ICE Mortgage Technology returned to profitability in the third quarter

A concerted effort to grow subscriptions has helped Intercontinental Exchange’s mortgage business withstand shrinking market pressures, the leader said.

ICE Mortgage Technology generated an operating profit of $16 million in the third quarter following a reported loss of $6 million. 3 months agoBut the latest figures are more than 85% below the $110 million reported in the third quarter of last year.

Company executives attributed the segment to profitability as customers subscribed to ICE Mortgage Technology products.

“The strength and resilience we are seeing in our recurring revenue is driven by new customers who continue to adopt our digital solutions, increased demand for our data and analytics tools, and the continued strong growth in demand for our data and analytics tools,” said Benjamin Jackson, President of InterContinental Exchange. It was brought about by retention,” he said. earnings phone.

However, the steep year-over-year decline in earnings for providers of the Encompass loan origination system illustrates a broader problem facing the mortgage industry today. 70% lower compared to a record amount a year ago. The current recession is Continuous stream of layoff notifications At mortgage lenders and fintechs, and the vendors that serve them.

ICE’s Mortgage Technology segment generated total revenues of $276 million in the third quarter. That’s down 7% from his reported $297 million three months ago. His recent quarterly total was also down 25% from his $366 million a year ago. Recurring revenues for the third quarter were $160 million.

ICE’s origination technology brought in $187 million. That’s down nearly 6% from his $196 million in the second quarter and 24% below his $245 million generated a year ago.

Jackson said the mortgage technology segment has been successful in converting customers into long-term customers.

“If we approach them about shifting more of the economic model we have with them to subscriptions, they’re willing to do so, even if it costs us some transaction revenue. About two-thirds of ICE Mortgage Technology’s customers want to renew, according to sources.

Although a much smaller percentage of ICE’s bottom line revenues, mortgage technology segment data and analytics services and products quarterly revenues declined 8% to $22 million from $24 million. However, this segment is up 22% from his $19 million last year.

While industry leaders are predicting across the board, Mortgage volumes continue to slow Next year, ICE executives say they are still planning for future growth.

ICE CEO Jeffrey Sprecher said: “There are an incredible number of people in this country who are starting new homes, having children, getting married and moving on.” , that demographic trend has to somehow be happy with where to live, so what we’re really looking at on a macro basis is building solutions to partially address that population I think.”

It is currently trying to merge with services technology giant Black Knight, but the deal raises antitrust concerns and is attracting resistance from the United States. Industry group When InvestorSprecher also tried to explain the benefits of integration.

“ICE plans a significant financial outlay to open up and upgrade Black Knight’s technology stack, which will allow other potential acquirers of Black Knight to expand its potential in the shrinking mortgage environment. We believe that it was difficult to do so.

The company said it expects to complete the transaction in the first half of 2023, subject to regulatory approvals.

Meanwhile, Black Knight, which also released third-quarter numbers on Thursday, reported net income of $30 million, down 26% and 44% from $40.3 million and $53.4 million on a three-month and full-year basis, respectively. reflects the

Black Knight Chairman Anthony Jabbour said in a press release:

Software Solutions segment operating income, which includes the MSP Service Platform and Loan Origination Systems, was $142.3 million, down 8% from $154.8 million on a quarterly basis and down 5% from $150 year-over-year. One million.

Black Knight’s data and analytics operating income of $13 million was down 5% from $13.7 million in the second quarter and down 24% from $17 million in the year-ago quarter.

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