Earnings Call: Q4 2017

Feb 7, 2018

Good morning, and welcome to the ICE 4th Quarter 2017 Earnings Conference Call. All participants will be in listen only mode. Please note this event is being recorded. I would now like to turn the conference over to Warren Gardner, Vice President of Investor Relations. Please go ahead. Good morning. ICE's Q4 2017 earnings release and presentation can be found in the Investors 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 these risks that could cause our results to differ materially from those described in forward looking statements, please refer to our 2017 Form 10 ks, which we filed this morning. In our earnings supplement, we refer to certain non GAAP measures, including adjusted income, operating margin, expenses, EPS, EBITDA and tax rate. We believe our non GAAP measures are more reflective of our cash operations and core business performance. You'll find a reconciliation to the GAAP equivalent GAAP term in the earnings materials and an explanation of why we deem this information to be meaningful as well as how management uses these measures in our Form 10 ks. 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. Also with us on the call are Jeff Sprecher, Chairman and CEO Scott Hill, Chief Financial Officer and joining us for the first time and available for Q and A will be Ben Jackson, our President. I'll now turn the call over to Scott. Thanks, Warren. Good morning, everyone, and thank you for joining us today. I'll start on Slide 4 with some of the key highlights from our Q4. ICE's consolidated 4th quarter net revenues increased 1% to 1 $100,000,000 Data revenues increased 2% as reported and grew 5% on an organic constant currency basis, while trading and clearing revenues were flat versus the prior period. Adjusted operating expenses were down 3% year over year to $479,000,000 and adjusted operating margin expanded to 58%. Importantly, we delivered over $70,000,000 in synergies in 2017, and as I will discuss later, we expect to generate around half of the remaining $60,000,000 in synergies during 2018. The combination of top line growth and margin expansion generated 4th quarter earnings of $0.73 per share, which was up 3% from last year's 4th quarter and contributed to full year earnings growth of 6%. Our strong earnings generated nearly $2,100,000,000 of operating cash flow in 2017. Cash flows were down slightly from 2016, but that was primarily due to our proactive move to use 130 $6,000,000 to fully fund the legacy NYSE pension plan. We have now largely eliminated any future pension liability. In addition, by taking the action in advance of corporate tax reform, we realized an incremental cash tax savings of nearly $20,000,000 related to the higher federal which you can see in more detail on Slide 5. During 2017, we repurchased $949,000,000 of our stock at an average price of just over $63 versus the twelvethirty one closing price of nearly $71 And even as we returned a record level of capital to our shareholders, we also achieved our leverage target ahead of schedule and continue to invest in both organic growth and strategic M and A, including the Bank of America Merrill Lynch Indices, Euroclear, NGX and BondPoint. It's worth pausing to note here that the combinations of assets we have acquired and divested during 2016 2017 will increase our revenues by over $30,000,000 and reduce our expenses by around $25,000,000 in 2018 versus our pro form a 2015 results. With our profits continuing to grow and our CapEx needs shrinking, 2018 sets up as another solid year for cash generation and capital return. We entered the year with a $1,200,000,000 share repurchase authorization, which is 20% higher than our prior authorization. And this morning, we announced our Q1 dividend of $0.24 per share, which is 20% higher than a year ago. Now let's move to Slide 6, where I'll discuss our Data and Listing segment. In the 4th quarter, segment revenues grew 5% year over year on an organic constant currency basis and our best in class operating margins expanded to 51%. Organic growth in our listings business was up 3% in the 4th quarter. Given our outstanding listings sale of NYSE Governance Services to accelerate to 5% to 6% growth in 2018. In our data services business, organic constant currency growth was 5% in the quarter with balanced growth across all business lines. Of note, 4th quarter results were reduced by around $4,000,000 due to the sale of Trayport on December 14. I'll provide some additional insights regarding our data services business on Slide 7. We entered the Q1 of 2018 with an organic ASV that's up 6% year over year and new signings across our pricing and analytics business that increased 12% in 2017. Importantly, roughly 40% of our 2017 pricing and analytics sales were attributable to innovative new products such as our continuous evaluated pricing services, our reference data product and our index offerings. We expect this enhanced product lineup, strong signings and high customer retention to generate organic growth in pricing and analytics greater than 7% in 2018. This is an acceleration from 5% growth in 2017, 3.5% growth in 2016 and the 2% to 3% growth at IDC prior to our acquisition in 2015. Our thesis when we acquired IDC was that a renewed focus on customers and product innovation would significantly accelerate revenue growth. That thesis is proving out. We're also seeing very strong growth in our connectivity and feeds business. Customers increased their capacity on our network by 20% in 2017, which contributed to revenue that grew over 7% organically for the year. And we expect this double digit growth in capacity and strong revenue growth to repeat in 2018. The strong growth in pricing and analytics as well as connectivity and fees will more than offset slower growth in our exchange data and should contribute to overall organic data revenue growth consistent with the longer term outlook we provided to you at our Investor Day in June. Let's now turn to Slide 8, where I'll review our Trading and Clearing segment. Revenues were flat year to year in the 4th quarter, while segment operating margins expanded to 67%. Despite a 2% decline in average daily volume for commodities, our revenues increased by 2% year over year supported by a resilient RPC, which benefited from favorable product