Intercontinental Exchange is making more money from its mortgage technology unit, profits executives said should remain steady with new customers offsetting big-name departures.
The sprawling financial giant reported $22 million in mortgage technology operating income for the third quarter, trending upward after past losses
Customers reset their minimums on Encompass, moves offset by higher transaction fees and new customer acquisitions making for the best quarter of the year for sales across the platform, company leaders said during earnings call Thursday.
ICE saw $137 million of transaction revenues in the third quarter, a 12% annual gain. That was fueled by double-digit revenue growth related to Encompass closed loans, and "high" single-digit growth in registrations with its Mortgage Electronic Registration Systems.
Executives however cautioned of seasonal impacts on purchase volumes in the upcoming quarters.
Inside the ICE Q3 earnings numbers
At-large, the company reported $816 million in net income, and $1.42 in diluted earnings per share. That was a slip from the prior quarter, but close to 25% gains in both profit and diluted EPS from last year.
Revenue from MSP operations was $216 million in the recent period, up 3% from last summer, but down $4 million from the second quarter.
Data and analytics revenue and closing solutions revenue were $66 million and $58 million, respectively; closing solutions revenue was up 8% annually. Origination technology revenue was also up $6 million from the prior year and $1 million from the recent quarter, at $188 million ending October. Combined, total mortgage technology revenue was down slightly from the end of June, but up 4% annually at $528 million.
Third quarter revenue fell for a few reasons, including higher-than-anticipated rolloff of inactive loans on MSP, said Chief Financial Officer Warren Gardiner. However, active loans on MSP also ticked higher in the recent period, breaking a small losing streak.
Customers also renewed at "slightly lower minimums" than ICE expected, but the discount to prior minimums was narrowing versus last year. Transaction fees have also been aided by a greater percent of loans above minimums, added Gardiner.
Who's joining, who's leaving
Over the summer ICE signed 16 new Encompass clients and 2 more to its MSP platform, both of those servicers which were already on the loan origination software.
Executives explained to analysts how some of the industry's biggest moves will also impact operations. Flagstar will roll off in the fourth quarter, following
Gardiner also discussed Pennymac, which in September announced a partnership with technology provider Vesta. To ICE, that transition is "probably about 0.5 point" of recurring revenue, but that won't impact the company until 2028. ICE President Ben Jackson also explained to analysts the lender's
How ICE is integrating artificial intelligence
Company leaders also described how artificial intelligence is improving productivity, particularly in a complex replatforming of MSP into ICE's modern tech stack. Jackson also suggested AI is helping customers to improve recapture rates.
The company is also applying agentic AI to automate department handoff for issue handling, and is planning a chatbot to help with functions such as payment scheduling for borrower self-service within ICE's platform.
"[AI] has enabled us to transition these platforms from what have been historically seen as systems of record to a system of intelligence," said Jackson.
The company's stock rose following the pre-market earnings call, but as of mid-afternoon Thursday fell around 1% to $148.95 per share.
