Good morning, all. Thank you for joining us on today's ICE Second Quarter 2025 Earnings Conference Call. My name is Drew, and I'll be the operator today. [Operator Instructions] It's now my pleasure to hand over to Katia Gonzalez, Manager of Investor Relations, to begin. Please go ahead when you're ready.

Good morning. ICE's second quarter 2025 earnings release and presentation can be found in the Investors section of ice.com. These items will be archived, and our call will be available for replay. Today's call may contain forward-looking statements. These statements, which we undertake no obligation to update, represent our current judgment and are subject to risks, assumptions and uncertainties. For a description of the risks that could cause our results to differ materially from those described in forward-looking statements, please refer to our 2024 Form 10-K, 2025 second quarter Form 10-Q and other filings with the SEC. In our earnings supplement, we refer to certain non-GAAP measures. We believe our non-GAAP measures are more reflective of our cash operations and core business performance. You'll find a reconciliation to the equivalent GAAP terms in the earnings materials. When used on this call, net revenue refers to revenue net of transaction-based expenses and adjusted earnings refers to adjusted diluted earnings per share. Throughout this presentation, unless otherwise indicated, references to revenue growth are on a constant currency basis. Please see the explanatory notes on the second page of the earnings supplement for additional details regarding the definition of certain items. With us on the call today are Jeff Sprecher, Chair and CEO; Warren Gardiner, Chief Financial Officer; Ben Jackson, President; and Chris Edmonds, President of Fixed Income & Data Services. I'll now turn the call over to Warren.

Thanks, Katia. Good morning, everyone, and thanks for joining us today. I'll begin on Slide 4 with a summary of our record second quarter results. Second quarter adjusted earnings per share were a record $1.81, up 19% year-over-year. These record results were led by a 9% increase in net revenue to a record $2.5 billion, with growth contributions from all 3 of our operating segments. Second quarter adjusted operating expenses totaled $983 million and were towards the low end of our guidance range, driven in part by additional technology-related savings and synergies. As a result of this strong performance, adjusted operating income increased by double digits to a record $1.6 billion, up 13% and on top of 11% pro forma growth in the second quarter of 2024. This strong business performance allowed us to return $532 million of capital to our shareholders during the quarter, including $255 million of share repurchases. Through the first half, we have returned over $1 billion to shareholders through both buybacks and dividends. And we did this while also investing in our business and reducing leverage, which ended the second quarter at our target of 3x EBITDA, ahead of our initial target when we closed the acquisition of Black Knight less than 2 years ago. Now let's move to Slide 5, where I'll provide an overview of the performance of our Exchange segment. Second quarter net revenues sold a record $1.4 billion, up 12% year-over-year and on top of 14% growth in the second quarter of 2024. Record transaction revenues of over $1 billion were up 15%, driven by a 20% increase in our interest rate business, record NYSE cash equities and option revenues up 10% and another quarter of record energy revenues, which grew 25% year-over-year. In addition, volumes in July continued to be…

Thank you, Warren, and thank you all for joining us this morning. Please turn to Slide 8. Across our Futures and Options markets, we've worked for nearly 3 decades to build out the scope and depth of our multi-asset and multi-geography offering to allow for both flexibility and precision trading from wherever in the world customers choose to trade on ICE. As a result, a record of over 1 billion contracts have traded on ICE through the first half, including a record 673 million energy contracts and a record 462 million interest rate contracts. This record performance drove 19% revenue growth in our Futures and Options revenues in the first half and is strong evidence of the ever-growing need for global risk management as our customers continue to turn to ICE to manage risk across the thousands of contracts offered on our platform. Across energy, markets have grown more global, more interconnected and more complex, shaped by shifting trade flows, regional dynamics and growing complexity in how energy is transported, produced, priced and consumed. We have continuously invested alongside this evolution, recognizing the importance of deep liquidity on our platform. Today, as a result of organic and inorganic investments, trading on our network is not tied to any single product or limited to any one region. Instead, we have built a diverse energy network that provides deep liquidity and price transparency across the spectrum of fuel sources from oil and refined products to coal, natural gas, power, environmental markets, renewables and ancillary products such as biofuels and their related credits. In essence, regardless of how the market evolves, whether driven by geopolitical change, shifting trade flows or growing demand in the developing world, we have strategically positioned our platform to offer customers the tools they need to manage risk effectively.…

