Item 16. Form 10-K Summary

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Item 16. Form 10-K Summary

None.

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 February 23, 2022.


Nasdaq, Inc.
(Registrant)

By:			/s/ Adena T. Friedman
Name:			Adena T. Friedman
Title:			President and Chief Executive Officer
Date:			February 23, 2022

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated as of February 23, 2022.


By:			/s/ Adena T. Friedman
Name:			Adena T. Friedman
Title:			President and Chief Executive Officer; Director

By:			/s/ Ann M. Dennison
Name:			Ann M. Dennison
Title:			Executive Vice President and Chief Financial Officer

By:			/s/ Michelle Daly
Name:			Michelle Daly
Title:			Senior Vice President, Controller and Principal Accounting Officer

By:			*
Name:			Michael R. Splinter
Title:			Chairman of the Board

By:			*
Name:			Melissa M. Arnoldi
Title:			Director

By:			*
Name:			Charlene T. Begley
Title:			Director

By:			*
Name:			Steven D. Black
Title:			Director

By:			*
Name:			Essa Kazim
Title:			Director


By:			*
Name:			Thomas A. Kloet
Title:			Director

By:			*
Name:			John D. Rainey
Title:			Director

By:			*
Name:			Toni Townes-Whitley
Title:			Director

By:			*
Name:			Jacob Wallenberg
Title:			Director

By:			*
Name:			Alfred W. Zollar
Title:			Director

* Pursuant to Power of Attorney
By:			/s/ John A. Zecca
Name:			John A. Zecca
Title:			Attorney-in-Fact

Nasdaq, Inc.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

The following consolidated financial statements of Nasdaq, Inc. and its subsidiaries are presented herein on the page indicated:



Report of Independent Registered Public Accounting Firm (PCAOB ID 42)			F-2
Consolidated Balance Sheets			F-5
Consolidated Statements of Income			F-6
Consolidated Statements of Comprehensive Income			F-7
Consolidated Statements of Changes in Stockholders' Equity			F-8
Consolidated Statements of Cash Flows			F-9
Notes to Consolidated Financial Statements			F-10

F-1

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Nasdaq, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Nasdaq, Inc. (the Company) as of December 31, 2021 and 2020, the related consolidated statements of income, comprehensive income, changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 23, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

F-2


			Market Technology Revenue Recognition
Description of the Matter			As described in Notes 2, 3 and 8 to the consolidated financial statements, the Company enters into long-term market technology contracts with customers to develop customized technology solutions, license the right to use software, and provide support and other services which results in these contracts containing multiple performance obligations. The Company recorded market technology deferred revenue of $117 million as of December 31, 2021 and recognized $463 million in revenue for the year then ended. Of the market technology revenue recognized, $216 million relates to marketplace infrastructure technology, where the Company allocates the contract transaction price to each performance obligation using their best estimate of the standalone selling price of each distinct good or service in the respective market technology contract. In instances where standalone selling price is not directly observable, such as when a product or service is not sold separately, the Company determines the standalone selling price predominantly through an expected cost plus a margin approach. The Company recognizes revenue over time using costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying the performance obligation. Auditing the Company’s calculation of the standalone selling price and timing of revenue recognition was complex and involved a high degree of subjective auditor judgment because of the significant management judgment required to develop the estimates. The standalone selling price is based on an estimate of total project costs, ongoing monitoring of completion of performance obligations and establishing margins for goods or services where a standalone selling price is not directly observable.


How We Addressed the Matter in Our Audit			We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company's processes with respect to estimates that impact the timing and measurement of revenue recognition. For example, we tested controls over the allocation of contract transaction price to performance obligations, including management’s review of the estimated margin used when applying the cost plus an estimated margin to determine the standalone selling price. We also evaluated the design and tested the operating effectiveness of controls over the completeness and accuracy of the data utilized to measure the estimate and recognize the revenue in the appropriate period. We performed substantive audit procedures that included, among other things, evaluating the significant assumptions and the accuracy and completeness of the underlying data used in management’s calculation. Specifically, we inspected certain customer contracts, including contract modifications, and tested management’s determination of the standalone selling price and its allocation to performance obligations in accordance with the cost plus a margin approach, including comparing the margin assumptions to actual margins earned on completed contracts. We also tested the accuracy of the revenue recognized in the current period by inspecting reports relating to the hours recorded on a project. We evaluated the adequacy of the Company’s disclosures in Notes 2, 3 and 8 to the consolidated financial statements related to market technology revenue recognition.

F-3


			Accounting for Acquisition of Verafin
Description of the Matter			As described in Note 4 to the consolidated financial statements the Company completed its acquisition of Verafin, accounted for as a business combination, for an aggregate purchase price of $2.75 billion. The transaction resulted in $1.88 billion of goodwill and $815 million of intangible assets being recorded. Intangible assets were comprised of customer relationships of $532 million, developed technology of $246 million, and a trade name of $37 million. Auditing the Company's accounting for its acquisition of Verafin was complex due primarily to the significant estimation in the Company’s determination of the fair value of the customer relationships and developed technology intangible assets, both of which were valued using the income approach. The significant assumptions used in estimating the value of the intangible assets included the discount rate for customer relationships and the royalty rate for the developed technology.


How We Addressed the Matter in Our Audit			We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company's processes with respect to estimates that impact the accounting for the Verafin acquisition. For example, we tested controls over the estimation process supporting the recognition and measurement of the customer relationships and developed technology intangible assets, which included testing controls over management’s review of assumptions used in the valuation models. To test the estimated fair value of the customer relationships and developed technology intangible assets, we performed audit procedures that included, among others, evaluating the Company's use of valuation methodologies, evaluating significant assumptions utilized by the Company, and evaluating the completeness and accuracy of the underlying data supporting those significant assumptions. We involved our valuation specialists to assist with our evaluation of the methodologies used by the Company, the discount rate applied in valuing the customer relationships, and the royalty rate utilized in the developed technology fair value estimates. We performed sensitivity analyses over the selected discount rate and royalty rate to evaluate the impact that movements in those assumptions would have on the fair value of the customer relationships and developed technology intangible assets.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 1986.

New York, New York

February 23, 2022

F-4

Nasdaq, Inc.

Consolidated Balance Sheets

(in millions, except share and par value amounts)


	December 31, 2021		December 31, 2020

Assets
Current assets:
Cash and cash equivalents	$	393	$	2,745
Restricted cash and cash equivalents	29		37
Default funds and margin deposits (including restricted cash and cash equivalents of $5,074 and $3,197, respectively)	5,911		3,942
Financial investments	208		195
Receivables, net	588		566
Other current assets	294		175
Total current assets	7,423		7,660
Property and equipment, net	509		475
Goodwill	8,433		6,850
Intangible assets, net	2,813		2,255
Operating lease assets	366		381
Other non-current assets	571		358
Total assets	$	20,115	$	17,979

Liabilities
Current liabilities:
Accounts payable and accrued expenses	$	185	$	175
Section 31 fees payable to SEC	62		224
Accrued personnel costs	252		227
Deferred revenue	329		235
Other current liabilities	115		121
Default funds and margin deposits	5,911		3,942
Short-term debt	1,018		—
Total current liabilities	7,872		4,924
Long-term debt	4,812		5,541
Deferred tax liabilities, net	406		502
Operating lease liabilities	386		389
Other non-current liabilities	234		187
Total liabilities	13,710		11,543

Commitments and contingencies

Equity
Nasdaq stockholders’ equity:
Common stock, $0.01 par value, 300,000,000 shares authorized, shares issued: 173,418,939 at December 31, 2021 and 171,278,761 at December 31, 2020; shares outstanding: 166,679,635 at December 31, 2021 and 164,933,678 at December 31, 2020	2		2
Additional paid-in capital	1,952		2,547
Common stock in treasury, at cost: 6,739,304 shares at December 31, 2021 and 6,345,083 shares at December 31, 2020	(437)		(376)
Accumulated other comprehensive loss	(1,587)		(1,368)
Retained earnings	6,465		5,628
Total Nasdaq stockholders’ equity	6,395		6,433
Noncontrolling interests	10		3
Total equity	6,405		6,436
Total liabilities and equity	$	20,115	$	17,979

See accompanying notes to consolidated financial statements.

F-5

Nasdaq, Inc.

Consolidated Statements of Income

(in millions, except per share amounts)


	Year Ended December 31,
		2021		2020		2019

Revenues:
Market Technology		$	463	$	357	$	338
Investment Intelligence		1,076		898		$	768
Corporate Platforms		613		521		$	490
Market Services		3,707		3,818		$	2,616
Other revenues		27		31		46
Total revenues		5,886		5,625		4,258
Transaction-based expenses:
Transaction rebates		(2,168)		(2,028)		(1,324)
Brokerage, clearance and exchange fees		(298)		(694)		(399)
Revenues less transaction-based expenses		3,420		2,903		2,535
Operating expenses:
Compensation and benefits		938		786		707
Professional and contract services		144		137		127
Computer operations and data communications		186		151		133
Occupancy		109		107		97
General, administrative and other		85		142		125
Marketing and advertising		57		39		39
Depreciation and amortization		278		202		190
Regulatory		64		24		31
Merger and strategic initiatives		87		33		30
Restructuring charges		31		48		39
Total operating expenses		1,979		1,669		1,518
Operating income		1,441		1,234		1,017
Interest income		1		4		10
Interest expense		(125)		(101)		(124)

Net gain on divestiture of businesses		84		—		27

Other income		81		5		5
Net income from unconsolidated investees		52		70		84
Income before income taxes		1,534		1,212		1,019
Income tax provision		347		279		245


Net income attributable to Nasdaq		$	1,187	$	933	$	774
Per share information:
Basic earnings per share		$	7.15	$	5.67	$	4.69
Diluted earnings per share		$	7.05	$	5.59	$	4.63
Cash dividends declared per common share		$	2.11	$	1.94	$	1.85

See accompanying notes to consolidated financial statements.

F-6

Nasdaq, Inc.

Consolidated Statements of Comprehensive Income

(in millions)


	Year Ended December 31,
		2021		2020		2019
Net income		$	1,187	$	933	$	774
Other comprehensive income (loss):
Foreign currency translation gains (losses)		(176)		269		(122)
Income tax benefit (expense)(1)		(42)		49		(31)
Foreign currency translation, net		(218)		318		(153)

Employee benefit plan adjustment losses		(1)		—		(4)
Employee benefit plan income tax benefit		—		—		1
Employee benefit plan, net		(1)		—		(3)

Total other comprehensive income (loss), net of tax		(219)		318		(156)
Comprehensive income attributable to Nasdaq		$	968	$	1,251	$	618

____________

(1) Primarily relates to the tax effect of unrealized gains and losses on Euro denominated notes.

See accompanying notes to consolidated financial statements.

F-7

Nasdaq, Inc.

Consolidated Statements of Changes in Stockholders' Equity

(in millions)


	Year Ended December 31,
		2021	2020			2019
			Shares	$		Shares	$		Shares	$
Common stock			165	2		165	2		165	2

Additional paid-in capital
Beginning balance				2,547			2,632			2,716
Share repurchase program			(3)	(468)		(2)	(222)		(2)	(200)
ASR agreement(1)			(2)	(475)		—	—		—	—
Share-based compensation			1	90		1	87		1	79
Stock option exercises, net			—	1		—	2		—	2
Other issuances of common stock, net(2)			6	257		1	48		1	35
Ending balance				1,952			2,547			2,632

Common stock in treasury, at cost
Beginning balance				(376)			(336)			(297)
Other employee stock activity			—	(61)		—	(40)		—	(39)
Ending balance				(437)			(376)			(336)

Accumulated other comprehensive loss
Beginning balance				(1,368)			(1,686)			(1,530)
Other comprehensive income (loss)				(219)			318			(156)

Ending balance				(1,587)			(1,368)			(1,686)

Retained earnings
Beginning balance				5,628			5,027			4,558
Impact of adoption of ASU 2016-13				—			(12)			—
Net income				1,187			933			774

Cash dividends declared per common share				(350)			(320)			(305)
Ending balance				6,465			5,628			5,027

Total Nasdaq stockholders’ equity				6,395			6,433			5,639

Noncontrolling interests
Beginning balance				3			—			—
Net activity related to noncontrolling interests				7			3			—
Ending balance				10			3			—

Total Equity			167	$	6,405	165	$	6,436	165	$	5,639

____________

(1) See “ASR Agreements,” of Note 12, “Nasdaq Stockholders’ Equity,” for further discussion.

(2) For the year ended December 31, 2021 primarily relates to the tax impact of shares accelerated and issued upon the sale of our U.S. Fixed Income business. See “2021 Divestiture,” of Note 4, “Acquisitions and Divestiture,” for further discussion.

See accompanying notes to consolidated financial statements.

F-8

Nasdaq, Inc.

Consolidated Statements of Cash Flows

(in millions)


	Year Ended December 31,
	2021		2020		2019

Cash flows from operating activities:
Net income	$	1,187	$	933	$	774
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	278		202		190
Share-based compensation	90		87		79
Deferred income taxes	94		41		35

Extinguishment of debt	33		36		11
Net gain on divestiture of businesses	(84)		—		(27)



Net income from unconsolidated investees	(52)		(70)		(84)
Other reconciling items included in net income	6		32		33
Net change in operating assets and liabilities, net of effects of acquisitions:
Receivables, net	(6)		(167)		(42)
Other assets	(140)		26		(173)
Accounts payable and accrued expenses	(17)		5		(49)
Section 31 fees payable to SEC	(162)		92		23
Accrued personnel costs	28		32		(9)
Deferred revenue	106		15		(15)
Other liabilities(1)	(278)		(12)		217

Net cash provided by operating activities	1,083		1,252		963
Cash flows from investing activities:
Purchases of securities	(316)		(283)		(579)
Proceeds from sales and redemptions of securities	285		402		543


Proceeds from divestiture of businesses, net of cash divested	190		—		132
Proceeds from sale of investment securities	—		22		11
Acquisition of businesses, net of cash and cash equivalents acquired	(2,430)		(157)		(206)
Purchases of property and equipment	(163)		(188)		(127)
Investments related to default funds and margin deposits, net (2)	(132)		109		(174)
Other investing activities	(87)		(27)		(14)
Net cash used in investing activities	(2,653)		(122)		(414)
Cash flows from financing activities:
Proceeds from (repayments of) commercial paper, net	420		(391)		116
Repayments of borrowings under our credit commitment and debt obligations	(804)		(1,468)		(1,215)
Payment of debt extinguishment cost	(33)		(36)		(11)

Proceeds from issuances of debt, net of issuance costs and utilization of credit commitment	826		3,807		680

Repurchases of common stock	(468)		(222)		(200)
ASR agreement	(475)		—		—
Dividends paid	(350)		(320)		(305)
Proceeds received from employee stock activity and other issuances	26		50		37
Payments related to employee shares withheld for taxes	(61)		(40)		(39)

Default funds and margin deposits	2,330		527		(1,535)
Other financing activities	7		3		—
Net cash provided by (used in) financing activities	1,418		1,910		(2,472)
Effect of exchange rate changes on cash and cash equivalents and restricted cash and cash equivalents	(331)		353		(188)
Net increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents	(483)		3,393		(2,111)
Cash and cash equivalents, restricted cash and cash equivalents at beginning of period	5,979		2,586		4,697
Cash and cash equivalents, restricted cash and cash equivalents at end of period	$	5,496	$	5,979	$	2,586
Reconciliation of Cash, Cash Equivalents and Restricted Cash and Cash Equivalents
Cash and cash equivalents	$	393	$	2,745	$	332
Restricted cash and cash equivalents	29		37		30
Restricted cash and cash equivalents (default funds and margin deposits)	5,074		3,197		2,224
Total	$	5,496	$	5,979	$	2,586
Supplemental Disclosure Cash Flow Information
Cash paid for: Interest	$	118	$	97	$	120
Income taxes, net of refund(1)	$	501	$	290	$	205

___________

(1) Includes payment of an acquired tax liability in 2021 related to the Verafin acquisition. See “2021 Acquisition,” of Note 4, “Acquisitions and Divestiture,” for further discussion.

