Mar 29, 2016 - develop and maintain our trading and clearing systems, as well as many ..... The primary OTC products fac
INTERCONTINENTAL EXCHANGE 2015 ANNUAL REPORT
INTERCONTINENTAL EXCHANGE
2015 ANNUAL REPORT
DEAR FELLOW SHAREHOLDERS: I am pleased to report another year of record
revenues in 2005, to over 5,500 employees and
15 years, we have transformed our business
results at Intercontinental Exchange (NYSE:
revenues of $3.3 billion in 2015 - our drive to
model to stay close to our customers’ evolving
ICE). As the operator of exchanges around the
serve markets is only increasing.
needs not just for a trading and clearing platform
world, we are deeply engaged in supporting
to manage their risk, but also, and importantly,
markets and their role in capital raising, price
With that in mind, before turning to the many
for the data and information necessary to inform
discovery and risk management. This includes
exciting opportunities in front of us, I’d like
their risk management decisions. And, in that
global markets that enable companies to manage
to reflect briefly on what was the best year in
process, our revenue mix has transformed from
the risk of their commodities and financial
our very successful first decade as a public
90% transaction-based to a more balanced
exposures, as well as stewardship of the New
company. In 2015, we again delivered on our
mix, with transaction revenues now 56% of total
York Stock Exchange, where we help more
double-digit earnings growth target. This marked
revenues in 2015.
than 2,400 listed companies reach corporate
our 10th consecutive year of both record revenue
milestones as they grow. I want to take a moment
and adjusted earnings growth, which is an
Our continued expansion into data services is
to highlight an important milestone for our own
unmatched achievement in our sector. Adjusted
aligned with rising customer demand for more
company. November 2015 marked the 10-year
net income attributable to ICE from continuing
information, analytics and valuation services.
anniversary of our IPO on the NYSE. The access
operations 1 was $1.4 billion, up 23% over 2014,
As markets fragment, market participants
to U.S. capital markets provided by the NYSE
and driven by $3.3 billion in revenues, which
require data to aggregate and better understand
helped our small start-up company founded in
grew 8% year on year. In addition, our adjusted
market dynamics. This need reflects the rising
1
Atlanta, Georgia to rapidly grow and continuously
operating margin increased 4 points year-on-
importance of passive investing and a desire
innovate for our customers and generate strong
year to 59%.
to increasingly conduct risk management and
returns for our investors on a global scale.
capital allocation decisions on a real-time Importantly, virtually every area of the company
basis. These changing customer needs also
Our growth is a direct result of our strategic
contributed to our growth. We reported record
reflect increasing regulatory requirements.
approach to serving customers in new ways,
revenues for our global data services and for
Regulations now require market participants to
but it would not have been possible without
NYSE listings, as well as record commodities
provide independent valuations on positions and
becoming a public company. And while we have
revenues and strong cash equities revenue. The
portfolios, as well as increase trade reporting to
become a larger company over the last decade -
diverse sources of revenue growth reflect the
data repositories, such as ICE Trade Vault. The
growing from 200 employees and $156 million in
strategic evolution of our company. Over the last
need for increased data capacity, combined
NET REVENUE (2)
DILUTED EPS FROM CONTINUING OPS
OPERATING CASH FLOW
(IN MILLIONS)
2
$1,327
$1,363
$1,598
$3,092
$3,338
2011
2012
2013
2014
2015
Net revenue represents total revenues, less transaction-based expenses.
3
(IN MILLIONS)
$6.90
$7.52
$8.38
$9.63
$12.15
$713
$733
$714
$1,463
$1,311
2011
2012
2013 3
2014 3
2015 3
2011
2012
2013
2014
2015
These are non-GAAP figures. Please refer to page 63 of the 10-K for a reconciliation to the GAAP figures.
with the growing need for secure and reliable
this to enhance our valuation and analytical
product development occurs to help our
networks due to cybersecurity concerns, also
services to offer actionable information -
customers better manage their exposures.
increases the importance of data delivery
whether that is for forward pricing curves,
That is why we believe that clearing will
mechanisms - which is why we are broadening
independent valuations, or the creation of new
continue to be an area of growth for us in the
the capabilities of our Secure Financial
indices and benchmarks.
coming years.
