Nasdaq Inc.

08/06/2024 | Press release | Distributed by Public on 08/06/2024 14:07

Quarterly Report for Quarter Ending June 30, 2024 (Form 10-Q)

ndaq-20240630
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________
FORM 10-Q
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
June 30, 2024
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period
from ________ to ________
Commission file number: 001-38855
___________________________________
Nasdaq, Inc.
(Exact name of registrant as specified in its charter)
Delaware 52-1165937
(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.)
151 W. 42nd Street, New York, New York 10036
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: +1 212401 8700
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, $0.01 par value per share NDAQ The Nasdaq Stock Market
4.500% Senior Notes due 2032 NDAQ32 The Nasdaq Stock Market
0.900% Senior Notes due 2033 NDAQ33 The Nasdaq Stock Market
0.875% Senior Notes due 2030 NDAQ30 The Nasdaq Stock Market
1.75% Senior Notes due 2029 NDAQ29 The Nasdaq Stock Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☒No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒ Accelerated filer ☐
Non-accelerated filer ☐ Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐No ☒
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
Class
Outstanding at July 29, 2024
Common Stock, $0.01 par value per share 575,940,337 shares
Nasdaq, Inc.
Page
Part I. FINANCIAL INFORMATION
Item 1.
Financial Statements (unaudited)
1
Condensed Consolidated Balance Sheets
1
Condensed Consolidated Statements of Income
2
Condensed Consolidated Statements of Comprehensive Income
3
Condensed Consolidated Statements of Changes in Stockholders' Equity
4
Condensed Consolidated Statements of Cash Flows
5
Notes to Condensed Consolidated Financial Statements
6
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
29
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
45
Item 4.
Controls and Procedures
47
Part II. OTHER INFORMATION
Item 1.
Legal Proceedings
48
Item 1A.
Risk Factors
48
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
48
Item 3.
Defaults Upon Senior Securities
48
Item 4.
Mine Safety Disclosures
48
Item 5.
Other Information
49
Item 6.
Exhibits
49
SIGNATURES
50
i
About this Form 10-Q
Throughout this Form 10-Q, unless otherwise specified:
•"Nasdaq," "we," "us" and "our" refer to Nasdaq, Inc.
•"Nasdaq Baltic" refers to collectively, Nasdaq Tallinn AS, Nasdaq Riga, AS, and AB Nasdaq Vilnius.
•"Nasdaq BX" refers to the cash equity exchange operated by Nasdaq BX, Inc.
•"Nasdaq BX Options" refers to the options exchange operated by Nasdaq BX, Inc.
•"Nasdaq Clearing" refers to the clearing operations conducted by Nasdaq Clearing AB.
•"Nasdaq CXC" and "Nasdaq CX2" refer to the Canadian cash equity trading books operated by Nasdaq CXC Limited.
•"Nasdaq First North" refers to our alternative marketplaces for smaller companies and growth companies in the Nordic and Baltic regions.
•"Nasdaq GEMX" refers to the options exchange operated by Nasdaq GEMX, LLC.
•"Nasdaq ISE" refers to the options exchange operated by Nasdaq ISE, LLC.
•"Nasdaq MRX" refers to the options exchange operated by Nasdaq MRX, LLC.
•"Nasdaq Nordic" refers to collectively, Nasdaq Clearing AB, Nasdaq Stockholm AB, Nasdaq Copenhagen A/S, Nasdaq Helsinki Ltd, and Nasdaq Iceland hf.
•"Nasdaq PHLX" refers to the options exchange operated by Nasdaq PHLX LLC.
•"Nasdaq PSX" refers to the cash equity exchange operated by Nasdaq PHLX LLC.
•"The Nasdaq Options Market" refers to the options exchange operated by The Nasdaq Stock Market LLC.
•"The Nasdaq Stock Market" refers to the cash equity exchange and listing venue operated by The Nasdaq Stock Market LLC.
Nasdaq also provides as a tool for the reader the following list of abbreviations and acronyms that are used throughout this Quarterly Report on Form 10-Q.
2022 Revolving Credit Facility: $1.25 billion senior unsecured revolving credit facility, which matures on December 16, 2027
2025 Notes: $500 million aggregate principal amount of 5.650% senior unsecured notes due June 28, 2025
2026 Notes: $500 million aggregate principal amount of 3.850% senior unsecured notes due June 30, 2026
2028 Notes: $1 billion aggregate principal amount of 5.350% senior unsecured notes due June 28, 2028
2029 Notes: €600 million aggregate principal amount of 1.75% senior unsecured notes due March 28, 2029
2030 Notes: €600 million aggregate principal amount of 0.875% senior unsecured notes due February 13, 2030
2031 Notes: $650 million aggregate principal amount of 1.650% senior unsecured notes due January 15, 2031
2032 Notes: €750 million aggregate principal amount of 4.500% senior unsecured notes due February 15, 2032
2033 Notes: €615 million aggregate principal amount of 0.900% senior unsecured notes due July 30, 2033
2034 Notes: $1.25 billion aggregate principal amount of 5.550% senior unsecured notes due February 15, 2034
2040 Notes: $650 million aggregate principal amount of 2.500% senior unsecured notes due December 21, 2040
2050 Notes: $500 million aggregate principal amount of 3.250% senior unsecured notes due April 28, 2050
2052 Notes: $550 million aggregate principal amount of 3.950% senior unsecured notes due March 7, 2052
2053 Notes: $750 million aggregate principal amount of 5.950% senior unsecured notes due August 15, 2053
2063 Notes: $750 million aggregate principal amount of 6.100% senior unsecured notes due June 28, 2063
Adenza: Adenza Holdings, Inc.
ARR: Annualized Recurring Revenue
ASU: Accounting Standards Update
AUM: Assets Under Management
CCP: Central Counterparty
CFTC: U.S. Commodity Futures Trading Commission
ESG: Environmental, Social and Governance
EMIR: European Market Infrastructure Regulation
ESPP: Nasdaq Employee Stock Purchase Plan
ETP: Exchange Traded Product
Exchange Act: Securities Exchange Act of 1934, as amended
FASB: Financial Accounting Standards Board
FINRA: Financial Industry Regulatory Authority
IPO: Initial Public Offering
NSCC: National Securities Clearing Corporation
OCC: The Options Clearing Corporation
OTC: Over-the-Counter
PSU: Performance Share Unit
SaaS: Software as a Service
SEC: U.S. Securities and Exchange Commission
ii
SERP: Supplemental Executive Retirement Plan
SPAC: Special Purpose Acquisition Company
SFSA: Swedish Financial Supervisory Authority
SOFR: Secured Overnight Financing Rate
S&P 500: S&P 500 Stock Index
TSR: Total Shareholder Return
U.S. GAAP: U.S. Generally Accepted Accounting Principles
U.S. Tape plans: U.S. cash equity and U.S. options industry data
NASDAQ, the NASDAQ logos, and other brand, service or product names or marks referred to in this report are trademarks or service marks, registered or otherwise, of Nasdaq, Inc. and/or its subsidiaries. FINRA and Trade Reporting Facility are registered trademarks of FINRA.
This Quarterly Report on Form 10-Q includes market share and industry data that we obtained from industry publications and surveys, reports of governmental agencies and internal company surveys. Industry publications and surveys generally state that the information they contain has been obtained from sources believed to be reliable, but we cannot assure you that this information is accurate or complete. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. Statements as to our market position are based on the most currently available market data. For market comparison purposes, The Nasdaq Stock Market data in this Quarterly Report on Form 10-Q for IPOs and new listings of equity securities (including issuers that switched from other listings venues, closed-end funds and ETPs) is based on data generated internally by us; therefore, the data may not be comparable to other publicly-available IPO data. Data in this Quarterly Report on Form 10-Q for IPOs and new listings of equity securities on the Nasdaq Nordic and Nasdaq Baltic exchanges and Nasdaq First North also is based on data generated internally by us. IPOs and new listings data is presented as of period end. While we are not aware of any misstatements regarding industry data presented herein, our estimates involve risks and uncertainties and are subject to change based on various factors. We refer you to the "Risk Factors" section in our Form 10-K for the fiscal year ended December 31, 2023 that was filed with the SEC on February 21, 2024.
Nasdaq intends to use its website, ir.nasdaq.com, as a means for disclosing material non-public information and for complying with SEC Regulation FD and other disclosure obligations.
iii
Forward-Looking Statements
The SEC encourages companies to disclose forward-looking information so that investors can better understand a company's future prospects and make informed investment decisions. This Quarterly Report on Form 10-Q contains these types of statements. Words such as "may," "will," "could," "should," "anticipates," "envisions," "estimates," "expects," "projects," "intends," "plans," "believes" and words or terms of similar substance used in connection with any discussion of future expectations as to industry and regulatory developments or business initiatives and strategies, future operating results or financial performance, and other future developments are intended to identify forward-looking statements. These include, among others, statements relating to:
•our strategic direction, including changes to our corporate structure;
•the integration of acquired businesses, including accounting decisions relating thereto;
•the scope, nature or impact of acquisitions, divestitures, investments, joint ventures or other transactional activities;
•the effective dates for, and expected benefits of, ongoing initiatives, including transactional activities and other strategic, restructuring, technology, ESG, de-leveraging and capital return initiatives;
•our products and services;
•the impact of pricing changes;
•tax matters;
•the cost and availability of liquidity and capital; and
•any litigation, or any regulatory or government investigation or action, to which we are or could become a party or which may affect us and any potential settlements of litigation, regulatory or governmental investigations or actions.
Forward-looking statements involve risks and uncertainties. Factors that could cause actual results to differ materially from those contemplated by the forward-looking statements include, among others, the following:
•our operating results may be lower than expected;
•our ability to successfully integrate acquired businesses or divest sold businesses or assets, including the fact that any integration or transition may be more difficult, time consuming or costly than expected, and we may be unable to realize synergies from business combinations, acquisitions, divestitures or other transactional activities;
•loss of significant trading and clearing volumes or values, fees, market share, listed companies, market data customers or other customers;
•our ability to develop and grow our non-trading businesses;
•our ability to keep up with rapid technological advances, including our ability to effectively manage the development and use of artificial intelligence in certain of our products and offerings, and adequately address cybersecurity risks;
•economic, political and market conditions and fluctuations, including inflation, interest rate and foreign currency risk inherent in U.S. and international operations, and geopolitical instability;
•the performance and reliability of our technology and technology of third parties on which we rely;
•any significant systems failures or errors in our operational processes;
•our ability to continue to generate cash and manage our indebtedness; and
•adverse changes that may occur in the litigation or regulatory areas, or in the securities markets generally, or increased regulatory oversight domestically or internationally.
Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the uncertainty and any risk related to forward-looking statements that we make. These risk factors are more fully described in the "Risk Factors"section in our Form 10-K filed with the SEC on February 21, 2024. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. You should carefully read this entire Quarterly Report on Form 10-Q, including "Part I. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" and the condensed consolidated financial statements and the related notes. Except as required by the federal securities laws, we undertake no obligation to update any forward-looking statement, release publicly any revisions to any forward-looking statements or report the occurrence of unanticipated events. For any forward-looking statements contained in any document, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
iv
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Nasdaq, Inc.
Condensed Consolidated Balance Sheets
(in millions, except share and par value amounts)
June 30, 2024 December 31, 2023
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 416 $ 453
Restricted cash and cash equivalents 24 20
Default funds and margin deposits (including restricted cash and cash equivalents of $5,037 and $6,645, respectively)
5,546 7,275
Financial investments 174 188
Receivables, net 960 929
Other current assets 189 231
Total current assets 7,309 9,096
Property and equipment, net 556 576
Goodwill 13,984 14,112
Intangible assets, net 7,171 7,443
Operating lease assets 400 402
Other non-current assets 790 665
Total assets $ 30,210 $ 32,294
Liabilities
Current liabilities:
Accounts payable and accrued expenses $ 301 $ 332
Section 31 fees payable to SEC 213 84
Accrued personnel costs 213 303
Deferred revenue 736 594
Other current liabilities 234 146
Default funds and margin deposits 5,546 7,275
Short-term debt 548 291
Total current liabilities 7,791 9,025
Long-term debt 9,249 10,163
Deferred tax liabilities, net 1,632 1,642
Operating lease liabilities 409 417
Other non-current liabilities 221 220
Total liabilities 19,302 21,467
Commitments and contingencies
Equity
Nasdaq stockholders' equity:
Common stock, $0.01 par value, 900,000,000 shares authorized, shares issued: 599,826,741 at June 30, 2024 and 598,014,520 at December 31, 2023; shares outstanding: 576,063,740 at June 30, 2024 and 575,159,336 at December 31, 2023
6 6
Additional paid-in capital 5,528 5,496
Common stock in treasury, at cost: 23,763,001 shares at June 30, 2024 and 22,855,184 shares at December 31, 2023
(641) (587)
Accumulated other comprehensive loss (2,011) (1,924)
Retained earnings 8,016 7,825
Total Nasdaq stockholders' equity 10,898 10,816
Noncontrolling interests 10 11
Total equity 10,908 10,827
Total liabilities and equity $ 30,210 $ 32,294
See accompanying notes to condensed consolidated financial statements.
1
Nasdaq, Inc.
Condensed Consolidated Statements of Income
(unaudited)
(in millions, except per share amounts)
Three Months Ended June 30, Six Months Ended June 30,
2024 2023 2024 2023
Revenues:
Capital Access Platforms $ 481 $ 438 $ 960 $ 852
Financial Technology 420 235 813 463
Market Services 883 750 1,678 1,631
Other revenues 8 10 18 20
Total revenues 1,792 1,433 3,469 2,966
Transaction-based expenses:
Transaction rebates (483) (444) (965) (931)
Brokerage, clearance and exchange fees (150) (64) (227) (197)
Revenues less transaction-based expenses 1,159 925 2,277 1,838
Operating expenses:
Compensation and benefits 328 261 669 517
Professional and contract services 39 30 72 61
Technology and communication infrastructure 69 56 135 110
Occupancy 27 32 56 71
General, administrative and other 30 22 58 35
Marketing and advertising 12 9 23 19
Depreciation and amortization 153 65 308 134
Regulatory 18 9 28 17
Merger and strategic initiatives 4 45 13 47
Restructuring charges 56 14 82 33
Total operating expenses 736 543 1,444 1,044
Operating income 423 382 833 794
Interest income 6 8 12 15
Interest expense (102) (36) (211) (73)
Other income (loss)
12 (6) 13 (7)
Net income (loss) from unconsolidated investees 2 (11) 6 3
Income before income taxes 341 337 653 732
Income tax provision 119 70 198 165
Net income 222 267 455 567
Net loss attributable to noncontrolling interests - - 1 1
Net income attributable to Nasdaq $ 222 $ 267 $ 456 $ 568
Per share information:
Basic earnings per share $ 0.39 $ 0.54 $ 0.79 $ 1.16
Diluted earnings per share $ 0.38 $ 0.54 $ 0.79 $ 1.15
Cash dividends declared per common share $ 0.24 $ 0.22 $ 0.46 $ 0.42
See accompanying notes to condensed consolidated financial statements.
2
Nasdaq, Inc.
Condensed Consolidated Statements of Comprehensive Income
(unaudited)
(in millions)
Three Months Ended June 30, Six Months Ended June 30,
2024 2023 2024 2023
Net income $ 222 $ 267 $ 455 $ 567
Other comprehensive income (loss):
Foreign currency translation gains (losses)
38 (116) (79) (138)
Income tax benefit (expense)(1)
(5) 3 (20) 10
Foreign currency translation, net 33 (113) (99) (128)
Employee benefit plan adjustment - - 19 -
Income tax expense
- - (5) -
Employee benefit plan, net - - 14 -
Other
- - (2) -
Total other comprehensive income (loss), net of tax
33 (113) (87) (128)
Comprehensive income 255 154 368 439
Comprehensive loss attributable to noncontrolling interests - - 1 1
Comprehensive income attributable to Nasdaq $ 255 $ 154 $ 369 $ 440
____________
(1) Primarily relates to the tax effect of unrealized gains and losses on Euro denominated notes.
See accompanying notes to condensed consolidated financial statements.
3
Nasdaq, Inc.
Condensed Consolidated Statements of Changes in Stockholders'Equity
(unaudited)
(in millions)
Three Months Ended June 30, Six Months Ended June 30,
2024 2023 2024 2023
Shares $ Shares $ Shares $ Shares $
Common stock 576 6 490 5 575 6 492 5
Additional paid-in capital
Beginning balance 5,526 1,312 5,496 1,445
Share repurchase program (1) (58) - - (1) (58) (3) (159)
Share-based compensation 1 39 2 34 3 69 3 60
Other issuances of common stock, net - 21 - 17 - 21 - 17
Ending balance 5,528 1,363 5,528 1,363
Common stock in treasury, at cost
Beginning balance (611) (555) (587) (515)
Other employee stock activity - (30) (1) (28) (1) (54) (1) (68)
Ending balance (641) (583) (641) (583)
Accumulated other comprehensive loss
Beginning balance (2,044) (2,006) (1,924) (1,991)
Other comprehensive income (loss)
33 (113) (87) (128)
Ending balance (2,011) (2,119) (2,011) (2,119)
Retained earnings
Beginning balance 7,932 7,411 7,825 7,207
Net income attributable to Nasdaq 222 267 456 568
Cash dividends declared and paid (138) (109) (265) (206)
Ending balance 8,016 7,569 8,016 7,569
Total Nasdaq stockholders' equity 10,898 6,235 10,898 6,235
Noncontrolling interests
Beginning balance 10 12 11 13
Net activity related to noncontrolling interests
- - (1) (1)
Ending balance 10 12 10 12
Total Equity 576 $ 10,908 491 $ 6,247 576 $ 10,908 491 $ 6,247
See accompanying notes to condensed consolidated financial statements.
4
Nasdaq, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
(in millions)
Six Months Ended June 30,
2024 2023
Cash flows from operating activities:
Net income $ 455 $ 567
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 308 134
Share-based compensation 69 60
Deferred income taxes (40) 30
Extinguishment of debt and bridge fees - 25
Non-cash restructuring charges 28 12
Net income from unconsolidated investees
(6) (3)
Operating lease asset impairments - 13
Other reconciling items included in net income 16 21
Net change in operating assets and liabilities:
Receivables, net (56) 72
Other assets 2 10
Accounts payable and accrued expenses (41) 14
Section 31 fees payable to SEC 130 (60)
Accrued personnel costs (86) (85)
Deferred revenue 144 189
Other liabilities 67 (20)
Net cash provided by operating activities 990 979
Cash flows from investing activities:
Purchases of securities (114) (411)
Proceeds from sales and redemptions of securities 119 296
Purchases of property and equipment (91) (79)
Investments related to default funds and margin deposits, net(1)
86 (103)
Other investing activities (18) 5
Net cash used in investing activities (18) (292)
Cash flows from financing activities:
Repayments of commercial paper, net (241) (524)
Repayments of term loan (340) -
Payment of debt extinguishment cost and bridge fees - (25)
Proceeds from issuances of debt, net of issuance costs - 5,016
Repurchases of common stock (58) (159)
Dividends paid (265) (206)
Proceeds received from employee stock activity and other issuances 21 18
Payments related to employee shares withheld for taxes (54) (68)
Default funds and margin deposits (1,396) 364
Net cash provided by (used in) financing activities (2,333) 4,416
Effect of exchange rate changes on cash and cash equivalents and restricted cash and cash equivalents (280) (230)
Net increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents
(1,641) 4,873
Cash and cash equivalents, restricted cash and cash equivalents at beginning of period
7,118 6,994
Cash and cash equivalents, restricted cash and cash equivalents at end of period $ 5,477 $ 11,867
Reconciliation of Cash, Cash Equivalents and Restricted Cash and Cash Equivalents
Cash and cash equivalents $ 416 $ 5,347
Restricted cash and cash equivalents 24 23
Restricted cash and cash equivalents (default funds and margin deposits) 5,037 6,497
Total $ 5,477 $ 11,867
Supplemental Disclosure Cash Flow Information
Interest paid $ 226 $ 67
Income taxes paid, net of refund $ 102 $ 136
__________________________
(1)Includes purchases and proceeds from sales and redemptions related to the default funds and margin deposits of our clearing operations. For further information, see "Default Fund Contributions and Margin Deposits," within Note 14, "Clearing Operations."
See accompanying notes to condensed consolidated financial statements.
5
Nasdaq, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. ORGANIZATION AND NATURE OF OPERATIONS
Nasdaq is a global technology company serving corporate clients, investment managers, banks, brokers, and exchange operators as they navigate and interact with the global capital markets and the broader financial system. We aspire to deliver world-leading platforms that improve the liquidity, transparency, and integrity of the global economy. Our diverse offering of data, analytics, software, exchange capabilities, and client-centric services enables clients to optimize and execute their business vision with confidence.