(2) 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 15, "Clearing Operations."

See accompanying notes to consolidated financial statements.

F-9

Nasdaq, Inc.

Notes to Consolidated Financial Statements

1. ORGANIZATION AND NATURE OF OPERATIONS

Nasdaq is a global technology company serving the capital markets and other industries. Our diverse offerings of data, analytics, software and services enable clients to optimize and execute their business vision with confidence.

We manage, operate and provide our products and services in four business segments: Market Technology, Investment Intelligence, Corporate Platforms, and Market Services.

For further discussion of our businesses, see “Products and Services,” of “Item 1. Business.”

Market Technology

Our Market Technology segment 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 solutions are utilized by leading markets in the U.S., Europe and Asia as well as emerging markets in the Middle East, Latin America, and Africa. The Market Technology segment includes our Anti Financial Crime Technology business and our Marketplace Infrastructure Technology business.

Our Anti Financial Crime Technology business includes Nasdaq Trade Surveillance, a SaaS solution designed for brokers and other market participants to assist them in complying with market rules, regulations and internal market surveillance policies. The Nasdaq Automated Investigator is our cloud-deployed anti-money laundering offering with an automated investigator tool for retail banks. In February 2021, we completed the acquisition of Verafin, a SaaS technology provider of anti-financial crime management solutions that offers a cloud-based platform to help detect, investigate, and report money laundering and financial fraud. See “2021 Acquisition,” of Note 4, “Acquisitions and Divestiture,” for further discussion.

Our Marketplace Infrastructure Technology business powers over 130 market infrastructure operators and new market clients in more than 55 countries and handles a wide array of assets, including but not limited to cash equities, equity derivatives, currencies, various interest-bearing securities, commodities, energy products and digital currencies. Our solutions can also be used in the creation of new asset classes, and non-capital markets customers, including those in insurance liabilities securitization, cryptocurrencies and sports wagering.

Investment Intelligence

Our Investment Intelligence segment includes our Market Data, Index and Analytics businesses.

Our Market Data business sells and distributes historical and real-time market data to the sell-side, the institutional investing community, retail online brokers, proprietary trading shops, other venues, internet portals and data distributors. Our market data products can enhance transparency of market activity within our exchanges and provide critical information to professional and non-professional investors globally. Additionally, our Nasdaq Cloud Data Service provided on our Data Link data dissemination platform provides a flexible and efficient method of delivery for real- time exchange data and other financial information.

Our Index business develops and licenses Nasdaq-branded indexes and financial products. We also license cash-settled options, futures and options on futures on our indexes. As of December 31, 2021, 362 ETPs listed on 25 exchanges in over 20 countries tracked a Nasdaq index and accounted for $424 billion in AUM.

Our Analytics business provides asset managers, investment consultants and institutional asset owners with investment insights and workflow solutions. The eVestment platform provides asset owners and allocators with analytics to make data-driven investment decisions, enables asset managers to position institutional products worldwide and provides liquidity solutions for private funds. Together with Solovis, a cloud-based multi-asset portfolio management provider, we offer a suite of cloud-based solutions that help institutional investors and consultants conduct pre-investment due diligence, and monitor their portfolios post-investment. During 2021, we launched Data Fabric, a managed data solution utilizing our Nasdaq Data Link to help investment management firms scale their data infrastructure with enhanced quality, governance and integrity.

Corporate Platforms

Our Corporate Platforms segment includes our Listing Services and IR & ESG Services businesses. These businesses deliver critical capital market and ESG solutions across the lifecycle of public and private companies.

Our Listing Services business includes our U.S. and European Listing Services businesses. We operate a variety of listing platforms around the world 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. In July 2021, we contributed our NPM business, which was included in our Listing Services business, to a standalone, independent company, of which we

F-10

own the largest minority interest, together with a consortium of third party financial institutions. The NPM business provides liquidity solutions for private companies to enable employees, investors, and companies to execute transactions.

As of December 31, 2021, there were 4,178 total listings on The Nasdaq Stock Market, including 441 ETPs. The combined market capitalization was approximately $28.2 trillion. In Europe, the Nasdaq Nordic and Nasdaq Baltic exchanges, together with Nasdaq First North, were home to 1,235 listed companies with a combined market capitalization of approximately $2.6 trillion.

We continue to grow our U.S. Corporate Bond exchange for the listing of corporate bonds. This exchange operates pursuant to The Nasdaq Stock Market exchange license and is powered by the NFF. As of December 31, 2021, 107 corporate bonds were listed on the Corporate Bond exchange. We also continue to develop the Nasdaq Sustainable Bond Network, a platform for increased transparency in the global sustainable bond markets.

Our IR & ESG Services business includes our Investor Relations Intelligence and Governance Solutions businesses, which serve both public and private companies and organizations. 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, various non-profit organizations to hospitals and health care 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 consultative services. In December 2021, we acquired QDiligence, a provider of software that facilitates digital director and officer questionnaires and self-evaluations for boards of directors and corporate secretaries.

Market Services

Our Market Services segment includes our Equity Derivative Trading and Clearing, Cash Equity Trading, FICC and Trade Management Services businesses. We operate multiple exchanges and other marketplace facilities 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 broker services, clearing, settlement and central depository services. In January 2020, we commenced an orderly wind-down of our Nordic broker services operations business. We expect this wind-down to continue through the second quarter of 2022. In June 2021, we sold our U.S. Fixed Income business which included an electronic platform for trading of U.S. Treasuries. See “2021 Divestiture,” of Note 4, “Acquisitions and Divestiture,” for further discussion. Also in June 2021, we completed the acquisition of a majority stake in Puro.earth, a Finnish-based leading marketplace for carbon removal.

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. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The 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 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.

Certain prior year amounts have been reclassified to conform to the current year presentation.

During the fourth quarter of 2021, we adjusted the presentation of cash and cash equivalents held within default funds and margin deposits on the consolidated statement of cash flows from operating activities, to present them as restricted cash and cash equivalents with the associated changes being included within cash flows from investing and financing activities. These balances cannot be used to satisfy the Company's operating or other liabilities. See Note 15, “Clearing Operations,” for further discussion of the default funds and margin deposits.

Prior period amounts have also been adjusted to conform to current period presentation. This immaterial adjustment had no impact on our previously reported consolidated balance sheets, consolidated statements of income, or consolidated statements of comprehensive income.

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The tables below present a summary of the 2020 and 2019 Statements of Cash Flows as reported and as adjusted:


	Year Ended December 31, 2020
	As Reported		Adjustment		Adjusted
			(in millions)
Net cash provided by operating activities	$	1,252	$	—	$	1,252
Net cash used in investing activities	(231)		109		(122)
Net cash provided by (used in) financing activities	1,383		527		1,910
Effect of exchange rate changes on cash, cash equivalents, restricted cash and cash equivalents	16		337		353
Net increase (decrease) in cash, cash equivalents, restricted cash and cash equivalents	2,420		973		3,393
Cash, cash equivalents, restricted cash and cash equivalents at beginning of period	362		2,224		2,586
Cash, cash equivalents, restricted cash and cash equivalents at end of period	$	2,782	$	3,197	$	5,979

Reconciliation of Cash, Cash Equivalents and Restricted Cash and Cash Equivalents
Cash and cash equivalents	$	2,745	$	—	$	2,745
Restricted cash and cash equivalents	37		—		37
Restricted cash and cash equivalents (Default funds and margin deposits)	—		3,197		3,197
Total	$	2,782	$	3,197	$	5,979


	Year Ended December 31, 2019
	As Reported		Adjustment		Adjusted
			(in millions)
Net cash provided by operating activities	$	963	$	—	$	963
Net cash used in investing activities	(240)		(174)		(414)
Net cash provided by (used in) financing activities	(937)		(1,535)		(2,472)
Effect of exchange rate changes on cash, cash equivalents, restricted cash and cash equivalents	(10)		(178)		(188)
Net increase (decrease) in cash, cash equivalents, restricted cash and cash equivalents	(224)		(1,887)		(2,111)
Cash, cash equivalents, restricted cash and cash equivalents at beginning of period	586		4,111		4,697
Cash, cash equivalents, restricted cash and cash equivalents at end of period	$	362	$	2,224	$	2,586

Reconciliation of Cash, Cash Equivalents and Restricted Cash and Cash Equivalents
Cash and cash equivalents	$	332	$	—	$	332
Restricted cash and cash equivalents	30		—		30
Restricted cash and cash equivalents (Default funds and margin deposits)	—		2,224		2,224
Total	$	362	$	2,224	$	2,586

Use of Estimates

In preparing our consolidated financial statements, we make assumptions, judgments and estimates that can have a significant impact on our revenue, operating income and net income, as well as on the value of certain assets and liabilities in our consolidated balance sheets. At least quarterly, we evaluate our assumptions, judgments and estimates, and make changes as deemed necessary.

Nasdaq has considered the impact of COVID-19 on the assumptions and estimates used in evaluating our assets and liabilities, including but not limited to our goodwill, intangible assets, equity method investments, equity securities and allowance for losses on accounts receivable. We determined that there was no material adverse impact on our results of operations and financial position for the year ended December 31, 2021. These estimates may change as new events occur and additional information is obtained. Actual results could differ from these estimates under different assumptions or conditions.

Foreign Currency

Foreign denominated assets and liabilities are remeasured into the functional currency at exchange rates in effect at the balance sheet date and recorded through the income statement. Gains or losses resulting from foreign currency transactions are remeasured using the rates on the dates on which those elements are recognized during the period, and are included in general, administrative and other expense in the Consolidated Statements of Income.

Translation gains or losses resulting from translating our subsidiaries’ financial statements from the local functional currency to the reporting currency, net of tax, are included in accumulated other comprehensive loss within stockholders’ equity in the Consolidated Balance Sheets. Assets and liabilities are translated at the balance sheet date while revenues and expenses are translated at the date the transaction occurs or at an applicable average rate.

Cash and Cash Equivalents

Cash and cash equivalents include all non-restricted cash in banks and highly liquid investments with original maturities of 90 days or less at the time of purchase. Such equivalent investments included in cash and cash equivalents in the Consolidated Balance Sheets were $109 million as of December 31, 2021 and $2,509 million as of December 31, 2020. Cash equivalents are carried at cost plus accrued interest, which approximates fair value due to the short maturities of these investments. The decrease in cash equivalents in 2021 was primarily due to the use of net proceeds of $1.9 billion from issuances of long-term debt in the fourth quarter of 2020 to acquire Verafin in February 2021. See “Acquisition of Verafin,” of Note 4, “Acquisitions and Divestiture,” for further discussion.

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Restricted Cash

Restricted cash and cash equivalents, which was $29 million as of December 31, 2021 and $37 million as of December 31, 2020, is restricted from withdrawal due to a contractual or regulatory requirement or not available for general use and as such is classified as restricted in the Consolidated Balance Sheets. As of December 31, 2021 and 2020, restricted cash and cash equivalents primarily includes funds held for our trading and clearing businesses.

Default Funds and Margin Deposits

Nasdaq Clearing members’ cash contributions are included in default funds and margin deposits in the Consolidated Balance Sheets as both a current asset and a current liability. 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. 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 Consolidated Balance Sheets as Nasdaq Clearing does not take legal ownership of these assets and the risks and rewards remain with the clearing members.

Receivables, net

Our receivables are concentrated with our member firms, market data distributors, listed companies, investor relations intelligence, governance and market technology customers. Receivables are shown net of allowance for credit losses. The allowance is maintained at a level that management believes to be sufficient to absorb expected losses over the life of our accounts receivable portfolio. The allowance is increased by the provision for bad debts, which is included in general, administrative and other expense in the Consolidated Statements of Income, and decreased by the amount of charge-offs, net of recoveries.

The allowance is primarily based on an aging methodology. This method applies loss rates based on historical loss information which is disaggregated by business segment and, as deemed necessary, is adjusted for other factors and considerations that could impact collectibility. Additionally, we consider corporate default rate averages over an extended period as compared to the period covered by our historical loss data and include an adjustment to historical loss percentages for current conditions and expected future conditions if necessary.

In circumstances where a specific customer’s inability to meet its financial obligations is known (i.e., bankruptcy filings), we determine whether a specific provision for bad debts is required. Accounts receivable are written-off against the allowance when collection efforts cease. Due to changing economic, business and market conditions, we review the allowance quarterly and make changes to the allowance through the provision for bad debts as appropriate. If circumstances change (i.e., higher than expected defaults or an unexpected material adverse change in a major customer’s ability to pay), our estimates of recoverability could be

reduced by a material amount. The total allowance netted against receivables in the Consolidated Balance Sheets was $17 million as of December 31, 2021, $21 million as of December 31, 2020 and $9 million as of December 31, 2019. The change in the balance in 2021 was immaterial.

In 2020 we adopted ASU 2016-13, which changed the impairment model for certain financial instruments. We recorded a $12 million non-cash cumulative effect adjustment to retained earnings on our opening Consolidated Balance Sheets as of January 1, 2020 as a result of the adoption of this new standard.

Investments

Purchases and sales of investment securities are recognized on settlement date.

Financial investments

Financial investments are comprised of trading securities bought principally to meet regulatory capital requirements mainly for our clearing operations at Nasdaq Clearing. These investments are classified as trading securities as they are generally sold in the near term, with changes in fair value included in other income in the Consolidated Statements of Income.

Fair value is generally obtained from third party pricing sources. When available, quoted market prices are used to determine fair value. If quoted market prices are not available, fair values are estimated using pricing models with observable market inputs. The inputs to the valuation models vary by the type of security being priced but are typically benchmark yields, reported trades, broker-dealer quotes, and prices of similar assets. Pricing models generally do not entail material subjectivity because the methodologies employed use inputs observed from active markets. See “Fair Value Measurements,” below for further discussion of fair value measures.

Equity Securities

Investments in equity securities with readily determinable fair values (other than those accounted for under the equity method or those that result in consolidation of the investee) are measured at fair value and any changes in fair value are recognized in other income in the Consolidated Statements of Income.

Equity investments without readily determinable fair values are accounted for under the measurement alternative, under which investments are measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer on a prospective basis. We assess relevant transactions that occur on or before the balance sheet date to identify observable price changes, and we regularly monitor these investments to evaluate whether there is an indication that the investment is impaired, based on the share price from the investee's latest financing round, the performance of the investee in relation to its own operating targets, the investee's liquidity and cash position,

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and general market conditions. If a qualitative assessment indicates that the security is impaired, Nasdaq will estimate the fair value of the security and, if the fair value is less than the carrying amount of the security, will recognize an impairment loss in net income equal to the difference in the period the impairment occurs. See Note 6, “Investments,” for further discussion of our equity securities.

For the years ended December 31, 2021, 2020 and 2019, no material adjustments were made to the carrying value of our equity securities.

Our investments in equity securities are included in other non-current assets in the Consolidated Balance Sheets, as we intend to hold these investments for more than one year.

