What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-02-08 compared with 2023-02-02 · 325 added, 254 removed, 816 unchanged (42% of the section changed)

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Securities and Exchange Commission on February 2, 2023.

We are a provider of market infrastructure, data services and technology solutions to a broad range of customers including financial institutions, corporations and government entities.

We are a leading global provider of technology and data to a broad range of customers including financial institutions, corporations and government entities.

These products, which span major asset classes including futures, equities, fixed income and U.S.

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We report our results in the following three segments:

We operate regulated marketplaces for the listing, trading and clearing of a broad array of derivatives contracts and financial securities.

We operate regulated marketplace technology for the listing, trading and clearing of a broad array of derivatives contracts and financial securities as well as data and connectivity services related to those venues.

• Fixed Income and Data Services:

We provide fixed income pricing, reference data, indices, analytics and execution services as well as global CDS clearing and multi-asset class data delivery solutions.

We provide fixed income pricing, reference data, indices, analytics and execution services as well as global CDS clearing and multi-asset class data delivery technology.

• Mortgage Technology:

We provide a technology platform that offers customers comprehensive, digital workflow tools that aim to address the inefficiencies that exist in the U.S.

residential mortgage market, from application through closing and the secondary market.

We provide a technology platform that offers customers comprehensive, digital workflow tools that aim to address inefficiencies and mitigate risks that exist in the U.S.

residential mortgage market life cycle from application through closing, servicing and the secondary market.

Recent Developments

Pending Acquisition of Black Knight, Inc.

On May 4, 2022, we announced that we had entered into a definitive agreement to acquire Black Knight, Inc., or Black Knight, a software, data and analytics company that serves the housing finance continuum, including real estate data, mortgage lending and servicing, as well as the secondary markets.

Pursuant to that certain Agreement and Plan of Merger, dated as of May 4, 2022, among ICE, Sand Merger Sub Corporation, a wholly owned subsidiary of ICE, or Sub, and Black Knight, which we refer to as the “merger agreement,” Sub will merge with and into Black Knight, which we refer to as the “merger,” with Black Knight surviving as a wholly owned subsidiary of ICE.

As of May 4, 2022, the transaction was valued at approximately $13.1 billion, or $85 per share of Black Knight common stock, with cash comprising 80% of the value of the aggregate transaction consideration and shares of our common stock comprising 20% of the value of the

aggregate transaction consideration at that time.

The aggregate cash component of the transaction consideration is fixed at $10.5 billion, and the value of the aggregate stock component of the transaction consideration will fluctuate with the market price of our common stock and will be determined based on the average of the volume weighted averages of the trading prices of our common stock on each of the ten consecutive trading days ending three trading days prior to the closing of the merger.

This transaction builds on our position as a provider of electronic workflow solutions for the rapidly evolving U.S.

Acquisition of Black Knight, Inc.

On September 5, 2023, we acquired Black Knight, Inc., or Black Knight, a software, data and analytics company that serves the housing finance continuum, including real estate data, mortgage lending and servicing, as well as the secondary markets.

Pursuant to the Agreement and Plan of Merger, dated as of May 4, 2022, among ICE, Sand Merger Sub Corporation, a wholly owned subsidiary of ICE, or Sub, and Black Knight, which we refer to as the “merger

agreement,” Sub merged with and into Black Knight, which we refer to as the “merger,” with Black Knight surviving as a wholly owned subsidiary of ICE.

The aggregate transaction consideration was approximately $11.8 billion, or $76 per share of Black Knight common stock, with cash comprising 90% of the value of the aggregate transaction consideration and shares of our common stock comprising 10% of the value of the aggregate transaction consideration.

The aggregate cash component of the transaction consideration was $10.5 billion, and the number of our shares issued was based on the market price of our common stock and the average of the volume weighted averages of the trading prices of our common stock on each of the ten consecutive trading days ending three trading days prior to the closing of the merger.

We expect that this transaction will build on our position as a provider of end-to-end electronic workflow solutions for the rapidly evolving U.S.

residential mortgage industry.

Black Knight provides a comprehensive and integrated ecosystem of software, data and analytics solutions serving the real estate and housing finance markets.

We believe the Black Knight ecosystem adds value for clients of all sizes across the mortgage and real estate lifecycles by helping organizations lower costs, increase efficiencies, grow their businesses, and reduce risk.

On August 19, 2022, our preliminary proxy statement/prospectus on Form S-4 was declared effective by the SEC, and on September 21, 2022, Black Knight stockholders approved the transaction.

The transaction is expected to close in the first half of 2023 following the receipt of regulatory approvals and the satisfaction of customary closing conditions.

On September 14, 2023, or the Divestiture Date, in connection with the merger agreement, we sold Black Knight’s Optimal Blue and Empower loan origination system, or LOS, businesses, or the Divestitures, to subsidiaries of Constellation Software, Inc.

The cash proceeds from the Divestitures were $241 million.

The structure of the Optimal Blue transaction also included a Promissory Note with a face value of $500 million issued by the purchaser to Black Knight, as a subsidiary of ICE, at the closing of the transaction.

As described in Note 3 to our consolidated financial statements included in this Annual Report, the Promissory Note was valued at $235 million on the Divestiture Date.

Pursuant to the Agreement Containing Consent Orders entered into between the FTC and ICE and Black Knight, the Promissory Note was required to be sold within six months of the Divestiture Date.

On February 7, 2024, the FTC approved the buyer of the Promissory Note and the proceeds of the Promissory Note sale will be paid to Black Knight in the near future.

As we elected the fair value option for the Promissory Note, we are required to mark the asset to fair value each reporting period.

For subsequent measurement as of December 31, 2023, we wrote down the value of the Promissory Note, resulting in a fair value loss of $160 million.

Global Market Conditions

Our results of operations are affected by global economic conditions, including macroeconomic conditions and geopolitical events or conflicts.

During 2022, macroeconomic conditions, including rising interest rates, recent spikes in inflation rates and market volatility, along with geopolitical concerns, including the war in Ukraine and the sanctions and other measures that have been and continue to be imposed in response to the war, created uncertainty and volatility in the global economy and resulted in a dynamic operating environment.

Since 2022, macroeconomic conditions, including rising interest rates, inflation and significant market volatility, along with geopolitical concerns, including the conflicts in Ukraine, Israel and Gaza, have created ongoing uncertainty and volatility in the global economy and resulted in a dynamic operating environment.

Our business has been impacted positively and negatively by these global economic conditions.

For instance, due to market volatility and rising interest rates, we have seen increased trading across a number of our products, such as interest rate and equity futures, credit default swaps and bonds.

Conversely, increases in mortgage interest rates in 2022 have resulted in reduced consumer and investor demand for mortgages and adversely impacted the transaction-based revenues in our Mortgage Technology segment.

We have suspended all services in Russia except for limited offerings to non-sanctioned entities.

From an operational perspective, our businesses, including our exchanges, clearing houses, listings venues, data services businesses and mortgage platforms, have not suffered a material negative impact as a result of these events in Ukraine and the surrounding region.

We expect the macro environment to remain dynamic in the near-term, and we continue to monitor macroeconomic conditions, including interest rates and inflation rates, as well as the uncertainty surrounding the extent and duration of the ongoing conflict between Russia and Ukraine, and the impact that any of the foregoing may have on the global economy and on our business.

Conversely, increases in mortgage interest rates in 2022 and 2023 have resulted in reduced consumer and investor demand for mortgages and adversely impacted the transaction-based revenues in our Mortgage Technology segment.

If mortgage rates remain high or further increase, or if banks change their mortgage lending practices, our Mortgage Technology segment revenues may be further impacted.

We expect the macroeconomic environment to remain dynamic in the near-term, and we continue to monitor macroeconomic conditions, including interest rates, the inflationary environment, geopolitical events and military conflicts, including repercussions from the conflicts in Ukraine, Israel and Gaza and the impact that any of the foregoing may have on the global economy and on our business.

Throughout 2023, we have closely monitored the credit worthiness of our counterparties and investment agents during the recent banking sector events, scrutinized counterparties directly impacted and monitored for any potential contagion.

We did not suffer any material negative impact from the banking sector events that occurred in early 2023.

In light of the current and expected macroeconomic environment we will continue to closely monitor credit worthiness of our counterparties, clearing members and our financial service providers and take risk management measures in line with established risk management frameworks.

Tax Policy Changes

In July and August 2022, the CHIPS and Science Act, or CHIPS, and the Inflation Reduction Act of 2022, or IRA, were signed into law.

The IRA introduced a 15% corporate alternative minimum tax, or CAMT, on adjusted financial statement income for corporations with profits in excess of $1 billion, effective for tax years after December 31, 2022.

While further guidance on the implementation of the CAMT is expected, we do not expect it will have a material impact to our 2023 effective tax rate.

We also do not expect that CHIPS will have a material impact.

The IRA also includes a stock buyback excise tax of 1% on share repurchases, which will apply to net stock buybacks after December 31, 2022.

We do not expect this to have a material impact once share repurchases are resumed.

The Organization for Economic Cooperation and Development, or OECD/G20, has proposed the introduction of a global minimum tax rate at 15%.

Consultations are ongoing and while we expect increased tax compliance requirements, we do not expect a material impact to our effective tax rate given our current tax profile.

The Organisation for Economic Cooperation and Development, or OECD, Global Anti-Base Erosion Pillar Two minimum tax rules, or Pillar Two, which generally provide for a minimum effective tax rate of 15%, are intended to apply to tax years beginning in 2024.

In 2023, the OECD issued administrative guidance providing transitional safe harbor rules concerning the implementation of the Pillar Two framework, which will apply to fiscal years ending on or before December 31, 2026.

The EU member states and many other countries, including the U.K., have committed to implement or have already

enacted legislation adopting the Pillar Two rules.

We are monitoring developments and evaluating the impacts of these new rules on our tax rate, including our ability to qualify for the safe harbor rules as implemented by each jurisdiction, however, we do not expect a material impact to our effective tax rate given our current tax profile.

Consolidated Financial Highlights

The following summarizes our results and significant changes in our consolidated financial performance for the periods presented (dollars in millions, except per share amounts):

(1) Operating income/(loss) from our Mortgage Technology segment was ($276 million) and $57 million in 2023 and 2022, respectively.

(2) The adjusted figures exclude items that are not reflective of our ongoing core operations and business performance.

Adjusted net income attributable to ICE is presented net of taxes.

These adjusted numbers are not calculated in accordance with U.S.

See “—Non-GAAP Financial Measures” below.

Year Ended December 31, Year Ended December 31,

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Adjusted operating margin (2)

59 % 58 % 1 pt 58 % 59 % (1 pt)

Other income/(expense), net $ (1,830) $ 2,249 n/a $ 2,249 $ (267) n/a

59 % 59 % — pts

59 % 58 % 1 pt

Other income/(expense), net $ (800) $ (1,830) (56) % $ (1,830) $ 2,249 n/a

Income tax expense $ 456 $ 310 47 % $ 310 $ 1,629 (81) %

Effective tax rate

17 % 29 % (12 pts) 29 % 24 % 5 pts

16 % 17 % (1 pt) 17 % 29 % (12 pts)

Net income attributable to ICE

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$ 3,542 $ 3,554 — % $ 3,554 $ 3,123 14 %

Free cash flow (3)

$ 3,053 $ 3,072 (1) % $ 3,072 $ 2,671 15 %

Adjusted free cash flow (3)

$ 3,197 $ 2,906 10 % $ 2,906 $ 2,821 3 %

*Percentage changes in the table above deemed "n/a" are not meaningful.

