The operator introduces the ICE First Quarter 2024 Earnings Conference Call and hands it over to Katia Gonzalez, Manager of ICE's Investor Relations. She mentions that the call may contain forward-looking statements and refers to the company's non-GAAP measures. The participants on the call are also introduced. Warren Gardiner, Chief Financial Officer, thanks everyone for joining and begins the presentation.

The speaker discusses the company's strong first quarter results, including record net revenues of $2.3 billion and adjusted operating income of $1.4 billion. They also mention a reduction in debt and a decrease in interest expenses. They then move on to discuss the performance of their Exchange segments, which saw record net revenues of $1.2 billion, driven by increases in transaction and energy revenues.

In the first quarter, the company saw a strong performance with a 28% increase in the oil complex, 42% growth in global natural gas revenues, and 26% growth in the environmental business. Open interest also increased by 23% year-over-year. Recurring revenues, which include exchange data services and listings business, totaled $357 million. The IPO market has shown improvement, with the NYSE capturing 70% of total proceeds raised and welcoming six of the top seven IPOs year-to-date. In the Fixed Income and Data Services segment, first quarter revenues reached a record $568 million, with transaction revenues driven by growth in corporate bond trading. Record recurring revenues of $449 million grew by 4% year-over-year, driven by improvements in the PRD business and double-digit growth in the index business.

In the first quarter, fixed income data and analytics ASV improved to 4% due to increased customer engagement and investment. Other data and network services also grew 4%, driven by Feeds business and oil and gas desktop solutions. Demand for connectivity solutions remained strong and is expected to continue in the second quarter. In the Mortgage Technologies segment, recurring revenues were impacted by industry consolidation and pressure on renewals, but customers are staying on the platform and there is potential for increased contract value in the future.

In the first quarter, transaction revenues were $109 million, with a slight increase in closed loans, but lower professional services fees and default management revenues. However, expense synergies and stable top-line have led to an 8% increase in segment operating income. Due to a shift in interest rate expectations, the mortgage technology business expects flat to low single-digit revenue growth for the year, but continues to invest in product development and expansion. Overall, the company had a strong start to the year with growth in revenue, operating income, free cash flow, and adjusted earnings per share. They are focused on meeting customer needs and positioning for future growth.

The company's customers rely on their technology and transparent markets to navigate uncertainty and manage risk. In the first quarter, the company saw record volumes and revenues in their Global Futures and Options business, with a significant increase in energy revenues. This is due to the company's investments in a global energy platform, which allows for diversified trading and risk management solutions. The company's oil markets also continue to see growth, with record volumes and open interest in other crude and refined products.

ICE has been building its global energy platform for over 20 years, creating hundreds of precise hedging instruments in collaboration with customers. In March 2021, ICE launched IFAD, which allowed market participants to contribute to the price formation of the Murban Futures contract. This contract reached new highs in the first quarter, along with record volumes for Platts Dubai contract and Midland WTI contract. These innovations drove record oil revenues. ICE's investments in the globalization of gas and the rise of LNG have established them as a leader in European gas trading and their benchmarks drive global price formation.

The number of market participants and revenues in the natural gas market grew significantly in the first quarter, driven by strong performance and open interest trends. The company's acquisition of the Climate Exchange has allowed them to operate the world's largest environmental markets, with record participation and increased average daily volume. The combination of the company's global energy platform and leading environmental portfolio positions them to help customers navigate the transition to reduced greenhouse gas emissions. The company's continuous investments and customer-driven approach have led to record performance and effective product innovation.

ICE's data business is uniquely positioned to leverage its distribution and infrastructure to create new content and expand its offerings. Its position as a leading provider of price and reference data has contributed to double-digit growth in its index business, driven by the increase in passive ETF assets benchmarked to its indices. ICE also offers proprietary data services and expertise in gathering and analyzing unstructured data, which it is now leveraging in its mortgage data initiatives. This includes integrating property and loan level mortgage datasets with climate risk metrics to improve transparency and risk management in the housing finance and property insurance sector.

