ice-20220630

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q



(Mark One)
☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022


Or
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from to

Commission File Number 001-36198

INTERCONTINENTAL EXCHANGE, INC.

(Exact name of registrant as specified in its charter)


Delaware			46-2286804
(State or other jurisdiction of incorporation or organization)			(IRS Employer Identification Number)


5660 New Northside Drive, Atlanta, Georgia			30328
(Address of principal executive offices)			(Zip Code)

(770) 857-4700

Registrant’s telephone number, including area code

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

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of August 1, 2022, the number of shares of the registrant’s Common Stock outstanding was 558,458,225 shares.

INTERCONTINENTAL EXCHANGE, INC.

Form 10-Q

Quarterly Period Ended June 30, 2022

TABLE OF CONTENTS




PART I.	Financial Statements
Item 1.	Consolidated Financial Statements (Unaudited):
	Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021	2
	Consolidated Statements of Income for the six months and three months ended June 30, 2022 and 2021	4
	Consolidated Statements of Comprehensive Income for the six months and three months ended June 30, 2022 and 2021	5
	Consolidated Statements of Changes in Equity and Redeemable Non-Controlling Interest for the six months and three months ended June 30, 2022 and 2021	6
	Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021	8
	Notes to Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	65
Item 4.	Controls and Procedures	68

PART II.	Other Information
Item 1.	Legal Proceedings	68
Item 1A.	Risk Factors	68
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	70
Item 3.	Defaults Upon Senior Securities	71
Item 4.	Mine Safety Disclosures	71
Item 5.	Other Information	71
Item 6.	Exhibits	71
SIGNATURES		73

PART I. Financial Statements

Item 1. Consolidated Financial Statements

Intercontinental Exchange, Inc. and Subsidiaries

Consolidated Balance Sheets

(In millions, except per share amounts)


	As of		As of December 31, 2021
	June 30, 2022
	(Unaudited)
Assets:
Current assets:
Cash and cash equivalents	$	830	$	607
Short-term restricted cash and cash equivalents	6,045		1,035
Cash and cash equivalent margin deposits and guaranty funds	164,483		145,936
Invested deposits, delivery contracts receivable and unsettled variation margin	3,189		4,493
Customer accounts receivable, net of allowance for doubtful accounts of $25 and $24 at June 30, 2022 and December 31, 2021, respectively	1,371		1,208
Prepaid expenses and other current assets	457		1,021
Total current assets	176,375		154,300
Property and equipment, net	1,703		1,699
Other non-current assets:
Goodwill	21,106		21,123
Other intangible assets, net	13,397		13,736
Long-term restricted cash and cash equivalents	405		398
Other non-current assets	2,221		2,246
Total other non-current assets	37,129		37,503
Total assets	$	215,207	$	193,502

Liabilities and Equity:
Current liabilities:
Accounts payable and accrued liabilities	$	719	$	703
Section 31 fees payable	172		57
Accrued salaries and benefits	220		354
Deferred revenue	473		194
Short-term debt	4		1,521
Margin deposits and guaranty funds	164,483		145,936
Invested deposits, delivery contracts payable and unsettled variation margin	3,189		4,493
Other current liabilities	162		153
Total current liabilities	169,422		153,411
Non-current liabilities:
Non-current deferred tax liability, net	3,945		4,100
Long-term debt	18,109		12,397
Accrued employee benefits	191		200
Non-current operating lease liability	267		252
Other non-current liabilities	412		394
Total non-current liabilities	22,924		17,343
Total liabilities	192,346		170,754
Commitments and contingencies


Equity:
Intercontinental Exchange, Inc. stockholders’ equity:
Preferred stock, $0.01 par value; 100 shares authorized; none issued or outstanding	—		—
Common stock, $0.01 par value; 1,500 shares authorized; 633 and 631 issued at June 30, 2022 and December 31, 2021, respectively, and 558 and 561 shares outstanding at June 30, 2022 and December 31, 2021, respectively	6		6
Treasury stock, at cost; 75 and 70 shares at June 30, 2022 and December 31, 2021, respectively	(6,223)		(5,520)
Additional paid-in capital	14,201		14,069
Retained earnings	15,135		14,350
Accumulated other comprehensive loss	(305)		(196)
Total Intercontinental Exchange, Inc. stockholders’ equity	22,814		22,709
Non-controlling interest in consolidated subsidiaries	47		39
Total equity	22,861		22,748
Total liabilities and equity	$	215,207	$	193,502

See accompanying notes.