(1) We define recurring revenues as the portion of our revenues that are generally predictable, stable, and can be expected to occur at regular intervals in the future with a relatively high degree of certainty and visibility.

We define transaction revenues as those associated with a more specific point-in-time service, such as trade execution.

We define transaction revenues as those associated with a more specific point-in-time service, such as a trade execution.

(2) The adjusted figures exclude items that are not reflective of our ongoing core operations and business performance.

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See “- Non-GAAP Financial Measures” below.

(3) We believe these non-GAAP liquidity measures provide useful information to management and investors to analyze cash resources generated from our operations.

We believe that free cash flow is useful as one of the bases for comparing our performance with our competitors and demonstrates our ability to convert the reinvestment of capital expenditures and capitalized software development costs required to maintain and grow our business.

We believe that adjusted free cash flow eliminates the impact of timing differences related to the payment of Section 31 fees.

These figures are not calculated in accordance with U.S.

See “—Non-GAAP Liquidity Measures” below.

• Revenues, less transaction-based expenses, increased $696 million in 2023 from 2022.

The increase in revenues includes $115 million in unfavorable foreign exchange effects arising from the stronger U.S.

dollar in 2022 from 2021.

• Revenues, less transaction-based expenses, increased $1.1 billion in 2021 from 2020.

The increase in revenues includes $44 million in favorable foreign exchange effects arising from the weaker U.S.

dollar in 2021 from 2020.

• Operating expenses decreased $43 million in 2022 from 2021.

The decrease in operating expenses includes $38 million in favorable foreign exchange effects arising from the stronger U.S.

dollar in 2022 from 2021.

The increase in revenues includes $17 million in favorable foreign exchange effects arising from fluctuations in the U.S.

dollar in 2023 as compared to 2022.

• Revenues, less transaction-based expenses, increased $146 million in 2022 from 2021.

The increase in revenues includes $115 million in unfavorable foreign exchange effects arising from fluctuations in the U.S.

dollar in 2022 as compared to 2021.

• Operating expenses increased $640 million in 2023 from 2022.

The increase in operating expenses includes $22 million in unfavorable foreign exchange effects arising from the weaker U.S.

dollar in 2021 from 2020.

• Other income/(expense), net, in 2022 primarily includes our share of estimated equity method investment losses and an impairment charge on our investment in Bakkt to its fair value, of $1.4 billion, a net gain on the sale of our Euroclear plc, or Euroclear, stake of $41 million, interest income of $108 million and interest expense of $616 million.

• Other income/(expense), net, in 2021 primarily includes our gain on the Bakkt transaction of $1.4 billion, our gain on the sale of our Coinbase Global, Inc., or Coinbase, investment of $1.2 billion, equity earnings in OCC of $51 million, estimated equity losses in our investment in Bakkt during the post-merger period of $92 million, dividend income from Euroclear plc, or Euroclear, of $60 million, a fair value adjustment gain on our Euroclear investment of $34 million and interest expense of $423 million.

• The effective tax rate in 2022 was lower than the effective tax rate in 2021 primarily due to the deferred income tax benefit from the impairment to our equity method investment in Bakkt in the current year, and the deferred income tax expense from the U.K.

tax law changes in the prior year.

• The effective tax rate in 2021 was higher than the effective tax rate in 2020 primarily due to the deferred income tax impacts resulting from the U.K.

tax law changes.

The increase in operating expenses includes $4 million in unfavorable foreign exchange effects arising from fluctuations in the U.S.

dollar in 2023 as compared to 2022.

• Operating expenses decreased $43 million in 2022 from 2021.

The decrease in operating expenses includes $38 million in favorable foreign exchange effects arising from fluctuations in the U.S.

dollar in 2022 as compared to 2021.

• Other income/(expense), net, in 2023 primarily includes interest income of $319 million, interest expense of $808 million, our equity earnings in OCC of $16 million, estimated equity losses in our investment in Bakkt of $135 million, a fair value loss of $160 million related to the Black Knight Promissory Note, an impairment related to our CAT loan receivable of $16 million, FX remeasurement losses of $12 million, and a loss on the sale of the Dun &

Bradstreet investment of $3 million, net of dividends received, that we acquired through the acquisition of Black Knight.

• Other income/(expense), net, in 2022 primarily includes interest income of $108 million, interest expense of $616 million, our share of estimated equity method investment losses and an impairment charge on our investment in Bakkt to its fair value of $1.4 billion, a net gain on the sale of our Euroclear plc, or Euroclear, stake of $41 million, our equity earnings in OCC of $15 million, and FX remeasurement losses of $9 million.

• The 16% effective tax rate in 2023 was below the U.S.

corporate income tax rate primarily driven by the following factors:

favorable audit settlements for historical years, favorable state apportionment changes, and the application of the high-tax exception to Global Intangible Low-Taxed Income.

These benefits were partially offset by the impact of the U.K.

corporate income tax increase from 19% to 25% effective April 1, 2023, and the tax impact of certain non-deductible Black Knight acquisition costs.

• The 17% effective tax rate in 2022 was below the U.S.

corporate income tax rate primarily driven by the deferred income tax benefit from the impairment of our equity method investment in Bakkt.

• The 29% effective tax rate in 2021 is significantly above the U.S corporate income tax rate primarily due to the deferred income tax expense resulting from the U.K.

tax law changes enacted in 2021.

In 2021, the U.K.

enacted a corporate income tax rate increase from 19% to 25% effective April 1, 2023.

In 2020, the UK enacted a corporate income tax rate increase from 17% to 19% effective April 1, 2020.

Business Environment and Market Trends

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Due to the fluctuations of the pound sterling and euro compared to the U.S.

dollar, our Exchanges segment revenues, less transaction-based expenses, were lower by $87 million in 2022 from 2021.

dollar, our Exchanges segment revenues, less transaction-based expenses, were higher by $14 million in 2023 from 2022.

Our exchange transaction and clearing revenues are presented net of rebates.

We recorded rebates of $869 million and $1.0 billion in 2022 and 2021, respectively.

We recorded rebates of $989 million and $869 million in 2023 and 2022, respectively.

We offer rebates in certain of our markets primarily to support market liquidity and trading volume by providing qualified participants in those markets a discount to the applicable commission rate.

Such rebates are calculated based on volumes traded.

The decrease in rebates is primarily due to lower volumes as compared to the prior year and the migration of Sterling futures rebates into the Sterling Overnight Index Average, or SONIA, and a change in the pricing and structure of SONIA products.

The increase in rebates is primarily due to higher volumes traded as compared to 2022.

• Energy Futures and Options:

Total energy volume decreased 4% and revenues decreased 6% in 2022 from 2021.

– Total oil futures and options volume decreased 12% in 2022 from 2021 driven, in part, by lower Gasoil volumes which are impacted by the uncertainty around Russian sanctions and the conflict in Ukraine.

– Our global natural gas futures and options volume increased 16% in 2022 from 2021 as 2022 benefited from elevated price volatility related to geopolitical events, including the conflict in Ukraine.

– Our environmentals and other futures and options volume decreased 12% in 2022 from 2021 with growth in U.S.

environmental volumes offset by lower EU environmental volumes.

Total energy volume increased 17% and revenues increased 29% in 2023 from 2022.

– Total oil futures and options volume increased 19% in 2023 from 2022 driven, in part, by price volatility related to oil supply/demand dynamics and geopolitical risk, coupled with increased focus on Brent with Midland WTI now deliverable into the Brent Basket, providing additional physical liquidity and exposure.

– Our global natural gas futures and options volume increased 16% in 2023 from 2022 primarily due to strength in our Dutch TTF complex as natural gas continues to globalize, coupled with price volatility related to geopolitical events in late 2023.

– Our environmentals and other futures and options volume were flat in 2023 from 2022.

• Agricultural and Metals Futures and Options:

Total volume in our agricultural and metals futures and options markets increased 16% and revenues increased 15% in 2023 from 2022.

The overall increase in agricultural volumes was due to 2022 benefiting from elevated price volatility and price inflation driving an increased need to manage risk across our commodity markets.

The overall increase in agricultural volumes was primarily due to 2023 benefiting from elevated price volatility as a result of weather-related supply and demand dynamics, such as El Nino, driving an increased need to manage risk across our commodity markets.

– Sugar futures and options volumes increased 20% in 2023 from 2022.

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• Financial Futures and Options:

Total volume increased 2% and revenues increased 21% in our financial futures and options markets in 2022 from 2021.

Adjusting for the transition of the LIBOR-based Sterling contract to the alternative rate-based SONIA contract, which is half the notional size of the Sterling contract, total volume in our financial futures and options markets increased 19% in 2022.

2022 benefited from elevated volatility across global markets driven by geopolitical events, central bank activity and inflationary concerns.

– Interest rate futures and options volume decreased 1% and revenue increased 23%, respectively, in 2022 from 2021.

Adjusting for the transition of the LIBOR-based Sterling contract to the alternative rate-based SONIA contract, which is half the notional size of the Sterling contract, interest rate volumes increased 20% in 2022 from 2021 driven by interest rate volatility and increased speculation of central bank activity due to inflation concerns.

Total volume in our financial futures and options markets was flat and revenues decreased 3% in 2023 from 2022, including the impacts of foreign exchange effects.

– Interest rate futures and options volume increased 4% and revenue increased 2% in 2023 from 2022 driven by interest rate volatility and speculation regarding central bank activity in late 2023.

Interest rate futures and options revenues were $299 million and $292 million in 2023 and 2022, respectively.

– Other financial futures and options volume, which includes our MSCI®, FTSE® and NYSE FANG+ equity index products, increased 15% and revenue increased 16% in 2022 from 2021.

2022 benefited from elevated volatility across global equity markets driven by geopolitical events, central bank activity and inflationary concerns.

– Other financial futures and options volume, which includes our MSCI®, FTSE® and NYSE FANG+ equity index products, decreased 15% and revenue decreased 12% in 2023 from 2022.

Other financial futures and options volume decreased as 2022 benefited from elevated volatility across global equity markets driven by geopolitical events, central bank activity and inflationary concerns.

Other financial futures and options revenues were $161 million and $183 million in 2023 and 2022, respectively.

• Cash Equities and Equity Options:

Cash equities volume increased 4% in 2022 from 2021 due to higher market volumes driven by elevated volatility related to inflationary, recessionary and geopolitical concerns.

Cash equities volume decreased 7% in 2023 from 2022 due to lower total market volumes as 2022 benefited from elevated volatility related to inflationary, recessionary and geopolitical concerns.

Cash equities revenues, net of transaction-based expenses, were $268 million and $275 million in 2023 and 2022, respectively.

Equity options volume increased 6% in 2022 from 2021 driven by increased participation and higher market share.

Equity options volume increased 4% in 2023 from 2022 driven by increased participation.

Equity options revenues, net of transaction-based expenses, were $115 million and $103 million in 2023 and 2022, respectively.

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securities exchanges, designated market maker service fees, exchange membership fees and agricultural grading and certification fees.

Our OTC and other revenues increased 31% in 2022 from 2021 primarily due to an increase in interest income on clearing margin deposits.

Following the October 2021 Bakkt transaction, Bakkt revenues are no longer included within our OTC and other revenues.

Our OTC and other revenues decreased 7% in 2023 from 2022 primarily due to a decrease in interest income on clearing margin deposits.

• Data and Connectivity Services:

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Through NYSE, NYSE American and NYSE Arca, we generate listings revenue related to the provision of listings services for public companies and ETFs, and related corporate actions for listed companies.

Listings revenues increased 7% in 2022 from 2021, driven by the full impact of strong equity capital markets activity in 2021.