In the fourth quarter of 2023, following the completion of the Adenza acquisition, including its two flagship solutions, AxiomSL and Calypso, we aligned our business more closely with the foundational shifts that are driving the evolution of the global financial system. We now manage, operate and provide our products and services in three business segments: Capital Access Platforms, Financial Technology and Market Services. The divisional structure, which was implemented during the fourth quarter of 2023, is as follows:
Capital Access Platforms
Our Capital Access Platforms segment comprises Data & Listing Services, Index and Workflow & Insights.
Our Data business distributes historical and real-time market data to sell-side customers, the institutional investing community, retail online brokers, proprietary trading firms and other venues, as well as internet portals and data distributors. Our data products can enhance the transparency of market activity within our exchanges and provide critical information to professional and non-professional investors globally.
Our Listing Services business operates listing platforms in the U.S. and Europe to provide multiple global capital raising solutions for public companies. Our main listing markets are The Nasdaq Stock Market and the Nasdaq Nordic and Nasdaq Baltic exchanges. Through Nasdaq First North, our Nordic and Baltic operations also offer alternative marketplaces for smaller companies and growth companies.
As of June 30, 2024, a total of 5,202 companies listed securities on our U.S., Nasdaq Nordic, Nasdaq Baltic and Nasdaq First North exchanges. As of June 30, 2024, there were 4,004 total listings on The Nasdaq Stock Market, including 645 ETPs. The combined market capitalization in the U.S. was approximately $31.8 trillion. In Europe, the Nasdaq Nordic and Nasdaq Baltic exchanges, together with Nasdaq First North, were home to 1,198 listed companies with a combined market capitalization of approximately $2.2 trillion.
Our Index business develops and licenses Nasdaq-branded indices and financial products. We also license cash-settled options, futures and options on futures on our indices. As of June 30, 2024, 372 ETPs listed on 27 exchanges in over 20 countries tracked a Nasdaq index and accounted for $569 billion in AUM.
Workflow & Insights includes our analytics and corporate solutions businesses. Our analytics business provides asset managers, investment consultants and institutional asset owners with information and analytics to make data-driven investment decisions, deploy their resources more productively, and provide liquidity solutions for private funds. Through our eVestment and Solovis solutions, we provide a suite of cloud-based solutions that help institutional investors and consultants conduct pre-investment due diligence, and monitor their portfolios post-investment. The eVestment platform also enables asset managers to efficiently distribute information about their firms and funds to asset owners and consultants worldwide.
Through our Solovis platform, endowments, foundations, pensions and family offices transform how they collect and aggregate investment data, analyze portfolio performance, model and predict future outcomes, and share meaningful portfolio insights with key stakeholders. The Nasdaq Fund Network and Nasdaq Data Link are additional platforms in our suite of investment data analytics offerings and data management tools.
Our corporate solutions business serves both public and private companies and organizations through our Investor Relations Intelligence, ESG Solutions and Governance Solutions products. Our public company clients can be companies listed on our exchanges or other U.S. and global exchanges. Our private company clients include a diverse group of organizations ranging from family-owned companies, government organizations, law firms, privately held entities, and various non-profit organizations to hospitals and healthcare systems. We help organizations enhance their ability to understand and expand their global shareholder base, improve corporate governance, and navigate the evolving ESG landscape through our suite of advanced technology, analytics, reporting and consulting services.
6
Financial Technology
Our Financial Technology segment comprises Financial Crime Management Technology, Regulatory Technology and Capital Markets Technology solutions.
Financial Crime Management Technology includes our Verafin solution, a cloud-based platform to help financial institutions detect, investigate, and report money laundering and financial fraud.
Regulatory Technology comprises our surveillance and AxiomSL solutions. Our surveillance solutions are designed for banks, brokers and other market participants to assist them in complying with market abuse and integrity rules and regulations. In addition, we provide regulators and exchanges with a platform for surveillance. AxiomSL is a global leader in risk data management and regulatory reporting solutions for the financial industry, including banks, broker dealers and asset managers. Its unique enterprise data management platform delivers data lineage, risk aggregation, analytics, workflow automation, reconciliation, validation and audit functionality, as well as disclosures. AxiomSL's platform supports compliance across a wide range of global and local regulations.
Capital Markets Technology includes market technology, trade management services and Calypso. Our market technology business is a leading global technology solutions provider and partner to exchanges, clearing organizations, central securities depositories, regulators, banks, brokers, buy-side firms and corporate businesses. Our market technology solutions are utilized by leading markets in North America, Europe and Asia as well as emerging markets in the Middle East, Latin America, and Africa. Our trade management services provide market participants with a wide variety of alternatives for connecting to and accessing our markets for a fee. Our marketplaces may be accessed via a number of different protocols used for quoting, order entry, trade reporting and connectivity to various data feeds. We also provide colocation services to market participants, whereby we offer firms cabinet space and power to house their own equipment and servers within our data centers. Additionally, we offer a number of wireless connectivity offerings between select data centers using millimeter wave and microwave technology. Calypso is a leading provider of front-to-back technology solutions for the financial markets. The Calypso platform provides customers with a single platform designed from the outset to enable consolidation, innovation and growth.
Market Services
Our Market Services segment includes revenues from equity derivatives trading, cash equity trading, Nordic fixed income trading & clearing, Nordic commodities and U.S. Tape plans data. We operate 19 exchanges across several asset classes, including derivatives, commodities, cash equity, debt, structured products and ETPs. In addition, in certain countries where we operate exchanges, we also provide clearing, settlement and central depository services. In June
2023, we entered into an agreement to sell our Nordic power trading and clearing business, which agreement was subsequently terminated in June 2024. Revenues from this business continue to be reflected in Other Revenues in the Condensed Consolidated Statements of Income for all periods, and in our Corporate segment for our segment disclosures. Additionally, certain data revenues from this business that were previously included in our Capital Access Platforms segment are also reflected in Other Revenues in the Condensed Consolidated Statements of Income for all periods, and in our Corporate segment for our segment disclosures.
Our transaction-based platforms provide market participants with the ability to access, process, display and integrate orders and quotes. The platforms allow the routing and execution of buy and sell orders as well as the reporting of transactions, providing fee-based revenues.
2. BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION
The condensed consolidated financial statements are prepared in accordance with U.S. GAAP and include the accounts of Nasdaq, its wholly-owned subsidiaries and other entities in which Nasdaq has a controlling financial interest. When we do not have a controlling interest in an entity, but exercise significant influence over the entity's operating and financial policies, such investment is accounted for under the equity method of accounting. We recognize our share of earnings or losses of an equity method investee based on our ownership percentage. See "Equity Method Investments," of Note 6, "Investments," for further discussion of our equity method investments.
The accompanying condensed consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the results. These adjustments are of a normal recurring nature. All significant intercompany accounts and transactions have been eliminated in consolidation.
As permitted under U.S. GAAP, certain footnotes or other financial information can be condensed or omitted in the interim condensed consolidated financial statements. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in Nasdaq's Form 10-K. The year-end balance sheet data was derived from the audited financial statements, but does not include all disclosures required by U.S. GAAP.
Certain prior year amounts have been reclassified to conform to the current year presentation.
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Accounting Estimates
In preparing our condensed consolidated financial statements, we make assumptions, judgments and estimates that can have a significant impact on our revenues, operating income and net income, as well as on the value of certain assets and liabilities in our Condensed Consolidated Balance Sheets. At least quarterly, we evaluate our assumptions, judgments and estimates, and make changes as deemed necessary.
Recent Accounting Developments
In November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures." ASU 2023-07 requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker ("CODM") and included within the segment measure of profit or loss, an amount and description of its composition for other segment items to reconcile to segment profit or loss, and the title and position of the entity's CODM and an explanation of how the CODM uses the reported measure of segment profit or loss in assessing segment performance and deciding how to allocate resources. ASU 2023-07 will be applied retrospectively and is effective for annual reporting periods in fiscal years beginning after December 15, 2023, and interim reporting periods in fiscal years beginning after December 31, 2024. We are currently reviewing the impact that the adoption of ASU 2023-07 may have on our consolidated financial statements and disclosures.
Subsequent Events
We have evaluated subsequent events through the issuance date of this Quarterly Report on Form 10-Q. See Note 4, "Acquisition," for further discussion.
3. REVENUE FROM CONTRACTS WITH CUSTOMERS
Disaggregation of Revenue
The following tables summarize the disaggregation of revenue by major product and service and by segment for the three and six months ended June 30, 2024 and 2023:
Three Months Ended June 30,
2024 2023
(in millions)
Capital Access Platforms
Data & Listing Services $ 187 $ 187
Index 167 129
Workflow & Insights 127 122
Financial Technology
Financial Crime Management Technology 67 54
Regulatory Technology 95 35
Capital Markets Technology 258 146
Market Services, net 250 242
Other revenues 8 10
Revenues less transaction-based expenses $ 1,159 $ 925
Six Months Ended June 30,
2024 2023
(in millions)
Capital Access Platforms
Data & Listing Services $ 372 $ 371
Index 336 239
Workflow & Insights 252 242
Financial Technology
Financial Crime Management Technology 131 106
Regulatory Technology 186 67
Capital Markets Technology 496 290
Market Services, net 486 503
Other revenues 18 20
Revenues less transaction-based expenses $ 2,277 $ 1,838
Substantially all revenues from the Capital Access Platforms segment were recognized over time for the three and six months ended June 30, 2024 and 2023. For the threeand sixmonths ended June 30, 2024, 15.8% and 13.8%, respectively, of Regulatory Technology revenues related to AxiomSL were recognized at a point in time, and for the threeand sixmonths ended June 30, 2024, 14.7% and 13.1%, respectively, of Capital Markets Technology revenues related to Calypso were recognized at a point in time.The remaining Financial Technology revenues were recognized over time. For the three and sixmonths ended June 30, 2024 and 2023 approximately 95.9%, and 92.9%, respectively, of Market Services revenues were recognized at a point in time and 4.1%, and 7.1%, respectively, were recognized over time.
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Contract Balances
Substantially all of our revenues are considered to be revenues from contracts with customers. The related accounts receivable balances are recorded in our Condensed Consolidated Balance Sheets as receivables, which are net of allowance for doubtful accounts of $16 millionas of June 30, 2024and $18 million as of December 31, 2023. There were no material upward or downward adjustments to the allowance during the six months ended June 30, 2024. We do not have obligations for warranties, returns or refunds to customers.
Deferred revenue is the only significant contract asset or liability as of June 30, 2024. Deferred revenue represents consideration received that is yet to be recognized as revenue for unsatisfied performance obligations. See Note 7, "Deferred Revenue," for our discussion on deferred revenue balances, activity, and expected timing of recognition.
We do not provide disclosures about transaction price allocated to unsatisfied performance obligations if contract durations are less than one year. For our initial listings, the transaction price allocated to remaining performance obligations is included in deferred revenue, and therefore not included below. For our Financial Crime Management Technology, Regulatory Technology, Capital Markets Technology and Workflow & Insights contracts, the portion of transaction price allocated to unsatisfied performance obligations is presented in the table below. To the extent consideration has been received, unsatisfied performance obligations would be included in the table below as well as deferred revenue.
The following table summarizes the amount of the transaction price allocated to performance obligations that are unsatisfied, for contract durations greater than one year, as of June 30, 2024:
Financial Crime Management Technology Regulatory Technology Capital Markets Technology Workflow & Insights Total
(in millions)
Remainder of 2024 $ 110 $ 140 $ 178 $ 89 $ 517
2025 240 256 278 135 909
2026 181 98 216 72 567
2027 91 57 151 31 330
2028 27 39 98 14 178
2029+ 9 13 204 2 228
Total $ 658 $ 603 $ 1,125 $ 343 $ 2,729
4. ACQUISITION
In June 2023, we entered into a definitive agreement to acquire Adenza, a provider of mission-critical risk management and regulatory software to the financial services industry, for $5.75 billion in cash (subject to customary post-closing adjustments) and a fixed amount of 85.6 million shares of Nasdaq common stock, based on the volume-weighted average price per share over 15 consecutive trading days prior to signing. Nasdaq issued approximately $5.0 billion of debt, and entered into a $600 million term loan, and used the proceeds for the cash portion of the consideration. See "Senior Unsecured Notes" and "2023 Term Loan" in "Financing of the Adenza Acquisition" of Note 8, "Debt Obligations," for further discussion.
On November 1, 2023, Nasdaq completed the acquisition of Adenza for a total purchase consideration of $9,984 million, which comprises the following:
(in millions, except price per share)
Shares of Nasdaq common stock issued 85.6
Closing price per share of Nasdaq common stock on November 1, 2023 $ 48.71
Fair value of equity portion of the purchase consideration $ 4,170
Cash consideration $ 5,814
Total purchase consideration $ 9,984
At the closing of the transaction, the 85.6 million shares of Nasdaq common stock were issued to Thoma Bravo, the sole shareholder of Adenza, and represented approximately 15% of the outstanding shares of Nasdaq. For further discussion on the rights of common stockholders refer to "Common Stock" of Note 11, "Nasdaq Stockholders' Equity." Adenza is part of our Financial Technology segment.
On July 26, 2024, Nasdaq announced a secondary public offering of 41.6 million shares of our common stock held by Thoma Bravo, which was offered to the public at $65.30 per share. In addition, on July 25, 2024, Nasdaq entered into a share repurchase agreement with Thoma Bravo to repurchase 1.2 million shares of our common stock, subject to the completion of the secondary public offering. These transactions were completed on July 30, 2024. Nasdaq used cash on hand and borrowings under our commercial paper program to fund the share repurchase amount of $77 million. At the completion of these transactions, Thoma Bravo held 42.8 million shares of Nasdaq common stock, representing approximately 7.4%.
The amounts in the table below represent the preliminary allocation of the purchase price to the acquired intangible assets, the deferred tax liability on the acquired intangible assets and other assets acquired and liabilities assumed based on their preliminary respective estimated fair values on the date of acquisition. These amounts are subject to revision during the remainder of the measurement period, a period not to exceed 12 months from the acquisition date.
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Adjustments to the provisional values, which may include tax and other estimates, during the measurement period will be recorded in the reporting period in which the adjustment amounts are determined. Changes to amounts recorded as assets and liabilities may result in a corresponding adjustment to goodwill.
The excess purchase price over the net tangible and acquired intangible assets has been recorded as goodwill. The goodwill recognized is attributable primarily to expected synergies and is assigned to our Financial Technology segment.
(in millions)
Goodwill $ 5,933
Acquired intangible assets 5,050
Receivables, net 236
Other net assets acquired 153
Cash and cash equivalents 48
Accrued personnel costs (44)
Deferred revenue (130)
Deferred tax liability on acquired intangible assets (1,262)
Total purchase consideration $ 9,984
Intangible Assets
The following table presents the details of acquired intangible assets at the date of acquisition. Acquired intangible assets with finite lives are amortized using the straight-line method.
Customer
Relationships
Technology
Trade
Names
Total Acquired Intangible Assets
Intangible asset value (in millions) $ 3,740 $ 950 $ 360 $ 5,050
Discount rate used 9.5 % 8.5 % 8.5 %
Estimated average useful life 22 years 6 years 20 years
Customer Relationships
Customer relationships represent the contractual relationships with customers.
Methodology
Customer relationships were valued using the income approach, specifically an excess earnings method. The excess earnings method examines the economic returns contributed by the identified tangible and intangible assets of a company, and then isolates the excess return that is attributable to the intangible asset being valued.
Discount Rate
The discount rate used reflects the amount of risk associated with the hypothetical cash flows for the customer relationships relative to the overall business. In developing a discount rate for the customer relationships, we estimated a weighted-average cost of capital for the overall business and we utilized this rate as an input when discounting the cash flows. The resulting discounted cash flows were then tax-effected at the applicable statutory rate.
A discounted tax amortization benefit was added to the fair value of the assets under the assumption that the customer relationships would be amortized for tax purposes over a period of 15 years.
Technology
As part of our acquisition of Adenza, we acquired developed technology relating to AxiomSL and Calypso.
Methodology
The developed technology was valued using the income approach, specifically the relief-from-royalty method, which is used to estimate the cost savings that accrue to the owner of an intangible asset who would otherwise have to pay royalties or license fees on revenues earned through the use of the asset. The royalty rate is applied to the projected revenue over the expected remaining life of the intangible asset to estimate royalty savings. The net after-tax royalty savings are calculated for each year in the remaining economic life of the technology and discounted to present value.
Discount Rate
The discount rate used reflects the amount of risk associated with the hypothetical cash flows for the developed technology relative to the overall business as discussed above in "Customer Relationships."
Trade Name
As part of our acquisition of Adenza, we acquired the AxiomSL and Calypso trade names. The trade names are recognized in the industry and carry a reputation for quality. As such, the reputation and positive recognition embodied in the trade names is a valuable asset to Nasdaq.
Methodology
The AxiomSL and Calypso trade names were valued using the income approach, specifically the relief-from-royalty method as discussed above in "Technology."
Discount Rate
The discount rate used reflects the amount of risk associated with the hypothetical cash flows for the trade name relative to the overall business as discussed above in "Customer Relationships."
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5. GOODWILL AND ACQUIRED INTANGIBLE ASSETS
Goodwill
The following table presents the changes in goodwill by business segment during the six months ended June 30, 2024:
(in millions)
Capital Access Platforms
Balance at December 31, 2023 $ 4,214
Foreign currency translation adjustments (47)
Balance at June 30, 2024 $ 4,167
Financial Technology
Balance at December 31, 2023 $ 7,873
Foreign currency translation adjustments (16)
Balance at June 30, 2024 $ 7,857
Market Services
Balance at December 31, 2023 $ 2,025
Foreign currency translation adjustments (65)
Balance at June 30, 2024 $ 1,960
Total
Balance at December 31, 2023 $ 14,112
Foreign currency translation adjustments (128)
Balance at June 30, 2024 $ 13,984
Goodwill represents the excess of purchase price over the value assigned to the net assets, including identifiable intangible assets, of a business acquired. Goodwill is allocated to our reporting units based on the assignment of the fair values of each reporting unit of the acquired company. We test goodwill for impairment at the reporting unit level annually, or in interim periods if certain events occur indicating that the carrying amount may be impaired, such as changes in the business climate, poor indicators of operating performance or the sale or disposition of a significant portion of a reporting unit. There was no impairment of goodwill for the threeand sixmonths ended June 30, 2024 and 2023; however, events such as prolonged economic weakness or unexpected significant declines in operating results of any of our reporting units or businesses may result in goodwill impairment charges in the future.
Acquired Intangible Assets
The following table presents details of our total acquired intangible assets, both finite- and indefinite-lived:
June 30, 2024 December 31, 2023
Finite-Lived Intangible Assets (in millions)
Gross Amount
Technology $ 1,235 $ 1,254
Customer relationships 5,722 5,743
Trade names and other 417 417
Foreign currency translation adjustment (216) (194)
Total gross amount $ 7,158 $ 7,220
Accumulated Amortization
Technology $ (249) $ (169)
Customer relationships (1,029) (912)
Trade names and other (32) (21)
Foreign currency translation adjustment 136 120
Total accumulated amortization $ (1,174) $ (982)
Net Amount
Technology $ 986 $ 1,085
Customer relationships 4,693 4,831
Trade names and other 385 396
Foreign currency translation adjustment (80) (74)
Total finite-lived intangible assets $ 5,984 $ 6,238
Indefinite-Lived Intangible Assets
Exchange and clearing registrations $ 1,257 $ 1,257
Trade names 121 121
Licenses 52 52
Foreign currency translation adjustment (243) (225)
Total indefinite-lived intangible assets $ 1,187 $ 1,205
Total intangible assets, net $ 7,171 $ 7,443
There was no impairment of intangible assets for the threeand six months ended June 30, 2024 and 2023.
The following tables present our amortization expense for acquired finite-lived intangible assets:
Three Months Ended June 30,
2024 2023
(in millions)
Amortization expense $ 122 $ 37
Six Months Ended June 30,
2024 2023
(in millions)
Amortization expense $ 244 $ 75
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The table below presents the estimated future amortization expense (excluding the impact of foreign currency translation adjustments of $80 million as of June 30, 2024) of acquired finite-lived intangible assets as of June 30, 2024:
(in millions)
Remainder of 2024 $ 247
2025 499
2026 494
2027 494
2028 460
2029+ 3,870
Total $ 6,064
6. INVESTMENTS
The following table presents the details of our investments:
June 30, 2024 December 31, 2023
(in millions)
Financial investments $ 174 $ 188
Equity method investments 407 380
Equity securities 109 87
Financial Investments
Financial investments are comprised of trading securities, primarily highly rated European government debt securities, of which $167 million as of June 30, 2024 and $168 million as of December 31, 2023 are assets primarily utilized to meet regulatory capital requirements, mainly for our clearing operations at Nasdaq Clearing.
Equity Method Investments
We record our estimated pro-rata share of earnings or losses each reporting period and record any dividends as a reduction in the investment balance. As of June 30, 2024 and 2023, our equity method investments primarily included our 40.0% equity interest in OCC.
The carrying amounts of our equity method investments are included in other non-current assets in the Condensed Consolidated Balance Sheets. No impairments were recorded for the three and sixmonths ended June 30, 2024 and 2023.
