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Investors

2015 Letter to Shareholders

Jeffrey C. Sprecher

Dear Fellow Shareholders:

I am pleased to report another year of record results at Intercontinental Exchange (NYSE: ICE). As the operator of exchanges around the world, we are deeply engaged in supporting markets and their role in capital raising, price discovery and risk management. This includes global markets that enable companies to manage the risk of their commodities and financial exposures, as well as stewardship of the New York Stock Exchange, where we help more than 2,400 listed companies reach corporate milestones as they grow. I want to take a moment to highlight an important milestone for our own company. November 2015 marked the 10-year anniversary of our IPO on the NYSE. The access to U.S. capital markets provided by the NYSE helped our small start-up company founded in Atlanta, Georgia to rapidly grow and continuously innovate for our customers and generate strong returns for our investors on a global scale.

Our growth is a direct result of our strategic approach to serving customers in new ways, but it would not have been possible without becoming a public company. And while we have become a larger company over the last decade - growing from 200 employees and $156 million in revenues in 2005, to over 5,500 employees and revenues of $3.3 billion in 2015 – our drive to serve markets is only increasing.

With that in mind, before turning to the many exciting opportunities in front of us, I’d like to reflect briefly on what was the best year in our very successful first decade as a public company. In 2015, we again delivered on our double-digit earnings growth target. This marked our 10th consecutive year of both record revenue and adjusted earnings growth, which is an unmatched achievement in our sector. Adjusted net income attributable to ICE from continuing operations1 was $1.4 billion, up 23% over 2014, and driven by $3.3 billion in revenues, which grew 8% year on year. In addition, our adjusted operating margin1 increased 4 points year-on-year to 59%.

Importantly, virtually every area of the company contributed to our growth. We reported record revenues for our global data services and for NYSE listings, as well as record commodities revenues and strong cash equities revenue. The diverse sources of revenue growth reflect the strategic evolution of our company. Over the last 15 years, we have transformed our business model to stay close to our customers’ evolving needs not just for a trading and clearing platform to manage their risk, but also, and importantly, for the data and information necessary to inform their risk management decisions. And, in the in that process, our revenue mix has transformed from 90% transaction-based to a more balanced mix, with transaction revenues now 56% of total revenues in 2015.

Our continued expansion into data services is aligned with rising customer demand for more information, analytics and valuation services. As markets fragment, market participants require data to aggregate and better understand market dynamics. This need reflects the rising importance of passive investing and a desire to increasingly conduct risk management and capital allocation decisions on a real-time basis. These changing customer needs also reflect increasing regulatory requirements. Regulations now require market participants to provide independent valuations on positions and portfolios, as well as increase trade reporting to data repositories, such as ICE Trade Vault. The need for increased data capacity, combined with the growing need for secure and reliable networks due to cybersecurity concerns, also increases the importance of data delivery mechanisms - which is why we are broadening the capabilities of our Secure Financial Transaction Infrastructure (SFTI) network.

As we look to 2016 and beyond, there are a number of opportunities we see across our business to continue to grow by serving our customers in new ways:

Data services

Risk management

Market dynamics

Our commitment to focus on addressing our customers’ needs is supported by numerous resources at our disposal:

  •  11 exchanges
  •  6 clearing houses
  •  9 asset classes
  •  Global data services across virtually all asset classes
  •  The premier capital raising venue
  •  A dedicated, customer-focused team around the world

And while we are a much larger company, what I said 10 years ago in this letter still rings true today:

“The successful implementation of our strategy in 2005 was made possible by a talented and dedicated team… Our management team is focused on achieving growth for our shareholders while maintaining the entrepreneurial culture and leading edge spirit that has driven our achievements to date.”

The ICE team wakes up every day committed to the future of our business which starts and ends with serving our customers. The evolution of data and risk management, blockchain, dynamic regulation, and the balance between balkanized markets and globalization is defining the needs of our customers, who are also creating new business models and processes. We at ICE always embrace change and look forward to delivering on our promise to grow by putting our customers first for the long-term benefit of our shareholders.

My best,

Jeffrey C. Sprecher's signature

Jeff
Chairman & CEO Intercontinental Exchange
Chairman, New York Stock Exchange
March 29, 2016


1 Adjusted figures represent non-GAAP measures. Please refer to page 63 in the company’s 2015 10-K filed on February 4, 2016 for reconciliations to the equivalent GAAP measures.