Thank you, Ben. Please turn to Slide 11. In the second quarter, amidst the dynamic macro environment, we once again grew revenues, grew adjusted operating income and grew adjusted earnings per share, delivering the best quarter and the best first half in our company's history. Over the past 25 years, ICE has grown from a small Atlanta-based power exchange into a global data and technology company. The heart of our strategy has been to drive transparency and create workflow efficiencies for our customers. We do this by building and operating mission-critical digital networks that leverage our technology, data and expertise to connect our customers to opportunity around asset classes and around the globe. We connect these customers to our liquid energy markets to help manage risk. We connect entrepreneurs to capital at the New York Stock Exchange. We connect people to our fixed income data to give them pre-trade and post-trade transparency. And we connect participants to one another in the mortgage space to create more efficient transaction workflows. As the world's leading energy marketplace, the breadth and diversity of our global commodity platform drives an important network effect producing capital efficiencies for our customer base. In the second quarter, we saw record volumes and record revenues across our energy complex, contributing to an unsurpassed first half as market participants look to hedge exposures to geopolitical dynamics. Across our interest rate business, uncertainty on central bank policy, shifting trade policies and ongoing geopolitical tensions drove demand for our interest rate risk management. As a result, in the first half, a record 462 million interest rate contracts traded on our platform, including records across our Euribor and SONIA markets. This strong performance contributed to a 19% increase in revenues year-to-date, including 20% growth in the second quarter. At the New York Stock Exchange, our cash equity trading volumes increased 47% versus the prior year, while our equity options volume increased 5%. Similarly, in our credit default swap business, broad market volatility drove increased demand for credit protection with CDS notional cleared increasing 42% in the second quarter versus the prior year. In summary, our record-setting first half results reflect the all-weather nature of our business model, where we've intentionally positioned the company to provide customer solutions in numerous geographies and economic conditions to facilitate all weather results. I'd like to end our prepared remarks today by thanking our customers for their continued business and for their trust. And I'd like to thank my colleagues at ICE for their contribution to our best-ever second quarter, following on the heels of our record first quarter, delivering an unsurpassed first half for the company. I'd now like to turn our call back to our moderator, Drew, and we'll conduct a question-and-answer session until 9:30 Eastern Time.

[Operator Instructions] Our first question today comes from Craig Siegenthaler from Bank of America.

We have a follow-up on some of your mortgage tech commentary on your efforts to improve your competitive positioning. So we're curious on how you're looking to upgrade your products, especially with new technologies like AI and blockchain that could improve your efficiency and also your client experience. And do you see new opportunities to employ both technologies in the future, too?

Thanks, Craig. This is Ben. So we -- and we've alluded to this in our comments that a lot of the innovation in technology that we're providing to the industry first starts with integrating for the first time all of these systems to create a front-to-back life-of-loan platform for our clients. That in and of itself is going to help to drive better analytics for customers that have a servicing book to understand the client base a lot better, be able to predict when they're going to be right for a refi or a home equity line of credit, create that signal and enable the customer themselves to have a self-service platform in our consumer web portal to be able to engage with them or for the client to reach out proactively to them. And then once they engage, a lot of the details around that client are auto loaded into Encompass, can flow straight through to an electronic closing and then back into servicing seamlessly. So that's going to create a ton of efficiency, and we're well on the way to executing that. As it relates to AI, we are leveraging AI in a number of areas today and see a number of areas in the future, where we can continue to enhance the experience for our customers in utilizing our technology suite. So one area, and I alluded to this in my prepared remarks, is in the data and document automation platform that's automating certain parts of the checking process of the underwriting of a loan. And we already have the capabilities utilizing AI to do things like credit, income, collateral verification and then have expanded as well into audit. So basically being able to provide a real-time audit on the loan package as it's underwriting to make…

Our next question today comes from Ben Budish from Barclays.

Warren, you mentioned in your prepared remarks that your leverage level is now down to your target 3x. Just curious if you could share any updated thoughts on capital allocation. I'm wondering if you can comment on some of the recent media headlines around a potential M&A transaction. I know that news didn't come from you guys, but is there anything you can share there? And otherwise, how should we think about capital priorities now that you're at your target leverage level?