Net income (loss) recognized from our equity interest in the earnings and losses of these equity method investments, was $2 million and $(11) million for the three months ended June 30, 2024 and 2023, respectively, and $6 million and $3 million for the six months ended June 30, 2024 and 2023, respectively.
Equity Securities
The carrying amounts of our equity securities are included in other non-current assets in the Condensed Consolidated Balance Sheets. We elected the measurement alternative for substantially all of our equity securities as they do not have a readily determinable fair value. No material adjustments were made to the carrying value of our equity securities for the three and sixmonths ended June 30, 2024 and 2023. As of June 30, 2024 and December 31, 2023, our equity securities primarily represent various strategic minority investments made through our corporate venture program.
7. DEFERRED REVENUE
Deferred revenue represents consideration received that is yet to be recognized as revenue. The changes in our deferred revenue during the six months ended June 30, 2024 are reflected in the following table:
Balance at December 31, 2023 Additions Revenue Recognized
Foreign Currency Translation Adjustments
Balance at June 30, 2024
(in millions)
Capital Access Platforms:
Initial Listings $ 97 $ 15 $ (21) $ (1) $ 90
Annual Listings 3 176 (1) (1) 177
Workflow & Insights 180 136 (124) - 192
Financial Technology:
Financial Crime Management Technology 123 98 (83) (4) 134
Regulatory Technology 68 36 (41) (1) 62
Capital Markets Technology 183 55 (105) (1) 132
Other 21 13 (6) (1) 27
Total $ 675 $ 529 $ (381) $ (9) $ 814
In the above table:
•Additions reflect deferred revenue billed in the current period, net of recognition.
•Revenue recognized includes revenue recognized during the current period that was included in the beginning balance.
•Other primarily includes deferred revenue from our non-U.S. listing of additional shares fees and our Index business. These fees are included in our Capital Access Platforms segment.
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As of June 30, 2024, we estimate that our deferred revenue will be recognized in the following years:
Fiscal year ended:
2024 2025 2026 2027 2028 2029+ Total
(in millions)
Capital Access Platforms:
Initial Listings $ 18 $ 29 $ 24 $ 12 $ 5 $ 2 $ 90
Annual Listings 177 - - - - - 177
Workflow & Insights 143 49 - - - - 192
Financial Technology:
Financial Crime Management Technology 98 36 - - - - 134
Regulatory Technology 44 18 - - - - 62
Capital Markets Technology 110 17 2 2 1 - 132
Other 13 7 4 3 - - 27
Total $ 603 $ 156 $ 30 $ 17 $ 6 $ 2 $ 814
In the above table, 2024 represents the remaining six months of 2024.
Deferred revenue that will be recognized beyond June 30, 2025 is included in other non-current liabilities in the Condensed Consolidated Balance Sheets. The timing of recognition of deferred revenue related to certain market technology contracts represents our best estimates as the recognition is primarily dependent upon the completion of customization and any significant modifications made pursuant to existing market technology contracts.
8. DEBT OBLIGATIONS
The following table presents the carrying amounts of our debt outstanding, net of unamortized debt issuance costs:
June 30, 2024 December 31, 2023
Short-term debt: (in millions)
Commercial paper $ 50 $ 291
2025 Notes, $500 million, 5.650% notes due June 28, 2025
498 497
Total short-term debt $ 548 $ 788
Long-term debt - senior unsecured notes:
2026 Notes, $500 million, 3.850% notes due June 30, 2026
499 499
2028 Notes, $1 billion, 5.350% notes due June 28, 2028
993 991
2029 Notes, €600 million, 1.75% notes due March 28, 2029
639 658
2030 Notes, €600 million, 0.875% notes due February 13, 2030
639 658
2031 Notes, $650 million, 1.650% notes due January 15, 2031
645 645
2032 Notes, €750 million, 4.500% notes due February 15, 2032
795 819
2033 Notes, €615 million, 0.900% notes due July 30, 2033
655 674
2034 Notes $1.25 billion, 5.550% notes due February 15, 2034
1,240 1,239
2040 Notes, $650 million, 2.500% notes due December 21, 2040
644 644
2050 Notes, $500 million, 3.250% notes due April 28, 2050
487 487
2052 Notes, $550 million, 3.950% notes due March 7, 2052
541 541
2053 Notes, $750 million, 5.950% notes due August 15, 2053
738 738
2063 Notes, $750 million, 6.100% notes due June 28, 2063
738 738
2023 Term Loan
- 339
2022 Revolving Credit Facility (4) (4)
Total long-term debt $ 9,249 $ 9,666
Total debt obligations $ 9,797 $ 10,454
In the table above, the 2025 Notes were reclassified to short-term debt as of June 30, 2024, including the balance as of December 31, 2023, for presentation purposes.
Commercial Paper Program
Our U.S. dollar commercial paper program is supported by our 2022 Revolving Credit Facility, which provides liquidity support for the repayment of commercial paper issued through this program. See "2022 Revolving Credit Facility" below for further discussion. The effective interest rate of commercial paper issuances fluctuates as short-term interest rates and demand fluctuate. The fluctuation of these rates may impact our interest expense.
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Senior Unsecured Notes
Our 2040 Notes were issued at par. All of our other outstanding senior unsecured notes were issued at a discount. As a result of the discount, the proceeds received from each issuance were less than the aggregate principal amount. As of June 30, 2024, the amounts in the table above reflect the aggregate principal amount, less the unamortized debt issuance costs, which are being accreted through interest expense over the life of the applicable notes. The accretion of these costs was $6 million for the six months ended June 30, 2024. Our Euro denominated notes are adjusted for the impact of foreign currency translation. Our senior unsecured notes are general unsecured obligations which rank equally with all of our existing and future unsubordinated obligations and are not guaranteed by any of our subsidiaries. The senior unsecured notes were issued under indentures that, among other things, limit our ability to consolidate, merge or sell all or substantially all of our assets, create liens, and enter into sale and leaseback transactions. The senior unsecured notes may be redeemed by Nasdaq at any time, subject to a make-whole amount.
Upon a change of control triggering event (as defined in the various supplemental indentures governing the applicable notes), the terms require us to repurchase all or part of each holder's notes for cash equal to 101% of the aggregate principal amount purchased plus accrued and unpaid interest, ifany.
The 2029 Notes, 2030 Notes, 2032 Notes and 2033 Notes pay interest annually. All other notes pay interest semi-annually. The U.S senior unsecured notes coupon rates may vary with Nasdaq's debt rating, to the extent Nasdaq is downgraded below investment grade, up to an upward rate adjustment not to exceed 2%.
Net Investment Hedge
Our Euro denominated notes have been designated as a hedge of our net investment in certain foreign subsidiaries to mitigate the foreign exchange risk associated with certain investments in these subsidiaries. Accordingly, the remeasurement of these notes is recorded in accumulated other comprehensive loss within Nasdaq's stockholders' equity in the Condensed Consolidated Balance Sheets. For the six months ended June 30, 2024, the impact of translation decreased the U.S. dollar value of our Euro denominated notes by $83 million.
Financing of the Adenza Acquisition
Senior Unsecured Notes
In June 2023, Nasdaq issued six series of notes for total proceeds of $5,016 million, net of debt issuance costs of $38 million, with various maturity dates ranging from 2025 to 2063. The net proceeds from these notes were used to finance the majority of the cash consideration due in connection with the Adenza acquisition. For further discussion of the Adenza acquisition, see Note 4, "Acquisition."
2023 Term Loan
In June 2023, in connection with the financing of the Adenza acquisition, we entered into a term loan credit agreement, or the 2023 Term Loan. The 2023 Term Loan provided us with the ability to borrow up to $600 million to finance a portion of the cash consideration for the Adenza acquisition, for repayment of certain debt of Adenza and its subsidiaries, and to pay fees, costs and expenses related to the transaction. On November 1, 2023, we borrowed $599 million, net of fees, under this term loan towards payment of the cash consideration due in connection with the Adenza acquisition. As of June 30, 2024 the term loan is fully repaid.
Credit Facilities
2022 Revolving Credit Facility
In December 2022, Nasdaq amended and restated its previously issued $1.25 billion five-year revolving credit facility, with a new maturity date of December 16, 2027. Nasdaq intends to use funds available under the 2022 Revolving Credit Facility for general corporate purposes and to provide liquidity support for the repayment of commercial paper issued through the commercial paper program. Nasdaq is permitted to repay borrowings under our 2022 Revolving Credit Facility at any time in whole or in part, without penalty.
As of June 30, 2024, no amounts were outstanding on the 2022 Revolving Credit Facility. The $(4) million balance represents unamortized debt issuance costs which are being accreted through interest expense over the life of the credit facility.
Borrowings under the revolving credit facility and swingline borrowings bear interest on the principal amount outstanding at a variable interest rate based on either the SOFR (or a successor rate to SOFR), the base rate (as defined in the 2022 Revolving Credit Facility agreement), or other applicable rate with respect to non-dollar borrowings, plus an applicable margin that varies with Nasdaq's debt rating. We are charged commitment fees of 0.100% to 0.250%, depending on our credit rating, whether or not amounts have been borrowed. These commitment fees are included in interest expense and were not material for the threeand sixmonths ended June 30, 2024 and 2023.
The 2022 Revolving Credit Facility contains financial and operating covenants. Financial covenants include a maximum leverage ratio. Operating covenants include, among other things, limitations on Nasdaq's ability to incur additional indebtedness, grant liens on assets, dispose of assets and make certain restricted payments. The facility also contains customary affirmative covenants, including access to financial statements, notice of defaults and certain other material events, maintenance of properties and insurance, and customary events of default, including cross-defaults to our material indebtedness.
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The 2022 Revolving Credit Facility includes an option for Nasdaq to increase the available aggregate amount by up to $750 million, subject to the consent of the lenders funding the increase and certain other conditions.
Other Credit Facilities
Certain of our European subsidiaries have several other credit facilities, which are available in multiple currencies, primarily to support our Nasdaq Clearing operations in Europe, as well as to provide a cash pool credit line. These credit facilities, in aggregate, totaled $181 million as of June 30, 2024 and $191 million as of December 31, 2023 in available liquidity, none of which was utilized. Generally, these facilities each have a one-year term. The amounts borrowed under these various credit facilities bear interest on the principal amount outstanding at a variable interest rate based on a base rate (as defined in the applicable credit agreement), plus an applicable margin. We are charged commitment fees (as defined in the applicable credit agreement), whether or not amounts have been borrowed. These commitment fees are included in interest expense and were not material for the threeand sixmonths ended June 30, 2024 and 2023.
These facilities include customary affirmative and negative operating covenants and events of default.
Debt Covenants
As of June 30, 2024, we were in compliance with the covenants of all of our debt obligations.
9. RETIREMENT PLANS
Defined Contribution Savings Plan
We sponsor a 401(k) plan, which is a voluntary defined contribution savings plan, for U.S. employees. Employees are immediately eligible to make contributions to the plan and are also eligible for an employer contribution match at an amount equal to 100.0% of the first 6.0% of eligible employee contributions. The following table presents the savings plan expense for the threeand sixmonths ended June 30, 2024 and 2023, which is included in compensation and benefits expense in the Condensed Consolidated Statements of Income:
Three Months Ended June 30, Six Months Ended June 30,
2024 2023 2024 2023
(in millions)
Savings Plan expense
$ 5 $ 5 $ 10 $ 10
Pension and Supplemental Executive Retirement Plans
Prior to 2024, we maintained non-contributory, defined-benefit pension plan, non-qualified SERPs for certain senior executives and other post-retirement benefit plans for eligible employees in the U.S. Most employees outside the U.S. are covered by local retirement plans or by applicable social laws. Benefits under social laws are generally expensed in the periods in which the costs are incurred.
In June 2023, we terminated our U.S. pension plan and took steps to wind down the plan and transfer the resulting liability to an insurance company which started in 2023 and was completed in 2024. These steps included settling all future obligations under our U.S. pension plan through a combination of lump sum payments to eligible, electing participants (completed in 2023) and the transfer of any remaining benefits to a third-party insurance company through a group annuity contract. In connection with the plan termination and partial settlement, a pre-tax charge of $9 million was recorded to compensation and benefits expense in 2023. We finalized the transfer of any remaining benefits during the first quarter of 2024 and recorded an additional settlement pre-tax charge of $23 million to compensation and benefits expense in the Condensed Consolidated Statements of Income. This was offset by a $19 million adjustment to Other Comprehensive Income and a $4 million cash settlement.
The total expense for these plans is included in compensation and benefits expense in the Condensed Consolidated Statements of Income:
Three Months Ended June 30, Six Months Ended June 30,
2024 2023 2024 2023
(in millions)
Retirement Plans expense
$ 8 $ 7 $ 38 $ 13
Nonqualified Deferred Compensation Plan
We sponsor a nonqualified plan, the Nasdaq, Inc. Deferred Compensation Plan. This plan provides certain eligible employees with the opportunity to defer a portion of their annual salary and bonus up to certain approval limits. All deferrals and associated earnings are our general unsecured obligations and were immaterial for the threeand sixmonths ended June 30, 2024 and 2023.
10. SHARE-BASED COMPENSATION
We have a share-based compensation program for employees and non-employee directors. Share-based awards granted under this program include restricted stock (consisting of restricted stock units), PSUs and stock options. For accounting purposes, we consider PSUs to be a form of restricted stock. Generally, annual employee awards are granted on or about April 1st of each year.
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Summary of Share-Based Compensation Expense
The following table presents the total share-based compensation expense resulting from equity awards and the 15.0% discount for the ESPP for the threeand sixmonths ended June 30, 2024 and 2023, which is included in compensation and benefits expense in the Condensed Consolidated Statements of Income:
Three Months Ended June 30, Six Months Ended June 30,
2024 2023 2024 2023
(in millions)
Share-based compensation expense before income taxes $ 39 $ 34 $ 69 $ 60
Common Shares Available Under Our Equity Plan
As of June 30, 2024, we had approximately 22.7 million shares of common stock authorized for future issuance under our Equity Plan.
Restricted Stock
We grant restricted stock to most employees. The grant date fair value of restricted stock awards is based on the closing stock price at the date of grant less the present value of future cash dividends. Restricted stock awards granted to employees below the manager level generally vest 33% on the first anniversary of the grant date, 33% on the second anniversary of the grant date, and the remainder on the third anniversary of the grant date. Restricted stock awards granted to employees at or above the manager level generally vest 33% on the second anniversary of the grant date, 33% on the third anniversary of the grant date, and the remainder on the fourth anniversary of the grant date.
Summary of Restricted Stock Activity
The following table summarizes our restricted stock activity for the six months ended June 30, 2024:
Restricted Stock
Number of Awards Weighted-Average Grant Date Fair Value
Unvested at December 31, 2023 4,209,299 $ 51.15
Granted 1,798,206 56.96
Vested (1,395,439) 44.31
Forfeited (139,114) 54.85
Unvested at June 30, 2024 4,472,952 $ 55.51
As of June 30, 2024, $164 million of total unrecognized compensation cost related to restricted stock is expected to be recognized over a weighted-average period of 2.5 years.
PSUs
We grant three-year PSUs to certain eligible employees. PSUs are based on performance measures that impact the amount of shares that each PSU eligible individual receives, subject to the satisfaction of applicable market performance conditions, with a three-year cumulative performance period that vest at the end of the performance period and which settle in shares of our common stock. Compensation cost is recognized over the three-year performance period, taking into account an estimated forfeiture rate, regardless of whether the market condition is satisfied, provided that the requisite service period has been completed. Performance will be determined by comparing Nasdaq's TSR to two peer groups, each weighted 50.0%. The first peer group consists of exchange companies, and the second peer group consists of all companies in the S&P 500. Beginning in 2024, we replaced the exchange company peer group with the S&P 500 GICS 4020 Index, which is a blend of exchanges, as well as data, financial technology and banking companies to align more closely with Nasdaq's diverse business and competitors. Nasdaq's relative performance ranking against each of these groups will determine the final number of shares delivered to each individual under the program. The award issuance under this program will be between 0.0% and 200.0% of the number of PSUs granted and will be determined by Nasdaq's overall performance against both peer groups. However, if Nasdaq's TSR is negative for the three-year performance period, regardless of TSR ranking, the award issuance will not exceed 100.0% of the number of PSUs granted. We estimate the fair value of PSUs granted under the three-year PSU program using the Monte Carlo simulation model, as these awards contain a market condition.
In 2024, we also granted PSUs with a two-year performance period to certain eligible executives at the senior vice president level and above. These PSUs are based on performance measures relating to the implementation of certain integration actions in connection with the Adenza acquisition. Achievement of the targets impacts the amount of shares that each PSU eligible individual receives. The PSUs have a two-year performance period and will vest oneyear after the end of the performance period, and settle in shares of our common stock. The award issuance under this program will be between 0.0% and 200.0% of the number of PSUs granted.
Grants of PSUs that were issued in 2021 with a three-year performance period exceeded the applicable performance metrics. As a result, an additional 387,011 units above the original target were granted in the first quarter of 2024 and were fully vested upon issuance.
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The following weighted-average assumptions were used to determine the weighted-average fair values of the outstanding PSU awards granted under the three-year PSU program during the six months ended June 30, 2024 and 2023:
Grant date April 1, 2024 April 3, 2023
Weighted-average risk-free interest rate 4.51 % 3.75 %
Expected volatility
24.50 % 23.88 %
Weighted-average grant date share price $ 62.29 $ 54.40
Weighted-average fair value at grant date $ 78.45 $ 52.56
Summary of PSU Activity
The following table summarizes our PSU activity for the six months ended June 30, 2024:
PSUs
Three-Year Program
Number of Awards Weighted-Average Grant Date Fair Value
Unvested at December 31, 2023 2,008,322 $ 62.86
Granted 1,270,334 73.76
Vested (961,331) 73.14
Forfeited (88,632) 61.76
Unvested at June 30, 2024 2,228,693 $ 64.68
In the table above, in addition to the annual employee grant described above, the granted amount also includes additional awards granted based on overachievement of performance metrics.
As of June 30, 2024, the total unrecognized compensation cost related to the PSU program is $89 million and is expected to be recognized over a weighted-average period of 1.7 years.
Stock Options
There were no stock option awards granted for the six months ended June 30, 2024. There were no stock options exercised for the sixmonths ended June 30, 2024 and 2023.
A summary of our outstanding and exercisable stock options at June 30, 2024 is as follows:
Number of Stock Options
Weighted-Average Exercise Price
Weighted-
Average
Remaining
Contractual
Term (in
years)
Aggregate
Intrinsic
Value (in
millions)
Outstanding at June 30, 2024 1,420,323 $ 41.79 4.7 $ 31
Exercisable at June 30, 2024 806,451 $ 22.23 2.5 $ 31
As of June 30, 2024, the aggregate pre-tax intrinsic value of the outstanding and exercisable stock options in the above table was $31 million and represents the difference between our closing stock price on June 30, 2024 of $60.26 and the exercise price, times the number of shares that would have been received by the option holder had the option holder exercised the stock options on that date. This amount can change based on the fair market value of our common stock. As of June 30, 2024 and 2023, 0.8 million outstanding stock options were exercisable and the exercise price was $22.23.
ESPP
We have an ESPP under which approximately 11.0 million shares of our common stock were available for future issuance as of June 30, 2024. Under our ESPP, employees may purchase shares having a value not exceeding 10.0% of their annual compensation, subject to applicable annual Internal Revenue Service limitations. We record compensation expense related to the 15.0% discount that is given to our employees.
11. NASDAQ STOCKHOLDERS'EQUITY
Common Stock
As of June 30, 2024, 900,000,000 shares of our common stock were authorized, 599,826,741 shares were issued and 576,063,740 shares were outstanding. As of December 31, 2023, 900,000,000 shares of our common stock were authorized, 598,014,520 shares were issued and 575,159,336 shares were outstanding. The holders of common stock are entitled to one vote per share, except that our certificate of incorporation limits the ability of any shareholder to vote in excess of 5.0% of the then-outstanding shares of Nasdaq common stock.
Common Stock in Treasury, at Cost
We account for the purchase of treasury stock under the cost method with the shares of stock repurchased reflected as a reduction to Nasdaq stockholders' equity and included in common stock in treasury, at cost in the Condensed Consolidated Balance Sheets. Shares repurchased under our share repurchase program are currently retired and canceled and are therefore not included in the common stock in treasury balance. If treasury shares are reissued, they are recorded at the average cost of the treasury shares acquired. We held 23,763,001 shares of common stock in treasury as of June 30, 2024 and 22,855,184 shares as of December 31, 2023, most of which are related to shares of our common stock withheld for the settlement of employee tax withholding obligations arising from the vesting of restricted stock and PSUs.
Share Repurchase Program
As of June 30, 2024, the remaining aggregate authorized amount under the existing share repurchase program was $1.8 billion.
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These repurchases may be made from time to time at prevailing market prices in open market purchases, privately-negotiated transactions, block purchase techniques, an accelerated share repurchase program or otherwise, as determined by our management. The repurchases are primarily funded from existing cash balances. The share repurchase program may be suspended, modified or discontinued at any time, and has no defined expiration date.