Listings revenues decreased 4% in 2023 from 2022, driven by market volatility causing delays in initial public offerings, or IPOs.

Listings revenues in our securities markets arise from fees applicable to companies listed on our cash equities exchanges– original listing fees and annual listing fees.

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Listings fees related to other corporate actions are considered contract modifications of our listing contracts and are recognized ratably over time as customers continue to list on our exchanges.

In 2022, NYSE listed over $345 billion in total market value from IPOs, including three of the top five operating company IPOs defined by offering proceeds raised, follow-on offerings and over 30 transfers from competing exchanges, an increase of 56% from $221 billion raised in 2021.

Additionally, in 2023, NYSE reported 32 listing transfers from competing exchanges, the second-highest total since 2002, bringing $120 billion in new market capitalization to the exchange and also listed two of the year's three largest IPOs.

Selected Operating Data

Management considers volume metrics when making financial and operating decisions, and believes volumes are useful for management and investors in understanding the performance of our exchanges business.

Volume of contracts traded, futures and options rate per contract and open interest are measures that we use in analyzing the performance of our futures and options contracts.

Handled volume, matched volume and cash equities and equity options rate per contract are measures that we use in analyzing our NYSE cash equities and equity options performance.

We believe each of these measures provides useful information for management and investors in understanding our performance.

Management considers these metrics when making financial and operating decisions.

Our calculation of these metrics may not be comparable to similarly titled measures used by other companies.

The following charts and tables present trading activity in our futures and options markets by commodity type based on the total number of contracts traded, as well as futures and options rate per contract (in millions, except for percentages and rate per contract amounts):

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Total cash handled volume 2,231 2,409 (7) % 2,409 2,317 4 %

Total cash market share matched 19.9 % 19.9 % — 19.9 % 22.1 % (2.3) pts

Total cash market share matched 19.9 % 19.9 % — 19.9 % 19.9 % —

NYSE equity options (contracts in thousands):

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Section 31 fees were $293 million and $499 million in 2023 and 2022, respectively.

The increase in Section 31 fees was primarily due to an increase in rates.

The decrease in Section 31 fees was primarily due to a decrease in rates.

The fees we collect are included in cash at the time of receipt and we remit the amounts to the SEC semi-annually as required.

The total amount is included in accrued liabilities and was $223 million as of December 31, 2022.

The total amount is included in current liabilities and was $79 million as of December 31, 2023.

We make liquidity payments to cash and options trading customers, as well as routing charges made to other exchanges which are included in transaction-based expenses.

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We record routing charges on a gross basis as a component of transaction and clearing fee revenue.

Cash liquidity payments, routing and clearing fees were $1.8 billion in both 2022 and 2021.

Cash liquidity payments, routing and clearing fees were $1.6 billion and $1.8 billion in 2023 and 2022, respectively.

Operating Expenses, Operating Income and Operating Margin

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Operating margin

70 % 65 % 5 pts 65 % 66 % (1 pt)

71 % 70 % 1 pt 70 % 65 % 5 pts

Adjusted operating margin (1)

72 % 69 % 3 pts 69 % 68 % 1 pt

73 % 72 % 1 pt 72 % 69 % 3 pts

(1) The adjusted figures exclude items that are not reflective of our ongoing core operations and business performance.

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1,079 1,023 5 1,023 1,012 1

Acquisition-related transaction and integration costs

1 1 (20) 1 — 195

Depreciation and amortization

341 349 (2) 349 341 2

Acquisition-related transaction and integration costs

— 1 (95) 1 1 (20)

Operating expenses

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In the table above, we consider fixed income data and analytics revenues and other data and network services revenues to be recurring revenues.

In 2022 and 2021, 11% and 14%, respectively, of our Fixed Income and Data Services segment revenues were billed in pounds sterling or euros.

In both 2023 and 2022, 11%, of our Fixed Income and Data Services segment revenues were billed in pounds sterling or euros.

As the pound sterling or euro exchange rate changes, the U.S.

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Due to the fluctuations of the pound sterling and euro compared to the U.S.

dollar during 2022, our Fixed Income and Data Services revenues were lower by $28 million in 2022 than in 2021.

dollar during 2023, our Fixed Income and Data Services revenues were higher by $3 million in 2023 than in 2022.

Fixed Income and Data Services Revenues

Our Fixed Income and Data Services revenues increased 11% in 2022 from 2021 primarily due to strength in our fixed income execution and CDS clearing businesses due to elevated volatility across global markets driven by geopolitical events, central bank activity and inflationary concerns.

Our Fixed Income and Data Services revenues increased 7% in 2023 from 2022 due to growth in our other data and network services and our fixed income data and analytics products, coupled with strength in CDS clearing.

• Fixed Income Execution:

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Execution fees are reported net of rebates, which were nominal in 2023 and 2022.

Our fixed income execution revenues increased 96% in 2022 from 2021 due to elevated volatility across global markets driven by geopolitical events, central bank activity and inflationary concerns.

Our fixed income execution revenues increased 23% in 2023 from 2022 due to increased activity as a result of continued interest rate volatility.

• CDS Clearing:

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The notional value of CDS cleared was $18.8 trillion and $23.8 trillion in 2023 and 2022, respectively.

The increases in the notional value of CDS cleared were primarily driven by heightened volatility related to geopolitical events and inflationary concerns.

The increase in revenues was primarily due to net interest income on collateral balances.

• Fixed Income Data and Analytics:

Our fixed income data and analytics revenues increased 1% in 2022 from 2021.

The increase in revenues was due to strength in our index business during the first half of 2022 and continued growth in our pricing and reference data business driven by the strong retention rate of existing customers, the addition of new customers, and increased purchases by existing customers.

This was partially offset by unfavorable foreign exchange effects arising from fluctuations of the U.S.

dollar as compared to 2021.

Our fixed income data and analytics revenues increased 2% in 2023 from 2022 primarily due to strength in our index business and growth in our pricing and reference data business.

• Other Data and Network Services:

Our other data and network services revenues increased 7% in 2023 from 2022.

The increase in revenues was driven primarily by growth in our ICE Global Network offering, coupled with increased demand and strong retention in our consolidated feeds business, and strength in our derivatives analytics and desktop revenues.

The increase in revenues was driven by growth in our ICE Global Network offering, coupled with strength in our desktops, feeds and derivatives analytics revenues.

Annual Subscription Value, or ASV, represents, at a point in time, the data services revenues, which includes Fixed Income Data and Analytics as well as Other Data and Network Services, subscribed for the succeeding 12 months.

ASV does not include new sales, contract terminations or price changes that may occur during that 12-month period.

However, while it is an indicative forward-looking metric, it does not provide a precise growth forecast of the next 12 months of data

services revenues.

However, while it is an indicative forward-looking metric, it does not provide a precise growth forecast of the next 12 months of data services revenues.

Management considers ASV metrics when making financial and operating decisions, and believes ASV is useful for management and investors in understanding our data services business performance.

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Operating margin

34 % 28 % 6 pts 28 % 27 % 1 pt

36 % 34 % 2 pts 34 % 28 % 6 pts

Adjusted operating margin (1)

43 % 38 % 5 pts 38 % 38 % —

44 % 43 % 1 pt 43 % 38 % 5 pts

(1) The adjusted figures exclude items that are not reflective of our ongoing core operations and business performance.

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The following charts and table present our selected statements of income data for our Mortgage Technology segment (dollars in millions):

* Other revenues were $19 million and data and analytics revenues were $22 million in 2020.

(1) Servicing Software is a new revenue category following completion of the Black Knight acquisition.

(2) The adjusted figures in the charts above are calculated by excluding items that are not reflective of our cash operations and core business performance.

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Closing solutions 179 239 (25) 239 319 (25)

Servicing software 288 — n/a — — —

Data and analytics 156 92 69 92 76 22

Other 52 53 (3) 53 19 185

1,317 1,129 17 1,129 1,407 (20)

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698 539 30 539 546 (1)

Acquisition-related transaction and integration costs

91 40 130 40 89 (56)

Depreciation and amortization

626 442 41 442 424 4

Operating expenses

Acquisition-related transaction and integration costs

269 91 194 91 40 130

Operating income

Operating expenses

1,593 1,072 49 1,072 1,010 6

Operating income/(loss) $ (276) $ 57 n/a $ 57 $ 397 (86) %

Recurring revenues $ 961 $ 643 50 % $ 643 $ 553 16 %

Transaction revenues $ 356 $ 486 (27) % $ 486 $ 854 (43) %

*Percentage changes in the table above deemed "n/a" are not meaningful.

In the table above, we consider subscription fee and certain other revenues to be recurring revenues.

Each revenue classification above contains a mix of recurring and transaction revenues, based on the various service offerings described in more detail below.

During 2023, we reclassified certain revenues within our Mortgage Technology segment that were previously included in other revenues to closing solutions, origination technology and data and analytics revenues.

Closing solutions revenues now include membership dues, and origination technology revenues and data and analytics revenues now include mortgage-related professional services revenues.

As of December 31, 2023, other revenues are no longer separately presented.

We believe this is a more accurate reflection of the nature of these revenues.

The impact of this change was not material, and the prior year periods have been adjusted for comparability.

Additionally, following the acquisition of Black Knight and beginning in the third quarter of 2023, we have added servicing software to our Mortgage Technology segment revenues.

The comparable periods in 2022 results do not include a contribution from the Black Knight acquisition.

Mortgage Technology Revenues

Our mortgage technology revenues are derived from our comprehensive U.S.

Our mortgage technology revenues are derived from our comprehensive, end-to-end U.S.

residential mortgage platform.

Our mortgage technology business is intended to enable greater workflow efficiency for customers focused on originating U.S.

residential mortgage loans.

Mortgage technology revenues decreased $278 million or 20% in 2022 from 2021 primarily due to lower mortgage origination volumes driven by rising interest rates.

Our mortgage technology business is intended to enable greater workflow efficiency and mitigate risks for customers throughout the mortgage life cycle.

Black Knight contributed $363 million of revenues in 2023 following completion of the acquisition.

Excluding the revenue contributed by Black Knight, mortgage technology revenues decreased $175 million or 15% in 2023 from 2022, primarily due to lower mortgage origination volumes driven by rising interest rates.

• Origination technology:

Our origination technology revenues decreased 22% in 2022 from 2021 due to lower transaction-based revenues as mortgage origination volumes declined during 2022.

Our origination technology revenues decreased 13% in 2023 from 2022 due to lower transaction-based revenues as mortgage origination volumes declined during 2023, offset by $11 million of origination technology revenue from Black Knight following completion of our acquisition in September 2023.

Our origination technology acts as a system of record for the mortgage transaction, automating the gathering, reviewing, and verifying of mortgage-related information and enabling automated enforcement of rules and business practices designed to help ensure that each completed loan transaction is of high quality and adheres to secondary market standards.

These revenues are based on recurring Software as a Service, or SaaS, subscription fees, with an additive transaction-based or success-based pricing fee as lenders exceed the number of loans closed that are included with their monthly base subscription.

In addition, the ICE Mortgage Technology network provides originators connectivity to the mortgage supply chain and facilitates the secure exchange of information between our customers and a broad ecosystem of third-party service providers, as well as lenders and investors that are critical to consummating the millions of loan transactions that occur on our origination network each year.

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Our closing solutions revenues decreased 25% in 2023 from 2022 due to lower mortgage origination volumes.

Our closing solutions connect key participants, such as lenders, title and settlement agents and individual county recorders, to digitize the closing and recording process.