Equity Method Investments

In general, the equity method of accounting is used when we own 20% to 50% of the outstanding voting stock of a company or when we are able to exercise significant influence over the operating and financial policies of a company. We have certain investments in which we have determined that we have significant influence and as such account for the investments under the equity method of accounting. 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. We evaluate our equity method investments for other-than-temporary declines in value by considering a variety of factors such as the earnings capacity of the investment and the fair value of the investment compared to its carrying amount. In addition, for investments where the market value is readily determinable, we consider the underlying stock price. If the estimated fair value of the investment is less than the carrying amount and management considers the decline in value to be other than temporary, the excess of the carrying amount over the estimated fair value is recognized in net income in the period the impairment occurs. See Note 6, “Investments,” for further discussion of our equity method investments.

No material impairments were recorded to reduce the carrying value of our equity method investments in 2021, 2020 or 2019.

Derivative Financial Instruments and Hedging Activities

Non-Designated Derivatives

We use foreign exchange forward contracts to manage foreign currency exposure of intercompany loans, accounts receivable, accounts payable and other balance sheet items. These contracts are not designated as hedges for financial reporting purposes. The change in fair value of these contracts is recognized in general, administrative and other expense in the Consolidated Statements of Income and offsets the foreign currency exposure.

As of December 31, 2021 and 2020, the fair value amounts of our derivative instruments were immaterial.

Net Investment Hedges

Net assets of our foreign subsidiaries are exposed to volatility in foreign currency exchange rates. We may utilize net investment hedges to offset the translation adjustment arising from re-measuring our investment in foreign subsidiaries.

Our 2029, 2030 and 2033 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. Any increase or decrease related to the remeasurement of the 2029, 2030, and 2033 Notes into U.S. dollars is recorded in accumulated other comprehensive loss within stockholders’ equity in the Consolidated Balance Sheets. See “2029 Notes,” “2030 Notes,” and “2033 Notes,” of Note 9, “Debt Obligations,” for further discussion.

Property and Equipment, net

Property and equipment, including leasehold improvements, are carried at cost less asset impairment charges and accumulated depreciation and amortization. Depreciation and amortization are recognized using the straight-line method over the estimated useful lives of the related assets, which range from 10 to 40 years for buildings and improvements, 2 to 5 years for data processing equipment, and 5 to 10 years for furniture and equipment.

Leasehold improvements are amortized using the straight-line method over the shorter of their estimated useful lives or the remaining term of the related lease.

We develop systems solutions for both internal and external use. Certain costs incurred in connection with developing or obtaining internal use software are capitalized. In addition, certain costs of computer software to be sold, leased, or otherwise marketed as a separate product or as part of a product or process are capitalized beginning when a product’s technological feasibility has been established and ending when a product is available for general release. Technological feasibility is established upon completion of a detailed program design or, in its absence, completion. Prior to reaching technological feasibility, all costs are charged to expense. Unamortized capitalized costs are included in data processing equipment and software, within property and equipment, net in the Consolidated Balance Sheets. Capitalized software costs are amortized on a straight-line basis over the estimated useful lives of the software, generally 5 to 10 years. Amortization of these costs is included in depreciation and amortization expense in the Consolidated Statements of Income.

Implementation costs incurred in a cloud computing arrangement that is a service contract are capitalized as a prepaid asset included in other assets in our Consolidated Balance Sheets and are amortized over the expected service period in the relevant expense category in the Consolidated Statements of Income.

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Property and equipment are subject to impairment testing when events or conditions indicate that the carrying amount of an asset may not be recoverable. The carrying amount of an asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Any required impairment loss is measured as the amount by which the carrying amount of the asset exceeds its fair value and is recorded as a reduction in the carrying amount of the related asset and a charge to operating results.

See Note 7, “Property and Equipment, net,” for further discussion.

Leases

At inception, we determine whether a contract is or contains a lease. We have operating leases which are primarily real estate leases for our U.S. and European headquarters and for general office space. As of December 31, 2021, these leases have varying lease terms with remaining maturities ranging from 1 month to 15 years. Operating lease balances are included in operating lease assets, other current liabilities, and operating lease liabilities in our Consolidated Balance Sheets. We do not have any leases classified as finance leases.

Operating lease assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Since our leases do not provide an implicit rate, we use our incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date in determining the present value of lease payments. The operating lease asset also includes any lease payments made and excludes lease incentives. Our lease terms include options to extend or terminate the lease when we are reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Certain of our lease agreements include rental payments adjusted periodically for inflation based on an index or rate. These payments are included in the initial measurement of the operating lease liability and operating lease asset. However, rental payments that are based on a change in an index or a rate are considered variable lease payments and are expensed as incurred.

We have lease agreements with lease and non-lease components, which are accounted for as a single performance obligation to the extent that the timing and pattern of transfer are similar for the lease and non-lease components and the lease component qualifies as an operating lease. We do not recognize lease liabilities and operating lease assets for leases with a term of 12 months or less. We recognize these lease payments on a straight-line basis over the lease term. See Note 16, “Leases,” for further discussion.

Goodwill and Indefinite-Lived Intangible Assets

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 recognize specifically identifiable intangibles, such as customer relationships, technology, exchange and clearing registrations, trade names and licenses when a specific right or contract is acquired. Goodwill and intangible assets deemed to have indefinite useful lives, primarily exchange and clearing registrations, are not amortized but instead are tested for impairment at least annually as of October 1 and more frequently whenever events or changes in circumstances indicate that the fair value of the asset may be less than its carrying amount, 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. When testing goodwill and indefinite-lived intangible assets for impairment, we have the option of first performing a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit or indefinite-lived intangible asset is less than their respective carrying amounts as the basis to determine if it is necessary to perform a quantitative impairment test. If we choose not to complete a qualitative assessment, or if the initial assessment indicates that it is more likely than not that the carrying amount of a reporting unit or the carrying amount of an indefinite-lived intangible asset exceed their respective estimated fair values, a quantitative test is required.

In performing a quantitative impairment test, we compare the fair value of each reporting unit and indefinite-lived intangible asset with their respective carrying amounts. If the carrying amounts of the reporting unit or the indefinite-lived intangible asset exceed their respective fair values, an impairment charge is recognized in an amount equal to the difference, limited to the total amount of goodwill allocated to that reporting unit or the total carrying value of the indefinite-lived intangible asset.

There was no impairment of goodwill or indefinite-lived intangible assets for the years ended December 31, 2021, 2020 and 2019. Future disruptions to our business and 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 or indefinite-lived intangible asset impairment charges in the future.

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Other Long-Lived Assets

We review our other long-lived assets, such as finite-lived intangible assets and property and equipment, for potential impairment when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying amount of an asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Fair value of finite-lived intangible assets and property and equipment is based on various valuation techniques. Any required impairment loss is measured as the amount by which the carrying amount of the asset exceeds its fair value and is recorded as a reduction in the carrying amount of the related asset and a charge to operating results.

We recorded pre-tax, non-cash finite-lived intangible assets impairment charges of $14 million in 2021 and property and equipment asset impairment charges of $4 million in 2020 and $24 million in 2019.

Revenue Recognition and Transaction-Based Expenses

Revenue From Contracts With Customers

Our revenue recognition policies under ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” are described in the following paragraphs.

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 Consolidated Balance Sheets as receivables which is net of an allowance for credit losses of $17 million as of December 31, 2021 and $21 million as of December 31, 2020. The changes in the balance between periods were immaterial. We do not have obligations for warranties, returns or refunds to customers.

For the majority of our contracts with customers there is no significant variable consideration. We do not have a material amount of revenues recognized from performance obligations that were satisfied in prior periods. We do not provide disclosures about transaction price allocated to unsatisfied performance obligations if contract durations are less than one year.

For contract durations that are one-year or greater, the portion of transaction price allocated to unsatisfied performance obligations is included in Note 3, “Revenue From Contracts With Customers.” Deferred revenue primarily represents our contract liabilities related to our fees for annual and initial listings, market technology, IR & ESG services and investment intelligence contracts. Deferred revenue is the only significant contract asset or liability as of December 31, 2021. See Note 8, “Deferred Revenue,” for our discussion of deferred revenue balances, activity, and expected timing of recognition. See “Revenue Recognition” below for further descriptions of our revenue contracts.

Sales commissions earned by our sales force are considered incremental and recoverable costs of obtaining a contract with a customer. These costs are deferred and amortized on a straight-line basis over the period of benefit that we have determined to be the contract term or estimated service period. Sales commissions for renewal contracts are deferred and amortized on a straight-line basis over the related contractual renewal period. Amortization expense is included in compensation and benefits expense in the Consolidated Statements of Income. The balance of deferred costs and related amortization expense are not material to our consolidated financial statements. Sales commissions are expensed when incurred if contract durations are one year or less. Sales taxes are excluded from transaction prices.

Certain judgments and estimates were used in the identification and timing of satisfaction of performance obligations and the related allocation of transaction price and are discussed below. We believe that these represent a faithful depiction of the transfer of services to our customers.

Revenue Recognition

Our primary revenue contract classifications are described below. Although we may discuss additional revenue details in our “Management's Discussion and Analysis of Financial Condition and Results of Operations,” the categories below best represent those that depict similar economic characteristics of the nature, amount, timing and uncertainty of our revenues and cash flows.

Market Technology

Market Technology revenues primarily consist of SaaS revenues, software, license and support revenues, and change request revenues.

In our market infrastructure technology business, we enter into long-term contracts with customers to develop customized technology solutions, license the right to use software, and provide support and other services to our customers. We also enter into agreements to modify the system solutions sold by Nasdaq after delivery has occurred. In addition, we enter into subscription agreements which allow customers to connect to our servers to access our software.

Our long-term contracts with customers to develop customized technology solutions, license the right to use software and provide support and other services to our customers have multiple performance obligations. The performance obligations are generally: (i) software license and installation service and (ii) software support. We have determined that the software license and installation service are not distinct as the license and the customized installation service are inputs to produce the combined output, a functional and integrated software system.

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For contracts with multiple performance obligations, we allocate the contract transaction price to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract. In instances where standalone selling price is not directly observable, such as when we do not sell the product or service separately, we determine the standalone selling price predominantly through an expected cost plus a margin approach.

Contract modifications are routine in the performance of our contracts. Contracts are often modified to account for changes in contract specifications or requirements. In most instances, contract modifications are for goods and services that are not distinct, and, therefore, are accounted for as part of the existing contract.

For our long-term contracts, payments are generally made throughout the contract life and can be dependent on either reaching certain milestones or paid upfront in advance of the service period depending on the stage of the contract. For subscription agreements, contract payment terms can be quarterly, annually or monthly, in advance. For all other contracts, payment terms vary.

We generally recognize revenue over time as our customers simultaneously receive and consume the benefits provided by our performance because our customer controls the asset for which we are creating, our performance does not create an asset with alternative use, and we have a right to payment for performance completed to date. For these services, we recognize revenue over time using costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying our performance obligation. Incurred costs represent work performed, which corresponds with, and thereby depicts, the transfer of control to the customer. Contract costs generally include labor and direct overhead. For software support and update services, and for subscription agreements which allow customers to connect to our servers to access our software, we generally recognize revenue ratably over the service period beginning on the date our service is made available to the customer since the customer receives and consumes the benefit consistently over the period as Nasdaq provides the services.

Accounting for our long-term contracts requires judgment relative to assessing risks and their impact on the estimate of revenues and costs. Our estimates are impacted by factors such as the potential for schedule and technical issues, productivity, and the complexity of work performed. When adjustments in estimated total contract costs are required, any changes in the estimated revenues from prior estimates are recognized in the current period for the effect of such change. If estimates of total costs to be incurred on a contract exceed estimates of total revenues, a provision for the entire estimated loss on the contract is recorded in the period in which the loss is determined.

Investment Intelligence

Market Data

Market data revenues are earned from U.S. and European proprietary market data products. In the U.S., we also earn revenues from U.S. shared tape plans.

We earn revenues primarily based on the number of data subscribers and distributors of our data. Market data revenues are subscription-based and are recognized on a monthly basis.

For U.S. tape plans, revenues are collected monthly based on published fee schedules and distributed quarterly to the U.S. exchanges based on a formula required by Regulation NMS that takes into account both trading and quoting activity. Revenues are presented on a net basis as we are acting as an agent in this arrangement.

Market Data Revenue Sharing

The most significant component of market data revenues recorded on a net basis is the UTP Plan revenue sharing in the U.S. All indicators of principal versus agent reporting under U.S. GAAP have been considered in analyzing the appropriate presentation of the revenue sharing. However, the following are the primary indicators of net reporting:

We are the administrator for the plan, in addition to being a participant in the plan. In our unique role as administrator, we facilitate the collection and dissemination of revenues on behalf of the plan participants. As a participant, we share in the net distribution of revenues according to the plan on the same terms as all other plan participants.
The operating committee of the plan, which is comprised of representatives from each of the participants, including us solely in our capacity as a plan participant, is responsible for setting the level of fees to be paid by distributors and subscribers and taking action in accordance with the provisions of the plan, subject to SEC approval.
Risk of loss on the revenue is shared equally among plan participants according to the plan.

The exchanges that comprise Nasdaq Nordic and Nasdaq Baltic do not have any material market data revenue sharing agreements.

Index

We develop and license Nasdaq branded indexes and financial products. We also provide index data products and custom calculation services for third-party clients. Revenues primarily include license fees from these branded indexes and financial products in the U.S. and abroad. We primarily have two types of license agreements: transaction-based licenses and asset-based licenses. Transaction-based licenses are generally renewable agreements. Customers are charged based on transaction volume or a minimum contract amount, or both. If a customer is charged based on transaction volume, we recognize revenue when the transaction occurs. If

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a customer is charged based on a minimum contract amount, we recognize revenue on a pro-rata basis over the licensing term since the customer receives and consumes the benefit as Nasdaq provides the service. Asset-based licenses are also generally renewable agreements. Customers are charged based on a percentage of AUM for licensed products, per the agreement, on a monthly or quarterly basis. These revenues are recognized over the term of the license agreement since the customer receives and consumes the benefit as Nasdaq provides the service. Revenue from index data subscriptions are recognized on a monthly basis.

Analytics

Analytics revenues are earned from investment content and analytics products. We earn revenues primarily based on the number of content and analytics subscribers and distributors.

Subscription agreements are generally one to three years in term, payable in advance, and provide for automatic renewal. Subscription-based revenues are recognized over time on a ratable basis over the contract period beginning on the date that our service is made available to the customer since the customer receives and consumes the benefit as Nasdaq provides the service.

Corporate Platforms

Listing Services

Listing services revenues primarily include initial listing fees and annual renewal fees. Under Topic 606, the initial listing fee is allocated to multiple performance obligations including initial and subsequent listing services and IR & ESG services (when a company qualifies to receive these services under the applicable Nasdaq rule), as well as a customer's material right to renew the option to list on our exchanges. In performing this allocation, the standalone selling price of the performance obligations is based on the initial and annual listing fees and the standalone selling price of the IPO complimentary services is based on its market value. All listing fees are billed upfront and the identified performance obligations are satisfied over time since the customer receives and consumes the benefit as Nasdaq provides the listing service. The amount of revenue related to IPO complimentary services performance obligation is recognized ratably over a three-year period, which is based on contract terms, with the remaining revenue recognized ratably over six years which is based on our historical listing experience and projected future listing duration.

