Intercontinental Exchange: more revenues from Wall Street,but the push is on mortgages

A single piece of data always tells part of the story. This is also the case for Intercontinental Exchange (Ice) which, among other things, controls the New York Stock Exchange (Nyse). Against this - in order to better understand the group's economic performance - it is first useful to look at a larger set of numbers. For example, at the historical trend of the income statement. This, in relation to revenues and over the last five years, has been marked by an increase year after year.

According to the Bloomberg terminal, the adjusted turnover of $6.036 billion (2020) increased to $9.28 billion last year. The same adjusted net profitability, which was worth 2.14 billion in 2020, rose to 2.98 billion in 2024. However, the first reading of the numbers is not always exhaustive. To grasp the dynamics of the business even better, it is correct to 'rely' on further indicators. An example? Margins, which can be represented by the ratio of adjusted EBITDA to turnover. Well: on the front line in question, it can be seen that the Ebitda margin was - according to the Bloomberg terminal - 65% in 2020. Subsequently it rose to 84% in 2022 and then slowed down. In 2024 it was 66.8%.

Put differently: in recent years, a smaller share of 'receipts' has been transformed into gross operating profitability. This fact is not too surprising. Ice - traditionally very active in M&A - completed the shopping spree of Black Night in 2023. The acquisition - evidently - may have contributed to the dilution of margins. True! The list giant had already made Ellie Mae its own - for example - in 2020. And yet, the underlying consideration remains valid. Growth by external lines, on the one hand, allows revenues to accelerate; but, on the other hand, it can reduce - in the medium term - margins. A possibility, the latter, which the do-it-yourselfer must monitor carefully. Yes, attention. Has the expansion trend continued in the first quarter of 2025? The answer is positive. Turnover rose by 8% while adjusted diluted earnings per share (EPS) were $1.72 (+16%). Not only that. The same adjusted margins - at the operating income level - between the beginning of January and the end of March stood at 61% compared to 59% for the same period in 2024. That is: margins appear to be on the upswing.

But it is not only a question of profitability and margins. Another front to be analysed, in order to understand the ways in which the business evolves, is the change in the distribution of revenues between the various business sectors. Ice divides the business into three segments. The first is 'Exchanges' (1.36 billion revenue in Q1 2025). This includes the operation of regulated (but also Otc) markets for the listing, trading and clearing of many securities: from derivatives (on commodities and non-commodities) to equities through to funds and ETFs. The trading venues - including over 10 regulated exchanges and 6 'clearing houses' - are located in various regions of the world. These include the USA, Great Britain, the EU, Canada, Asia and the Middle East. A second area, on the other hand, is 'Fixed income & Data Services' (596 million turnover). Various activities fall under this umbrella: from bond execution to data services and credit default swaps. Finally: the division called 'Mortgage Technology' (510 million turnover). The division is responsible for offering software and digital services whereby the process of granting, managing and closing mortgages in the US can be carried out.That said, in the last five years, it is precisely the 'Mortgage technology' area that has gained in importance - also thanks to M&A. According to the Bloomberg terminal, this sector was worth 9.86% of turnover in 2020. Gradually, dumb films increased in value, reaching 21.8% of the total at the end of last year. At the same time, the incidence of revenue generated by 'Exchanges' declined, with 'Fixed income & Data Services' also showing weakness. The described trend, on closer inspection, rather faithfully represents the will of the group. That is to say: thanks to extraordinary transactions, the aim is to expand - and more articulate - the business. Diversification which is vital to ensure growth. Not least because, worldwide, the long-term trend is the overall contraction of trading volumes and associated margins. Consequently, revenue diversification is essential.

 M&A and competition