mix and our commercial customer orientation. We continue to build on that growth in 2018 with January total futures and options volumes up 12% year over year. This growth was led by strength in interest rates, which were up 28% year over year and Ags, which were up 17% year over year. Open interest trends also remained strong with overall OI up 12% year over year. Moving next to Slide 9, you can see the positive trends across our trading and clearing segment. Average daily volume in our futures and options business increased by 10% in 2017, and this was on top of 8% growth in 2016. Our 2017 growth was led by a 15% year over year increase in our Brit franchise, which notched its 21st consecutive year of record volumes. Our European and UK interest rate volumes increased 28% to the highest level since 2013. More importantly, open interest across the platform increased 11% in 2017 with oil OI up 8% and rates OI up 38%. Open interest is an important indicator of customer demand and future growth across our markets. And as I just noted, we are benefiting from high open interest with a solid start to the year in January and the early days of February despite some temporary uncertainty created by the implementation of MiFID II. I'll wrap up my remarks on Slide 10 with a preview of 2018. As I noted earlier in our data business, we entered 2018 with organic ASV up 6% year over year and strong momentum in our pricing and analytics and connectivity and feeds businesses. The ASD metric combined with our consistently high customer retention, new products and improving sales efficiency supports our view that 2018 organic data revenue growth will accelerate to between 6% 7%. We have provided Slide 17 in the appendix to help establish the organic revenue base for 2018. The strength of our data revenues, accelerated growth in our listings business as well as growing open interest in revenue capture trends in our trading and clearing segment all bode well for another year solid top line growth in 2018. That revenue growth coupled with margin expansion, tax reform and capital expenditures, which we expect to be down by 10% year over year, should make 2018 another strong year for capital return. As I mentioned, this morning we announced a 20% increase in our 1st quarter dividend. And in January, we already deployed $100,000,000 of that $1,200,000,000 repurchase authorization. I'll turn next to expenses. We expect expenses in the range of $2,000,000,000 to $2,050,000,000 for 2018. This includes $30,000,000 of the remaining $60,000,000 in IDC synergies. When we report our Q1 results, you will see our 2017 compensation expenses restated to reflect a change in the GAAP accounting rules related to pension. The full year impact will increase 2017 expenses by just under $10,000,000 and 2018 comp will be accounted for in a consistent manner. FX as well as a small net impact from our various acquisitions and divestitures will add around $15,000,000 in expenses in 2018, but are also expected to increase revenues by over $40,000,000 In addition, similar to 2017, we expect to see variable expenses which are directly associated with revenue growth increased by around $20,000,000 Next, we will invest $35,000,000 to $40,000,000 in our employees through increased merit based compensation and cash performance bonuses in 2018. And finally, in light of the recent change in U. S. Tax law, we expect our tax rate to fall to somewhere between 22% 25%, which should add around $150,000,000 to $200,000,000 to our net income and cash flow. We intend to reinvest $30,000,000 to $35,000,000 of those savings during 2018 to further strengthen our cyber capabilities and our technology and operations footprint. This investment will support the development and future growth of our fixed income indices, our reference data offering, MERS, BondPoint and our safety network. We do not anticipate a similar level of incremental investment to be required in future years and the majority of the tax savings will still drop to the bottom line. With that, I'll be happy to take your questions during Q and A. But for now, I'll turn it over to Jeff. Thank you, Scott, and good morning to everyone on the call. I'll begin on Slide 11. 2017 marked another year of solid revenue growth, margin expansion, rising capital return and for the 12th consecutive year record adjusted earnings. We've achieved this growth through bull markets and bear markets, through periods of elevated volatility and muted volatility, as well as through regulatory change and ever evolving customer needs. We credit this track record of growth to a consistent vision, which is to uncover and to solve for inefficiencies across markets, while enhancing the workflows of our customers. As our platform has expanded, our opportunity and ability to execute on this vision has grown with it. We benefit from an execution business that now spans all major asset classes and operates across multiple jurisdictions. It's complemented by a subscription based data business that is critical to our customers' workflows, one with a proven ability to generate consistent and compounding growth through various business cycles. Combined with our efficient cost structure, we deliver a consistent high quality cash flow that provides us with the visibility and confidence to continually invest in our future growth, while increasing capital return to our shareholders. As you can see on Slide 12, this unique model is supported by a foundation of some of the world's deepest liquidity pools in its most important markets. We operate the world's largest energy market, the largest venue for European and UK interest rate trading, and we're the global leader in corporate listings. We do this by levering our 7 clearing houses and 12 exchanges across 5 major market centers. This comprises the world's largest and most flexible trading and risk management infrastructure, which drives a comprehensive suite of data and connectivity services. Our vast infrastructure is critical to linking participants around the world to the markets and information that they require to manage risk every day. Moving to Slide 13. In our energy markets, we're building on our position as the premier global energy platform. Revenues in our energy business topped $900,000,000 for the first time ever in 2017, driven