly highlight trends in our business that may not otherwise be apparent when relying solely on GAAP financial measures, since these measures eliminate from our results specific financial items that have less bearing on our core operating performance. We strongly recommend that investors review the GAAP financial measures and additional non-GAAP information included in our Annual Report on Form 10-K, including our consolidated financial statements and the notes thereto.
Adjusted operating expenses, adjusted operating income, adjusted operating margin, adjusted net income attributable to ICE common stockholders, adjusted diluted earnings per share and free cash flow for the periods presented below are calculated by adding or subtracting the adjustments described below, which are not reflective of our cash operations and core business performance, and their related income tax effect and other tax adjustments (in millions, except for per share amounts):
8
Adjusted Operating Income, Operating Marginand Operating Expense Reconciliation
(In millions)
(Unaudited)
| Exchanges Segment | Fixed Income and Data Services Segment | Mortgage Technology Segment | Consolidated | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Year Ended <br><br>December 31, | Year Ended <br><br>December 31, | Year Ended <br><br>December 31, | Year Ended <br><br>December 31, | |||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||
| Total revenues, less transaction-based expenses | $ | 3,856 | $ | 3,631 | $ | 1,883 | $ | 1,810 | $ | 1,407 | $ | 595 | $ | 7,146 | $ | 6,036 | ||||||||
| Operating expenses | 1,333 | 1,242 | 1,354 | 1,318 | 1,010 | 443 | 3,697 | 3,003 | ||||||||||||||||
| Less: Amortization of acquisition-related intangibles | 73 | 74 | 180 | 191 | 369 | 123 | 622 | 388 | ||||||||||||||||
| Less: Transaction and integration costs and acquisition-related success fees | 59 | 12 | — | — | 39 | 89 | 98 | 101 | ||||||||||||||||
| Less: Impairment of developed software | — | 11 | — | — | — | — | — | 11 | ||||||||||||||||
| Less: Accrual relating to a regulatory settlement | — | — | — | 8 | — | — | — | 8 | ||||||||||||||||
| Adjusted operating expenses | $ | 1,201 | $ | 1,145 | $ | 1,174 | $ | 1,119 | $ | 602 | $ | 231 | $ | 2,977 | $ | 2,495 | ||||||||
| Operating income | $ | 2,523 | $ | 2,389 | $ | 529 | $ | 492 | $ | 397 | $ | 152 | $ | 3,449 | $ | 3,033 | ||||||||
| Adjusted operating income | $ | 2,655 | $ | 2,486 | $ | 709 | $ | 691 | $ | 805 | $ | 364 | $ | 4,169 | $ | 3,541 | ||||||||
| Operating margin | 65 | % | 66 | % | 28 | % | 27 | % | 28 | % | 25 | % | 48 | % | 50 | % | ||||||||
| Adjusted operating margin | 69 | % | 68 | % | 38 | % | 38 | % | 57 | % | 61 | % | 58 | % | 59 | % |
9
Adjusted Operating Income, Operating Marginand Operating Expense Reconciliation
(In millions)
(Unaudited)
| Exchanges Segment | Fixed Income and Data <br><br>Services Segment | Mortgage Technology <br><br>Segment | Consolidated | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended December 31, | Three Months <br><br>Ended December 31, | Three Months <br><br>Ended December 31, | Three Months <br><br>Ended December 31, | |||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||
| Total revenues, less transaction-based expenses | $ | 1,014 | $ | 871 | $ | 480 | $ | 450 | $ | 346 | $ | 350 | $ | 1,840 | $ | 1,671 | ||||||||
| Operating expenses | 356 | 323 | 344 | 331 | 260 | 237 | 960 | 891 | ||||||||||||||||
| Less: Amortization of acquisition-related intangibles | 17 | 21 | 44 | 47 | 92 | 85 | 153 | 153 | ||||||||||||||||
| Less: Transaction and integration costs | 47 | 2 | — | — | 11 | 13 | 58 | 15 | ||||||||||||||||
| Less: Impairment of developed software | — | 11 | — | — | — | — | — | 11 | ||||||||||||||||
| Adjusted operating expenses | $ | 292 | $ | 289 | $ | 300 | $ | 284 | $ | 157 | $ | 139 | $ | 749 | $ | 712 | ||||||||
| Operating income | $ | 658 | $ | 548 | $ | 136 | $ | 119 | $ | 86 | $ | 113 | $ | 880 | $ | 780 | ||||||||
| Adjusted operating income | $ | 722 | $ | 582 | $ | 180 | $ | 166 | $ | 189 | $ | 211 | $ | 1,091 | $ | 959 | ||||||||
| Operating margin | 65 | % | 63 | % | 28 | % | 26 | % | 25 | % | 32 | % | 48 | % | 47 | % | ||||||||
| Adjusted operating margin | 71 | % | 67 | % | 38 | % | 37 | % | 55 | % | 60 | % | 59 | % | 57 | % |
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Adjusted Net Income Attributable to ICE andEPS
(In millions)
| Twelve Months Ended 12/31/2021 | Twelve Months Ended 12/31/2020 | |||||
|---|---|---|---|---|---|---|
| Net income attributable to ICE common stockholders | $ | 4,058 | $ | 2,089 | ||
| Add: Amortization of acquisition-related intangibles | 622 | 388 | ||||
| Add: Transaction and integration costs and acquisition-related success fees | 98 | 101 | ||||
| Less: Gain on value of Euroclear equity investment | (34 | ) | (35 | ) | ||
| Less: Gain on sale of Coinbase equity investment | (1,227 | ) | — | |||
| Less: Gain on deconsolidation of Bakkt | (1,419 | ) | — | |||
| Less: Gain on sale of BIDS equity investment | — | (20 | ) | |||
| Less: Gain related to the settlement of an acquisition-related indemnification claim | (7 | ) | — | |||
| Add: Accelerated unamortized costs related to the early<br> payoff of the June 2023 floating rate senior notes | 4 | — | ||||
| Add: Extinguishment of December 2020 Senior Notes | — | 14 | ||||