In the U.S., annual renewal fees are charged to listed companies based on their number of outstanding shares at the end of the prior year and are recognized ratably over the following twelve-month period since the customer receives and consumes the benefit as Nasdaq provides the service. Annual fees are charged to newly listed companies on a pro-rata basis, based on outstanding shares at the time of listing and recognized over the remainder of the year. European annual renewal fees, which are received from companies listed on our Nasdaq Nordic and Nasdaq Baltic exchanges and Nasdaq First North, are directly related to the listed

companies’ market capitalization on a trailing twelve-month basis and are recognized ratably over the following twelve-month period since the customer receives and consumes the benefit as Nasdaq provides the service.

IR & ESG Services

Our IR & ESG Services business includes our Investor Relations Intelligence and Governance Solutions businesses, which serve both public and private companies and organizations.

IR & ESG Services revenues primarily include subscription and transaction-based income from our investor relations intelligence and governance solutions products and services. Subscription-based revenues earned are recognized over time on a ratable basis over the contract period beginning on the date that our service is made available to the customer since the customer receives and consumes the benefit as Nasdaq provides the service. Generally, fees are billed in advance and the contract provides for automatic renewal. As part of subscription agreements, customers can also be charged usage fees based upon actual usage of the services provided. Revenues from usage fees are recognized at a point in time when the service is provided.

Market Services

Transaction-Based Trading and Clearing

Transaction-based trading and clearing includes equity derivative trading and clearing, cash equity trading and FICC revenues. Nasdaq charges transaction fees for trades executed on our exchanges, as well as on orders that are routed to and executed on other market venues. Nasdaq charges clearing fees for contracts cleared with Nasdaq Clearing.

In the U.S., transaction fees are based on trading volumes for trades executed on our U.S. exchanges and in Europe, transaction fees are based on the volume and value of traded and cleared contracts. In Canada, transaction fees are based on trading volumes for trades executed on our Canadian exchange.

Nasdaq satisfies its performance obligation for trading services upon the execution of a customer trade and clearing services when a contract is cleared, as trading and clearing transactions are substantially complete when they are executed and we have no further obligation to the customer at that time. Transaction-based trading and clearing fees can be variable and are based on trade volume tiered discounts. Transaction revenues, as well as any tiered volume discounts, are calculated and billed monthly in accordance with our published fee schedules. In the U.S., we also pay liquidity payments to customers based on our published fee schedules. We use these payments to improve the liquidity on our markets and therefore recognize those payments as a cost of revenue.

The majority of our FICC trading and clearing customers are charged transaction fees, as discussed above, which are primarily based on volume of traded and cleared contracts.

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For U.S. equity derivative trading, we credit a portion of the per share execution charge to the market participant that provides the liquidity. For U.S. cash equity trading, for The Nasdaq Stock Market, Nasdaq PSX and Nasdaq CXC, we credit a portion of the per share execution charge to the market participant that provides the liquidity, and for Nasdaq BX and Nasdaq CX2, we credit a portion of the per share execution charge to the market participant that takes the liquidity. We record these credits as transaction rebates that are included in transaction-based expenses in the Consolidated Statements of Income. These transaction rebates are paid on a monthly basis and the amounts due are included in accounts payable and accrued expenses in the Consolidated Balance Sheets.

In the U.S., we pay Section 31 fees to the SEC for supervision and regulation of securities markets. We pass these costs along to our customers through our equity derivative trading and clearing fees and our cash equity trading fees. We collect the fees as a pass-through charge from organizations executing eligible trades on our options exchanges and our cash equity platforms and we recognize these amounts in transaction-based expenses when incurred. Section 31 fees received are included in cash and cash equivalents in the Consolidated Balance Sheets at the time of receipt and, as required by law, the amount due to the SEC is remitted semiannually and recorded as Section 31 fees payable to the SEC in the Consolidated Balance Sheets until paid. Since the amount recorded as revenues is equal to the amount recorded as transaction-based expenses, there is no impact on our revenues less transaction-based expenses. As we hold the cash received until payment to the SEC, we earn interest income on the related cash balances.

Under our Limitation of Liability Rule and procedures, we may, subject to certain caps, provide compensation for losses directly resulting from our systems’ actual failure to correctly process an order, quote, message or other data into our platform. We do not record a liability for any potential claims that may be submitted under the Limitation of Liability Rule unless they meet the provisions required in accordance with U.S. GAAP. As such, losses arising as a result of the rule are accrued and charged to expense only if the loss is probable and estimable.

Trade Management Services

We provide market participants with a wide variety of alternatives for connecting to and accessing our markets for a fee. We also offer market participants colocation services, whereby we charge firms for cabinet space and power to house their own equipment and servers within our data centers. These participants are charged monthly fees for cabinet space, connectivity and support in accordance with our published fee schedules. These fees are recognized on a monthly basis when the performance obligation is met. We also earn revenues from annual and monthly exchange membership and registration fees. Revenues for monthly exchange membership and registration fees are recognized on a monthly basis as the service is provided. Revenues from annual fees for exchange membership and registration fees

are recognized ratably over the following twelve-month period since the customer receives and consumes the benefit as Nasdaq provides the service. We also offer broker services to financial participants in the Nordic market primarily offering back office technology solutions. Revenues from broker services are based on a fixed basic fee for licensing, maintenance and support and development, and an incremental fee depending on the number of transactions. Broker services revenues are generally billed and recognized monthly. As previously disclosed, in January 2020, we commenced an orderly wind-down of this broker services business. We expect this wind-down to continue through the second quarter of 2022.

Other Revenues

For the years ended December 31, 2021, 2020 and 2019, other revenues include the revenues associated with our U.S. Fixed Income business, which was sold in June 2021. Prior to the sale date, these revenues were included in our Market Services and Investment Intelligence segments. See “2021 Divestiture,” of Note 4,“Acquisitions and Divestiture,” to the consolidated financial statements for further discussion of this divestiture. Additionally, other revenues include revenues associated with the NPM business which we contributed to a standalone, independent company, of which we own the largest minority interest, together with a consortium of third party financial institutions in July 2021. Prior to July, these revenues were included in our Corporate Platforms segment. For the year ended December 31, 2019, other revenues also include the revenues from the BWise enterprise governance, risk and compliance software platform, which was sold in March 2019. Prior to the sale date, these revenues were included in our IR & ESG Services business within our Corporate Platforms segment and were both subscription and transaction-based revenues.

Earnings Per Share

We present both basic and diluted earnings per share. Basic earnings per share is computed by dividing net income attributable to Nasdaq by the weighted-average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing net income attributable to Nasdaq by the weighted-average number of common shares and common share equivalents outstanding during the period and reflects the assumed conversion of all dilutive securities, which primarily consist of restricted stock, PSUs, and employee stock options. Common share equivalents are excluded from the computation in periods for which they have an anti-dilutive effect. Stock options for which the exercise price exceeds the average market price over the period are anti-dilutive and, accordingly, are excluded from the calculation. Shares which are considered contingently issuable are included in the computation of dilutive earnings per share on a weighted average basis when management determines the applicable performance criteria would have been met if the performance period ended as of the date of the relevant computation. See Note 13, “Earnings Per Share,” for further discussion.

F-19

Pension and Post-Retirement Benefits

Pension and other post-retirement benefit plan information for financial reporting purposes is developed using actuarial valuations. We assess our pension and other post-retirement benefit plan assumptions on a regular basis. In evaluating these assumptions, we consider many factors, including evaluation of the discount rate, expected rate of return on plan assets, mortality rate, healthcare cost trend rate, retirement age assumption, our historical assumptions compared with actual results and analysis of current market conditions and asset allocations. See Note 10, “Retirement Plans,” for further discussion.

Discount rates used for pension and other post-retirement benefit plan calculations are evaluated annually and modified to reflect the prevailing market rates at the measurement date of a high-quality fixed-income debt instrument portfolio that would provide the future cash flows needed to pay the benefits included in the benefit obligations as they come due. Actuarial assumptions are based upon management’s best estimates and judgment.

The expected rate of return on plan assets for our U.S. pension plans represents our long-term assessment of return expectations which may change based on significant shifts in economic and financial market conditions. The long-term rate of return on plan assets is derived from return assumptions based on targeted allocations for various asset classes. While we consider the pension plans’ recent performance and other economic growth and inflation factors, which are supported by long-term historical data, the return expectations for the targeted asset categories represent a long-term prospective return.

Share-Based Compensation

Nasdaq uses the fair value method of accounting for share-based awards. Share-based awards, or equity awards, include restricted stock, PSUs, and stock options. The fair value of restricted stock awards and PSUs, other than PSUs granted with market conditions, is determined based on the grant date closing stock price less the present value of future cash dividends. We estimate the fair value of PSUs granted with market conditions using a Monte Carlo simulation model at the date of grant. The fair value of stock options are estimated using the Black-Scholes option-pricing model.

We generally recognize compensation expense for equity awards on a straight-line basis over the requisite service period of the award, taking into account an estimated forfeiture rate. Granted but unvested shares are generally forfeited upon termination of employment.

Excess tax benefits or expense related to employee share-based payments, if any, are recognized as income tax benefit or expense in the Consolidated Statements of Income when the awards vest or are settled.

Nasdaq also has an ESPP that allows eligible employees to purchase a limited number of shares of our common stock at six-month intervals, called offering periods, at 85.0% of the lower of the fair market value on the first or the last day of each offering period. The 15.0% discount given to our employees is included in compensation and benefits expense in the Consolidated Statements of Income.

See Note 11, “Share-Based Compensation,” for further discussion of our share-based compensation plans.

Merger and Strategic Initiatives

We incur incremental direct merger and strategic initiative costs relating to various completed and potential acquisitions, divestitures, and other strategic opportunities. These costs generally include integration costs, as well as legal, due diligence and other third party transaction costs. As of December 31, 2021, all planned integrations have been completed.

Fair Value Measurements

Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability, or the exit price, in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be either recorded or disclosed at fair value, we consider the principal or most advantageous market in which we would transact, and we also consider assumptions that market participants would use when pricing the asset or liability. Fair value measurement establishes a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect Nasdaq’s market assumptions. These two types of inputs create the following fair value hierarchy:

Level 1 - Quoted prices for identical instruments in active markets.
Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
Level 3 - Instruments whose significant value drivers are unobservable.

This hierarchy requires the use of observable market data when available.

See Note 14, “Fair Value of Financial Instruments,” for further discussion.

F-20

Tax Matters

We use the asset and liability method to determine income taxes on all transactions recorded in the consolidated financial statements. Deferred tax assets (net of valuation allowances) and deferred tax liabilities are presented net by jurisdiction as either a non-current asset or liability in our Consolidated Balance Sheets, as appropriate. Deferred tax assets and liabilities are determined based on differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities (i.e., temporary differences) and are measured at the enacted rates that will be in effect when these differences are realized. If necessary, a valuation allowance is established to reduce deferred tax assets to the amount that is more likely than not to be realized.

In order to recognize and measure our unrecognized tax benefits, management determines whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Once it is determined that a position meets the recognition thresholds, the position is measured to determine the amount of benefit to be recognized in the consolidated financial statements. Interest and/or penalties related to income tax matters are recognized in income tax expense.

Subsequent Events

We have evaluated subsequent events through the issuance date of this Annual Report on Form 10-K. See Note 21, “Subsequent Events,” for further discussion.

Recent Accounting Developments

In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805) - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.” The ASU requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities from acquired contracts using the revenue recognition guidance under Topic 606 in order to align the recognition of a contract liability with the definition of a performance obligation. This approach differs from the current requirement to measure contract assets and contract liabilities acquired in a business combination at fair value. This ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted. We adopted this standard on January 1, 2022 on a prospective basis.

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 years ended December 31, 2021, 2020 and 2019:


	Year Ended December 31,
	2021		2020		2019
	(in millions)
Market Technology
Anti Financial Crime Technology	$	247	$	130	$	121
Marketplace Infrastructure Technology	216		227		217
Investment Intelligence
Market data	414		399		387
Index	459		324		223
Analytics	203		175		158
Corporate Platforms
Listing services	387		307		290
IR & ESG Services	226		214		200
Market Services
Transaction-based trading and clearing, net	916		800		606
Trade management services	325		296		287
Other revenues	27		31		46
Revenues less transaction-based expenses	$	3,420	$	2,903	$	2,535

Substantially all revenues from the Market Technology, Investment Intelligence and Corporate Platforms segments were recognized over time for the years ended December 31, 2021, 2020, and 2019. For the years ended December 31, 2021, 2020 and 2019 approximately 70.8%, 69.8% and 64.4%, respectively, of Market Services revenues were recognized at a point in time and 29.2%, 30.2% and 35.6%, respectively, were recognized over time.

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 Consolidated Balance Sheets as receivables, which are net of allowance for doubtful accounts of $17 million as of December 31, 2021 and $21 million as of December 31, 2020. The changes in the balance between periods were immaterial. We do not have obligations for warranties, returns or refunds to customers.

For the majority of our contracts with customers, except for our market technology and listings services contracts, our performance obligations range from three months to three years and there is no significant variable consideration.

F-21

Deferred revenue is the only significant contract asset or liability as of December 31, 2021. Deferred revenue represents consideration received that is yet to be recognized as revenue for unsatisfied performance obligations. Deferred revenue primarily represents our contract liabilities related to our fees for Market Technology, Analytics, annual and initial listings, and IR & ESG Services contracts. See Note 8, “Deferred Revenue,” for our discussion on deferred revenue balances, activity, and expected timing of recognition.

We do not have a material amount of revenue recognized from performance obligations that were satisfied in prior periods. 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. For our market technology, Analytics, and IR & ESG 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 December 31, 2021:


	Market Technology		Analytics		IR & ESG Services		Total
	(in millions)
2022	$	506	$	63	$	57	$	626
2023	337		38		30		405
2024	178		15		8		201
2025	106		4		1		111
2026	68		3		—		71
2027+	92		2		—		94
Total	$	1,287	$	125	$	96	$	1,508

4. ACQUISITIONS AND DIVESTITURE

We completed the following divestiture and acquisitions in 2021 and 2020. Financial results of each transaction are included in our consolidated financial statements from the date of each acquisition.

2021 Divestiture

In June 2021, we sold our U.S. Fixed Income business, which was part of our FICC business within our Market Services segment, to Tradeweb Markets Inc. We recognized a pre-tax gain on the sale of $84 million, net of disposal costs. The pre-tax gain is included in net gain on divestiture of businesses in the Consolidated Statements of Income.

As part of the purchase price consideration related to this business when it was acquired in 2013, we agreed to future annual issuances of 992,247 shares of Nasdaq common stock, which approximated certain tax benefits associated with the transaction. Such contingent future issuances of Nasdaq common stock were to be issued annually through 2027 if Nasdaq’s total gross revenues equaled or exceeded $25 million in each such year. The contingent future issuances of Nasdaq common stock were subject to anti-dilution protections and acceleration upon certain events.

Upon the consummation of the sale of our U.S. Fixed Income business, the aggregate number of Nasdaq shares remaining under the contingent obligation described above were reduced (pursuant to the discounting adjustment provisions set forth in the original purchase agreement for Nasdaq's acquisition of the business) and accelerated, resulting in an issuance of approximately 6.2 million shares of Nasdaq common stock to an assignee of the entity that sold this business to us in 2013.

Nasdaq intends to use the proceeds from the sale, available tax benefits and working and clearing capital of this business, as well as other sources of cash, to repurchase shares of Nasdaq common stock to reduce the impact on earnings per share dilution from the sale.