by a year of record energy volumes. And our Brent oil complex recorded its 21st year of volume as commercial customers increasingly rely on our platform to help meet their global hedging needs. As you can see, 2018 is off to a strong start, building on our track record of growth upon growth. Open interest in our oil markets is up 9% year over year with Brent futures hitting a new record in late January as investment in North Sea oil fields continues. Similarly in our gas oil markets, average volumes are up 19% year over year as demand for diesel fuel rises on the back of an improving European and Asian economy. And given the gas oil is a byproduct of a barrel of Brent crude oil, growth in our gas oil business is generally a positive leading indicator for our Brent franchise. Notably, the extreme U. S. Winter weather to start the year and the transitory market reports such as the surprise WTI inventory draw reported in January provided more speculative trading opportunities in the benchmark energy contracts of WTI and Henry Hub. While we benefited from the moves in these products, these types of trends tend to be transient in nature and not structural. Because we cater to a largely commercial customer base by offering a complete range of global energy contracts, our energy markets tend to be less cyclical in nature with an upward growth bias over the long term. Also in January, Europe implemented MiFID II's position limit and reporting regimes. While these created short term challenges for many of our commodity customers, particularly in the month of December and through the 1st few weeks of January, these market concerns have now quieted as we found regulators to be receptive to our customers' concerns. In fact, the UK's FCA processed over 1,000 hedge exemption applications, many of which were filed at the last minute to bring clarity to our customers. And as you can see, our crude oil market share has rebounded accordingly compared to the 1st few weeks of the year. Again, this was a transient versus structural moment. Shifting to our long standing global natural gas strategy, We continue to make progress on many fronts. In our North American markets, we operate the leading venue for natural gas basis trading, providing liquidity and hedging for over 100 gas delivery hubs. Given the structural changes in natural gas exploration in North America, we see signs that some of the large commercial customers are shifting away from hedging with the benchmark Henry Hub contract and are moving business into these regional basis markets. And this was demonstrated by record volume and open interest in our natural gas basis markets in January. The newest addition to our strategic natural gas efforts is our acquisition of NGX in December. It brings us additional trading, clearing and physical settlement solutions, enhancing our leading North American position. And when coupled with our European and UK natural gas contracts, we now offer a full range of trading and hedging tools across international markets, a service that our commercial customers view as increasingly important as this asset class continues to globalize. Turning now to Slide 14. As we move into 2018 and look for ways to leverage our multi asset class platform, there are many secular trends upon which we continue to capitalize. In the fixed income markets, we're creating an expanded platform that's designed to facilitate the efficiency and information increasingly sought by market participants. The fixed income market is one of the largest investable asset classes in the world with a market structure that is early in its transition from analog to digital workflow. We've assembled a unique suite of assets to help facilitate this evolution, while addressing specific customer needs along the way. We're a leading provider of independent fixed income pricing. We have a global reference data business that spans 11,000,000 instruments across 145 countries. We have widely used fixed income analytics critical to our customers' risk and inventory management workflows. We're now the 2nd largest fixed income index provider following our Q4 acquisition of the Bank of America Merrill Lynch Index Suite, offering over 5,000 unique indices. And at the start of 2018, we closed on our acquisition of BondPoint, broadening our fixed income execution offering in the dealer to client segment. While we're still in the early days, it's worth noting that BondPoint is off to a strong start in January registering the best volume month in its history, up 30% year over year. Customers are receptively engaging with the platform now that it's a part of the ICE fixed income ecosystem, demonstrating the complementary nature of our solutions. This suite of products execution services are delivered over our purpose built secure connectivity safety platform that links the markets, information and innovation essential to improving customer workflows. And so we've positioned ourselves similar to how we have in times past to help evolve markets at inflection points, to bring efficiencies and to ingrain our services by the virtue of their capabilities into the daily workflows of our customers. Shifting to our role as the leading venue in the world for capital raising, 2017 marked the 7th consecutive year that the New York Stock Exchange led in initial public offerings, raising over $31,000,000,000 This is almost twice the amount raised by any other exchange globally. As the world's premier listing venue, we've attracted 38 of the last 38 large IPOs defined as raising $700,000,000 or more. And in 2017, we raised 89% of the technology sector proceeds in the United States. 2018 is off to an exceptional start with over $8,000,000,000 raised through initial public offerings, which is the best January in the NYSE's 225 year history. I'll conclude my remarks on Slide 15. 