Intercontinental Exchange Inc. · NYSE:ICE
Intercontinental Exchange — Merger or Acquisition (September 2023)
27 slides from Intercontinental Exchange's merger presentation, Sep 28, 2023
Slide 1: ICE + Black Knight Closing Call
ICE + Black Knight Closing Call September 28, 2023 1 | CONFIDENTIAL
Slide 2: Cautionary Statement Regarding Forward Looking Statements
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS This presentation may contain “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements regarding ICE’s business that are not historical facts are forward-look
Slide 3: Call Participants
Call Participants Jeff Sprecher Ben Jackson Warren Gardiner Katia Gonzalez Chair & CEO President Chief Financial Officer Manager, Investor Chair, ICE Mortgage Relations Technology 3 | CONFIDENTIAL
Slide 4: Over Two Decades of Innovation and Growth
Over Two Decades of Innovation and Growth Commodities, Equities, Fixed Income & Interest Rates Commodities Equities Fixed Income & Interest Rates Leveraging trading & With ICE’s fixed income clearing infrastructure, pricing & reference data ICE expands ICE acquires Black ICE adds to its energy ICE a
Slide 5: Intentional Risk Management Diversification & Further Move Into Interest Rates
Intentional Risk Management Diversification & Further Move Into Interest Rates Balanced Revenue Mix1 All-Weather Execution, Settlement & Hedging1 Equities 23% Corporate 21% Fixed Income & Interest Rates 52% Government 6% Commodities Consumer 25% 25% TTM 2Q23 Revenue $8.5 billion 56% Recurring Revenu
Slide 6: Strategic Vision: Strengthening the Overall Ecosystem for Consumer Credit
Strategic Vision: Strengthening the Overall Ecosystem for Consumer Credit Life of Loan Platform Expands & Benefits to the Improves Visibility & Accelerates TAM American Homebuyer Durability of Revenue ▪ Continued expansion of end-to- ▪ Expands ICE Mortgage ▪ Digitization and automation will ▪ Increa
Slide 7: A Life of Loan Platform Unlike Any Other
A Life of Loan Platform Unlike Any Other Lead Processing, Home Closing & Secondary & Servicing & Generation & Underwriting, & Search Post-Closing Loan Trading Defaults Application Pre-Closing Mortgage Workflow Loan Origination, Closing, Funding, Invoicing, Claims, Marketing Call Center, Services, Ve
Slide 8: Efficiencies Across the Workflow Underpin Expanded Opportunity
Efficiencies Across the Workflow Underpin Expanded Opportunity Adds Servicing TAM of ~$2Bn ~$14 billion Total Addressable Market • Highly complementary to origination TAM; highly recurring revenue stream Application, • Integration of servicing & origination systems will reduce costs across the Closi
Slide 9: Opportunities to Benefit the American Homebuyer
Opportunities to Benefit the American Homebuyer ▪ Digitization and automation will reduce friction and help lower costs to originate for all parties, ultimately making getting a loan more affordable and accessible for future borrowers ▪ Leveraging data across the mortgage workflow, lenders can help
Slide 10: Improves Visibility and Durability of Business Model
Improves Visibility and Durability of Business Model ▪ Increases mix of high-growth recurring revenue; IMT pro forma recurring revenue mix increases to ~80% ▪ Net revenue synergies of ~$125 million expected by year 5 largely through cross-selling ICE Mortgage Technology Examples of Near-Term Synergy
Slide 11: Opportunities Post-Black Knight Acquisition
Opportunities Post-Black Knight Acquisition Total Addressable Market September & 4Q’23 Contribution from Black Knight ▪ 3Q’23 net revenues: ~$85 - $90 million; 4Q’23 net revenues: ~$275 - $285 million ▪ 3Q’23 adj. expenses(2): $50 - $55 million; 4Q’23 adj. expenses(2): ~$160 - $170 million ▪ 3Q’23 a
Slide 12: Strong Financial Outlook for Combined Company
Strong Financial Outlook for Combined Company Balanced Pro Forma With Less Exposure to Revenue Mix1 Mortgage Transactions1 Mortgage Technology 25% Transaction 44% Exchanges Recurring 49% 56% Fixed Income & Data Services 26% IMT trans rev ~6% of Total ICE Revenue 12 |(1) Trailing twelve months (TTM)
Slide 13: ICE's History of Evolution and Growth
ICE’s History of Evolution and Growth $5.30 $5.06 $4.41 $3.77 $3.51 $2.93 $2.76 $2.42 $1.93 $1.68 $1.50 $1.38 $1.07 $0.83 $0.85 $0.68 $0.48 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 13 |(1) 2013-2022 are adjusted figures that represent non-GAAP measures. Pl
Slide 14: Appendix
Appendix 14 | CONFIDENTIAL
Slide 15: About ICE
About ICE 15 | CONFIDENTIAL 15 | CONFIDENTIAL
Slide 16: Overview
Overview ICE is a leading global provider of data services and technology solutions to a broad range of customers including financial institutions, corporations and government entities. By combining our world class technology with our data services and operating expertise, we add transparency and en
Slide 17: A Leading Global Provider of Data and Technology
A Leading Global Provider of Data and Technology We design, build and operate digital networks across asset classes Exchanges Fixed Income & Data Mortgage Technology Exchanges across the major asset Electronification of the fixed income Digitization of the U.S. residential classes, including energy.
