ICE Mortgage Technology reported better than expected second quarter results due to new customer growth and increased adoption of
"Mortgage technology revenues grew 17% year-over-year, second quarter transaction revenues increased by 8%, while recurring revenues were up 36%, and at $136 million exceeded the high end of our guidance," said Warren Gardiner, Intercontinental Exchange's chief financial officer
In the first quarter, recurring revenue was $125 million, while for the second quarter last year, it was $100 million on a pro forma basis.
On a GAAP basis, ICE Mortgage Technology's second quarter operating income was $95 million, compared with $106 million in the first quarter and $31 million in the second quarter of 2020.
However, the year-ago results omit much of the impact of the
Using an adjusted pro forma calculation, which treats the unit as if Intercontinental Exchange owned Ellie Mae, MERS and Simplifile since 2018, as well as including corporate expenses, ICE Mortgage Technology earned $189 million in the second quarter, down from $214 million in the first quarter but above $160 million one year prior.
"Shifting into the third quarter, we expect the recurring revenues will once again grow sequentially and be in the range of $137 million to $142 million, representing around 30% growth versus last year," Gardiner said.
Because of its operating subsidiaries, ICE Mortgage Technology has a touchpoint with nearly every industry participant, added Intercontinental Exchange President Benjamin Jackson.
"As these new customers come on to our network, we benefit from new subscription revenues, and have the opportunity to expand the customer relationship over time as they adopt additional solutions, just as we've seen in our other markets," Jackson said. "This flywheel effect... gives us confidence that we can grow a business that at $1.2 billion in revenue today is only a fraction of the $10 billion addressable market that is in the early days of an analog to digital conversion."
The bulk of ICE Mortgage Exchange's operating revenue comes in from single transactions that users have with the company. In the second quarter, transactional revenue totaled $204 million, down from $230 million in the first quarter. For the year ago period, using the pro forma calculation, $190 million of transactional revenue was generated by those businesses.
Recently Intercontinental Exchange rolled out ICE Locked Rate Feed, using daily mortgage rate information from the loan origination system, which is then fed into the mortgage-backed securities prepayment model created by its fixed income business.
"It represents the first time that we've coupled the valuable underlying content from ICE Mortgage Technology with our expertise in identifying and creating new data offerings," said Intercontinental Exchange Chairman and CEO Jeffrey Sprecher. "This enhancement [is one] of the many innovative solutions that we're able to bring to our customers as a result of the synergistic relationships that exist across our platform."