The following is a summary of our share repurchase activity, reported based on settlement date, for the six months ended June 30, 2024:
Six Months Ended June 30, 2024
Number of shares of common stock repurchased 975,102
Average price paid per share $ 59.08
Total purchase price (in millions)
$ 58
In the table above, the number of shares of common stock repurchased excludes an aggregate of 907,817 shares withheld to satisfy tax obligations of the grantee upon the vesting of restricted stock and PSUs, and these repurchases are excluded from our repurchase program.
As discussed above in "Common Stock in Treasury, at Cost," shares repurchased under our share repurchase program are currently retired and cancelled.
Preferred Stock
Our certificate of incorporation authorizes the issuance of 30,000,000 shares of preferred stock, par value $0.01 per share, issuable from time to time in one or more series. As of June 30, 2024 and December 31, 2023, no shares of preferred stock were issued or outstanding.
Cash Dividends on Common Stock
During the first six months of 2024, our board of directors declared and paid the following cash dividends:
Declaration Date Dividend Per
Common Share 		Record Date Total Amount Paid Payment Date
(in millions)
January 29, 2024 $ 0.22 March 14, 2024 $ 127 March 28, 2024
April 24, 2024 0.24 June 14, 2024 138 June 28, 2024
$ 265
The total amount paid of $265 million was recorded in retained earnings within Nasdaq's stockholders' equity in the Condensed Consolidated Balance Sheets at June 30, 2024.
In July 2024, the board of directors approved a regular quarterly cash dividend of $0.24 per share on our outstanding common stock. The dividend is payable on September 27, 2024 to shareholders of record at the close of business on September 13, 2024. The estimated aggregate payment of this dividend is $138 million. Future declarations of quarterly dividends and the establishment of future record and payment dates are subject to approval by the board of directors.
The board of directors maintains a dividend policy with the intention to provide shareholders with regular and increasing dividends as earnings and cash flows increase.
12. EARNINGS PER SHARE
The following tables set forth the computation of basic and diluted earnings per share:
Three Months Ended June 30,
2024 2023
Numerator: (in millions, except share and per share amounts)
Net income attributable to common shareholders $ 222 $ 267
Denominator:
Weighted-average common shares outstanding for basic earnings per share 576,375,433 490,778,304
Weighted-average effect of dilutive securities - Employee equity awards 2,575,343 2,852,781
Weighted-average common shares outstanding for diluted earnings per share 578,950,776 493,631,085
Basic and diluted earnings per share:
Basic earnings per share $ 0.39 $ 0.54
Diluted earnings per share $ 0.38 $ 0.54
Six Months Ended June 30,
2024 2023
Numerator: (in millions, except share and per share amounts)
Net income attributable to common shareholders $ 456 $ 568
Denominator:
Weighted-average common shares outstanding for basic earnings per share 575,913,549 490,357,081
Weighted-average effect of dilutive securities - Employee equity awards 3,027,384 3,845,307
Weighted-average common shares outstanding for diluted earnings per share 578,940,933 494,202,388
Basic and diluted earnings per share:
Basic earnings per share $ 0.79 $ 1.16
Diluted earnings per share $ 0.79 $ 1.15
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In the preceding table, employee equity awards from our PSU program, which are considered contingently issuable, are included in the computation of dilutive earnings per share on a weighted average basis when management determines that the applicable performance criteria would have been met if the performance period ended as of the date of the relevant computation.
Securities that were not included in the computation of diluted earnings per share because their effect was antidilutive were immaterial for the threeand sixmonths ended June 30, 2024 and 2023.
13. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following tables present our financial assets and financial liabilities that were measured at fair value on a recurring basis as of June 30, 2024 and December 31, 2023.
June 30, 2024
Total
Level 1
Level 2
Level 3
(in millions)
European government debt securities
$ 168 $ 168 $ - $ -
Swedish mortgage bonds
6 - 6 -
Total assets at fair value $ 174 $ 168 $ 6 $ -
December 31, 2023
Total
Level 1
Level 2
Level 3
(in millions)
European government debt securities
$ 170 $ 170 $ - $ -
State-owned enterprises and municipal securities
11 - 11 -
Swedish mortgage bonds
7 - 7 -
Total assets at fair value $ 188 $ 170 $ 18 $ -
Financial Instruments Not Measured at Fair Value on a Recurring Basis
Some of our financial instruments are not measured at fair value on a recurring basis but are recorded at amounts that approximate fair value due to their liquid or short-term nature. Such financial assets and financial liabilities include: cash and cash equivalents, restricted cash and cash equivalents, receivables, net, certain other current assets, accounts payable and accrued expenses, Section 31 fees payable to SEC, accrued personnel costs, commercial paper and certain other current liabilities.
We have certain investments, primarily our investment in OCC, which are accounted for under the equity method of accounting. We have elected the measurement alternative for the majority of our equity securities, which primarily represent various strategic investments made through our corporate venture program. See "Equity Method Investments," and "Equity Securities," of Note 6, "Investments," for further discussion.
We also consider our debt obligations to be financial instruments. As of June 30, 2024, the majority of our debt obligations were fixed-rate obligations. We are exposed to changes in interest rates as a result of borrowings under our 2022 Revolving Credit Facility, as the interest rates on this facility have a variable rate depending on the maturity of the borrowing and the implied underlying reference rate. We are also exposed to changes in interest rates on amounts outstanding from the sale of commercial paper under our commercial paper program. The fair value of our remaining debt obligations utilizing discounted cash flow analyses for our floating rate debt, and prevailing market rates for our fixed rate debt was $9.0 billion as of June 30, 2024 and $10.0 billion as of December 31, 2023. The discounted cash flow analyses are based on borrowing rates currently available to us for debt with similar terms and maturities. Our commercial paper and our fixed rate and floating rate debt are categorized as Level 2 in the fair value hierarchy.
For further discussion of our debt obligations, see Note 8, "Debt Obligations."
Non-Financial Assets Measured at Fair Value on a Non-Recurring Basis
Our non-financial assets, which include goodwill, intangible assets, and other long-lived assets, are not required to be carried at fair value on a recurring basis. Fair value measures of non-financial assets are primarily used in the impairment analysis of these assets. Any resulting asset impairment would require that the non-financial asset be recorded at its fair value. Nasdaq uses Level 3 inputs to measure the fair value of the above assets on a non-recurring basis. As of June 30, 2024 and December 31, 2023, there were no non-financial assets measured at fair value on a non-recurring basis.
14. CLEARING OPERATIONS
Nasdaq Clearing
Nasdaq Clearing is authorized and supervised under EMIR as a multi-asset clearinghouse by the SFSA. Such authorization is effective for all member states of the European Union and certain other non-member states that are part of the European Economic Area, including Norway. The clearinghouse acts as the CCP for exchange and OTC trades in equity derivatives, fixed income derivatives, resale and repurchase contracts, power derivatives, emission allowance derivatives, and seafood derivatives. In June 2023, we entered into an agreement to sell our Nordic power trading and clearing business, which agreement was subsequently terminated in June 2024.
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Through our clearing operations in the financial markets, which include the resale and repurchase market, the commodities markets, and the seafood market, Nasdaq Clearing is the legal counterparty for, and guarantees the fulfillment of, each contract cleared. These contracts are not used by Nasdaq Clearing for the purpose of trading on its own behalf. As the legal counterparty of each transaction, Nasdaq Clearing bears the counterparty risk between the purchaser and seller in the contract. In its guarantor role, Nasdaq Clearing has precisely equal and offsetting claims to and from clearing members on opposite sides of each contract, standing as the CCP on every contract cleared. In accordance with the rules and regulations of Nasdaq Clearing, default fund and margin collateral requirements are calculated for each clearing member's positions in accounts with the CCP. See "Default Fund Contributions and Margin Deposits" below for further discussion of Nasdaq Clearing's default fund and margin requirements.
Nasdaq Clearing maintains three member sponsored default funds: one related to financial markets, one related to commodities markets and one related to the seafood market. Under this structure, Nasdaq Clearing and its clearing members must contribute to the total regulatory capital related to the clearing operations of Nasdaq Clearing. This structure applies an initial separation of default fund contributions for the financial, commodities and seafood markets in order to create a buffer for each market's counterparty risks. See "Default Fund Contributions" below for further discussion of Nasdaq Clearing's default fund. A power of assessment and a liability waterfall have also been implemented to further align risk between Nasdaq Clearing and its clearing members. See "Power of Assessment" and "Liability Waterfall" below for further discussion.
Default Fund Contributions and Margin Deposits
As of June 30, 2024, clearing member default fund contributions and margin deposits were as follows:
June 30, 2024
Cash Contributions Non-Cash Contributions Total Contributions
(in millions)
Default fund contributions $ 993 $ 124 $ 1,117
Margin deposits 4,553 5,904 10,457
Total $ 5,546 $ 6,028 $ 11,574
Of the total default fund contributions of $1,117 million, Nasdaq Clearing can utilize $1,009 million as capital resources in the event of a counterparty default. The remaining balance of $108 million pertains to member posted surplus balances.
Our clearinghouse holds material amounts of clearing member cash deposits which are held or invested primarily to provide security of capital while minimizing credit, market and liquidity risks. While we seek to achieve a reasonable rate of return, we are primarily concerned with preservation of capital and managing the risks associated with these deposits.
Clearing member cash contributions are maintained in demand deposits held at central banks and large, highly rated financial institutions or secured through direct investments, primarily central bank certificates and highly rated European government debt securities with original maturities primarily one year or less, reverse repurchase agreements and multilateral development bank debt securities. Investments in reverse repurchase agreements range in maturity from 1 to 8 days and are secured with highly rated government securities and multilateral development banks. The carrying value of these securities approximates their fair value due to the short-term nature of the instruments and reverse repurchase agreements.
Nasdaq Clearing has invested the total cash contributions of $5,546 million as of June 30, 2024 and $7,275 million as of December 31, 2023, in accordance with its investment policy as follows:
June 30, 2024 December 31, 2023
(in millions)
Demand deposits $ 3,943 $ 5,344
Central bank certificates 1,094 1,301
Restricted cash and cash equivalents $ 5,037 $ 6,645
European government debt securities 124 306
Reverse repurchase agreements 230 209
Multilateral development bank debt securities 155 115
Investments $ 509 $ 630
Total $ 5,546 $ 7,275
In the table above, the change from December 31, 2023 to June 30, 2024 includes currency translation adjustments, driven by the strengthening of the U.S. Dollar against the Swedish Krona and the Euro, of $298 million for restricted cash and cash equivalents and $35 million for investments.
For the sixmonths ended June 30, 2024 and 2023, investments related to default funds and margin deposits, net includes purchases of investment securities of $22,446 million and $19,956 million respectively, and proceeds from sales and redemptions of investment securities of $22,532 million, and $19,853 million respectively.
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In the investment activity related to default fund and margin contributions, we are exposed to counterparty risk related to reverse repurchase agreement transactions, which reflect the risk that the counterparty might become insolvent and, thus, fail to meet its obligations to Nasdaq Clearing. We mitigate this risk by only engaging in transactions with high credit quality reverse repurchase agreement counterparties and by limiting the acceptable collateral under the reverse repurchase agreement to high quality issuers, primarily government securities and other securities explicitly guaranteed by a government. The value of the underlying security is monitored during the lifetime of the contract, and in the event the market value of the underlying security falls below the reverse repurchase amount, our clearinghouse may require additional collateral or a reset of the contract.
Default Fund Contributions
Required contributions to the default funds are proportional to the exposures of each clearing member. When a clearing member is active in more than one market, contributions must be made to all markets' default funds in which the member is active. Clearing members' eligible contributions may include cash and non-cash contributions. Cash contributions received are maintained in demand deposits held at central banks and large, highly rated financial institutions or invested by Nasdaq Clearing, in accordance with its investment policy, either in central bank certificates, highly rated government debt securities, reverse repurchase agreements with highly rated government debt securities as collateral, or multilateral development bank debt securities. Nasdaq Clearing maintains and manages all cash deposits related to margin collateral. All risks and rewards of collateral ownership, including interest, belong to Nasdaq Clearing. Clearing members' cash contributions are included in default funds and margin deposits in the Condensed Consolidated Balance Sheets as both a current asset and a current liability. Non-cash contributions include highly rated government debt securities that must meet specific criteria approved by Nasdaq Clearing. Non-cash contributions are pledged assets that are not recorded in the Condensed Consolidated Balance Sheets as Nasdaq Clearing does not take legal ownership of these assets and the risks and rewards remain with the clearing members. These balances may fluctuate over time due to changes in the amount of deposits required and whether members choose to provide cash or non-cash contributions.
In addition to clearing members' required contributions to the liability waterfall, Nasdaq Clearing is also required to contribute capital to the liability waterfall and overall regulatory capital as specified under its clearinghouse rules. As of June 30, 2024, Nasdaq Clearing committed capital totaling $122 million to the liability waterfall and overall regulatory capital, in the form of government debt securities, which are recorded as financial investments in the Condensed Consolidated Balance Sheets. The combined regulatory capital of the clearing members and Nasdaq Clearing is intended to secure the obligations of a clearing member exceeding such member's own margin and default fund deposits and may be used to cover losses sustained by a clearing member in the event of a default.
Margin Deposits
Nasdaq Clearing requires all clearing members to provide collateral, which may consist of cash and non-cash contributions, to guarantee performance on the clearing members' open positions, or initial margin. In addition, clearing members must also provide collateral to cover the daily margin call if needed. See "Default Fund Contributions" above for further discussion of cash and non-cash contributions.
Similar to default fund contributions, Nasdaq Clearing maintains and manages all cash deposits related to margin collateral. All risks and rewards of collateral ownership, including interest, belong to Nasdaq Clearing and are recorded in revenues. These cash deposits are recorded in default funds and margin deposits in the Condensed Consolidated Balance Sheets as both a current asset and a current liability. Pledged margin collateral is not recorded in our Condensed Consolidated Balance Sheets as all risks and rewards of collateral ownership, including interest, belong to the counterparty.
Nasdaq Clearing marks to market all outstanding contracts and requires payment from clearing members whose positions have lost value. The mark-to-market process helps identify any clearing members that may not be able to satisfy their financial obligations in a timely manner allowing Nasdaq Clearing the ability to mitigate the risk of a clearing member defaulting due to exceptionally large losses. In the event of a default, Nasdaq Clearing can access the defaulting member's margin and default fund deposits to cover the defaulting member's losses.
Regulatory Capital and Risk Management Calculations
Nasdaq Clearing manages risk through a comprehensive counterparty risk management framework, which comprises policies, procedures, standards and financial resources. The level of regulatory capital is determined in accordance with Nasdaq Clearing's regulatory capital and default fund policy, as approved by the SFSA. Regulatory capital calculations are continuously updated through a proprietary capital-at-risk calculation model that establishes the appropriate level of capital.
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As mentioned above, Nasdaq Clearing is the legal counterparty for each contract cleared and thereby guarantees the fulfillment of each contract. Nasdaq Clearing accounts for this guarantee as a performance guarantee. We determine the fair value of the performance guarantee by considering daily settlement of contracts and other margining and default fund requirements, the risk management program, historical evidence of default payments, and the estimated probability of potential default payouts. The calculation is determined using proprietary risk management software that simulates gains and losses based on historical market prices, extreme but plausible market scenarios, volatility and other factors present at that point in time for those particular unsettled contracts. Based on this analysis, excluding any liability related to the Nasdaq commodities clearing default (see discussion above), the estimated liability was nominal and no liability was recorded as of June 30, 2024.
Power of Assessment
To further strengthen the contingent financial resources of the clearinghouse, Nasdaq Clearing has power of assessment that provides the ability to collect additional funds from its clearing members to cover a defaulting member's remaining obligations up to the limits established under the terms of the clearinghouse rules. The power of assessment corresponds to 230% of the clearing member's aggregate contribution to the financial, commodities and seafood markets' default funds.
Liability Waterfall
The liability waterfall is the priority order in which the capital resources would be utilized in the event of a default where the defaulting clearing member's collateral and default fund contribution would not be sufficient to cover the cost to settle its portfolio. If a default occurs and the defaulting clearing member's collateral, including cash deposits and pledged assets, is depleted, then capital is utilized in the following amount and order:
•junior capital contributed by Nasdaq Clearing, which totaled $40 million as of June 30, 2024;
•a loss-sharing pool related only to the financial market that is contributed to by clearing members and only applies if the defaulting member's portfolio includes interest rate swap products;
•specific market default fund where the loss occurred (i.e., the financial, commodities, or seafood market), which includes capital contributions of the clearing members on a pro-rata basis; and
•fully segregated senior capital for each specific market contributed by Nasdaq Clearing, calculated in accordance with clearinghouse rules, which totaled $17 million as of June 30, 2024.
If additional funds are needed after utilization of the liability waterfall, or if part of the waterfall has been utilized and needs to be replenished, then Nasdaq Clearing will utilize its power of assessment and additional capital contributions will be required by non-defaulting members up to the limits established under the terms of the clearinghouse rules.
In addition to the capital held to withstand counterparty defaults described above, Nasdaq Clearing also has committed capital of $65 million to ensure that it can handle an orderly wind-down of its operation, and that it is adequately protected against investment, operational, legal, and business risks.
Market Value of Derivative Contracts Outstanding
The following table presents the market value of derivative contracts outstanding prior to netting:
June 30, 2024
(in millions)
Commodity and seafood options, futures and forwards $ 44
Fixed-income options and futures 875
Stock options and futures 151
Index options and futures 48
Total $ 1,118
In the table above:
•We determined the fair value of our option contracts using standard valuation models that were based on market-based observable inputs including implied volatility, interest rates and the spot price of the underlying instrument.
•We determined the fair value of our futures contracts based upon quoted market prices and average quoted market yields.
•We determined the fair value of our forward contracts using standard valuation models that were based on market-based observable inputs including benchmark rates and the spot price of the underlying instrument.
Derivative Contracts Cleared
The following table presents the total number of derivative contracts cleared through Nasdaq Clearing for thesixmonths ended June 30, 2024 and 2023:
Six Months Ended June 30,
2024 2023
Commodity and seafood options, futures and forwards 114,432 111,406
Fixed-income options and futures 9,699,691 9,765,001
Stock options and futures 11,827,220 10,695,634
Index options and futures 18,480,430 21,203,826
Total 40,121,773 41,775,867
In the table above, the total volume in cleared power related to commodity contracts was 122 Terawatt hours (TWh) and 162 TWh for the six months ended June 30, 2024 and 2023, respectively.
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Resale and Repurchase Agreements Contracts Outstanding and Cleared
The outstanding contract value of resale and repurchase agreements was $3.4 billion and $2.4 billion as of June 30, 2024 and 2023, respectively. The total number of resale and repurchase agreements contracts cleared was 2,431,690 and 2,418,638 for the six months ended June 30, 2024 and 2023, respectively.
15. LEASES
We have operating leases, which are primarily real estate leases, predominantly for our U.S. and European headquarters, data centers and for general office space. The following table provides supplemental balance sheet information related to Nasdaq's operating leases:
Leases Balance Sheet Classification June 30, 2024 December 31, 2023
(in millions)
Assets:
Operating lease assets Operating lease assets $ 400 $ 402
Liabilities:
Current lease liabilities Other current liabilities $ 63 $ 62
Non-current lease liabilities Operating lease liabilities 409 417
Total lease liabilities $ 472 $ 479
The following table summarizes Nasdaq's lease cost:
Three Months Ended June 30, Six Months Ended June 30,
2024 2023 2024 2023
(in millions)
Operating lease cost $ 19 $ 22 $ 40 $ 50
Variable lease cost 9 11 18 23
Sublease income (1) (1) (2) (2)
Total lease cost $ 27 $ 32 $ 56 $ 71
In the table above, operating lease costs include short-term lease cost, which was immaterial.
In the first quarter of 2023, we initiated a review of our real estate and facility capacity requirements due to our new and evolving work models. As a result of this ongoing review, for the six months ended June 30, 2023, we recorded impairment charges of $23 million, of which $13 million related to operating lease asset impairment and is included in operating lease cost in the table above, $5 million related to exit costs and is included in variable lease cost in the table above and $5 million related to impairment of leasehold improvements, which are recorded in depreciation and amortization expense in the Condensed Consolidated Statements of Income. We fully impaired our lease assets for locations that we vacated with no intention to sublease. Substantially all of the property, equipment and leasehold improvements associated with the vacated leased office space were fully impaired as there are no expected future cash flows for these items.
The following table reconciles the undiscounted cash flows for the following years and total of the remaining years to the operating lease liabilities recorded in our Condensed Consolidated Balance Sheets.
June 30, 2024
(in millions)
Remainder of 2024 $ 42
2025 73
2026 59
2027 55
2028 54
2029+ 280
Total lease payments $ 563
Less: interest (91)
Present value of lease liabilities $ 472
In the table above, interest is calculated using the interest rate for each lease. Present value of lease liabilities includes the current portion of $63 million.
