8-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT PURSUANT TO SECTION 13 or 15(d) of THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported):  May 2, 2019  

Intercontinental Exchange, Inc.

(Exact Name of Registrant as Specified in Charter)

Delaware	001-36198	46-2286804
(State or other jurisdiction of incorporation)	(Commission File No.)	(I.R.S. Employer 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

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. ¨

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

Item 2.02. Results of Operations and Financial Condition.

On May 2, 2019, Intercontinental Exchange, Inc. (“ICE”) announced its financial results for the fiscal quarter ended March 31, 2019. A copy of ICE’s 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.

ICE 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 ICE’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2019.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.	Description
99.1	Press release dated May 2, 2019.

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.

	INTERCONTINENTAL EXCHANGE, INC.
	/s/ Scott A. Hill
	Scott A. Hill
	Chief Financial Officer
Date: May 2, 2019

EX-99.1

Exhibit 99.1

 Intercontinental Exchange Reports First Quarter 2019

•	First quarter revenues of $1.3 billion, +4% y/y	Jeffrey C. Sprecher, ICE Chairman & Chief Executive Officer, said, “We are pleased to report another quarter of revenue and earnings per share growth as compounding growth in our subscription-based Data & Listings business helped to offset a quarter of relatively muted trading activity. We remain focused on bringing efficiencies to our customers' workflows and creating value for our stockholders."
•	GAAP diluted EPS of $0.85, +8% y/y
•	Adj. diluted EPS of $0.92, +2% y/y
•	Operating margin of 52%; Adj. operating margin of 58%
•	Through March 31, 2019, returned nearly $600M to stockholders

ATLANTA & NEW YORK, May 2, 2019 - Intercontinental Exchange (NYSE: ICE), a leading operator of global exchanges and clearing houses and provider of data and listing services, today reported financial results for the first quarter of 2019. For the quarter ended March 31, 2019, consolidated net income attributable to ICE was $484 million on $1.3 billion of consolidated revenues, less transaction-based expenses. First quarter GAAP diluted earnings per share (EPS) were $0.85. Adjusted net income attributable to ICE was $527 million in the first quarter and adjusted diluted EPS were $0.92. 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.

Scott A. Hill, ICE Chief Financial Officer, added: "During the first quarter, we once again grew revenues, earnings and cash flows, enabling us to return nearly $600 million to stockholders. Our results are a testament to the diversity and global nature of our business mix, as well as our ability to drive future growth and create value for our stockholders."

First Quarter 2019 Business Highlights

$ in millions	Net Revenue		Op Margin			Adj Op Margin
Data & Listings	$	657		43	%		51	%
Trading & Clearing	$	613		63	%		67	%
Consolidated	$	1,270		52	%		58	%

First quarter consolidated net revenues were $1.3 billion, up 4% year-over-year. Data and listings revenues in the first quarter were $657 million and trading and clearing net revenues were $613 million. Consolidated operating expenses were $605 million for the first quarter of 2019. On an adjusted basis, consolidated operating expenses were $528 million. Consolidated operating income for the first quarter was $665 million and the operating margin was 52%. On an adjusted basis, consolidated operating income for the first quarter was $742 million and the adjusted operating margin was 58%.

1

Data and Listings Segment Results

First quarter data and listings revenues were $657 million, including data revenues of $546 million, up 5% year-over-year, and listings revenues of $111 million, up 2% year-over-year. On a constant currency basis⁽¹⁾, segment revenues were up 5% with data revenues up 6% year-over-year and listings revenues up 2% year-over-year. Data and listings operating expenses were $377 million and on an adjusted basis, were $323 million in the first quarter. Segment operating income for the first quarter was $280 million and the operating margin was 43%. On an adjusted basis, operating income was $334 million and the adjusted operating margin was 51%.

