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    ICE
    Earnings call· Sep 2025(Q3 FY25)

    Intercontinental Exchange, Inc. ICE

    Oct 30, 2025 Source

    Executive summary

    Intercontinental Exchange, Inc. Q3 FY25 — Record Performance Driven by Recurring Revenue and Strategic AI Investments

    Intercontinental Exchange delivered a record third quarter, driven by robust recurring revenue growth across its Exchange and Fixed Income segments. The company is strategically investing in AI to enhance internal efficiencies and client solutions, exemplified by the ICE Aurora platform and the Polymarket investment, which aims to leverage blockchain for improved collateral management and market innovation. Management remains focused on extending its growth trajectory and creating shareholder value through strategic investments and capital returns.

    Highlights

    5

    • Adjusted diluted EPS was $1.71, up 10% year-over-year, marking the best third quarter in company history.

    • Net revenues totaled $2.4 billion, underpinned by a 5% increase in recurring revenue.

    • Exchange data and connectivity services grew 9% year-over-year, while Fixed Income and Data Services recurring revenue rose 7%.

    • ICE Bonds revenues increased 15% year-over-year, driven by 41% growth in the muni business.

    • Mortgage Technology revenues were up 4% year-over-year, with transaction revenue growing 12%, and MSP active loans ticked higher for the first time in several quarters.

    Concerns

    4

    • Third quarter adjusted operating expenses benefited from approximately $15 million in one-time items, implying a higher run-rate going forward.

    • The third quarter adjusted tax rate of 21% benefited from prior year tax audit settlements and is expected to normalize to between 24% and 26% in Q4.

    • Mortgage segment Q3 revenues were a few million dollars lower than anticipated due to the roll-off of inactive MSP loans and some customers renewing at slightly lower minimums.

    • PennyMac announced it would be leaving the MSP platform over time, which is expected to impact recurring revenue by approximately 0.5 point, but not until 2028.

    Guidance & targets

    9
    CategoryTargetConfidence
    Adjusted Operating Expenses
    $1.005 billion to $1.015 billion
    medium materiality
    High
    Adjusted Nonoperating Expense
    $180 million and $185 million
    medium materiality
    High
    Adjusted Tax Rate
    between 24% and 26%
    medium materiality
    High
    Full-Year Exchange Data Growth
    towards the high end of our 4% to 5% guidance range
    medium materiality
    High
    Data and Network Technology Revenue Growth
    high single-digit range
    medium materiality
    High
    Fixed Income and Data Services Total Segment Recurring Revenue Growth
    between 5% and 6%
    medium materiality
    High
    Fixed Income and Data Services Total Segment Recurring Revenue Growth
    between 5% and 6%
    medium materiality
    High
    MSP Re-platforming Completion
    within 2 years
    high materiality
    High
    Mortgage Technology Revenues
    remain at these levels
    medium materiality
    Medium

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Exchange
    Net revenues built on strong double-digit growth in the prior 2 years. Recurring revenues were a record, driven by futures data and approximately $6 million of auto-related revenue not expected to repeat in Q4. NYSE maintained high listing standards and retention rate.
    Transaction revenues: $876 millionRecurring revenues: $389 millionRecurring revenue growth YoY: 7%Exchange data and connectivity services growth YoY: 9%Open interest across futures and options complex growth YoY (end Oct): 16%Energy futures open interest growth YoY (end Oct): 14%Interest rate futures open interest growth YoY (end Oct): 37%New IPO proceeds raised by NYSE (first 3 quarters 2025): $20 billionNYSE retention rate: 99%
    		$1.3 billion———
    Fixed Income and Data Services
    Achieved record revenues, with ICE Bonds driven by growing institutional adoption in muni business. CDS results impacted by lower Fed funds rate. Recurring revenue growth was strong, with data network technology accelerating due to demand for data and AI integration. Q3 included a few million dollars of one-time revenue not expected to repeat.
    Transaction revenues: $123 millionRecurring revenues: $495 millionRecurring revenue growth YoY: 7%ICE Bonds revenues growth YoY: 15%Muni business growth YoY: 41%Fixed income data and analytics revenues: $311 millionFixed income data and analytics revenues growth YoY: 5%ETF AUM (end Q3): $754 billionData network technology growth YoY: 10% (accelerating from 7% H1, 5% 2024)
    		$618 million———
    Mortgage Technology
    Revenues increased despite a tough macro backdrop. Year-over-year improvement largely driven by data and analytics business and MSP within servicing. Q4 revenues expected to remain at similar levels, impacted by Mr. Cooper's acquisition of Flagstar and customer minimum resets, offset by new customer revenue. Highest sales quarter of the year for the segment.
    Recurring revenues: $391 millionTransaction revenues: $137 millionTransaction revenue growth YoY: 12%Encompass closed loans revenue growth: double-digitMERS registrations growth: high single-digitNew MSP clients signed: 2 (both already on Encompass)New Encompass clients signed: 16 (5 already on MSP or MSP subservicer)
    		$528 million4%——

