By Pritam Biswas and Laura Matthews
Intercontinental Exchange on Thursday reported second-quarter profit above Wall Street estimates as higher trading volumes at the New York Stock Exchange parent more than offset weakness in its mortgage technology unit, whose weak outlook weighed on shares.
Revenue from ICE's exchanges segment, its biggest business, rose 9% to $1.09 billion from a year earlier, while the company's mortgage technology segment saw a slump of 16% to $249 million.
Warren Gardiner, chief financial officer, told analysts on a call that recurring revenues helped the mortgage unit, which helps businesses originate, review and process mortgages, to outperform an industry experiencing nearly 40% decline in origination volumes.
However, he added "current cyclical pressures are likely to drive recurring revenue growth into the low single-digit range for the full year."
ICE shares fell 3.3%.
Patrick O'Shaughnessy, an analyst at Raymond James, said recurring revenue in mortgage technology and the elongated sales cycle in ICE's fixed income data and analytics segments remain "points of frustration" for investors.
"That said, we believe things are clearly trending in the right direction," said O'Shaughnessy.
On an adjusted basis, ICE reported a profit of $1.43 per share for the quarter ended June 30, above analysts' average estimates of $1.37 a piece, according to Refinitiv data.
Revenues in fixed income and data services rose 6% from a year ago to $546 million, while transaction revenue grew 23%, including 25% growth in ICE's credit default swap clearing business.
ICE's rival Nasdaq beat estimates for second-quarter profit last month, helped by resilient demand for its investment-related products and capital markets solutions.
(Reporting by Pritam Biswas in Bengaluru and Laura Matthews in New York; Editing by Anil D'Silva and Nick Zieminski)
