Earnings Call: Q4 2020

Feb 4, 2021

Good morning. My name is Kate, and I will be your conference operator today. At this time, I would like to After the speakers' remarks, there will be a question and answer session. Please note this event is being recorded. Welcome Mr. Gardner, you may begin your conference. Good morning. ICE's Q4 2020 earnings release and presentation can be found in the Investors section of watch the replay of the call today. These items will be archived and our call will be available for replay. Today's call may contain forward looking statements. Welcome you to the operator for today's conference call. Please note that 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 2020 Form 10 ks welcome and other filings with the SEC. In our earnings supplement, we refer to certain non GAAP measures, including pro form a revenues, adjusted income, EPS, welcome our operating income, operating margin, expenses, effective tax rate and debt to adjusted EBITDA. We believe our non GAAP measures welcome our cash operations and core business performance. To find a reconciliation to the equivalent GAAP term in the earnings materials and an explanation of why we deem this welcome you to the call to questions. Thank you, and good morning everyone. I will now turn the call over to our operator for questions. Thank you, welcome you to our Investor Relations website. Please note that our website is not available at all. Please note that our website is not available at all. Please note that our website is walk you through the call today. Please see the explanatory notes on the second page of the earnings supplement for additional details regarding the definition of certain terms. Welcome everyone. With us on the call today are Jeff Frecker, Chairman and CEO Scott Hill, Chief Financial Officer and Ben Jackson, our President. Now turn the call over to Scott. Thanks, Warren. Good morning, everyone, and thank you for joining us today. I'll begin on Slide 4 walk you through some key highlights from 2020 and a summary of our strong Q4 results. Earnings per share of $4.51 We're up 16% year over year on record revenues of over $6,000,000,000 Free cash flow totaled a record $2,400,000,000 And we returned nearly $2,000,000,000 to shareholders through buybacks and dividends. We also used some of that cash walk you through the call today and our strong credit profile to make the important strategic acquisition of Ellie Mae in September, an acquisition that was nearly 3% accretive to our full year welcome you to our Q4 results were an exclamation point on a great year. Earnings per share totaled $1.13 up 19% year over year. Net revenues totaled approximately $1,700,000,000 walk you through a 14% increase on a pro form a basis. While we've now transitioned to new segment reporting, I'll mention that 4th quarter data services revenues totaled walk to $595,000,000 which was at the high end of our guidance range and up 6% year over year. For the full year, walk you through the call. Despite the challenges brought on by the pandemic, our data sales teams focus on serving our customers, deliver data services revenues that grew 5% over the prior year We were above the high end of our guidance, largely driven by lower levels of capitalized labor as our technology team, who delivered near flawless execution, while largely working from home for most of 2020, took some well deserved vacation to recharge from an extraordinary year. Now let's move to Slide 5, where I'll provide an overview of the performance of our Exchange segment. 4th quarter revenues totaled $871,000,000 up 6% year over year. Transaction revenues increased 7%, Our energy open interest, which we believe is the best indicator of long term growth, was up 4% versus a year ago, including 11% growth in our global natural gas walk you through the Q1 of 2019. Recurring revenues, which include our exchange data and listing services, increased 3% year over year. These results were driven by the NYSE share of strong year over year growth in industry SIP revenues. Looking to the Q1, we expect recurring revenues in the Exchange segment to be between $310,000,000 $315,000,000 welcome everyone to the call. The segment grew 3% year over year. While transaction revenues declined 16%, recurring revenues, which account for nearly 90% of total segment revenues, welcome the Q1 driven by continued growth in customer demand for both ICE Global Network and consolidated feeds. Looking to 2021, we expect recurring revenues in this segment to grow 5% to 6% on a constant currency basis for the full year, including $395,000,000 to $400,000,000 in the Q1. These expectations are supported by ASV growth of 5.7 percent walk you through the call. Please flip to Slide 7, where I'll discuss the results in our Mortgage Technology segment. Please note that my comments on revenue growth are on a pro form a basis. Mortgage Technology revenues grew 65% year over year in the 4th quarter and fifty 6 walk you through the Q1 of 2019. Conditions, accelerating millennial homeownership trends and demand for digital workflow tools such as our network, closing solutions and analytics, All contributed to our strong results. Recurring revenues increased 29% versus the prior year as increased utilization and new customer adoption Both our origination technology and analytics continue to expand our subscription base. We expect recurring revenues in the Q1 walk you through the call to range between $122,000,000 $127,000,000 representing around 30% growth versus last year on a pro form a basis. I'll conclude my remarks on Slide 8 with some additional guidance. We expect 2021 adjusted operating expenses walk you through the call to be in the range of $2,830,000,000 to $2,880,000,000 We expect the spin out of Bakkt welcome to the Q1 of 2019 to reduce expenses versus last year by $50,000,000 And as I mentioned on the last earnings call, we expect roughly watch the replay of our company's earnings release. We