Sure. Ben, thanks for the question. So right, we did reach the target leverage ratio in the quarter. We did though ahead of our scheduled target when we announced the deal. So pleased with that. We did repurchase $250-or-so million worth of stock during the quarter. I'd expect as you move into the second half, we'll tick that up a little bit higher from where we were, but we still will probably chip away a little bit of that CP balance that we have, albeit probably not as much as we were previously, of course. So that's kind of how we're thinking about the capital return profile of the company at the moment, as we move through into the second half. In terms of broader capital allocation, obviously, the priority first here is to invest in the business, and you've seen us do that. I think it's from the perspective of some of the headlines you may have seen out there. I mean, we don't really comment on M&A rumors that are out there. So I think, look, we're obviously always looking. We've done that from the beginning of the company. So I think from that perspective, I'll leave it at that. But right now, the focus for us is obviously just kind of we haven't gotten to the leverage target, starting to kind of tick up the buyback and continue to chip away at that CP balance.

Our next question today comes from Ken Worthington from JPMorgan.

In IMT, origination and closing solution revenue both jumped nicely this quarter. And I'm trying to get a better sense of what we're seeing here. Can you give us a sense to what extent the jump was driven by new relationships onboarding versus sort of higher industry activity versus just plain seasonality?

Ken, this is Ben. Thanks for the question. It's a mix of all those elements that you just mentioned. We have been very explicit around the number of wins that we've been having each quarter since we closed on the Black Knight acquisition and continue to have great success in terms of winning new clients and -- yes, those clients because these are complicated implementations, they take some time to work through. But now we're at a stage where some of these clients are starting to come online. In fact, in the second quarter, we had one of our large regional banks come online on Encompass. So that success continues. We continue to have a great funnel of new client activity. This past quarter, I mentioned we had 23 wins on Encompass. Four of those wins, by the way, were clients that were on either MSP or that sub-service through somebody that's on MSP. And in addition, we had 2 wins on the MSP side, one of which was at the beginning of the second quarter that I mentioned on the last call, which was United Wholesale Mortgage, an existing IMT client. And then we had another MSP win as well last quarter from an existing IMT client. So we'll continue to see really good success on the sales front. We're seeing clients on the MSP side continuing to look for an independent, well-capitalized neutral technology provider that doesn't potentially compete with them. And that's what's leading to either sales directly through us of moving -- clients moving to the MSP platform. But we're also seeing independent sub-servicers, most of which are on MSP, are also having a lot of activity with clients as well as some of those clients that are sub-servicing with others that could potentially be perceived to compete with them are reevaluating those relationships. So that's a big piece of it. But obviously, the backdrop of the environment is starting to improve, definitely helped with areas like our closing solutions, where that is a very transaction-oriented part of the business. Our MERS business is doing very well. In fact, we've heard from one of the large depositories that traditionally has not used MERS is intending to start using MERS for the first time later this year. Simplifile continues to do well as well. So it's really a mix of those elements.

Our next question comes from the line of Alex Blostein from Goldman Sachs.

I wanted to ask you guys something that doesn't come up a whole lot on these Q&A sessions, but you spend more time talking about it recently, which is around data centers. You seem to continue to build out capacity there. And maybe help us understand a little better how they could translate into either new or improved revenue opportunities for ICE as a whole?

Alex, it's Chris. So we have a footprint that we have continued to invest in. As you recognized, we've built out on the footprint that we have today about half of our capacity that sits out there today. We have great line of sight into what that looks like on a go-forward basis and continued engagement with the clients as to what their needs are and a very scheduled process of how we will bring that online as power and things begin to become available and our CapEx associated with that. I will let Warren comment on that if he needs to. But it's our proprietary network that we have forever talked about having -- Jeff's made reference to ICE Cloud and things that we want to control that experience, and our clients have adapted to that very well and continue to come to us to fulfill those needs. So we have runway there through early 2030s that we will continue to develop in conjunction with the needs of our clients over that time base.

Our next question comes from Kyle Voigt from KBW.

I think of asking maybe a slight follow-up, but staying on the fixed income segment, ASP growth accelerated to 6% year-on-year. You noted a couple of tailwinds there, but it seems like most of the acceleration has been in Data and Network Technology. Just wondering if you could unpack the drivers of that acceleration a bit and what you're doing to drive that. And then on the fixed income data and analytics side, we're seeing growth that's still closer to 4%. Are you seeing ASP accelerate in that business as well? And is there a pathway to get back to kind of a 5% to 6% organic revenue growth rate in that business, do you think?