Intercontinental Exchange, Inc. and Subsidiaries

Consolidated Statements of Income

(In millions, except per share amounts)

(Unaudited)


	Six Months Ended June 30,				Three Months Ended June 30,
	2022		2021		2022		2021
Revenues:
Exchanges	$	3,247	$	2,942	$	1,604	$	1,336
Fixed income and data services	1,021		926		512		458
Mortgage technology	604		695		297		340
Total revenues	4,872		4,563		2,413		2,134
Transaction-based expenses:
Section 31 fees	174		166		123		41
Cash liquidity payments, routing and clearing	985		893		476		386
Total revenues, less transaction-based expenses	3,713		3,504		1,814		1,707
Operating expenses:
Compensation and benefits	714		719		355		365
Professional services	69		81		35		37
Acquisition-related transaction and integration costs	62		28		53		10
Technology and communication	344		327		169		165
Rent and occupancy	41		41		20		20
Selling, general and administrative	112		111		57		60
Depreciation and amortization	510		506		256		251
Total operating expenses	1,852		1,813		945		908
Operating income	1,861		1,691		869		799
Other income/(expense):
Interest income	9		—		8		—
Interest expense	(264)		(213)		(161)		(106)
Other income/(expense), net	(35)		1,287		23		1,239
Other income/(expense), net	(290)		1,074		(130)		1,133
Income before income tax expense	1,571		2,765		739		1,932
Income tax expense	338		862		173		679
Net income	$	1,233	$	1,903	$	566	$	1,253
Net income attributable to non-controlling interest	(21)		(5)		(11)		(1)
Net income attributable to Intercontinental Exchange, Inc.	$	1,212	$	1,898	$	555	$	1,252
Earnings per share attributable to Intercontinental Exchange, Inc. common stockholders:
Basic	$	2.17	$	3.38	$	0.99	$	2.23
Diluted	$	2.16	$	3.36	$	0.99	$	2.22
Weighted average common shares outstanding:
Basic	560		562		558		563
Diluted	562		565		560		565

See accompanying notes.

Intercontinental Exchange, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(In millions)

(Unaudited)


	Six Months Ended June 30,				Three Months Ended June 30,
	2022		2021		2022		2021
Net income	$	1,233	$	1,903	$	566	$	1,253
Other comprehensive income/(loss):
Foreign currency translation adjustments, net of tax expense/(benefit) of ($1) for both the six and three months ended June 30, 2022 and $1 for the three months ended June 30, 2021	(109)		17		(84)		10
Change in equity method investment	—		1		—		—


Other comprehensive income/(loss)	(109)		18		(84)		10
Comprehensive income	$	1,124	$	1,921	$	482	$	1,263
Comprehensive income attributable to non-controlling interest	(21)		(5)		(11)		(1)
Comprehensive income attributable to Intercontinental Exchange, Inc.	$	1,103	$	1,916	$	471	$	1,262

See accompanying notes.

Intercontinental Exchange, Inc. and Subsidiaries

Consolidated Statements of Changes in Equity and Redeemable Non-Controlling Interest

(In millions)

(Unaudited)


	Intercontinental Exchange, Inc. Stockholders’ Equity												Non- Controlling Interest in Consolidated Subsidiaries		Total Equity
	Common Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income/(Loss)
	Shares	Value		Shares	Value
Balance, as of December 31, 2021	631	$	6	(70)	$	(5,520)	$	14,069	$	14,350	$	(196)	$	39	$	22,748
Other comprehensive loss	—	—		—	—		—		—		(109)		—		(109)

Exercise of common stock options	—	—		—	—		20		—		—		—		20

Repurchases of common stock	—	—		(4)	(632)		—		—		—		—		(632)
Payments relating to treasury shares	—	—		(1)	(71)		—		—		—		—		(71)
Stock-based compensation	—	—		—	—		88		—		—		—		88
Issuance under the employee stock purchase plan	—	—		—	—		24		—		—		—		24

Issuance of restricted stock	2	—		—	—		—		—		—		—		—

Distributions of profits	—	—		—	—		—		—		—		(13)		(13)
Dividends paid to stockholders	—	—		—	—		—		(427)		—		—		(427)