will now begin the Q4 of 2019. We will now begin the Q4 of 2019. We will now begin the Q4 of 2019. We will now begin the Q4 of 2019. We will now begin the Q4 of 2019. We will now begin the Q4 of 2019. We will now begin the Q4 of fiscal 2020. Welcome everyone to support the significant growth in customers and volumes that we've seen over the past few years and which we expect to continue. With those items roughly netting out, our year over year expense growth will be largely consistent with prior years, including investments in our people and tied to revenue growth. We expect compensation expense across ICE to increase by $40,000,000 to $50,000,000 Expenses tied to revenue growth watch positive impact to revenues. For the Q1, we expect adjusted operating expenses to be in the range of $720,000,000 to $730,000,000 walk you through the call, including roughly $23,000,000 related to VAC. In summary, we delivered a very strong finish to another record year. At the same time, we invested in our business to meet the needs of our customers, while also expanding our mortgage technology network through the acquisition of Ellie Mae. Welcome you. As a result, we've set the stage for continued top and bottom line growth and enhanced shareholder returns into 2021 and beyond. I'll be happy to take your questions during Q and A, but for now, I'll hand it to Ben to discuss some additional business highlights and key growth initiatives. Thank you, Scott, and good morning to everyone on the call. Please turn to Slide 9, where I'll begin with some of the highlights and key initiatives walk you through the call today. While inflation, economic growth and geopolitics will always influence welcome to the Q1 of 2019. We are focusing on investing in the structural growth opportunities that exist across global energy markets. Welcome investments that have been critical to the 7% average annual revenue growth we have generated across our energy and environmental network over the last 5 years. In our oil markets, we soon plan to launch ICE Futures Abu Dhabi or IFAD. This is a launch in partnership with the Abu Dhabi National Oil Company or ADNOC and 9 of the world's largest energy trading firms. Welcome you to the Q1 of 2019. And by leveraging the existing breadth of our energy network, We will launch an array of related differentials, cracks and inter commodity spreads against our Brent, WTI, welcome Gas Oil and naphtha benchmarks. In our natural gas markets, the demand centers of Europe and Asia are increasingly at the welcome everyone to the floor. We began investing in the globalization of gas markets over a decade ago Today, exchange traded volume is approaching 50%, with open interest walk in TTF growing at an average annual rate of nearly 40% since 2015. This growing network also plays an important role in the growth of our global environmental markets, where the number of market participants has walk you through the call over to our operator. As customers increasingly seek solutions walk you through the call to help navigate the long tail and the complex evolution of global energy markets. Turning to Slide 10, ICE Mortgage Technology is at the center of an analog to digital conversion as customers demand greater workflow automation. In addition, an acceleration of millennial home buying and attractive refinancing conditions continue to provide a tailwind to our robust results. Pro form a mortgage technology revenues welcome to the $10,000,000,000 addressable market. Our approach has been and will be similar to the blueprint we apply across our other networks. Welcome the call to the operator to discuss the value proposition of our network. As a recent example, during the Q4, we launched our credit analyzer, a product that leverages our artificial intelligence engine or AIQ to reduce the time it takes to perform a credit review walk you through the call today. In 2021, we plan to begin rolling out new eclose solutions, welcome an initiative that we believe has a $1,000,000,000 addressable market. And we continue to see strong customer walk you through the call today. We will now take across our network and our data and analytics offerings as we execute our strategy of relieving the pain points and inefficiencies welcome everyone to the next question and answer session. Our decades long position as a leading provider of price information and reference data has served as the foundation for what is today the 2nd largest provider welcome our fixed income indices globally. While critical, our price information and our indices welcome a network we designed to reduce the workflow inefficiencies that exist within the ETF create redeem process. Late last year, we integrated ICE Chat, a platform that we acquired in 2008 and have since grown to over 100,000 users. We also linked ETF Hub to our ICE fixed income select platform, providing access to our fixed income data and analytics as well as seamless connectivity to our trading venues. As a leading provider of these proprietary data services, We have also developed an expertise in the gathering and cleansing of unstructured data, essentially welcome our team to the team to share our financial results. We are pleased to announce that our team has a strong foundation for developing actionable insights and identifying opportunities, welcome the number of key strategic initiatives we are leveraging through new product development such as our suite of ESG data services and some early mortgage data initiatives, welcome you to our announcement to apply our data services expertise to ADP's unstructured workforce data to help bring additional insights walk into the municipal bond markets. As we move into 2021, we are excited about the many opportunities for growth that lie ahead, welcome the opportunity that we're able to capture because of the investments we've made in the past and the strategic investments we will continue to make across our networks walk you through the future. With that, I'll turn the call over to Jeff. Thank you, Ben, and thank you all for joining us this morning. Please turn to Slide 12. Over 2 years ago and in collaboration with Starbucks and Microsoft among others, We ceded a venture within ICE called Bakkt. Our vision was to leverage our collective core competencies welcome to build a regulated ecosystem that would support the full lifecycle of a digital asset. And through efficiency gains and greater transparency, Since launching Bakkt in 2018, we've applied our blueprint. We've invested in organic product development by building a consumer wallet and launching In January, Bakkt announced that it will merge with a SPAC managed by Victory Park Capital. 