Closing solutions also include revenues from our MERSCORP Holdings, Inc., or MERS database, which provides a system of record for recording and tracking changes and servicing rights and beneficial ownership interests in loans secured by U.S.

Our closing solutions connect key participants, such as lenders, title and settlement agents and

individual county recorders, to digitize the closing and recording process.

Closing solutions also include revenues from our MERSCORP Holdings, Inc., or MERS database, which provides a system of record for recording and tracking changes, servicing rights and beneficial ownership interests in loans secured by U.S.

residential real estate.

Revenues from closing solutions are largely transaction-based and are based on the volume of loans closed.

• Servicing software:

Our servicing software revenues include integrated mortgage servicing solutions, which help automate all areas of the servicing process, from loan boarding to final payment or default, to help lower costs, reduce risk and improve financial performance.

Our servicing solutions support first lien mortgages, home equity loans and lines of credit on a single platform to manage all servicing processes, including loan setup and maintenance, escrow administration, investor reporting, and regulatory requirements.

We also provide solutions that provide consumers with access to customized, timely information about their mortgages and allow our clients’ customer service representatives to access the same customer information, which is key to increasing borrower retention.

Another servicing solution provides clients, third-party providers and their developers access to our growing catalog of APIs across the mortgage life cycle.

Our default servicing solutions help simplify the complex process for loans that move into default, while supporting servicers with their compliance requirements and to facilitate more efficient loss mitigation processes.

We also offer advanced technology to support the bankruptcy and foreclosure process, and more efficiently manage claims related to properties in foreclosure, as well as tools to support loss analysis, to help servicers make the right decisions at the right time.

• Data and Analytics :

Our Data and Analytics revenues increased 24% in 2022 from 2021 due to the addition of new customers in our Automation, Intelligence, Quality, or AIQ, and data businesses.

Revenues include those related to ICE Mortgage Technology’s AIQ offering, which applies machine learning to the entire loan origination process, offering customers greater efficiency by streamlining data collection and validation through our automated document recognition and data extraction capabilities.

AIQ revenues can be both recurring and transaction-based in nature.

In addition, our data offerings include real-time industry and peer benchmarking tools, which provide originators a granular view into the real-time trends of the U.S.

residential mortgage market.

We also provide a Data as a Service, or DaaS, offering through private data clouds for lenders to access their own data and origination information.

Our Data and Analytics revenues increased 69% in 2023 from 2022 primarily due to $63 million of revenue from Black Knight following completion of our acquisition in September 2023.

Data and Analytics revenues include those related to ICE Mortgage Technology's Data & Document Automation and Mortgage Analyzer solutions, or Analyzer (formerly known as AIQ), which offers customers greater efficiency by streamlining data collection and validation through our automated document recognition and data extraction capabilities.

Analyzer revenues can be both recurring and transaction-based in nature.

In addition, our data offerings include near real-time industry and peer benchmarking tools, which provide originators a granular view into the real-time trends of the U.S.

residential mortgage market, as well as credit and prepayment models, custom and proprietary analytics, valuation, and MLS solutions.

We also provide a Data as a Service, or DaaS, for lenders and industry participants to access industry data and origination information.

The data and insights from these solutions inform, support and enhance our other solutions to help lenders and servicers make more informed decisions, improve performance, identify and predict risk and generate more qualified leads.

Revenues related to our data products are largely subscription-based and recurring in nature.

Other revenues decreased 3% in 2022 from 2021 due to lower professional services and non-mortgage consumer engagement revenue.

Other revenues include professional services fees, as well as revenues from ancillary products.

Other revenues can be both recurring and transaction-based in nature.

Our data and analytics offerings include property ownership data, lien data, servicing data, automated valuation models and collateral risk scores, among others, provided to clients in the mortgage, real estate and capital markets verticals.

Operating Expenses, Operating Income and Operating Margin

The following chart summarizes our Mortgage Technology segment's operating expenses, operating income and operating margin (dollars in millions).

The primary driver of the increase in operating expenses is related to the impact of the Black Knight acquisition and the corresponding Black Knight related operating expenses.

The resulting operating loss and negative margin is primarily related to the acquisition-related transaction and integration costs incurred during the year.

See “- Consolidated Operating Expenses” below for a discussion of the significant changes in our operating expenses.

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$ 809 $ 618 31 % $ 618 $ 602 3 %

Operating income

$ 57 $ 397 (86) % $ 397 $ 152 162 %

Operating income/(loss) $ (276) $ 57 n/a $ 57 $ 397 (86) %

Adjusted operating income (1)

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39 % 45 % (6 pts) 45 % 57 % (12 pts)

*Percentage changes in the table above deemed "n/a" are not meaningful.

(1) The adjusted figures exclude items that are not reflective of our ongoing core operations and business performance.

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We expect our operating expenses to increase in absolute terms in future periods in connection with the growth of our business, and to vary from year-to-year based on the type and level of our acquisitions, integration of acquisitions, and other investments.

In 2022 and 2021, 9% and 10%, respectively, of our operating expenses were incurred in pounds sterling or euros.

In both 2023 and 2022, 9% of our operating expenses were billed in pounds sterling or euros.

Due to fluctuations in the U.S.

dollar compared to the pound sterling and euro, our consolidated operating expenses were $38 million lower in 2022 than in 2021.

dollar compared to the pound sterling and euro, our consolidated operating expenses were $4 million higher in 2023 than in 2022.

See Item 7(A) “- Quantitative and Qualitative Disclosures About Market Risk - Foreign Currency Exchange Rate Risk” below for additional information.

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Stock-based compensation expenses $ 197 $ 149 32 %

Employee headcount increased in 2022 from 2021 primarily due to recent acquisitions and a shift to move certain costs in-house, primarily in India.

Compensation and benefits expense decreased $55 million in 2022 from 2021 primarily due to $54 million in expenses related to Bakkt prior to deconsolidation in 2021.

Compensation expense includes higher costs from increased headcount, annual merit increases and other related costs, offset by lower bonus expense in 2022 due to lower target performance as compared to the above-target performance in 2021.

Stock-based compensation expenses decreased in 2022 due to the deconsolidation of Bakkt and lower target performance in 2022 as compared to the above-target performance in 2021.

Employee headcount increased in 2023 from 2022 primarily due to our acquisition of Black Knight.

Compensation and benefits expense increased $188 million in 2023 from 2022 primarily due to $155 million attributable to our acquisition of Black Knight and an increase in our bonus and noncash performance-based restricted stock compensation accruals, partially offset by higher capitalized labor and lower payroll.

The stock-based compensation expenses in the table above relate to employee stock option and restricted stock awards and exclude stock-based compensation related to acquisition-related transaction and integration costs.

Professional Services Expenses

Professional services expense includes fees for consulting services received on strategic and technology initiatives, temporary labor, as well as regulatory, legal and accounting fees, and may fluctuate as a result of changes in our use of these services in our business.

Professional services expenses decreased $28 million in 2022 from 2021 primarily due to lower regulatory and litigation expenses, lower consulting expenses related to bringing certain mortgage technology-related costs in-house, and $13 million in expenses recorded at Bakkt in 2021 prior to deconsolidation.

Professional services expenses decreased $8 million in 2023 from 2022 primarily due to lower consulting expenses related to bringing certain mortgage technology-related costs in-house, partially offset by higher legal expenses primarily related to the Black Knight acquisition.

Acquisition-Related Transaction and Integration Costs

In 2022, we incurred $93 million in acquisition-related transaction costs primarily due legal and consulting expenses related to our pending acquisition of Black Knight and our integration of Ellie Mae.

In 2023, we incurred $269 million in acquisition-related transaction and integration costs primarily due to legal, consulting and integration expenses related to our acquisition and integration of Black Knight and our integration of Ellie Mae.

Included in the acquisition-related transaction and integration costs was $55 million of Black Knight replacement restricted stock awards that accelerated due to the Divestitures and certain terminations.

We expect to continue to explore and pursue various potential acquisitions and other strategic opportunities to strengthen our competitive position and support our growth.

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Technology and communications expenses may be impacted by growth in electronic contract volume, our capacity requirements, changes in the number of telecommunications hubs and connections with customers to access our electronic platforms directly.

Technology and communications expenses increased by $17 million in 2022 from 2021, primarily due to increased hardware and software support costs, increased hosting costs and increased data services costs, partially offset by $11 million in expenses in 2021 related to Bakkt prior to deconsolidation.

Technology and communications expenses increased by $51 million in 2023 from 2022, primarily due to $40 million related to Black Knight and increased hardware and software support costs, partially offset by a decrease in license expense.

Rent and Occupancy Expenses

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We have significant operations located in the U.S., U.K., and India, with smaller offices located throughout the world.

Rent and occupancy expenses included decreased rent expense in 2022 from 2021 due to office closures, and expenses in 2021 related to Bakkt prior to deconsolidation.

These costs were partially offset by higher costs related to utilities, repairs and maintenance as more employees returned to the office.

Rent and occupancy expenses increased $9 million in 2023 from 2022, primarily due to $5 million related to Black Knight and other increases in rent and utility costs.

See Item 2 “- Properties” above for additional information regarding our leased and owned property.

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Selling, general and administrative expenses include marketing, advertising, public relations, insurance, bank service charges, dues and subscriptions, travel and entertainment, non-income taxes and other general and administrative costs.

Selling, general and administrative expenses increased in 2022 from 2021, primarily due to increased marketing expenses related to additional branding efforts and increased travel and entertainment expenses compared to suppressed travel demand in 2021 as a result of COVID-19.

These were partially offset by $19 million in expenses related to Bakkt in 2021 prior to deconsolidation.

Selling, general and administrative expenses increased $40 million in 2023 from 2022, primarily due to $8 million attributable to Black Knight, payments of claims made following a NYSE system outage that occurred in January 2023, accruals for regulatory matters, an increase in travel and entertainment expenses and increased bad debt expense.

Depreciation and Amortization Expenses

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We recorded amortization expenses on intangible assets acquired as part of our acquisitions, as well as on other intangible assets, of $749 million and $610 million in 2023 and 2022, respectively.

During 2023, $141 million in amortization expense was related to intangible assets acquired in connection with our Black Knight acquisition.

We recorded depreciation expenses on our fixed assets of $466 million and $421 million in 2023 and 2022, respectively.

The increase in 2022 over 2021 was primarily due to an increase in internally developed software assets at ICE Mortgage Technology.

The increase in 2023 over 2022 was primarily due to an increase in internally developed software assets in our Mortgage Technology segment.

Consolidated Non-Operating Income/(Expense)

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(808) (616) 31 (616) (423) 46

Other income/(expense), net (1,322) 2,671 n/a 2,671 80 n/a

Total other income/(expense), net $ (1,830) $ 2,249 n/a $ 2,249 $ (267) n/a

Other income/(expense), net (311) (1,322) (76) (1,322) 2,671 n/a

Total other income/(expense), net $ (800) $ (1,830) (56) % $ (1,830) $ 2,249 n/a

Net income attributable to non-controlling interest

$ (70) $ (52) 35 % $ (52) $ (11) 383 %

*Percentage changes in the table above deemed "n/a" are not meaningful.

Interest Income

Interest income increased in 2023 from 2022 primarily due to an increase in short-term interest rates combined with larger investment balances.

Interest income in 2022 includes $76 million in interest income recognized in connection with the short-term investments related to the $5.0 billion of SMR Notes (as defined in "Liquidity and Capital Resources— Debt") for the Black Knight acquisition and the remainder primarily relates to interest on the restricted cash balances held within our regulated entities.

