Intercontinental Exchange Inc.

Good day and welcome to the ICE first quarter 2022 earnings conference call and webcast. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Mary Caroline O'Neill, head of investor relations. Please go ahead.

Good morning. ICE's first quarter 2022 earnings release and presentation can be found in the investor section of theice.com. These items will be archived and our call will be available for replay. Today's call may contain forward-looking statements. These statements, which we undertake no obligation to update, represent our current judgment and are subject to risks, assumptions, and uncertainties. For a description of the risks that could cause our results to differ materially from those described in forward-looking statements, please refer to our 2021 Form 10-K and other filings with the SEC. In addition, the press release announcing the ICE and Black Knight transaction includes important disclosures that apply to this call. Please also note that this call does not constitute an offer to sell or buy or the solicitation of any offer to buy or sell any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities law of any such jurisdiction. No offerings of securities shall be made except by means of prospectus, meeting the requirements of Section 10 of the Securities Act of 1933. In connection with the proposed transaction, ICE will file with the SEC a registration statement on Form S-4 to register the shares of ICE common stock to be issued in connection with the transaction. The registration statement will include a proxy statement of Black Knight that also constitutes a prospectus of ICE. The definitive proxy statement prospectus will be sent to the stockholders of Black Knight seeking their approval of the transaction and other related matters. Before making any voting or investment decisions, investors and security holders of ICE and Black Knight are urged to carefully read the entire registration statement and proxy statement prospectus when they become available. as well as any amendments or supplements to these documents, because they will contain important information about the proposed transaction. In our earnings supplement, we refer to certain non-GAAP measures. We believe our non-GAAP measures are more reflective of our cash operations and our core business performance. You'll find a reconciliation to the equivalent GAAP term in the earnings materials. When used on this call, net revenue refers to revenue net of transaction-based expenses, and adjusted earnings refers to adjusted diluted earnings per share. Throughout this presentation, unless otherwise indicated, references to revenue growth are on a constant currency basis. Please see the explanatory notes on the second page of the earnings supplement for additional details regarding the definition of certain items. With us on the call today are Jeff Sprecher, Chair and CEO, Warren Gardner, Chief Financial Officer, Ben Jackson, President, and Joe Tyrell, President of ICE Mortgage Technology. I'll now turn the call over to Warren.

Thanks, MC. Good morning, everyone, and thank you for joining us today. I'll begin on slide four of the earnings supplement with some quick highlights from our first quarter results, and then I'll turn it over to Jeff to discuss the exciting transaction we announced yesterday afternoon. First quarter adjusted earnings per share totaled $1.43, up 7% year over year, marking the best quarter in our company's history. Net revenues totaled a record $1.9 billion, an increase 6% versus last year. Total transaction revenues grew 4%, while total recurring revenues which accounted for nearly half of our business, increased by 9%. Importantly, this is on top of 10% growth in the first quarter of 2021. First quarter adjusted operating expenses totaled $746 million, in the middle of our guidance range. Had it not been for a few million dollars of severance, adjusted operating expenses would have been towards the low end of the range. Looking to the second quarter, we expect adjusted operating expenses to be in the range of $740 to $750 million. First quarter adjusted operating income increased by 9% to a record $1.2 billion, while free cash flow totaled $660 million, which we largely deployed in the form of share repurchases of $475 million. Now let's move to slide 5, where I'll provide a quick overview of the performance of each of our segments. First quarter exchange net revenues totaled $1.1 billion, an increase of 12% year-over-year. This strong performance was driven by a 36% increase in our interest rate futures and a 16% increase in our energy revenues. Revenues within our global natural gas and environmental products, which represent approximately 40% of energy revenues, increased by 30% in the quarter. Recurring revenues, which include our exchange data services and our NYSE listings business, increased by 7% year-over-year, including 13% growth in listings. Turning now to slide six, In our fixed income and data services segment, first quarter revenues totaled a record $509 million, a 9% increase versus a year ago. Transaction revenues increased by 28%, including 9% revenue growth in ICE bonds and 33% growth in our CDS business, driven by rising interest rates and macroeconomic uncertainty. Recurring revenue growth, which accounted for nearly 85% of segment revenues, grew by 6% in the quarter. Once again, driven by double-digit growth in our index and consolidated fees businesses and strong performance from our ICE global network and other data services businesses. And importantly, annual subscription value, or ASV, enters the second quarter up over 6% year-over-year. Shifting to mortgage technology on slide seven. First quarter revenues total $307 million. While total mortgage technology revenues declined year-over-year in the first quarter, who once again outperformed an industry that experienced a 40% decline in origination volumes, including an 80% decline in term refi volume. Recurring revenues, which accounted for over half of segment revenues, totaled $156 million and grew 24% year over year. As the mortgage origination backdrop continues to normalize, customers are in search of both automation and greater efficiency, a trend that contributed to one of the strongest sales quarters for our data and analytics product suite, including the implementation of our analyzers by JPMorgan Chase. In addition, based on the strong performance through the first quarter of 2022 and the visibility we have into the current sales pipeline, we believe recurring revenue growth in our mortgage business is trending towards the high end of our low to mid-teens guidance range. In summary, while rapid rise in interest rates may have weighed on mortgage transaction volumes during the quarter, That same macroeconomic factor also provided a tailwind to our interest rate, commodity, and fixed income businesses. And once again, alongside strong growth across our recurring revenue base, helped us deliver another record quarter for revenues, adjusted operating income, and adjusted earnings per share, a testament to the all-weather nature of our business model. With that, I'll hand it over to Jeff. Thank you, Warren.