The company is using insights to improve climate risk modeling for existing municipal bond and mortgage backed securities products. They are also leveraging technology and data to create innovative solutions for their mortgage business, resulting in 20 new Encompass clients in the first quarter. They have also closed deals with Citizens Bank, Webster Bank, and Lennar, showcasing the value of their complete front to back offering. This approach has been validated by their growing customer relationships.

Our company's clients are looking for a solution provider that can support digital workflows for the entire homeownership process. We are committed to investing in our network and improving our Encompass and MSP platforms to better serve our customers' needs. Our recent developments, such as the new web user experience and the MSP Digital Experience, demonstrate our focus on streamlining processes and increasing efficiencies. Additionally, we have integrated Encompass with MSP and expanded our service provider options for tax, flood, and closing fees. We are optimistic about our future growth opportunities.

Jeffrey Sprecher, CEO of ICE, discussed the company's investments in artificial intelligence (AI) and how it is being incorporated into their business. ICE has an internal R&D group focused on testing novel use cases and implementing appropriate governance for AI. They have also invested in AI for their Mortgage Data & Document Automation product, commodity chat platform, and regulatory compliance activities. The market's focus on AI is fueling growth for ICE, which was originally a company that relied on human intermediaries for trading.

ICE's thesis of using digital networks to connect people and broaden access to risk management has led to the creation and management of 14 global data centers and the ICE Cloud. This strategy has resulted in increasing demand for ICE data center and ICE Cloud access, with customers requesting to incorporate their AI models within the network. This interest in AI is expected to drive multi-year revenue growth in the data and connectivity business. Additionally, ICE's listed emissions offset and renewable energy markets are gaining attention from power companies and data center developers, further contributing to revenue growth.

ICE Benchmark Administration, a subsidiary of ICE, manages a carbon market data service that has seen a surge in interest from companies. The United Nations' Science Based Target Initiative and the European Commission's plans to increase emissions reductions create a positive outlook for revenue growth in ICE's environmental and renewable markets. In the first quarter, ICE saw growth in revenues, operating income, and earnings per share, which is attributed to their mission critical data, market technology, and strategic business model. ICE has deliberately grown through acquisitions and entrepreneurship, targeting interrelated markets to help customers manage risk from both natural and human factors.

The speaker discusses the company's strategy of targeting a mix of businesses to find growth in different conditions, and how they have positioned themselves to provide customer solutions for all weather results. They thank their customers and colleagues for their contributions to their record quarter. The first question from the Q&A session is about the globalization of gas and the surge in TTF volume growth. The speaker believes that TTF has a long runway for growth and attributes this to the liberalization of natural gas. The second question is about the potential impact of the Biden administration's pause on LNG export licenses, and the speaker believes there is still a strong potential for growth in TTF despite this potential obstacle.

The emergence of LNG has made gas a global commodity and TTF has become the benchmark for hedging risks. While European gas markets have recovered, geopolitical risks continue to affect supply chains. The recent pause on new permits for U.S. LNG exporters is seen as a speed bump, with the impact being felt in the long term due to the time it takes for permits to come online. Open interest and volumes for TTF have seen significant increases.

The speaker discusses the impact of changes in the natural gas market, specifically the liberalization of LNG and the importance of managing risk through TTF. The next question from a Barclays representative asks about the revised guidance for the IMT business, and the speaker explains that it is impacted by changes in the NBA forecast and interest rates. They also mention that negotiations for recurring revenue are tougher, but churn is low.

The company has revised its guidance for the quarter due to the recent decrease in interest rates and mortgage bonds. They are taking a more conservative approach and are uncertain about the future trajectory. However, they are confident in the long-term growth of the business and have continued to gain new customers. Renewal rates are high and customers are renewing at higher subscription levels.