Total lease payments in the table above excludes $83 million of legally binding minimum lease payments for leases signed but not yet commenced. The increase from 2023 related to a new lease signed in the first quarter of 2024 for our European headquarters. This lease will commence in 2025 with a lease term of 10 years. These payments also include a data center lease for which we have not yet obtained full control of the leased premises.
The following table provides information related to Nasdaq's lease term and discount rate:
June 30, 2024
Weighted-average remaining lease term (in years) 9.3
Weighted-average discount rate 3.9 %
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The following table provides supplemental cash flow information related to Nasdaq's operating leases:
Six Months Ended June 30,
2024 2023
(in millions)
Cash paid for amounts included in the measurement of operating lease liabilities $ 42 $ 38
Lease assets obtained in exchange for operating lease liabilities $ 22 $ 8
16. INCOME TAXES
Income Tax Provision
The following tables present our income tax provision and effective tax rate:
Three Months Ended June 30,
2024 2023
(in millions)
Income tax provision $ 119 $ 70
Effective tax rate 34.9 % 20.8 %
Six Months Ended June 30,
2024 2023
(in millions)
Income tax provision $ 198 $ 165
Effective tax rate 30.3 % 22.5 %
The higher effective tax rate for the three and six months ended June 30, 2024, as compared to the prior year periods, was primarily due to the completion of an intra-group transfer of certain intellectual property, or IP, assets to our U.S. headquarters, which resulted in a one-time net tax expense of $33 million. The effective tax rate in 2023 included a higher tax benefit from a favorable audit settlement. The effective tax rate may vary from period to period depending on, among other factors, the geographic and business mix of earnings and losses. These and other factors, including history of pre-tax earnings and losses, are taken into account in assessing the ability to realize deferred tax assets.
Tax Audits
Nasdaq and its eligible subsidiaries file a consolidated U.S. federal income tax return, applicable state and local income tax returns and non-U.S. income tax returns. We are subject to examination by federal, state and local, and foreign tax authorities. Our federal income tax return is under audit for tax year 2018 and is subject to examination by the Internal Revenue Service for the years 2020 through 2022. Several state tax returns are currently under examination by the respective tax authorities for the years 2014 through 2022. Non-U.S. tax returns are subject to examination by the respective tax authorities for the years 2018 through 2023.
We regularly assess the likelihood of additional assessments by each jurisdiction and have established tax reserves that we believe are adequate in relation to the potential for additional assessments. Examination outcomes and the timing of examination settlements are subject to uncertainty. Although the results of such examinations may have an impact on our unrecognized tax benefits, we do not anticipate that such impact will be material to our condensed consolidated financial position or results of operations, but may be material to our operating results for a particular period and the effective tax rate for that period. We do not expect the settlement of any tax audits to be material in the next twelve months.
17. COMMITMENTS, CONTINGENCIES AND GUARANTEES
Guarantees Issued and Credit Facilities Available
In addition to the default fund contributions and margin collateral pledged by clearing members discussed in Note 14, "Clearing Operations," we have obtained financial guarantees and credit facilities, which are guaranteed by us through counter indemnities, to provide further liquidity related to our clearing businesses. Financial guarantees issued to us totaled $4 million as of June 30, 2024 and December 31, 2023. As discussed in "Other Credit Facilities," of Note 8, "Debt Obligations," we also have credit facilities primarily related to our Nasdaq Clearing operations, which are available in multiple currencies, and totaled $181 million as of June 30, 2024 and $191 million as of December 31, 2023 in available liquidity, none of which was utilized.
Other Guarantees
Through our clearing operations in the financial markets, Nasdaq Clearing is the legal counterparty for, and guarantees the performance of, its clearing members. See Note 14, "Clearing Operations," for further discussion of Nasdaq Clearing performance guarantees.
We have provided a guarantee related to lease obligations for The Nasdaq Entrepreneurial Center, Inc., which is a not-for-profit organization designed to convene, connect and engage aspiring and current entrepreneurs. This entity is not included in the condensed consolidated financial statements of Nasdaq.
We believe that the potential for us to be required to make payments under these arrangements is unlikely. Accordingly, no contingent liability is recorded in the Condensed Consolidated Balance Sheets for the above guarantees.
Routing Brokerage Activities
One of our broker-dealer subsidiaries, Nasdaq Execution Services, provides a guarantee to securities clearinghouses and exchanges under its standard membership agreements, which require members to guarantee the performance of other members. If a member becomes unable to satisfy its obligations to a clearinghouse or exchange, other members would be required to meet its shortfalls. To mitigate these performance risks, the exchanges and clearinghouses often
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require members to post collateral, as well as meet certain minimum financial standards. Nasdaq Execution Services' maximum potential liability under these arrangements cannot be quantified. However, we believe that the potential for Nasdaq Execution Services to be required to make payments under these arrangements is unlikely. Accordingly, no contingent liability is recorded in the Condensed Consolidated Balance Sheets for these arrangements.
Legal and Regulatory Matters
CFTC Matter
In June 2022, NASDAQ Futures, Inc. ("NFX"), a non-operational, wholly-owned subsidiary of Nasdaq, received a telephonic "Wells Notice" from the staff of the CFTC relating to certain alleged potential violations by NFX of provisions of the Commodity Exchange Act and CFTC rules thereunder during the period beginning July 2015 through October 2018. The alleged potential violations concern the accuracy of NFX's description of one of its market maker incentive programs. The Wells Notice informed NFX that the CFTC staff made, subject to consideration of NFX's response, a preliminary determination to recommend that the CFTC authorize an enforcement action against NFX in connection with its former futures exchange business. Nasdaq sold NFX's futures exchange business to a third-party in November 2019, including the portfolio of open interest in NFX contracts. During 2020, all remaining open interest in NFX contracts was migrated to other exchanges and NFX ceased operation. A Wells Notice is neither a formal charge of wrongdoing nor a final determination that the recipient has violated any law. NFX has submitted a response to the Wells Notice that contests all aspects of the CFTC staff's position. The CFTC staff subsequently informed us that it planned to formally recommend that the CFTC authorize a civil enforcement action. We have been engaged, however, in discussions with the CFTC staff about potentially agreeing to a settlement of this matter. The terms of any potential settlement offer are not finalized, are subject to change, and would require the CFTC's approval, but we anticipate that any settlement will involve the payment of a monetary penalty. While we cannot predict the ultimate outcome of this matter, including whether it will result in a settlement agreement, at this time we do not believe the outcome will have a material impact on our business or operating results. However, in the event that the parties are unable to reach a settlement agreement, the CFTC may still pursue a civil enforcement action, which could have a material negative impact on our business or operating results.
SFSA Inquiry
In September 2023, Nasdaq Stockholm AB, a wholly-owned subsidiary of Nasdaq and the operator of the Nasdaq Stockholm exchange, received a written notification from the SFSA regarding a review initiated with regard to the obligation of Nasdaq Stockholm AB to report suspected market abuse. The review was initiated in connection with an investigation of alleged insider trading in the shares of four companies listed on the Nasdaq Stockholm exchange. In June 2024, the SFSA issued Nasdaq Stockholm AB an administrative fine of SEK100 million, or $9 million, for infringements of the Market Abuse Regulation and the Swedish Securities Market Act. Nasdaq Stockholm AB will not appeal the decision.
Other Matters
Except as disclosed above and in our prior reports filed under the Exchange Act, we are not currently a party to any litigation or proceeding that we believe could have a material adverse effect on our business, consolidated financial condition, or operating results. However, from time to time, we have been threatened with, or named as a defendant in, lawsuits or involved in regulatory proceedings.
In the normal course of business, Nasdaq discusses matters with its regulators raised during regulatory examinations or otherwise subject to their inquiries. Management believes that censures, fines, penalties or other sanctions that could result from any ongoing examinations or inquiries will not have a material impact on its consolidated financial position or results of operations. However, we are unable to predict the outcome or the timing of the ultimate resolution of these matters, or the potential fines, penalties or injunctive or other equitable relief, if any, that may result from these matters.
Tax Audits
We are engaged in ongoing discussions and audits with taxing authorities on various tax matters, the resolutions of which are uncertain. Currently, there are matters that may lead to assessments, some of which may not be resolved for several years. Based on currently available information, we believe we have adequately provided for any assessments that could result from those proceedings where it is more likely than not that we will be assessed. We review our positions on these matters as they progress. See "Tax Audits," of Note 16, "Income Taxes," for further discussion.
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18. BUSINESS SEGMENTS
In the fourth quarter of 2023, following the completion of the Adenza acquisition, including its two flagship solutions, AxiomSL and Calypso, we aligned our business more closely with the foundational shifts that are driving the evolution of the global financial system. We now manage, operate and provide our products and services in three business segments: Capital Access Platforms, Financial Technology and Market Services. See Note 1, "Organization and Nature of Operations," for further discussion of our reportable segments.
This Quarterly Report on Form 10-Q presents our results in alignment with the new corporate structure. All periods presented are restated to reflect the new structure.
Our management allocates resources, assesses performance and manages these businesses as three separate segments. We evaluate the performance of our segments based on several factors, of which the primary financial measure is operating income. Results of individual businesses are presented based on our management accounting practices and structure. Our chief operating decision maker does not review total assets or statements of income below operating income by segments as key performance metrics; therefore, such information is not presented below.
The following tables present certain information regarding our business segments for the threeand sixmonths ended June 30, 2024 and 2023:
Three Months Ended June 30,
2024 2023
(in millions)
Capital Access Platforms
Total revenues $ 481 $ 438
Operating income 271 241
Financial Technology
Total revenues 420 235
Operating income 199 96
Market Services
Total revenues 883 750
Transaction-based expenses (633) (508)
Revenues less transaction-based expenses 250 242
Operating income 146 143
Corporate Items
Total revenues 8 10
Operating loss (193) (98)
Consolidated
Total revenues $ 1,792 $ 1,433
Transaction-based expenses (633) (508)
Revenues less transaction-based expenses $ 1,159 $ 925
Operating income $ 423 $ 382
Six Months Ended June 30,
2024 2023
(in millions)
Capital Access Platforms
Total revenues $ 960 $ 852
Operating income 551 465
Financial Technology
Total revenues 813 463
Operating income 375 183
Market Services
Total revenues 1,678 1,631
Transaction-based expenses (1,192) (1,128)
Revenues less transaction-based expenses 486 503
Operating income 277 305
Corporate Items
Total revenues 18 20
Operating loss (370) (159)
Consolidated
Total revenues $ 3,469 $ 2,966
Transaction-based expenses (1,192) (1,128)
Revenues less transaction-based expenses $ 2,277 $ 1,838
Operating income $ 833 $ 794
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The items below are allocated to Corporate Items in our management reports as we believe they do not contribute to a meaningful evaluation of a particular segment's ongoing operating performance. Management does not consider these items for the purpose of evaluating the performance of our segments or their managers or when making decisions to allocate resources. Therefore, we believe performance measures excluding the below items provide management with a useful representation of our segments' ongoing activity in each period. These items, which are presented in the tables below, include the following:
•Amortization expense of acquired intangible assets: We amortize intangible assets acquired in connection with various acquisitions. Intangible asset amortization expense can vary from period to period due to episodic acquisitions completed, rather than from our ongoing business operations. As such, if intangible asset amortization is included in performance measures, it is more difficult to assess the day-to-day operating performance of the segments, and the relative operating performance of the segments between periods.
•Merger and strategic initiatives expense: We have pursued various strategic initiatives and completed acquisitions and divestitures in recent years that have resulted in expenses which would not have otherwise been incurred. These expenses generally include integration costs, as well as legal, due diligence and other third-party transaction costs. The frequency and the amount of such expenses vary significantly based on the size, timing and complexity of the transaction. For the three and six months ended June 30, 2024, and for the three months ended June 30, 2023, these costs primarily relate to the Adenza acquisition. For the three and six months ended June 30, 2024, these costs were partially offset by the recognition of a termination fee due to Nasdaq in the second quarter of 2024, related to the termination of the proposed divestiture of our Nordic power trading and clearing business.
•Restructuring charges: In the fourth quarter of 2023, following the closing of the Adenza acquisition, our management approved, committed to and initiated a restructuring program, "Adenza Restructuring" to optimize our efficiencies as a combined organization. In October 2022, following our September 2022 announcement to realign our segments and leadership, we initiated a divisional alignment program with a focus on realizing the full potential of this structure. See Note 19, "Restructuring Charges," for further discussion of these plans.
•Revenues and expenses - divested businesses: In June 2023, we entered into an agreement to sell our Nordic power trading and clearing business, which agreement was subsequently terminated in June 2024. Revenues and expenses related to this business for the three and six months ended June 30, 2024 and 2023, continue to be included as revenues and expenses - divested businesses. Historically, these amounts were included in our Market Services and Capital Access Platforms results.
•Other items: We have included certain other charges or gains in corporate items, to the extent we believe they should be excluded when evaluating the ongoing operating performance of each individual segment. Other items primarily include:
◦Lease asset impairments: For the three and six months ended June 30, 2023, this included impairment charges related to our operating lease assets and leasehold improvements associated with vacating certain leased office space, which are recorded in occupancy and depreciation and amortization expense in our Condensed Consolidated Statements of Income.
◦Legal and regulatory matters: For the three and six months ended June 30, 2024, this primarily related to settlement of an SFSA fine, see "SFSA Inquiry" of Note 17, "Commitments, Contingencies and Guarantees," for further discussion, and accruals related to certain legal matters. For the six months ended June 30, 2023, this primarily included insurance recoveries related to certain legal matters. The fine is recorded in regulatory expense and the accruals and insurance recoveries are recorded in professional and contract services and general, administrative and other expense in the Condensed Consolidated Statements of Income.
◦Pension settlement charge: For the six months ended June 30, 2024, we recorded a pre-tax charge as a result of settling our U.S. pension plan. The plan was terminated and partially settled in 2023, with final settlement occurring during the first quarter of 2024. The pre-tax charge is recorded in compensation and benefits in the Condensed Consolidated Statements of Income. See Note 9, "Retirement Plans," for further discussion.
The following tables summarize our Corporate Items:
Three Months Ended June 30,
2024 2023
(in millions)
Revenues - divested businesses $ 8 $ 10
Expenses:
Amortization expense of acquired intangible assets 122 37
Merger and strategic initiatives expense 4 45
Restructuring charges 56 14
Lease asset impairments - 5
Legal and regulatory matters 13 -
Expenses - divested businesses 4 6
Other 2 1
Total expenses $ 201 $ 108
Operating loss $ (193) $ (98)
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Six Months Ended June 30,
2024 2023
(in millions)
Revenues - divested businesses $ 18 $ 20
Expenses:
Amortization expense of acquired intangible assets 244 75
Merger and strategic initiatives expense 13 47
Restructuring charges 82 33
Lease asset impairments - 23
Legal and regulatory matters 16 (11)
Pension Settlement 23 -
Expenses - divested businesses 8 11
Other 2 1
Total expenses $ 388 $ 179
Operating loss $ (370) $ (159)
For further discussion of our segments' results, see "Segment Operating Results," of "Part I, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations."
19. RESTRUCTURING CHARGES
In the fourth quarter of 2023, following the closing of the Adenza acquisition, our management approved, committed to and initiated a restructuring program, "Adenza Restructuring" to optimize our efficiencies as a combined organization. In connection with this program, we expect to incur approximately $80 million in pre-tax charges principally related to employee-related costs, contract terminations, real estate impairments and other related costs. We expect to achieve benefits primarily in the form of expense and revenue synergies. Costs related to the Adenza Restructuring program will be recorded as restructuring charges in the Condensed Consolidated Statements of Income.
In October 2022, following our September 2022 announcement to realign our segments and leadership, we initiated a divisional alignment program with a focus on realizing the full potential of this structure. In connection with the program, we expect to incur $115 million to $145 million in pre-tax charges principally related to employee-related costs, consulting, asset impairments and contract terminations over a two-year period. Costs related to the divisional alignment program will be recorded as restructuring charges in the Condensed Consolidated Statements of Income.
The following table presents a summary of the Adenza restructuring program and our divisional alignment program charges for the threeand sixmonths ended June 30, 2024 and 2023 as well as total program costs incurred since the inception date of each program.
Three Months Ended June 30, Six Months Ended June 30,
2024 2023 2024 2023
(in millions)
Asset impairment charges
Adenza restructuring $ 24 $ - $ 24 $ -
Divisional realignment 4 - 4 12
Consulting services
Adenza restructuring 3 - 3 -
Divisional realignment 11 7 21 10
Employee-related costs
Adenza restructuring 8 - 12 -
Divisional realignment 3 4 6 7
Other
Adenza restructuring 2 - 5 -
Divisional realignment 1 3 7 4
Total restructuring charges $ 56 $ 14 $ 82 $ 33
Total Program Costs Incurred
Adenza restructuring $ 54
Divisional realignment $ 123
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of the financial condition and results of operations of Nasdaq should be read in conjunction with our condensed consolidated financial statements and related notes included in this Form 10-Q.
OVERVIEW
Nasdaq is a global technology company serving corporate clients, investment managers, banks, brokers, and exchange operators as they navigate and interact with the global capital markets and the broader financial system. We aspire to deliver world-leading platforms that improve the liquidity, transparency, and integrity of the global economy. Our diverse offering of data, analytics, software, exchange capabilities, and client-centric services enables clients to optimize and execute their business vision with confidence.
Our organizational structure aligns our businesses with the foundational shifts that are driving the evolution of the global financial system. In order to amplify our strategy, we aligned the Company more closely with evolving client needs into Capital Access Platforms, Financial Technology and Market Services reportable segments. All prior periods have been restated to conform to the current period presentation. See Note 18, "Business Segments," to the condensed consolidated financial statements for further discussion of our reportable segments and geographic data, as well as how management allocates resources, assesses performance and manages these businesses as three separate segments.
Second Quarter 2024 and Recent Developments
• Nasdaq extended its listings leadership in the U.S., leading U.S. exchanges for eligible operating company IPOs with a 72% total win rate in the second quarter of 2024.
•Nasdaq executed the highest ever one-day notional Closing Cross volume in June. During the annual Russell U.S. indexes reconstitution, Nasdaq successfully facilitated approximately 2.9 billion shares traded in 0.878 seconds across Nasdaq-listed securities, representing a record $95.3 billion dollars in market value.
•ETP AUM linked to Nasdaq indices reached record levels, ending the second quarter of 2024 at $569 billion.
•In the second quarter of 2024, we returned $138 million to shareholders through dividend payments and $58 million in repurchases of our common stock.
•In July 2024, the board of directors approved a regular quarterly cash dividend of $0.24 per share on our outstanding common stock.
Nasdaq's Operating Results
The following tables summarize our financial performance for the three and six months ended June 30, 2024 compared to the same periods in 2023. The comparability of our results of operations between reported periods is impacted by the acquisition of Adenza in November 2023. See Note 4, "Acquisition," to the condensed consolidated financial statements for further discussion. For a detailed discussion of our results of operations, see "Segment Operating Results" below.
Three Months Ended June 30, Percentage Change
2024 2023
(in millions, except per share amounts)
Revenues less transaction-based expenses $ 1,159 $ 925 25.3 %
Operating expenses 736 543 35.5 %
Operating income $ 423 $ 382 10.7 %
Net income attributable to Nasdaq $ 222 $ 267 (16.9) %
Diluted earnings per share $ 0.38 $ 0.54 (29.6) %
Cash dividends declared per common share $ 0.24 $ 0.22 9.1 %
Six Months Ended June 30, Percentage Change
2024 2023
(in millions, except per share amounts)
Revenues less transaction-based expenses $ 2,277 $ 1,838 23.9 %
Operating expenses 1,444 1,044 38.3 %
Operating income $ 833 $ 794 4.9 %
Net income attributable to Nasdaq $ 456 $ 568 (19.7) %
Diluted earnings per share $ 0.79 $ 1.15 (31.3) %
Cash dividends declared per common share $ 0.46 $ 0.42 9.5 %
In countries with currencies other than the U.S. dollar, revenues and expenses are translated using monthly average exchange rates. Impacts on our revenues less transaction-based expenses and operating income associated with fluctuations in foreign currency are discussed in more detail under "Item 3. Quantitative and Qualitative Disclosures about Market Risk."
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The following chart summarizes our ARR (in millions):
ARR for a given period is the current annualized value derived from subscription contracts with a defined contract value. This excludes contracts that are not recurring, are one-time in nature, or where the contract value fluctuates based on defined metrics. ARR is currently one of our key performance metrics to assess the health and trajectory of our recurring business. ARR does not have any standardized definition and is therefore unlikely to be comparable to similarly titled measures presented by other companies. ARR should be viewed independently of revenue and deferred revenue and is not intended to be combined with or to replace either of those items. For AxiomSL and Calypso recurring revenue contracts, the amount included in ARR is consistent with the amount that we invoice the customer during the current period. Additionally, for AxiomSL and Calypso recurring revenue contracts that include annual values that increase over time, we include in ARR only the annualized value of components of the contract that are considered active as of the date of the ARR calculation. We do not include the future committed increases in the contract value as of the date of the ARR calculation. ARR is not a forecast and the active contracts at the end of a reporting period used in calculating ARR may or may not be extended or renewed by our customers.