65 percent economic interest. Our decision to merge Bakkt was 3 fold. 1st, The combination will provide significant incremental capital, enabling Bakkt to maximize its future growth potential. 2nd, by listing as a public company on the New York Stock Exchange, Bakkt will benefit from elevated consumer brand recognition. And third, We believe this transaction will unlock value for ICE shareholders, value that we believe was not fully recognized within the ICE share price. And as you've often heard us say, I believe one of the most important parts of my job and the job of the management team here at ICE is to leverage our infrastructure and our expertise to create value for our shareholders. In that vein and shifting to what was another successful year, 2020 marked our 15th consecutive year of record adjusted earnings per share. A track record of growth that began with our initial public offering on the New York Stock Exchange in 2,005 and is compounded delivering this growth and building shareholder value has been consistent since our inception. Through the application of our world class technology, leading operating expertise that add transparency and that drives powerful network effects across the asset classes that we operate. And As we've expanded into new asset classes, we've grown our addressable market, broadened our expertise and further solidified a foundation for growth welcome you to the future. 2020 was a year of incredible global challenges. Our customers needed to find ways to protect their employees So thank you to our customers for their business and their trust. And thank you to my colleagues at ICE welcome everyone to the best Q4 in our company's history, resulting in another welcome our Q and A session walk until 9:30 Eastern Time. The first question comes from Rich Repetto of Piper Sandler. Please go ahead. Good morning, Jeff, Scott and Ben. Congrats on the great year. I guess The question is on the recurring revenue. Thanks for the breakout and transparency on that, Scott. So I get the I think the exchange you said are the SiP walk you through the call. What I didn't understand is how what's recurring in the mortgage side. And it looks like you're about almost half of your revenue is Overall, if I have it calculated accurately. Yes, Rich, you picked up on it exactly right. We did want to continue to give transparency in our guidance on those elements of our business that are recurring And a little easier to predict in some of the volume based business. And you're exactly right that if you add up the total of the recurring guide, It's around midpoint $830,000,000 of revenue, which is just less than half of the overall business. If you look at, we've given you that detail on a pro form a basis historically. And if you do the math on the guide, In the Q1, those recurring revenues are growing 7% to 9%. So very strong performance on a very stable part of our business right out of the gate, walk you through the call. Obviously, led by a strong performance in the mortgage business, which has picked up customers, picked up volume from existing customers, But then also the data business, which again despite the pandemic, as I said in my remarks, sales team did a remarkable job and put us in a position where ASV was nearly 6 watch the progress we've made in the past several years. So we feel very good about those recurring businesses and we intend to continue to give you each quarter our perspective on what we expect watch those revenues to be. You asked specifically about the recurring nature of the mortgage bids. I'll let Ben give you a little color on what's driving that great performance. Hi, Rich. We saw this so the first thing to start with is on the mortgage side of the business, When someone subscribes to come on to our network, they're getting our full platform and our network services as part of that. So there's a base level of subscription fee that someone's paying to be a part of that, and that's really what that recurring revenue piece is. And when we analyzed the deal, one of the exciting things that we saw under the covers here and that I've talked about in terms of walk the different TAMs that we can go after here, with this business. Out of that $10,000,000,000 TAM, 4 of it alone is just in the origination side. And automating that whole origination process. And we had seen that Ellie Mae had increased market share from 38% to 44% walk you through the call today. In a pretty short period of time, we had conviction that they're going to continue to grow market share in that space. And I'm pleased to say that under the covers, what we've seen in walk you through the call. In terms of sales performance, and I even highlighted this on the last quarterly earnings call, back in October that the sales results have been phenomenal in terms of selling walk you through the call to questions. New versions of our loan origination system into new customers and then also cross sales of our products walk into the customer base. And to go into that even a little bit further, in Q3 and Q4, the company set all time records in terms of bookings on the Encompass loan origination system. So Q3 and Q4 were the 2 highest quarters ever in the company's history. Q4 across the entire Ellie Mae product set was the largest bookings quarter ever in the company's history. So all of that are real tailwinds and Scott gave the guide to the Q1 recurring revenue for the business as well and why we feel really welcome Alex Kramm with UBS. Please go ahead. Yes. Hey, thank you. Just to follow on that mortgage discussion just now since you gave some recurring revenue guidance, etcetera. Can Can you just give us an update how you feel about your outlook for the full year in general? And it's 2 part question. 