Slide 18: Consistent Growth and Value Creation
Consistent Growth and Value Creation $s in millions Total Revenue Recurring Revenues 18% $7,292 CAGR 51% $4,638 $1,363 11% 2012 2017 2022 2012 2022 $s in millions (1) Adj. Free Cash Flow Adj. EPS(1) 16% $5.30 $2,906 13% CAGR CAGR $1,731 $2.93 $1.50 $665 2012 2017 2022 2012 2017 2022 18 |(1) 2017 and
Slide 19: Strong Capital Return
Strong Capital Return Ellie Mae acquired in Capital Return Philosophy $2,081 2020 $1,916 Agreed to $1,753 acquire Black Dividend Growth Knight $1,425 $1,485 ▪ Grow the dividend as the company grows $1,460 $1,247 ▪ Double-digit increase on avg. since 2013; 2Q23 $1,198 $632 dividend +11% y/y $991 $997
Slide 20: Proven Track Record of Deleveraging Following Acquisitions
Proven Track Record of Deleveraging Following Acquisitions • History of realizing synergies on or ahead of schedule • Demonstrated ability to efficiently and effectively integrate acquisitions while growing core business • Proven record of driving further growth and generating premium value for all
Slide 21: ICE Mortgage Technology Overview
ICE Mortgage Technology Overview 21 | CONFIDENTIAL 21 | CONFIDENTIAL
Slide 22: Overview of IMT Products and Revenue Model
Overview of IMT Products and Revenue Model Product Description Revenue Model ▪ All-in-one SaaS-based mortgage management system providing workflow management and vendor connectivity Encompass Origination ▪ ▪ ▪ Primarily “success-based pricing” equal to: System Processing Product Eligibility and Pric
Slide 23: Overview of Black Knight Products and Revenue Model
Overview of Black Knight Products and Revenue Model Product Description Revenue Model Core Servicing ▪ Servicing Software provides core solutions that automate loan servicing • Software Largely subscription-based revenues based on number of loans serviced ▪ Loan Setup ▪ Accounting • The greater of a
Slide 24: Non-GAAP Reconciliations
Non-GAAP Reconciliations 24 | CONFIDENTIAL 24 | CONFIDENTIAL
Slide 25: Adjusted Net Income & EPS
Adjusted Net Income & EPS Twelve Months Ended Twelve Months Ended in millions except per share amounts December 31, 2022 December 31, 2021 Net income attributable to ICE $ 1,446 $ 4,058 Add: Amortization of acquisition-related intangibles 610 622 Add: Transaction and integration costs and acquisitio
Slide 26: Adjusted Net Income & EPS
Adjusted Net Income & EPS Twelve Months Twelve Months Twelve Months Twelve Months in millions except per share amounts Ended 12/31/20 Ended 12/31/19 Ended 12/31/18 Ended 12/31/17 Net income attributable to ICE $2,089 $1,933 $1,988 $2,526 Add: Amortization of acquisition-related intangibles 388 309 2
Slide 27: Adjusted Free Cash Flow
Adjusted Free Cash Flow Twelve Months Twelve Months Twelve Months Twelve Months Twelve Months Twelve Months in millions Ended 12/31/2022 Ended 12/31/2021 Ended 12/31/2020 Ended 12/31/2019 Ended 12/31/2018 Ended 12/31/2017 Cash flow from operations $3,554 $3,123 $2,881 $2,659 $2,533 $2,085 Less: Capi
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