2017 was another record year. We grew revenues, margins, earnings and capital returns to new levels. We expanded our ability to provide unique mission critical content to drive markets. We enhanced our distribution by bringing markets, information and participants together. And we continued to broaden the addressable market for our future strategic growth. So as we look to 2018 and beyond, the foundation that we've created for sustainable organic growth has never been stronger, nor has our opportunity set been as broad. Just a few weeks into the year, we can already report on this strong foundation. In our derivatives business, interest rate futures volumes rose 28% in January. Our North American natural gas volumes grew 16%. Our gas oil volumes rose 19%. In our data business, global signings are up 12%, while ASV enters the New Year up 6 percent. And in our newly expanded fixed income business, we've benefited from BondPoint's 30% volume growth. And this growth is all off a base record year for us in 2017. As a leading provider of vital infrastructure and information to financial and commodity markets, we continue to look for ways to efficiently connect the market participants with the risk management solutions that they need. It's a virtuous cycle, one fueled by our pursuit of efficiency and productivity. This is the platform that we've positioned to generate sustainable long term growth with benefits accruing to all stakeholders. So I'd like to thank our customers for their business in 2017. And I want to thank my colleagues for their hard work and contributions to another record year, a year in which we became the 1st exchange operator to join the Fortune 500 and were named as one of Fortune Magazine's Future 50 Companies. These credits are something that we do not seek out, but I hope that our team takes great pride in being recognized. I'll now turn our call back to our moderator, Kate, and we'll conduct a question and answer session until 9:30 am Eastern Time. We will now begin the question and answer session. The first question comes from Rich Repetto of Sandler O'Neill. Please go ahead. Good morning, Jeff. Good morning, Scott. And I guess I'll start broad, Jeff. You had a significant win with the in MiFID II and open access mandate being delayed. So I'm just trying to get like how important that was to you? And then related to that, when you look at MiFID II, I know you talked about the impact on energy, but MiFID II and Brexit, you have more time to look at Brexit as well. What's the what's your views on it now, both from a fundamental and an M and A standpoint from those 2 items? Sure. Well, I think as you know, we've spent a tremendous amount of time in Europe with the most senior people in governments all over Europe discussing the pluses and minuses of the open access provision, the way it was drafted and designed in MiFID II. And there's a concern across Europe whether or not the way that particular provision operates makes sense in a future without the UK as a part of the EU and whether it makes sense to help drive the economy together and finance the real economy without overly fragmenting markets and creating a lot of inefficiencies. So, we saw governments all across Europe coordinate a move to delay that and what we what you can see now and it gets provision fits with their future and whether or not there should be some modification or reworking of broadly of MiFID, but specifically of that provision. So we are very engaged in that conversation. We had a lot to do with the delay. And we appreciate that the governments did delay and that they did engage with us and that they have taken a step back. More broadly, MiFID, as I said in my prepared remarks, it was it's just the way markets work, but a lot of people were unprepared. And a lot of customers a lot of customers waited till the last minute. There are some very specific reporting requirements. There are some very specific position limit accountability type requirements. And so I mentioned that the FCA in particular processed over 1,000 applications. You did see at the end of December and into January, a lot of people just stepped out of the market trying to figure out how this would work. Fortunately, it's much calmer. The FCA at our request has held a number of meetings and calls, broad calls the market. He's going to continue to do more on how MiFID gets implemented across our particularly our U. K. Exchange and we really appreciate that they've engaged on that. I've had a lot of conversations with senior people over this period in addition to talking about MiFID. I think there's a lot of positive work going on underneath the headlines of Brexit, but there still has to be a deal agreed. And how that's going to work and how that's going to shape out is very hard to know. And there's certainly a possibility that things could go pear shaped in the process. So we have a cautious view towards Europe right now. That being said, we made an investment in Euroclear, which is a custody custodian, a custody solution for Europe. It's one that we use, it's one that we'll continue to use and it's one that we want to help grow and expand. So while we have some broad concerns about how Europe unfolds, where we've seen strategic ability to pinpoint opportunity, we certainly will do it. The next question comes from Ken Worthington of JPMorgan. Please go ahead. Hi, good morning. I wanted to talk about the BAML Index business. So you're providing reference data now for BAML. You've got pricing now for BAML. I guess maybe you had it before with IDC. There's analytics for BAML. What kind of cross selling did you guys pursue in the quarter for these ancillary services? And I know it feels very early, but was there any positive impact from the ancillary services this quarter? And if so, or even if not, maybe what is the outlook again for the ancillary services provided to BAML as we look out say like a year or so? Thanks. Sure. Well, first of all, it's been great. I mean, in a word, it's been incredibly well received. And I've mentioned this before, Ken, and I think also in response to some of your questions on earlier calls that it gets harder and harder in financial services to provide content to major firms because of the from a regulatory standpoint. They need really good clean data and information distributed across the organizations in a way that is easily consumed. So by having a broader package of things that we can deliver, people that didn't pay attention to these offerings when they weren't a part of the ICE ecosystem are suddenly paying attention to them. And so that is essentially a cross sell. And because so many people now are hooked to our safety network and increasingly hooking to our safety network. In fact, it's one of the fastest growing parts of