Profits for Intercontinental Exchange's mortgage technology operations remained in the black for the third straight quarter, as the company touted its software adoption even as customers adjusted for recent slowdowns in volume.
Revenues for the mortgage unit increased to approximately $532 million in the fourth quarter, increasing from $528 million in the previous quarter and $508 million year over year. The total was the highest since the second half of 2022 on a pro forma basis.
Overall, the owner of Encompass and MSP origination and servicing tools posted operating profit of $8 million from the mortgage technology division in the fourth quarter. The total represented a decrease
Full-year profits also ended in the black, coming in at $14 million compared to a $170 million loss in 2024.
On an adjusted pro forma basis factoring in
Ongoing headwinds come with 2026 expectations for improvement
As the company noted in previous earnings announcements, customers committing to lower minimum business levels continued to slow profit trajectory. ICE leadership noted, though, that pullbacks were largely offset by implementations and expansion of its products.
"Some customer renewals came in at lower minimums. Importantly, these renewals are paired with higher per-transaction pricing that becomes increasingly beneficial as origination volumes normalize," ICE Chief Financial Officer Warren Gardiner also noted during its earnings call.
"We substantially worked through the 2020 to 2022 vintage contract renewals, reducing, but not yet eliminating the headwind from Encompass minimum adjustments," he continued.
Still, the company expressed optimism for improving fortunes in the mortgage industry this year, when it expects technology revenues to increase in the low to mid-single-digit range. The lower end of its forecast would come to pass even if originations came in at flat-to-modest growth.
Quarterly recurring revenues finished at $391 million, in line with expectations. Transaction revenue totaled $141 million, up by 20% from the previous year.
"This was driven by a significant increase in transaction revenues from Encompass closed loans as customers increasingly exceed their minimums in an improving origination environment," Gardiner said.
The company pointed to momentum provided by the approximately 90 deals signed for Encompass in the past year as a bellwether for 2026.
"We feel really good about our positioning," said Intercontinental Exchange President Ben Jackson. "And then looking forward to the funnel that we have, the largest players in the market are as engaged as ever with us on looking for ways to automate and provide them more efficiencies."
Executives also celebrated two new clients on the mortgage servicing platform, one of which came from cross selling with Encompass. Additionally, the company noted the successful implementation of MSP at United Wholesale Mortgage, nine months
At the same time ICE leaders highlighted its artificial intelligence advancements for its mortgage technology, they provided an update on planned client transitions away from its legacy SDK system, playing down any potential impact to current development or business.
With the end of support for SDK — short for software development kit — initially planned for late 2025, ICE
For clients still on the SDK origination software that was first introduced over 20 years ago, the pivot toward newer ICE technology had been a "lower priority," according to Jackson.
"We gave them more time to do it because we know it wasn't slowing down our pace of innovation in other areas. We have not seen it in any way, shape or form as a hindrance to our sales success, nor have we seen it impacting any kind of attrition or change in the competitive landscape," he said.