$ in millions		1Q19		1Q18	% Chg		Const Curr(1)
Revenue:
Pricing and Analytics	$	266	$	254	5	%	6	%
Exchange Data and Feeds		176		164	7	%	8	%
Desktops and Connectivity		104		102	2	%	3	%
Data Total		546		520	5	%	6	%
Listings		111		109	2	%	2	%
Segment Revenue	$	657	$	629	4	%	5	%

(1) Net revenues in constant currency are calculated holding both the pound sterling and euro at the average exchange rate from 1Q18, 1.3918 and 1.2292, respectively.

Trading and Clearing Segment Results

First quarter trading and clearing net revenues were $613 million, up 3% from one year ago. Trading and clearing operating expenses were $228 million and adjusted operating expenses were $205 million in the first quarter. Segment operating income for the first quarter was $385 million and the operating margin was 63%. On an adjusted basis, operating income was $408 million and the adjusted operating margin was 67%.

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$ in millions		1Q19		1Q18	% Chg
Revenue, net:
Energy	$	229	$	235	(2	)%
Ags & metals		62		65	(5	)%
Financials(1)		83		91	(9	)%
Cash equities & equity options		77		83	(7	)%
Fixed income & credit(2)		87		56	54	%
OTC & other transaction(3)		11		13	(14	)%
Other revenue(4)		64		53	21	%
Segment Revenue	$	613	$	596	3	%

(1) Financials include interest rates and other financial futures and options.

(2) Fixed income and credit includes fixed income execution, CDS execution and clearing and ICE Mortgage Services.

(3) OTC & other transactions include physical energy.

(4) Other revenue includes 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, exchange member fees, and agriculture grading and certification fees.

• Energy futures and options revenue in the first quarter decreased 2% year-over-year reflecting a 12% decline in average daily volume (ADV), partially offset by an 11% increase in rate per contract (RPC).

• Ags and metals futures and options revenue in the first quarter decreased 5% year-over-year reflecting a 1% decrease in ADV and 3% decline in RPC.

• Financials futures and options revenue in the first quarter decreased 9% year-over-year reflecting an 8% decline in ADV.

• U.S. cash equities and equity options revenue in the first quarter decreased 7% year-over-year reflecting a 15% decline in cash equities RPC and a 5% decrease in equity options ADV.

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	ADV (lots in thousands)					RPC
	1Q19		% Chg			1Q19		% Chg
Energy		2,552		(12	)%	$	1.47		11	%
Ags & metals		449		(1	)%	$	2.25		(3	)%
Financials		2,672		(8	)%	$	0.49		—
Interest Rates		2,230		(9	)%	$	0.38		(3	)%
Other Financials		442		(7	)%	$	1.07		5	%
Total Futures & Options		5,673		(9	)%	$	1.06		6	%
Cash Equities (in millions)		1,886		9	%	$	0.045		(15	)%
Equity Options		3,331		(5	)%	$	0.12		(3	)%

The first quarter of 2019 included 61 trading days for commodities, other financials, cash equities and equity options and 63 trading days for interest rates. The first quarter of 2018 included 61 trading days for commodities, other financials, cash equities and equity options and 63 trading days for interest rates.

Other Matters

• In the first quarter, ICE repurchased $440 million of its common stock and paid $157 million in dividends.

• Unrestricted cash was $653 million and outstanding debt was $7.5 billion as of March 31, 2019.

• Operating cash flow in the first quarter was $654 million, up 14% from $573 million one year ago. In the first quarter of 2019, free cash flow was $624 million, up 18% from $530 million one year ago.

• The effective tax rate for the first quarter of 2019 was 21%.

Financial Guidance

• ICE's second quarter 2019 data revenues are expected to be in a range of $550 million to $555 million.

• ICE's second quarter 2019 GAAP operating expenses are expected to be in a range of $615 million to $625 million and adjusted operating expenses⁽¹⁾ are expected to be in a range of $537 million to $547 million.

• ICE's full year 2019 GAAP operating expenses are expected to be in a range of $2.46 billion to $2.49 billion and adjusted operating expenses⁽¹⁾ are expected to be in a range of $2.15 billion to $2.18 billion.