1, obviously, walk you gave us 8% to 10% outlook that you're comfortable with for 2021, you said, when you closed Ali, but that was just for Ali. And now you're obviously running ahead. So, one, how should we be thinking about that guidance going forward now? And how should we really hold you accountable Now that you're obviously talking about pro form a numbers, you're integrating the business. So how should we think about it from a combined ICE plus LE mortgage outlook for the year? Thanks, Alex. It's Ben. So obviously, 4th quarter walk you through the call. We blew away all industry estimates in terms of volume. So you got to set that aside. And when we did this deal, we were very clear that we saw this as a long term growth We'll grow 8% to 10% per year on average over 10 years. And underneath the covers as I just referenced in the answer I gave to Rich, If you look under the covers of what's happened with that business since we've acquired it, sales strength has been very strong. So I mentioned a couple of the Encompass welcome all of our records that we saw over the last couple of quarters. Also another and that's 4 of the $10,000,000,000 TAM. Another 4 of that 10 welcome you to the Q platform, so record bookings of the analyzers that are automating that origination workflow in the Q4. We continue to see strength across Encompass as well as AIQ in January, and we're ahead in January than where we thought we were going to be in terms of our model. What this means is that as we're hitting these types of sales results and sales records for the company, it obviously means there's going to be more recurring revenue in walk you through the business. It means there's going to be more customers on the business. There's going to be more loans that are on the platform that are now on our network, walk you through the lines of the business. And more loans on our network interact with the 3rd parties on the network that we have. And for the efficiencies that we provide to people ordering services like a flood report or a credit report off that network, We monetize that and charge a service fee for the efficiency that we're providing. So all of these we see as watch significant tailwinds into the business that give us confidence that we can grow regardless of a volume environment welcome the next question is from Mike Carrier of Bank of America. Please go ahead. Good morning and thanks for taking the question. Just wanted to get an update on the data outlook and I guess mostly on the equity side. You just given some of the changes walk with the SEC on the data rules. Just wanted to see how you think about if that can impact the business, walk how you guys are thinking about it, whether it's from like a product standpoint, new competition coming in to the industry, and how you're, let's say, to navigate? Yes. Hey, Mike, it's Scott. I'll take this and then if Jeff wants to jump in, he can. I think your question as I understood it was looking at Kind of the recurring revenues in the Exchange business and specifically Exchange data, what are our expectations in terms of any revenue impacts from ongoing dialogue with the SEC and the answer is none. We're in conversations about changes they've discussed, But right now, we haven't seen any impact. We don't anticipate any impact. Yes, I'll tell you what I think is consistent with what we said for probably the last 2 or 3 years, Which is that's not a line we expect to generate a lot of growth for us, not a line that we expect is going to go down much. It's just kind of be stable. And again, we've given you some history on the recurring revenue. And if you look 3Q, 4Q, the guide to 1Q, they're all kind of walk you through the call. Right in that same number. So, there is no expectation on our end that there are any changes that are likely to impact revenue this year. We've also said in the past and I think it's still true that any changes that did come will likely come in over the course of 2, 3, 5 years, not immediately. So the net net answer is that no real impact expected on that bucket of revenue for us this year. The next question is from Ken Hill of Loop Capital. Please go ahead. Hey, good morning. I was hoping to go back walk you through the call. One of the smaller portions of the mortgage business there on data analytics. I think that run rate is about $70,000,000 annually, but the opportunity set as you mentioned is about walk $4,000,000,000 of addressable market there. So I was hoping you can talk to maybe what infrastructure you're putting in place, what processes you're putting in place to build that out and maybe help us with the vision for that there over the longer term. Thanks, Ken. This is Ben. So this is an area that we have invested heavily in, the business has invested heavily in and when we're looking at and analyzing walk you through the acquisition of Ellie Mae. It's one of the areas we were absolutely most excited about. And the area of this business under data and analytics is really that AIQ business, that's an acquisition that Ellie Mae had done a few years ago. And If you look at the heart of what that business is all about and investments that have been made, it's all about automating the walk you through the call today. And out of that 8,000, dollars 5,200 of it is just associated walk you through manual processing. And at a minimum, we believe through our AI offerings, there is a great opportunity to chip away at a minimum half of that. So $2,600 in savings is ripe for automation. And this is things like I mentioned in the script around credit analyzers. And last quarter, I talked about our income analyzers. This is taking all the stare and compare work that happens and walk you through the call. And you get a credit report to see what was the date of it, what was the score. You compare the score on the credit report to the information that we have in our Olbrich's business walk around what are the underwriting requirements for the particular product that this customer has applied for. And we're able to automate walk you through a ton of the process right now that is done manually and it's one of the highest growth sales items we've seen. And as I And answer your prior question that we hit a record in Q4 of new sales of this product. And in terms of the 4 walk through the financials. It's a pretty easy number to get to. If you look at the efficiencies that we provide and assume conservatively, it's $2,600 in savings per loan that we can provide to customers. If we monetize a part of that, say some subset of that. And you use a round number of around $10,000,000 loans being done per year, which is way down from what it was last year. You do the math on 10,000,000 loans. We roughly have almost 50% market share and loan flow that's going through times one subset of that save And you get to a very big number very quickly. And as our customers are seeing that benefit, we're obviously monetizing it watch. The next question is from Brian Bedell of Deutsche Bank. Please go ahead. Great. Thanks. Good morning, folks. Maybe just to dig a little bit deeper on the mortgage recurring revenue, the guide of the 122 to 127, it's A bit of a wide range, maybe if you Ben, if you could talk about the variables that you're seeing that sort of impact the low versus walk you through the high end of that range. And then if you can I think you gave guidance for the recurring revenue and fixed income walk you through the Q1 of 2019? I'm not sure if I missed the recurring revenue guide for mortgage technology for the full year or if you have a view on that. And then if I could just layer in the synergy on the data side in terms of coming up with real time, More real time mortgage production data. I know you're working on that, maybe just an update on a progress report on that. Okay. So that one question I think had 3 parts. But let me see if I can get them. First of all, I don't know that 5 wide on an over a 100,000,000 guide is that wide. It's simply a matter of customers that we've onboarded and that we expect to continue to onboard. I mean that's the thing. Again, if you look at the history that we've provided on that line, our recurring mortgage technology revenues walk you through the Q4 of 2019, we're 92, they were 95, 100, 108, 100 and 19. So we've seen that consistent growth on a sequential walk you through the Q1 of 2019. On a quarterly basis, because of everything Ben talked about, more customers, customers that had a certain number of seats, sign up for more seats. And so we expect growth to go through the quarter and exactly whether or not that growth is going to add $1,000,000 or $3,000,000 again on an over $120,000,000 guide plus or minus a little It doesn't seem like that's that wide a guide, because it's not 5 wide, it's actually plus or minus 2.5. But we so we feel good about it. What I said on the data business and to be specific, the fixed income recurring revenues was that based on a 5.7% ASV, We fully expect the business to again grow right around that at 5% to 6% for the year. As you know, that ASV figure now is effectively 100% of the revenue walk you through the call today. And so we're able to tell you that plus or minus a little bit given that ASV is at 5.7%, we 5% to 6% growth is the right view in terms of thinking about the full year for that fixed income recurring revenue. With regards to the data piece on mortgages and how they're working with the sales team or sorry, the Lend's team to do that, I'll hand that to Ben, Yes, as I mentioned in the script, we have identified some early opportunities on the data side. As you can imagine, there is an absolute treasure trove of information and data sets that are walk you through the call today. Within the mortgage technology business segment across all the businesses that are in there. So you have the merge business in there, you have Simplifile And you have the Encompass system and the Ellie Mae business in there. Some of the areas that We're looking to leverage the data sets and the power of the data sets in there are simple things like when you're going through walk you through a few questions. One of the most common areas where you'll see errors is walk you through the process when you get to the closing. And what happens at the closing is that you have to compare walk the original estimates of what your closing fees were going to be at the closing table from what the original estimates were that were provided 60 plus days ago. And if those numbers are off by any amount, it's not even a material amount, it could be 0 tolerance, 10% tolerance, You have to go back through the entire origination process again. What we found is that Simplifile has all of that information. They know exactly what the closing requirements are, what the walk you through the call. These are in every jurisdiction around the U. S. So we manage all of that reference data for our clients in the closing process. Walk you through the process and then combining that with our welcome our artificial intelligence expertise and automation expertise that we have in our AI tools is able to create a Significant amount more efficiency and a higher quality loan asset that's going to be less subject to errors as you get to the closing table. And A lot of these capabilities in the artificial intelligence area and how to leverage this type of information and data is directly coming from the expertise that we have on the data