To facilitate these repurchases, the board of directors authorized an increase to the share repurchase program. See “Share Repurchase Program,” of Note 12, “Nasdaq Stockholders' Equity,” for further discussion.

2021 Acquisition

Acquisition of Verafin

In February 2021, we completed the acquisition of Verafin, a SaaS technology provider of anti-financial crime management solutions that provides a cloud-based platform to help detect, investigate, and report money laundering and financial fraud, for an aggregate purchase price of $2.75 billion, subject to certain adjustments. The $2.75 billion purchase price includes a cash payment of $102 million, reflected in cash from operating activities in our Consolidated Statements of Cash Flows, the release of which is subject to certain employment-related conditions over three years following the closing of the transaction. This payment was recorded as a prepaid expense and is recorded in other current and non-current assets in our Consolidated Balance Sheets and will be amortized to merger and strategic initiatives expense on a straight-line basis over a three-year period. Verafin is part of our Market Technology segment.

Nasdaq used the net proceeds from our offering of senior notes in December 2020, commercial paper issuances, and cash on hand to fund this acquisition. See “Commercial Paper Program,” and “Senior Unsecured Notes Due 2022, 2031 and 2040,” of Note 9, “Debt Obligations,” for further discussion.

F-22

As of December 31, 2021, the allocation of purchase price includes the effect of a $9 million measurement period adjustment recorded during the second quarter. This adjustment resulted in an increase to both total net liabilities acquired and goodwill. Additional adjustments to the provisional values may result before the end of the measurement period, a period not to exceed 12 months from the acquisition date. These adjustments, which may include tax and other estimates 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.



	(in millions)
Goodwill	$	1,882
Acquired Intangible Assets	815
Total Net Liabilities Acquired	(46)
Purchase Consideration	$	2,651

Intangible Assets

The following table presents the details of acquired intangible assets for Verafin at the date of acquisition. Acquired intangible assets with finite lives are amortized using the straight-line method.


	Customer Relationships			Technology			Trade Name			Total Acquired Intangible Assets
Intangible asset value (in millions)	$	532		$	246		$	37		$	815
Discount rate used	7.5		%	7.5		%	7.5		%
Estimated average useful life	22 years			7 years			20 years

Customer Relationships

Customer relationships represent the non-contractual and 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.

For our acquisition of Verafin, 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 20 years.

Estimated Useful Life

We estimate the useful life based on the historical behavior of the customers and a parallel analysis of the customers using the excess earnings method.

Technology

As part of our acquisition of Verafin, we acquired developed technology.

Methodology

The developed technology was valued using the income approach, specifically the relief-from-royalty method, or RFRM. The RFRM 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 rates used reflect 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.”

Estimated Useful Life

We have estimated the useful life of the Verafin technology to be 7 years.

Trade Name

As part of our acquisition of Verafin, we acquired a trade name. The trade name is recognized in the industry and carries a reputation for quality. As such, the reputation and positive recognition embodied in the trade name is a valuable asset to Nasdaq.

Methodology

The Verafin trade name was valued using the income approach, specifically the RFRM 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.”

F-23

Estimated Useful Life

We have estimated the useful life of the Verafin trade name to be 20 years and our intention is to continue to use it in the branding of products.

2020 Acquisition

Acquisition of Solovis

In March 2020, we acquired Solovis, a provider of multi-asset class portfolio management, analytics and reporting tools across public and private markets. Solovis is part of our Investment Intelligence segment.

Pro Forma Results and Acquisition-Related Costs

The consolidated financial statements for the years ended December 31, 2021, 2020 and 2019 include the financial results of the above acquisitions from the dates of these acquisitions. Pro forma financial results have not been presented since these acquisitions both individually and in the aggregate were not material to our financial results.

Acquisition-related costs for the transactions described above

were expensed as incurred and are included in merger and strategic initiatives expense in the Consolidated Statements of Income.

5. GOODWILL AND ACQUIRED INTANGIBLE ASSETS

Goodwill

The following table presents the changes in goodwill by business segment during the year ended December 31, 2021:




	(in millions)
Market Technology
Balance at December 31, 2020	$	309
Goodwill acquired	1,873


Other adjustments	(11)
Balance at December 31, 2021	$	2,171
Investment Intelligence
Balance at December 31, 2020	$	2,541


Divestiture of business	(23)
Other adjustments	(90)
Balance at December 31, 2021	$	2,428
Corporate Platforms
Balance at December 31, 2020	$	481



Other adjustments	(12)
Balance at December 31, 2021	$	469
Market Services
Balance at December 31, 2020	$	3,519
Goodwill acquired	15

Divestiture of business	(37)
Other adjustments	(132)
Balance at December 31, 2021	$	3,365

Total
Balance at December 31, 2020	$	6,850
Goodwill acquired	1,888

Divestiture of business	(60)
Other adjustments	(245)
Balance at December 31, 2021	$	8,433

In the table above:

Divestiture of business relates to the sale of our U.S. Fixed Income business. See “2021 Divestiture,” of Note 4, “Acquisitions and Divestiture,” for further discussion. In addition to revenues earned through Market Services, our U.S. Fixed Income business also earned fees from market data, which are included in our Investment Intelligence segment. Therefore, a portion of the goodwill was allocated to this segment.
Other adjustments includes foreign currency translation adjustment. For Market Technology, it also includes a measurement period adjustment related to our acquisition of Verafin. See “2021 Acquisition,” of Note 4, “Acquisitions and Divestiture,” for further discussion.

As of December 31, 2021, the amount of goodwill, primarily relating to our acquisition of Verafin, that is expected to be deductible for tax purposes in future periods is $1.8 billion.

F-24

Acquired Intangible Assets

The following table presents details of our total acquired intangible assets, both finite- and indefinite-lived:


	December 31, 2021		December 31, 2020

Finite-Lived Intangible Assets	(in millions)
Gross Amount
Technology	$	295	$	76
Customer relationships	2,050		1,599
Trade names and other	60		18
Foreign currency translation adjustment	(143)		(104)
Total gross amount	$	2,262	$	1,589
Accumulated Amortization
Technology	$	(54)	$	(24)
Customer relationships	(711)		(648)
Trade names and other	(11)		(6)
Foreign currency translation adjustment	81		58
Total accumulated amortization	$	(695)	$	(620)
Net Amount
Technology	$	241	$	52
Customer relationships	1,339		951
Trade names and other	49		12
Foreign currency translation adjustment	(62)		(46)
Total definite-lived intangible assets	$	1,567	$	969

Indefinite-Lived Intangible Assets
Exchange and clearing registrations	$	1,257	$	1,257
Trade names	121		121
Licenses	52		52
Foreign currency translation adjustment	(184)		(144)
Total indefinite-lived intangible assets	$	1,246	$	1,286
Total intangible assets, net	$	2,813	$	2,255

The change in the gross and net amounts for technology, customer relationships and trade names and other finite-lived intangible assets as of December 31, 2021 compared with December 31, 2020 is primarily related to our acquisition of Verafin. The change in the gross and net amounts for customer relationships as of December 31, 2021 compared with December 31, 2020 is also related to the divestiture of our U.S. Fixed Income business. See “2021 Acquisition,” and “2021 Divestiture,” of Note 4, “Acquisitions and Divestiture,” for further discussion of these transactions. There was no impairment of indefinite-lived intangible assets for the years ended December 31, 2021, 2020 and 2019. We recorded an impairment charge of $14 million in 2021 related to a finite-lived intangible asset for customer relationships associated with the wind down of a previous acquisition included in depreciation and amortization expense in the Consolidated Statements of Income. There were no material finite-lived impairment charges in 2020 and 2019.

The following table presents our amortization expense for acquired finite-lived intangible assets:







	Year Ended December 31,
	2021		2020		2019
	(in millions)
Amortization expense	$	170	$	103	$	101

The increase in amortization expense for the year ended December 31, 2021 compared with the same periods in 2020 and 2019 was primarily due to additional amortization expense for acquired intangible assets related to our acquisition of Verafin. These amounts are included in depreciation and amortization expense in the Consolidated Statements of Income.

The table below presents the estimated future amortization expense (excluding the impact of foreign currency translation adjustments of $62 million as of December 31, 2021) of acquired finite-lived intangible assets as of December 31, 2021:


	(in millions)
2022	$	161
2023	157
2024	152
2025	149
2026	146
2027+	864
Total	$	1,629

F-25

6. INVESTMENTS

The following table presents the details of our investments:


	December 31, 2021		December 31, 2020
	(in millions)
Financial investments	$	208	$	195



Equity method investments	$	363	$	216
Equity securities	$	67	$	60

Financial Investments

Financial investments are comprised of trading securities, primarily highly rated European government debt securities, of which $162 million as of December 31, 2021 and $175 million as of December 31, 2020, 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 December 31, 2021 and 2020, 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 Consolidated Balance Sheets. No material impairments were recorded for the years end December 31, 2021 and 2020.

Net income recognized from our equity interest in the earnings and losses of these equity method investments, primarily OCC, was $52 million for the year ended December 31, 2021, $70 million for the year ended December 31, 2020 and $84 million for the year ended December 31, 2019. For the year ended December 31, 2021, lower equity interest in the earnings of OCC as compared to 2020 and 2019 is primarily driven by a reduction, in 2021, in the clearing fee rates that OCC charged its customers.

Equity Securities

The carrying amounts of our equity securities are included in other non-current assets in the Consolidated Balance Sheets. We elected the measurement alternative for primarily 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 year ended December 31, 2021, 2020 and 2019. As of December 31, 2021 and December 31, 2020, our equity securities primarily represent various strategic investments made through our corporate venture program as well as investments acquired through various acquisitions.

7. PROPERTY AND EQUIPMENT, NET

The following table presents our major categories of property and equipment, net:


	Year Ended December 31,
	2021		2020
	(in millions)
Data processing equipment and software	$	735	$	732
Furniture, equipment and leasehold improvements	288		300
Total property and equipment	1,023		1,032
Less: accumulated depreciation and amortization and impairment charges	(514)		(557)
Total property and equipment, net	$	509	$	475

Depreciation and amortization expense for property and equipment was $108 million for the year ended December 31, 2021, $99 million for the year ended December 31, 2020, and $89 million for the year ended December 31, 2019. These amounts are included in depreciation and amortization expense in the Consolidated Statements of Income.

We recorded pre-tax, non-cash property and equipment asset impairment charges on capitalized software that was retired and accelerated depreciation expense on certain assets as a result of a decrease in their useful life of $4 million in 2021, $14 million in 2020 and $26 million in 2019. These charges are included in restructuring charges in the Consolidated Statements of Income. See Note 20, “Restructuring Charges,” for a discussion of our 2019 restructuring plan. There were no other material impairments of property and equipment recorded in 2021, 2020 or 2019.

As of December 31, 2021 and 2020, we did not own any real estate properties.

8. DEFERRED REVENUE

Deferred revenue represents consideration received that is yet to be recognized as revenue. The changes in our deferred revenue during the year ended December 31, 2021 are reflected in the following table:


	Balance at December 31, 2020		Additions		Revenue Recognized		Adjustments		Balance at December 31, 2021
	(in millions)
Market Technology	$	53	$	113	$	(46)	$	(3)	$	117
Investment Intelligence	97		104		(95)		—		106
Corporate Platforms:
Initial Listing	91		97		(41)		(2)		145
Annual Listings	2		3		(2)		(1)		2
IR & ESG Services	46		52		(41)		—		57
Other	17		15		(9)		(2)		21
Total	$	306	$	384	$	(234)	$	(8)	$	448

F-26

In the preceding table:

Additions primarily reflect deferred revenue billed in the current period, net of recognition. Market Technology additions include deferred revenue acquired as part of the acquisition of Verafin.
Revenue recognized includes revenue recognized during the current period that was included in the beginning balance.
Adjustments reflect foreign currency translation adjustments.
Other primarily includes deferred revenue from non-U.S. listing of additional shares fees. Listing of additional shares fees are included in our Listing Services business.

As of December 31, 2021, we estimate that our deferred revenue will be recognized in the following years:


Fiscal year ended:	2022		2023		2024		2025		2026		2027+		Total
	(in millions)
Market Technology	$	109	$	6	$	1	$	1	$	—	$	—	$	117
Investment Intelligence	104		2		—		—		—		—		106
Corporate Platforms:
Initial Listings	49		35		26		17		14		4		145
Annual Listings	2		—		—		—		—		—		2
IR & ESG Services	56		1		—		—		—		—		57
Other	9		7		4		1		—		—		21
Total	$	329	$	51	$	31	$	19	$	14	$	4	$	448

In the above table, the timing of recognition of our deferred market technology revenues is primarily dependent upon the completion of customization and any significant modifications made pursuant to existing market technology contracts. As such, as it relates to market technology revenues, the timing represents our best estimate.

9. DEBT OBLIGATIONS

The following table presents the changes in the carrying amount of our debt obligations during the year ended December 31, 2021:


	December 31, 2020		Additions		Payments, Foreign Currency Translation and Accretion		December 31, 2021
	(in millions)
Short-term debt - commercial paper	$	—	$	4,079	$	(3,659)	$	420
2022 Notes	597		—		1		598
Total short-term debt	$	597	$	4,079	$	(3,658)	$	1,018
Long-term debt - senior unsecured notes:
2024 Notes	$	498	$	—	$	1	$	499
2023 Notes	730		—		(730)		—
2026 Notes	497		—		1		498
2029 Notes	726		—		(50)		676
2030 Notes	726		—		(50)		676
2050 Notes	485		—		1		486

2031 Notes	643		—		—		643
2040 Notes	643		—		1		644
2033 Notes	—		726		(32)		694
2020 Credit Facility	(4)		100		(100)		(4)
Total long-term debt	$	4,944	$	826	$	(958)	$	4,812
Total debt obligations	$	5,541	$	4,905	$	(4,616)	$	5,830

In the table above, the 2022 Notes were reclassified to short-term debt as of December 31, 2021.

Commercial Paper Program

Our U.S. dollar commercial paper program is supported by our 2020 Credit Facility which provides liquidity support for the repayment of commercial paper issued through this program. See “2020 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.

In February 2021, we issued $475 million of commercial paper to partially fund the acquisition of Verafin. For further discussion of the acquisition of Verafin, see “2021 Acquisition,” of Note 4, “Acquisitions and Divestiture.”

F-27

In July 2021, we issued commercial paper to partially fund our ASR agreement. See “ASR Agreements,” of Note 12, “Nasdaq Stockholders' Equity."

As of December 31, 2021, commercial paper notes in the table above reflect the aggregate principal amount outstanding, less the unamortized discount which is being accreted through interest expense over the life of the applicable notes. The original maturities of these notes range from 31 days to 66 days and the weighted-average maturity is 29 days. The weighted-average effective interest rate is 0.34% per annum.

Senior Unsecured Notes

Our 2022 and 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 December 31, 2021, the amounts in the table above reflect the aggregate principal amount, less the unamortized debt discount and the unamortized debt issuance costs which are being accreted through interest expense over the life of the applicable notes. For our Euro denominated notes, the “Payments, Foreign Currency Translation and Accretion” column also includes 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, if any.

2024 Notes

In May 2014, Nasdaq issued the 2024 Notes, which pay interest semiannually at a rate of 4.25% per annum until June 1, 2024. Such interest rate may vary with Nasdaq’s debt rating, to the extent Nasdaq is downgraded below investment grade, up to a rate not to exceed 6.25%.