our company. They have a pipe already that is secure, that has a cyber security provenance over it that allows us to pretty easily get behind firewalls and deliver new products and services. So it's going well. The other the interesting thing about this market as we've talked about before on both on this call and you and I privately is that there is kind of a rapid demand for clean information. And so it is not a case where a customer will buy information from one provider and not buy from a second provider. If people are taking the data and information and indices from multiple providers And some as a backup, if you will, for their own BCP planning and some just because there's a thirst for the best information that people can find because of the increased use of quantitative analysis in investing. So long winded way of saying the thesis that we had is working. And Lynn Martin, who's running that business is excited, frankly, about the responses that her team is getting, particularly in that area of indices and valuation. The next question is from Dan Fannon of Jefferies. Please go ahead. Thanks. Good morning. Scott, you mentioned your capital priorities of returning 100% of the free cash flow net of M and A. So I guess, can you update us your thoughts on M and A after pretty active year of divestitures and small deals in 2017? Yes, I think we're looking at the world the same way. We've said it a while ago that our focus would be on incremental bolt on deals, and that's absolutely what we've executed on. I think the good news embedded in all of it is we were very active last year and are still sitting right in our leverage range with good cash on the balance sheet with, as I mentioned earlier, a 20% increase in the dividend and a 20% increase of the share buyback authorization, of which we already spent onetwelveth and onetwelveth of the year. So I think as we look out, we're continuing to focus on strategic M and A that will enhance businesses that we already have or strategies that we're pursuing. But the key as is always for us is can we find those deals at the right price that generate the right levels of return for investors. The next question is from Michael Carrier of Bank of America. Please go ahead. Hey, good morning guys. This is Sameer Morkutla on for Michael Carrier. Thanks for taking the question. Just a quick one just related to the data services revenue again. I guess, one, is the 6% to 7% growth including any FX benefits? And I guess, given the divestitures and the wind down of those businesses, and I guess, the really strong ASVs and signings, I guess, why isn't this growth in 2018 even higher than the 6% to 7%? Yes. So first of all, the 6% to 7%, as reported or at constant currency, each I expect will be in that range. Obviously, FX right now is a little bit of a help, but I think we'll grow between 6% 7% as reported and at constant currency on an organic basis. And compared to last year, that's coming off of 5%. And so when you're asking why it's not growing faster, it's growing significantly faster than it did in 2017. And then I'll note a couple of points or repeat a couple of points that I said in my prepared remarks. That includes our pricing and analytics business that's going to grow faster than 7% versus 5% last year and 3.5% in 2016 and 2% when it was owned by IDC. That includes our connectivity and feeds business that's going to grow faster than 7% again in 2018. And it's mitigated a little bit by exchange data where it will grow, but it's going to grow in kind of the low single digit. So we're really happy not only with the overall growth of that business, but the mix of revenues. And then the other thing not to lose sight of is we're growing revenues with a starting margin at 51%, which is significantly above anybody else in our space. So we're happy with the growth. We like the margin profile. The incremental margins will be even better. And again, we feel good about the strength of our data business across the board. And one other point that gets to some of the core of what we do is we've been trying to be more open and transparent about the data that comes out of the cash equities market, the New York Stock Exchange and the cash equities market. We participate in the SIP, which is the industry revenue generator. Behind the scenes, we've been pushing the SIP to be more transparent. We have a proposal that's been on the table for quite a while that the SIP committee is looking at and it's going to take up shortly to become more transparent. We on our last call for the first time started to put more color around that particular business. But long story short, there's really not a lot of growth in the earnings from U. S. Cash equities markets. And I think that's maybe surprised people and it's partly why we want there to be more transparency around the SIP. And that's a part of for reporting purposes, that's all embedded in that data business as well. The next question comes from Alex Blostein of Goldman Sachs. Please go ahead. Hey, guys. Good morning. I want to go back to data again for a second and looking at Slide 7. So, Scott, you guys continue to kind of give us a little bit more color on the drivers in this business, which is definitely appreciated. I want to hit on the capacity growth number that you highlighted, so plus 20% year over year on the Safety Network. I guess, A, how should we think about this as kind of the leading indicator for data connectivity? Any sort of revenue base you can kind of circle around to think about, okay, this is really the base that is growing and is indicative of this 20% growth? Or should we think of that more of a, hey, customers are using more capacity and we'll be buying more of our data, so that's actually a leading indicator for the other stuff. Yes, that's a great question. And look, we're a couple of years into the business. My sense is that the connectivity capacity growth is very similar to open interest. If it's trending up that if open interest interest is trending up that says good things about the future prospects for our trading business as the capacity grows that says good things about our data business. And as we dig deeper into that understanding that business, one of the reasons I have that confidence is connectivity and the feeds business growing. So more people