Transaction Infrastructure (SFTI) network. • Market dynamics. Robust market
• Risk management. Risk is inherent in As we look to 2016 and beyond, there are a
our customers’ business - whether it’s a
infrastructure is trusted to operate through all
number of opportunities we see across our
commercial market participant hedging
financial and economic environments and is
business to continue to grow by serving our
price exposure, a trader seeking to eliminate
expected to continuously evolve in response to
customers in new ways:
counterparty risk, or a treasury manager
ever changing market dynamics. Over the past
seeking increased capital efficiencies. Our
several years, we have seen a global financial
customers must continuously manage their
crisis, the rise and fall of commodities prices,
transparency, information, analysis and
exposures and optimize their capital. In
the implementation of global financial reform
connectivity, all of which are used by market
2002, we launched the first cleared OTC
and an extended period of global quantitative
participants to transact across markets and
energy contract, in 2008, we launched the
easing.
instruments. And while Interactive Data,
first new clearing house in London in over
SuperDerivatives, ICE, and NYSE data
a century and in 2009, we launched the
As long as there is volatility in the underlying
are each strong businesses in their own
first CDS clearing house. Since then, we
markets we serve, whether due to economic
right, we believe they are more valuable to
have seen firsthand the needs that exist
factors like employment, GDP and inflation,
our customers on a combined basis. Our
across the clearing spectrum from post-trade
or geopolitical events that impact interest rate
customers’ needs are not limited to exchange-
processing to delivery and settlement. We
and commodity price levels, we will be there
traded data. The broader market for fixed
have also developed extensive governance
to help our customers manage their risks.
income and derivatives is vast and Interactive
and risk committee frameworks and default
An example of this is our global oil markets,
Data and SuperDerivatives are central to
management plans that provide market
where prices have declined since 2014. The
the changes taking place in these over-
participants and regulators with confidence
volatility of oil prices has been significant and
the-counter (OTC) markets. We are seeing
in the stability of each of our six regulated
the breadth of oil and oil related products
data and connectivity services increasingly
clearing houses. Not only are clearing
we provide resulted in record oil revenues,
linked to markets they serve, and as an
houses a key component of infrastructure
which increased 14% in 2015, and resulted in
exchange operator with significant amounts
for managing payments and risk, but they
ICE’s Brent crude contract achieving its 19th
of proprietary data, we will continue to use
are also a source of innovation, where new
consecutive annual volume record.
• Data services. Our data services provide
FUTURES & OPTIONS NET REVENUE
DATA SERVICES FEE REVENUE
(IN MILLIONS)
(IN MILLIONS)
$962
$993
$1,029
$1,341
$1,357
$134
$161
$246
$691
$871
2011
2012
2013
2014
2015
2011
2012
2013
2014
2015
“In 2015, we again delivered on our double-digit earnings growth target. This marked our 10th consecutive year of both record revenue and adjusted earnings growth, which is an unmatched achievement in our sector.”
“Over the last 15 years, we have transformed our business model to stay close to our customers’ evolving needs, not just for a trading and clearing platform to manage their risk, but also for the data necessary to inform their risk management decisions.”
JEFFREY C. SPRECHER CHAIRMAN & CEO INTERCONTINENTAL EXCHANGE CHAIRMAN, NEW YORK STOCK EXCHANGE
Our commitment to focus on addressing our customers’ needs is supported by numerous resources at our disposal: • 11 exchanges • 6 clearing houses • 9 asset classes • Global data services across virtually all asset classes • The premier capital raising venue • A dedicated, customer-focused team around the world
And while we are a much larger company, what I said 10 years ago in this letter still rings true today: “The successful implementation of our strategy in 2005 was made possible by a talented and dedicated team… Our management team is focused on achieving growth for our shareholders while maintaining the entrepreneurial culture and leading edge spirit that has driven our achievements to date.”
The ICE team wakes up every day committed to the future of our business which starts and ends with serving our customers. The evolution of data and risk management, blockchain, dynamic regulation, and the balance between balkanized markets and globalization is defining the needs of our customers, who are also creating new business models and processes. We at ICE always embrace change and look forward to delivering on our promise to grow by putting our customers first for the long-term benefit of our shareholders.
My best,
Jeff Chairman & CEO Intercontinental Exchange Chairman, New York Stock Exchange March 29, 2016
1
Adjusted figures represent non-GAAP measures. Please refer to page 63 in the company’s 2015 10-K filed on February 4, 2016 for reconciliations to the equivalent GAAP measures.
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