Early Extinguishment of 2023 Notes

Nasdaq issued the 2023 Notes in May 2016, which paid interest annually at a rate of 1.75% per annum. In August 2021, we primarily used the net proceeds from the 2033 Notes to repay in full and redeem our 2023 Notes. For further discussion see “2033 Notes” below. In connection with the early extinguishment of the 2023 Notes, we recorded a pre-tax charge of $33 million, which primarily includes a make-whole redemption price premium. This charge is included in general, administrative and other expense in the Consolidated Statements of Income for the year ended December 31, 2021.

2026 Notes

In June 2016, Nasdaq issued the 2026 Notes, which pay interest semi-annually at a rate of 3.85% per annum until June 30, 2026. Such interest rate may vary with Nasdaq’s debt rating, to the extent Nasdaq is downgraded below investment grade, up to a rate not to exceed 5.85%.

2029 Notes

In April 2019, Nasdaq issued the 2029 Notes, which pay interest annually at a rate of 1.75% per annum until March 28, 2029. Such interest rate may vary with Nasdaq’s debt rating, to the extent Nasdaq is downgraded below investment grade, up to a rate not to exceed 3.75%.

The 2029 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. The decrease in the carrying amount of $50 million noted in the “Payments, Foreign Currency Translation and Accretion” column in the table above primarily reflects the remeasurement of the 2029 Notes into U.S. dollars and is recorded in accumulated other comprehensive loss within Nasdaq's stockholders’ equity in the Consolidated Balance Sheets as of December 31, 2021.

2030 Notes

In February 2020, Nasdaq issued the 2030 Notes. The 2030 Notes pay interest annually in arrears, which began on February 13, 2021.

The 2030 Notes were 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. The decrease in the carrying amount of $50 million noted in the “Payments, Foreign Currency Translation and Accretion” column in the table above primarily reflects the remeasurement of the 2030 Notes into U.S. dollars and is recorded in accumulated other comprehensive loss within Nasdaq's stockholders’ equity in the Consolidated Balance Sheets as of December 31, 2021.

2050 Notes

In April 2020, Nasdaq issued the 2050 Notes. The 2050 Notes pay interest semi-annually in arrears, which began on October 28, 2020. The interest rate of 3.25% may vary with Nasdaq's debt rating, to the extent Nasdaq is downgraded below investment grade, up to a rate not to exceed 5.25%.

Senior Unsecured Notes Due 2022, 2031 and 2040

In December 2020, Nasdaq issued the 2022, 2031 and 2040 Notes. The net proceeds were used to partially fund the acquisition of Verafin. For further discussion of the acquisition of Verafin, see “2021 Acquisition,” of Note 4, “Acquisitions and Divestiture.”

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2022 Notes

The 2022 Notes pay interest semi-annually in arrears, which began on June 21, 2021. The interest rate of 0.445% may vary with Nasdaq's debt rating, to the extent Nasdaq is downgraded below investment grade, up to a rate not to exceed 2.445%.

2031 Notes

The 2031 Notes pay interest semi-annually in arrears, which began on January 15, 2021. The interest rate of 1.650% may vary with Nasdaq's debt rating, to the extent Nasdaq is downgraded below investment grade, up to a rate not to exceed 3.65%.

2040 Notes

The 2040 Notes pay interest semi-annually in arrears, which began on June 21, 2021. The interest rate of 2.500% may vary with Nasdaq's debt rating, to the extent Nasdaq is downgraded below investment grade, up to a rate not to exceed 4.50%.

2033 Notes

In July 2021, Nasdaq issued €615 million aggregate principal amount of 0.900% senior notes due in 2033, which pay interest annually in arrears, beginning on July 30, 2022. The net proceeds from the 2033 Notes were approximately $726 million after deducting the underwriting discount and expenses of the offering. We primarily used the net proceeds from the 2033 Notes to redeem all of the 2023 Notes. For further discussion of the 2023 Notes, see “Early Extinguishment of 2023 Notes” above.

The 2033 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. The decrease in the carrying amount of $32 million noted in the “Payments, Foreign Currency Translation and Accretion” column in the table above primarily reflects the remeasurement of the 2033 Notes into U.S. dollars and is recorded in accumulated other comprehensive loss within Nasdaq stockholders’ equity in the Consolidated Balance Sheets as of December 31, 2021.

Credit Facilities

2020 Credit Facility

In December 2020, Nasdaq entered into the 2020 Credit Facility, which replaced a former credit facility and consists of a $1.25 billion five-year revolving credit facility (with sublimits for non-dollar borrowings, swingline borrowings and letters of credit). Nasdaq intends to use funds available under the 2020 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 2020 Credit Facility at any time in whole or in part, without penalty.

As of December 31, 2021, no amounts were outstanding on the 2020 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. Of the $1.25 billion that is available for borrowing, $420 million provides liquidity support for the commercial paper program. As such, as of December 31, 2021, the total remaining amount available under the 2020 Credit Facility was $830 million, excluding the amounts that support the commercial paper program. See “Commercial Paper Program” above for further discussion of our commercial paper program.

Under our 2020 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 LIBOR (or a successor rate to LIBOR), the base rate (as defined in the credit 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 0.125% to 0.350%, 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 year ended December 31, 2021 and 2020.

The 2020 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.

The 2020 Credit Facility includes an option for Nasdaq to increase the available aggregate amount by up to $625 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 for one subsidiary. These credit facilities, in aggregate, totaled $212 million as of December 31, 2021 and $232 million as of December 31, 2020 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 years ended December 31, 2021 and 2020.

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These facilities include customary affirmative and negative operating covenants and events of default.

Debt Covenants

As of December 31, 2021, we were in compliance with the covenants of all of our debt obligations.

10. RETIREMENT PLANS

Defined Contribution Savings Plan

We sponsor a 401(k) 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. Savings plan expense included in compensation and benefits expense in the Consolidated Statements of Income was $14 million for the year ended December 31, 2021, $14 million for the year ended December 31, 2020 and $13 million for the year ended December 31, 2019.

Pension and Supplemental Executive Retirement Plans

We maintain non-contributory, defined-benefit pension plans, non-qualified SERPs for certain senior executives and other post-retirement benefit plans for eligible employees in the U.S., collectively referred to as the Nasdaq Benefit Plans. Our pension plans and SERPs are frozen. Future service and salary for all participants do not count toward an accrual of benefits under the pension plans and SERPs. 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. The total expense for these plans is included in compensation and benefits expense in the Consolidated Statements of Income and was $26 million for the year ended December 31, 2021, $23 million for the year ended December 31, 2020 and $20 million for the year ended December 31, 2019.

Nasdaq recognizes the funded status of the Nasdaq Benefit Plans, measured as the difference between the fair value of the plan assets and the benefit obligation, in the Consolidated Balance Sheets. The fair value of our U.S. defined-benefit pension plans' assets was $111 million as of December 31, 2021 and the benefit obligation was $112 million as of December 31, 2021. As a result, the U.S. defined-benefit pension plans are underfunded by $1 million as of December 31, 2021. The fair value of our U.S. defined-benefit pension plans' assets was $119 million as of December 31, 2020 and the benefit obligation was $118 million as of December 31, 2020. As a result, the U.S. defined-benefit pension plans were fully funded as of December 31, 2020. During 2021 and 2020, we did not make any contributions to our U.S. defined-benefit pension plans. For our SERP and other post-retirement benefit plans, the net underfunded liability was $34 million as of December 31, 2021 and $30 million as of December 31, 2020. The underfunded liability for the above plans is included in accrued personnel costs and other non-current liabilities in the Consolidated Balance Sheets. The

plan assets of the Nasdaq Benefit Plans are invested per target allocations adopted by Nasdaq’s Pension and 401(k) Committee and are primarily invested in collective fund investments that have underlying investments in fixed income securities. The collective fund investments are valued at net asset value which is a practical expedient to estimate fair value.

Accumulated Other Comprehensive Loss

As of December 31, 2021, accumulated other comprehensive

loss for the Nasdaq Benefit Plans was $26 million reflecting an unrecognized net loss of $33 million, partially offset by an income tax benefit of $7 million, primarily due to our pension plans.

Estimated Future Benefit Payments

We expect to make the following benefit payments to participants in the next ten fiscal years under the Nasdaq Benefit Plans:


	Pension		SERP		Post-retirement		Total
Fiscal Year Ended:	(in millions)
2022	$	8	$	6	$	—	$	14
2023	7		2		—		9
2024	8		2		—		10
2025	8		2		—		10
2026	10		2		—		12
2027 through 2031	38		8		2		48
	$	79	$	22	$	2	$	103

11. 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.

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 years ended December 31, 2021, 2020 and 2019, which is included in compensation and benefits expense in the Consolidated Statements of Income:


	Year Ended December 31,
		2021		2020		2019
		(in millions)
Share-based compensation expense before income taxes		$	90	$	87	$	79
Income tax benefit		(24)		(23)		(21)
Share-based compensation expense after income taxes		$	66	$	64	$	58

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Common Shares Available Under Our Equity Plan

As of December 31, 2021, we had approximately 9.5 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 33.3% on the first anniversary of the grant date, 33.3% on the second anniversary of the grant date, and 33.3% on the third anniversary of the grant date. Restricted stock awards granted to employees at or above the manager level generally vest 33.3% on the second anniversary of the grant date, 33.3% on the third anniversary of the grant date, and 33.3% on the fourth anniversary of the grant date.

Summary of Restricted Stock Activity

The following table summarizes our restricted stock activity for the years ended December 31, 2021, 2020 and 2019:


	Restricted Stock
	Number of Awards	Weighted-Average Grant Date Fair Value

Unvested at December 31, 2018	1,583,375	$	68.62
Granted	605,033	85.03
Vested	(548,588)	61.45
Forfeited	(153,064)	73.99
Unvested at December 31, 2019	1,486,756	$	77.38
Granted	743,300	89.93
Vested	(499,357)	72.95
Forfeited	(91,648)	81.17
Unvested at December 31, 2020	1,639,051	$	84.21
Granted	507,745	151.56
Vested	(541,603)	83.34
Forfeited	(138,853)	102.11
Unvested at December 31, 2021	1,466,340	$	106.16

As of December 31, 2021, $81 million of total unrecognized compensation cost related to restricted stock is expected to be recognized over a weighted-average period of 1.8 years.

PSUs

PSUs are based on performance measures that impact the amount of shares that each recipient will receive upon vesting. Prior to April 1, 2020, we had two performance-based PSU programs for certain officers, a one-year performance-based program and a three-year cumulative performance-based program that focuses on TSR. Effective April 1, 2020, to better align the equity programs for eligible officers, the one-year performance-based program was eliminated and all eligible officers now participate in the three-year cumulative performance-based program. While the performance periods are complete for all PSUs granted under the one-year performance-based program, some shares underlying these PSUs have not vested.

One-Year PSU Program

The grant date fair value of PSUs under the one-year performance-based program was based on the closing stock price at the date of grant less the present value of future cash dividends. Under this program, an eligible employee received a target grant of PSUs, but could have received from 0.0% to 150.0% of the target amount granted, depending on the achievement of performance measures. These awards vest ratably on an annual basis over a three-year period commencing with the end of the one-year performance period. Compensation cost is recognized over the performance period and the three-year vesting period based on the probability that such performance measures will be achieved, taking into account an estimated forfeiture rate.

Three-Year PSU Program

Under the three-year performance-based program, each eligible individual receives PSUs, subject to market conditions, with a three-year cumulative performance period that vest at the end of the performance period. 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. 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.

F-31

Grants of PSUs that were issued in 2019 with a three-year performance period exceeded the applicable performance parameters. As a result, an additional 289,307 units above the original target were granted in the first quarter of 2022 and were fully vested upon issuance.

The following weighted-average assumptions were used to determine the weighted-average fair values of the PSU awards granted under the three-year PSU program for the years ended December 31, 2021 and 2020:


	Year Ended December 31,
	2021			2020
Weighted-average risk free interest rate	0.33		%	0.27		%
Expected volatility	30.30		%	27.40		%
Weighted-average grant date share price	$	155.63		$	92.34
Weighted-average fair value at grant date	$	218.24		$	111.50

In the table above:

The risk-free interest rate for periods within the expected life of the award is based on the U.S. Treasury yield curve in effect at the time of grant; and
We use historic volatility for PSU awards issued under the three-year PSU program, as implied volatility data could not be obtained for all the companies in the peer groups used for relative performance measurement within the program.

In addition, the annual dividend assumption utilized in the Monte Carlo simulation model is based on Nasdaq’s dividend yield at the date of grant.

Summary of PSU Activity

The following table summarizes our PSU activity for the years ended December 31, 2021, 2020 and 2019:


	PSUs
	One-Year Program			Three-Year Program
	Number of Awards	Weighted-Average Grant Date Fair Value		Number of Awards	Weighted-Average Grant Date Fair Value
Unvested at December 31, 2018	314,231	$	74.01	837,750	$	96.57
Granted	179,599	83.56		397,553	96.55
Vested	(147,984)	70.64		(431,751)	93.25
Forfeited	(28,595)	75.43		(6,101)	103.29
Unvested at December 31, 2019	317,251	$	80.87	797,451	$	98.31
Granted	26,780	84.17		320,328	107.42
Vested	(138,423)	78.09		(300,767)	81.57
Forfeited	(36,060)	82.41		(7,023)	98.26
Unvested at December 31, 2020	169,548	$	83.33	809,989	$	108.12
Granted	—	—		360,569	175.98
Vested	(99,764)	82.99		(392,727)	116.86
Forfeited	(20,050)	83.29		(13,707)	142.29
Unvested at December 31, 2021	49,734	$	84.03	764,124	$	135.04

In the table above, the granted amount includes additional awards granted based on overachievement of performance parameters as well as target awards.

As of December 31, 2021, $1 million of total unrecognized compensation cost related to the one-year PSU program is expected to be recognized over a weighted-average period of 1.0 year. For the three-year PSU program, $43 million of total unrecognized compensation cost is expected to be recognized over a weighted-average period of 1.4 years.

F-32

Stock Options

A summary of stock option activity for the years ended December 31, 2021, 2020 and 2019 is as follows:


	Number of Stock Options	Weighted-Average Exercise Price

Outstanding at December 31, 2018	448,966	$	49.25

Exercised	(69,699)	20.84
Forfeited	(165)	25.28
Outstanding at December 31, 2019	379,102	$	54.32

Exercised	(85,195)	23.91
Forfeited	(554)	20.94
Outstanding and exercisable at December 31, 2020	293,353	$	63.22

Exercised	(24,409)	25.28
Forfeited	(127)	25.28
Outstanding and exercisable at December 31, 2021	268,817	$	66.68

The net cash proceeds from the exercise of 24,409 stock options for the year ended December 31, 2021 was $1 million. The net cash proceeds from the exercise of 85,195 stock options for the year ended December 31, 2020 was $2 million. The net cash proceeds from the exercise of 69,699 stock options for the year ended December 31, 2019 was $2 million.

As of December 31, 2021, the aggregate pre-tax intrinsic value of the outstanding and exercisable stock options in the above table was $39 million and represents the difference between our closing stock price on December 31, 2021 of $210.01 and the exercise price, times the number of shares, which would have been received by the option holders had the option holders exercised their stock options on that date. This amount can change based on the fair market value of our common stock. As of December 31, 2021, the weighted-average remaining contractual term of the outstanding and exercisable stock options included in the above table was 5.0 years.

The total pre-tax intrinsic value of stock options exercised was $3 million for the year ended December 31, 2021, $9 million for the year ended December 31, 2020 and $6 million for the year ended December 31, 2019.