side for the business. Let me this is Jeff. Let me just bridge a wider point, which is We've been building a technology base in the mortgage space and it's obviously a very hot space and we've got a really great platform in commodity and the LMA business that we The growth that we've seen comes from the vision that we're articulating of an end to end platform managed by ICE. We live in a society today where many of the platforms that we interact with, You have to ask yourself, am I actually their customer? They're providing a service to me, but am I actually the customer? Walk you through the question and answer session. Because is the customer the person who's buying the data off of that platform or is the customer the person that's giving up the data in exchange for free usage. And we're seeing a lot of examples right now in our society of people that And in reality, they're not providing any revenue to them. The revenue is coming from a different source. And so, as we're out selling our vision, We're having that conversation with people in the mortgage industry and it is resonating. The very data that you asked about and the way that artificial intelligence will interact with that data is an area that ICE has built decades of And I think that, that bodes well for us as we continue to have a broader conversation in our welcome everybody to the next question. The next question is from Alex Blostein of Goldman Sachs. Please go ahead. Great. Good morning, everybody. Jeff, question for you around maybe some of the regulatory things watch potentially might be on the call, but really was hoping to get your perspective on everything that's going on, in the retail trading side of the equation. It feels like Concept of payment for the flow has come up a bunch of times in the past. I don't know if this time is going to be any different, but curious to kind of get your perspective on how things might evolve and whether or not With 50% of volumes now trading off exchange, could there be an opportunity for the lit venues to grab some of that market share back? It's a great question, it's one. Obviously, we've been thinking about over the last week or so. I guess I'll remind you that when we bought the New York Stock Exchange, We were pretty vocal about the fact that we thought that the market structure in the U. S. Equity space was flawed and that It needed a holistic review. And in fact, we tried to come up with a grand bargain that we talked to welcome many, many people across the industry about, that would have resulted in some major change. We were unsuccessful and the last SEC seemed to spend an inordinate amount of time on welcome the governance of industry consortiums basically that manage infrastructure walk and really step back and look at the totality of the infrastructure and whether or not Fortunately or unfortunately that infrastructure paralyzes the industry somewhat and innovation in my view. And so we're going to have a new SEC Chair and if welcome Chairman Gensler is confirmed and actually takes that seat. He is a person that worked in the derivative space walk in part of his career, worked in the regulated commodities and derivatives space for part of his walk you through the call to questions. And I will now turn the call over to Bob. Thank you, Bob. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Our next question comes from the line of Chris C. Thank you. Thank you. Thank you. Thank you. Walk you through a sense that it's an enforcement agency and a consumer protection agency, as well as a market structure agency. And historically, the people that have chaired the agency, have been lawyers by training who are welcome you to the next question. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Our next question comes from the line of And we'll see if it results, but there's an opportunity with a new chair and a new vision inside the SEC to potentially talk about a grand bargain again, watch, which we would welcome. And by that, I mean, we would give up some unique positioning that we have if others did the same thing and try to get back The next question is from Ari Ghosh of Credit Suisse. Please go ahead. Hey, good morning, everyone. And just a quick one on mortgage debt. On the origination debt revenue piece, just curious how we should Think about the sensitivity to market conditions over here. Is there either like a backlog or do you have any visibility for a portion of these transaction based revenues? Again, just curious because I think you were embedding pretty conservative industry and refi assumptions for the year and the outlook Perhaps it's a little more favorable than it did 3 to 4 months ago. Thanks. Thanks, Ari. Walk through it, how we see the business' ability to walk you through various volume cycles, and I'll answer your direct question around volumes. So if you think about this business, welcome everyone to the operator. This business and what really excited about us and just the results that we see in the few months that we've owned it now have just further confirmed The business's ability to grow through volume environments are that, 1, it's continuing to gain market share. I've shared the sales results, so you can see that. Number 2, more customers equals more loan flow. And when you have more loan flow going on to that network, On average, a loan that's going through our network with customers of ours on the platform, We see that that loan interacts around 7 times with various third parties on the network. So each new loan that comes onto that network, walk through the call. There are several different times that it's interacting with 3rd party service providers and services that we provide on that network. And For 3rd party service providers, we get a fee for the efficiency, that we provide for somebody interacting with that loan. The 3rd area is just, it's a process that's right for automation and I touched upon the opportunity there, around $10,000,000 loans walk you through the call today. And at least 2,600 in efficiency and some subset of that, you do the math and it's a big number. And then the 4th area welcome everyone to the close that we are in a very unique position with the MERS and SIMPLIFYLE assets and the network that we have on the closing side It's extremely unique, integrating that with our origination network through encompass walk by connecting that into an eclose room and we have several, big deliveries this year, 1 in Q2 of our hybrid eclose offering and then walk you through the Q2 of 2019. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Our next question comes from the line of Chris Meehan. Please go ahead. Thank you. Thank you. Thank you. Thank you. Thank you. Our next question comes from the line of Chris Meehan. Thank you. Welcome and beyond. When it comes to volumes itself, we do have a bit of a unique insight because we are an walk through the integration platform. We see almost 50% of loans that are originated in the U. S. We do see that the loans very early on in the process. So we see them on their original applications coming through for a refinance or a purchase, which gives us a 60 to 90 day preview of what the market is going to look like. You also when you look at industry analysts, You see the estimates that are out there. If you go beyond a quarter or 2, anyone that follows these estimates know that they're subject to revision and significant revision. It's very hard to predict mortgage origination volumes out beyond a couple of quarters, just like it's hard to predict U. S. Equity market volumes and oil volumes walk you through the Q1 of 2019. Okay. Thank you. Thank you. Thank you. Thank you. Our next question comes from the line of It's like Fannie and Freddie for the next quarter to maximum 2 quarters. Those are walk you through the call today. As close to what we see in the data in our platform as being indicative of what we expect volumes to be. But beyond that, it's difficult to forecast We're underneath the covers with all the other growth areas that we have regardless of volume environment. We are very optimistic this business can grow. The next question is from Chris Allen of Compass Point. Please go ahead. Good morning, guys. I just wanted to follow on mortgage beat. I just wanted to ask just in terms of the share gains that you're How much is coming from existing customers versus new customers? And any Sure. So we're actually seeing thanks, Chris, for the question. So we're seeing growth Literally across every segment of customer in our platform. So, yes, independent mortgage We are seeing their share of the market. It'd be very strong in particular on the purchase side of the market With refinances, you do tend to see some refinance volume to go to some of the large banks just because that's where you have a lot of your banking relationship with, to go there, but in the purchase market, we are seeing that independent banks are continuing to grow. That said, we're growing in each segment. So we service the large banks, we service the independent mortgage banks, we service correspondent banks, Wholesale banks, you name it. And we're looking at that sales strength that I referenced earlier, we're seeing that walk you through the entire portfolio. And one of the things I'd just highlight on the volume front, we tend to if you look at our share and Our strengths, a lot of it is balanced in the purchase market, albeit we do interact a lot with the refinance market as well. When we look at the trends of what happened in 2020 and going into this year, we're seeing application volumes up Significantly in refi, they are up as well, significantly in purchase, but not as much as refi. Walk you through the call. And on the refinance side, if you look at estimates that Fannie and Freddie have, for example, for 30 year mortgages walk you through the call today. Of 2.7% to 2.9% right now for calendar year 2021, that puts up to 20,000,000 units walk you through the call to questions. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. So we still see a tail in refinance volumes. We're seeing underneath the covers, one of the things on purchase, we are seeing pent up demand on the purchase side. There's just not a lot of inventory walk you through the call out there. So as vaccines roll out, as the economy starts rolling, as people are willing to move and actually sell, I think you have a decent amount of purchase demand pent up there as well, which given that our market shares tend to be a little bit more tilted towards purchase than refi is another tailwind for The next question is from Owen Lau of Oppenheimer. Please go ahead. Good morning and thank you for taking my question. So on Slide 20, you disclosed that you have a 1.4% ownership in Coinbase. Could you please talk about the cost basis? Why did you make that investment? And is there any synergy with ICE or BAG? Thank you. Yes, that's a good question. First of all, as a company, we've never thought that We were a private equity firm or a venture firm and that we should be stewards of our shareholders' money in that regard. We've always thought that excess capital should be returned. But strategic advantage by having a relationship with the company, either by partnering with them or by knowledge transfer and what have you. And So, we invested in Coinbase in its early rounds because we were trying look to understand the blockchain and the significance of digital currencies in payments. And obviously, that company has been welcome you to the Q1 of 2019. Okay. Thank you. Thank you. Thank you. Thank you. Our next question comes from the line of And our investment was just almost insignificant honestly, so In terms of a monetary number. I would also say, we have obviously a similar kind of investment in Bakkt, which again was driven by us trying to understand blockchain. And as you may recall, walk you through the call. 3 years ago, 2 3 years ago, a lot of people