| Add: Pre-acquisition interest expense on debt issued for Ellie Mae acquisition | — | 5 | ||||
| Add: Impairment of developed software | — | 11 | ||||
| Add: Impairment of CAT promissory notes | — | 2 | ||||
| Add: Accrual relating to legal settlement | 16 | 30 | ||||
| Add: Accrual relating to regulatory settlement | — | 8 | ||||
| Add/(Less): Net losses/(income) from unconsolidated investees | 42 | (71 | ) | |||
| Add/(Less): Income tax effect for the above items | 574 | (109 | ) | |||
| Add: Deferred tax adjustments on acquisition-related intangibles | 183 | 36 | ||||
| Adjusted net income attributable to ICE common stockholders | $ | 2,910 | $ | 2,449 | ||
| Basic earnings per share attributable to ICE common stockholders | $ | 7.22 | $ | 3.79 | ||
| Diluted earnings per share attributable to ICE common stockholders | $ | 7.18 | $ | 3.77 | ||
| Adjusted basic earnings per share attributable to ICE common stockholders | $ | 5.17 | $ | 4.44 | ||
| Adjusted diluted earnings per share attributable to ICE common stockholders | $ | 5.15 | $ | 4.41 | ||
| Basic weighted average common shares outstanding | 562 | 552 | ||||
| Diluted weighted average common shares outstanding | 565 | 555 |
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Adjusted Net Income Attributable to ICE andEPS
(In millions)
(Unaudited)
| Three Months Ended 12/31/2021 | Three Months Ended 12/31/2020 | |||||
|---|---|---|---|---|---|---|
| Net income attributable to ICE | $ | 1,527 | $ | 526 | ||
| Add: Amortization of acquisition-related intangibles | 153 | 153 | ||||
| Add: Transaction and integration costs | 58 | 15 | ||||
| Less: Gain on deconsolidation of Bakkt | (1,419 | ) | — | |||
| Add: Impairment of developed software | — | 11 | ||||
| Less: Gain on value of Euroclear equity investment | — | (35 | ) | |||
| Less: Gain on sale of BIDS equity investment | — | (20 | ) | |||
| Add: Accrual for potential legal settlements | — | 30 | ||||
| Add: Net losses from unconsolidated investees | 84 | 13 | ||||
| Add/(Less): Income tax effect related to the items above | 370 | (47 | ) | |||
| Add/(Less): Deferred tax adjustments on acquisition-related intangibles | (13 | ) | 3 | |||
| Adjusted net income attributable to ICE | $ | 760 | $ | 649 | ||
| Basic earnings per share | $ | 2.72 | $ | 0.94 | ||
| Diluted earnings per share | $ | 2.70 | $ | 0.93 | ||
| Adjusted basic earnings per share | $ | 1.35 | $ | 1.16 | ||
| Adjusted diluted earnings per share | $ | 1.34 | $ | 1.15 | ||
| Basic weighted average common shares outstanding | 562 | 561 | ||||
| Diluted weighted average common shares outstanding | 565 | 564 |
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Free Cash Flow Calculation
(In millions)
(Unaudited)
| Twelve Months Ending<br><br>December 31, 2021 | Twelve Months Ending<br><br>December 31, 2020 | |||||
|---|---|---|---|---|---|---|
| Cash flow from operations | $ | 3,123 | $ | 2,881 | ||
| Less: Capital expenditures and capitalized software development costs | (452 | ) | (410 | ) | ||
| Add/(Less): Section 31 fees, net | 150 | (69 | ) | |||
| Free cash flow | $ | 2,821 | $ | 2,402 |
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About IntercontinentalExchange
Intercontinental Exchange (NYSE: ICE) is a Fortune 500 company and provider of marketplace infrastructure, data services and technology solutions to a broad range of customers including financial institutions, corporations and government entities. We operate regulated marketplaces, including the New York Stock Exchange, for the listing, trading and clearing of a broad array of derivatives contracts and financial securities across major asset classes. Our comprehensive data services offering supports the trading, investment, risk management and connectivity needs of customers around the world and across asset classes. As a leading technology provider for the U.S. residential mortgage industry, ICE Mortgage Technology provides the technology and infrastructure to transform and digitize U.S. residential mortgages, from application and loan origination through to final settlement.
Trademarks of ICE and/or its affiliates include Intercontinental Exchange, ICE, ICE block design, NYSE and New York Stock Exchange. Information regarding additional trademarks and intellectual property rights of Intercontinental Exchange, Inc. and/or its affiliates is located here. Key Information Documents for certain products covered by the EU Packaged Retail and Insurance-based Investment Products Regulation can be accessed on the relevant exchange website under the heading “Key Information Documents (KIDS).”
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 -- Statements in this press release regarding ICE's business that are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of additional risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see ICE's Securities and Exchange Commission (SEC) filings, including, but not limited to, the risk factors in ICE's Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on February 3, 2022.
SOURCE: Intercontinental Exchange
ICE-CORP
ICE Investor Relations Contact:
Mary Caroline O'Neal
+1 770 738 2151
marycaroline.oneal@ice.com
investors@ice.com
ICE Media Contact:
Josh King
+1 212 656 2490
josh.king@ice.com
media@ice.com
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