ESPP

We have an ESPP under which approximately 4.2 million shares of our common stock were available for future issuance as of December 31, 2021. 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. The following table summarizes employee activity and expense associated with the ESPP for the years ended December 31, 2021, 2020 and 2019:


	Year Ended December 31,
	2021		2020		2019
Number of shares purchased by employees	201,758		221,123		229,172
Weighted-average price of shares purchased	$	124.24	$	95.79	$	73.79
Compensation expense (in millions)	$	7	$	5	$	4

12. NASDAQ STOCKHOLDERS' EQUITY

Common Stock

As of December 31, 2021, 300,000,000 shares of our common stock were authorized, 173,418,939 shares were issued and 166,679,635 shares were outstanding. As of December 31, 2020, 300,000,000 shares of our common stock were authorized, 171,278,761 shares were issued and 164,933,678 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 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 6,739,304 shares of common stock in treasury as of December 31, 2021 and 6,345,083 shares as of December 31, 2020, 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.

F-33

Share Repurchase Program

As discussed in “2021 Divestiture,” of Note 4, “Acquisitions and Divestiture,” on June 16, 2021, our board of directors authorized an increase to our share repurchase program to an aggregate authorized amount of $1.5 billion. As of December 31, 2021, the remaining aggregate authorized amount under the existing share repurchase program was $926 million.

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, excluding the repurchases done through our ASR agreement described below, reported based on settlement date, for the year ended December 31, 2021:


	Year Ended December 31, 2021

Number of shares of common stock repurchased	2,911,208
Average price paid per share	$	160.87
Total purchase price (in millions)	$	468

In the table above, the number of shares of common stock repurchased excludes an aggregate of 394,221 shares withheld upon the vesting of restricted stock and PSUs for the year ended December 31, 2021.

As discussed above in “Common Stock in Treasury, at Cost,” shares repurchased under our share repurchase program are currently retired and cancelled.

ASR Agreements

In July 2021, we entered into an ASR agreement to repurchase $475 million of common stock. We received a total delivery of 2,431,212 shares of common stock and completed the ASR program during the fourth quarter of 2021. The ASR agreement was entered into pursuant to our $1.5 billion share repurchase authorization as discussed in "Share Repurchase Program," above.

On January 26, 2022 we announced that we entered into an ASR agreement to repurchase $325 million of common stock and received an initial delivery of 1,533,923 shares of common stock. The final number of shares to be repurchased will be based on the volume-weighted average price of the Company’s common stock during the term of the ASR agreement, less a discount and subject to adjustments pursuant to the terms of the ASR agreement. The final settlement of the ASR agreement is expected to be completed in the first quarter of 2022. At settlement, our counterparty may be required to deliver additional shares of common stock to us, or, under certain circumstances, we may be required to deliver shares of our common stock or may elect to make a cash payment to our counterparty.

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 December 31, 2021 and December 31, 2020, no shares of preferred stock were issued or outstanding.

Cash Dividends on Common Stock

During 2021, 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 27, 2021	$	0.49	March 12, 2021	$	81	March 26, 2021
April 21, 2021	0.54		June 11, 2021	89		June 25, 2021
July 21, 2021	0.54		September 10, 2021	90		September 24, 2021
October 20, 2021	0.54		December 3, 2021	90		December 17, 2021
				$	350

The total amount paid of $350 million was recorded in retained earnings within Nasdaq's stockholders' equity in the Consolidated Balance Sheets at December 31, 2021.

In January 2022, the board of directors approved a regular quarterly cash dividend of $0.54 per share on our outstanding common stock. The dividend is payable on March 25, 2022 to shareholders of record at the close of business on March 11, 2022. The estimated amount of this dividend is $90 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 stockholders with regular and increasing dividends as earnings and cash flows increase.

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13. EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share:
















	Year Ended December 31,
	2021		2020		2019
Numerator:	(in millions, except share and per share amounts)
Net income attributable to common shareholders	$	1,187	$	933	$	774
Denominator:
Weighted-average common shares outstanding for basic earnings per share	165,899,459		164,415,191		164,931,628
Weighted-average effect of dilutive securities:
Employee equity awards	2,463,063		2,135,532		1,679,922
Contingent issuance of common stock	—		353,218		358,611
Weighted-average common shares outstanding for diluted earnings per share	168,362,522		166,903,941		166,970,161
Basic and diluted earnings per share:
Basic earnings per share	$	7.15	$	5.67	$	4.69
Diluted earnings per share	$	7.05	$	5.59	$	4.63

In the tables above:

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.
For the years ended December 31, 2020 and 2019, the contingent issuance of common stock was related to a contingent obligation associated with a business we sold in June 2021. See “2021 Divestiture,” of Note 4, “Acquisitions and Divestiture,” for further discussion.

Securities that were not included in the computation of diluted earnings per share because their effect was antidilutive were immaterial for the years ended December 31, 2021, 2020 and 2019.

14. 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 December 31, 2021 and December 31, 2020.


	December 31, 2021
	Total		Level 1		Level 2		Level 3
	(in millions)

European government debt securities	$	144	$	144	$	—	$	—
Corporate debt securities	20		—		20		—
State owned enterprises and municipal securities	11		—		11		—
Swedish mortgage bonds	21		—		21		—
Time deposits	12		—		12		—
Total assets at fair value	$	208	$	144	$	64	$	—

	December 31, 2020
	Total		Level 1		Level 2		Level 3
	(in millions)
European government debt securities	$	156	$	156	$	—	$	—
Corporate debt securities	2		—		2		—
State owned enterprises and municipal securities	15		—		15		—
Swedish mortgage bonds	22		—		22		—

Total assets at fair value	$	195	$	156	$	39	$	—

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.

Our investment in OCC is 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.

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We also consider our debt obligations to be financial instruments. As of December 31, 2021, 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 2020 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. As of December 31, 2021, we had no outstanding borrowings under our 2020 Credit Facility. We are also exposed to changes in interest rates as a result of the amounts outstanding from the sale of commercial paper under our commercial paper program. The fair value of our debt obligations utilizing discounted cash flow analyses for our floating rate debt, and prevailing market rates for our fixed rate debt was $5.9 billion as of both December 31, 2021 and 2020. The discounted cash flow analyses are based on borrowing rates currently available to us for debt with similar terms and maturities. The fair value of our commercial paper as of December 31, 2021 approximated the carrying value since the rates of interest on this short-term debt approximated market rates. 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 9, “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 December 31, 2021 and December 31, 2020, there were no non-financial assets measured at fair value on a non-recurring basis.

15. 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.

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. As of September 1, 2021, the mutualized default fund has been eliminated and the default fund structure is fully segregated. 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.

Nasdaq Commodities Clearing Default

In September 2018, a member of the Nasdaq Clearing commodities market defaulted due to the inability to post sufficient collateral to cover increased margin requirements for the positions of the relevant member, which had experienced losses due to sharp adverse movements in the Nordic - German power market spread. Nasdaq Clearing followed default procedures and offset the future market risk on the defaulting member’s positions.

Immediately following the event, Nasdaq Clearing launched a comprehensive enhancement program to strengthen the resilience and robustness of the clearinghouse.

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In December 2018, the SFSA initiated a review of Nasdaq Clearing. In January 2021, the SFSA issued a warning combined with an administrative fine of approximately $33 million (SEK 300 million) to Nasdaq Clearing based on its review. Nasdaq Clearing appealed the SFSA´s decision to the Administrative Court. In December 2021, the court rejected Nasdaq Clearing’s appeal and upheld the decision of the SFSA. In January 2022, Nasdaq Clearing appealed this decision to the Administrative Court of Appeal. While we continue to firmly believe in the merit of our appeal, due to the recent decision by the Administrative Court, we have determined it is appropriate to record an accrual for the full amount of the administrative fine issued by the SFSA. The charge is included in regulatory expense in our Consolidated Statements of Income for the year ended December 31, 2021.

Default Fund Contributions and Margin Deposits

As of December 31, 2021, clearing member default fund contributions and margin deposits were as follows:


	December 31, 2021
	Cash Contributions		Non-Cash Contributions		Total Contributions
	(in millions)
Default fund contributions	$	771	$	109	$	880
Margin deposits	5,140		6,614		11,754
Total	$	5,911	$	6,723	$	12,634

Of the total default fund contributions of $880 million, Nasdaq Clearing can utilize $804 million as capital resources in the event of a counterparty default. The remaining balance of $76 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 1 year or less, reverse repurchase agreements and multilateral development bank debt securities. Investments in reverse repurchase agreements range in maturity from 4 days to 14 days and are secured with highly rated government securities. 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 $5,911 million as of December 31, 2021 and $3,942 million as of December 31, 2020, in accordance with its investment policy as follows:


	December 31, 2021		December 31, 2020
	(in millions)
Demand deposits	$	3,061	$	2,086
Central bank certificates	2,013		1,111
Restricted cash and cash equivalents	$	5,074	$	3,197
European government debt securities	414		470
Reverse repurchase agreements	152		180

Multilateral development bank debt securities	271		95
Investments	$	837	$	745
Total	$	5,911	$	3,942

In the table above the change from December 31, 2020 to December 31, 2021 includes currency translation adjustments of $321 million for restricted cash and cash equivalents and $40 million for investments.

For the years ended December 31, 2021, 2020 and 2019 investments related to default funds and margin deposits, net includes purchases of investment securities of $(41,098) million, $(54,046) million and $(38,203) million, respectively, and proceeds from sales and redemptions of investment securities of $40,966 million, $54,155 million and $38,029 million, respectively.

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

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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 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 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. Assets pledged are held at a nominee account in Nasdaq Clearing’s name for the benefit of the clearing members and are immediately accessible by Nasdaq Clearing in the event of a default. 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 December 31, 2021, Nasdaq Clearing committed capital totaling $138 million to the liability waterfall and overall regulatory capital, in the form of government debt securities, which are recorded as financial investments in the 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 Consolidated Balance Sheets as both a current asset and a current liability. Pledged margin collateral is not recorded in our Consolidated Balance Sheets as all risks and rewards of collateral ownership, including interest, belong to the counterparty. Assets pledged are held at a nominee account in Nasdaq Clearing’s name for the benefit of the clearing members and

are immediately accessible by Nasdaq Clearing in the event of a default.

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 is comprised of 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.

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 December 31, 2021.

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 230.0% 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 would not be sufficient to cover the cost to settle its portfolio. If a default occurs and the defaulting clearing member’s

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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 $44 million as of December 31, 2021;
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 $24 million as of December 31, 2021.

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 $70 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:


	December 31, 2021
	(in millions)
Commodity and seafood options, futures and forwards	$	282
Fixed-income options and futures	291
Stock options and futures	147
Index options and futures	80
Total	$	800

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 the years ended December 31, 2021 and 2020:


	December 31, 2021	December 31, 2020
Commodity and seafood options, futures and forwards	536,252	672,219
Fixed-income options and futures	23,140,918	21,299,713
Stock options and futures	20,308,811	19,757,733
Index options and futures	37,860,187	51,371,391
Total	81,846,168	93,101,056

In the table above, the total volume in cleared power related to commodity contracts was 813 Terawatt hours (TWh) and 956 TWh for the years ended December 31, 2021 and 2020, respectively.

Resale and Repurchase Agreements Contracts Outstanding and Cleared

The outstanding contract value of resale and repurchase agreements was $139 million and $253 million as of December 31, 2021 and 2020, respectively. The total number of resale and repurchase agreements contracts cleared was 6,070,414 and 4,832,504 for the years ended December 31, 2021 and 2020, respectively .

16. LEASES

We have operating leases which are primarily real estate leases predominantly for our U.S. and European headquarters and for general office space. The following table provides supplemental balance sheet information related to Nasdaq's operating leases:


Leases	Balance Sheet Classification	December 31, 2021		December 31, 2020
		(in millions)
Assets:
Operating lease assets	Operating lease assets	$	366	$	381

Liabilities:
Current lease liabilities	Other current liabilities	$	37	$	46
Non-current lease liabilities	Operating lease liabilities	386		389
Total lease liabilities		$	423	$	435

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The following table summarizes Nasdaq's lease cost:


	Year Ended December 31,
			2021		2020		2019
		(in millions)
Operating lease cost			$	85	$	85	$	79
Variable lease cost			28		26		23
Sublease income			(4)		(4)		(5)
Total lease cost			$	109	$	107	$	97

In the table above, operating lease costs include short-term lease cost, which was immaterial.

The following table reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the operating lease liabilities recorded in our Consolidated Balance Sheets.


	December 31, 2021
	(in millions)
2022	$	52
2023	57
2024	52
2025	39
2026	36
2027+	293
Total lease payments	529
Less: interest	(106)
Present value of lease liabilities	$	423

In the table above, interest is calculated using the interest rate for each lease. Present value of lease liabilities include the current portion of $37 million.

Total lease payments in the table above exclude $168 million of legally binding minimum lease payments for a ten year lease signed but not yet commenced.

The following table provides information related to Nasdaq's lease term and discount rate:


	December 31, 2021
Weighted-average remaining lease term (in years)	11.4

Weighted-average discount rate	3.8	%

The following table provides supplemental cash flow information related to Nasdaq's operating leases:


	Year Ended December 31,
	2021		2020		2019
	(in millions)
Cash paid for amounts included in the measurement of operating lease liabilities	$	77	$	77	$	78

Lease assets obtained in exchange for new operating lease liabilities	$	45	$	100	$	26

17. INCOME TAXES

Income Before Income Tax Provision

The following table presents the domestic and foreign components of income before income tax provision:


	Year Ended December 31,
	2021		2020		2019
	(in millions)
Domestic	$	1,299	$	898	$	691
Foreign	235		314		328
Income before income tax provision	$	1,534	$	1,212	$	1,019

Income Tax Provision

The income tax provision consists of the following amounts:


	Year Ended December 31,
	2021		2020		2019
	(in millions)
Current income taxes provision:
Federal	$	144	$	114	$	120
State	45		50		40
Foreign	64		74		50
Total current income taxes provision	253		238		210
Deferred income taxes provision (benefit):
Federal	82		37		27
State	22		6		7
Foreign	(10)		(2)		1
Total deferred income taxes provision	94		41		35
Total income tax provision	$	347	$	279	$	245

We have determined that undistributed earnings of certain non-U.S. subsidiaries will be reinvested for an indefinite period of time. We have both the intent and ability to indefinitely reinvest these earnings. As of December 31, 2021, the cumulative amount of undistributed earnings in these subsidiaries is $286 million. Given our intent and ability to reinvest these earnings for an indefinite period of time, we have not accrued a deferred tax liability on these earnings. A determination of an unrecognized deferred tax liability related to these earnings is not practicable.

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A reconciliation of the income tax provision, based on the U.S. federal statutory rate, to our actual income tax provision for the years ended December 31, 2021, 2020 and 2019 is as follows:


	Year Ended December 31,
	2021		2020		2019
Federal income tax provision at the statutory rate	21.0	%	21.0	%	21.0	%
State income tax provision, net of federal effect	3.9	%	4.2	%	4.1	%

Excess tax benefits related to employee share-based compensation	(1.3)	%	(0.6)	%	(0.5)	%
Non-U.S. subsidiary earnings	0.3	%	0.5	%	1.0	%
Tax credits and deductions	(0.3)	%	(0.2)	%	(0.2)	%
Change in unrecognized tax benefits	0.6	%	(0.6)	%	(0.1)	%
Other, net	(1.6)	%	(1.3)	%	(1.3)	%
Actual income tax provision	22.6	%	23.0	%	24.0	%

The majority of the decrease in our effective tax rate in 2021 compared to 2020 was due to a tax benefit related to federal, state and local provision to return adjustments, which is included in “Other, net” in the table above. The majority of the decrease in our effective tax rate in 2020 compared to 2019 was the result of favorable audit settlements and remeasurement of our deferred inventory, which is included in “Other, net” in the table above.

