Intercontinental Exchange (NYSE:ICE) executives highlighted a mix of secular growth drivers, product expansion opportunities, and capital allocation priorities during a conference discussion hosted by UBS analyst Alex Kramm. ICE’s CFO, Warren (last name not provided in the transcript), emphasized the company’s diversified model across major asset classes and its balance of recurring and transaction-based revenue.
Business mix and financial profile
Warren described ICE as a “$10 billion revenue company” with “60% operating margins,” EBITDA “a little bit over $6.5 billion,” and free cash flow “about $4.2 billion” for 2025. He said the company operates “mission-critical businesses and technology and data services,” positioning ICE as “picks and shovels” for participants in global markets across equities, mortgages, interest rates, and commodities.
Energy derivatives: secular tailwinds and product depth
On ICE’s largest franchise, energy trading, Warren said strong volume trends have been supported by structural factors rather than purely cyclical volatility. He cited continued “globalization of energy as an asset class,” with LNG growth increasing the need for risk management tools. He pointed to ICE’s TTF contract as a key benchmark for gas pricing and said the company has multiple contracts linked to that benchmark, including the Japan Korea Marker and U.S. contracts. On oil, he highlighted Brent as a cornerstone contract with “hundreds of other contracts” linked to it.
He also suggested AI could indirectly boost energy demand, noting that artificial intelligence is becoming “more of a consumer of power and electricity,” potentially adding another “leg of growth” to energy markets. Warren said open interest was “up nicely” early in the year and characterized that as supportive for the near- to medium-term outlook.
Asked about geopolitical developments such as Venezuela, Warren said shifting supply chains can create long-tail demand for risk management products, similar to what occurred after Russia’s invasion of Ukraine altered Europe’s gas sourcing. He said ICE could develop new products if customers signal demand, emphasizing that ICE has historically built its “thousands of contracts across energy” by following customer pain points. He added that ICE has several Canadian crude contracts that are “somewhat similar to Venezuelan crude” in grade and quality, and that those contracts have seen some benefit as market participants manage current risks.
Rates, clearing, and tokenization initiatives
Beyond energy, Warren said ICE’s interest rate complex has seen meaningful growth in open interest, citing an increase of “almost 50% or so,” and highlighted strength in SOFR and SONIA activity (he corrected himself mid-sentence). He also noted that ICE recently received approval for U.S. Treasury clearing, leveraging existing clearing capabilities, particularly from its CDS clearing business. While he said Treasury clearing is unlikely to be a near-term revenue contributor because regulations come into effect later in the year or early next year, he described the Treasury market as “significant in size” and framed the initiative as an opportunity for 2027 and 2028.
On tokenization, Warren discussed plans tied to the New York Stock Exchange, saying ICE has seen customer interest in trading tokenized securities. ICE intends to start with tokenized ETFs and broaden over time. He emphasized that ICE aims to operate “under the current regulatory overlay” and will bring NYSE Pillar technology as the core stack alongside in-house blockchain capabilities. Warren described the initiative as having “pretty insignificant” incremental expense because infrastructure is already in place, though timing will depend on working through regulatory discussions “over the next couple of months.”
Data services growth drivers and new datasets
Warren said ICE’s Fixed Income Data and Analytics growth has been driven by end-of-day pricing demand, real-time pricing, and index growth, as well as broader trends including fixed income electronification and a shift toward passive fixed income. He also said ICE’s desktop and feeds businesses have been growing “high single digit to low double digits,” with the desktop business benefiting from energy-market customers.
A more recent driver has been ICE Global Network, the company’s data center and connectivity business. Warren said customers are increasingly demanding “bigger pipes,” reflecting higher data and messaging requirements. He noted that ICE has capacity at its Mahwah campus (acquired with NYSE) and plans to build “another building on that campus this year” to add capacity. He described the data center business as potentially lumpy due to capacity sell-outs followed by reload investment, but said outlook remains favorable. In a clarification later, Warren said ICE’s overall recurring revenue guidance was “mid-single digits towards the higher end” of that range, while the Data and Network Technology business within it is expected to be “high single” digits.
