IntercontinentalExchange Reports Solid Q2 As Data Service Revenues Surge

IntercontinentalExchange Group (NYSE:ICE) saw 37% and 26% year on year (y-o-y) growth in its Q2 2016 revenues and net income, respectively. In line with our expectations, the Data Services segment, supported by a series of acquisitions (SuperDerivatives, IDC and Trayport) and increasing demand, rose to $497 million and was the major contributor to the exchange operator’s revenue growth. Additionally, transaction-based revenues were up 15% y-o-y, led by growth in commodities and financial derivative revenues. While the growth in commodity derivative revenues was driven by the increase in energy trading volumes (due to the uncertainty around oil prices), higher cash equities and equity options trading volumes boosted the financial derivatives revenues.

Operating expenses rose by a massive 41% y-o-y, mainly due to the increase in compensations and acquisition-related costs. Consequently, we saw a 2% decline in the company’s EBITDA margin, which partially offset the growth in net income to 26% as compared to the year-ago period.

Going forward, we expect data services revenue to grow, owing to the company’s acquisitions. Moreover, trading volumes are like to to continue their upward trends, thereby fueling transaction-based revenues.

See the full Trefis analysis for Intercontinental Exchange.

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