are taking more of their data from us. A lot of it's our proprietary data, but it's also feeds from other places as we become the single source. They need greater capacity in order to consume the data from us and including those feeds. We're seeing customers sign up. Historically, it was more people connecting to the NYSE. Now we're seeing more people connect up through safety for Web ICE, which again will help drive more trading, will help drive more data on the commodity side of our business. So as I look at the capacity growing 20% last year, it will grow double digits again this year. People are moving off a smaller ports to larger ports. For me, it's definitely a leading indicator. And one of the reasons why Jeff talked about the additional transparency with regards to exchange data, But one of the reasons why we're giving so much additional transparency on data revenue growth is because we have metrics like this capacity that give us confidence that the growth we're seeing is sustainable. The next question is from Ben Herbert of Citi. Please go ahead. Good morning. Thanks for taking the question. Just another question around data and just the pricing and analytics, the 40% of science from your growth products. And then as we think back to your June Investor Day and that mix of data revenue drivers. I know that's more of a long term guide, but if we think of it this year just with newer products, how that mix shift, that 20% that was guided back in June, if that might be a bigger share in 'eighteen or maybe even into 'nineteen just on some of your newer product developments? Thank you. Yes, great. So thanks for the question. So if you look at our revenue guidance in 2018, what we expect to get from new products is very much in line with what we showed you in June. And so the contribution we expected to be strong, it is strong. In addition to that, some of these new products are also driving another part of that pie we showed you that was meaningful with new customers. And so particularly in Europe customers who have new demands put on them from MiFID, we're seeing consume those products. And so there's a little bit of a bleed over between what's a new product and what's a new you'll understand that some of those are new liquidity indicators, you'll understand that some of those are new liquidity indicators, as an example, our BestEx product as an example. The continuous evaluative price has been around for a while. So that's not really a new product as much as it is for a platform to develop future new products. So overall, the contribution that we showed you in June, if you look at it in terms of pricing, new products, new customers, high retention, We had around 95% retention in our pricing and analytics business again last year. All of those things are contributing in a very good balance by the way in the growth in 2017 and also again in the growth in 2018. The next question is from Alex Kramm of UBS. Please go ahead. Hey, good morning. I want to stay on the data side and it's probably extension of some of the last few questions, but maybe you can be a little bit more specific around MiFID II and what you're seeing there. I guess, because you're obviously showing the upside in signings in Europe. So maybe you can give a little bit more detail of what exactly you've been seeing? But then more importantly, how far along do you think the customer base is when it comes to the data side? Meaning, like do you think throughout 2018, there's still a very big addressable market of people that still need to get ready, still need to get Best X products from you and I guess around the confidence level just for more sales there? And then maybe just real quick on the flip side as well. I mean budgets are still coming down because of MiFID II. So I'm just wondering if you are actually seeing people also struggling with budgets and maybe even canceling some of the things that are not as must have. Thank you. Yes. So that's a great question, Ott. And I will tell you, I'm very bullish on what we're seeing in EMEA related to MiFID II. And I think that and what I think, Lynn Martin and I as we talk about it, Tim Noble who runs sales, they're very excited because we're early days. There are some companies that have begun to prepare and have begun to understand what MiFID II's implications are, but it's early days. And so as I look at 29% growth in signings in EMEA in terms of pricing and analytics, as I look at ASV for pricing and analytics, which is above the 6% ASV on average, there's no question in my mind that MiFID 2 in particular and we noted on Slide 7 things like BESTX and CEP and liquidity indicators, all of those products are still really in demand in terms of Europe. And I'll tell you that some of that confidence in that answer is reflected but my guess is when we split it out, Europe is going to be a big driver of that but my guess is when we split it out, Europe is going to be a big driver of that growth just as it was for the year on Slide 7. The other thing that's really encouraging is that we've designed these products, the BEST Act, the liquidity indicators to meet specific requirements of MiFID II, customers in the U. S. And Asia are starting to see the efficacy of using those products as well. And so I'm encouraged that those products will continue to be in demand in Europe, but also will start to contribute more and more to the growth we're seeing in the U. S. And also in Asia. And so it's a great example of where a product innovation to meet a given need with a sales team that's focused, which ours is, it offers a great opportunity to start to sell those products and their built for purpose use to other customers in different geographies and but also excited about the prospects for some of those products outside of Europe. The next question is from Brian Bedell of Deutsche Bank. Please go ahead. Hi, good morning. Thanks folks. Maybe just switching gears a little bit to the fixed income strategy, maybe question for both Scott and Jeff on this. Maybe Scott, if you can give us a little bit of a refresh of the revenue contribution from old and given the increase in volumes and BondPoint coming into January, I just want to get a better sense of the revenue trajectory in the fixed income platform trading platform overall? And then maybe just more