Warren also provided an update on ICE’s efforts to commercialize non-traditional datasets through partnerships such as Polymarket and Reddit. He said customers have expressed interest in ICE “bringing together” raw data and packaging it into products suitable for institutional workflows and distribution channels. For Reddit, he referenced sentiment and signals; for Polymarket, he cited real-time probabilities for events adjacent to financial and commodity markets, and said some customers already use Polymarket to inform risk management. ICE is working on a data deal intended to “institutionalize” the data so customers do not have to scrape it from a website. Warren said the effort is not expected to “move the needle this year” against ICE’s “$2 billion-plus recurring revenue” pricing and data services line, but could become more material over time.
Mortgage technology: improving trends, cross-sell, and headwinds
On mortgage technology, Warren said performance has improved from prior years, with the business closer to “mid-single digit” growth and “5% in the fourth quarter,” aided by a “mini boom in refi” late in the year. He characterized the broader mortgage market as still historically weak, saying last year was “probably the third worst year in the last 30,” following the prior two years as the worst.
He said ICE’s focus is expanding its network through customer wins and adoption of products such as Encompass, analyzers, and MSP, rather than forecasting near-term mortgage rates. Discussing bank adoption, Warren said Encompass historically skewed toward non-bank customers, while Black Knight’s MSP platform brought “a ton of banks,” enabling cross-sell into large, medium, and smaller banks. He noted implementations—especially for large institutions—can take “18 months” to “a couple of years.”
Warren said ICE has increased expected revenue synergies from the Black Knight transaction to “roughly speaking” $100 million, up from $55 million previously, and that “about a third or a little over a third” of that is already in the revenue run rate. He also cited a recurring revenue headwind of “probably two points” related to unique M&A activity in the mortgage space, while adding that prior headwinds from Encompass contract minimums are expected to lessen versus recent years.
Investments, AI positioning, and capital allocation
On expenses and investment priorities, Warren said ICE’s approach is “business as usual,” emphasizing continuous investment in new opportunities without needing to “catch up.” He cited AI as an increasing investment area, including mortgage-related AI tools and internal employee productivity initiatives. He also highlighted ongoing investment in data center build-outs to support the connectivity business, which he said is growing “in the double digits.”
In discussing AI-related disintermediation concerns, Warren argued that ICE’s fixed income data is “high-quality proprietary data,” supported by “50-something years of history across 3 million bonds” and algorithms designed for reliable pricing. He said AI models and LLMs will need that kind of data as inputs, framing AI as an opportunity rather than a threat. In mortgage, he described ICE’s systems as defensible given regulation and their role as core systems of record, and said ICE is building AI tools to drive workflow efficiency.
On capital allocation, Warren said ICE prioritizes investing in the business, then paying and growing the dividend—targeting “more in the double-digit range” of dividend growth on average over time—before considering M&A or buybacks. He reiterated that ICE evaluates M&A based on returns, synergies, and whether the combined business grows faster than it would on a standalone basis (“one plus one is three”). Absent M&A, he said ICE has been returning excess capital through buybacks and dividends, while noting the company is at “three times leverage” and may pay down some commercial paper, though he indicated “more of the balance will go toward buybacks at the moment, given where our stock is.”
About Intercontinental Exchange (NYSE:ICE)
Intercontinental Exchange (NYSE: ICE) is a global operator of exchanges, clearing houses and data services that provides infrastructure for the trading, clearing, settlement and information needs of financial and commodity markets. Founded in 2000 by Jeffrey C. Sprecher as an electronic energy trading platform, the company has grown through organic expansion and acquisitions to operate a broad portfolio of assets spanning listed equities, futures and options, fixed income, and over-the-counter derivatives.