• ICE's interest expense is expected to be $71 million in the second quarter.

• ICE's diluted share count for the second quarter is expected to be in the range of 563 million to 569 million weighted average shares outstanding.

(1) The 2019 Non-GAAP adjusted operating expense excludes $78 million in amortization of acquisition-related intangibles for the second quarter of 2019 and $306 million for the full year. The GAAP operating expense forecast does not reflect an estimate of acquisition-related transaction and integration costs for the second quarter of 2019.

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Earnings Conference Call Information

ICE will hold a conference call today, May 2, 2019, at 8:30 a.m. ET to review its first quarter 2019 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 888-317-6003 from the United States, 866-284-3684 from Canada or 412-317-6061 from outside of the United States and Canada. Telephone participants are required to provide the participant entry number 6842994 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 second quarter 2019 earnings has been scheduled for August 1, 2019 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: http://ir.theice.com/investors-and-media/supplemental-volume-info/default.aspx

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Consolidated Statements of Income

(In millions, except per share amounts)

(Unaudited)

	Three Months Ended  March 31,
Revenues:	2019			2018
Transaction and clearing, net	$	862		$	898
Data services		546			520
Listings		111			109
Other revenues		64			53
Total revenues		1,583			1,580
Transaction-based expenses:
Section 31 fees		69			121
Cash liquidity payments, routing and clearing		244			234
Total revenues, less transaction-based expenses		1,270			1,225
Operating expenses:
Compensation and benefits		248			240
Professional services		33			30
Acquisition-related transaction and integration costs		—			12
Technology and communication		107			105
Rent and occupancy		17			17
Selling, general and administrative		42			33
Depreciation and amortization		158			138
Total operating expenses		605			575
Operating income		665			650
Other income (expense):
Interest income		9			4
Interest expense		(71	)		(52	)
Other income, net		23			15
Other income (expense), net		(39	)		(33	)
Income before income tax expense		626			617
Income tax expense		134			143
Net income	$	492		$	474
Net income attributable to non-controlling interest		(8	)		(10	)
Net income attributable to Intercontinental Exchange, Inc.	$	484		$	464
Earnings per share attributable to Intercontinental Exchange, Inc. common stockholders:
Basic	$	0.85		$	0.80
Diluted	$	0.85		$	0.79
Weighted average common shares outstanding:
Basic		568			582
Diluted		570			586
Dividend per share	$	0.275		$	0.24

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Consolidated Balance Sheets

(In millions)

(Unaudited)

	As of			As of
	March 31, 2019			December 31, 2018
Assets:
Current assets:
Cash and cash equivalents	$	653		$	724
Short-term restricted cash and cash equivalents		868			818
Customer accounts receivable, net		1,181			953
Margin deposits, guaranty funds and delivery contracts receivable		64,564			63,955
Prepaid expenses and other current assets		219			242
Total current assets		67,485			66,692
Property and equipment, net		1,538			1,241
Other non-current assets:
Goodwill		13,098			13,085
Other intangible assets, net		10,406			10,462
Long-term restricted cash and cash equivalents		370			330
Other non-current assets		960			981
Total other non-current assets		24,834			24,858
Total assets	$	93,857		$	92,791
Liabilities and Equity:
Current liabilities:
Accounts payable and accrued liabilities	$	509		$	521
Section 31 fees payable		70			105
Accrued salaries and benefits		125			280
Deferred revenue		479			135
Short-term debt		1,005			951
Margin deposits, guaranty funds and delivery contracts payable		64,564			63,955
Other current liabilities		283			161
Total current liabilities		67,035			66,108
Non-current liabilities:
Non-current deferred tax liability, net		2,308			2,337
Long-term debt		6,492			6,490
Accrued employee benefits		203			204
Operating lease liability-non-current		306			—
Other non-current liabilities		312			350
Total non-current liabilities		9,621			9,381
Total liabilities		76,656			75,489
Commitments and contingencies
Redeemable non-controlling interests in consolidated subsidiaries		71			71
Equity:
Intercontinental Exchange, Inc. stockholders’ equity:
Common stock		6			6
Treasury stock, at cost		(2,851	)		(2,354	)
Additional paid-in capital		11,597			11,547
Retained earnings		8,644			8,317
Accumulated other comprehensive loss		(290	)		(315	)
Total Intercontinental Exchange, Inc. stockholders’ equity		17,106			17,201
Non-controlling interest in consolidated subsidiaries		24			30
Total equity		17,130			17,231
Total liabilities and equity	$	93,857		$	92,791