strategically, Jeff, as you think about that and marrying that with the BAML indices, if you can talk about your view of how that platform will progress during this year? Yes. So I'll start and no, we haven't disclosed specifically the revenues associated with the BOM business. As Jeff alluded to, we had a record month in BondPoint in January, over 30% growth in terms of volume. The way I would characterize it is it's a relatively small part of our revenue today, but a very big growth opportunity as we move forward. And what we've put together is an interesting collection of assets that is all available essentially on that safety network. And the way we're thinking about it is that, if an existing customer in one of those businesses wants to just continue as they have in the past, that's fine. But what we really are trying to do is go to that customer and say we have a whole suite of services around fixed income. And since we have a purchasing relationship and a connectivity relationship with you, why don't you think about these other opportunities. And we put those together through our sales efforts in a package, if you will. And we also have the benefit of the fact that NYSE ARCA is the leading listings platform for ETFs and we have a very close working relationship with the ETF providers and are also following this trend of ETF growth in the fixed income space. It's a very convenient way for people to own fixed income instruments and it's one of the fastest growing parts of that space. So we there are a lot of services that around NYSE that we can also provide for people that are launching and marketing those kinds of products. So it's been a great reception so far with the various bits and bobs that we've put together. And honestly, I think it's even surprised us that a lot of major companies that didn't pay attention to certain pieces that we have, Now that they're under the ICE name and on our connectivity platform, these customers are very engaged with us in a way that bodes well for our future. And I'll just give you one quick data point in the spirit of being helpful. We gave you a chart last quarter that said if you look at BondPoint NGX and Bank of America Merrill Lynch indices, those would add about $93,000,000 of revenue. And I'll tell you that split roughly half between NGX and the other half of Five Points in Bank of America Merrill Lynch. So that will give you an idea of the base from which we believe we will grow. The next question is from Chris Allen of Rosenblatt. Please go ahead. Good morning, guys. I'm getting this question a lot from clients. So I was just wondering if you guys could clarify the market data guide. What's the impact from the acquisitions in 2018? It looks about $20,000,000 Is that based on kind of the 2017 run rate? And does that bake in any incremental growth opportunities for those that set of businesses you acquired? So I'm going to answer your question and if my answer indicates I didn't understand it, then ask it again. But our 6% to 7% growth in the data business is an organic number. And so it doesn't benefit from nor does it detract it from in terms of acquisition. So again, going back to the model we showed you in June, that model showed you that typically we'll have around 10% plus or minus contribution from acquisitions, but in the 6% to 7% guidance, that's organic. Again, organic as reported, organic constant currency, doesn't matter. We're going to grow 6% to 7% overall. And if you're looking for kind of the net impact of the acquisitions on data revenues, we gave you that on the last quarter, that's $18,000,000 But again, organic 6% to 7%, no benefit from acquisitions, no hurt from divestitures. It's 6% to 7% real growth that we're driving through all the reasons we talked about on the call. The next question is from Vincent Hung of Autonomous. Please go ahead. Hey. So I know you talked about it a bit on last quarter call and touched upon it today. But now having had a bit of time to look around Euroclear for maybe a quarter or so, I'd be interested to get your thoughts on that asset in terms of like the structural opportunities, what you think you could do for them specifically, and then ultimately, whether you'd be interested in control? Well, first of all, we think it's an interesting asset and it's one that we're a customer of and we use and so it's important to us. And so we had a have had a long pre existing relationship. But we like the management very much there. We like the Chairman. And we really feel like that we can do things with it together with that company to both help us and the ICE shareholders and help BureauClear. It's similar to the outlook we had when we invested in Satip in Brazil, which allowed us to launch a number of new initiatives in Brazil that on the back of that in partnership with Sateep and even though we've now sold out of Sateep as it merged into BM and F, We still have those initiatives operating in Brazil and they're still very important to us. So we see that same template, if you will, with Euroclear. I think that we'll know more. We've been invited to join the Board and Hester Serafini, who runs our U. S. Clearing Operations Commodity Clearing Operations is going to join that Board. And so we'll have more insight, at least she will have more insight into how we can contribute at the governance level. But long story short, I think it's a very good company and I think we have good relationships that will allow us to find opportunities together. The next question is from Chris Harris of Wells Fargo. Please go ahead. Hey, guys. You're going to be moving some of your energy contracts to the U. S, I believe later this month. So just wondering if you guys can talk a little bit about that action, whether that might create complexities for your customers? And could we see you guys do more there? Sure. Well, let me ask Ben Jackson, who is here for the first time to take that one. Thanks, Chris. Good to speak to all of you for the first time in this forum. So it's easy for people, we got a lot of questions around this when we moved it, looking at and thinking is this particular fallout from MiFID. And the reality is that this move is primarily about responding to our customers that trade our North American energy complex. These customers are primarily based in North