So I'll try to break that down. Certainly, in our -- in the networks piece, you look at our consolidated feeds business that we have there and the pricing that comes along with that, that gives us an opportunity as we continue to add new unique sets of content that we will distribute across that feed business along the way. And also on our Desktops in there. So those are 2 drivers that you would see there. If you look at our Index business and how we've continued to build out the custom indices and the offering that we see there, you look at the proliferation of our ETF ecosystem along with the fixed income ecosystem, I think what you're seeing is those 2 things coming together and people taking advantage of those 2 things in a single point. Those will both drive future business in both our evaluated pricing and reference data opportunities, as we continue to grow that over time. And certainly, the business that Ben referenced in his prepared remarks, and so did Warren around the increasing of our passive AUM, is evidence of that growth.

Yes. Kyle, the only thing I'd add to that, too, is just on the Fixed Income and Data Analytics business. We did actually exit the quarter in that particular business line at a 5% ASV. We had a record quarter for PRD within that, and so business trends are really strong there as we kind of head into the second half year, so feel good about that. Part of the reason we were around 4% this quarter for that line was also the index business. While it grew, it didn't grow in the double- digit range because we did have a bit of a market pullback there earlier in the quarter. So that business, of course, as you know, will ebb and flow with the markets to some degree. But as we exit the quarter there, again, we were in a pretty good footing from that perspective. So I feel good about the trajectory of that business as we head into the balance of the year. And then, similarly on the Data and Network Technology business, also seeing some continued strength there, as we head into the second half, pretty broad based as well across ICE Global Work, our Desktops business and then our Feeds business, as Chris mentioned as well.

Our next question comes from the line of Chris Allen from Citi.

Wanted to kind of go back to Mortgage Technology. You've got a lot of inbound just on the recurring revenue trajectory here. You noted some of the factors that were keeping things down. I think Flagstar had about a 1% impact. Just wondering what -- is there a geography issue too here? You mentioned customers resetting minimums. Does that translate to higher transaction fees? And when we kind of think about the overall guide where industry activity is trending, like how are you thinking about where the guide is kind of setting up for the rest of the year?

Yes. So look, I'm very comfortable with the guidance range that we gave at the beginning of the year, low to mid-single digits at this point. I do think on the recurring revenue side, importantly, we will grow this year. I did mention a couple of the headwinds that we do expect in the second half. Flagstar, of course, but that's on an annualized basis, about 1% of total revenues. That will happen early in the fourth quarter. We do have the inactive loans that roll off. We have that every year. And that's more of a third quarter event. And then on the minimums, as I mentioned too, we continue to see people resetting some minimums, particularly customers from vintages back in 2020 and 2021, a little bit of 2022. I will say we've moved through most of that or a lot of that, and we are seeing the discount, if you will, to the prior minimum, narrow pretty significantly relative to where we were last year, and so we're seeing an improvement in that. So ultimately, we've got probably less of a headwind than we had last year, which has been helpful. And then, on the revenue side for recurring, we've got, obviously, customer implementations. We've been a bit better on that front this year. I will say though, these take a long time. We've talked about revenue synergies, which I can give you an update on today is we're around $80 million now, but only about 1/5 of that is actually in the run rate. So we are working through those, and those can take some time to implement, particularly larger ones, but we're seeing some improvement there at the end of the day. And so you've got a little bit better of a tailwind, a little bit less of a headwind versus last year and why I think we can continue to grow on the recurring revenue side as we move through this year. In terms of the overall guidance, I mean, look, that's tough to predict. I mean, obviously, the first half of the year was good. In the second quarter, we saw some strong loan growth. It's hard to know what the second half will necessarily look like. But I think -- again, I think based on what we're seeing at the moment, we're comfortable that we'll be within the guidance range we gave for the overall business.

Our next question today comes from the line of Ashish Sabadra from RBC Capital Markets.

This is [indiscernible] for Ashish Sabadra. Maybe just a follow-up on the mortgage tech. Great to kind of see that margin expansion there. Can you maybe touch on what's kind of driving that disciplined expense management? And I'll take a follow-up later.

