Company Updates & Weekly Activity (July 31st-August 4th)

Company Updates, Weekly Activity, & Portfolio Update

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Company Updates

1. Intercontinental Exchange (ICE)

This is one of my favorite businesses, serving as a partial anchor to my portfolio and top dividend growth candidate. ICE had a record Q2, beating on almost every estimate despite a difficult and unpredictable economic environment. Before we jump into ICE, it’s important to emphasize that this business is broken into three primary segments. The following segments: Exchanges, Data Services & Fixed Income, & Mortgage Technology.

Here is a snapshot on their Q2 earnings results:

• 2Q23 net revenues of $1.9B, +4% YoY.

• 2Q23 GAAP diluted earnings per share (EPS) of $1.42, +43% YoY.

• 2Q23 adj. diluted earnings per share of $1.43, +8% YoY

• 2Q23 operating income of $955 million, +10% YoY; adj. operating income of $1.1B, +5% YoY.

• 2Q23 operating margin of 51%; adj. operating margin of 60%.

• Cash on hand $2.9B.

I want investors to understand that this is not a growth stock, this is almost like a stalwart. Their results and growth are slow, steady, and consistent. Overtime, these results have a compounding effect, which I’ll get to in a moment. However, these results were great, they actually delivered the best second quarter and the best first half in their company’s history.

Here’s what Jeff Sprecher, CEO of ICE, had to say:

"We are pleased to report our second quarter results, which were highlighted by another quarter of revenue and earnings per share growth. Amidst an uncertain macro environment, customers continue to access our networks to manage risk, consume data and drive workflow efficiencies. As we look to the second half of the year and beyond, we remain focused on driving innovation, helping to serve our customers' risk management needs and delivering value to our stockholders."

Here’s a visual of their record Q2 results… again, not stunningly impressive to what you’ll see over in the pure growth realm, but solid results nonetheless:

As seen above, small consistent increases. Management did make a couple updates on revenues, expenses, and basic financial guidance:

• FY2023 Mortgage Tech recurring: Low-single digits, Prior: Mid-to-high single digits

• FY2023 adj. expenses: $3.04 - $3.06B, Prior: $3.04 - $3.09B

• 3Q23 adj. expenses: $760 - $770M Expenses

• 3Q23 adj. non-op expense: $70 - $75M

• 3Q23 share count: 560 – 564M