America and they wanted our North American products to be based in North America. As Jeff mentioned in his comments, our North American energy complex is doing well. When we looked at our portfolio of North American products, some of which were executed in the U. S, namely our gas and power complex in the U. S. And others in Europe with our natural gas liquids and North American oil complex. And then you add on top of it the strategic acquisition of NGX, we have even more products in North America. So we collaborate with our customers and determined that bringing this complex together in the mid North America was the right way to service their needs. We've always it's important to know that we've always had a strategy of having multiple venues around the world to be able to have a diversified portfolio and an easy way for our customers to access our very good products around the world. The next question is from Kyle Voigt of KBW. Please go ahead. Hi. I'm just going to try one more on uroquier, maybe one for Scott. Just wondering if the opportunity came up, would becoming a majority owner and asset that needs a banking license give you any pause? And I believe Euroclear also has a very high credit rating, I think AA for competitive reasons. And there are certain constraints that could put on your leverage and credit rating if it was majority owned. And then lastly, maybe you could just give us an update on dividends you expect to receive from your clear in 2018 in the other income line? Thank you. Sure. In the 10 years I've been here, we've never been settled in M and A. And so the concept of creep to control and all that is that's I guess, one for parlor talk. But I think Jeff, it was very eloquently described exactly what our intent here and I think he's right. It's completely analogous to fatigue. We think the management team now does a good job. We think the Chairman is managing the government structure in a good way. We know a lot of the customers, we are one of the customers. So this is about aligning our interests to try and go after interesting strategic opportunities together. That's what this is about. And so I have looked at whether I want a banking license or not. We had one of those advice trust, it was a little bit painful, but we managed through it. But again, we're not looking at those considerations because that's not what this investment is. This investment is aligning our strategic interest for somebody to whom we're a big customer right now and what we believe can be a good partner and help develop additional custodial and collateral management capabilities that will benefit both of our customer sets. To your specific question, as was reported a week or so ago and as we disclosed further in our 10 ks today, we have reached agreement to acquire an additional stake that would bring us to around 9.8% total. That portion has not yet closed. And so it's difficult for me to tell you the size of the dividend. It could be 4% to 5% if the dividend is paid before this next set close, it could be 9 to 10 if the next round we get the regulatory approvals we need in time. And then in terms of timing, my expectation would be it would hit in 1st or second quarter. But we'll give you more guidance as we know more on that. Again, the dividend is a nice return that we get over the short term, but we're in this for the strategic partnership, not the dividend. The next question is a follow-up from Brian Bedell of Deutsche Bank. Please go ahead. Great. Thanks so much. I just want to follow-up on the your comments on the market on close offering from Bats, your view of whether that's going to end up going through despite the protest from you guys in NASDAQ and maybe just sort of the portion of trading on revenue that happens at the close at the NYSE? Sure. So in terms of where that is, it's been asked for the commission, the full commission to vote on whether or not that market structure should go forward. It's been approved by the staff and now it will go in front of the full commission. There's no timing on that. It's not been scheduled. So, it's hard to know when or if that how that'll be heard. But we're opposed to the proposal because the market, what we think will happen if that goes ahead is not one competitor challenging the liquidity at the close of the listing exchanges, we think all competitors will challenge all listings. And what you'll see is a massive fragmentation of the close. And on days like Monday, where ETFs and stocks are highly volatile, having a difficult time settling, to have fragmented that essential moment for benefit that really hasn't been accounted. I mean, it's hard to know what the cost benefit of a highly fragmented market will be to save a few pennies in essentially in a market structure, Why one would do that? So we've asked for the full commission to think about those issues and for the industry to really discuss those issues. Listed companies, when they decide, where to list their shares have multiple opportunities now to there are 3 about to be 4 exchanges that will handle a listing. And part of the listing process auctions and settlement mechanisms that each exchange uses. And listed companies are coming out opposed to being forced to have their closing move to another exchange after they've made a decision and are worried about this fragmentation. So we'll see where it goes. I'm a bit surprised that this is even being promulgated, honestly. The highest price closing, the person that charges the most at the closing is the one that's actually trying to promote this idea. In my mind, I don't know why they wanted to put that offering that they have at risk. But nonetheless, the proposal is out there and I think the industry will have a pretty vigorous debate and we'll see where this lands. But it won't be without a lot of negative input from market participants who as they think through the repercussions of the idea. This concludes our question and answer session. I would like to turn the conference back over to Jeff Sprecher for closing remarks. Thank you, Kate, and we appreciate your time today. Thanks for joining us, and we'll continue to update you through the quarter and through the year as we build out on the strategy that we discussed. Thank you, everybody. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.