    Operational metrics

    15
    Adjusted Diluted EPS
    $1.71up 10% YoY
    Q3 FY25

    Best third quarter in company's history.

    Net Revenues
    $2.4 billion
    Q3 FY25

    Underpinned by recurring revenue growth.

    Recurring Revenue Growth
    5%YoY
    Q3 FY25

    Company-wide recurring revenue growth.

    Adjusted Operating Expenses
    $981 million
    Q3 FY25

    Benefited from approximately $15 million in one-time items.

    Adjusted Tax Rate
    21%
    Q3 FY25

    Benefited from recent prior year tax audit settlements.

    Capital Returned to Shareholders
    $674 million
    Q3 FY25

    Includes share repurchases and dividends.

    Capital Returned to Shareholders
    $1.7 billion
    YTD FY25

    Year-to-date total.

    Share Repurchases
    ~$400 million
    Q3 FY25

    Part of capital allocation.

    Debt Reduction
    ~$175 million
    Q3 FY25

    Reducing gross leverage.

    Gross Leverage
    just over 2.9x
    Q3 FY25

    Reduced from prior period.

    Polymarket Investment Funding
    $1 billion
    October 2025

    Funded in early October, with expectation to fund up to an additional $1 billion in the future.

    MSP Re-platforming Time Reduction
    ~60%
    Ongoing

    Reduced time to rewrite 30 million lines of code for MSP user interface with AI assistance (GitHub Copilot).

    Code Conversion Time Reduction
    ~60%
    Ongoing

    Reduced time to convert code for index qualification, calculation, and reporting using AI.

    Reference Data Document Processing
    ~40,000
    Q3 FY25

    AI used to process and validate documents from hundreds of sources in reference data business.

    MSP Cost to Service Loan Savings
    20% to 30%
    Ongoing

    Based on a recently conducted customer study, expected to increase with new innovations.

    Deals & partnerships

    2
    PolymarketStrategic investment and data agreement$1 billion (initial funding)

    ICE made a strategic investment in Polymarket and announced a data agreement to become a global distributor of Polymarket's event-driven data. The investment aims to learn from Polymarket's blockchain-based architecture for 24/7 collateral management and rapid market listing, which ICE believes can make global clearing more efficient and increase trading volumes. Initial funding of $1 billion was made in October with CP issuance, with up to an additional $1 billion expected.

    Mr. CooperAcquisition of Flagstar

    Mr. Cooper's acquisition of Flagstar was mentioned as a factor influencing the Q4 revenue outlook for the Mortgage Technology segment, as Flagstar will roll off ICE's platform.

    Risks & headwinds

    6
    One-time operating expense benefits not repeatingQ4 FY25 onwards

    ~$15 million

    Mitigation: Disciplined cost management and strategic AI investments for efficiency.

    Tax rate normalizationQ4 FY25

    24% to 26% (from 21%)

    Mitigation: None stated, but it's a normalization from a one-time benefit.

    Mortgage segment revenue pressureQ3 FY25

    A few million dollars lower than anticipated in Q3

    Mitigation: New customer wins and benefit of higher transaction fees are expected to largely offset these impacts in Q4.

    Customer departure from MSP platform2028

    ~0.5 point impact on recurring revenue

    Mitigation: ICE highlights its independent, well-capitalized, and neutral technology provider position to attract new clients and maintain sales momentum.

    Impact of lower Fed funds rate on CDS businessQ3 FY25

    Lower member interest

    Mitigation: None explicitly stated, but overall Fixed Income and Data Services recurring revenue still grew 7%.