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 same and other factors, including history of pre-tax earnings and losses, are taken into account in assessing the ability to realize deferred tax assets.

Deferred Income Taxes

The temporary differences, which give rise to our deferred tax assets and (liabilities), consisted of the following:


	December 31,
	2021		2020
	(in millions)
Deferred tax assets:
Deferred revenues	$	12	$	8
U.S. federal net operating loss	—		3
Foreign net operating loss	4		4
State net operating loss	1		2
Compensation and benefits	28		28


Federal benefit of uncertain tax positions	6		5
Operating lease liabilities	99		97
Unrealized losses	2		54
Other	34		39
Gross deferred tax assets	186		240
Less: valuation allowance	(4)		(3)
Total deferred tax assets, net of valuation allowance	$	182	$	237

Deferred tax liabilities:
Amortization of software development costs and depreciation	$	(65)	$	(55)
Amortization of acquired intangible assets and goodwill	(322)		(499)
Investments	(99)		(77)

Operating lease assets	(84)		(86)
Other	(16)		(19)
Gross deferred tax liabilities	$	(586)	$	(736)
Net deferred tax liabilities	$	(404)	$	(499)
Reported as:
Non-current deferred tax assets	$	2	$	3
Deferred tax liabilities, net	(406)		(502)
Net deferred tax liabilities	$	(404)	$	(499)

In the table above, non-current deferred tax assets are included in other non-current assets in the Consolidated Balance Sheets.

As of December 31, 2021 and 2020, we recognized a valuation allowance of $4 million and $3 million, respectively, due to recurring operating losses in a foreign jurisdiction. Based on all available positive and negative evidence, we believe the sources of future taxable income are sufficient to realize the remainder of Nasdaq's deferred tax asset inventory.

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Nasdaq has deferred tax assets associated with NOLs in U.S. state and local and non-U.S. jurisdictions with the following expiration dates:


Jurisdiction	December 31, 2021		Expiration Date
	(in millions)
Foreign NOL	$	4	No expiration

State NOL	1		2025-2036

Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:


	Year Ended December 31,
	2021		2020		2019
	(in millions)
Beginning balance	$	42	$	48	$	52
Additions as a result of tax positions taken in prior periods	16		9		10
Additions as a result of tax positions taken in the current period	11		2		1
Reductions related to settlements with taxing authorities	(6)		(6)		(10)
Reductions as a result of lapses of the applicable statute of limitations	(6)		(11)		(5)
Ending balance	$	57	$	42	$	48

We had $57 million of unrecognized tax benefits as of December 31, 2021, $42 million as of December 31, 2020, and $48 million as of December 31, 2019 which, if recognized in the future, would affect our effective tax rate. Nasdaq does not believe that our unrecognized tax benefits will materially change over the next 12 months.

We recognize interest and/or penalties related to income tax matters in the provision for income taxes in our Consolidated Statements of Income, which was a $2 million tax benefit for both the years ended December 31, 2021 and 2020, and a tax provision of $3 million for 2019. Accrued interest and penalties, net of tax effect were $4 million as of December 31, 2021 and $8 million as of December 31, 2020.

Tax Audits

Nasdaq and its eligible subsidiaries file a consolidated U.S. federal income tax return and 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 for the years 2018 through 2020 is subject to examination by the Internal Revenue Service. Several state tax returns are currently under examination by the respective tax authorities for the years 2012 through 2019. Non-U.S. tax returns are subject to examination by the respective tax authorities for the years 2015 through 2020. 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 consolidated financial position or results of operations. We do not expect to settle any material tax audits in the next twelve months.

18. 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 15, “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 $5 million as of December 31, 2021 and December 31, 2020. As discussed in “Other Credit Facilities,” of Note 9, “Debt Obligations,” we also have credit facilities primarily related to our Nasdaq Clearing operations, which are available in multiple currencies, and totaled $212 million as of December 31, 2021 and $232 million as of December 31, 2020 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 15, “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 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 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 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 Consolidated Balance Sheets for these arrangements.

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Legal and Regulatory Matters

Litigation

As previously disclosed, we are named as one of many defendants in City of Providence v. BATS Global Markets, Inc., et al., 14 Civ. 2811 (S.D.N.Y.), which was filed on April 18, 2014 in the United States District Court for the Southern District of New York. The district court appointed lead counsel, who filed an amended complaint on September 2, 2014. The amended complaint names as defendants seven national exchanges, as well as Barclays PLC, which operated a private ATS. On behalf of a putative class of securities traders, the plaintiffs allege that the defendants engaged in a scheme to manipulate the markets through high-frequency trading; the amended complaint asserts claims against us under Section 10(b) of the Exchange Act and Rule 10b-5, as well as under Section 6(b) of the Exchange Act. The plaintiffs seek injunctive and monetary relief of an unspecified amount. We filed a motion to dismiss the amended complaint on November 3, 2014. In response, the plaintiffs filed a second amended complaint on November 24, 2014, which names the same defendants and alleges essentially the same violations. We then filed a motion to dismiss the second amended complaint on January 23, 2015. On August 26, 2015, the district court entered an order dismissing the second amended complaint in its entirety. The plaintiffs appealed the judgment of dismissal to the United States Court of Appeals for the Second Circuit (although opting not to appeal the dismissal with respect to Barclays PLC or the dismissal of claims under Section 6(b) of the Exchange Act). On December 19, 2017, the Second Circuit issued an opinion vacating the district court’s judgment of dismissal and remanding to the district court for further proceedings. On May 18, 2018, the exchanges filed a motion to dismiss the amended complaint, raising issues not addressed in the proceedings to date. On May 28, 2019, the district court denied the exchanges’ renewed motion to dismiss, leading the parties to commence the discovery process. Discovery, focused on issues of whether the case can be certified as a class action and whether the plaintiffs’ claims are precluded by federal securities regulation, ended on April 26, 2021, and potentially dispositive motions regarding these issues were filed on May 28, 2021. Given the preliminary nature of the proceedings, we are unable to estimate what, if any, liability may result from this litigation. However, we believe that the claims are without merit and will continue to litigate vigorously.

Armenian Stock Exchange Investigation

As disclosed in our prior filings with the SEC, a former non-U.S. subsidiary of Nasdaq, NASDAQ OMX Armenia OJSC, operated the Armenian Stock Exchange and the Central Depository of Armenia, which are regulated by the Central Bank of Armenia under Armenian law. In accordance with the requirements of Armenian law, Mellat Bank SB CJSC, an Armenian entity that is designated under Executive Order 13382, was a market participant on the Armenian Stock Exchange and, as a result, paid participation and transaction fees to the Armenian Stock Exchange during the period from 2012-2014. In 2014, we voluntarily self-disclosed this matter to the U.S. Department of Treasury’s Office of Foreign Assets Control, or OFAC, and received authorization from OFAC to continue, if necessary, certain activities pertaining to Mellat Bank SB CJSC in Armenia in a limited manner. In 2015, Nasdaq sold a majority of its ownership of Nasdaq OMX Armenia OJSC, with the remaining minority interest sold in 2018.

OFAC has been conducting an inquiry into the Armenian Stock Exchange matter described above and in our prior filings since 2016, and during the first quarter of 2021, we were advised that OFAC is considering a civil monetary penalty in connection with that matter. We are currently in discussions with OFAC.

While we believe our decision to voluntarily self-report this issue and our continued cooperation with OFAC, along with the permit we received from OFAC in connection with our transactions involving the Armenian Stock Exchange, will be mitigating factors with respect to the matter, any monetary fines or restrictions may nonetheless be material to our financial results in the period in which they are imposed. We cannot currently predict when our discussions with OFAC will conclude or the amount of any potential penalties imposed. Accordingly, we are unable to reasonably estimate any potential loss or range of loss and we have not accrued for a loss contingency.

Nasdaq Commodities Clearing Default

In December 2021, we recorded a charge related to an administrative fine issued by the SFSA associated with the default which occurred in 2018. The charge is included in regulatory expense in our Consolidated Statements of Income for the year ended December 31, 2021. See “Nasdaq Commodities Clearing Default,” of Note 15, “Clearing Operations,” for further information.

Other Matters

Except as disclosed above and in 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.

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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 17, “Income Taxes,” for further discussion.

19. BUSINESS SEGMENTS

We manage, operate and provide our products and services in four business segments: Market Technology, Investment Intelligence, Corporate Platforms and Market Services. See Note 1, “Organization and Nature of Operations,” for further discussion of our reportable segments.

Our management allocates resources, assesses performance and manages these businesses as four 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 table presents certain information regarding our business segments for the years ended December 31, 2021, 2020 and 2019:


	Year Ended December 31,
	2021		2020		2019
Market Technology	(in millions)
Total revenues	$	463	$	357	$	338
Depreciation and amortization	111		33		30
Operating income	46		32		54
Purchase of property and equipment	48		43		40
Investment Intelligence
Total revenues	1,076		898		768
Depreciation and amortization	62		57		52
Operating income	694		572		480
Purchase of property and equipment	44		52		30
Corporate Platforms
Total revenues	613		521		490
Depreciation and amortization	31		34		34
Operating income	247		187		177
Purchase of property and equipment	30		30		27
Market Services
Total revenues	3,707		3,818		2,616
Transaction-based expenses	(2,466)		(2,722)		(1,723)
Revenues less transaction-based expenses	1,241		1,096		893
Depreciation and amortization	73		76		72
Operating income	800		685		508
Purchase of property and equipment	41		63		30
Corporate Items
Total revenues	27		31		46
Depreciation and amortization	1		2		2
Operating income (loss)	(346)		(242)		(202)

Consolidated
Total revenues	$	5,886	$	5,625	$	4,258
Transaction-based expenses	(2,466)		(2,722)		(1,723)
Revenues less transaction-based expenses	$	3,420	$	2,903	$	2,535
Depreciation and amortization	$	278	$	202	$	190
Operating income	$	1,441	$	1,234	$	1,017
Purchase of property and equipment	$	163	$	188	$	127

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Certain amounts 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. These items, which are presented in the table 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. Management does not consider intangible asset amortization expense 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 intangible asset amortization expense provide management with a useful representation of our segments' ongoing activity in each period.

*•*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. Management does not consider merger and strategic initiatives expense 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 merger and strategic initiatives expense provide management with a useful representation of our segments' ongoing activity in each period.

Restructuring charges: We initiated the transition of certain technology platforms to advance our strategic opportunities as a technology and analytics provider and continue the re-alignment of certain business areas. See Note 20, “Restructuring Charges,” for further discussion of our 2019 restructuring plan. We believe performance measures excluding restructuring charges provide management with a useful representation of our segments' ongoing activity in each period.
Revenues and expenses - divested/contributed businesses: We have included in corporate items the revenues and expenses of our U.S. Fixed Income business, which was previously included in our Market Services and Investment Intelligence results. See “2021 Divestiture,” of Note 4, “Acquisitions and Divestiture,” for further discussion of this divestiture. Also included are the revenues and expenses associated with the NPM business which we contributed to a standalone, independent company, of which we own the largest minority interest, together with a consortium of third party financial institutions in July 2021. Prior to July these revenues were previously included in our Corporate Platforms results. For 2019, we have included in corporate items the revenues and expenses of the BWise business which was part of the IR & ESG Services business within our Corporate Platforms segment as BWise was sold in March 2019.
Other significant 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 significant items include:

◦for the year ended December 31, 2021 a charge related to an administrative fine imposed by the SFSA associated with the default that occurred in 2018, see “Nasdaq Commodities Clearing Default,” of Note 15, “Clearing Operations,” for further discussion, and for the year ended December 31, 2020 the reversal of a regulatory fine issued by the SFSA. Both charges have been included in regulatory expense in the Consolidated Statements of Income;

◦for the year ended December 31, 2020, a provision for notes receivable associated with the funding of technology development for the consolidated audit trail;

◦for the years ended December 31, 2021 and 2020, a charge on extinguishment of debt;

◦for the year ended December 31, 2020, charitable donations made to the Nasdaq Foundation, COVID-19 response and relief efforts, and social justice charities; and

◦for the years ended December 31, 2020, certain litigation costs which are recorded in professional and contract services expense in the Consolidated Statements of Income.

The above charges are recorded in general, administrative and other expense, unless otherwise noted, in our Consolidated Statements of Income.

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The following table summarizes our Corporate Items:




















	Year Ended December 31,
	2021		2020		2019
	(in millions)
Revenues - divested/contributed businesses	$	27	$	31	$	46
Expenses:
Amortization expense of acquired intangible assets	170		103		101
Merger and strategic initiatives expense	87		33		30
Restructuring charges	31		48		39
Regulatory matters	33		(6)		—
Provision for notes receivable	—		6		20
Extinguishment of debt	33		36		11
Charitable donations	—		17		—

Expenses - divested/contributed businesses	10		18		25
Other	9		18		22
Total expenses	373		273		248
Operating loss	$	(346)	$	(242)	$	(202)

For further discussion of our segments’ results, see “Segment Operating Results,” of “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Geographic Data

The following table presents total revenues and property and equipment, net by geographic area for 2021, 2020 and 2019. Revenues are classified based upon the location of the customer. Property and equipment information is based on the physical location of the assets.


	Total Revenues		Property and Equipment, Net
2021:	(in millions)
United States	$	4,822	$	325
All other countries	1,064		184
Total	$	5,886	$	509
2020:
United States	$	4,662	$	311
All other countries	963		164
Total	$	5,625	$	475
2019:
United States	$	3,405	$	250
All other countries	853		134
Total	$	4,258	$	384

Our property and equipment, net for all other countries primarily includes assets held in Sweden. No single customer accounted for 10.0% or more of our revenues in 2021, 2020 and 2019.

20. RESTRUCTURING CHARGES

In September 2019, we initiated the transition of certain technology platforms to advance the company's strategic opportunities as a technology and analytics provider and continue the re-alignment of certain business areas. In connection with these restructuring efforts, we retired certain elements of our marketplace infrastructure and technology product offerings as we implement NFF and other technologies internally and externally. This represented a fundamental shift in our strategy and technology as well as executive re-alignment. In June 2021, we completed our 2019 restructuring plan and recognized total pre-tax charges of $118 million over a two-year period. Total pre-tax charges related primarily to non-cash items such as asset impairments and accelerated depreciation, and third-party consulting costs. Severance and employee-related charges were also incurred.

The following table presents a summary of the 2019 restructuring plan charges in the Consolidated Statements of Income for the years ended December 31, 2021, 2020 and 2019 which primarily consisted of consulting services, asset impairment charges primarily related to capitalized software that was retired, and accelerated depreciation expense on certain assets as a result of a decrease in their useful life.












	Year Ended December 31,
	2021		2020		2019
	(in millions)
Asset impairment charges and accelerated depreciation expense	$	4	$	14	$	26
Consulting services	19		22		2
Contract terminations	—		3		2
Severance and employee-related costs	1		3		8
Other	7		6		1
Total restructuring charges	$	31	$	48	$	39

21. Subsequent Event

In January 2022, we entered into an ASR agreement to repurchase $325 million of common stock. Refer to “ASR Agreements,” of Note 12, “Nasdaq Stockholders' Equity,” for further discussion.

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