The ARR chart includes:
▪
Proprietary market data subscriptions and annual listing fees within our Data & Listing Services business, index data subscriptions and guaranteed minimum on futures contracts within our Index business and subscription contracts under our Workflow & Insights business.
▪
SaaS subscription and support contracts related to Verafin, surveillance, market technology, AxiomSL, Calypso and trade management services, excluding one-time service requests.
The following chart summarizes our quarterly annualized SaaS revenues for Solutions, which comprises our Capital Access Platforms and Financial Technology segments, for June 30, 2024 and 2023 (in millions):
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Segment Operating Results
The following tables present our revenues by segment:
Three Months Ended June 30, Percentage Change
2024 2023
(in millions)
Capital Access Platforms $ 481 $ 438 9.8 %
Financial Technology 420 235 78.7 %
Market Services 883 750 17.7 %
Other revenues 8 10 (20.0) %
Total revenues $ 1,792 $ 1,433 25.1 %
Transaction rebates (483) (444) 8.8 %
Brokerage, clearance and exchange fees (150) (64) 134.4 %
Total revenues less transaction-based expenses $ 1,159 $ 925 25.3 %
Six Months Ended June 30, Percentage Change
2024 2023
(in millions)
Capital Access Platforms $ 960 $ 852 12.7 %
Financial Technology 813 463 75.6 %
Market Services 1,678 1,631 2.9 %
Other revenues 18 20 (10.0) %
Total revenues $ 3,469 $ 2,966 17.0 %
Transaction rebates (965) (931) 3.7 %
Brokerage, clearance and exchange fees (227) (197) 15.2 %
Total revenues less transaction-based expenses $ 2,277 $ 1,838 23.9 %
The following charts present our Capital Access Platforms, Financial Technology and Market Services segments as a percentage of our total revenues, less transaction-based expenses.
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CAPITAL ACCESS PLATFORMS
The following tables present revenues from our Capital Access Platforms segment:
Three Months Ended June 30, Percentage Change
2024 2023
(in millions)
Data & Listing Services $ 187 $ 187 - %
Index 167 129 29.5 %
Workflow & Insights 127 122 4.1 %
Total Capital Access Platforms $ 481 $ 438 9.8 %
Six Months Ended June 30, Percentage Change
2024 2023
(in millions)
Data & Listing Services $ 372 $ 371 0.3 %
Index 336 239 40.6 %
Workflow & Insights 252 242 4.1 %
Total Capital Access Platforms $ 960 $ 852 12.7 %
As of June 30,
2024 2023
ARR (in millions) $ 1,226 $ 1,216
Data & Listing Services Revenues
The following tables present key drivers from our Data & Listing Services business:
Three Months Ended June 30,
2024 2023
IPOs
The Nasdaq Stock Market 39 23
Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic 5 1
Total new listings
The Nasdaq Stock Market 84 62
Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic 10 6
Six Months Ended June 30,
2024 2023
IPOs
The Nasdaq Stock Market 66 63
Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic 6 3
Total new listings
The Nasdaq Stock Market 163 143
Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic 12 13
As of June 30,
2024 2023
ARR (in millions) $ 668 $ 678
Number of listed companies
The Nasdaq Stock Market 4,004 4,106
Exchanges that comprise Nasdaq Nordic and Nasdaq Baltic 1,198 1,249
In the table above:
•For the three months ended June 30, 2024 and 2023, IPOs included 8 and 5 SPACs, respectively. For the six months ended June 30, 2024 and 2023, IPOs included 13 and 15 SPACs, respectively. Number of total listed companies on The Nasdaq Stock Market for the six months ended June 30, 2024 and 2023 included 645 and 547 ETPs, respectively.
•IPOs, new listings (which includes IPOs) and total listed companies for exchanges that comprise Nasdaq Nordic and Nasdaq Baltic represent companies listed on the Nasdaq Nordic and Nasdaq Baltic exchanges and companies listed on the alternative markets of Nasdaq First North.
Data & Listing Services revenues were essentially unchanged for the three and six months ended June 30, 2024 compared with the same periods in 2023 as higher data sales, higher data usage, new listings and pricing were partially offset by the impact of 2023 delistings and downgrades and lower amortization of prior period initial listing fees.
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Index Revenues
The following table presents key drivers from our Index business:
As of or
Three Months Ended June 30,
2024 2023
Number of licensed ETPs 372 386
TTM change in period end ETP AUM tracking Nasdaq indices (in billions)
Beginning balance $ 418 $ 321
Net appreciation 115 73
Net impact of ETP sponsor switches (17) (1)
Net inflows 53 25
Ending balance $ 569 $ 418
Quarterly average ETP AUM tracking Nasdaq indices (in billions) $ 531 $ 381
ARR (in millions) $ 74 $ 72
In the table above, TTM represents trailing twelve months.
Index revenues increased in the second quarter and first six months of 2024 compared with the same periods in 2023 primarily due to higher AUM in exchange traded products linked to Nasdaq indices and growth in trading volume on futures contracts linked to the Nasdaq-100 Index. The increase in the first six months also includes a $16 million one-time item related to a legal settlement to recoup revenue.
Workflow & Insights Revenues
The following table presents key drivers from our Workflow & Insights business:
As of or
Three Months Ended June 30
2024 2023
(in millions)
ARR $ 484 $ 466
Quarterly annualized SaaS revenues 414 394
Workflow & Insights revenues increased in the second quarter and first six months of 2024 compared with the same periods in 2023 primarily due to an increase in analytics revenues. The increase was primarily due to higher Data Link sales and growth in our eVestment product offerings.
FINANCIAL TECHNOLOGY
The following table presents revenues from our Financial Technology segment:
Three Months Ended June 30, Percentage Change
2024 2023
(in millions)
Financial Crime Management Technology
$ 67 $ 54 24.1 %
Regulatory Technology
95 35 171.4 %
Capital Markets Technology
258 146 76.7 %
Total Financial Technology $ 420 $ 235 78.7 %
Six Months Ended June 30, Percentage Change
2024 2023
(in millions)
Financial Crime Management Technology
$ 131 $ 106 23.6 %
Regulatory Technology
186 67 177.6 %
Capital Markets Technology
496 290 71.0 %
Total Financial Technology $ 813 $ 463 75.6 %
Financial Crime Management Technology Revenues
The following tables present revenues and key drivers for our Financial Crime Management Technology business:
Three Months Ended June 30, Six Months Ended June 30,
2024 2023 2024 2023
(in millions) (in millions)
Revenues $ 67 $ 54 $ 131 $ 106
As of or
Three Months Ended June 30
2024 2023
(in millions)
ARR and Quarterly annualized SaaS revenues $ 258 $ 207
Financial Crime Management Technology revenues increased in the second quarter and first six months of 2024 compared with the same periods in 2023 primarily due to price increases, new sales to existing clients and new customer acquisitions, particularly small and medium-sized businesses.
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Regulatory Technology Revenues
The following tables present revenues and key drivers for our Regulatory Technology business:
Three Months Ended June 30, Six Months Ended June 30,
2024 2023 2024 2023
(in millions) (in millions)
Revenues $ 95 $ 35 $ 186 $ 67
As of or
Three Months Ended June 30
2024 2023
(in millions)
ARR $ 338 $ 132
Quarterly annualized SaaS revenues 180 116
Regulatory Technology revenues increased in the second quarter and first six months of 2024 compared with the same periods in 2023 primarily due to the inclusion of revenues from AxiomSL associated with our acquisition of Adenza and higher surveillance revenues.
Capital Markets Technology Revenues
The following tables present revenues and key drivers for our Capital Markets Technology business:
Three Months Ended June 30, Six Months Ended June 30,
2024 2023 2024 2023
(in millions) (in millions)
Revenues $ 258 $ 146 $ 496 $ 290
As of or
Three Months Ended June 30
2024 2023
(in millions)
ARR $ 846 $ 512
Quarterly annualized SaaS revenues 123 38
Capital Markets Technology revenues increased in the second quarter and first six months of 2024 compared with the same periods in 2023. The increase was primarily due to the inclusion of revenues from Calypso associated with our acquisition of Adenza and higher trade management services revenues mainly driven by demand for colocation and connectivity services and pricing, partially offset by lower market technology revenues related to lower professional fees due to a large project delivery in the comparative periods of 2023.
MARKET SERVICES
The following tables present revenues from our Market Services segment:
Three Months Ended June 30, Percentage Change
2024 2023
(in millions)
Market Services $ 883 $ 750 17.7 %
Transaction-based expenses:
Transaction rebates (483) (444) 8.8 %
Brokerage, clearance and exchange fees
(150) (64) 134.4 %
Total Market Services, net $ 250 $ 242 3.3 %
Six Months Ended June 30, Percentage Change
2024 2023
(in millions)
Market Services $ 1,678 $ 1,631 2.9 %
Transaction-based expenses:
Transaction rebates (965) (931) 3.7 %
Brokerage, clearance and exchange fees
(227) (197) 15.2 %
Total Market Services, net $ 486 $ 503 (3.4) %
Our Market Services segment includes equity derivatives trading, cash equity trading, Nordic fixed income trading & clearing, U.S. Tape plans and other revenues. The following tables present net revenues by product from our Market Services segment:
Three Months Ended June 30, Percentage Change
2024 2023
(in millions)
U.S. Equity Derivative Trading $ 90 $ 89 1.1 %
Cash Equity Trading 112 103 8.7 %
U.S. Tape plans 31 35 (11.4) %
Other 17 15 13.3 %
Total Market Services, net $ 250 $ 242 3.3 %
Six Months Ended June 30, Percentage Change
2024 2023
(in millions)
U.S. Equity Derivative Trading $ 181 $ 191 (5.2) %
Cash Equity Trading 212 206 2.9 %
U.S. Tape plans 59 72 (18.1) %
Other 34 34 - %
Total Market Services, net $ 486 $ 503 (3.4) %
In the tables above, Other includes Nordic fixed income trading & clearing, Nordic derivatives and Canadian cash equities trading.
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U.S. Equity Derivative Trading
The following tables present total revenues, transaction-based expenses, and total revenues less transaction-based expenses as well as key drivers from our U.S. Equity Derivative Trading business:
Three Months Ended June 30, Percentage Change
2024 2023
(in millions)
U.S. Equity Derivative Trading Revenues $ 334 $ 297 12.5 %
Section 31 fees
19 10 90.0 %
Transaction-based expenses:
Transaction rebates (243) (207) 17.4 %
Section 31 fees
(19) (10) 90.0 %
Brokerage and clearance fees (1) (1) - %
U.S. Equity Derivative Trading Revenues, net
$ 90 $ 89 1.1 %
Six Months Ended June 30, Percentage Change
2024 2023
(in millions)
U.S. Equity Derivative Trading Revenues $ 657 $ 624 5.3 %
Section 31 fees
30 33 (9.1) %
Transaction-based expenses:
Transaction rebates (474) (431) 10.0 %
Section 31 fees
(30) (33) (9.1) %
Brokerage and clearance fees (2) (2) - %
U.S. Equity Derivative Trading Revenues, net
$ 181 $ 191 (5.2) %
Section 31 fees are recorded as U.S. equity derivative and cash equity trading revenues with a corresponding amount recorded in transaction-based expenses. We are assessed these fees from the SEC and pass them through to our customers in the form of incremental fees. Pass-through fees can increase or decrease due to rate changes by the SEC, our percentage of the overall industry volumes processed on our systems, and differences in actual dollar value traded. Section 31 fees increased in the second quarter of 2024 compared with the same period in 2023 primarily due to higher average SEC fee rates as a result of an increase in the SEC fee rate in May 2024. Section 31 fees decreased in the first six months of 2024 compared with the same period in 2023 primarily due to lower average SEC fee rates. Since the amount recorded in revenues is equal to the amount recorded as Section 31 fees, there is no impact on our net revenues.
Three Months Ended June 30,
2024 2023
U.S. equity options
Total industry average daily volume (in millions) 42.1 39.2
Nasdaq PHLX matched market share 9.9 % 11.5 %
The Nasdaq Options Market matched market share 5.5 % 6.4 %
Nasdaq BX Options matched market share 2.3 % 3.0 %
Nasdaq ISE Options matched market share 6.9 % 6.0 %
Nasdaq GEMX Options matched market share 2.6 % 2.2 %
Nasdaq MRX Options matched market share 2.1 % 1.6 %
Total matched market share executed on Nasdaq's exchanges 29.3 % 30.7 %
Six Months Ended June 30,
2024 2023
U.S. equity options
Total industry average daily volume (in millions) 42.7 40.8
Nasdaq PHLX matched market share 10.1 % 11.3 %
The Nasdaq Options Market matched market share 5.4 % 6.8 %
Nasdaq BX Options matched market share 2.3 % 3.1 %
Nasdaq ISE Options matched market share 6.6 % 5.8 %
Nasdaq GEMX Options matched market share 2.6 % 2.1 %
Nasdaq MRX Options matched market share 2.3 % 1.6 %
Total matched market share executed on Nasdaq's exchanges 29.3 % 30.7 %
U.S. equity derivative trading revenues increased in the second quarter and first six months of 2024 compared with the same periods in 2023 primarily due to higher gross capture rate and higher industry trading volumes, partially offset by lower overall matched market share executed on Nasdaq's exchanges. The U.S. equity derivative trading revenues less transaction-based expenses were essentially unchanged in the second quarter compared with the same period in 2023 as higher industry trading volumes were offset by lower capture rate and lower overall matched market share executed on Nasdaq's exchanges. The U.S. equity derivative trading revenues less transaction-based expenses decreased in first six months of 2024 compared with the same period in 2023 primarily due to lower overall matched market share executed on Nasdaq's exchanges and lower capture rate, partially offset by higher industry volumes.
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Transaction rebates, in which we credit a portion of the execution charge to the market participant, increased in the second quarter and first six months of 2024 compared with the same periods in 2023 primarily due to higher rebate capture rate and higher industry trading volumes, partially offset by lower overall U.S. matched market share executed on Nasdaq's exchanges.
Cash Equity Trading Revenues
The following tables present total revenues, transaction-based expenses, and total revenues less transaction-based expenses as well as key drivers and other metrics from our Cash Equity Trading business:
Three Months Ended June 30, Percentage Change
2024 2023
(in millions)
Cash Equity Trading Revenues $ 353 $ 339 4.1 %
Section 31 fees
124 49 153.1 %
Transaction-based expenses:
Transaction rebates (235) (232) 1.3 %
Section 31 fees
(124) (49) 153.1 %
Brokerage and clearance fees (6) (4) 50.0 %
Cash equity trading revenues, net $ 112 $ 103 8.7 %
Six Months Ended June 30, Percentage Change
2024 2023
(in millions)
Cash Equity Trading Revenues $ 703 $ 705 (0.3) %
Section 31 fees
184 152 21.1 %
Transaction-based expenses:
Transaction rebates (480) (489) (1.8) %
Section 31 fees
(184) (152) 21.1 %
Brokerage and clearance fees (11) (10) 10.0 %
Cash equity trading revenues, net $ 212 $ 206 2.9 %
See the discussion in "U.S. Equity Derivative Trading" for an explanation of Section 31 fees for the second quarter of 2024 as compared with the same period in 2023. Section 31 fees increased in the first six months of 2024 compared with the same period in 2023 primarily due to higher trading volumes partially offset by lower average SEC fee rates. Since the amount recorded in revenues is equal to the amount recorded as Section 31 fees, there is no impact on our net revenues.
Three Months Ended June 30,
2024 2023
Total U.S.-listed securities
Total industry average daily share volume (in billions) 11.8 10.8
Matched share volume (in billions) 119.3 113.7
The Nasdaq Stock Market matched market share 15.6 % 16.3 %
Nasdaq BX matched market share 0.3 % 0.4 %
Nasdaq PSX matched market share 0.2 % 0.4 %
Total matched market share executed on Nasdaq's exchanges 16.1 % 17.1 %
Market share reported to the FINRA/Nasdaq Trade Reporting Facility 42.9 % 34.2 %
Total market share 59.0 % 51.3 %
Nasdaq Nordic and Nasdaq Baltic securities
Average daily number of equity trades executed on Nasdaq's exchanges 663,897 687,158
Total average daily value of shares traded (in billions) $ 4.7 $ 4.7
Total market share executed on Nasdaq's exchanges 73.5 % 71.4 %
Six Months Ended June 30,
2024 2023
Total U.S.-listed securities
Total industry average daily share volume (in billions) 11.8 11.3
Matched share volume (in billions) 236.0 235.5
The Nasdaq Stock Market matched market share 15.7 % 16.1 %
Nasdaq BX matched market share 0.3 % 0.3 %
Nasdaq PSX matched market share 0.2 % 0.4 %
Total matched market share executed on Nasdaq's exchanges 16.2 % 16.8 %
Market share reported to the FINRA/Nasdaq Trade Reporting Facility 42.2 % 32.9 %
Total market share 58.4 % 49.7 %
Nasdaq Nordic and Nasdaq Baltic securities
Average daily number of equity trades executed on Nasdaq's exchanges 665,183 739,480
Total average daily value of shares traded (in billions) $ 4.7 $ 5.0
Total market share executed on Nasdaq's exchanges 72.6 % 70.1 %
In the tables above, total market share includes transactions executed on The Nasdaq Stock Market's, Nasdaq BX's and Nasdaq PSX's systems plus trades reported through the FINRA/Nasdaq Trade Reporting Facility.
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Cash equity trading revenues increased in the second quarter of 2024 compared with the same period in 2023 primarily due to higher U.S. industry trading volumes, partially offset by lower overall U.S. matched market share executed on Nasdaq's exchanges and lower gross capture. Cash equity trading revenues was essentially unchanged in the first six months of 2024 compared with the same period in 2023 primarily due to higher U.S. industry trading volumes, offset by lower overall U.S. matched market share executed on Nasdaq's exchanges.
Cash equity trading revenues less transaction-based expenses increased in the second quarter and first six months of 2024 compared with the same periods in 2023 primarily due to higher U.S. industry trading volumes and higher capture rate, partially offset by lower overall U.S. matched market share executed on Nasdaq's exchanges.
Transaction rebates increased in the second quarter of 2024 compared with the same period in 2023 primarily due to higher U.S. industry volumes, partially offset by lower overall U.S. matched market share executed on Nasdaq's exchanges and lower rebate capture rate. Transaction rebates decreased in the first six months of 2024 compared with the same period in 2023 primarily due to lower U.S. matched market share executed on Nasdaq's exchanges and lower rebate capture rate, partially offset by higher U.S. trading volumes. For The Nasdaq Stock Market and Nasdaq PSX, we credit a portion of the per share execution charge to the market participant that provides the liquidity, and for Nasdaq BX, we credit a portion of the per share execution charge to the market participant that takes the liquidity.
U.S. Tape Plans
The following tables present revenues from our U.S. Tape plans business:
Three Months Ended June 30, Percentage Change
2024 2023
(in millions)
U.S. Tape plans $ 31 $ 35 (11.4) %
Six Months Ended June 30, Percentage Change
2024 2023
(in millions)
U.S. Tape plans $ 59 $ 72 (18.1) %
U.S. Tape plans revenues decreased in the second quarter and first six months of 2024 compared with the same periods in 2023 primarily due to lower industry-wide usage volume. The decrease in the first six months of 2024 also reflected the impact of one-time industry-wide adjustments.
Other
Other includes Nordic fixed income trading and clearing, Nordic derivatives and Canadian cash equities trading. The following tables present revenues and a key driver from our Other business:
Three Months Ended June 30, Percentage Change
2024 2023
(in millions)
Other $ 17 $ 15 13.3 %
Six Months Ended June 30, Percentage Change
2024 2023
(in millions)
Other $ 34 $ 34 - %
In the tables above, other includes transaction rebates of $5 million for the three months ended June 30, 2024 and 2023, and $11 millionfor the six months ended June 30, 2024 and 2023.
Three Months Ended June 30,
2024 2023
Nasdaq Nordic and Nasdaq Baltic options and futures
Total average daily volume of options and futures contracts 251,677 307,754
Six Months Ended June 30,
2024 2023
Nasdaq Nordic and Nasdaq Baltic options and futures
Total average daily volume of options and futures contracts 246,527 326,687
In the tables above, Nasdaq Nordic and Nasdaq Baltic total average daily volume of options and futures contracts include Finnish option contracts traded on Eurex for which Nasdaq and Eurex have a revenue sharing arrangement. The revenue sharing arrangement ended in the fourth quarter of 2023.
Other revenues increased in the second quarter of 2024 compared with the same period in 2023 primarily due to an increase in Canadian cash equities trading and Nordic fixed income trading and clearing revenues. Other revenues is unchanged in the first six months of 2024 compared with the same period in 2023.