    Seasonal impact on mortgage purchase volumesQ4 FY25 and Q1 FY26

    Lighter volumes

    Mitigation: None explicitly stated, but it's a known seasonal pattern.

    What to watch in Q4 FY25

    5

    Adjusted Operating Expenses

    Q4 FY25
    Current$981 million (Q3 FY25)
    Target$1.005 billion to $1.015 billion

    Why it matters

    Verifies if the sequential increase due to one-time📎 benefits not repeating aligns with guidance, impacting profitability.

    We expect fourth quarter adjusted operating expenses to be in the range of $1.005 billion to $1.015 billion.

    Q&A highlights

    6

    How easy is it to integrate AI into MSP/Encompass, and can it maximize competitiveness? Does new technology hope extend client sign-up times, especially for large customers?

    Ben Jackson explained that AI transforms MSP/Encompass into 'systems of intelligence' by orchestrating complex, highly regulated workflows and leveraging ICE's proprietary data (compliance, underwriting, closing guidelines). He highlighted strong sales performance in Q3, including new MSP and Encompass clients, indicating that customers are buying into ICE's vision.

    “I think the -- in my mind, the best way to summarize the impact of AI on our mortgage origination and servicing platforms is that it's enabled us to transition these platforms from what have historically been seen as systems of record to a system of intelligence.”

    asked by Ken Worthington · answered by Benjamin Jackson

    2 min read6 chapters

    Detailed Narrative

    01

    AI Strategy and ICE Aurora Platform

    ICE is extending its 25-year automation journey through AI, building tools to enhance efficiency and analytical insights for both internal operations and customer solutions. The company introduced ICE Aurora, a platform leveraging deep workflow expertise, proprietary data, and network effects. This strategy involves a bottom-up risk assessment of automation levels across processes, balancing probabilistic accuracy of AI models with regulatory compliance and the need for human intervention in exception handling for highly regulated businesses.

    02

    Energy Markets Strength and Open Interest Growth

    Despite lower overall market volatility🌐, ICE's energy markets delivered their second strongest third quarter in history, following a record Q3 last year. This performance was driven by continued strength in global gas and power markets, with volumes up 8% and 18% year-over-year, respectively. Open interest across futures and options surged 16% year-over-year by late October, with energy futures up 14% and interest rate futures climbing 37%, indicating strong demand for risk management tools.

    03

    Fixed Income Data & Analytics Innovation

    The Fixed Income and Data Services segment achieved record revenues, with recurring revenue growing 7% and data network technology up 10%. ICE's proprietary data is a key differentiator, with AI being leveraged to process and validate approximately 40,000 documents per month in reference data, achieving over 95% accuracy. Machine learning also powers evaluated pricing and bid-ask spread determination, significantly improving evaluation quality against actual market trades.

    04

    Strategic Rationale for Polymarket Investment

    ICE invested in Polymarket to gain insights into blockchain-based 24/7 collateral management and rapid market listing, believing these innovations can make global clearing and trade settlement more efficient. The company aims to learn from Polymarket's architecture to evolve its own clearing system (ICE Risk Model 2) and potentially minimize collateral requirements for customers, which historically correlates with increased trading volumes. ICE sees Polymarket as a leader in non-sports prediction markets, offering valuable event-driven data for traditional finance.

    05

    AI's Impact on Mortgage Technology

    AI is transforming ICE's mortgage platforms from 'systems of record' to 'systems of intelligence,' streamlining the homeownership experience and enhancing productivity. MSP customers are already seeing 20-30% savings on loan servicing costs. AI is also dramatically accelerating internal projects, such as the MSP re-platforming, reducing the estimated completion time from seven years to approximately 3.5 years, with the remaining work targeted for completion within two years.

    06

    Internal AI Adoption and Efficiency Gains

    Internally, ICE is deploying AI across various functions, including engineers using copilots for code modernization, improving customer service efficiency through real-time issue diagnosis and summarization, and enhancing data gathering and organization for financial data offerings. AI tools are also making surveillance more efficient for pattern recognition. The company views AI as an assistant that makes colleagues better at their jobs, enabling them to do 'more with the same' headcount and accelerating speed to market.

    AI-generated summary of the company’s earnings call. Not investment advice.