Sure. So it's 2 things. The first, we did -- through part of the integration that we're obviously still ongoing here, we moved significantly, most of that is really in the operations technology group, moving those over to ICE, Inc., a little bit of corporate. And so there was a bit of a reallocation, if you will, of the expenses across the segments that occurred as part of the integration, all planned in terms of how we've done that. So we did that actually a couple of quarters ago, and that's why you're seeing from a year-over-year perspective some benefit. And then the second part of that, too, is really on the synergy side, as you've heard us talk about. And so we did raise the synergy target at the beginning of this year. You're starting to see those flow through. And I feel very comfortable that we will reach that target as we exit this year. So I think those 2 things or combination together with a typical strong expense control that we've always been good at is really why you're seeing that margin expansion at the end of the day for that segment. But I would encourage you really to look ultimately and zoom out always at the overall business and just note because, again, those expenses will move from segment to segment when you have those allocation changes. We did grow margins 2 points this quarter. We had pretty solid incremental margin on top of that. So I would encourage you to also zoom out and look at the broader expense base, if you will, in terms of how we're performing on that front.

Our next question comes from Simon Clinch from Rothschild.

I wanted to pivot to the gas markets and the strength that you're seeing as TTF is sort of establishing itself as a global benchmark for gas. How should we think about the scale of the future opportunity here? I mean, could you perhaps talk about TTF in the concept of its share of total gas volumes across the U.S. and Europe and where that might go to, for example, and comparing that to perhaps to Brent within oil?

Sure. Thanks for the question. So as we've talked about on prior calls, and it was in my prepared remarks as well today. Our overall energy market is doing fantastic. There are a number of different reasons for that and tailwinds for it. And I'll just delve specifically into natural gas trends as an example. So one development that we see is going to continue to create a long tailwind for the growth of natural gas globally is just the resolution to the tariffs and trade discussions that have been going on. As in many of these settlements, you're starting to see energy being in U.S. energy and forward commitments to purchase U.S. Energy as a key element to it. Examples of that are the settlement that just happened in the last 12 hours with South Korea, including a commitment around future purchases of gas. Japan last weekend had the same thing. Both of those are highly complementary to our JKM contract. And JKM also trades oftentimes a package to TTF. So as that LNG hits the water that JKM contract is the Japan-Korea marker and is very, very well positioned to be the pricing point for that gas. In the EU settlement this past week, gas and oil commitments for future purchases are a part of that coming out of the U.S. We see that as tailwinds as well as oil that leaves the Gulf heading towards Europe is priced via Brent and our HOU contract, and gas that's destined for Europe is a tailwind to TTF. So we see a number of tailwinds. That's one example. Obviously, the geopolitical situations have reset supply chains, and U.S. gas is flowing around the world as a result of that, in particular, into Europe, and those supply chains will be hard…

Our final question today comes from Dan Fannon from Jefferies.

Jeff, I was hoping you could expand upon Warren's comments and just talk about your appetite for large-scale M&A given where your business sits today, your stock valuation and all the other factors that go into it.

Sure. I don't -- first of all, I don't think, as we sit today, anything has changed over the DNA of the company, which is we do feel like companies need to evolve. We want to be an all-weather name. So we care deeply about the mix of the businesses that we have and making sure that we can rationalize that in various geographies and various economic conditions that we can continue to deliver growth. So that's at the core of how we're planning the company going forward, and we meet regularly on strategy and look at our ability to buy into businesses to accelerate that strategy or to invest organically to move into these various strategies. And we're disciplined about how we do it in terms of what's the best way to deploy capital. And always in that mix is a conversation about share buybacks and dividends and return of capital to shareholders as the highest value use of funds. So nothing has changed there. I think what is unique is that Warren has pointed out that we've hit our leverage ratio targets. We were very diligent about the last large acquisition that we did, which was the acquisition of Black Knight and paying down the debt that we borrowed ahead of schedule to put ourselves in a position where we have maximum flexibility under these market conditions to execute a long-term strategy. A long-winded way of saying nothing changed, but the same discipline exists within the company to make sure that we can be trusted as a management team to deliver the highest value that we're capable of delivering to shareholders.

With that, we have no further questions in the queue. So that concludes the Q&A portion of today's call. I'll now hand back over to Jeff Sprecher for some closing remarks.

Thank you, Drew, and I want to thank all of you for joining us this morning. And we continue to look forward to updating you soon, as we build out these innovative solutions that I mentioned and continue to drive an all-weather business model that we're designing for growth. With that, I hope you all have a good day, and I look forward to seeing you soon.

That concludes today's call. You may now disconnect your lines.