OTHER REVENUES
For the threeand sixmonths ended June 30, 2024 and 2023, other revenues include revenues related to our Nordic power trading and clearing business, following our announcement in June 2023 that we entered into an agreement to sell this business. This agreement was subsequently terminated in June 2024. Revenues from this business will continue to be reflected in Other Revenues. Prior to June 2023, these revenues were included in our Market Services and Capital Access Platforms segments.
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EXPENSES
Operating Expenses
The following tables present our operating expenses:
Three Months Ended June 30, Percentage Change
2024 2023
(in millions)
Compensation and benefits $ 328 $ 261 25.7 %
Professional and contract services 39 30 30.0 %
Technology and communication infrastructure 69 56 23.2 %
Occupancy 27 32 (15.6) %
General, administrative and other 30 22 36.4 %
Marketing and advertising 12 9 33.3 %
Depreciation and amortization 153 65 135.4 %
Regulatory 18 9 100.0 %
Merger and strategic initiatives 4 45 (91.1) %
Restructuring charges 56 14 300.0 %
Total operating expenses $ 736 $ 543 35.5 %
Six Months Ended June 30, Percentage Change
2024 2023
(in millions)
Compensation and benefits $ 669 $ 517 29.4%
Professional and contract services 72 61 18.0%
Technology and communication infrastructure 135 110 22.7%
Occupancy 56 71 (21.1)%
General, administrative and other 58 35 65.7%
Marketing and advertising 23 19 21.1%
Depreciation and amortization 308 134 129.9%
Regulatory 28 17 64.7%
Merger and strategic initiatives 13 47 (72.3)%
Restructuring charges 82 33 148.5%
Total operating expenses $ 1,444 $ 1,044 38.3%
The increase in compensation and benefits expense for the second quarter and first six months of 2024 compared with the same periods in 2023 was primarily driven by increased headcount related to Adenza and higher incentive compensation. The increase in the first six months of 2024 also includes a pre-tax charge of $23 million resulting from the finalization of the termination of our pension plan.
Headcount, including employees of non-wholly owned consolidated subsidiaries, increased to 8,658 employees as of June 30, 2024 from 6,565 employees as of June 30, 2023, primarily due to our acquisition of Adenza.
Professional and contract services expense increased in the second quarter and first six months of 2024 compared with the same periods in 2023 primarily due to increased legal and consulting expenses.
Technology and communication infrastructure expense increased in the second quarter and first six months of 2024 compared with the same periods in 2023 primarily due to an increase in expenses related to the inclusion of Adenza and an increase in investment in technology expense related to our cloud initiatives and software.
Occupancy expense decreased in the second quarter and first six months of 2024 compared with the same periods in 2023 primarily due to $5 million and $18 million in impairment charges and exit related costs recorded in the second quarter and first six months of 2023, respectively, following the abandonment of leased office space.
General, administrative and other expense increased in the second quarter and first six months of 2024 compared with the same periods in 2023 primarily due to insurance recoveries related to legal matters recorded in the second quarter and first six months of 2023, as well as increased expenses related to the inclusion of Adenza and higher travel costs in the second quarter and first six months of 2024.
Marketing and advertising expense increased in the second quarter and first six months of 2024 compared with the same periods in 2023 primarily due to higher client incentive spending resulting from higher IPO activity.
Depreciation and amortization expense increased in the second quarter and first six months of 2024 compared with the same periods in 2023 primarily due to an increase in amortization related to the intangible assets acquired as part of the Adenza acquisition.
Regulatory expense increased in the second quarter and first six months of 2024 compared with the same periods in 2023 primarily due to the fine incurred in connection with the SFSA inquiry. See "SFSA Inquiry" of Note 17, "Commitments, Contingencies and Guarantees," to the condensed consolidated financial statements for further discussion.
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We have pursued various strategic initiatives and completed acquisitions and divestitures in recent years, which have resulted in expenses which would not have otherwise been incurred. These expenses generally include integration costs, as well as legal, due diligence and other third-party transaction costs and vary based on the size and frequency of the activities described above. For the three and six months ended June 30, 2024, and for the three months ended June 30, 2023, these costs primarily relate to the Adenza acquisition. For the three and six months ended June 30, 2024, these costs were partially offset by the recognition of a termination fee due to Nasdaq in the second quarter of 2024, related to the termination of the proposed divestiture of our Nordic power trading and clearing business.
Restructuring charges increased in the second quarter and first six months of 2024 compared with the same periods in 2023 as a result of charges from our Adenza restructuring program and our divisional alignment program. See Note 19, "Restructuring Charges," to the condensed consolidated financial statements for further discussion. By 2025, we expect to achieve benefits of the 2022 divisional alignment program through combined annual run-rate operating efficiencies and revenue synergies of approximately $30 million annually. We expect to achieve $80 million of net expense synergies two years following the closing of the Adenza acquisition.
Non-operating Income and Expenses
The following tables present our non-operating income and expenses:
Three Months Ended June 30, Percentage Change
2024 2023
(in millions)
Interest income $ 6 $ 8 (25.0)%
Interest expense (102) (36) 183.3 %
Net interest expense (96) (28) 242.9 %
Other income (loss) 12 (6) (300.0) %
Net income (loss) from unconsolidated investees 2 (11) (118.2) %
Total non-operating expense $ (82) $ (45) 82.2 %
Six Months Ended June 30, Percentage Change
2024 2023
(in millions)
Interest income $ 12 $ 15 (20.0) %
Interest expense (211) (73) 189.0 %
Net interest expense (199) (58) 243.1 %
Other income (loss) 13 (7) (285.7) %
Net income (loss) from unconsolidated investees 6 3 100.0 %
Total non-operating income (expenses) $ (180) $ (62) 190.3 %
The following tables present our interest expense:
Three Months Ended June 30, Percentage Change
2024 2023
(in millions)
Interest expense on debt $ 99 $ 34 191.2 %
Accretion of debt issuance costs and debt discount 2 1 100.0 %
Other fees 1 1 - %
Interest expense $ 102 $ 36 183.3 %
Six Months Ended June 30, Percentage Change
2024 2023
(in millions)
Interest expense on debt $ 202 $ 69 192.8 %
Accretion of debt issuance costs and debt discount 7 3 133.3 %
Other fees 2 1 100.0 %
Interest expense $ 211 $ 73 189.0 %
Interest income decreased in the second quarter and first six months of 2024 compared with the same periods in 2023 due to lower average cash balance.
Interest expense increased in the second quarter and first six months of 2024 compared with the same periods in 2023 primarily due to debt issued in June 2023 to finance the Adenza acquisition. See "Financing of the Adenza Acquisition," of Note 8, "Debt Obligations," to the condensed consolidated financial statements for further discussion.
Other income (loss) primarily represents realized and unrealized gains and losses from strategic investments related to our corporate venture program.
Net income (loss) from unconsolidated investees increased in the second quarter and first six months of 2024 compared with the same periods in 2023 primarily due to lower income recognized from our equity method investment in OCC. See "Equity Method Investments," of Note 6, "Investments," to the condensed consolidated financial statements for further discussion.
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Tax Matters
The following tables present our income tax provision and effective tax rate:
Three Months Ended June 30, Percentage Change
2024 2023
($ in millions)
Income tax provision $ 119 $ 70 70.0 %
Effective tax rate 34.9 % 20.8 %
Six Months Ended June 30, Percentage Change
2024 2023
(in millions)
Income tax provision $ 198 $ 165 20.0 %
Effective tax rate 30.3 % 22.5 %
For further discussion of our tax matters, see Note 16, "Income Taxes," to the condensed consolidated financial statements.
NON-GAAP FINANCIAL MEASURES
In addition to disclosing results determined in accordance with U.S. GAAP, we also provide non-GAAP net income attributable to Nasdaq and non-GAAP diluted earnings per share in this Quarterly Report on Form 10-Q. Management uses this non-GAAP information internally, along with U.S. GAAP information, in evaluating our performance and in making financial and operational decisions. We believe our presentation of these measures provides investors with greater transparency and supplemental data relating to our financial condition and results of operations. In addition, we believe the presentation of these measures is useful to investors for period-to-period comparisons of our ongoing operating performance.
These measures are not in accordance with, or an alternative to, U.S. GAAP, and may be different from non-GAAP measures used by other companies. In addition, other companies, including companies in our industry, may calculate such measures differently, which reduces their usefulness as comparative measures. Investors should not rely on any single financial measure when evaluating our business. This non-GAAP information should be considered as supplemental in nature and is not meant as a substitute for our operating results in accordance with U.S. GAAP. We recommend investors review the U.S. GAAP financial measures included in this Quarterly Report on Form 10-Q, including our condensed consolidated financial statements and the notes thereto. When viewed in conjunction with our U.S. GAAP results and the accompanying reconciliation, we believe these non-GAAP measures provide greater transparency and a more complete understanding of factors affecting our business than U.S. GAAP measures alone.
We understand that analysts and investors regularly rely on non-GAAP financial measures, such as non-GAAP net income attributable to Nasdaq and non-GAAP diluted earnings per share, to assess operating performance. We use non-GAAP net income attributable to Nasdaq and non-GAAP diluted earnings per share because they highlight
trends more clearly in our business that may not otherwise be apparent when relying solely on U.S. GAAP financial measures, since these measures eliminate from our results specific financial items that have less bearing on our ongoing operating performance. We believe that excluding the following items from the non-GAAP net income attributable to Nasdaq provides a more meaningful analysis of Nasdaq's ongoing operating performance and comparisons in Nasdaq's performance between periods:
•Amortization expense of acquired intangible assets: We amortize intangible assets acquired in connection with various acquisitions. Intangible asset amortization expense can vary from period to period due to episodic acquisitions completed, rather than from our ongoing business operations. As such, if intangible asset amortization is included in performance measures, it is more difficult to assess the day-to-day operating performance of the businesses and the relative operating performance of the businesses between periods.
•Merger and strategic initiatives expense:We have pursued various strategic initiatives and completed acquisitions and divestitures in recent years that have resulted in expenses which would not have otherwise been incurred. The frequency and the amount of such expenses vary significantly based on the size, timing and complexity of the transaction. These expenses primarily include integration costs, as well as legal, due diligence and other third-party transaction costs. For the three and six months ended June 30, 2024, and for the three months ended June 30, 2023, these costs primarily relate to the Adenza acquisition. For the three and six months ended June 30, 2024, these costs were partially offset by the recognition of a termination fee due to Nasdaq in the second quarter of 2024, related to the termination of the proposed divestiture of our Nordic power trading and clearing business.
•Restructuring charges:In the fourth quarter of 2023, following the closing of the Adenza acquisition, our management approved, committed to and initiated a restructuring program, "Adenza Restructuring" to optimize our efficiencies as a combined organization. In October 2022, following our September 2022 announcement to realign our segments and leadership, we initiated a divisional alignment program with a focus on realizing the full potential of this structure. See Note 19, "Restructuring Charges," to the condensed consolidated financial statements for further discussion of our Adenza restructuring program and our divisional alignment program.
•Net income (loss) from unconsolidated investees: We exclude our share of the earnings and losses of our equity method investments. This provides a more meaningful analysis of Nasdaq's ongoing operating performance or comparisons in Nasdaq's performance between periods. See "Equity Method Investments," of Note 6, "Investments," to the condensed consolidated financial statements for further discussion.
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•Other items: We have excluded certain other charges or gains, including certain tax items, that are the result of other non-comparable events to measure operating performance. We believe the exclusion of such amounts allows management and investors to better understand the ongoing financial results of Nasdaq. Other significant items include:
◦Lease asset impairments: For the three and six months ended June 30, 2023, other items include impairment charges related to our operating lease assets and leasehold improvements associated with vacating certain leased office space, which are recorded in occupancy and depreciation and amortization expense in our Condensed Consolidated Statements of Income.
◦Legal and regulatory matters: For the three and six months ended June 30, 2024, other items primarily include settlement of a SFSA fine, see "SFSA Inquiry" of Note 17, "Commitments, Contingencies and Guarantees," to the condensed consolidated financial statements for further discussion, and accruals related to certain legal matters. For the six months ended June 30, 2023, other items include insurance recoveries related to certain legal matters. The fine is recorded in regulatory expense and the accruals related to legal matters and insurance recoveries are recorded in professional and contract services and general, administrative and other expense in the Condensed Consolidated Statements of Income.
◦Pension settlement charge: For the six months ended June 30, 2024, we recorded a pre-tax charge as a result of settling our U.S. pension plan. The plan was terminated and partially settled in 2023, with final settlement occurring during the first quarter of 2024. The loss is recorded in compensation and benefits in the Condensed Consolidated Statements of Income. See Note 9, "Retirement Plans," to the condensed consolidated financial statements for further discussion.
◦Other (income) loss: For the three and six months ended June 30, 2024, other items include net gains from strategic investments entered into through our corporate venture program, which are included in other income (loss) in our Consolidated Statements of Income
•Significant tax items: The non-GAAP adjustment to the income tax provision for all periods primarily includes the tax impact of each non-GAAP adjustment. In addition, for the three and six months ended June 30, 2024, tax items also include a one-time net tax expense of $33 million related to the completion of an intra-group transfer of certain IP assets to our U.S. headquarters.
The following tables present reconciliations between U.S. GAAP net income attributable to Nasdaq and diluted earnings per share and non-GAAP net income attributable to Nasdaq and diluted earnings per share:
Three Months Ended June 30,
2024 2023
(in millions, except per share amounts)
U.S. GAAP net income attributable to Nasdaq $ 222 $ 267
Non-GAAP adjustments:
Amortization expense of acquired intangible assets 122 37
Merger and strategic initiatives expense 4 45
Restructuring charges 56 14
Lease asset impairments - 5
Net (income) loss from unconsolidated investees
(2) 11
Legal and regulatory matters 13 -
Other (income) loss
(10) 8
Total non-GAAP adjustments $ 183 $ 120
Total non-GAAP tax adjustments (41) (37)
Tax on intra-group transfer of IP assets
33 -
Total non-GAAP adjustments, net of tax $ 175 $ 83
Non-GAAP net income attributable to Nasdaq $ 397 $ 350
U.S. GAAP effective tax rate 34.9 % 20.8 %
Total adjustments from non-GAAP tax rate (10.7) % 2.6 %
Non-GAAP effective tax rate 24.2 % 23.4 %
Weighted-average common shares outstanding for diluted earnings per share 578.9 493.6
U.S. GAAP diluted earnings per share $ 0.38 $ 0.54
Total adjustments from non-GAAP net income 0.31 0.17
Non-GAAP diluted earnings per share $ 0.69 $ 0.71
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Six Months Ended June 30,
2024 2023
(in millions, except per share amounts)
U.S. GAAP net income attributable to Nasdaq $ 456 $ 568
Non-GAAP adjustments:
Amortization expense of acquired intangible assets 244 75
Merger and strategic initiatives expense 13 47
Restructuring charges 82 33
Lease asset impairments - 23
Net (income) loss from unconsolidated investees
(6) (3)
Legal and regulatory matters 16 (11)
Pension settlement charge
23 -
Other (income) loss
(9) 9
Total non-GAAP adjustments $ 363 $ 173
Total non-GAAP tax adjustments (88) (52)
Tax on intra-group transfer of IP assets
33 -
Total non-GAAP adjustments, net of tax $ 308 $ 121
Non-GAAP net income attributable to Nasdaq $ 764 $ 689
U.S. GAAP effective tax rate 30.3 % 22.5 %
Total adjustments from non-GAAP tax rate (5.4) % 1.5 %
Non-GAAP effective tax rate 24.9 % 24.0 %
Weighted-average common shares outstanding for diluted earnings per share 578.9 494.2
U.S. GAAP diluted earnings per share $ 0.79 $ 1.15
Total adjustments from non-GAAP net income 0.53 0.24
Non-GAAP diluted earnings per share $ 1.32 $ 1.39
LIQUIDITY AND CAPITAL RESOURCES
Historically, we have funded our operating activities and met our commitments through cash generated by operations, augmented by the periodic issuance of debt. Currently, our cost and availability of funding remain healthy. We continue to prudently assess our capital deployment strategy through balancing acquisitions, internal investments, debt repayments, and shareholder return activity, including share repurchases and dividends.
We expect that our current cash and cash equivalents combined with cash flows provided by operating activities, supplemented with our borrowing capacity and access to additional financing, including our revolving credit facility and our commercial paper program, provides us additional flexibility to meet our ongoing obligations and the capital deployment strategic actions described above, while allowing us to invest in activities and product development that support the long-term growth of our operations.
Principal factors that could affect the availability of our internally-generated funds include:
• deterioration of our revenues in any of our business segments;
• changes in regulatory and working capital requirements; and
•an increase in our expenses.
Principal factors that could affect our ability to obtain cash from external sources include:
• operating covenants contained in our credit facilities that limit our total borrowing capacity;
• credit rating downgrades, which could limit our access to additional debt;
• a significant decrease in the market price of our common stock; and
• volatility or disruption in the public debt and equity markets.
The following table summarizes selected measures of our liquidity and capital resources:
June 30, 2024 December 31, 2023
(in millions)
Cash and cash equivalents $ 416 $ 453
Financial investments 174 188
Working capital (482) 71
The decrease in working capital is primarily driven by the reclassification of the 2025 Notes to short-term debt in the second quarter of 2024, see "Debt Obligations" below, increased deferred revenue due to the acquisition of Adenza, and increased Section 31 fees payable to the SEC.
Cash and Cash Equivalents
Cash and cash equivalents includes all non-restricted cash in banks and highly liquid investments with original maturities of 90 days or less at the time of purchase. The balance retained in cash and cash equivalents is a function of anticipated or possible short-term cash needs, prevailing interest rates, our investment policy, and alternative investment choices. As of June 30, 2024, our cash and cash equivalents of $416 million were primarily invested in commercial paper, money market funds and bank deposits.
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Repatriation of Cash
Our cash and cash equivalents held outside of the U.S. in various foreign subsidiaries totaled $176 million as of June 30, 2024 and $236 million as of December 31, 2023. The remaining balance held in the U.S. totaled $240 million as of June 30, 2024 and $217 million as of December 31, 2023.
Cash Flow Analysis
The following table summarizes the changes in cash flows:
Six Months Ended June 30,
2024 2023
Net cash provided by (used in): (in millions)
Operating activities $ 990 $ 979
Investing activities (18) (292)
Financing activities (2,333) 4,416
Net Cash Provided by Operating Activities
Net cash provided by operating activities primarily consists of net income adjusted for certain non-cash items, including depreciation and amortization expense, expense associated with share-based compensation, deferred income taxes and the effects of changes in working capital. Changes in working capital include changes in accounts receivable and deferred revenue which are impacted by the timing of customer billings and related collections from our customers; accounts payable and accrued expenses due to timing of payments; accrued personnel costs, which are impacted by employee performance targets and the timing of payments related to employee bonus incentives; and Section 31 fees payable to the SEC, which is impacted by the changes in SEC fee rates and the timing of collections from customers and payments to the SEC.
Net cash provided by operating activities increased $11 million for the six months ended June 30, 2024 compared with the same period in 2023. The increase was primarily driven by changes in our operating assets and liabilities and timing of various payments and receipts of $40 million, partially offset by a decrease of $29 million driven by the decrease in net income adjusted for certain noncash operating activities.
The changes in our operating assets and liabilities primarily included higher cash inflows from Section 31 fees payable to SEC due to higher Section 31 fee rate as of May 2024, as well as various other increased cash inflows impacting our working capital. This was partially offset by higher cash outflows from receivables, net primarily due to higher Trading Services receivables driven by higher Section 31 fee rate as well as the growth in our index licensing revenues and higher accounts payable and accrued expenses, primarily due to an increase in our accrued interest and interest paid relating to the senior unsecured notes issued in June 2023 in connection with the Adenza acquisition. Non-cash charges in the first six months of 2024 primarily included $308 million of depreciation and amortization and $69 million of share-based compensation.
Net Cash Used in Investing Activities
Net cash used in investing activities for the six months ended June 30, 2024 primarily related to purchases of property and equipment of $91 million and $18 million from other investing activities primarily related to our corporate venture program, partially offset by net proceeds from sales and redemptions of investments related to default funds and margin deposits of $86 million and proceeds from the sales and redemptions of trading securities, net, of $5 million.
Net cash used in investing activities for the six months ended June 30, 2023 primarily related to net purchases of trading securities of $115 million, net purchases of investments related to default funds and margin deposits of $103 million, and purchases of property and equipment of $79 million, partially offset by proceeds of $5 million from other investing activities.
Net Cash Provided by (Used in) Financing Activities
Net cash used in financing activities for the six months ended June 30, 2024 primarily related to a decrease related to our default funds and margin deposits of $1,396 million, $340 million relating to repayment of the 2023 Term Loan, $265 million of dividend payments to our shareholders, $241 million from repayments of our commercial paper, net, $58 million in repurchases of common stock and $54 million of payments related to employee shares withheld for taxes.
Net cash provided by financing activities for the six months ended June 30, 2023 primarily related to $5,016 million proceeds from issuances of senior unsecured notes, in connection with the Adenza transaction, net of debt issuance costs and an increase in default funds and margin deposits of $364 million, partially offset by $524 million from repayments of our commercial paper, net, $206 million of dividend payments to our shareholders, $159 million in repurchases of common stock and $68 million of payments related to employee shares withheld for taxes.
