What Are IntercontinentalExchange’s Key Drivers of Revenue?
IntercontinentalExchange Group (NYSE:ICE) has seen its revenue grow at a CAGR of 40% and stock price jump 2.8x between 2013 and 2017. We attribute this performance primarily to the growth in the company’s data services segment, driven by a series of acquisitions, as demand for data-driven insights and analytics-driven recommendations has increased substantially in the last few years. Trading revenues saw muted growth due to consistent declines in U.S. equity options trading volumes and ICE’s market share. However, significant growth across the derivative and cash equity trading managed to offset the losses from equity options.
We have an $82 price estimate for Intercontinental Exchange’s stock, which is about 20% ahead of the current market price. We believe the overall revenues should grow by 6% in 2018. Our interactive dashboard shows the historical trends and our expectations for the company’s FY’18 top line; you can modify the key value drivers to see how they will impact the company’s results.
- Up 24% Since The Start Of 2023, What To Expect From Intercontinental Exchange Stock After Q4 Results?
- Up 7% In The Last One Month, Where Is Intercontinental Exchange Stock Headed?
- Where Is Intercontinental Exchange Stock Headed?
- Intercontinental Exchange Stock Is Trading Below Its Fair Value
- Intercontinental Exchange Stock To Edge Past the Expectations In Q4
- Forecast Of The Day: Intercontinental Exchange Data Services Revenue
Derivative Trading Volumes Saw Growth; Equity Options Remained Under Pressure
ICE’s trading business, which contributed around 80% of its overall revenues in 2013, accounted for nearly 51% of its business in 2017. Among asset classes, the growth in derivatives revenues was largely driven by the phenomenal growth in energy, interest rate and metal derivative volumes. Interest rate derivative volumes and revenues were driven by uncertain macro conditions and rate hikes in the last few years. Among commodities, energy derivatives saw a significant surge. The demand-supply gap led to increased volatility in the oil market. Oil prices have continued to fluctuate due to OPEC’s stance on capping production.
Equity options suffered the most with consistent declines in trading volumes and market share. The industry-wide volumes continued to decline amid uncertain macro conditions and geopolitical turmoil. The company continued to face stiff competition from exchanges such as the Chicago Board Options Exchange and NASDAQ. The competition intensified over the years, as several new options exchanges launched in the U.S.
See the full Trefis analysis for Intercontinental Exchange