Intercontinental Exchange touted Encompass wins in the second quarter and revealed coming know-how upgrades that it expects to improve mortgage bond buying and selling in its newest earnings name.
The firm’s mortgage know-how unit reported progress on each a quarterly and annual foundation, with operating income coming in at $11 million in the second quarter. Operating margin was 2%. Income got here in constructive for the first time in over two years and improved from losses of $27 million in the first quarter and $32 million a 12 months in the past.
ICE’s historic earnings information contains professional forma numbers from Black Knight, earlier proprietor of its MSP servicing platform, prior to the merger of each firms in 2023.
Profits got here off of $531 million in second-quarter income, representing a rise of 4.1% from the prior reporting interval’s $510 million. Year over 12 months, income grew 4.9% from $506 million.
ICE’s MSP servicing software program operations accounted for $220 million of the complete with enterprise in its Encompass loan-origination system enterprise garnering $187 million. Data and analytics raked in $66 million, whereas ICE’s closing options earned $58 million.
“The year-over-year enchancment was largely pushed by information and analytics and our servicing enterprise,” mentioned Warren Gardiner, chief monetary officer at Intercontinental Exchange, throughout the name.
On the servicing facet, the firm continues to be using a wave of momentum after placing a cope with United Wholesale Mortgage to deliver the lender onto its MSP platform in April. UWM’s resolution to deliver servicing in-house with ICE as a accomplice got here after the acquisition of Mr. Cooper by longtime rival Rocket Cos. The merger between Rocket and Mr. Cooper will lead to some attrition in the latter half of the 12 months, however leaders mentioned they anticipated present revenues to stay close to second-quarter ranges.
“We’re seeing shoppers on the MSP facet persevering with to search for an impartial, well-capitalized impartial know-how supplier that does not doubtlessly compete with them,” mentioned firm President Ben Jackson.
Since the completion of its merger with Black Knight, ICE executives have usually celebrated the variety of new prospects it has managed to entice to its Encompass loan-origination system throughout earnings calls. Many of these shoppers now make use of the firm’s know-how for each originations and servicing.
ICE signed on 23 new Encompass prospects in the second quarter, together with a big regional financial institution, it mentioned.
The mortgage unit’s constructive outcomes helped elevate total web income at Intercontinental Exchange to $851 million for the quarter, or $1.48 per diluted share. Profits elevated from the first quarter’s $797 million and $632 million over the similar three months in 2024.
Aside from mortgage know-how, ICE’s major enterprise segments are buying and selling exchanges and glued income and information providers.
Moves ICE is making in secondary market buying and selling
The Atlanta-based monetary providers and world trade platform additionally pointed to initiatives combining the strengths of its ICE Bonds unit with mortgage know-how information meant to improve transparency in capital markets.
“Later this 12 months, ICE Bonds plans to combine pricing and analytics for mortgage know-how to assist merchants make extra knowledgeable buying and selling selections,” Jackson mentioned.
“Also, in the second half of this 12 months, we plan to launch the first model of our secondary complete mortgage buying and selling platform. This is designed to automate and supply important efficiencies to what’s at present a really analog course of,” he continued.
As a part of the efforts, the firm launched a request-for-quote protocol in April for mortgage-backed securities that sits alongside ICE’s present MBS click-to-trade platform.
