By Jaiveer Shekhawat and Laura Matthews
(Reuters) – Intercontinental Exchange reported third-quarter profit in line with expectations on Thursday, as strong trading volumes in the energy and options segments helped offset higher expenses for the New York Stock Exchange parent.
Conflict in the Middle East and diverging views of the interest rate trajectory have bumped up volatility in the global markets, prompting traders to actively adjust their portfolios to capitalize on fluctuating prices and avoid risks.
Exchanges typically benefit from market turmoil, which tends to boost overall trading volumes.
ICE’s energy trading volumes rose 23% in the third quarter, with gains across segments including oil, gasoil as well as other crude and refined products. Natural gas average daily volumes increased 33%.
“Our customers continue to rely on our mission-critical data and technology to manage their risk and capture workflow efficiencies amid a dynamic macroeconomic environment,” Chief Executive Jeffrey Sprecher said in a statement.
The company’s shares fell nearly 6% after it reported an adjusted profit of $1.55 per share, consistent with analyst expectations, according to estimates compiled by LSEG.
ICE’s weaker-than-expected performance in its mortgage technology segment “was notable” because ICE didn’t seem to benefit from a refinancing wave in September, Owen Lau, senior analyst at Oppenheimer & Co., said in a note.
Total revenue from the company’s exchange business, the biggest component of its revenue base, was $1.25 billion compared with $1.11 billion in the year-earlier period.
Financials revenue, which is housed within its exchanges segment and includes interest rates and other financial futures and options, jumped 26%.
The results come as the initial public offerings market nears a three-year slowdown, impacting exchanges that charge fees for stock listings.
Still, analysts expect a meaningful recovery next year, with a strong pipeline of startups waiting to go public as uncertainty around interest rates and the U.S. election eases, creating a tailwind for ICE and its closest rival, Nasdaq.
ICE’s listings business posted a 1% decline in quarterly revenue.
Total operating expenses rose to $1.25 billion in the quarter compared with $1.16 billion a year earlier.
Revenue jumped 17% to a quarterly record of $2.35 billion, meeting analyst views.
(Reporting by Jaiveer Singh Shekhawat in Bengaluru and Laura Matthews in New York; Editing by Shounak Dasgupta)