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Non-GAAP Financial 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 Quarterly Report on Form 10-Q, 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):

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Adjusted Operating Income, Operating Margin and Operating Expense Reconciliation

(In millions)

(Unaudited)

	Trading and Clearing Segment						Data and Listings Segment						Consolidated
	Three Months Ended March 31,						Three Months Ended March 31,						Three Months Ended March 31,
	2019			2018			2019			2018			2019			2018
Total revenues, less transaction-based expenses	$	613		$	596		$	657		$	629		$	1,270		$	1,225
Total operating expenses	$	228		$	207		$	377		$	368		$	605		$	575
Less: Interactive Data integration costs		—			—			—			12			—			12
Less: Amortization of acquisition-related intangibles		23			16			54			53			77			69
Adjusted total operating expenses	$	205		$	191		$	323		$	303		$	528		$	494
Operating income	$	385		$	389		$	280		$	261		$	665		$	650
Adjusted operating income	$	408		$	405		$	334		$	326		$	742		$	731
Operating margin		63	%		65	%		43	%		42	%		52	%		53	%
Adjusted operating margin		67	%		68	%		51	%		52	%		58	%		60	%

Adjusted Net Income Attributable to ICE and EPS

(In millions)

(Unaudited)

	Three Months Ended March 31, 2019			Three Months Ended March 31, 2018
Net income attributable to ICE	$	484		$	464
Add: Interactive Data integration costs		—			12
Add: Amortization of acquisition-related intangibles		77			69
Add: Adjustment to reduce net gain on Trayport divestiture		—			1
Less: Income tax effect for the above items		(20	)		(21	)
Less: Deferred tax adjustments on acquisition-related intangibles		(17	)		—
Add: Other tax adjustments		3			—
Adjusted net income attributable to ICE	$	527		$	525
Diluted earnings per share attributable to ICE	$	0.85		$	0.79
Adjusted diluted earnings per share attributable to ICE	$	0.92		$	0.90

9

Free Cash Flow Calculation

(In millions)

(Unaudited)

	Three months ended March 31, 2019			Three months ended March 31, 2018
Cash flow from operations	$	654		$	573
Less: Capital expenditures and capitalized software development costs		(65	)		(51	)
Add: Section 31 fees, net		35			8
Free cash flow	$	624		$	530

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About Intercontinental Exchange

Intercontinental Exchange (NYSE: ICE) is a Fortune 500 company formed in the year 2000 to modernize markets. ICE serves customers by operating the exchanges, clearing houses and information services they rely upon to invest, trade and manage risk across global financial and commodity markets. A leader in market data, ICE Data Services serves the information and connectivity needs across virtually all asset classes. As the parent company of the New York Stock Exchange, the company is the premier venue for raising capital in the world, driving economic growth and transforming markets.

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 at http://www.intercontinentalexchange.com/terms-of-use. 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 Intercontinental Exchange, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the SEC on February 7, 2019. We caution you not to place undue reliance on these forward looking statements. Any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of an unanticipated event. New factors emerge from time to time, and it is not possible for management to predict all factors that may affect our business and prospects. Further, management cannot assess the impact of each factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

SOURCE: Intercontinental Exchange

ICE-CORP

ICE Investor Relations Contact:

Warren Gardiner

+1 770 835 0114

warren.gardiner@theice.com

investors@theice.com

ICE Media Contact:

Damon Leavell

+1 212 323 8587

damon.leavell@theice.com

media@theice.com

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