Interest income primarily represents interest earned on our short-term investments, and in 2023 and 2022 included $213 million and $83 million, respectively, in interest income recognized in connection with the short-term investments related to both the $5 billion of the Notes (as defined in "Liquidity and Capital Resources— Debt") issued and the operating cash accumulated for the Black Knight acquisition.

In addition, our clearing houses also earned interest income of $88 million in 2023 and $22 million in 2022.

The remainder primarily relates to interest earned on various unrestricted and restricted cash balances held within our group entities.

Interest Expense

Interest expense increased in 2022 from 2021 primarily due to $135 million in interest expense in 2022 related to the Black Knight acquisition-related-debt, $30 million in costs associated with our May 2022 debt refinancing as well as higher bond coupons associated with the re-financing of our existing debt.

Interest expense on our outstanding debt increased $192 million in 2023 driven primarily by the debt raised to fund the Black Knight acquisition.

Interest expense on the $5 billion of Senior Notes issued in May 2022 to partially fund the Black Knight acquisition resulted in an incremental increase in interest expense of $87 million.

In addition, in 2023 we incurred interest expense of $88 million on borrowings under our Term Loan facility and issuances under our Commercial Paper Program (each as defined in "Liquidity and Capital Resources—Debt"), both of which partially funded the Black Knight acquisition.

We also assumed a $1 billion Senior Note in connection with our Black Knight acquisition which resulted in $17 million of interest expense during 2023.

See “— Debt” below.

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Our equity method investments include OCC and Bakkt, among others.

We recognized ($1.3 billion) and ($42 million) during 2022 and 2021, respectively, of our share of estimated equity method investment losses, net, and impairment charges, which are included in other income/(expense).

In 2022, after recording our share of Bakkt's equity method losses, which included Bakkt's impairment charge, we recorded an impairment charge on our investment in Bakkt to its fair value as other expense.

This was based on what we consider to be an other-than-temporary decline in fair value as a result of several factors, including consideration of the impairment charge recorded by Bakkt (see Notes 3 and 4 to our consolidated financial statements).

We recognized losses of $122 million and $1.3 billion during 2023 and 2022, respectively, of our share of estimated equity method investment losses, net, and impairment charges, which are included in other income/(expense), net.

The estimated losses and impairment during 2023 and 2022 are primarily related to our investment in Bakkt.

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Both 2023 and 2022 include adjustments to reflect the difference between reported prior period actual results from our original estimates.

During 2021, Bakkt completed its merger with VIH, as a result of which we retained an approximate 68% economic interest in Bakkt, and we recorded a gain of $1.4 billion as other income upon our deconsolidation of Bakkt.

Following the merger, we show our economic interest share of estimated Bakkt profits/(losses) as equity earnings, which are also included in other income (expense), net.

We recorded other expense of ($92 million) related to our Bakkt investment for the post-merger period during 2021.

During 2021, Coinbase completed an IPO and we sold our investment in Coinbase for $1.2 billion, and recorded a gain of $1.2 billion as other income.

During 2022, we recorded a $9 million accrual for legal settlements as other expense.

During 2021, we recorded a gain of $7 million related to the settlement of an acquisition-related indemnification claim from a prior acquisition as other income.

In addition, we accrued approximately $16 million related to a legal settlement.

In connection with our acquisition of Black Knight, we acquired an investment in Dun & Bradstreet, which we classified as an equity investment.

Subsequent to the Black Knight acquisition and prior to December 31, 2023, we sold the entire investment for a total of $187 million and realized a total loss of $3 million on the sales, net of dividends received, which is included in other income/(expense), net in 2023.

In connection with our sale of Black Knight’s Optimal Blue and Empower LOS businesses we received a Promissory Note as part of the sale proceeds that was originally valued at $235 million on the Divestiture Date.

As we elected the fair value option for the Promissory Note, we are required to mark the asset to fair value each reporting period.

For subsequent measurement as of December 31, 2023, we wrote down the value of the Promissory Note, resulting in a fair value loss of $160 million, which is included in other income/(expense), net in 2023.

During 2023, we recorded an impairment related to our CAT loan receivable of $16 million.

During 2022, we recorded a $9 million accrual for legal settlements.

We completed the sale of our Euroclear stake on May 20, 2022.

The carrying value of our investment was $700 million at the time of the sale.

We recorded a net gain of $41 million on the sale, which is included in other income during 2022.

We recorded a net gain of $41 million on the sale, which was included in other income during 2022.

We did not receive a Euroclear dividend during the 2022 prior to the sale of our investment.

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Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost , or ASU 2017-07, we are recognizing the other components of net benefit cost of our defined benefit plans in the income statement as non-operating income on a full retrospective basis.

The combined net periodic expense of these plans was $2 million and $3 million in 2022 and 2021, respectively.

The combined net periodic expense/(benefit) of these plans was ($2 million) and $2 million in 2023 and 2022, respectively.

Non-controlling Interest

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As of December 31, 2023, our non-controlling interests include those related to the non-ICE limited partners' interest in our CDS clearing subsidiaries and non-controlling interest in ICE Futures Abu Dhabi.

During 2021 we received a contribution from a group of minority investors for a non-controlling interest in ICE Futures Abu Dhabi.

Prior to completion of the Bakkt transaction on October 15, 2021, our non-controlling interest also included the redeemable non-controlling interest of the non-ICE partners in Bakkt.

On October 15, 2021, Bakkt completed its merger with VIH and as of December 31, 2021, we no longer held redeemable non-controlling interest related to Bakkt.

Refer to Note 3 to our consolidated financial statements contained elsewhere in this Annual Report.

Consolidated Income Tax Provision

Consolidated income tax expense was $310 million and $1.6 billion in 2022 and 2021, respectively.

Consolidated income tax expense was $456 million and $310 million in 2023 and 2022, respectively.

The change in consolidated income tax expense between years is primarily due to the tax impact of changes in our pre-tax income and the changes in our effective tax rate.

The consolidated income tax expense for 2021 was elevated due to the tax expense associated with the gains resulting from our Coinbase and Bakkt transactions.

Our effective tax rate was 16% and 17% in 2023 and 2022, respectively.

The effective tax rate for 2022 is lower than the effective tax rate for 2021 primarily due to the deferred income tax benefit from the impairment to our equity method investment in Bakkt in 2022 and deferred income tax expenses from the U.K.

tax law changes in 2021.

In 2021, the U.K.

enacted a corporate income tax rate increase from 19% to 25% effective April 1, 2023.

The 16% effective tax rate for the current year was below the statutory U.S.

federal corporate income tax rate primarily driven by the following factors:

favorable audit settlements for historical years, favorable state apportionment changes and the application of the high-tax exception to Global Intangible Low-Taxed Income.

These 2023 tax benefits were partially offset by the impact of the U.K.

corporate income tax increase from 19% to 25% effective April 1, 2023 and the tax impact of certain non-deductible Black Knight acquisition costs.

In conjunction with the increase in the U.K.

corporate income tax rate in 2023, we intend to elect the high-tax exception to Global Intangible Low-Taxed Income in 2023 in our federal income tax return to be filed in 2024.

Our 2023 tax provision includes the impacts of this election.

The 17% effective tax rate for 2022 was below the statutory U.S.

federal corporate income tax rate as well, primarily driven by the deferred income tax benefit from the impairment to our equity investment in Bakkt in 2022.

The OECD Global Anti-Base Erosion Pillar Two minimum tax rules, or Pillar Two, which generally provide for a minimum effective tax rate of 15%, are intended to apply to tax years beginning in 2024.

The EU member states and many other countries, including the U.K., our most significant non-US jurisdiction, have committed to implement or have already enacted legislation adopting the Pillar Two rules.

In July 2023, the U.K.

enacted the U.K.

Finance Act 2023, effective as of January 1, 2024, which included provisions to implement certain portions of the OECD Global Anti-Base Erosion Pillar Two minimum tax rules and included an election to apply a transitional safe harbor to extend certain effective dates to accounting periods ending on or before June 30, 2028.

These new U.K.

Pillar Two rules did not have a material impact on our income tax provision as of December 31, 2023.

See Note 13 to our consolidated financial statements and related notes, which are included in this Annual Report, for additional information on these tax items.

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Below are charts that reflect our outstanding debt and capital allocation.

The acquisition and integration costs in the chart below include cash paid for acquisitions, net of cash received for divestitures, cash paid for equity and equity method investments, cash paid for non-controlling interest and redeemable non-controlling interest, and acquisition-related transaction and integration costs, in each year.

The acquisition and integration costs in the chart below include cash paid for acquisitions, net of cash acquired and cash received for divestitures, cash paid for equity and equity method investments, and acquisition-related transaction and integration costs, in each year.

(1) 2021, 2022, and 2023 acquisition and integration costs, net of divestitures excludes $1.2 billion, $741 million, and $187 million of proceeds from sales of our Coinbase, Euroclear, and Dun & Bradstreet investments, respectively.

We have financed our operations, growth and cash needs primarily through income from operations and borrowings under our various debt facilities.

Our principal capital requirements have been to fund capital expenditures, working capital, strategic acquisitions and investments, stock repurchases, dividends and the development of our technology platforms.

We believe that our cash on hand and cash flows from operations will be sufficient to repay our outstanding debt, but we

may also need to incur additional debt or issue additional equity securities in the future.

We believe that our cash on hand and cash flows from operations will be sufficient to repay our outstanding debt, but we may also incur additional debt or issue additional equity securities in the future to satisfy our liquidity needs.

See “- Future Capital Requirements” below.

See “- Cash Flow” below for a discussion of our capital expenditures and capitalized software development costs.

Consolidated cash and cash equivalents were $1.8 billion and $607 million as of December 31, 2022 and 2021, respectively.

We had $6.6 billion and $1.4 billion in short-term and long-term restricted cash and cash equivalents as of December 31, 2022 and 2021, respectively, the increase of which is related to the restricted $5.0 billion of SMR Notes intended to be used to finance the Black Knight acquisition.

Consolidated cash and cash equivalents were $899 million and $1.8 billion as of December 31, 2023 and 2022, respectively.

We had $871 million and $6.6 billion in short-term and long-term restricted cash and cash equivalents as of December 31, 2023 and 2022, respectively.

We had $680 million in restricted short-term investments as of December 31, 2023.

We had $79.0 billion and $142.0 billion of cash and cash equivalent margin deposits and guaranty funds as of December 31, 2023 and 2022, respectively.

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subsidiaries was $374 million.

tax reform, the majority of our foreign earnings since January 1, 2018 have been subject to immediate U.S.

income taxation, and the existing non-U.S.

unrestricted cash balance can be distributed to the U.S.

in the future with no material additional income tax consequences.

Due to the application of Global Intangible Low-Taxed Income as of January 1, 2018, the majority of our foreign earnings for the period January 1, 2018 through December 31, 2022 have been subject to immediate U.S.

income taxation, and can be distributed to the U.S.

in the future with no material additional U.S.

income tax consequences.

We intend to apply the high tax exception to Global Intangible Low-Taxed Income in 2023, and thus the majority of our foreign earnings in the current year are not expected to be subject to immediate U.S.

income taxation.

However, these foreign earnings can also generally be distributed to the U.S.

with no additional U.S.

income tax consequences.

Our cash and cash equivalents and financial investments are managed as a global treasury portfolio of non-speculative financial instruments that are readily convertible into cash, such as overnight deposits, term deposits, money market funds, mutual funds for treasury investments, short duration fixed income investments and other money market instruments, thus ensuring high liquidity of financial assets.

We may invest a portion of our cash in excess of short-term operating needs in investment-grade marketable debt securities, including government or government-sponsored agencies and corporate debt securities.