Net income/(loss) attributable to non-controlling interest	—	—		—	—		—		(21)		—		21		—
Net income	—	—		—	—		—		1,233		—		—		1,233
Balance, as of June 30, 2022	633	$	6	(75)	$	(6,223)	$	14,201	$	15,135	$	(305)	$	47	$	22,861


	Intercontinental Exchange, Inc. Stockholders’ Equity												Non- Controlling Interest in Consolidated Subsidiaries		Total Equity
	Common Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income/(Loss)
	Shares	Value		Shares	Value
Balance, as of March 31, 2022	633	$	6	(74)	$	(6,064)	$	14,153	$	14,793	$	(221)	$	36	$	22,703
Other comprehensive loss	—	—		—	—		—		—		(84)		—		(84)

Exercise of common stock options	—	—		—	—		5		—		—		—		5

Repurchases of common stock	—	—		(1)	(157)		—		—		—		—		(157)
Payments relating to treasury shares	—	—		—	(2)		—		—		—		—		(2)
Stock-based compensation	—	—		—	—		43		—		—		—		43





Dividends paid to stockholders	—	—		—	—		—		(213)		—		—		(213)


Net income/(loss) attributable to non-controlling interest	—	—		—	—		—		(11)		—		11		—
Net income	—	—		—	—		—		566		—		—		566
Balance, as of June 30, 2022	633	$	6	(75)	$	(6,223)	$	14,201	$	15,135	$	(305)	$	47	$	22,861

Intercontinental Exchange, Inc. and Subsidiaries

Consolidated Statements of Changes in Equity and Redeemable Non-Controlling Interest — (Continued)

(In millions)

(Unaudited)


	Intercontinental Exchange, Inc. Stockholders’ Equity												Non- Controlling Interest in Consolidated Subsidiaries		Total Equity		Redeemable Non-Controlling Interest
	Common Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income/(Loss)
	Shares	Value		Shares	Value
Balance, as of December 31, 2020	629	$	6	(68)	$	(5,200)	$	13,845	$	11,039	$	(192)	$	36	$	19,534	$	93
Other comprehensive income	—	—		—	—		—		—		18		—		18		—
Exercise of common stock options	—	—		—	—		8		—		—		—		8		—

Payments relating to treasury shares	—	—		—	(67)		—		—		—		—		(67)		—
Stock-based compensation	—	—		—	—		81		—		—		—		81		2
Issuance under the employee stock purchase plan	—	—		—	—		18		—		—		—		18		—
Issuance of restricted stock	2	—		—	—		—		—		—		—		—		—
Distributions of profits	—	—		—	—		—		—		—		(11)		(11)		—
Dividends paid to stockholders	—	—		—	—		—		(374)		—		—		(374)		—

Net income/(loss) attributable to non-controlling interest	—	—		—	—		—		(5)		—		11		6		(6)
Net income	—	—		—	—		—		1,903		—		—		1,903		—
Balance, as of June 30, 2021	631	$	6	(68)	$	(5,267)	$	13,952	$	12,563	$	(174)	$	36	$	21,116	$	89


	Intercontinental Exchange, Inc. Stockholders’ Equity												Non- Controlling Interest in Consolidated Subsidiaries		Total Equity		Redeemable Non-Controlling Interest
	Common Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income/(Loss)
	Shares	Value		Shares	Value
Balance, as of March 31, 2021	631	$	6	(68)	$	(5,265)	$	13,908	$	11,498	$	(184)	$	31	$	19,994	$	91

Other comprehensive income	—	—		—	—		—		—		10		—		10		—
Exercise of common stock options	—	—		—	—		5		—		—		—		5		—

Payments relating to treasury shares	—	—		—	(2)		—		—		—		—		(2)		—
Stock-based compensation	—	—		—	—		39		—		—		—		39		2





Dividends paid to stockholders	—	—		—	—		—		(187)		—		—		(187)		—



Net income/(loss) attributable to non-controlling interest	—	—		—	—		—		(1)		—		5		4		(4)
Net income	—	—		—	—		—		1,253		—		—		1,253		—
Balance, as of June 30, 2021	631	$	6	(68)	$	(5,267)	$	13,952	$	12,563	$	(174)	$	36	$	21,116	$	89

See accompanying notes.

Intercontinental Exchange, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In millions)

(Unaudited)


	Six Months Ended June 30,
	2022	2021
Operating activities:
Net income	$