Intercontinental Exchange, Inc. — 2024 Q1

Ken, it's Ben. Thanks for the question. And I'll take the first part of your question first, and then I'll hit the second part. In terms of natural gas, we believe that TTF is a long, long runway to go. And what really fundamentally changed is that natural gas has been liberalized. It's no longer wedded to just pipeline flows, and it can now move freely around the world in the form of LNG. And there have been massive investments in LNG terminals and regasification terminals around the world that have really changed and evolved gas into a global commodity, and TTF has emerged as the global way to hedge that risk.

Sure, Ben. Let me start on that transaction. I'm going to turn it to Ben to give you some color more on what's going on with the customer front. So yes, you're correct. I mean when we thought about guidance last quarter and we gave you that guidance, the high end of that range really was taking in what some of the forecasters were giving you in terms of what they thought the year was going to look like. And we wanted to build in towards the lower end of that range, a little bit more of a conservative outlook.

Ben, I'll follow up on the second part of your question there. We have 100% conviction on the ability for this business to grow over the long term. And we continued quarter-over-quarter to just give more and more evidence to the fact with just customer wins that are coming on board. So we feel great that even in this volume environment, that is an environment that hasn't been seen almost in a generation since 1991, that we're continuing to bring customers onto our platform into our ecosystem and continuing to gain in that area.

This is Lynn Martin. Thanks so much for the question. So we are incredibly excited at the opportunity to continue to build out the institutional connectivity across our Fixed Income & Data Services segment. Now part of the reason why we're so excited is because we have seen the adoption on the institutional side in our muni execution business, in particular, continued to grow with a CAGR over the last 2 years. And because of the way we have deliberately curated our data assets, we think there is still room to continue to grow given the success we've had with institutional adoption, particularly in our index business.

Yes. Thanks, Lynn. And Patrick, thanks for the question. What I've seen from being in the role since January 1, is this opportunity on the execution side for us to draw closer what we're seeing in the development of SMA or separate managed accounts to the institutional trading that's going on there. There's a deep desire across the street that get closer to those 2 pools of liquidity, and we're uniquely positioned to provide that opportunity. And as Lynn mentioned, bringing the data, so everyone is looking at exactly the same marks and valuations for those transaction values has been an important way for us to step up to the plate and provide that solution that is unique across the street and available to us and our clients.

Thanks, Dan. It's Ben. In terms of these large clients that we've signed, it does take time to implement them. These systems are core to their operations. There's a high amount of compliance that's managed through these applications. So it takes time to bed them down in highly regulated companies. So it is going to take time for those to flow through. But many of them, as they -- as we've been announcing a lot of these wins through last year, is going to start playing out towards the latter part of this year. And into next year, you'll start seeing contribution of those.

It's Chris. I -- what I would say, I've seen since taking on the role is two really things, one macro and one, I think, related to us. Certainly, there's a focus on the client base to find the most comprehensive solution set that's available, and they're looking for opportunities around there to tie that into single or very few vendors to provide that. And we also made a change in how we have service to clients since January. And so we moved to a different structure within the team itself, and I'm very proud of the team and the results they produced from that because they're much closer to the client these days.

And then just to follow that up, this is Lynn. On the macro side, we've seen a reengagement on the fixed income fund side of the business with the amount of fixed income funds having increased by about 7% versus the prior year, which again, makes us incredibly well positioned given the suite of assets that we have, both on the end of day pricing, the reference data, the years of history there, plus on the more modern tools that we have rolled out to the market, like CEP, where we see continued strong adoption and continued strong demand. And then obviously, the fixed income index business that I referenced earlier in my comments.

Craig, it's Warren. So I think Chris and Lynn just covered kind of what we were seeing on the customer front, and that's a big part of why you're seeing that pickup in ASV in the Fixed Income & Data and Analytics business. So -- and so we've seen pretty stable retention trends. We're seeing an improvement in the sales cycle. We're seeing, as I said in my prepared remarks, more of a reengagement from the customer base within the fixed income ecosystem around those products, whether it's the pricing and reference data business or the index business. And that's really a big reason of why we're seeing the improvement there.

It's Warren. So yes, we still expect that to be in the low single-digit range. Really, what happened this quarter, I mentioned a little bit in my prepared remarks with more on the New York Stock Exchange data side, where in the prior year we had -- the administrator takes kind of overbilled people and our allocation was a little bit higher, and so we had to reverse some of that in the first quarter. You'll see revenue in the second quarter pick back up as that kind of is no longer the case for us. And so I think you start to see a little bit better growth as we kind of move to the balance of the year within that segment because the underlying trends there are still the same as what we've been seeing in the last couple of quarters.

That sounds like three questions, Brian. I'll take 1 and 3, then Ben will take 2. So I think towards the higher end of that of the total -- of the range for total revenue, where we're talking about originations down more in the higher single-digit, mid- to high single-digit range versus 2023, which was also, by the way, the worst year for originations in probably about 30 years, I think you'd expect recurring revenues to be down a little bit year-over-year. I mean renewals will come in a little bit -- will be under a little bit of pressure, continue to be under a little bit of pressure. I would imagine decisions get pushed out a little bit, things of that nature.

And I'll pick up on some of the comments that I made earlier around sales. So we continue to have great sales success. We're really happy with the success that we're having with our clients and the fact that even this environment, and I use the analogy, when the tides are out, we're so pleased to see that clients right now are making investments at this point in time to be able to better position that when the tide comes in and when volumes start to return that they don't have to just throw bodies to the business in a very inefficient way that they can actually leverage technology and automation that we're providing to help them grow. So we're very pleased in what we're seeing there.

Thanks, Alex. It's Ben. And for us, we see it as a long-term growth trend for us, to answer the tail end of that question that you asked there because in our view, the trends within energy broadly as well as within oil specifically, are still that there's been underinvestment in legacy energy infrastructure. The markets are still electronifying. The market wants the efficiency that can be provided by the electronification. You have energy markets that are more global. Supply chains are continuing to evolve. Clients want more precision in their ability to manage risk at the point of production and consumption. And the world is moving more green. So you have that confluence of issues.

Well, thank you, Emily. Thanks all for joining us this morning, and I want to thank my colleagues again for a record first quarter and our customers for their continued business and trust. And we look forward to updating you again soon as we continue to try to innovate and build out this all-weather business model. Have a good day.