The company is seeing some customers renew with lower minimums and subscriptions, resulting in higher per close loan fees. However, they are still focused on increasing total contract value through new innovations. Sales success has been strong, but there is uncertainty about potential lengthening of sales cycles due to changing rate expectations. The company is closely monitoring the market and customers are investing in critical infrastructure during this time. The questioner asks for an update on the company's efforts to build out institutional connectivity in the fixed income and data services business and the company's strategy for the institutional opportunity.

The company is excited about the potential for growth in their institutional connectivity in the fixed income and data services segment. They have seen significant adoption on the institutional side in their muni-execution business and believe there is still room for growth. The index business has also seen record AUM and the company is focusing on bringing together SMA and institutional trading. The company has had success in signing up large financial institutions for their mortgage services.

Benjamin Jackson, speaking on behalf of the company, explains that it takes time for larger clients to fully implement their systems and contribute to revenue. The servicing side of the business has seen some declines due to industry consolidation and a temporary acceleration of MSR sales from a large depository. However, overall, the company has a record number of clients on their MSP platform and continues to acquire new clients.

In the paragraph, the speaker discusses the progress made in modernizing the technology stack for the servicing side of the business. They mention a new natural language processing platform, the integration of Simplifile and encompass, and how these improvements have led to client wins. They also touch on the fixed income business, noting investments by clients and efforts to improve the sales and retention process under new leadership.

The company is focused on finding comprehensive solutions for their clients and has made changes to better service them. This has resulted in a shortened sales cycle and increased discussions about future strategic plans. The fixed income business has seen increased demand and adoption, particularly in the areas of end-of-day pricing, reference data, and CEP. There has also been growth in the fixed income index business. The company expects this acceleration in annualized subscription value to lead to future revenue growth.

The company has seen a pickup in ASV in the fixed income and data and analytics business, resulting in stable retention trends and an improvement in the sales cycle. This is due to a reengagement from customers within the fixed income ecosystem, driven by a stabilization in interest rates and the attractiveness of fixed income as an asset class. The Exchange segment's recurring revenues were flat, with only 1% growth from data and connectivity. The company expects low single-digit growth in recurring fees for the full year, which may be dependent on the IPO environment opening up further or an acceleration in data and connectivity in the second half of the year.

The company expects low single-digit growth in the mortgage segment, with a pick-up in revenue in the second quarter due to a decrease in administrative fees. The underlying trends in the segment are positive, with momentum in listings and strong performance in exchange data. The company is also seeing progress in new business wins, despite headwinds from Black Knight servicing. The company anticipates recurring revenue to increase throughout the year.

Warren Gardiner and Ben will provide updates on the revenue synergy goal and the company's performance. They expect originations to be down in the higher single-digit range compared to last year, due to uncertainty in the market. However, other areas of the business, such as bonds, CDS, and futures, are performing well and helping to offset the decline in mortgage originations. The company is also making progress on revenue synergies.

The company has made progress in increasing their revenue and will provide updates on this in the future. They are also seeing success in sales and are using the current environment as an opportunity to help clients and improve their own business strategies. This includes restructuring agreements and implementing new platforms to better serve clients and continue growth in the future.

Benjamin Jackson, CEO of Openlink, discusses the growth of the energy markets, specifically in oil, which has seen a 20% increase in open interest year-over-year. He attributes this growth to a long-term trend of underinvestment in legacy energy infrastructure, the electronification of markets, and the global nature of energy supply chains. Clients are seeking more precision in managing risk at production and consumption points, as the world moves towards more sustainable energy sources.

The company has successfully managed its energy portfolio by offering liquid products in its gas, oil, and environmental businesses. This has led to a strong relationship between these businesses and has positioned the company well for growth. The company has introduced innovative products, such as Murban and RINs contracts, which have contributed to its success. The CEO emphasizes the importance of looking at the company's energy business as a whole.

The speaker thanks their colleagues and customers for a successful first quarter and expresses excitement for future updates and innovations. The operator then concludes the call.

This summary was generated with AI and may contain some inaccuracies.