Intercontinental Exchange Earnings: Strong Energy Futures Offset Weakness in Mortgage Technology

Wide-moat Intercontinental Exchange reported solid second-quarter earnings as strong trading revenue offset continued weakness in the mortgage technology business. Net revenue increased 4% from last year to $1.9 billion. Intercontinental's bottom-line results benefited from strong cost management and an unusually low tax expense, with net income rising 44% year over year to $799 million. While these were good results, they were driven by high futures trading volume in the firm’s exchange segment, and volume can vary significantly from quarter to quarter based on market conditions. As we incorporate these results, we do not plan to alter our $136 fair value estimate for Intercontinental Exchange.