ICE Pre-Earnings: Data Services To Continue Boosting Top-Line

IntercontinentalExchange Group (NYSE:ICE) is scheduled to announce its Q3 2016 earnings on Tuesday, November 1st. The consensus estimates are for around 32% growth in the exchange operator’s revenue and 10% growth in EPS. Increasing demand for market data-related products and services has led to consistent growth for the company for a year now. The company’s acquisitions in this regard have led the Data Services segment increase by over $400 million in the first half of the year. The company’s trading volumes have suffered some headwinds amid reduced volatility in comparison to the same period of 2015.

The impressive growth in oil and metal derivatives volumes has been offset by the decline in equity options and cash equity trading volumes. As investors seek safe investment alternatives, a gap in supply and demand  has led to increased volatility in the oil and metal market, thereby propelling the trading volumes. Energy derivatives have seen around 3% year-over-year and 10% year-to-date growth. Metals derivatives have grown by 2% year over year and over 17% year to date. These volumes are likely to continue growing in the coming quarters, thereby generating the transaction-based revenues.

The company’s cash equity activity has gone down for the first time in the year, possibly due to lack of investors’ interest in the wake of uncertain financial conditions. However, with the possibility of improvement in these conditions, the trading volumes are likely to improve in the coming quarters.

See the full Trefis analysis for Intercontinental Exchange

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