were asking us whether blockchain was going to be used for clearing, whether it was going to walk the traditional financial services industry and we wanted to be on top of that technology welcome everyone to the operator to the operator. And so we also invested and helped stand up Bakkt, which again I think is a company that we have a small We also made an investment in Euroclear, which is European custody solution That again, we have adjacency to, company is doing very, very well. And so we do have, as your question I think is trying to allude to, a number of very, very interesting look at the numbers that I think over time we'll try to unlock for our shareholders as The next question is from Kyle Voigt of KBW. Please go ahead. Hi, good morning. So in the Q4, S&P Global announced its acquisition of IHS. Just last week, We had the LSE Refinitiv deal closed. Just given the size of these transactions, can you just talk about the kind of broad competitive environment, the landscape walk you through the question and answer session. And maybe how you'd expect the environment to evolve as some of these competitors gain scale or add product breadth? Sure. Well, I'm glad to say that we've recognized early the adjacency of data and information and analytics around risk management walk and move relatively quickly to formalize our internal offerings and also make acquisitions similar large acquisitions for us that is really now probably half of our business And so it's not surprising to us that others are making moves in that space. With respect to all the companies actually that you mentioned, we have some relationships with them. And so you've seen a movement of large exchange and data information groups Advancing their own businesses, but also somewhat collaborating across the industry where necessary. So we have a good relationship with the managers of all of those companies, even though in some areas, The next question is from Simon Klinch of Atlantic Equities. Please go ahead. Hi, thanks for taking my question. I was wondering if we jump back to the mortgage tech side again and just your comments about walk just under 50% market share on the origination side. I was wondering if you could talk about the how you see the future competitive environment developing in origination And what you think and where you think that market share can go? Is there a natural cap to that market share for you in the long run? Thanks, Simon. What's amazing when we as we've over the last decade looked at the mortgage space, You've got an area of the marketplace that you can't emphasize enough how analog it is. When you look at That market share that I had mentioned and you say, well, what's second behind that? What's second behind that is a lot of walk you through the call center. Either homegrown systems, Excel spreadsheets or stitched together systems. And that's what gave us a ton of confidence walk in doing this transaction that there is a long way to go in terms of market share just on the origination side. But the other piece that I Can't emphasize enough is that we are in a very unique position where not only do we have this very strong origination network It's helping to write a ton of benefit to our customers in automating this manual workflow. We're in a unique position where we also have the significant network in the electronification of the close, in that closing process. Walk you through the call. And where the magic we see is really going to happen in this deal is not only in the automation of the origination front, welcome your underwriter of your loans, the bank or independent mortgage company and the underwriter that's underwriting your loan to your attorney, your settlement agent, your title welcome the insurance provider, etcetera, all into a digital closing room to be able to codify that transaction, close it electronically, register it on MERS, both the note as well as the loan, be able to electronically vault All the documentation associated to it and file it in the local county courthouse electronically via SimpleFile. That is welcome you to our next question. Thank you. Thank you. Thank you. Thank you. Thank you. Our next question comes from the line of launch because we had a partnership with Ellie Mae prior to doing the transaction. And as I mentioned earlier, we have some very key pieces functionality that are in the pilot phase and rolling out in Q2 on our eclose solution. And then we have another welcome you to a big set of functionality coming out in the second half of this year that's all going to lead to long term 2022, 2023 Yes. Just to focus on how we're thinking about Mortgage right now, the real opportunity for us is to take the loan origination customers that were on Ellie Mae have a multiple of revenues for us beyond those that are simply using the loan origination platform. So the market share, if you are, that we're looking at internally is the bigger TAM of end to end services walk you through the call today as Ben just described. And we have seen and I've been involved and Ben's been involved And Scott's been involved, actually all of the 3 of us here have all been involved in helping Ellie close some LOS deals, where we've been able to the end to end vision and that's brought the new customer to the platform for the loan origination system. But it is that full vision, I think that is helping to increase the market share if you solely look at loan origination. But the bigger addressable market for us is taking those already loan origination customers and getting them to use the end to end network. This concludes our question and answer session. I would like to turn the conference back over to Mr. Sprecher at this time. Thank you, Kate. Thank all of you for joining us this morning and we look forward to speaking to you again soon. But in the meantime, I hope that you stay safe and that you and your loved ones stay healthy. And with that, we'll conclude the call and have a great day.