As of December 31, 2022, we held $1 million of unrestricted cash that was set aside for legal, regulatory and surveillance operations at NYSE.

The following table presents the major components of net changes in cash and cash equivalents, and restricted cash and cash equivalents (in millions):

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Net cash provided by operating activities primarily consists of net income adjusted for certain items, including depreciation and amortization, deferred taxes, stock-based compensation and the effects of changes in working capital.

The $431 million increase in net cash provided by operating activities in 2022 from 2021 was driven by a $220 million increase in net income, adjusted for certain noncash operating activities.

In 2022, these adjustments also include the gain on the sale of our Euroclear investment and the net losses and impairment of our unconsolidated investees.

During 2021, these adjustments also included the gains on the sale of our Coinbase investment and our deconsolidation of Bakkt.

Net income increased in 2022 from 2021 due to higher revenues of $146 million, driven by our Exchanges and Fixed Income and Data Services segments, as well as lower expenses, primarily due to the deconsolidation of Bakkt.

The remaining $211 million increase is due to changes in our working capital and the timing of various payments and receipts.

These changes include higher Section 31 fees payable of $316 million due to the rate changes determined by the SEC, offset primarily by timing of various payments and receipts, including higher interest receivable/payable on the cash and collateral held at our clearinghouses.

Net cash provided by operating activities was substantially similar in 2023 and 2022.

Net cash provided by operating activities in 2023 is primarily related to $2.4 billion of net income, $1.5 billion of non cash adjustments to net income including $1.2 billion of depreciation and amortization, $257 million of stock-based compensation, $122 million of net losses from our equity method investments, $160 million of the fair value loss on the Promissory Note, offset by $329 million of deferred tax benefit for the year.

This was also offset by $389 million of cash used in operating activities related to changes in working capital.

Net cash provided by operating activities in 2022 is primarily related to $1.5 billion of net income, $1.9 billion of non cash adjustments to net income including $1.0 billion of depreciation and amortization, $155 million of stock-based compensation, $1.3 billion of net losses from our equity method investments, offset by $593 million of deferred tax benefit for the year.

In addition, there was also $123 million of cash provided by operating activities related to changes in working capital.

Investing Activities

Consolidated net cash provided by investing activities in 2022 primarily relates to $7.5 billion of proceeds from the sale of invested margin deposits and $741 million in proceeds from the sale of our Euroclear investment, partially offset by $6.9 billion purchases of invested margin deposits, $225 million of capitalized expenditures, $257 million of software development costs, $73 million for purchases of equity and equity method investments and $59 million cash paid for acquisitions, net of cash acquired.

Consolidated net cash used in investing activities in 2021 relates to $5.1 billion purchases of invested margin deposits, $179 million of capitalized expenditures, $273 million of capitalized software development costs, $117 million for the purchase of an equity method investment and $66 million cash paid for acquisitions, net of cash acquired, partially offset by $3.7 billion of proceeds from the sale of invested margin deposits and $1.2 billion in proceeds from the sale of our Coinbase investment.

Consolidated net cash used in investing activities in 2023 primarily relates to $10.2 billion paid for acquisitions, net of cash acquired, $1.6 billion of purchases of invested margin deposits, $1.3 billion for purchases of restricted investments primarily related to debt securities purchased by certain clearing houses for purposes of meeting regulatory capital requirements, $190 million of capitalized expenditures, and $299 million of software development costs, partially offset by $4.0 billion of proceeds from the sale of invested margin deposits, $641 million of proceeds from restricted investments related to the debt securities mentioned above, and $187 million of net proceeds from the sale of certain equity investments.

Consolidated net cash provided by investing activities in 2022 primarily relates to $7.5 billion of proceeds from the sale of invested margin deposits and $741 million in proceeds from the sale of our Euroclear investment, partially offset by $6.9 billion purchases of invested margin deposits, $225 million of capitalized expenditures, $257 million of capitalized software development costs, $73 million for the purchases of investments and $59 million cash paid for acquisitions, net of cash acquired.

The capital expenditures primarily relate to hardware and software purchases to continue the development and expansion of our electronic platforms, data services and clearing houses and leasehold improvements.

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Financing Activities

Consolidated net cash used in financing activities in 2022 primarily relates to a $4.5 billion change in our cash and cash equivalent margin deposits and guaranty fund balances, $2.7 billion in repayments of debt, $1.0 billion in net repayments under our Commercial Paper Program, $632 million in repurchases of common stock, $853 million in dividend payments to our stockholders and $73 million in cash payments related to treasury shares received for restricted stock tax payments and stock options exercises, partially offset by $7.9 billion in net proceeds from our debt offerings.

Consolidated net cash provided by financing activities in 2021 primarily relates to an increase in our cash and cash equivalent margin deposits and guaranty fund balances of $65.7 billion, partially offset by $1.2 billion in repayments of debt, $1.4 billion in net repayments under our Commercial Paper Program, $250 million in repurchases of common stock, $747 million in dividend payments to stockholders and $70 million in cash payments related to treasury shares received for restricted stock tax payments and stock options exercises.

As of December 31, 2022, we had $18.1 billion in outstanding debt, all of which relates to our senior notes.

We also have $4 million outstanding under credit lines at our ICE India subsidiaries.

As of December 31, 2022, our senior notes of $18.1 billion had a weighted average maturity of 16 years and a weighted average cost of 3.6% per annum.

We did not have any commercial paper notes outstanding as of December 31, 2022.

As of December 31, 2021, we had $13.9 billion in outstanding debt, consisting of $12.9 billion of senior notes, $1.0 billion under our U.S.

dollar commercial paper program, or the Commercial Paper Program, and $10 million under credit lines at our ICE India subsidiaries.

Consolidated net cash used in financing activities in 2023 primarily relates to a $65.4 billion decrease in our cash and cash equivalent margin deposits and guaranty fund liability balances due to lower commodity prices and reduced volatility, $2.3 billion repayments of debt, $955 million in dividend payments to our stockholders and $78 million in cash payments related to treasury shares received for restricted stock tax payments and stock options exercises, partially offset by $2.0 billion in proceeds from net issuances under our Commercial Paper Program and $2.4 billion in net proceeds from our debt offerings.

Consolidated net cash used in financing activities in 2022 primarily relates to a $4.5 billion change in our cash and cash equivalent margin deposits and guaranty fund liability balances, $2.7 billion in repayments of debt, $1.0 billion in net repayments under our Commercial Paper Program, $632 million in repurchases of common stock, $853 million in dividend payments to our stockholders and $73 million in cash payments related to treasury shares received for restricted stock tax payments and stock options exercises, partially offset by $7.9 billion in net proceeds from our debt offerings.

As of December 31, 2023, we had $22.6 billion in outstanding debt, consisting of $19.0 billion of senior notes, $2.0 billion under our Commercial Paper Program and $1.6 billion under our Term Loan.

As of December 31, 2023, our senior notes of $19.0 billion had a weighted average maturity of 15 years and a weighted average cost of 3.6% per annum.

The commercial paper notes had original maturities ranging from three to 73 days as of December 31, 2021, with a weighted average interest rate of 0.33% per annum, and a weighted average remaining maturity of 26 days.

In September 2021, we used the proceeds from commercial paper issuances and cash on hand to fund the redemption of $1.25 billion aggregate principal amount of senior floating rate notes due in June 2023, or the Floating Rate Notes.

We delivered a notice of redemption of the Floating Rate Notes to Wells Fargo Bank, National Association, as trustee, under the indenture governing the Floating Rate Notes, which was delivered to the holders of the Floating Rate Notes on September 17, 2021, and they were subsequently redeemed on September 27, 2021.

In connection with this redemption, we recorded $4 million in accelerated unamortized deferred loan costs, which are included in interest expense in our consolidated statements of income for 2021.

We have a $3.9 billion senior unsecured revolving credit facility, or the Credit Facility, pursuant to a credit agreement with Wells Fargo Bank, N.A., as primary administrative agent, issuing lender and swing-line lender, Bank of America, N.A., as syndication agent, backup administrative agent and swing-line lender, and the lenders party thereto.

On October 15, 2021, we agreed with the lenders to extend the maturity date of the Credit Facility to October 15, 2026, among other items.

On May 25, 2022, we agreed with the lenders to extend the maturity date of the Credit Facility from October 15, 2026, to May 25, 2027, among other items.

As of December 31, 2022, of the $3.9 billion that is currently available for borrowing under the Credit Facility, $171 million was required to support certain broker-dealer and other subsidiary commitments.

We did not have any notes outstanding under our Commercial Paper Program, as of December 31, 2022.

Therefore, there was not a required amount to backstop the Commercial Paper Program.

This included the $1.0 billion principal amount of Black Knight InfoServ LLC's 3.625% senior notes due 2028, or the Black Knight Notes, that became part of ICE's consolidated long-term debt on the acquisition date of September 5, 2023 and remained outstanding as of December 31, 2023.

Our Commercial Paper notes had original maturities of 4 to 45 days, with a weighted average interest rate of 5.70% per annum and a weighted average maturity of 32 days.

Our Term Loan has a maturity date of August 31, 2025 and bears interest at a rate of 6.3% as of December 31, 2023.

As of December 31, 2022, we had $18.1 billion in outstanding debt, all of which related to our senior notes.

We also had $4.0 million outstanding under credit lines at our ICE India subsidiaries.

As of December 31, 2022, our senior notes had a weighted average maturity of 16 years and a weighted average cost of 3.6% per annum.

We did not have any commercial paper notes or Term Loan balances outstanding as of December 31, 2022.

We have a $3.9 billion senior unsecured revolving credit facility, or the Credit Facility, with a maturity date of May 25, 2027.

As of December 31, 2023, of the $3.9 billion that was available for borrowing under the Credit Facility, $2.0 billion was required to backstop the amount outstanding under the Commercial Paper Program and $172 million was required to support certain broker-dealer and other subsidiary commitments.

Amounts required to backstop notes outstanding under the Commercial Paper Program will fluctuate as we increase or decrease our commercial paper borrowings.

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• $1.5 billion in aggregate principal amount of 4.95% senior notes due in 2052, or the 2052 Notes;

• $1.0 billion in aggregate principal amount of 5.20% senior notes due in 2062, or the 2062 Notes, collectively, the Notes.

We intend to use the net proceeds of $4.9 billion from the offering of the 2025 Notes, the 2027 Notes, the 2029 Notes and the 2062 Notes, or collectively, the SMR Notes, together with the issuance of commercial paper and/or borrowings under the Credit Facility, cash on hand or other immediately available funds and borrowings under the Term Loan, discussed below, to finance the cash portion of the purchase price for Black Knight.

The SMR Notes are subject to a special mandatory redemption feature pursuant to which we will be required to redeem all of the outstanding SMR Notes at a redemption price equal to 101% of the aggregate principal amount of the SMR Notes, plus accrued and unpaid interest, in the event that the Black Knight acquisition is not consummated on or prior to May 4, 2023 subject to two automatic extensions of three months each, to August 4, 2023 and to November 4, 2023, respectively, if clearance under the HSR Act (or a restraint under U.S.

antitrust laws) remains outstanding and all other conditions to closing are satisfied (or in the case of conditions that by their terms are to be satisfied at the closing, are capable of being satisfied if the closing were to occur on such date) at each extension date, or if the Black Knight merger agreement is terminated at any time prior to such date.

ICE would then need to secure new financing to close the transaction.

There can be no assurance that the new financing could be secured and if it is secured, the terms of the new financing may be more expensive to ICE when compared to the existing financing terms for the $5.0 billion of outstanding notes.

