Data Services, Higher Trade Revenues Lead To A Profitable Q1 For ICE

+6.75%
Upside
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Market
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Trefis
ICE: Intercontinental Exchange logo
ICE
Intercontinental Exchange

IntercontinentalExchange Group (NYSE:ICE) announced its first quarter fiscal 2016 earnings on Wednesday, May 4, reporting a 32% year on year (y-o-y) rise in revenues. The primary contributor to this growth was the data service segment, rising inorganically to $400 million, due to ICE’s acquisition of IDC and Trayport (~65%). Moreover, the company said that it is looking at other acquisitions – Standard & Poor’s Securities Evaluations, Inc. (SPSE), a provider of fixed income evaluated pricing, and Credit Market Analysis Ltd. (CMA), a provider of independent data for the OTC markets – to further boost its data service revenues.

In terms of the bottom line, higher compensation and acquisition-related costs led to a rise in operating expenses, causing the company-wide EBITDA margin to remain largely flat at 46.8%.

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As per our expectations, transaction revenues grew 11% y-o-y in the period, driven mainly by financials (+15% y-o-y), and agricultural and metal derivatives (+17% y-o-y). Financial derivative revenues were up due to a spike in interest rate contracts trading caused by the uncertainty around Fed’s actions, and the general volatility in the financial markets at the beginning of the financial year 2016. Correspondingly, increased price volatility (related to weather and production levels) was responsible for the rise in agricultural trading volumes in Q1.

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See the links below for more information and analysis about ICE:

Notes:
1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment / ask questions on the comments section
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to the full Trefis analysis for Intercontinental Exchange.

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