See Note 8, "Debt Obligations," to the condensed consolidated financial statements for further discussion of our debt obligations.
See "Share Repurchase Program," and "Cash Dividends on Common Stock," of Note 11, "Nasdaq Stockholders' Equity," to the condensed consolidated financial statements for further discussion of our share repurchase program and cash dividends declared and paid on our common stock.
Financial Investments
Our financial investments totaled $174 million as of June 30, 2024 and $188 million as of December 31, 2023. Of these securities, $167 million as of June 30, 2024 and $168 million as of December 31, 2023 are assets primarily utilized to meet regulatory capital requirements, mainly for our clearing operations at Nasdaq Clearing. See Note 6, "Investments," to the condensed consolidated financial statements for further discussion.
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Regulatory Capital Requirements
Clearing Operations Regulatory Capital Requirements
We are required to maintain minimum levels of regulatory capital for the clearing operations of Nasdaq Clearing. The level of regulatory capital required to be maintained is dependent upon many factors, including market conditions and creditworthiness of the counterparty. As of June 30, 2024, our required regulatory capital of $122 million was primarily comprised of highly rated European government debt securities that are included in financial investments in the Condensed Consolidated Balance Sheets.
Broker-Dealer Net Capital Requirements
Our broker-dealer subsidiaries, Nasdaq Execution Services, NFSTX, LLC, and Nasdaq Capital Markets Advisory, are subject to regulatory requirements intended to ensure their general financial soundness and liquidity. These requirements obligate these subsidiaries to comply with minimum net capital requirements. As of June 30, 2024, the combined required minimum net capital totaled $1 million and the combined excess capital totaled $23 million, substantially all of which is held in cash and cash equivalents in the Condensed Consolidated Balance Sheets. The required minimum net capital is included in restricted cash and cash equivalents in the Condensed Consolidated Balance Sheets.
Nordic and Baltic Exchange Regulatory Capital Requirements
The entities that operate trading venues in the Nordic and Baltic countries are each subject to local regulations and are required to maintain regulatory capital intended to ensure their general financial soundness and liquidity. As of June 30, 2024, our required regulatory capital of $36 million was primarily invested in European government bills and mortgage bonds and Icelandic government bonds that are included in financial investments in the Condensed Consolidated Balance Sheets and cash, which is included in restricted cash and cash equivalents in the Condensed Consolidated Balance Sheets.
Other Capital Requirements
We operate several other businesses which are subject to local regulation and are required to maintain certain levels of regulatory capital. As of June 30, 2024, other required regulatory capital of $23 million, primarily related to Nasdaq Central Securities Depository, was primarily invested in European government debt securities that are included in financial investments in the Condensed Consolidated Balance Sheets.
Equity and dividends
Share Repurchase Program
See "Share Repurchase Program," of Note 11, "Nasdaq Stockholders' Equity," to the condensed consolidated financial statements for further discussion of our share repurchase program.
Cash Dividends on Common Stock
The following table presents our quarterly cash dividends paid per common share on our outstanding common stock:
2024 2023
First quarter $ 0.22 $ 0.20
Second quarter 0.24 0.22
Total $ 0.46 $ 0.42
See "Cash Dividends on Common Stock," of Note 11, "Nasdaq Stockholders' Equity," to the condensed consolidated financial statements for further discussion of the dividends.
Debt Obligations
The following table summarizes our debt obligations by contractual maturity:
Maturity Date June 30, 2024 December 31, 2023
Short-term debt: (in millions)
Commercial paper $ 50 $ 291
2025 Notes
June 2025 498 $ 497
Total short-term debt
$ 548 $ 788
Long-term debt - senior unsecured notes:
2026 Notes
June 2026 499 499
2028 Notes
June 2028 993 991
2029 Notes March 2029 639 658
2030 Notes February 2030 639 658
2031 Notes January 2031 645 645
2032 Notes
February 2032 795 819
2033 Notes July 2033 655 674
2034 Notes
February 2034 1,240 1,239
2040 Notes December 2040 644 644
2050 Notes April 2050 487 487
2052 Notes March 2052 541 541
2053 Notes August 2053 738 738
2063 Notes June 2063 738 738
2023 Term Loan November 2026 - 339
2022 Revolving Credit Facility
December 2027 (4) (4)
Total long-term debt
$ 9,249 $ 9,666
Total debt obligations
$ 9,797 $ 10,454
In the table above, the 2025 Notes were reclassified to short-term debt as of June 30, 2024, including the balance as of December 31, 2023, for presentation purposes.
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For the six months ended June 30, 2024, the weighted average interest rate on our debt obligations was approximately 3.98%. This rate can fluctuate based on changes in interest rates for our variable rate debts, changes in foreign currency exchange rates and changes in the amount and duration of outstanding debt. In addition to the 2022 Revolving Credit Facility, we also have other credit facilities primarily to support our Nasdaq Clearing operations in Europe, as well as to provide a cash pool credit line. These European credit facilities, which are available in multiple currencies, totaled $181 million as of June 30, 2024 and $191 million as of December 31, 2023 in available liquidity, none of which was utilized.
Financing of the Adenza Acquisition
In June 2023, Nasdaq issued six series of notes for total proceeds of $5,016 million, net of debt issuance costs of $38 million, with various maturity dates ranging from 2025 to 2063. The net proceeds from these notes were used to finance the majority of the cash consideration due in connection with the Adenza acquisition.
In addition, in connection with the financing of the Adenza acquisition, we entered into the 2023 Term Loan agreement. The 2023 Term Loan provided us with the ability to borrow up to $600 million to finance a portion of the cash consideration for the Adenza acquisition and other amounts incurred in connection with this transaction. On November 1, 2023, we borrowed $599 million, net of fees, under this term loan towards payment of the cash consideration due in connection with the Adenza acquisition. As of June 30, 2024 the term loan is fully repaid.
As of June 30, 2024, we were in compliance with the covenants of all of our debt obligations.
See Note 8, "Debt Obligations," to the condensed consolidated financial statements for further discussion of our debt obligations.
Contractual Obligations and Contingent Commitments
Nasdaq had no significant changes to our contractual obligations and contingent commitments from those disclosed in "Part I. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report Form 10-K that was filed with the SEC
February 21, 2024.
Off-Balance Sheet Arrangements
For discussion of off-balance sheet arrangements see:
• Note 14, "Clearing Operations," to the condensed consolidated financial statements for further discussion of our non-cash default fund contributions and margin deposits received for clearing operations; and
• Note 17, "Commitments, Contingencies and Guarantees," to the condensed consolidated financial statements for further discussion of:
◦Guarantees issued and credit facilities available;
◦Other guarantees; and
◦Routing brokerage activities.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a result of our operating, investing and financing activities, we are exposed to market risks such as interest rate risk and foreign currency exchange rate risk. We are also exposed to credit risk as a result of our normal business activities.
We have implemented policies and procedures to measure, manage, monitor and report risk exposures, which are reviewed regularly by management and the board of directors. We identify risk exposures and monitor and manage such risks on a daily basis.
We perform sensitivity analyses to determine the effects of market risk exposures. We may use derivative instruments solely to hedge financial risks related to our financial positions or risks that are incurred during the normal course of business. We do not use derivative instruments for speculative purposes.
Interest Rate Risk
We are subject to the risk of fluctuating interest rates in the normal course of business. Our exposure to market risk for changes in interest rates relates primarily to our financial investments and debt obligations, which are discussed below.
Financial Investments
As of June 30, 2024, our investment portfolio was primarily comprised of highly rated European government debt securities, which pay a fixed rate of interest. These securities are subject to interest rate risk and the fair value of these securities will decrease if market interest rates increase. If market interest rates were to increase immediately and uniformly by a hypothetical 100 basis points from levels as of June 30, 2024, the fair value of this portfolio would decline by $3 million.
Debt Obligations
As of June 30, 2024, substantially all of our debt obligations were fixed-rate obligations. Interest rates on certain tranches of notes are subject to adjustment to the extent our debt rating is downgraded below investment grade, as further discussed in Note 8, "Debt Obligations," to the condensed consolidated financial statements. While changes in interest rates will have no impact on the interest we pay on fixed-rate obligations, we are exposed to changes in interest rates as a result of the borrowings under our 2022 Revolving Credit Facility and our commercial paper program as these facilities have a variable interest rate. As of June 30, 2024, we have $50 million of outstanding borrowings under our commercial paper program. A hypothetical 100 basis points increase in interest rates on our outstanding commercial paper would increase our annual interest expense by approximately $1 million based on borrowings as of June 30, 2024.
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We may utilize interest rate swap agreements to achieve a desired mix of variable and fixed rate debt.
Foreign Currency Exchange Rate Risk
We are subject to foreign currency exchange rate risk. Our primary transactional exposure to foreign currency denominated revenues less transaction-based expenses and operating income for the three and six months ended June 30, 2024 is presented in the following tables:
Euro Swedish Krona Canadian Dollar Other Foreign Currencies U.S. Dollar Total
(in millions, except currency rate)
Three Months Ended June 30, 2024
Average foreign currency rate to the U.S. dollar 1.077 0.094 0.731 # N/A N/A
Percentage of revenues less transaction-based expenses 9.2% 3.4% 0.7% 3.8% 82.9% 100.0%
Percentage of operating income 16.9% (10.3)% (9.1)% (13.5)% 116.0% 100.0%
Impact of a 10% adverse currency fluctuation on revenues less transaction-based expenses $(11) $(4) $(1) $(4) $- $(20)
Impact of a 10% adverse currency fluctuation on operating income $(7) $(4) $(4) $(6) $- $(21)
Euro Swedish Krona Canadian Dollar Other Foreign Currencies U.S. Dollar Total
(in millions, except currency rate)
Six Months Ended June 30, 2024
Average foreign currency rate to the U.S. dollar 1.081 0.095 0.736 # N/A N/A
Percentage of revenues less transaction-based expenses 8.4% 3.6% 0.7% 3.5% 83.8% 100.0%
Percentage of operating income 15.9% (6.9)% (8.8)% (12.8)% 112.6% 100.0%
Impact of a 10% adverse currency fluctuation on revenues less transaction-based expenses $(19) $(8) $(2) $(8) $- $(37)
Impact of a 10% adverse currency fluctuation on operating income $(13) $(6) $(7) $(11) $- $(37)
__________
# Represents multiple foreign currency rates.
N/A Not applicable.
The adverse impacts shown in the preceding tables should be viewed individually by currency and not in aggregate due to the correlation between changes in exchange rates for certain currencies.
Our investments in foreign subsidiaries are exposed to volatility in currency exchange rates through translation of the foreign subsidiaries' net assets or equity to U.S. dollars. Substantially all of our foreign subsidiaries operate in functional currencies other than the U.S. dollar. The financial statements of these subsidiaries are translated into U.S. dollars for consolidated reporting using a current rate of exchange, with net gains or losses recorded in accumulated other comprehensive loss within stockholders' equity in the Condensed Consolidated Balance Sheets.
Our primary exposure to net assets in foreign currencies as of June 30, 2024 is presented in the following table:
Net Assets Impact of a 10% Adverse Currency Fluctuation
(in millions)
Swedish Krona $ 2,812 $ 281
British Pound 151 15
Norwegian Krone 150 15
Canadian Dollar 117 12
Australian Dollar 97 10
Euro 49 5
In the table above, Swedish Krona includes goodwill of $2,119 million and intangible assets, net of $466 million.
Credit Risk
Credit risk is the potential loss due to the default or deterioration in credit quality of customers or counterparties. We are exposed to credit risk from third parties, including customers, counterparties and clearing agents. These parties may default on their obligations to us due to bankruptcy, lack of liquidity, operational failure or other reasons. We limit our exposure to credit risk by evaluating the counterparties with which we make investments and execute agreements. For our investment portfolio, our objective is to invest in securities to preserve principal while maximizing yields, without significantly increasing risk. Credit risk associated with investments is minimized substantially by ensuring that these financial assets are placed with governments which have investment grade ratings, well-capitalized financial institutions and other creditworthy counterparties.
Our subsidiary, Nasdaq Execution Services, may be exposed to credit risk due to the default of trading counterparties in connection with the routing services it provides for our trading customers. System trades in cash equities routed to other market centers for members of our cash equity exchanges are routed by Nasdaq Execution Services for clearing to the NSCC. In this function, Nasdaq Execution Services is to be neutral by the end of the trading day, but may be exposed to intraday risk if a trade extends beyond the trading day and into the next day, thereby leaving Nasdaq Execution Services susceptible to counterparty risk in the period between accepting the trade and routing it to the
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clearinghouse. In this interim period, Nasdaq Execution Services is not novating like a clearing broker but instead is subject to the short-term risk of counterparty failure before the clearinghouse enters the transaction. Once the clearinghouse officially accepts the trade for novation, Nasdaq Execution Services is legally removed from trade execution risk. However, Nasdaq has membership obligations to NSCC independent of Nasdaq Execution Services' arrangements.
Pursuant to the rules of the NSCC and Nasdaq Execution Services' clearing agreement, Nasdaq Execution Services is liable for any losses incurred due to a counterparty or a clearing agent's failure to satisfy its contractual obligations, either by making payment or delivering securities. Adverse movements in the prices of securities that are subject to these transactions can increase our credit risk. However, we believe that the risk of material loss is limited, as Nasdaq Execution Services' customers are not permitted to trade on margin and NSCC rules limit counterparty risk on self-cleared transactions by establishing credit limits and capital deposit requirements for all brokers that clear with NSCC. Historically, Nasdaq Execution Services has never incurred a liability due to a customer's failure to satisfy its contractual obligations as counterparty to a system trade. Credit difficulties or insolvency, or the perceived possibility of credit difficulties or insolvency, of one or more larger or visible market participants could also result in market-wide credit difficulties or other market disruptions.
We have credit risk related to transaction and subscription-based revenues that are billed to customers on a monthly or quarterly basis, in arrears. Our potential exposure to credit losses on these transactions is represented by the receivable balances in our Condensed Consolidated Balance Sheets. We review and evaluate changes in the status of our counterparties' creditworthiness. Credit losses such as those described above could adversely affect our consolidated financial position and results of operations.
We also are exposed to credit risk through our clearing operations with Nasdaq Clearing. See Note 14, "Clearing Operations," to the condensed consolidated financial statements for further discussion. Our clearinghouse holds material amounts of clearing member cash deposits, which are held or invested primarily to provide security of capital while minimizing credit, market and liquidity risks. While we seek to achieve a reasonable rate of return, we are primarily concerned with preservation of capital and managing the risks associated with these deposits. As the clearinghouse may pass on interest revenues (minus costs) to the members, this could include negative or reduced yield due to market conditions. The following is a summary of the risks associated with these deposits and how these risks are mitigated.
•Credit Risk. When the clearinghouse has the ability to hold cash collateral at a central bank, the clearinghouse utilizes its access to the central bank system to minimize credit risk exposures. When funds are not held at a central bank, we seek to substantially mitigate credit risk by ensuring that investments are primarily placed in large, highly rated financial institutions, highly rated government debt instruments and other creditworthy counterparties.
•Liquidity Risk.Liquidity risk is the risk a clearinghouse may not be able to meet its payment obligations in the right currency, in the right place and the right time. To mitigate this risk, the clearinghouse monitors liquidity requirements closely and maintains funds and assets in a manner which minimizes the risk of loss or delay in the access by the clearinghouse to such funds and assets. For example, holding funds with a central bank where possible or investing in highly liquid government debt instruments serves to reduce liquidity risks.
•Interest Rate Risk. Interest rate risk is the risk that interest rates rise causing the value of purchased securities to decline. If we were required to sell securities prior to maturity, and interest rates had risen, the sale of the securities might be made at a loss relative to the latest market price. Our clearinghouse seeks to manage this risk by making short term investments of members' cash deposits. In addition, the clearinghouse investment guidelines allow for direct purchases or repurchase agreements with short dated maturities of high quality sovereign debt (for example, European government and U.S. Treasury securities), central bank certificates and multilateral development bank debt instruments.
•Security Issuer Risk.Security issuer risk is the risk that an issuer of a security defaults on its payment when the security matures. This risk is mitigated by limiting allowable investments and collateral under reverse repurchase agreements to high quality sovereign, government agency or multilateral development bank debt instruments.
Item 4. Controls and Procedures
Disclosure controls and procedures.
Nasdaq's management, with the participation of Nasdaq's Chief Executive Officer, and Executive Vice President and Chief Financial Officer, has evaluated the effectiveness of Nasdaq's disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, Nasdaq's Chief Executive Officer and Executive Vice President and Chief Financial Officer, have concluded that, as of the end of such period, Nasdaq's disclosure controls and procedures are effective.
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Changes in internal control over financial reporting. There have been no changes in Nasdaq's internal control over financial reporting (as defined in Rule 13a-15(f) and Rule 15d-15(f) under the Exchange Act) that occurred during the quarter ended June 30, 2024 that have materially affected, or are reasonably likely to materially affect, Nasdaq's internal control over financial reporting.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
For a description of our legal proceedings, if any, see "Legal and Regulatory Matters" of Note 17, "Commitments, Contingencies and Guarantees," to the condensed consolidated financial statements, which is incorporated herein by reference.
Item 1A. Risk Factors
In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed under "Risk Factors" in our most recent Form 10-K. These risks could materially and adversely affect our business, financial condition and results of operations. These risks and uncertainties are not the only ones facing us. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
Share Repurchase Program
See "Share Repurchase Program," of Note 11, "Nasdaq Stockholders' Equity," to the condensed consolidated financial statements for further discussion of our share repurchase program.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
The table below represents repurchases made by or on behalf of us or any "affiliated purchaser" of our common stock during the fiscal quarter ended June 30, 2024:
Period (a)
Total Number of Shares Purchased 		(b) Average Price Paid Per Share (c)
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs 		(d) Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions)
April 2024
Share repurchase program - $ - - $ 1,890
Employee transactions 459,790 $ 62.26 N/A N/A
May 2024
Share repurchase program - $ - - $ 1,890
Employee transactions 317 $ 60.87 N/A N/A
June 2024
Share repurchase program 975,102 $ 59.08 975,102 $ 1,832
Employee transactions 9,191 $ 59.03 N/A N/A
Total Quarter Ended June 30, 2024
Share repurchase program 975,102 $ 59.08 975,102 $ 1,832
Employee transactions 469,298 $ 62.20 N/A N/A
In the preceding table:
•N/A - Not applicable.
•See "Share Repurchase Program," of Note 11, "Nasdaq Stockholders' Equity," to the condensed consolidated financial statements for further discussion of our share repurchase program.
•Employee transactions represents shares surrendered to us to satisfy tax withholding obligations arising from the vesting of restricted stock and PSUs previously issued to employees.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
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Item 5. Other Information
During the three months ended June 30, 2024, none of the Company's directors or officers adopted, terminated or modified a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" (as such terms are defined in Item 408 of Regulation S-K) except as follows and each of which is intended to satisfy the affirmative defense of Rule 10b5-1(c): (i) on April 26, 2024, Bradley J. Peterson, Executive Vice President and Chief Information Officer/Chief Technology Officer, adopted a Rule 10b5-1 trading plan for the sale of up to 40,000 shares of our common stock, subject to certain conditions and which expires on September 13, 2024 and (ii) on June 13, 2024, John A. Zecca, Executive Vice President and Chief Legal, Risk and Regulatory Officer, adopted a Rule 10b5-1 trading plan for the sale of up to 11,000 shares of our common stock, subject to certain conditions and which expires on June 13, 2025.
Item 6. Exhibits
Exhibit Number
10.1
Form of Nasdaq Restricted Stock Unit Award Certificate (employees).*
10.2
Form of Nasdaq Restricted Stock Unit Award Certificate (directors).*
10.3
Form of Nasdaq Three-Year Performance Share Unit Agreement.*
10.4
Form of Nasdaq Two-Year Performance Share Unit Agreement.*
31.1
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley").
31.2
Certification of Executive Vice President and Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley.
32.1
Certifications Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley.
101
The following materials from the Nasdaq, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023; (ii) Condensed Consolidated Statements of Income for the three and six months ended June 30, 2024 and 2023; (iii) Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2024 and 2023; (iv) Condensed Consolidated Statements of Changes in Stockholders' Equity for the three and six months ended June 30, 2024 and 2023; (v) Condensed Consolidated Statements of Cash Flows for the three and six months ended June 30, 2024 and 2023; and (vi) notes to condensed consolidated financial statements.
104 Cover Page Interactive Data File, formatted in iXBRL and contained in Exhibit 101.
* Management contract or compensatory plan or arrangement.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on August 6, 2024.
Nasdaq, Inc.
(Registrant)
By: /s/ Adena T. Friedman
Name: Adena T. Friedman
Title: Chief Executive Officer
Date: August 6, 2024
By:
/s/ Sarah Youngwood
Name:
Sarah Youngwood
Title:
Executive Vice President and
Chief Financial Officer
Date: August 6, 2024
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