The $4.9 billion of net proceeds from the SMR Notes are separately invested and recorded as short-term restricted cash and cash equivalents in our consolidated balance sheet as of December 31, 2022.

• $1.0 billion in aggregate principal amount of 5.20% senior notes due in 2062, or the 2062 Notes.

We used the net proceeds of our senior notes due in 2025, 2027, 2029 and 2062, or collectively, the Notes, together with the issuance of commercial paper, cash on hand and borrowings under the Term Loan, to finance the cash portion of the purchase price for Black Knight.

For additional information regarding this transaction, refer to Note 3 to our consolidated unaudited financial statements, included in this Annual Report.

We used the $3.0 billion of net proceeds from the offering of the 2033 Notes and the 2052 Notes to redeem $2.7 billion aggregate principal amount of four series of senior notes that would have matured in 2022 and 2023.

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For additional information regarding this transaction, refer to Note 3 to our consolidated unaudited financial statements, included in this Annual Report.

On May 4, 2022, we entered into a 364-day senior unsecured bridge facility in an aggregate principal amount not to exceed $14.0 billion, or the Bridge Facility.

The commitments that the Company obtained for the Bridge Facility were permanently reduced from $14.0 billion and there were no amounts outstanding as of December 31, 2022 as a result of (i) the amendment and extension of the Credit Facility, (ii) the issuance by the Company of certain senior unsecured notes on May 23, 2022, (iii) Euroclear divestment proceeds, (iv) the generation of cash internally by the Company, and (v) the effectiveness of our term loan facility.

In November 2023, we commenced a private exchange offer and related consent solicitation with respect to the outstanding Black Knight Notes, pursuant to which we offered to issue, in a private offering to eligible holders, new notes in exchange for any and all of the Black Knight Notes held by eligible holders.

We also solicited consents from eligible holders to amend the Black Knight Notes and the related indenture under which they were issued to eliminate certain of the covenants, restrictive provisions and events of default from such indenture.

The private exchange offer and related consent solicitation expired in December 2023 as the condition that ICE receive the consents of the holders of at least a majority in aggregate principal amount of the Black Knight Notes to adopt certain proposed amendments to the Black Knight Notes and the related indenture under which they were issued was not satisfied.

In the future, we may consider alternatives to restructure the Black Knight Notes, which may include one or more consent solicitations and private exchange offers with eligible holders.

However, we are not required to restructure the Black Knight Notes and may or may not pursue any alternatives to do so.

Any such transaction will only be made in compliance with applicable laws.

On May 25, 2022, we entered into a $2.4 billion two-year senior unsecured delayed draw term loan facility, or the Term Loan.

Draws under the Term Loan bear interest on the principal amount outstanding at either (a) Term SOFR plus an applicable margin plus a credit spread adjustment of 10 basis points or (b) a "base rate" plus an applicable margin.

The applicable margin ranges from 0.625% to 1.125% for Term SOFR loans and from 0.000% to 0.125% for base rate loans, in each case, based on a ratings-based pricing grid.

The proceeds from borrowings under the Term Loan will be used to fund a portion of the purchase price for the Black Knight acquisition.

We drew down on the Term Loan in full on August 31, 2023 in connection with the closing of the Black Knight acquisition.

On both September 29, 2023 and December 29, 2023, we repaid $400 million, reducing the principal outstanding balance at December 31, 2023, to $1.6 billion.

Draws under the Term Loan bear interest on the principal amount outstanding at Term SOFR plus an applicable margin, currently 5.46%, plus a credit spread adjustment.

The proceeds from borrowings under the Term Loan were used to fund a portion of the purchase price for the Black Knight acquisition.

We have the option to prepay outstanding amounts under the Term Loan in whole or in part at any time.

No amounts were outstanding under the Term Loan as of December 31, 2022.

Our Commercial Paper Program enables us to borrow efficiently at reasonable short-term interest rates and provides us with the flexibility to de-lever using our strong annual cash flows from operating activities whenever our leverage becomes elevated as a result of investment or acquisition activities.

We had net repayments of $1.0 billion under our Commercial Paper Program during 2022, and did not have any notes outstanding under our Commercial Paper Program as of December 31, 2022.

Upon maturity of our commercial paper and to the extent old issuances are not repaid by cash on hand, we are exposed to the rollover risk of not being able to issue new commercial paper.

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In December 2021, our Board approved an aggregate of $3.15 billion for future repurchases of our common stock with no fixed expiration date that became effective January 1, 2022.

The $3.15 billion replaced the previous amount approved by the Board.

The approval of our Board for stock repurchases does not obligate us to acquire any particular amount of our common stock.

In addition, our Board may increase or decrease the amount available for repurchases from time to time.

During 2022, we repurchased 5.0 million shares of our outstanding common stock at a cost of $632 million, including 4.6 million shares at a cost of $582 million under our Rule 10b5-1 trading plan and 0.4 million shares at a cost of $50 million on the open market.

During 2021, we repurchased 1.8 million shares of our outstanding common stock at a cost of $250 million on the open market.

We did not have any share repurchases in 2023.

During 2022, we repurchased 5.0 million shares of our outstanding common stock at a cost of $632 million, including 4.6 million shares at a cost of $582 million under our Rule 10b5-1

trading plan and 0.4 million shares at a cost of $50 million on the open market.

Open market repurchases are only made during an open trading period and all shares repurchased are held in treasury stock.

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In December 2021, we entered into a new Rule 10b5-1 trading plan that became effective in February 2022.

In connection with our pending acquisition of Black Knight, on May 4, 2022, we terminated our Rule 10b5-1 trading plan and suspended share repurchases.

In connection with our acquisition of Black Knight, on May 4, 2022, we terminated our Rule 10b5-1 trading plan and suspended share repurchases.

The remaining balance of Board approved funds for future repurchases as of December 31, 2023 was $2.5 billion.

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As of December 31, 2023, we had $2.5 billion authorized for future repurchases of our common stock.

We may resume repurchases of our common stock subject to achieving certain debt leverage ratio targets.

Refer to Note 12 to our consolidated financial statements included in this Annual Report for additional details on our stock repurchase program.

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On February 8, 2024, we announced a $0.45 per share dividend for the first quarter of 2024 payable on March 29, 2024 to stockholders of record as of March 15, 2024.

Other than the facilities for the ICE Clearing Houses, our Credit Facility and our Commercial Paper Program are currently the only significant agreements or arrangements that we have for liquidity and capital resources with third parties.

Notes 10 and 14 to our consolidated financial statements for further discussion.

Other than the facilities for the ICE Clearing Houses, our Credit Facility, our Term Loan and our Commercial Paper Program are currently the only significant agreements or arrangements that we have for liquidity and capital resources with third parties.

See Notes 10 and 14 to our consolidated financial statements for further discussion.

In the event of any strategic acquisitions, mergers or investments, or if we are required to raise capital for any reason or desire to return capital to our stockholders, we may incur additional debt, issue additional equity to raise necessary funds, repurchase additional shares of our common stock or pay a dividend.

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We use certain financial measures internally to evaluate our performance and make financial and operational decisions that are presented in a manner that adjusts from their equivalent GAAP measures or that supplement the information provided by our GAAP measures.

We use these adjusted results because we believe they more clearly highlight trends in our business that may not otherwise be apparent when relying solely on GAAP financial measures, since these measures eliminate from our results specific financial items that have less bearing on our core operating performance.

We use these adjusted results because we believe they more clearly highlight trends in

our business that may not otherwise be apparent when relying solely on GAAP financial measures, since these measures eliminate from our results specific financial items that have less bearing on our core operating performance.

We use these measures in communicating certain aspects of our results and performance, including in this Annual Report, and believe that these measures, when viewed in conjunction with our GAAP results and the accompanying reconciliation, can provide investors with greater transparency and a greater understanding of factors affecting our financial condition and results of operations than GAAP measures alone.

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Amortization of acquisition-related intangibles 65 67 73 168 180 180 515 363 369 748 610 622

Transaction and integration costs and acquisition-related success fees — 59 12 — — — 91 39 89 91 98 101

Impairment of developed software — — 11 — — — — — — — — 11

Accrual relating to a regulatory settlement — — — — — 8 — — — — — 8

Transaction and integration costs — — 59 — — — 269 91 39 269 91 98

Other 17 — — — — — — — — 17 — —

Adjusted operating expenses

$ 1,199 $ 1,142 $ 1,201 $ 1,252 $ 1,193 $ 1,174 $ 809 $ 618 $ 602 $ 3,260 $ 2,953 $ 2,977

Operating income

$ 2,862 $ 2,523 $ 2,389 $ 719 $ 529 $ 492 $ 57 $ 397 $ 152 $ 3,638 $ 3,449 $ 3,033

Operating income/(loss) $ 3,159 $ 2,862 $ 2,523 $ 811 $ 719 $ 529 $ (276) $ 57 $ 397 $ 3,694 $ 3,638 $ 3,449

Adjusted operating income

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Amortization of acquisition-related intangibles 748 610 622

Transaction and integration costs and acquisition-related success fees 91 98 101

Transaction and integration costs 269 91 98

Gain on sale and fair value adjustment of equity investments and dividends received, net — (41) (1,321)

Gain on deconsolidation of Bakkt — — (1,419)

Net losses/(income) from and impairment of unconsolidated investees 1,340 42 (71)

Net interest expense on pre-acquisition-related debt and debt extinguishment 89 4 19

Net losses from and impairment of unconsolidated investees 122 1,340 42

Net interest (income)/expense on pre-acquisition-related debt and debt extinguishment (12) 89 4

Other 196 9 9

Net income tax effect for the above items and deferred tax adjustments (309) (579) 587

Deferred tax adjustments on acquisition-related intangibles (126) 9 183

Other tax adjustments $ (79) $ — $ —

Adjusted net income attributable to ICE common stockholders $ 3,177 $ 2,974 $ 2,863

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Transaction and integration costs are included as part of our core business expenses, except for those that are directly related to the announcement, closing, financing or termination of a transaction.

However, we adjust for the acquisition-related transaction and integration costs relating to acquisitions such as Ellie Mae given the magnitude of the $11.4 billion purchase price of the acquisition.

We also adjust for the acquisition-related transaction costs related to the merger of Bakkt and VIH, and for our pending acquisition of Black Knight, due to the significance of these transactions.

However, we adjust for the acquisition-related transaction and integration costs relating to acquisitions such as Black Knight and Ellie Mae given the magnitude of the $11.8 and $11.4 billion, respectively, purchase prices of the acquisitions.

We also adjusted for the acquisition-related transaction costs related to the merger of Bakkt and VIH in 2021 due to the significance of the transaction.

We adjust for gains and losses on investment transactions and changes in the fair value of our investments.

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The following non-GAAP adjustments are reported in the table above related to investments:

• During 2023, we excluded the combined realized loss of $3 million related to our sales of the Dun & Bradstreet investment, net of dividends;

• During 2022, we excluded the $41 million gain on the sale of our Euroclear investment;

• During 2021 and 2020, we excluded $34 million and $35 million, respectively, of fair value gains on our Euroclear equity investment and during 2021, we excluded Euroclear dividends received of $60 million;

• During 2021, we excluded a $34 million fair value gain on our Euroclear equity investment and Euroclear dividends received of $60 million;

• In 2021, we excluded the $1.4 billion gain on the deconsolidation of Bakkt and the $1.2 billion gain on the sale of our Coinbase equity investment.

• In 2020, we excluded the $20 million gain on the sale of our BIDS equity investment.

Similarly, and as included in the table above, we adjust for our share of net income/(losses) and impairment charges related to our equity method investments, which primarily include OCC and Bakkt.

Our share of 2021 net losses from unconsolidated investees includes the period from the Bakkt merger on October 15, 2021 through December 31, 2021.

During 2022, after recording our share of Bakkt's equity method losses, which included Bakkt's impairment charge, we recorded an impairment in our investment in Bakkt to its fair value as other expense.

In 2023, our share of total Bakkt net losses was $135 million and our share of OCC net income was $16 million.

During 2022, after recording our share of Bakkt's equity method losses, which included an impairment charge recorded by Bakkt, we recorded an impairment in our investment in Bakkt to its fair value as other expense.

In 2022, the total Bakkt net losses and impairment was $1.4 billion and our share of OCC net income was $15 million.

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The following non-GAAP adjustments are reported in the table above related to our debt:

• In 2023, we excluded $170 million of interest income earned on investments from the pre-acquisition debt proceeds.

This adjustment was net of $158 million of interest expense on pre-acquisition-related debt from our May 2022 debt refinancing related to the Black Knight acquisition.

• In 2022, we excluded $59 million of net interest expense on pre-acquisition-related debt from our May 2022 debt refinancing related to the Black Knight acquisition.

This adjustment was net of interest income earnings on investments from the pre-acquisition debt proceeds.

• In 2022, we adjusted for costs of $30 million associated with the May and June 2022 extinguishment of four series of senior notes that would have matured in 2022 and 2023 using proceeds from our May 2022 issuance of new senior notes.

• In 2022, we excluded $135 million of interest expense on pre-acquisition-related debt from our May 2022 debt refinancing related to the pending Black Knight acquisition.

This adjustment was net of $76 million of interest income earnings on investments from the pre-acquisition debt proceeds.

• In 2021, we adjusted for the acceleration of unamortized costs of $4 million related to the September 2021 early redemption of our Floating Rate Notes.

• In 2020, we adjusted for the extinguishment payment of $14 million related to the June 2020 early redemption of the December 2020 Senior Notes which included both a make-whole redemption payment and duplicative interest, and adjusted for pre-acquisition interest expense of $5 million on the August 2020 debt issued to fund a portion of the purchase price of our Ellie Mae acquisition.

Other adjustments not considered to be a part of our core business operations include:

• Accruals related to legal and regulatory settlements, including settlements related to an acquisition-related indemnification claim;

• A 2020 impairment of software developed at Bakkt when it was our subsidiary, since it related to the build-out of a fundamental software design rather than a recurring upgrade;

• A 2020 promissory note impairment charge on work performed by the original plan processor on the CAT as non-GAAP adjustments.

See additional discussion on the CAT in Item 1(A) "-Risk Factors" in this Annual Report.

Non-GAAP tax adjustments include the tax impacts of the pre-tax non-GAAP adjustments and deferred tax adjustments on acquisition-related intangibles.

Deferred tax adjustments on acquisition-related intangibles include the impact of U.K.

state tax law changes and apportionment updates, as well as other foreign tax law changes which resulted in deferred tax expense of $9 million, $183 million and $36 million in 2022, 2021 and 2020, respectively, related to the following:

• Deferred tax adjustments in 2022 related primarily to U.S.

• We adjust for the 2023 fair value loss of $160 million related to the Black Knight Promissory Note as this not believed to be part of our core operations.

• A $6 million expense for claims made following a NYSE system outage that occurred in January 2023;

• 2023 accruals related to regulatory matters of $11 million;

• The 2023 impairment related to our CAT loan receivable of $16 million.

The CAT was approved by the SEC in 2016 to improve regulators’ ability to monitor trading activity;

• A 2022 accrual related to legal and regulatory matters;

• In 2021 we excluded a gain of $7 million related to the settlement of an acquisition-related indemnification claim and $16 million related to a legal settlement.

Non-GAAP tax adjustments include the tax impacts of the pre-tax non-GAAP adjustments, deferred tax adjustments on acquisition-related intangibles and other tax adjustments.

Other tax adjustments of $79 million in 2023 are primarily related to audit settlements for pre-acquisition tax matters as well as state apportionment changes in prior years.

Deferred tax adjustments on acquisition-related intangibles include the impact of tax law changes and apportionment updates resulting in deferred tax (benefit)/expense of ($126 million), $9 million and $183 million in 2023, 2022 and 2021, respectively, related to the following:

• Deferred tax adjustments in in 2023 and 2022 related primarily to U.S.

state apportionment changes;

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corporate income tax rate from 19% to 25% effective April 1, 2023.

• The deferred tax adjustments in 2020 were due to the tax law changes enacted in July 2020, which increased the U.K.

corporate income tax rate from 17% to 19% effective April 1, 2020, as well as impacts of U.S.

state apportionment charges.

For additional information on these items, refer to our consolidated financial statements included in this Annual Report and “- Recent Developments,” “- Consolidated Operating Expenses”, “- Consolidated Non-Operating Income (Expenses)” and “-Consolidated Income Tax Provision” above.

• Other tax adjustments in 2023 are primarily related to audit settlements for pre-acquisition tax matters as well as state apportionment charges in prior years.

For additional information on these items, refer to our consolidated financial statements included in this Annual Report and “- Recent Developments,” “- Consolidated Operating Expenses”, “- Consolidated Non-Operating Income/(Expense)” and “-Consolidated Income Tax Provision” above.

Non-GAAP Liquidity Measures

We consider free cash flow and adjusted free cash flow to be non-GAAP liquidity measures that provide useful information to management and investors to analyze cash resources generated from our operations.

We believe that free cash flow and adjusted free cash flow are useful as the bases for comparing our performance with our competitors and demonstrate our ability to convert the reinvestment of capital expenditures and capitalized software development costs required to maintain and grow our business, as well as adjust for timing differences related to the payment of Section 31 fees.

These non-GAAP liquidity measures are not presented in accordance with, or as an alternative to, GAAP liquidity measures and may be different from non-GAAP measures used by other companies.

Free cash flow and adjusted free cash flow, including the related adjustments are as follows (in millions):

Year Ended December 31,

2023 2022 2021

Net cash provided by operating activities

$ 3,542 $ 3,554 $ 3,123

Capital expenditures

(190) (225) (179)

Capitalized software development costs

(299) (257) (273)

Free cash flow

3,053 3,072 2,671

Section 31 fees, net

144 (166) 150

Adjusted free cash flow

$ 3,197 $ 2,906 $ 2,821

For additional information on these items, refer to our consolidated financial statements included in this Annual Report and “—Consolidated Operating Expenses” above.

Off-Balance Sheet Arrangements

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As of December 31, 2023, our primary cash requirements include the following contractual and other obligations.

As of December 31, 2022, we had $18.1 billion in outstanding debt, including $4 million of short-term debt.

Our outstanding debt consists of $18.1 billion of fixed rate senior notes and $4 million under credit lines at our ICE India subsidiaries.

As of December 31, 2023, we had $22.6 billion in outstanding debt, including $2.0 billion of short-term debt.

Our outstanding debt consists of $19.0 billion of fixed rate senior notes, $1.6 billion under our Term Loan and $2.0 billion in commercial paper.

Our operating leases primarily relate to our leased office space and data center facilities, and as of December 31, 2023, we had fixed lease payment obligations of $442 million, with $73 million payable within one-year.

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These impairment evaluations are performed by comparing the carrying value of the goodwill or other indefinite-lived intangibles to its estimated fair value.

In accordance with ASU 2017-04, Simplifying the Test for Goodwill Impairment , or ASU-2017, for both goodwill and indefinite-lived intangible impairment testing, we have the option to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit or indefinite-lived intangible asset is less than its carrying amount.

In accordance with ASU 2017-04, Simplifying the Test for Goodwill Impairment , for both goodwill and indefinite-lived intangible impairment testing, we have the option to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit or indefinite-lived intangible asset is less than its carrying amount.

If the fair value of the goodwill or indefinite-lived intangible asset is less than its carrying value, an impairment loss is recognized in earnings in an amount equal to the difference.

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determination of fair value and/or impairment.

We did not record any impairments in 2022, 2021 or 2020 as a result of our goodwill or indefinite-lived impairment testing.

We considered potential indicators of impairment to goodwill and other intangible assets for each of our reporting units, which included continued global inflation concerns and changing interest rates, including their effect on our forecasts and discount rates, among other things.

Other than an impairment in 2023 of certain trademark intangible assets, we did not record any impairments in 2023, 2022 or 2021 as a result of our goodwill or indefinite-lived impairment testing.

We are also required to evaluate other finite-lived intangible assets for impairment by first determining whether events or changes in circumstances indicate that the carrying value of these assets to be held and used may not be recoverable.

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We have exposure to market risk for changes in interest rates relating to our cash and cash equivalents, short-term and long-term restricted cash and cash equivalents, short-term and long-term investments and indebtedness.

As of December 31, 2022 and 2021, our cash and cash equivalents and short-term and long-term restricted cash and cash equivalents were $8.4 billion and $2.0 billion, respectively, of which $346 million and $276 million, respectively, were denominated in pounds sterling, euros or Canadian dollars, and the remaining amounts are denominated in U.S.

As of December 31, 2023 and 2022, our cash and cash equivalents and short-term and long-term restricted cash and cash equivalents and investments were $2.5 billion and $8.4 billion, respectively, of which $270 million and $346 million, respectively, were denominated in pounds sterling, euros or Canadian dollars, and the remaining amounts are denominated in U.S.

We do not use our investment portfolio for trading or other speculative purposes.

A hypothetical 50% decrease in short-term interest rates would decrease our annual pre-tax earnings by $15 million as of December 31, 2023, assuming no change in the amount or composition of our cash and cash equivalents and short-term and long-term restricted cash and cash equivalents.

As of December 31, 2022, we had $18.1 billion in outstanding debt, consisting of $18.1 billion related to our senior notes and $4 million under lines of credit at our India subsidiaries.

As of December 31, 2023, we had $22.6 billion in outstanding debt, consisting of $19.0 billion related to our senior notes, $1.6 billion under our term loan and $2.0 billion in commercial paper.

See Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations – Debt," and Note 10 to our consolidated financial statements included in this Annual Report.

The interest rates on our Commercial Paper Program are currently evaluated based upon current maturities and market conditions.

As of December 31, 2022, we did not have any notes outstanding under our Commercial Paper Program.

The weighted average interest rate on our Commercial Paper Program was 0.33% as of December 31, 2021.

The effective interest rate of commercial paper issuances will continue to fluctuate based on the movement in short-term interest rates along with shifts in supply and demand within the commercial paper market.

The weighted average interest rate on notes outstanding under our Commercial Paper Program was 5.70% as of December 31, 2023, and we did not have any notes outstanding under our Commercial Paper Program as of December 31, 2022.

The effective interest rate of issuances under our Commercial Paper Program will continue to fluctuate based on the movement in short-term interest rates along with shifts in supply and demand within the commercial paper market.

Foreign Currency Exchange Rate Risk

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We have a significant part of our assets, liabilities, revenues and expenses recorded in pounds sterling or euros.

In both 2022 and 2021, 13% of our consolidated revenues, less transaction-based expenses, were denominated in pounds sterling or euros, and in 2022 and 2021, 9% and 10%, respectively, of our consolidated operating expenses were denominated in pounds sterling or euros.

In 2023 and 2022, 14% and 13%, respectively, of our consolidated revenues, less transaction-based expenses, were denominated in pounds sterling or euros, and in both 2023 and 2022, 9% of our consolidated operating expenses were denominated in pounds sterling or euros.

As the pound sterling or euro exchange rate changes, the U.S.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis